EXHIBIT 10.1
EXECUTION COPY
$150,000,000
CREDIT AGREEMENT
DATED AS OF
OCTOBER 31, 2003
AMONG
KRISPY KREME DOUGHNUT CORPORATION,
AS BORROWER,
THE LENDERS PARTY HERETO,
WACHOVIA BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT AND AN ISSUING LENDER,
BRANCH BANKING AND TRUST COMPANY,
AS SYNDICATION AGENT,
BANK OF AMERICA, N.A.
AND
ROYAL BANK OF CANADA,
AS CO-DOCUMENTATION AGENTS,
AND
WACHOVIA CAPITAL MARKETS, LLC,
AS SOLE LEAD ARRANGER AND BOOK RUNNER
TABLE OF CONTENTS
PAGE
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ARTICLE I.
DEFINITIONS............................................................................................ 1
SECTION 1.01 Definitions....................................................................... 1
SECTION 1.02 Accounting Terms and Determinations............................................... 18
SECTION 1.03 Terms Generally................................................................... 19
SECTION 1.04 Use of Defined Terms.............................................................. 19
ARTICLE II.
THE CREDITS............................................................................................ 19
SECTION 2.01 Commitments to Lend............................................................... 19
SECTION 2.02 Method of Borrowing Term Loans, Revolving Credit Loans and Swing Loans............ 22
SECTION 2.03 Continuation and Conversion Elections............................................. 24
SECTION 2.04 Notes............................................................................. 24
SECTION 2.05 Maturity of Revolving Credit Loans................................................ 25
SECTION 2.06 Interest Rates.................................................................... 25
SECTION 2.07 Fees.............................................................................. 27
SECTION 2.08 Optional Termination or Reduction of the Revolving Credit Commitments............. 28
SECTION 2.09 Termination of the Revolving Credit Commitments................................... 28
SECTION 2.10 Optional Prepayments.............................................................. 28
SECTION 2.11 Repayment of Term Loans; Mandatory Payments....................................... 29
SECTION 2.12 General Provisions as to Payments................................................. 30
SECTION 2.13 Computation of Interest and Fees.................................................. 31
ARTICLE III.
LETTER OF CREDIT FACILITY.............................................................................. 32
SECTION 3.01 Obligation to Issue............................................................... 32
SECTION 3.02 Types and Amounts................................................................. 32
SECTION 3.03 Conditions........................................................................ 32
SECTION 3.04 Issuance of Letters of Credit..................................................... 33
SECTION 3.05 Reimbursement Obligations; Duties of the Issuing Lender........................... 33
SECTION 3.06 Participations.................................................................... 34
SECTION 3.07 Payment of Reimbursement Obligations.............................................. 36
SECTION 3.08 Compensation for Letters of Credit................................................ 37
SECTION 3.09 Indemnification; Exoneration...................................................... 37
ARTICLE IV.
CONDITIONS TO BORROWINGS............................................................................... 38
SECTION 4.01 Conditions to First Borrowing..................................................... 38
SECTION 4.02 Conditions to All Borrowings...................................................... 40
SECTION 4.03 Determinations Under Section 4.01................................................. 40
ARTICLE V.
REPRESENTATIONS AND WARRANTIES......................................................................... 41
SECTION 5.01 Corporate Existence and Power..................................................... 41
SECTION 5.02 Corporate and Governmental Authorization; No Contravention........................ 41
SECTION 5.03 Binding Effect.................................................................... 41
SECTION 5.04 Financial Information; No Material Adverse Effect................................. 41
SECTION 5.05 No Litigation..................................................................... 42
SECTION 5.06 Compliance with ERISA............................................................. 42
SECTION 5.07 Compliance with Laws; Payment of Taxes............................................ 42
SECTION 5.08 Subsidiaries...................................................................... 43
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SECTION 5.09 Investment Company Act............................................................ 43
SECTION 5.10 Public Utility Holding Company Act................................................ 43
SECTION 5.11 Ownership of Property; Liens; Leases.............................................. 43
SECTION 5.12 No Default........................................................................ 43
SECTION 5.13 Full Disclosure................................................................... 43
SECTION 5.14 Environmental Matters............................................................. 43
SECTION 5.15 Capital Stock..................................................................... 44
SECTION 5.16 Use of Proceeds; Margin Stock..................................................... 44
SECTION 5.17 Insolvency........................................................................ 45
SECTION 5.18 Insurance......................................................................... 45
SECTION 5.19 Intellectual Property............................................................. 45
SECTION 5.20 Material Agreements............................................................... 45
ARTICLE VI.
AFFIRMATIVE COVENANTS.................................................................................. 46
SECTION 6.01 Information....................................................................... 46
SECTION 6.02 Inspection of Property, Books and Records......................................... 48
SECTION 6.03 Conduct of Business and Maintenance of Existence.................................. 48
SECTION 6.04 Use of Proceeds................................................................... 48
SECTION 6.05 Compliance with Laws; Payment of Taxes............................................ 48
SECTION 6.06 Insurance......................................................................... 49
SECTION 6.07 Maintenance of Property........................................................... 49
SECTION 6.08 Environmental Matters............................................................. 49
SECTION 6.09 Certain Obligations Respecting Subsidiaries....................................... 49
ARTICLE VII.
NEGATIVE COVENANTS..................................................................................... 50
SECTION 7.01 Use of Proceeds................................................................... 50
SECTION 7.02 Consolidations, Mergers and Sales of Assets; Dissolution.......................... 50
SECTION 7.03 Change in Fiscal Year; Accounting Policies; Capital Stock......................... 51
SECTION 7.04 Change in Nature of Business...................................................... 51
SECTION 7.05 Transactions with Affiliates...................................................... 51
SECTION 7.06 Restricted Payments............................................................... 51
SECTION 7.07 Investments....................................................................... 52
SECTION 7.08 Acquisitions...................................................................... 52
SECTION 7.09 Limitation on Liens............................................................... 52
SECTION 7.10 Limitation on Debt................................................................ 53
SECTION 7.11 Sale-Leasebacks; Synthetic Leases................................................. 54
SECTION 7.12 OTHER NEGATIVE PLEDGE............................................................. 54
SECTION 7.13 Financial Covenants............................................................... 54
ARTICLE VIII.
DEFAULTS............................................................................................... 55
SECTION 8.01 Events of Default................................................................. 55
ARTICLE IX.
THE ADMINISTRATIVE AGENT............................................................................... 58
SECTION 9.01 Appointment; Powers and Immunities................................................ 58
SECTION 9.02 Reliance by Administrative Agent.................................................. 58
SECTION 9.03 Defaults.......................................................................... 59
SECTION 9.04 Rights of Administrative Agent and its Affiliates as a Lender..................... 59
SECTION 9.05 Indemnification................................................................... 59
SECTION 9.06 Consequential Damages............................................................. 60
SECTION 9.07 Registered Holder of Loan Treated as Owner........................................ 60
SECTION 9.08 Nonreliance on Administrative Agent and Other Lenders............................. 60
SECTION 9.09 Failure to Act.................................................................... 60
SECTION 9.10 Successor Administrative Agent.................................................... 61
SECTION 9.11 Other Agents...................................................................... 61
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ARTICLE X.
CHANGE IN CIRCUMSTANCES; COMPENSATION.................................................................. 61
SECTION 10.01 Basis for Determining Interest Rate Inadequate or Unfair.......................... 61
SECTION 10.02 Illegality........................................................................ 62
SECTION 10.03 Increased Cost and Reduced Return................................................. 62
SECTION 10.04 Base Rate Loans Substituted for Euro-Dollar Loans................................. 63
SECTION 10.05 Compensation...................................................................... 64
SECTION 10.06 Replacement of Lenders............................................................ 64
ARTICLE XI.
MISCELLANEOUS.......................................................................................... 65
SECTION 11.01 Notices........................................................................... 65
SECTION 11.02 No Waivers........................................................................ 66
SECTION 11.03 Expenses; Documentary Taxes....................................................... 66
SECTION 11.04 Indemnification................................................................... 66
SECTION 11.05 Setoff; Sharing of Setoffs; Application of Payments............................... 67
SECTION 11.06 Amendments and Waivers............................................................ 69
SECTION 11.07 Independence of Covenants......................................................... 69
SECTION 11.08 Successors and Assigns............................................................ 70
SECTION 11.09 Confidentiality................................................................... 72
SECTION 11.10 Representation by Lenders......................................................... 73
SECTION 11.11 Obligations Several............................................................... 73
SECTION 11.12 Governing Law..................................................................... 73
SECTION 11.13 Severability...................................................................... 73
SECTION 11.14 Interest.......................................................................... 73
SECTION 11.15 Interpretation.................................................................... 74
SECTION 11.16 Arbitration; Waiver of Jury Trial................................................. 74
SECTION 11.17 Counterparts...................................................................... 75
SECTION 11.18 Source of Funds - ERISA........................................................... 75
Exhibit A-1 Form of Revolving Credit Loan Note
Exhibit A-2 Form of Swing Loan Note
Exhibit A-3 Form of Term Loan Note
Exhibit B Form of Opinion of Counsel for the Obligors
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Continuation or Conversion
Exhibit E Form of Compliance Certificate
Exhibit F Form of Closing Certificate
Exhibit G Form of Officer's Certificate
Exhibit H Form of Parent Guaranty
Exhibit I Form of Subsidiary Guaranty
Exhibit J Form of Affiliate Guaranty
Exhibit K Form of Guaranty Assumption Agreement
Exhibit L Form of Notice in Respect of Issuance of Letters of Credit
Schedule 1.01 Commitments
Schedule 4.01 Refinanced Debt
Schedule 5.08 Subsidiaries
Schedule 5.14 Environmental Matters
Schedule 7.07(e) Investment Policy
Schedule 7.09 Existing Liens
Schedule 7.10 Existing Debt
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of October 31, 2003, among KRISPY KREME
DOUGHNUT CORPORATION, a North Carolina corporation; the LENDERS party hereto;
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent and an Issuing
Lender; BRANCH BANKING AND TRUST COMPANY, as Syndication Agent; and BANK OF
AMERICA, N.A. and ROYAL BANK OF CANADA, as Co-Documentation Agents.
The Borrower (as defined below) has requested that the Lenders (as
defined below) extend credit to it, in an aggregate principal amount not to
exceed $150,000,000 (which amount may, in the circumstances hereinafter
provided, be increased to $200,000,000).
The Lenders are prepared to extend such credit on the terms and
conditions hereof, and, accordingly, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 DEFINITIONS. The terms as defined in this Section 1.01
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Acquisition" means, as to any Person, the acquisition (in a single
transaction or a series of related transactions) by such Person of (a) at least
50% of the outstanding Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) assets constituting
one or more business units or divisions of any other Person.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.06(b).
"Administrative Agent" means Wachovia Bank, National Association, a
national banking association organized under the laws of the United States of
America, in its capacity as administrative agent for the Lenders, and its
successors and permitted assigns in such capacity.
"Administrative Details Reply Form" means an administrative
questionnaire in the form supplied by the Administrative Agent.
"Affiliate" of any relevant Person means (i) any Person that directly,
or indirectly through one or more intermediaries, controls the relevant Person
(a "Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Affiliate Guarantor" means Montana Mills Bread Co., Inc., a Delaware
corporation, and its successors and permitted assigns.
"Affiliate Guaranty" means an Affiliate Guaranty Agreement in
substantially the form of Exhibit J.
"Agreement" means this Credit Agreement, together with all amendments,
modifications, restatements and supplements hereto.
"Applicable Margin" has the meaning set forth in Section 2.06(a).
"Arbitration Award" means that certain arbitration award against the
Borrower made on March 20, 2003, in favor of Kevin Boylan and Bruce Newberg, in
the amount of $8,550,000.
"Arranger's Letter Agreement" means, collectively, those certain letter
agreements, each dated as of August 1, 2003 among the Borrower, the
Administrative Agent and Wachovia Capital Markets, LLC, as arranger, relating to
the structure of the Loans, and certain fees from time to time payable by the
Borrower to Wachovia Capital Markets, LLC, as sole lead arranger and book
runner, and to the Administrative Agent, together with all amendments and
supplements thereto.
"Assignee" has the meaning set forth in Section 11.08(b).
"Assignment and Acceptance" means any form of assignment agreement
approved from time to time by the Loan Syndications and Trading Association or
the Administrative Agent.
"Authority" has the meaning set forth in Section 10.02.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half
of one percent (0.5%) above the Federal Funds Rate. For purposes of determining
the Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate
shall be effective on the date of each such change.
"Base Rate Loan" means a Loan that bears or is to bear interest at a
rate based upon the Base Rate, and is to be made as a Base Rate Loan pursuant to
the applicable Notice of Borrowing, Notice of Continuation or Conversion,
Section 2.01(b) or Section 2.02(e), or Article X, as applicable.
"Borrower" means Krispy Kreme Doughnut Corporation, a North Carolina
corporation, and its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower (i) at the same time by all of the Revolving Credit Lenders, in the
case of a Revolving Credit Borrowing pursuant to Article II, (ii) on the Closing
Date by all the Term Loan Lenders, in the case of the Term Loans made pursuant
to Article II or (iii) by the Swing Lender, for Swing Loans. A Borrowing is a
"Revolving Credit Borrowing" if such Loans are made pursuant to Section 2.01(a),
a "Swing Loan Borrowing" if such Loans are made pursuant to Section 2.01(b) or a
"Term Loan Borrowing" if such Loans are made pursuant to Section 2.01(c). A
Borrowing
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is a "Base Rate Borrowing" if such Loans are Base Rate Loans or a "Euro-Dollar
Borrowing" if such Loans are Euro-Dollar Loans.
"Capital Stock" means any nonredeemable capital stock, membership
interests or partnership interests of the Borrower or any Consolidated
Subsidiary (to the extent issued to a Person other than the Borrower), whether
common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et. seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 10.02.
"Closing Certificate" has the meaning set forth in Section 4.01(d).
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also include the income tax regulations promulgated thereunder, whether final,
temporary or proposed.
"Commitment" means, as to any Lender, such Lender's Revolving Credit
Commitment or Term Loan Commitment and "Commitments" means the Revolving Credit
Commitments and Term Loan Commitments of all the Lenders. The initial aggregate
amount of the Commitments is $150,000,000.
"Compliance Certificate" has the meaning set forth in Section 6.01(c).
"Consolidated EBITDA" means the sum of the following, calculated on a
consolidated basis in accordance with GAAP for the Parent and its Consolidated
Subsidiaries, for the relevant fiscal period: Consolidated Net Income plus, to
the extent deducted in determining Consolidated Net Income, (a) Depreciation and
Amortization expense; plus (b) Consolidated Interest Expense less Consolidated
Interest Income; plus (c) income tax expense. In determining Consolidated EBITDA
for any period, the Arbitration Award shall be excluded as if it had not
occurred or been paid (in whole or in part) at any time during such period.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of (a) Consolidated Interest Expense for such period and (b) all
payment obligations of the Parent and its Consolidated Subsidiaries for such
period under all operating leases and rental agreements.
"Consolidated Interest Expense" means, for any period, interest,
whether expensed or capitalized, in respect of Debt of the Parent or any
Consolidated Subsidiaries outstanding during such period.
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"Consolidated Interest Income" means, for any period, interest income
of the Parent or any Consolidated Subsidiaries during such period.
"Consolidated Joint Venture" means any Consolidated Subsidiary that is
(a) not a Wholly-Owned Subsidiary, and (b) engaged in Krispy Kreme franchisee or
doughnut and bakery store operations.
"Consolidated Leverage Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of (a) Consolidated Total Debt on such day, to (b)
Consolidated EBITDA for the period of four consecutive Fiscal Quarters ending on
such day.
"Consolidated Net Income" means, for any period, the Net Income of the
Parent and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP, but (i) including, to the extent excluded from the
calculation of such Net Income, the income (or deficit) of any Consolidated
Joint Venture that is a Subsidiary Guarantor and (ii) excluding (a) non-cash
extraordinary items, (b) the income (or deficit) of any Person accrued prior to
the date it becomes a Subsidiary of the Parent or is merged into or consolidated
with the Parent or any of its Subsidiaries, (c) to the extent included in the
calculation of such Net Income, the income (or deficit) of any Person (other
than the Borrower, a Guarantor or a Wholly Owned Subsidiary) in which the Parent
or any of its Subsidiaries has an ownership interest, except to the extent that
any such income is actually received by the Borrower or a Guarantor in the form
of cash dividends or cash distributions, and (d) the undistributed positive
earnings of any Subsidiary of the Parent to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any contract or agreement binding on such
Subsidiary (other than under any Loan Document), any constitutive document of
such Subsidiary or any Governmental Requirement applicable to such Subsidiary.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Parent and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means a Subsidiary, the accounts of which are
customarily consolidated with those of the Parent for the purpose of reporting
to stockholders of the Parent or, in the case of a recently acquired Subsidiary,
the accounts of which would, in accordance with the Parent's regular practice,
be so consolidated for that purpose.
"Consolidated Tangible Net Worth" means, at any time, Stockholders'
Equity, less the sum of the value, as set forth or reflected on the most recent
consolidated balance sheet of the Parent and its Consolidated Subsidiaries,
prepared in accordance with GAAP, of:
(a) All assets which would be treated as intangible assets for
balance sheet presentation purposes under GAAP, including without limitation
goodwill (whether representing the excess of cost over book value of assets
acquired, or otherwise), trademarks, tradenames, copyrights, patents and
technologies, and unamortized debt discount and expense;
(b) To the extent not included in (a) of this definition, any
amount at which shares of Capital Stock of the Parent appear as an asset on the
balance sheet of the Parent and its Consolidated Subsidiaries;
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(c) Loans or advances to stockholders, directors, officers or
employees; and
(d) To the extent not included in (a) of this definition, deferred
expenses.
"Consolidated Total Assets" means, at any time, the total assets of the
Parent and its Consolidated Subsidiaries, determined on a consolidated basis, as
set forth or reflected on the most recent consolidated balance sheet of the
Parent and its Consolidated Subsidiaries, prepared in accordance with GAAP.
"Consolidated Total Debt" means at any date the aggregate principal
amount of all Debt of the Parent and its Consolidated Subsidiaries, determined
on a consolidated basis as of such date.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" means, for any Person at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person as lessee under capital leases, (e)
all obligations of such Person to reimburse any bank or other Person in respect
of amounts payable under a banker's acceptance, (f) all Redeemable Preferred
Stock of such Person (in the event such Person is a corporation), (g) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid or to be paid under a letter of credit or similar instrument, (h)
all Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, (i) all obligations of such Person with
respect to interest rate protection agreements, foreign currency exchange
agreements or other hedging arrangements, including Swap Agreements (valued at
the termination value thereof computed in accordance with a method approved by
the International Swaps and Derivatives Association and agreed to by such Person
in the applicable hedging agreement, if any), (j) all Debt of others Guaranteed
by such Person, (k) all obligations of such Person to purchase securities or
other property arising out of or in connection with the sale of the same or
substantially similar securities or property and (l) all obligations of such
Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person. The Debt of any
Person shall include the Debt of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such Debt
provide that such Person is not liable therefor.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived in writing, become an Event of Default.
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"Default Rate" means, with respect to any Loan, on any day, the sum of
2% plus the then highest interest rate (including the Applicable Margin) which
may be applicable to any Loans hereunder (irrespective of whether any such type
of Loans are actually outstanding hereunder).
"Depreciation and Amortization" means for any period the sum of all
depreciation and amortization expenses of the Parent and its Consolidated
Subsidiaries for such period, as determined in accordance with GAAP.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial lenders in North Carolina or New York are
authorized or required by law to close.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
(c) a Related Fund; and (d) any other Person (other than a natural Person)
approved by the Administrative Agent and, so long as no Default has occurred and
is continuing, the Borrower (such approvals not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall
not include the Borrower or any of the Borrower's Affiliates or Subsidiaries.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any Subsidiary
or the Properties, including but
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not limited to any such requirement under CERCLA or similar state legislation
and all federal, state and local laws, ordinances, regulations, orders, writs,
decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law, and all rules and regulations
from time to time promulgated thereunder. Any reference to any provision of
ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan that bears or is to bear interest at a
rate based upon the Adjusted London Interbank Offered Rate, and to be made as a
Euro-Dollar Loan pursuant to a Notice of Borrowing or continued as or converted
to a Euro-Dollar Loan pursuant to a Notice of Continuation or Conversion.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.06(b).
"Event of Default" has the meaning set forth in Section 8.01.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Administrative Agent on such
day on such transactions, as determined by the Administrative Agent.
"Fiscal Quarter" means any fiscal quarter of the Parent.
"Fiscal Year" means any fiscal year of the Parent.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of
Income Available for Fixed Charges to Consolidated Fixed Charges.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Governmental Authority" means and includes the country, state, county,
city and political subdivisions in which any Person or any such Person's
property is located or that exercises valid jurisdiction over any such Person or
any such Person's property, and any court, agency, department, commission,
board, bureau or instrumentality of any of them including monetary authorities
or central bank that exercise valid jurisdiction over any such Person or any
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such Person's property. Unless otherwise specified, all references to
Governmental Authority herein shall mean a Governmental Authority having
jurisdiction over, where applicable, the Borrower, the Administrative Agent, the
Issuing Lenders, the Swing Lender, any Lender, any Lending Office or any Loan
Document.
"Governmental Requirement" means any law, statute, code, ordinance,
order, determination, regulation, judgment, injunction, franchise, permit,
certificate, license, authorization or other direction or requirement (whether
or not having the force of law), including, without limitation, Environmental
Requirements, and occupational, safety and health standards or controls, of any
Governmental Authority.
"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 (i) to secure, 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 provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) 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 such 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.
"Guarantor" means each of the Parent, the Subsidiary Guarantors, the
Affiliate Guarantor, and any other Person that guarantees the Obligations of the
Borrower under the Loan Documents.
"Guaranty" means any one of the Parent Guaranty, the Subsidiary
Guaranty, or the Affiliate Guaranty, and "Guaranties" means, collectively, the
Parent Guaranty, the Subsidiary Guaranty and the Affiliate Guaranty.
"Guaranty Assumption Agreement" means a Guaranty Assumption Agreement
substantially in the form of Exhibit K.
"Hazardous Materials" means (a) solid or hazardous waste, as defined in
the Resource Conservation and Recovery Act of 1980, 42 U.S.C. Section 6901 et
seq. and its implementing regulations and amendments, or in any applicable state
or local law or regulation, (b) "hazardous substance", "pollutant", or
"contaminant" as defined in CERCLA, or in any applicable state or local law or
regulation, (c) gasoline, or any other petroleum product or by-product,
including, crude oil or any fraction thereof, (d) toxic substances, as defined
in the Toxic Substances Control Act of 1976, or in any applicable state or local
law or regulation and (e) insecticides, fungicides, or rodenticides, as defined
in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any
applicable state or local law or regulation, as each such Act, statute or
regulation may be amended from time to time.
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"Income Available for Fixed Charges" for any period means the sum of
(a) Consolidated Net Income and (b) Consolidated Fixed Charges, all determined
with respect to the Parent and its Consolidated Subsidiaries on a consolidated
basis for such period and in accordance with GAAP.
"Increase Effective Date" has the meaning set forth in Section 2.01(d).
"Interest Period" means with respect to each Euro-Dollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the first, second, third or sixth month thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (subject to clause (c) below)
which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day,
unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of the appropriate subsequent calendar month;
(c) no Interest Period may be selected that begins before
the Maturity Date and would otherwise end after the Maturity Date; and
(d) Term Loans may only have an Interest Period of one
month.
"Investment" means any investment in any Person, whether by means of
(a) any purchase or other acquisition of Capital Stock or Debt or the assets of
the business of such Person, (b) any purchase or other acquisition of
obligations or securities of such Person, (c) any capital contribution to such
Person, (d) any loan or advance to such Person, (e) any making of a time deposit
with such Person, (f) any Guarantee or assumption of any obligation of such
Person or (g) any other direct or indirect investment in such Person, including,
without limitation, any acquisition by way of a merger or consolidation, and any
arrangement pursuant to which the investor incurs Debt of the type referred to
in clause (j) of the definition of "Debt" in respect of such Person. The amount
of any Investment shall be determined as follows: (i) with respect to any
Investment in an unconsolidated Joint Venture, the amount of such Investment
that would be, in conformity with GAAP, set forth opposite the caption
"Investment in unconsolidated joint ventures" (or any like caption) with respect
to such unconsolidated Joint Venture on a consolidated balance sheet of the
Parent and its Consolidated Subsidiaries, (ii) with respect to any Investment in
a Consolidated Joint Venture, the aggregate value, determined in accordance with
GAAP, of such Investment in such Consolidated Joint Venture and (iii) with
respect to all other Investments, the amount actually invested, less any return
of capital, without adjustment for subsequent increases or decreases in the
market value of such Investment.
"Investment Committee" has the meaning set forth in Schedule 7.07(e).
"Issuing Lender" means Wachovia.
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"Joint Venture" means (i) any entity in which the Parent, the Borrower
or any Subsidiary has made any Investment that would be, in conformity with
GAAP, set forth opposite the caption "Investment in unconsolidated joint
ventures" (or any like caption) on a consolidated balance sheet of the Parent
and its Consolidated Subsidiaries and (ii) any Consolidated Joint Venture.
"Joint Venture Investments" means, on any date, the aggregate amount of
outstanding Investments in Joint Ventures on such date.
"Lender" means each lender listed on the signature pages hereof as
having a Commitment, and its successors and assigns, and, as the context
requires, includes the Issuing Lender and Swing Lender.
"Lending Office" means, as to each Lender, (a) its office located at
its address set forth or identified in the Administrative Details Reply Form as
its Lending Office) and (b) as to any Lender which enters into any Assignment
and Acceptance (whether as transferor Lender or as Assignee thereunder), as set
forth in such Assignment and Acceptance, or in each case such other office as
such Lender may hereafter designate as its Lending Office by notice to the
Borrower and the Administrative Agent.
"Letter of Credit" means any letter of credit issued hereunder. A
letter of credit may be a commercial letter of credit or a standby letter of
credit.
"Letter of Credit Application Agreement" shall mean, with respect to a
Letter of Credit, such form of application therefor (whether in a single or
several documents) as the Issuing Lender may employ in the ordinary course of
business for its own account, whether or not providing for collateral security,
with such modifications thereto as may by agreed upon by the Issuing Lender and
the Borrower and are not materially adverse to the interests of the Lenders;
provided, however, that in the event of any conflict between the terms of any
Letter of Credit Application Agreement and this Agreement, the terms of this
Agreement shall control.
"Letter of Credit Commitment" means $60,000,000.
"Letter of Credit Fees" has the meaning set forth in Section 3.08.
"Letter of Credit Obligations" means, at any particular time, the sum
of (a) the Reimbursement Obligations at such time, (b) the aggregate maximum
amount available for drawing under the Letters of Credit at such time and (c)
the aggregate maximum amount available for drawing under Letters of Credit the
issuance of which has been authorized by the Issuing Lender but which have not
yet been issued.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset, whether by consensual agreement or by operation of
statute or other law, or by any agreement, contingent or otherwise, to provide
any of the foregoing. For the purposes of this Agreement, the Borrower or any
Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under
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any conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Base Rate Loan, Euro-Dollar Loan, Revolving Credit Loan,
Swing Loan, or Term Loan, and "Loans" means Base Rate Loans, Euro-Dollar Loans,
Revolving Credit Loans, Swing Loans, Term Loans, or any or all of them, as the
context shall require.
"Loan Documents" means this Agreement, the Notes, the Parent Guaranty,
the Affiliate Guaranty, the Subsidiary Guaranty, any other document evidencing,
relating to or securing the Loans or the Letters of Credit, and any other
document or instrument delivered from time to time in connection with this
Agreement, the Notes or the Loans or the Letters of Credit, as such documents
and instruments may be amended, modified, restated or supplemented from time to
time, but excluding Swap Agreements.
"London Interbank Offered Rate" has the meaning set forth in Section
2.06(b).
"LSTA Confidentiality Agreement" means any form of Confidentiality
Agreement approved from time to time by the Loan Syndications and Trading
Association or the Administrative Agent.
"Majority-Owned Joint Venture" means each Joint Venture in which the
Parent and/or one of its Subsidiaries owns not less than 50% of the Capital
Stock, including, but not limited to, Freedom Rings, LLC; Golden Gate Doughnuts,
LLC; New England Dough, LLC; and Glazed Investments, LLC.
"Margin Stock" means "margin stock" as defined in Regulations T, U or
X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of the Parent
and its Consolidated Subsidiaries, taken as a whole, (b) the rights and remedies
of the Administrative Agent or the Lenders under the Loan Documents, or the
ability of the Borrower or any Guarantor to perform its obligations under the
Loan Documents to which it is a party, as applicable, or (c) the legality,
validity or enforceability of any Loan Document.
"Material Subsidiary" means, as of each date of determination, any
Consolidated Subsidiary (a) whose consolidated total assets exceed 5% of
Consolidated Total Assets or (b) whose consolidated total revenues exceed 5% of
the consolidated total revenues of the Parent and its Consolidated Subsidiaries
determined in accordance with GAAP as of the last day of the Fiscal Quarter of
the Parent most recently ended as of such date of determination; provided,
however, if at any time the aggregate consolidated total assets or aggregate
consolidated total revenues of the Obligors shall be less than 80% of
Consolidated Total Assets or consolidated total revenues of the Parent and its
Consolidated Subsidiaries, respectively, the Borrower shall designate one or
more additional Subsidiaries as Material Subsidiaries such that, after giving
effect to such designations, the aggregate consolidated total assets and
aggregate consolidated
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total revenues of the Obligors shall be equal to or greater than 80% of
Consolidated Total Assets and consolidated total revenues of the Parent and its
Consolidated Subsidiaries, respectively. Notwithstanding the requirements of
clauses (a) and (b) above, neither Glazed Investments, LLC nor New England
Dough, LLC shall be a Material Subsidiary hereunder unless specifically so
designated at the option of the Borrower pursuant to the proviso above.
"Maturity Date" means October 31, 2007.
"Minimum Consolidated Tangible Net Worth" has the meaning set forth in
Section 7.13(c).
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Cash Position" means on any day, with respect to the Operating
Account, a sum equal to the opening available balance in the Operating Account,
plus any maturing investment principal and interest credited to the Operating
Account, minus the daily presentment of checks and Operating Account holds,
minus any floor balance which has been established to cover bank charges, minus
any maturing interest debited to the Operating Account, in each case for such
day.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Non-Guarantor Joint Venture Investments" means the aggregate amount of
Joint Venture Investments in Persons that are not Guarantors.
"Notes" means each of the Revolving Credit Loan Notes, Swing Loan Note
or Term Loan Notes, or any or all of them, as the context shall require.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Notice of Continuation or Conversion" has the meaning set forth in
Section 2.03.
"Obligations" shall mean, collectively, the aggregate outstanding
principal amount of the Revolving Credit Exposures and the Term Loans and, to
the extent not included therein, (a) all payment and performance obligations of
the Obligors to the Lenders, the Swing Lender, the Issuing Lenders and the
Administrative Agent under this Agreement and the other Loan Documents
(including any interest, fees and expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), as they may be amended from time to time,
or as a result of making the Loans or issuing the Letters of Credit, (b) the
obligation to pay an amount equal to the amount of any and all damages which the
Administrative Agent, the Issuing Lenders, the Swing Lender, and the Lenders, or
any of them, may suffer by reason of a breach by any Obligor of any obligation,
covenant, or undertaking with respect to this Agreement or any other Loan
Document, and (c) any obligations of any Obligor to the Administrative Agent (or
an Affiliate of the Administrative Agent) or any Lender (or an Affiliate of a
Lender) under any Swap Agreement permitted hereunder.
"Obligor" means each of the Borrower and the Guarantors.
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"Officer's Certificate" means, as to any Person, a certificate
substantially in the form of Exhibit G, signed by a secretary, assistant
secretary, member, or manager, as applicable (or such other officer or Person
acceptable to the Administrative Agent) of such Person, certifying as to the
names, true signatures and incumbency of the officer, member or manager, as
applicable, of such Person authorized to execute and deliver the Loan Documents,
and certified copies of the following items for such Person, each as applicable
to such Person: (i) Organization Documents, (ii) certificate of the Secretary of
State of such Person's state of incorporation, organization or partnership as to
the good standing of such Person as such an entity, and (iii) the action taken
by the Board of Directors or other appropriate body of such Person authorizing
such Person's execution, delivery and performance of this Agreement, the other
Loan Documents and Swap Agreements related thereto to which such Person is a
party.
"Operating Account" means the principal operating account of the
Borrower maintained with the Administrative Agent.
"Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws; (b) with respect to
any limited liability company, the articles of formation and operating
agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or other
applicable agreement of formation and any agreement, instrument, filing or
notice with respect thereto filed in connection with its formation with the
secretary of state or other department in the state of its formation, in each
case as amended from time to time.
"Operating Profits" means, as applied to any Person for any period, the
operating income of such Person for such period, as determined in accordance
with GAAP.
"Parent" means Krispy Kreme Doughnuts, Inc., a North Carolina
corporation.
"Parent Guaranty" means a Parent Guaranty Agreement in substantially
the form of Exhibit H.
"Participant" has the meaning set forth in Section 11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Performance Pricing Determination Date" has the meaning set forth in
Section 2.06(a).
"Permitted Acquisition" means any Acquisition, provided that (a) the
Person being acquired in such Acquisition is engaged in the same or
substantially the same line or lines of business, or in a business reasonably
related to such line or lines of business, as the Borrower as of the Closing
Date, (b) the Borrower satisfies, and will continue to satisfy, after giving
effect (on a pro forma basis) to such Acquisition and any Debt incurred in
connection therewith, the financial covenants set forth in Section 7.13 through
the Maturity Date as set forth in a certificate of an Authorized Officer
delivered to the Administrative Agent at least five Business Days prior to the
consummation of such Acquisition (provided, that no such certificate shall be
required prior to the consummation of such Acquisition if the Borrower's
aggregate consideration for such Acquisition constitutes less than 10% of
Consolidated Tangible Net Worth), (c) such
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Acquisition is approved by the Board of Directors (or a majority of holders of
the Capital Stock of such Person) of the Person whose assets or Capital Stock
are being acquired pursuant to such Acquisition, and (d) no Default has then
occurred and is continuing or would result therefrom.
"Permitted Encumbrance" means:
(a) Liens for taxes, assessments or governmental charges
or levies on its property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings;
(b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens arising in
the ordinary course of business which secure payment of obligations not
more than sixty (60) days past due;
(c) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation; and
(d) utility easements, building restrictions and other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character
and which do not in any material way affect the marketability of the
same or interfere with the use thereof in the business of the Borrower
or its Subsidiaries.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
"Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Wachovia. Wachovia lends
at interest rates above and below the Prime Rate.
"Property" means any kind of property or asset of the Parent or any
Subsidiary, whether real, personal or mixed, or tangible or intangible, and any
interest therein.
"Quarterly Payment Date" means each March 31, June 30, September 30 and
December 31, or, if any such day is not a Domestic Business Day, the next
succeeding Domestic Business Day the first of which shall be the first such date
after the date of this Agreement.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Maturity Date either (i)
mandatorily redeemable (by
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sinking fund or similar payments or otherwise) or (ii) redeemable at the option
of the holder thereof.
"Register" has the meaning set forth in Section 11.08(c).
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Reimbursement Obligations" means the reimbursement or repayment
obligations of the Borrower to the Issuing Lenders pursuant to Section 3.05 with
respect to Letters of Credit.
"Related Fund" means, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by the same investment advisor as such Lender.
"Reported Net Income" means, for any period, the Net Income of the
Parent and its Consolidated Subsidiaries determined on a consolidated basis.
"Required Lenders" means at any time, Lenders having more than 50% of
the sum of the total Revolving Credit Commitments plus the outstanding principal
amount of the Term Loans or, if the Revolving Credit Commitments are no longer
in effect, Lenders having more than 50% of the sum of the total Revolving Credit
Exposures plus the outstanding principal amount of the Term Loans, at such time.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's or Parent's Capital Stock (except dividends payable
solely in shares of its Capital Stock), (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a) any shares of the
Borrower's or Parent's Capital Stock (except shares acquired upon the conversion
thereof into other shares of its Capital Stock) or (b) any option, warrant or
other right to acquire shares of the Borrower's or Parent's Capital Stock, or
(iii) any direct or indirect prepayment or redemption of any subordinated Debt
of the Borrower or Parent.
"Revolving Credit Availability Period" means the period from and
including the Closing Date to but excluding the Revolving Credit Termination
Date.
"Revolving Credit Commitment" means with respect to each Lender, the
commitment of such Lender to make Revolving Credit Loans and to acquire
participations in Letters of Credit or Swing Loans hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and increased
pursuant to Section 2.01(d) and (b) reduced or increased from time to
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time pursuant to assignments by or to such Lender pursuant to Section 11.08. The
initial amount of each Lender's Revolving Credit Commitment is set forth on
Schedule 1.01, or the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Revolving Credit Commitment, as applicable. The aggregate
original amount of the Revolving Credit Commitments is $119,337,500.
"Revolving Credit Commitment Ratios" shall mean the percentages in
which the Lenders are severally bound to make advances to the Borrower under the
Revolving Credit Commitment, which, as of the Closing Date, are set forth
(together with dollar amounts thereof) on Schedule 1.01.
"Revolving Credit Exposure" means, with respect to any Revolving Credit
Lender at any time, the sum of (i) the outstanding principal amount of such
Lender's Revolving Credit Loans, and (ii) the outstanding principal amount of
such Lender's participating interest in, or ratable share of, the Letter of
Credit Obligations and the Swing Loans, at such time.
"Revolving Credit Lender" means (a) initially, a Lender that has a
Revolving Credit Commitment set forth opposite its name on Schedule 1.01 and (b)
thereafter, the Lenders from time to time holding Revolving Credit Loans and
Revolving Credit Commitments after giving effect to any assignments thereof
permitted by Section 11.08.
"Revolving Credit Loan" means a Base Rate Loan or a Euro-Dollar Loan
made pursuant to the terms and conditions set forth in Section 2.01(a).
"Revolving Credit Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-1, evidencing the obligation of
the Borrower to repay Revolving Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Revolving Credit Termination Date" means the earlier to occur of (i)
the Maturity Date, (ii) the date the Revolving Credit Commitments are terminated
pursuant to Section 8.01 following the occurrence of an Event of Default, or
(iii) the date the Borrower terminates the Revolving Credit Commitments entirely
pursuant to Section 2.08.
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Parent and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Parent and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Parent or any of its Consolidated Subsidiaries.
Shareholders' equity generally would include, but not be limited to (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, (D) employee stock ownership plan debt guarantees, and (E)
translation adjustments for foreign currency balances.
"Subordinated Debt" means, for any Person at any date, Debt of such
Person (including, without limitation, any Debt of such Person convertible into
equity) which (a) is subordinated to the Obligations of the Borrower hereunder
and, if applicable, the obligations of the Guarantors under the Guaranties, on
terms and conditions satisfactory to the Administrative Agent in its sole
- 16 -
discretion, (b) does not allow for payment of any portion of the principal
thereof prior to the date six (6) months after the Maturity Date, and (c) at the
time of issuance and after giving effect thereto, the Borrower shall be in
compliance with Section 7.13 and the Borrower shall have delivered to the
Administrative Agent a certificate of the chief financial officer of the Parent
to such effect setting forth in reasonable detail the computations necessary to
determine such compliance.
"Subsidiary" of any Person means a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interest having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Parent.
"Subsidiary Guarantor" means each of Freedom Rings, LLC, Golden Gate
Doughnuts, LLC, each Material Subsidiary as of the Closing Date and each
Subsidiary that becomes a "Subsidiary Guarantor" thereafter pursuant to Section
6.09.
"Subsidiary Guaranty" means a Subsidiary Guaranty Agreement in
substantially the form of Exhibit I.
"Swap Agreement" means "swap agreement" as defined in 11 U.S.C. Section
101 executed in connection with this Agreement or any of the other Loan
Documents.
"Sweep Plus Service Program" means the Sweep Plus Service Program of
the Administrative Agent and any other cash management arrangement which the
Borrower and Wachovia agree should be included in the borrowing and repayment of
any Swing Loan pursuant to Section 2.01(b).
"Swing Lender" means Wachovia.
"Swing Loan" means a Loan made by the Swing Lender pursuant to Section
2.01(b), which must be a Base Rate Loan.
"Swing Loan Note" means the promissory note of the Borrower,
substantially in the form of Exhibit A-2, evidencing the obligation of the
Borrower to repay the Swing Loans, together with all amendments, consolidations,
modifications, renewals, and supplements thereto.
"Synthetic Lease" means any synthetic lease, tax retention operating
lease, or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an operating lease pursuant to GAAP.
"Taxes" has the meaning set forth in Section 2.12(c).
"Term Loan" means a Base Rate Loan or a Euro-Dollar Loan made pursuant
to Section 2.01(c).
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"Term Loan Commitment" means with respect to each Lender, the
commitment of such Lender to make Term Loans pursuant to Article II, expressed
as an amount representing the maximum aggregate principal amount of the Term
Loans to be made by such Lender hereunder. The initial amount of each Lender's
Term Loan Commitment is set forth on Schedule 1.01. The aggregate amount of the
Term Loan Commitment is $30,662,500.
"Term Loan Commitment Ratios" shall mean the percentages in which the
Lenders are severally bound to make advances to the Borrower under the Term Loan
Commitment, which, as of the Closing Date, are set forth (together with dollar
amounts thereof) on Schedule 1.01.
"Term Loan Lender" means (a) initially, a Lender that has a Term Loan
Commitment set forth opposite its name on Schedule 1.01 and (b) thereafter, the
Lenders from time to time holding Term Loans after giving effect to any
assignments thereof permitted by Section 11.08.
"Term Loan Notes" means the promissory notes of the Borrower,
substantially in the form of Exhibit A-3, evidencing the obligation of the
Borrower to repay Term Loans, together with all amendments, consolidations,
modifications, renewals and supplements thereto.
"Transferee" has the meaning set forth in Section 11.08(g).
"Unconsolidated Joint Venture" means any Person (other than the Parent
or a Consolidated Subsidiary) (a) in which the Parent and/or any of its
Consolidated Subsidiaries has made an Investment, and (b) that develops and owns
Krispy Kreme doughnut and bakery stores.
"Unused Commitment" means at any date, with respect to any Lender, an
amount equal to its Revolving Credit Commitment less the aggregate outstanding
principal amount of its Revolving Credit Loans and Letter of Credit Obligations.
"Wachovia" means Wachovia Bank, National Association, a national
banking association, and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Parent.
SECTION 1.02 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Parent's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Parent and its Consolidated Subsidiaries delivered
to the Administrative Agents unless with respect to any such change concurred in
by the Parent's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this Agreement or any of
the other Loan Documents: (i) the Borrower shall have objected to determining
such compliance on such basis at the time of delivery of such financial
statements, or (ii) the Administrative Agent shall so object in writing within
thirty (30) days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis
- 18 -
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under Section 6.01
hereof, shall mean the financial statements referred to in Section 5.04).
SECTION 1.03 TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights and (f) titles of
Articles and Sections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 1.04 USE OF DEFINED TERMS. All terms defined in this Agreement
shall have the same defined meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall require
otherwise.
ARTICLE II.
THE CREDITS
SECTION 2.01 COMMITMENTS TO LEND.
(a) Revolving Credit Loans. Each Revolving Credit Lender severally
agrees, on the terms and conditions set forth herein, to make Revolving Credit
Loans to the Borrower from time to time during the Revolving Credit Availability
Period; provided that,
(i) immediately after each such Revolving Credit Loan is
made, the aggregate outstanding principal amount of Revolving Credit
Loans made by such Revolving Credit Lender plus such Lender's
participating interest in, or ratable share of, the Letter of Credit
Obligations shall not exceed the amount of its Revolving Credit
Commitment, and
(ii) the aggregate outstanding principal amount of all
Revolving Credit Loans, Swing Loans and Letter of Credit Obligations
shall not exceed the aggregate amount of the Revolving Credit
Commitments.
- 19 -
Each Revolving Credit Borrowing under this Section 2.01(a)
shall be in an aggregate principal amount of $1,000,000 or any larger integral
multiple of $100,000 (except that any such Revolving Credit Borrowing may be in
the aggregate amount of the Revolving Credit Commitments less the aggregate
amount of the outstanding Revolving Credit Loans, Swing Loans and Letter of
Credit Obligations) and shall be made pro rata based on the Revolving Credit
Lenders' respective Revolving Credit Commitment Ratios. Within the foregoing
limits, the Borrower may borrow under this Section 2.01(a), repay or, to the
extent permitted by Section 2.10, prepay Revolving Credit Loans and reborrow
under this Section at any time during the Revolving Credit Availability Period.
(b) Swing Loans.
(i) In addition to the foregoing, the Swing Lender shall
from time to time, upon the request of the Borrower, if the applicable
conditions precedent in Article IV have been satisfied, make Swing
Loans to the Borrower in an aggregate principal amount at any time
outstanding not exceeding $10,000,000 (the "Swing Loan Commitment");
provided that, immediately after any Swing Loan is made, the conditions
set forth in clauses (i) and (ii) of Section 2.01(a) shall have been
satisfied. Each Swing Loan Borrowing under this Section 2.01(b) shall
be in an aggregate principal amount of $100,000 or any larger multiple
of $50,000. Within the foregoing limits, the Borrower may borrow under
this Section 2.01(b), prepay and reborrow under this Section 2.01(b) at
any time before the Revolving Credit Termination Date. Swing Loans
shall not be considered a utilization of the Revolving Credit
Commitment of the Swing Lender or any other Revolving Credit Lender
hereunder. All Swing Loans shall be made as Base Rate Loans.
(ii) On each Business Day, the Administrative Agent shall
calculate the Net Cash Position. If the Net Cash Position is less than
zero, then the Borrower shall be deemed to have irrevocably requested
that the Swing Lender make a Swing Loan to the Borrower in an amount
equal to the lesser of (A) an amount, which when rounded up to the
nearest $1,000, equals or exceeds the amount of the deficit Net Cash
Position and (B) an amount, which when added to the aggregate principal
amount of all outstanding Swing Loans (after giving effect to any
amount requested), shall not exceed the lesser of (1) the aggregate
Revolving Credit Commitments less the sum of all outstanding Revolving
Credit Loans and Letter of Credit Obligations and (2) the Swing Loan
Commitment; provided, however, that the obligation of the Swing Lender
to make any such Swing Loan to the Borrower shall be subject to all the
terms and conditions hereof.
(iii) Principal and interest on Swing Loans deemed
requested pursuant to clause (ii) above shall be paid pursuant to the
terms and conditions of the Sweep Plus Service Program without any
deduction, setoff or counterclaim whatsoever. Principal and interest on
Swing Loans requested pursuant to Section 2.02 shall be paid pursuant
to the terms of this Agreement. Unless sooner paid pursuant to the
provisions hereof or the provisions of the Sweep Plus Service Program,
the principal of the Swing Loans shall be paid in full, together with
accrued interest thereon, on the Maturity Date.
- 20 -
(iv) At any time, upon the request of the Swing Lender,
each Revolving Credit Lender other than the Swing Lender shall, on the
third Domestic Business Day after such request is made, purchase a
participating interest in Swing Loans in an amount equal to its ratable
share (based upon its respective Revolving Credit Commitment) of such
Swing Loans. On such third Domestic Business Day, each Revolving Credit
Lender will immediately transfer to the Swing Lender, in immediately
available funds, the amount of its participation. Whenever, at any time
after the Swing Lender has received from any such Revolving Credit
Lender its participating interest in a Swing Loan, the Administrative
Agent receives any payment on account thereof, the Administrative Agent
will distribute to such Revolving Credit Lender its participating
interest in such amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such
Revolving Credit Lender's participating interest was outstanding and
funded); provided, however, that in the event that such payment
received by the Administrative Agent is required to be returned, such
Revolving Credit Lender will return to the Administrative Agent any
portion thereof previously distributed by the Administrative Agent to
it. Each Revolving Credit Lender's obligation to purchase such
participating interests shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation: (i)
any set-off, counterclaim, recoupment, defense or other right which
such Revolving Credit Lender or any other Person may have against the
Swing Lender requesting such purchase or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of a Default or
the termination of the Revolving Credit Commitments; (iii) any adverse
change in the condition (financial or otherwise) of the Borrower or any
other Person; (iv) any breach of this Agreement by the Borrower or any
other Revolving Credit Lender; or (v) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.
(c) Term Loans. The Term Loan Lenders agree to make, severally in
accordance with their respective Term Commitment Ratios and not jointly, upon
the terms and subject to the conditions of this Agreement, the Term Loans to the
Borrower on the Closing Date in an aggregate principal amount equal to the Term
Loan Commitments, whereupon the Term Loan Commitments shall terminate in their
entirety. After the Closing Date, the Term Loans may be continued or converted
pursuant to a Notice of Continuation or Conversion as provided in Section 2.03
below; provided, however, that amounts borrowed under this Section 2.01(c) and
repaid or prepaid may not be reborrowed.
(d) Increase in Revolving Credit Commitments.
(i) Provided that no Default has occurred and is
continuing, upon notice to the Administrative Agent (which shall
promptly notify the Revolving Credit Lenders), the Borrower may on a
one-time basis, request an increase in the aggregate Revolving Credit
Commitments to an amount not to exceed $50,000,000 (for maximum
aggregate Revolving Credit Commitments of $169,337,500). At the time of
sending such notice, the Borrower (in consultation with the
Administrative Agent) shall specify the time period within which each
Revolving Credit Lender is requested to respond (which shall in no
event be less than ten (10) Domestic Business Days from the date of
delivery of such notice to the Revolving Credit Lenders). Each
Revolving Credit Lender shall notify
- 21 -
the Administrative Agent within such time period whether or not it
agrees, in its sole discretion, to increase its Revolving Credit
Commitment and, if so, whether by an amount equal to, greater than, or
less than its Revolving Credit Commitment Ratio of such requested
increase. Any Revolving Credit Lender not so responding within such
time period shall be deemed to have declined to increase its Revolving
Credit Commitment. The Administrative Agent shall notify the Borrower
and each Revolving Credit Lender of the Revolving Credit Lenders'
responses to the request made hereunder. To achieve the full amount of
a requested increase, the Administrative Agent may also invite
additional Eligible Assignees to become Revolving Credit Lenders
pursuant to a joinder agreement in form and substance satisfactory to
the Administrative Agent and its counsel.
(ii) If the aggregate Revolving Credit Commitments are
increased in accordance with this Section 2.01(d), the Administrative
Agent and the Borrower shall determine the effective date (the
"Increase Effective Date") and the final allocation of such increase.
The Administrative Agent shall promptly notify the Borrower and the
Revolving Credit Lenders of the final allocation of such increase and
the Increase Effective Date; provided that such final allocation for
each Revolving Credit Lender shall not be greater than the amount
agreed to by such Revolving Credit Lender in its notice submitted
pursuant to the third sentence of clause (i) above. As a condition
precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate of each Obligor dated as of the
Increase Effective Date (in sufficient copies for each Revolving Credit
Lender) signed by the chief financial officer of such Obligor (i)
certifying and attaching the resolutions adopted by such Obligor
approving or consenting to such increase, and (ii) in the case of the
Borrower and the Parent, certifying that, before and after giving
effect to such increase, (A) the representations and warranties
contained in Article V and the other Loan Documents are true and
correct on and as of the Increase Effective Date, and (B) no Default
exists. The Borrower shall prepay any Revolving Credit Loans
outstanding on the Increase Effective Date (and pay any additional
amounts required pursuant to Section 10.05) to the extent necessary to
keep the outstanding Revolving Credit Loans ratable with any revised
Revolving Credit Commitment Ratios arising from any nonratable increase
in the aggregate Revolving Credit Commitments under this Section
2.01(d).
(iii) This Section shall supersede any provisions in
Sections 11.05 or 11.06 to the contrary.
SECTION 2.02 METHOD OF BORROWING TERM LOANS, REVOLVING CREDIT LOANS AND
SWING LOANS.
(a) With the exception of Swing Loans deemed requested pursuant to
Section 2.01(b)(ii), the Borrower shall give the Administrative Agent notice (a
"Notice of Borrowing"), which shall be substantially in the form of Exhibit C,
prior to (i) 9:30 a.m. (Charlotte, North Carolina time) on the same Domestic
Business Day of each Base Rate Borrowing, and (ii) 11:00 a.m. (Charlotte, North
Carolina time) at least three (3) Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
- 22 -
(i) the date of such Borrowing (including the advance of
the Term Loans on the Closing Date), which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day
in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be
Term Loans, Revolving Credit Loans or Swing Loans,
(iv) in the case of Revolving Credit Loans and Term Loans,
whether such Loans are to be Base Rate Loans or Euro-Dollar Loans, and
(v) in the case of a Euro-Dollar Borrowing, the duration
of the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Administrative
Agent shall promptly notify each Lender of the contents thereof and (unless such
Borrowing is a Swing Loan Borrowing) of such Lender's ratable share of such
Borrowing, and such Notice of Borrowing, once received by the Administrative
Agent, shall not thereafter be revocable by the Borrower.
(c) Not later than 11:00 a.m. (Charlotte, North Carolina time) on
the date of each Borrowing, each Lender shall (except as provided in paragraph
(d) of this Section) make available its ratable share of such Borrowing, in
Federal or other funds immediately available in Charlotte, North Carolina, to
the Administrative Agent at its address determined pursuant to Section 11.01.
Unless the Administrative Agent determines that any applicable condition
specified in Article IV has not been satisfied, the Administrative Agent will
make the funds so received from the Lenders available to the Borrower at the
Administrative Agent's aforesaid address. Unless the Administrative Agent
receives notice from a Revolving Credit Lender, at the Administrative Agent's
address referred to in or specified pursuant to Section 11.01, no later than
4:00 p.m. (local time at such address) on the Domestic Business Day before the
date of a Revolving Credit Borrowing stating that such Revolving Credit Lender
will not make a Revolving Credit Loan in connection with such Borrowing, the
Administrative Agent shall be entitled to assume that such Revolving Credit
Lender will make a Revolving Credit Loan in connection with such Revolving
Credit Borrowing and, in reliance on such assumption, the Administrative Agent
may (but shall not be obligated to) make available such Revolving Credit
Lender's ratable share of such Borrowing to the Borrower for the account of such
Revolving Credit Lender. If the Administrative Agent makes such Revolving Credit
Lender's ratable share available to the Borrower and such Revolving Credit
Lender does not in fact make its ratable share of such Revolving Credit
Borrowing available on such date, the Administrative Agent shall be entitled to
recover such Revolving Credit Lender's ratable share from such Revolving Credit
Lender or the Borrower (and for such purpose shall be entitled to charge such
amount to any account of the Borrower maintained with the Administrative Agent),
together with interest thereon for each day during the period from the date of
such Revolving Credit Borrowing until such sum shall be paid in full at a rate
per annum equal to (x) the Federal Funds Rate from the date such payment is due
until the third Domestic Business Day following such date, and (y) the Base Rate
thereafter. Unless the Administrative Agent determines that any applicable
condition specified in Article IV has not been satisfied, the Swing Lender will
make available to the
- 23 -
Borrower at the Swing Lender's Lending Office the amount of any such Borrowing
which is a Swing Loan Borrowing; provided that any Swing Loan Borrowings deemed
requested pursuant to Section 2.01(b)(ii) shall be made available pursuant the
terms of Section 2.01(b)(ii).
(d) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default, which Default shall not have been cured or waived.
(e) In the event that a Notice of Borrowing fails to specify
whether the Loans comprising such Borrowing are to be Base Rate Loans or
Euro-Dollar Loans, such Loans shall be made as Base Rate Loans.
(f) Notwithstanding anything to the contrary contained herein,
there shall not be more than six (6) Interest Periods outstanding at any given
time.
SECTION 2.03 CONTINUATION AND CONVERSION ELECTIONS. By delivering a
notice (a "Notice of Continuation or Conversion"), which shall be substantially
in the form of Exhibit D, to the Administrative Agent on or before 12:00 p.m.
(Charlotte, North Carolina time), on a Domestic Business Day (or Euro-Dollar
Business Day, in the case of Euro-Dollar Loans outstanding), the Borrower may
from time to time irrevocably elect, by notice on the same Domestic Business Day
as the date of such conversion in the case of a conversion to a Base Rate Loan
or three (3) Euro-Dollar Business Days prior to the date of such continuation or
conversion in the case of a continuation of or conversion to a Euro-Dollar Loan,
that all, or any portion in an aggregate principal amount of $1,000,000 or any
larger integral multiple of $100,000 be, (i) in the case of Base Rate Loans,
converted into Euro-Dollar Loans or (ii) in the case of Euro-Dollar Loans,
converted into Base Rate Loans or continued as Euro-Dollar Loans; provided,
however, that (x) each such conversion or continuation shall be pro rated among
the applicable outstanding Loans of all Lenders that have made such Loans, and
(y) no portion of the outstanding principal amount of any Loans may be continued
as, or be converted into, any Euro-Dollar Loan when any Default has occurred and
is continuing. In the absence of delivery of a Notice of Continuation or
Conversion with respect to any Euro-Dollar Loan at least three (3) Euro-Dollar
Business Days before the last day of the then current Interest Period with
respect thereto, such Euro-Dollar Loan shall, on such last day, automatically
convert to a Base Rate Loan.
SECTION 2.04 NOTES.
(a) Upon request of any Lender, made through the Administrative
Agent, the Revolving Credit Loans of each Lender may be evidenced by a single
Revolving Credit Loan Note payable to the order of such Lender for the account
of its Lending Office in an amount equal to the original principal amount of
such Lender's Revolving Credit Commitment. Upon request of the Swing Lender, the
Swing Loans may be evidenced by a single Swing Loan Note payable to the order of
the Swing Lender in the original principal amount of $10,000,000.
(b) Upon request of any Lender, made through the Administrative
Agent, the Term Loans made by any Lender to the Borrower may be evidenced by a
single Term Loan Note payable to the order of such Lender for the account of its
Lending Office in an amount equal to such Lender's Term Loan Commitment.
- 24 -
(c) Upon receipt of any Lender's Notes pursuant to Section 4.01,
the Administrative Agent shall deliver such Notes to such Lender. Each Lender
shall record, and prior to any transfer of its Notes shall endorse on the
Schedules forming a part thereof appropriate notations to evidence, the date,
amount and maturity of, and effective interest rate for, each Loan made by it,
the date and amount of each payment of principal made by the Borrower with
respect thereto, and such Schedules of each such Lender's Notes shall constitute
rebuttable presumptive evidence of the respective principal amounts owing and
unpaid on such Lender's Notes; provided that the failure of any Lender to make,
or any error in making, any such recordation or endorsement shall not affect the
obligation of the Borrower hereunder or under the Notes or the ability of any
Lender to assign its Notes. Each Lender is hereby irrevocably authorized by the
Borrower so to endorse its Notes and to attach to and make a part of any Note a
continuation of any such Schedule as and when required.
SECTION 2.05 MATURITY OF REVOLVING CREDIT LOANS. All Revolving Credit
Loans shall mature, and the principal amount thereof shall be due and payable
on, the Maturity Date.
SECTION 2.06 INTEREST RATES.
(a) "Applicable Margin" means:
(i) for the period commencing on the Closing Date to and
including the first Performance Pricing Determination Date, (x) for any
Base Rate Loan, 0%, and (y) for any Euro-Dollar Loan, 1.25%; and
(ii) from and after the first Performance Pricing
Determination Date (as hereinafter defined), for any Base Rate Loan and
for each Euro-Dollar Loan, the percentage determined on each
Performance Pricing Determination Date by reference to the table set
forth below as to such type of Loan and the Consolidated Leverage Ratio
for the quarterly or annual period ending immediately prior to such
Performance Pricing Determination Date.
APPLICABLE MARGIN
- --------------------------------------------------------------------------------------------------
TIER CONSOLIDATED LEVERAGE RATIO EURO DOLLAR LOANS BASE RATE LOAN
- --------------------------------------------------------------------------------------------------
I > or = 2.0 to 1.0 2.00% 0.75%
- --------------------------------------------------------------------------------------------
II < 2.0 to 1.0 but > or = 1.5 to 1.0 1.50% 0.25%
- --------------------------------------------------------------------------------------------
III < 1.5 to 1.0 but > or = 1.0 to 1.0 1.25% 0%
- --------------------------------------------------------------------------------------------
IV < 1.0 to 1.0 1.00% 0%
- --------------------------------------------------------------------------------------------
In determining interest for purposes of this Section 2.06 and
fees for purposes of Section 2.07, the Borrower and the Lenders shall
refer to the Parent's most recent consolidated quarterly and annual (as
the case may be) financial statements delivered pursuant to Section
6.01(a) or (b), as the case may be. If such financial statements
require a change in interest pursuant to this Section 2.06 or fees
pursuant to Section 2.07,
- 25 -
the Borrower shall deliver to the Administrative Agent, along with such
financial statements, a notice to that effect, which notice shall set
forth in reasonable detail the calculations supporting the required
change.
The "Performance Pricing Determination Date" is the date which
is (A) forty-five (45) days after the end of each of the first three
(3) Fiscal Quarters of each Fiscal Year and (B) ninety (90) days after
the end of each Fiscal Year; provided that the first Performance
Pricing Determination Date shall occur after the end of the second
(2nd) full Fiscal Quarter immediately following the Closing Date. Any
such required change in interest and fees shall become effective on
such Performance Pricing Determination Date, and shall be in effect
until the next Performance Pricing Determination Date, provided that:
(i) for Euro-Dollar Loans, changes in interest shall only be effective
for Interest Periods commencing on or after the Performance Pricing
Determination Date; and (ii) no fees or interest shall be decreased
pursuant to this Section 2.06 or Section 2.07 if a Default is in
existence on the Performance Pricing Determination Date; provided,
further, that if the Borrower fails to deliver financial statements as
required by Section 6.01(a) or (b), as the case may be, the Applicable
Margin shall be deemed to be the highest percentage set forth in the
table above from and including the date such financial statements were
due to but excluding the date such financial statements are received by
the Administrative Agent.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Applicable Margin plus the applicable Adjusted
London Interbank Offered Rate for such Interest Period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three (3) months, at intervals of three (3) months after
the first day thereof. Any overdue principal of and, to the extent permitted by
law, overdue interest on any Euro-Dollar Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upwards,
if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan, the rate per annum
determined on the basis of the offered rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan offered for
a term comparable to such Interest Period, which rates appear on Telerate Page
3750 effective as of 11:00 a.m., London time, two (2) Euro-Dollar Business Days
prior to the first day of such Interest Period, provided that if no such offered
rates appear on such page, the "London Interbank Offered Rate" for such Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/100th of 1%) of rates quoted by not less than two (2) major lenders in
New York City, selected by the Administrative Agent, at approximately 10:00
a.m., New York City time, two (2) Euro-Dollar Business Days prior to the first
day of such Interest Period, for deposits in Dollars offered by leading European
- 26 -
banks for a period comparable to such Interest Period in an amount comparable to
the principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member lender of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Lender to United States residents). The Adjusted London Interbank Offered
Rate shall be adjusted automatically on and as of the effective date of any
change in the Euro-Dollar Reserve Percentage.
(c) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Borrower and the Lenders of each rate of interest so determined,
and its determination thereof shall be conclusive in the absence of manifest
error.
(d) After the occurrence and during the continuance of an Event of
Default, the principal amount of the Loans (and, to the extent permitted by
applicable law, all accrued interest thereon) and all other Obligations may, at
the election of the Required Lenders, bear interest at the Default Rate.
SECTION 2.07 FEES.
(a) The Borrower shall pay to the Administrative Agent, for the
ratable benefit of each Lender, a commitment fee, calculated in the manner
provided in the last paragraph of Section 2.06(a)(ii), on the average daily
amount of such Lender's Unused Commitment at a rate per annum equal to: (i) for
the period commencing on the Closing Date to and including the first Performance
Pricing Determination Date, 0.25%; and (ii) from and after the first Performance
Pricing Determination Date, the percentage determined on each Performance
Pricing Determination Date by reference to the table set forth below and the
Consolidated Leverage Ratio for the quarterly or annual period ending
immediately prior to such Performance Pricing Determination Date:
COMMITMENT FEE
- --------------------------------------------------------------------
TIER CONSOLIDATED LEVERAGE RATIO PERCENTAGE
- --------------------------------------------------------------------
I > or = 2.0 to 1.0 0.375%
- -----------------------------------------------------------------
II < 2.0 to 1.0 but > or = 1.5 to 1.0 0.300%
- -----------------------------------------------------------------
III < 1.5 to 1.0 but > or = 1.0 to 1.0 0.250%
- -----------------------------------------------------------------
IV < 1.0 to 1.0 0.200%
- -----------------------------------------------------------------
provided that if the Borrower fails to deliver financial statements as required
by Section 6.01(a) or (b), as the case may be, the applicable rate per annum for
calculating such commitment fee
- 27 -
shall be deemed to be the highest percentage set forth in the table above from
and including the date such financial statements were due to but excluding the
date such financial statements are received by the Administrative Agent. Such
commitment fees shall accrue from and including the Closing Date to but
excluding the Revolving Credit Termination Date and shall be payable on each
Quarterly Payment Date and on the Revolving Credit Termination Date.
(b) The Borrower shall pay to the Administrative Agent, for the
account and sole benefit of the Administrative Agent, such fees and other
amounts at such times as set forth in the Arranger's Letter Agreement.
SECTION 2.08 OPTIONAL TERMINATION OR REDUCTION OF THE REVOLVING CREDIT
COMMITMENTS. The Borrower may, upon at least three (3) Domestic Business Days'
notice to the Administrative Agent, terminate at any time, or proportionately
reduce the Revolving Credit Commitments from time to time by an aggregate amount
of at least $5,000,000 or any larger integral multiple of $1,000,000. If the
Revolving Credit Commitments are terminated in their entirety, all accrued fees
(as provided under Section 2.07) shall be due and payable on the effective date
of such termination. All terminations or reductions of Revolving Credit
Commitments shall be permanent. Each reduction shall be made ratably among the
Revolving Credit Lenders in accordance with their respective Revolving Credit
Commitments.
SECTION 2.09 TERMINATION OF THE REVOLVING CREDIT COMMITMENTS. The
Revolving Credit Commitments shall terminate on the Revolving Credit Termination
Date and any Revolving Credit Loans then outstanding (together with accrued
interest thereon) shall be due and payable on such date.
SECTION 2.10 OPTIONAL PREPAYMENTS.
(a) Revolving Credit Loans and Term Loans.
(i) The Borrower may upon notice to the Administrative
Agent, at any time or from time to time, voluntarily prepay Revolving
Credit Loans or Term Loans in whole or in part without premium or
penalty; provided that (A) such notice must be received by the
Administrative Agent not later than (x) three (3) Euro-Dollar Business
Days prior to any date of prepayment of Euro-Dollar Loans and (y) one
(1) Domestic Business Day prior to any date of prepayment of Base Rate
Loans, (B) any prepayment of Euro-Dollar Loans shall be in a principal
amount of $1,000,000 or a whole multiple of $100,000 in excess thereof,
and (C) any prepayment of Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such
prepayment, whether the Loan to be prepaid is a Revolving Credit Loan
and/or a Term Loan and whether the Loan to be prepaid is a Base Rate
Loan or a Euro-Dollar Loan. Any prepayment of a Loan shall be
accompanied by all accrued interest thereon and, in the case of any
Euro-Dollar Loan, any additional amounts required pursuant to Article
X.
(ii) Upon receipt of a notice of prepayment pursuant to
this Section 2.10, the Administrative Agent shall promptly notify each
Lender of the contents thereof and of
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such Lender's ratable share of such prepayment and such notice, once
received by the Administrative Agent, shall not thereafter be revocable
by the Borrower.
(iii) Each such prepayment shall be applied to the Loans of
the Lenders in accordance with their respective Revolving Credit
Commitment Ratios or Term Loan Commitment Ratios, as applicable;
provided that voluntary prepayments of Term Loans under this Section
2.10 shall be applied ratably to the remaining scheduled principal
amortization payments thereof; provided further that if the Borrower
fails to specify the application of a voluntary prepayment then such
prepayment shall be applied first to Swing Loans, then to Revolving
Credit Loans and then to Term Loans and ratably to the scheduled
remaining principal amortization payments thereof, in each case first
to Base Rate Loans and then to Euro-Dollar Loans in direct order of
Interest Period maturities.
(b) Swing Loans. The Borrower may upon notice to the Swing Lender
(with a copy to the Administrative Agent), at any time or from time to time,
voluntarily prepay Swing Loans in whole or in part without premium or penalty;
provided that (A) such notice must be received by the Swing Lender and the
Administrative Agent not later than one (1) Domestic Business Day prior to any
date of the prepayment, and (B) any such prepayment shall be in a minimum
principal amount of $100,000 or a whole multiple of $50,000 in excess thereof.
Each such notice shall specify the date and amount of such prepayment and once
received by the Swing Lender, such notice shall not thereafter be revocable by
the Borrower.
(c) Continuation of Swap Agreements. Notwithstanding anything in
this Agreement to the contrary, any prepayment shall not affect the Borrower's
obligation to continue making payments under any Swap Agreements, which Swap
Agreements shall remain in full force and effect notwithstanding such
prepayment, subject to the terms of such Swap Agreements.
SECTION 2.11 REPAYMENT OF TERM LOANS; MANDATORY PAYMENTS.
(a) Term Loans. Outstanding principal of the Term Loans will be
payable monthly commencing on the first day of the first full calendar month
after the Closing Date, and continuing on the first day of each calendar month
thereafter, in the amounts of $137,500 each with a final payment of all
outstanding principal of and accrued interest on the Term Loans due on the
Maturity Date.
(b) Mandatory Payments. On each date on which the conditions set
forth in clauses (i) or (ii) of Section 2.01(a) are not satisfied (including,
without limitation, by reason of the reduction of the Revolving Credit
Commitments pursuant to Section 2.08) the Borrower shall repay or prepay such
principal amount of the outstanding Revolving Credit Loans, if any (together
with interest accrued thereon and any amount due under Section 10.05), as may be
necessary so that after such payment the aggregate unpaid principal amount of
the Revolving Credit Loans does not exceed the aggregate amount of the Revolving
Credit Commitments as then reduced. Each such payment or prepayment shall be
applied first to any Swing Loans outstanding, and then ratably to the Revolving
Credit Loans of the Revolving Credit Lenders outstanding on the date of payment
or prepayment in the following order of priority: (i) first, to Base Rate Loans
and (ii) lastly, to Euro-Dollar Loans.
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SECTION 2.12 GENERAL PROVISIONS AS TO PAYMENTS.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees required to be made by them hereunder,
without any setoff, counterclaim or any deduction whatsoever, not later than
11:00 a.m. (Charlotte, North Carolina time) on the date when due, in Federal or
other funds immediately available in Charlotte, North Carolina, to the
Administrative Agent at its address referred to in Section 11.01. The
Administrative Agent will promptly distribute to the Swing Lender each such
payment received on account of the Swing Loans and to each Lender its ratable
share of each such payment received by the Administrative Agent for the account
of the Lenders.
(b) Whenever any payment of principal of, or interest on, the Base
Rate Loans, or of fees hereunder shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day.
(c) All payments of principal, interest and fees and all other
amounts to be paid by the Borrower pursuant to this Agreement with respect to
any Loan or the issuance and maintenance of any Letter of Credit, shall be paid
without deduction for, and free from, any tax, imposts, levies, duties,
deductions, or withholdings of any nature now or at anytime hereafter imposed by
any Governmental Authority or by any taxing authority thereof or therein
excluding in the case of each Lender, taxes imposed on or measured by its net
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes imposed on
it, by the jurisdiction of such Lender's applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, imposts, levies,
duties, deductions or withholdings of any nature being "Taxes"). In the event
that the Borrower is required by applicable law to make any such withholding or
deduction of Taxes with respect to any Loan, the issuance and maintenance of any
Letters of Credit or fee or other amount, the Borrower shall pay such deduction
or withholding to the applicable taxing authority, shall promptly furnish to any
Lender in respect of which such deduction or withholding is made all receipts
and other documents evidencing such payment and shall pay to such Lender
additional amounts as may be necessary in order that the amount received by such
Lender after the required withholding or other payment shall equal the amount
such Lender would have received had no such withholding or other payment been
made. If no withholding or deduction of Taxes is payable in respect to any Loan,
the issuance and maintenance of any Letters of Credit or fee relating thereto,
the Borrower shall furnish any Lender, at such Lender's request, a certificate
from each applicable taxing authority or an opinion of counsel acceptable to
such Lender, in either case stating that such payments are exempt from or not
subject to withholding or deduction of Taxes. If the Borrower fails to provide
such original or certified copy of a receipt evidencing payment of Taxes or
certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to
compensate such Lender for, and indemnify it with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax payments or
tax exemption.
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Each Lender which is not organized under the laws of the United States
or any state thereof agrees, as soon as practicable after receipt by it of a
request by the Borrower to do so, to file all appropriate forms and take other
appropriate action to obtain a certificate or other appropriate document from
the appropriate Governmental Authority in the jurisdiction imposing the relevant
Taxes, establishing that it is entitled to receive payments of principal and
interest under this Agreement and the Notes without deduction and free from
withholding of any Taxes imposed by such jurisdiction; provided that if it is
unable, for any reason, to establish such exemption, or to file such forms and,
in any event, during such period of time as such request for exemption is
pending, the Borrower shall nonetheless remain obligated under the terms of the
immediately preceding paragraph.
In the event any Lender receives a refund of any Taxes paid by the
Borrower pursuant to this Section 2.12(c), it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided that if at any
time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower and the
Lenders contained in this Section 2.12(c) shall be applicable with respect to
any Participant, Assignee or other Transferee, and any calculations required by
such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the payment in
full or cancellation of the Notes.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent on such date, each Lender shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Lender, together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate for the first three (3) Domestic Business Days
after the date such payment is due and at the Base Rate thereafter.
SECTION 2.13 COMPUTATION OF INTEREST AND FEES. Interest on Base Rate
Loans based on the Prime Rate shall be computed on the basis of a year of 365 or
366 days, as applicable, and paid for the actual number of days elapsed
(including the first day but excluding the last day). Interest on Base Rate
Loans based on the Federal Funds Rate and interest on Euro-Dollar Loans shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed, calculated as to each Interest Period from and including the first
day thereof to but excluding the last day thereof. Commitment fees, Letter of
Credit Fees and any other fees payable hereunder shall be computed on the basis
of a year of 360 days and paid for the actual number of days elapsed (including
the first day but excluding the last day).
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ARTICLE III.
LETTER OF CREDIT FACILITY
SECTION 3.01 OBLIGATION TO ISSUE. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations and warranties of
the Borrower herein set forth, the Issuing Lender shall issue for the account of
the Borrower, one or more Letters of Credit denominated in Dollars, in
accordance with this Article III, from time to time during the period commencing
on the Closing Date and ending on the day that is five (5) Domestic Business
Days prior to the Revolving Credit Termination Date.
SECTION 3.02 TYPES AND AMOUNTS. The Issuing Lender shall have no
obligation to issue any Letter of Credit at any time:
(a) if the aggregate maximum amount then available for drawing
under Letters of Credit, after giving effect to the issuance of the requested
Letter of Credit, shall exceed any limit imposed by law or regulation upon the
Issuing Lender;
(b) if, after giving effect to the issuance of the requested
Letter of Credit, (i) the aggregate Letter of Credit Obligations would exceed
the Letter of Credit Commitment, or (ii) the conditions set forth in clauses (i)
and (ii) of Section 2.01(a) would not be satisfied; or
(c) which has an expiration date on or after the earlier of (i)
the date twelve (12) months after the date of the issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, twelve (12) months
after the then-current expiration date of such Letter of Credit so long as such
renewal or extension occurs within three (3) months of such then-current
expiration date) and (ii) the date that is five (5) Domestic Business Days prior
to the Maturity Date.
SECTION 3.03 CONDITIONS. In addition to being subject to the
satisfaction of the conditions contained in Article IV, the obligation of the
Issuing Lender to issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(a) the Borrower shall have delivered to the Issuing Lender at
such times and in such manner as the Issuing Lender may prescribe, a Letter of
Credit Application Agreement and such other documents and materials as may be
required pursuant to the terms thereof all satisfactory in form and substance to
the Issuing Lender and the terms of the proposed Letter of Credit shall be
satisfactory in form and substance to the Issuing Lender;
(b) as of the date of issuance, no Governmental Requirement or
Governmental Authority shall purport by its terms to enjoin or restrain the
Issuing Lender from issuing the Letter of Credit and no Governmental Requirement
applicable to the Issuing Lender and no request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Lender shall prohibit or request that the Issuing Lender refrain
from the issuance of letters of credit generally or the issuance of that Letter
of Credit; and
(c) after the issuance of the requested Letter of Credit, the
conditions set forth in clauses (i) and (ii) of Section 2.01(a) shall be
satisfied.
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SECTION 3.04 ISSUANCE OF LETTERS OF CREDIT.
(a) Request for Issuance. At least two Domestic Business Days
before the effective date for any Letter of Credit, the Borrower shall give the
Issuing Lender a written notice containing the original signature of an
authorized officer or employee of the Borrower. Such notice shall be irrevocable
and shall specify the original face amount of the Letter of Credit requested
(which original face amount shall not be less than $10,000), the effective date
(which day shall be a Domestic Business Day) of issuance of such requested
Letter of Credit, the date on which such requested Letter of Credit is to
expire, the amount of then outstanding Letter of Credit Obligations, the purpose
for which such Letter of Credit is to be issued, whether such Letter of Credit
may be drawn in single or partial draws and the person for whose benefit the
requested Letter of Credit is to be issued.
(b) Issuance; Notice of Issuance. If the conditions set forth in
Sections 3.02 and 3.03 and Article IV are satisfied, the Issuing Lender shall
issue the requested Letter of Credit. The Issuing Lender shall give each
Revolving Credit Lender notice in substantially the form of Exhibit L, or
telephonic notice confirmed promptly thereafter in writing, of the issuance of a
Letter of Credit and shall deliver to each Revolving Credit Lender in connection
with such written notice a copy of the Letter of Credit issued by the Issuing
Lender.
(c) No Extension or Amendment. The Issuing Lender shall not extend
or amend any Letter of Credit if the issuance of a new Letter of Credit having
the same terms as such Letter of Credit as so amended or extended would be
prohibited by Section 3.02 or Section 3.03. Any such renewals or extensions
shall not occur prior to three months preceding the then-current expiration
date.
SECTION 3.05 REIMBURSEMENT OBLIGATIONS; DUTIES OF THE ISSUING LENDER.
(a) Reimbursement. Notwithstanding any provisions to the contrary
in any Letter of Credit Application Agreement:
(i) the Borrower shall reimburse the Issuing Lender for
drawings under a Letter of Credit issued by it no later than the
Domestic Business Day of payment by the Issuing Lender;
(ii) any Reimbursement Obligation with respect to any
Letter of Credit shall bear interest from the date of the relevant
drawing under the pertinent Letter of Credit until the date of payment
in full thereof at a rate per annum equal to the Default Rate; and
(iii) in order to implement the foregoing, upon the
occurrence of a draw under any Letter of Credit, unless the Issuing
Lender is reimbursed in accordance with clause (i) above, the Borrower
irrevocably authorizes the Issuing Lender and the Administrative Agent
to treat such nonpayment as a Notice of Borrowing in the amount of such
Reimbursement Obligation and the Lenders to make Loans to the Borrower
in such amount regardless of whether the conditions precedent to the
making of Loans hereunder have been met. The Borrower further
authorizes the Administrative Agent to credit the proceeds of such Loan
so as to immediately eliminate the liability of the Borrower for
Reimbursement Obligations under such Letter of Credit.
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(b) Duties of the Issuing Lender. Any action taken or omitted to
be taken by the Issuing Lender in connection with any Letter of Credit, if taken
or omitted in the absence of willful misconduct or gross negligence, shall not
put the Issuing Lender under any resulting liability to any Revolving Credit
Lender, or assuming that the Issuing Lender has complied with the procedures
specified in Section 3.04 and such Revolving Credit Lender has not given a
notice contemplated by Section 3.06(a) that continues in full force and effect,
relieve that Revolving Credit Lender of its obligations hereunder to the Issuing
Lender. In determining whether to pay under any Letter of Credit, the Issuing
Lender shall have no obligation relative to the Revolving Credit Lenders other
than to confirm that any documents required to have been delivered under such
Letter of Credit appear to comply on their face with the requirements of such
Letter of Credit.
(c) Applicability of ISP98. Unless otherwise expressly agreed by
the Issuing Lender and the Borrower when a Letter of Credit is issued, the rules
of the "International Standby Practices 1998" published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each Letter of Credit.
SECTION 3.06 PARTICIPATIONS.
(a) Purchase of Participations. Immediately upon issuance by the
Issuing Lender of any Letter of Credit in accordance with the procedures set
forth in Section 3.04, each Revolving Credit Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Lender,
without recourse or warranty, an undivided interest and participation, to the
extent of such Revolving Credit Lender's ratable share of the aggregate
Revolving Credit Commitments, in such Letter of Credit; provided, that a Letter
of Credit shall not be entitled to the benefits of this Section 3.06 if the
Issuing Lender shall have received written notice from any Revolving Credit
Lender on or before the Domestic Business Day immediately prior to the date of
the Issuing Lender's issuance of such Letter of Credit that one or more of the
conditions contained in Section 3.03 or Article IV is not then satisfied, and,
in the event the Issuing Lender receives such a notice, it shall have no further
obligation to issue any Letter of Credit until such notice is withdrawn by that
Revolving Credit Lender or until the Required Lenders have effectively waived
such condition in accordance with the provisions of this Agreement.
(b) Sharing of Letter of Credit Payments. In the event that the
Issuing Lender makes any payment under any Letter of Credit for which the
Borrower shall not have repaid such amount to the Issuing Lender pursuant to
Section 3.05(a)(i) or which cannot be paid by a Loan pursuant to Section
3.05(a)(iii), the Issuing Lender shall promptly notify each Revolving Credit
Lender of such failure, and each Revolving Credit Lender shall promptly and
unconditionally pay to the Issuing Lender such Revolving Credit Lender's ratable
share of the amount of such payment in Dollars and in same day funds. If the
Issuing Lender so notifies such Revolving Credit Lender prior to 10:00 a.m.
(Charlotte, North Carolina time) on any Domestic Business Day, such Revolving
Credit Lender shall make available to the Issuing Lender its ratable share of
the amount of such payment on such Domestic Business Day in same day funds. If
and to the extent such Revolving Credit Lender shall not have so made its
ratable share of the amount of such payment available to the Issuing Lender,
such Revolving Credit Lender agrees to pay to the Issuing Lender forthwith on
demand such amount together with interest thereon, for each day from the date
such payment was first due until the date such amount is paid to the Issuing
Lender
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at the Federal Funds Rate for the first three (3) days and thereafter at the
Base Rate. The failure of any Revolving Credit Lender to make available to the
Issuing Lender its ratable share of any such payment shall neither relieve nor
increase the obligation of any other Revolving Credit Lender hereunder to make
available to the Issuing Lender its ratable share of any payment on the date
such payment is to be made.
(c) Sharing of Reimbursement Obligation Payments. Whenever the
Issuing Lender receives a payment on account of a Reimbursement Obligation,
including any interest thereon, as to which the Issuing Lender has received any
payments from the Lenders pursuant to this Section 3.06, it shall promptly pay
to each Revolving Credit Lender which has funded its participating interest
therein, in Dollars and in the kind of funds so received, an amount equal to
such Revolving Credit Lender's ratable share thereof. Each such payment shall be
made by the Issuing Lender on the Domestic Business Day on which the funds are
paid to such Person, if received prior to 10:00 am. (Charlotte, North Carolina
time) on such Domestic Business Day, and otherwise on the next succeeding
Domestic Business Day.
(d) Documentation. Upon the request of any Revolving Credit
Lender, the Issuing Lender shall furnish to such Revolving Credit Lender copies
of any Letter of Credit, Letter of Credit Application Agreement and other
documentation relating to Letters of Credit issued pursuant to this Agreement.
(e) Obligations Irrevocable. The obligations of the Revolving
Credit Lenders to make payments to the Issuing Lender with respect to a Letter
of Credit shall be irrevocable, not subject to any qualification or exception
whatsoever and shall be made in accordance with, but not subject to, the terms
and conditions of this Agreement under all circumstances (assuming that the
Issuing Lender has issued such Letter of Credit in accordance with Section 3.04
and such Revolving Credit Lender has not given a notice contemplated by Section
3.06(a) that continues in full force and effect), including, without limitation,
any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Issuing
Lender, the Administrative Agent, the Swing Lender, any Revolving
Credit Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions;
(iii) any draft, certificate or any other document
presented under the Letter of Credit proves to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
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(v) payment by the Issuing Lender 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;
(vi) payment by the Issuing Lender under any Letter of
Credit against presentation of any draft or certificate that does not
comply with the terms of such Letter of Credit; or
(vii) any other circumstances or happenings whatsoever,
whether or not similar to any of the foregoing.
SECTION 3.07 PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) Payments to Issuing Lender. The Borrower agrees to pay to the
Issuing Lender the amount of all Reimbursement Obligations, interest and other
amounts payable to the Issuing Lender under or in connection with any Letter of
Credit issued for the Borrower's account immediately when due, irrespective of:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Issuing
Lender, the Administrative Agent, the Swing Lender, any Lender or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions;
(iii) any draft, certificate or any other document
presented under the Letter of Credit proves to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) payment by the Issuing Lender 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;
(vi) payment by the Issuing Lender under any Letter of
Credit against presentation of any draft or certificate that does not
comply with the terms of such Letter of Credit; or
(vii) any other circumstances or happenings whatsoever,
whether or not similar to any of the foregoing.
(b) Recovery or Avoidance of Payments. In the event any payment by
or on behalf of the Borrower received by the Issuing Lender with respect to a
Letter of Credit and distributed by
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the Issuing Lender to the Revolving Credit Lenders on account of their
participations is thereafter set aside, avoided or recovered from the Issuing
Lender in connection with any receivership, liquidation or bankruptcy
proceeding, each Revolving Credit Lender that received such distribution shall,
upon demand by the Issuing Lender, contribute such Revolving Credit Lender's
ratable share of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by the Issuing Lender upon the amount
required to be repaid by it.
SECTION 3.08 COMPENSATION FOR LETTERS OF CREDIT.
(a) Letter of Credit Fees. The Borrower shall pay to the
Administrative Agent with respect to each Letter of Credit issued hereunder (i)
for the account of each Revolving Credit Lender, a participation fee (a
"Participation Fee") with respect to its participations in Letters of Credit,
which shall accrue at a rate per annum equal to the Applicable Margin applicable
to interest on Euro-Dollar Loans on the average daily amount of such Revolving
Credit Lender's Letter of Credit Obligations during the period from and
including the date hereof to but excluding the later of the Revolving Credit
Termination Date and the date on which such Lender ceases to have any Letter of
Credit Obligations, and (ii) for the account of the Issuing Lender, a fronting
fee ("Fronting Fee" and, together with Participation Fees, the "Letter of Credit
Fees") equal to 0.125% per annum of the face amount of such Letter of Credit,
payable on the Domestic Business Day on which such Letter of Credit is issued.
Participation Fees shall be payable on each Quarterly Payment Date and on the
Revolving Credit Termination Date. The Administrative Agent shall promptly remit
such Participation Fees, when paid, to the Revolving Credit Lenders in
accordance with their ratable shares thereof.
(b) Issuing Lender Charges. The Borrower shall pay to the Issuing
Lender, solely for its own account, the standard charges assessed by the Issuing
Lender in connection with the issuance, administration, amendment and payment or
cancellation of Letters of Credit issued hereunder, which charges shall be those
typically charged by the Issuing Lender to its customers generally having credit
and other characteristics similar to the Borrower, as determined in good faith
by the Issuing Lender.
SECTION 3.09 INDEMNIFICATION; EXONERATION.
(a) Indemnification. In addition to amounts payable as elsewhere
provided in this Article III, the Borrower shall protect, indemnify, pay and
save the Issuing Lender, the Administrative Agent, the Swing Lender and each
Lender harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees) which the Issuing Lender, the Administrative Agent, the Swing Lender or
any Lender may incur or be subject to as a consequence of the issuance of any
Letter of Credit for the Borrower's account other than as a result of its gross
negligence or willful misconduct, as determined by a court of competent
jurisdiction.
(b) Assumption of Risk by Borrower. As between the Borrower, on
the one hand, and the Issuing Lender, the Administrative Agent, Swing Lender and
Lenders, on the other hand, the Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit issued for the Borrower's
account by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Lender, the
Administrative Agent,
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the Swing Lender and the Lenders shall not be responsible for (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
the Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason, (iii) failure of the beneficiary of a
Letter of Credit to comply duly with conditions required in order to draw upon
such Letter of Credit, (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher, for errors in interpretation of
technical terms, (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or of
the proceeds thereof, (vii) the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and (viii)
any consequences arising from causes beyond the control of the Issuing Lender,
the Administrative Agent, the Swing Lender and the Lenders.
(c) Exoneration. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender under or in connection with the Letters of Credit
or any related certificates if taken or omitted in good faith and with
reasonable care, shall not put the Issuing Lender, the Administrative Agent, the
Swing Lender or any Lender under any resulting liability to the Borrower or
relieve the Borrower of any of its obligations hereunder to any such Person.
ARTICLE IV.
CONDITIONS TO BORROWINGS
SECTION 4.01 CONDITIONS TO FIRST BORROWING. The obligation of each
Lender to make a Loan on the occasion of the first Borrowing (or the obligation
of the Issuing Lender to issue the first Letter of Credit hereunder) is subject
to the satisfaction of the conditions set forth in Section 4.02 and receipt by
the Administrative Agent of the following:
(a) from each of the parties hereto of either (i) a duly executed
counterpart of this Agreement signed by the Borrower or (ii) a facsimile
transmission of such executed counterpart (with the original to be sent to the
Administrative Agent by overnight courier);
(b) a duly executed Revolving Credit Loan Note, a duly executed
Term Loan Note and a duly executed Swing Loan Note for the account of each
Lender entitled thereto, if such Lender has requested the delivery of such
Notes, pursuant to Section 2.04;
(c) an opinion letter of Kilpatrick Stockton, LLP, counsel for the
Obligors, dated as of the Closing Date, substantially in the form of Exhibit B
and covering such additional matters relating to the transactions contemplated
hereby as the Administrative Agent or any Lender may reasonably request;
(d) a certificate (the "Closing Certificate") substantially in the
form of Exhibit F, dated as of the Closing Date, signed by a principal financial
officer of the Borrower and the
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Parent, to the effect that (i) no Default has occurred and is continuing as of
the date hereof, (ii) the representations and warranties of the Borrower
contained in Article V are true on and as of the date hereof, (iii) Consolidated
EBITDA for the twelve-month period ending August 3, 2003 is not less than
$95,000,000, (iv) the Consolidated Leverage Ratio (calculated on the basis of
Consolidated Total Debt as of August 3, 2003 and Consolidated EBITDA for the
twelve-month period ending August 3, 2003) does not exceed 1.70 to 1.00, (v) the
Borrower is in compliance with Section 7.13 on a pro forma basis on the Closing
Date after giving effect to the transactions contemplated by, and the first
Borrowing under, this Agreement, together with such evidence of the foregoing as
the Administrative Agent may reasonably require and (vi) since February 2, 2003,
there has been no event, act, condition or occurrence having, or which could
reasonably be expected to have, alone or in the aggregate, a Material Adverse
Effect;
(e) from each Obligor, all documents which the Administrative
Agent or any Lender may reasonably request relating to the solvency and
existence of such Obligor, the organizational authority for and the validity of
this Agreement, the other Loan Documents and the Swap Agreements to which such
Obligor is a party, and any other matters relevant hereto, all in form and
substance satisfactory to the Administrative Agent, including, without
limitation, an Officer's Certificate;
(f) from the Parent, a duly executed Parent Guaranty;
(g) from each Subsidiary Guarantor, a duly executed Subsidiary
Guaranty; except that the duly executed Subsidiary Guaranty to be provided by
Golden Gate Doughnuts, LLC shall be delivered pursuant to the terms of Section
6.09(c);
(h) from the Affiliate Guarantor, a duly executed Affiliate
Guaranty;
(i) evidence satisfactory to the Administrative Agent that the
Debt of the Borrower and the Subsidiaries listed on Schedule 4.01 will be
indefeasibly paid in full with the proceeds of the Loans on the Closing Date
(and all related security interests shall be released); and
(j) the payment of any fees the Borrower shall have agreed to pay
to any Lender or the Administrative Agent in connection herewith, including the
reasonable fees and expenses of Womble Carlyle Sandridge & Rice, PLLC, counsel
to the Administrative Agent, in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other Loan Documents and
extensions of credit hereunder (to the extent that statements for such fees and
expenses have been delivered to the Borrower).
In addition, if the Borrower desires funding of a Euro-Dollar Loan on
the Closing Date, the Administrative Agent shall have received, the requisite
number of days prior to the Closing Date, a funding indemnification letter
satisfactory to it, pursuant to which (i) the Administrative Agent and the
Borrower shall have agreed upon the interest rate, amount of Borrowing and
Interest Period for such Euro-Dollar Loan, and (ii) the Borrower shall indemnify
the Lenders from any loss or expense arising from the failure to close on the
anticipated Closing Date identified in such letter or the failure to borrow such
Euro-Dollar Loan on such date.
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SECTION 4.02 CONDITIONS TO ALL BORROWINGS. The obligation of the Term
Loan Lenders to make the Term Loans on the Closing Date and the obligation of
each Revolving Credit Lender to make a Revolving Credit Loan, or the obligations
of the Swing Lender to make a Swing Loan, on the occasion of each Borrowing (or
the obligation of the Issuing Lender to issue each Letter of Credit) is subject
to the satisfaction of the following conditions:
(a) with respect to a Borrowing, receipt by the Administrative
Agent of a Notice of Borrowing;
(b) the fact that, immediately before and after such Borrowing or
Letter of Credit is issued, as applicable, no Default shall have occurred and be
continuing;
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the date of such
Borrowing or Letter of Credit is issued, as applicable (except to the extent any
such representation or warranty is expressly made as of a prior date); and
(d) the fact that, immediately after such Borrowing or Letter of
Credit is issued, as applicable, the conditions set forth in clauses (i) and
(ii) of Section 2.01(a) shall have been satisfied.
Each Revolving Credit Borrowing, each Swing Loan Borrowing, each Notice
of Continuation or Conversion, and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing, Notice of Continuation or Conversion or issuance of
a Letter of Credit, as applicable, as to the truth and accuracy of the facts
specified in paragraphs (b), (c) and (d) of this Section; provided, that (i) if
a Notice of Continuation or Conversion is to continue or convert to a
Euro-Dollar Loan, such Notice of Continuation or Conversion shall be deemed to
be such a representation and warranty by the Borrower only as to the matters set
forth in paragraphs (b) and (d) above, and (ii) if a Notice of Continuation or
Conversion is to convert to a Base Rate Loan, such Notice of Continuation or
Conversion shall be deemed to be a representation and warranty by the Borrower
only as to the matters set forth in paragraph (d) above.
SECTION 4.03 DETERMINATIONS UNDER SECTION 4.01. For purposes of
determining compliance with the conditions specified in Section 4.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Administrative Agent responsible for the transactions contemplated by
this Agreement shall have received notice from such Lender prior to the Closing
Date, specifying its objection thereto.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and
each Lender that:
SECTION 5.01 CORPORATE EXISTENCE AND POWER. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of North Carolina. The Borrower is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary, except for any failure to comply with the foregoing
which does not have a Material Adverse Effect, and has all corporate powers and
all government authorizations, licenses, consents and approvals required to
engage in its business and operations as now conducted, except for any failure
to comply with the foregoing which does not have a Material Adverse Effect.
SECTION 5.02 CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents, as applicable, (i) are within
the Borrower's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any Governmental Authority, (iv) do not contravene, or constitute a default
under, any provision of any Governmental Requirement or of the Organization
Documents of the Borrower or, to the best of the Borrower's knowledge, any
material agreement relating to Debt, judgment, injunction, order, decree or
other instrument relating to Debt binding upon the Borrower or any of its
Subsidiaries, and (v) do not result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries.
SECTION 5.03 BINDING EFFECT. Each Loan Document to which the Borrower
is a party constitutes a valid and binding agreement of the Borrower enforceable
in accordance with its terms, provided that the enforceability hereof and
thereof is subject in each case to general principles of equity and to
bankruptcy, insolvency and similar laws affecting the enforcement of creditors'
rights generally.
SECTION 5.04 FINANCIAL INFORMATION; NO MATERIAL ADVERSE EFFECT.
(a) The consolidated balance sheet of the Parent and its
Consolidated Subsidiaries as of February 2, 2003 and the related consolidated
statements of income, shareholders' equity and cash flows for the Fiscal Year
then ended, reported on by PricewaterhouseCoopers LLP, copies of which have been
delivered to each of the Lenders, and the unaudited consolidated financial
statements of the Parent and its Consolidated Subsidiaries for the interim
period ended August 3, 2003, copies of which have been delivered to each of the
Lenders, fairly present, in conformity with GAAP, the consolidated financial
position of the Parent and its Consolidated Subsidiaries as of such dates and
their consolidated results of operations and cash flows for such periods stated.
(b) Since February 2, 2003, there has been no event, act,
condition or occurrence having, or which could reasonably be expected to have,
alone or in the aggregate, a Material Adverse Effect.
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SECTION 5.05 NO LITIGATION. There is no action, suit or proceeding
pending, or to the knowledge of the Borrower threatened, against or affecting
the Borrower or any of its Subsidiaries before any court or arbitrator or any
Governmental Authority which, alone or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or which in any manner draws into
question the validity of or could impair in any material respect the ability of
the Borrower or any of its Subsidiaries to perform its obligations under any of
the Loan Documents to which it is a party.
SECTION 5.06 COMPLIANCE WITH ERISA.
(a) To the best of the Borrower's knowledge, the Borrower and each
member of the Controlled Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Code, and has not incurred any liability to the PBGC or a Plan
under Title IV of ERISA, provided, that the Borrower does not make any
representation or warranty under this Section 5.06 as to any Subsidiary for
matters pertaining to periods prior to the date on which such Subsidiary became
a Subsidiary except to the extent that the Borrower received any such
representations and/or warranties from the seller (or any of its affiliates) of
any relevant Subsidiary in connection with the acquisition of any relevant
Subsidiary.
(b) To the best of the Borrower's knowledge, neither the Borrower
nor any member of the Controlled Group is or ever has been obligated to
contribute to any Multiemployer Plan, provided, that the Borrower does not make
any representation or warranty under this Section 5.06 as to any Subsidiary for
matters pertaining to periods prior to the date on which such Subsidiary became
a Subsidiary except to the extent that the Borrower received any such
representations and/or warranties from the seller (or any of its affiliates) of
any relevant Subsidiary in connection with the acquisition of any relevant
Subsidiary.
SECTION 5.07 COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Borrower and,
to the best of the Borrower's knowledge, each Subsidiary Guarantor, is in
compliance with all Governmental Requirements, except where such compliance is
being contested in good faith through appropriate proceedings or could not
reasonably be expected to have a Material Adverse Effect. There have been filed
on behalf of the Borrower and, to the best of the Borrower's knowledge, each
Subsidiary Guarantor, all Federal, state and material local income, excise,
property and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower, or to the best of the Borrower's knowledge, any
Subsidiary Guarantor, have been paid or are being contested in good faith or, if
unpaid and uncontested, are in immaterial amounts. The charges, accruals and
reserves on the books of the Borrower and, to the best of the Borrower's
knowledge, each Subsidiary Guarantor, in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate. To the best of the
Borrower's knowledge, United States income tax returns of the Borrower and each
Subsidiary which is a U.S. Person have been examined and closed through the
Fiscal Year ended January, 2000. The Borrower has not given or been requested to
give a waiver of the statute of limitations relating to the payment of Federal,
state (other than Ohio, North Carolina, South Carolina and New York), local or
foreign taxes.
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SECTION 5.08 SUBSIDIARIES. Each Subsidiary of the Borrower is a
corporation, limited partnership, limited liability company or similar entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such qualification is
necessary, and has all powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted. As of
the Closing Date, the Borrower does not have any Subsidiaries except for those
Subsidiaries listed on Schedule 5.08, which accurately sets forth each such
Subsidiary's complete name and jurisdiction of organization and identifies each
Material Subsidiary.
SECTION 5.09 INVESTMENT COMPANY ACT. Neither the Borrower nor any of
the Borrower's Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 5.10 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of the Borrower's Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 5.11 OWNERSHIP OF PROPERTY; LIENS; LEASES. The Borrower has
title to or leasehold or other interests in its material Properties sufficient
for the conduct of its business, and no owned Property is subject to any Lien
except Permitted Encumbrances.
SECTION 5.12 NO DEFAULT. Neither the Borrower nor any of the Borrower's
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which, alone or in the aggregate, could reasonably be expected to have or
cause a Material Adverse Effect. No Default has occurred and is continuing.
SECTION 5.13 FULL DISCLOSURE. All information heretofore furnished by
the Borrower to the Administrative Agent or any Lender for purposes of or in
connection with this Agreement, any of the other Loan Documents or any
transaction contemplated hereby or thereby is, and all such information
hereafter furnished by the Borrower to the Administrative Agent or any Lender
will be, true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information is stated or
certified. The Borrower has disclosed to the Lenders in writing any and all
facts which, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
SECTION 5.14 ENVIRONMENTAL MATTERS.
(a) To the best of the Borrower's actual knowledge (without, as to
Properties not located in the United States of America, having performed any
further independent inquiry therefor solely in connection with the Loans),
neither the Borrower nor any Subsidiary of the Borrower is aware that it is
subject to any Environmental Liability which could reasonably be expected to
have or cause a Material Adverse Effect, neither the Borrower nor any Subsidiary
of the Borrower (except in respect of immaterial Environmental Liabilities in de
minimis amounts)
- 43 -
has received notice that it has been designated as a potentially responsible
party under CERCLA or under any state statute similar to CERCLA, and none of the
Properties located in the United States and owned by the Borrower or any
Subsidiary of the Borrower has been identified on any current or proposed (1)
National Priorities List under 40 C.F.R. Section 300, (2) CERCLIS list or (3)
any list arising from a state statute similar to CERCLA.
(b) To the best of the Borrower's actual knowledge (without having
performed any further independent inquiry therefor solely in connection with the
Loans), except as set forth in Schedule 5.14, no Hazardous Materials have been
or are being used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from any of the Properties or are otherwise present at, on, in
or under any of the Properties, or, to the best of the actual knowledge of the
Borrower, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in minimal amounts in the ordinary
course of business in compliance with all applicable Environmental Requirements.
(c) The Borrower represents, for itself and each of its
Subsidiaries, that to the best of its actual knowledge (without having performed
any further independent inquiry therefor solely in connection with the Loans),
the Borrower and the Borrower's Subsidiaries are in compliance in all material
respects with all Environmental Requirements in connection with the operation of
its facilities and the Properties and the respective businesses of the Borrower
and each of its Subsidiaries.
SECTION 5.15 CAPITAL STOCK. All Capital Stock, debentures, bonds, notes
and all other securities of the Borrower and its Subsidiaries presently issued
and outstanding are validly and properly issued in accordance with all
applicable laws in all material respects, including, but not limited to, the
"Blue Sky" laws of all applicable states and the federal securities laws. The
issued shares of Capital Stock of the Borrower's Wholly Owned Subsidiaries are
owned by the Borrower free and clear of any Lien or adverse claim. At least a
majority of the issued shares of Capital Stock of the Borrower's other
Subsidiaries (other than Wholly Owned Subsidiaries) is owned by the Borrower
free and clear of any Lien or adverse claim.
SECTION 5.16 USE OF PROCEEDS; MARGIN STOCK. The proceeds of all Loans
will be used to (a) refinance certain existing Debt of the Obligors, (b) provide
for the working capital and general corporate requirements of the Obligors, and
(c) finance Permitted Acquisitions and Investments permitted under Section 7.07.
Neither the Borrower nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of purchasing or carrying any
Margin Stock, and no part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation T, U or X.
Margin Stock constitutes less than 25% of the value of those assets of the
Borrower and its Subsidiaries that are subject to any limitation on sale, pledge
or other restriction hereunder.
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SECTION 5.17 INSOLVENCY. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans under this Agreement:
(i) the Borrower will not (x) be "insolvent" (as defined in Section 101 of the
"Bankruptcy Code"), or Section 2 of either the "UFTA" or the "UFCA", or as
defined or used in any "Other Applicable Law" (as those terms are defined
below), or (y) be unable to pay its debts generally as such debts become due
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA
or Section 6 of the UFCA, or (z) have an unreasonably small capital to engage in
any business or transaction, whether current or contemplated, within the meaning
of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the
UFCA; and (ii) the obligations of the Borrower under the Loan Documents and with
respect to the Loans will not be rendered avoidable under any Other Applicable
Law. For purposes of this Section 5.17, "Bankruptcy Code" means Title 11 of the
United States Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA"
means the Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means
any other applicable law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
SECTION 5.18 INSURANCE. The Borrower and each of its Subsidiaries has
(either in the name of the Borrower or in such Subsidiary's own name), with
financially sound and reputable insurance companies, insurance in at least such
amounts and against at least such risks (including on all its property, and
public liability and worker's compensation) as are usually insured against in
the same general area by companies of established repute engaged in the same or
similar business.
SECTION 5.19 INTELLECTUAL PROPERTY. The Borrower and the Consolidated
Subsidiaries own, or are licensed to use, all copyrights, trademarks, trade
names, patents, technology, know-how and processes, service marks and rights
with respect to the foregoing that are used in or necessary for the conduct of
their respective businesses as currently conducted, unless the failure to have
such rights could not reasonably be expected to result in a Material Adverse
Effect. To the knowledge of the Borrower, the use of such copyrights,
trademarks, trade names, patents, technology, know-how and processes, service
marks and rights with respect to the foregoing by the Borrower and the
Consolidated Subsidiaries does not infringe in any material respect on the
rights of any Person.
SECTION 5.20 MATERIAL AGREEMENTS. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any charter
or other corporate restriction the performance of or compliance with which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in (a)
any agreement to which it is a party, which default could reasonably be expected
to have a Material Adverse Effect, or (b) any agreement or instrument evidencing
or governing Debt.
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ARTICLE VI.
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Lender has any
Commitment outstanding, or any Loan or other amount payable under this Agreement
or any other Loan Document remains unpaid, or any Letter of Credit Obligation
remains outstanding:
SECTION 6.01 INFORMATION. The Borrower will deliver, or cause to be
delivered, to the Administrative Agent and each of the Lenders:
(a) as soon as available and in any event within ninety (90) days
after the end of each Fiscal Year, a consolidated balance sheet of the Parent
and its Consolidated Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year, all certified by
PriceWaterhouseCoopers, LLP or other independent public accountants of
nationally recognized standing, with such certification to be free of exceptions
and qualifications not acceptable to the Required Lenders;
(b) as soon as available and in any event within forty-five (45)
days after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year, a consolidated balance sheet of the Parent and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related statement of
income or operations for such Fiscal Quarter and for the portion of the Fiscal
Year ended at the end of such Fiscal Quarter and year-to-date statement of cash
flows for the portion of the Fiscal Year ended at the end of such Fiscal
Quarter, setting forth in each case in comparative form the figures for the
corresponding Fiscal Quarter and the corresponding portion of the previous
Fiscal Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by the chief financial officer or
the chief accounting officer of the Parent;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit E (a "Compliance Certificate"), of the
chief financial officer of the Parent (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in compliance with
the requirements of Sections 7.02, 7.06, 7.07, 7.09, 7.10 and 7.13 on the date
of such financial statements; (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto; and (iii) setting forth the Leverage Ratio as of the most
recent Performance Pricing Determination Date and the Applicable Margin for
Euro-Dollar Loans and Base Rate Loans in effect as a result thereof;
(d) simultaneously with the delivery of each set of annual
financial statements referred to in paragraph (a) above, a statement of the firm
of independent public accountants which reported on such statements to the
effect that nothing has come to their attention to cause them to believe that
any Default existed on the date of such financial statements;
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(e) within sixty (60) days after the commencement of each Fiscal
Year, the Borrower shall deliver to the Administrative Agent and the Lenders the
annual operating plan for the Borrower and the Subsidiaries, including, without
limitation, an annual budget for the Borrower and its Subsidiaries, including
forecasts of the income statement, the balance sheet and an operating profit and
cash flow statement for the immediately succeeding year;
(f) as soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year of each Majority-Owned Joint
Venture, a consolidated balance sheet for such Majority-Owned Joint Venture and
its Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all certified by PriceWaterhouseCoopers,
LLP or other independent public accountants of nationally recognized standing,
with such certification to be free of exceptions and qualifications not
acceptable to the Required Lenders;
(g) promptly upon the mailing thereof to the shareholders of the
Parent generally, copies of all financial statements, reports and proxy
statements so mailed;
(h) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or monthly reports which the
Parent or any of its Subsidiaries shall have filed with the Securities and
Exchange Commission;
(i) if and when any member of the Controlled Group (x) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (y) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice; or (z)
receives notice from the PBGC under Title IV of ERISA of an intent to terminate
or appoint a trustee to administer any Plan, a copy of such notice;
(j) within five (5) Domestic Business Days after the Borrower
becomes aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting officer of the Borrower setting forth
the details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(k) prompt written notice of any legal or arbitral proceedings, or
of any proceedings, by or before any Governmental Authority, and any material
development in respect of such proceedings, affecting the Parent or any of its
Subsidiaries, if an adverse determination in any such proceeding could
reasonably be expected to have, alone or in the aggregate, a Material Adverse
Effect; and
(l) from time to time such additional information regarding the
financial position or business of the Parent and its Subsidiaries as the
Administrative Agent, at the request of any Lender, may reasonably request.
- 47 -
Information required to be delivered pursuant to Sections 6.01(a),
6.01(b), 6.01(g) or 6.01(h) above shall be deemed to have been delivered on the
date on which the Borrower provides notice to the Administrative Agent and the
Lenders that such information has been posted on the Parent's website on the
Internet at the website address listed on the signature pages hereof, at
sec.gov/edaux/searches.htm or at another website identified in such notice and
accessible by the Administrative Agent and the Lenders without charge; provided
that (i) such notice may be included in a Compliance Certificate delivered
pursuant to Section 6.01(c) and (ii) the Borrower shall deliver paper copies of
the information referred to in Sections 6.01(a), 6.01(b), 6.01(g) or 6.01(h) to
the Administrative Agent or any Lender upon any request for such delivery.
SECTION 6.02 INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Borrower
will (i) keep, and cause each Subsidiary to keep, 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; and (ii) permit, and cause each Subsidiary to permit,
representatives of the Administrative Agent or any Lender at the Administrative
Agent's or such Lender's expense prior to the occurrence of a Default and at the
Borrower's expense after the occurrence of a Default to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants. The Administrative Agent and the Lenders shall use commercially
reasonable efforts to give advance notice to the chief executive officer or the
chief financial officer of the Borrower of any intent to have such discussions
with the Borrower's officers, employees and independent public accountants (as
applicable). The Borrower agrees to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as often as may
reasonably be desired.
SECTION 6.03 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Borrower will, and will cause each Subsidiary and Guarantor to, maintain its
organizational existence and carry on the major part of its business in
substantially the same fields as such business is now carried on and maintained;
take all reasonable action to maintain all rights, privileges, permits, licenses
and franchises necessary or desirable in the normal conduct of its business; and
preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.
SECTION 6.04 USE OF PROCEEDS. The proceeds of the Loans will be used
only to (a) refinance certain existing Debt of the Obligors, (b) provide for the
working capital and general corporate requirements of the Obligors and (c)
finance Permitted Acquisitions and Investments permitted under Section 7.07.
SECTION 6.05 COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Borrower will,
and will cause each of its Subsidiaries and each member of the Controlled Group
to, comply in all material respects with applicable Governmental Requirements
(including but not limited to ERISA), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued or where non-compliance could not, alone or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Borrower will pay,
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and will cause each of its Subsidiaries to pay, prior to the date on which
penalties attach thereto, all taxes, assessments, governmental charges, claims
for labor, supplies, rent and other obligations which, if unpaid, might become a
Lien against any part of the Property of the Parent or any Subsidiary, except
liabilities being contested in good faith and against which the Parent will, or
will cause the relevant Subsidiary to, set up reserves in accordance with GAAP.
SECTION 6.06 INSURANCE. The Borrower will maintain, and will cause each
of its Subsidiaries to maintain (either in the name of the Borrower or in such
Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on such of its property in at least such amounts, with such
deductibles and against at least such risks as are usually insured against in
the same general area by companies of established repute engaged in the same or
similar businesses.
SECTION 6.07 MAINTENANCE OF PROPERTY. The Borrower shall, and shall
cause each Subsidiary to, maintain all of its properties and assets in good
condition, repair and working order, ordinary wear and tear excepted.
SECTION 6.08 ENVIRONMENTAL MATTERS.
(a) The Borrower shall furnish to the Lenders and the
Administrative Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, and
all facts, events, or conditions actually known to the Borrower that could
reasonably be expected to lead to any of the foregoing.
(b) The Borrower will, and will cause each of its Subsidiaries to,
handle and use all Hazardous Materials in compliance with all applicable
Environmental Requirements.
(c) The Borrower agrees that upon the occurrence of an
Environmental Release at or on any of the Properties it will act immediately to
investigate the extent of, and to take appropriate remedial action to eliminate,
such Environmental Release, in accordance with all applicable Environmental
Requirements.
SECTION 6.09 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES.
(a) Subsidiary Guarantors. With respect to any Person that becomes
a Material Subsidiary after the Closing Date (whether created, acquired,
designated or otherwise), the Borrower shall, within ten (10) Domestic Business
Days after such occurrence, creation or acquisition, notify the Administrative
Agent thereof and cause such new Material Subsidiary within ten (10) Domestic
Business Days after such request, (a) to become a party to the Subsidiary
Guaranty by executing and delivering to the Administrative Agent counterparts
thereof or a Guaranty Assumption Agreement with respect thereto, (b) to deliver
to the Administrative Agent the certificate specified in Section 4.01(e) for
such Material Subsidiary with appropriate insertions and attachments, and (c) if
requested by the Administrative Agent, to deliver to the Administrative Agent,
addressed to the Lenders, a legal opinion in substantially the form of Exhibit B
with respect to such Material Subsidiary and the Subsidiary Guaranty, from
counsel to such Subsidiary reasonably satisfactory to the Administrative Agent.
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(b) Ownership of Subsidiaries. The Borrower will, and will cause
the Parent and each Subsidiary to, take such action from time to time as shall
be necessary to ensure that the Borrower, the Parent and each Subsidiary at all
times own (free of all Liens) more than 50% of the issued and outstanding shares
of each class of stock of each of its Subsidiaries owned on the date hereof or
on the date such Subsidiary becomes a Subsidiary, as applicable, provided that
none of the Borrower, the Parent or any Subsidiary will reduce its ownership of
the issued and outstanding shares of each class of stock of each of its
Subsidiaries at any time, or permit any Lien thereon, if any Default shall be in
existence at such time or would be created by such reduction in ownership or the
imposition of any such Lien.
(c) Post-Closing Guaranty. With respect to the Subsidiary Guaranty
to be provided by Golden Gate Doughnuts, LLC, the Borrower shall, within thirty
(30) calendar days after the Closing Date cause Golden Gate Doughnuts, LLC, (a)
to become a party to the Subsidiary Guaranty by executing and delivering to the
Administrative Agent counterparts thereof or a Guaranty Assumption Agreement
with respect thereto, (b) to deliver to the Administrative Agent the certificate
specified in Section 4.01(e) for Golden Gate Doughnuts, LLC with appropriate
insertions and attachments, and (c) to deliver to the Administrative Agent,
addressed to the Lenders, a legal opinion in substantially the form of Exhibit B
with respect to Golden Gate Doughnuts, LLC and the Subsidiary Guaranty, from
counsel to Golden Gate Doughnuts, LLC reasonably satisfactory to the
Administrative Agent.
ARTICLE VII.
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Lender has any
Commitment outstanding or any Loan or other amount payable under this Agreement
or any other Loan Document remains unpaid, or any Letter of Credit Obligation
remains outstanding:
SECTION 7.01 USE OF PROCEEDS. No portion of the proceeds of the Loans
will be used by the Borrower or any Subsidiary (i) in connection with, whether
directly or indirectly, any tender offer for, or other acquisition of, stock of
any corporation with a view towards obtaining control of such other corporation,
unless such tender offer or other acquisition is to be made on a negotiated
basis with the approval of the Board of Directors of the Person to be acquired,
and the provisions of Section 7.07 would not be violated, (ii) directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock, or (iii) for any purpose in violation
of any applicable Governmental Requirement.
SECTION 7.02 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS; DISSOLUTION.
(a) Consolidations, Mergers and Sales of Assets. The Borrower will
not, and will not permit any Subsidiary to, consolidate or merge with or into,
or sell, lease or otherwise transfer all or any substantial part of its assets
to, any other Person, or discontinue or eliminate any business line or segment,
provided that (i) the Borrower may merge with another Person if (A) such Person
is organized under the laws of the United States of America or one of its
states, (B) the Borrower is the Person surviving such merger and (C) immediately
after giving effect to such merger, no Default shall have occurred and be
continuing, (ii) Subsidiaries of the Borrower may
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merge with one another, provided that if either party to the merger is a
Subsidiary Guarantor, the surviving entity must be a Subsidiary Guarantor, (iii)
any Subsidiary may merge with another Person if such merger is a Permitted
Acquisition and the Subsidiary is the Person surviving such merger, and (iv) the
foregoing limitation on the sale, lease or other transfer of assets and on the
discontinuation or elimination of a business line or segment shall not prohibit,
during any Fiscal Quarter, a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single transaction or in a
series of related transactions) unless the aggregate assets to be so transferred
or utilized in a business line or segment to be so discontinued, when combined
with all other assets transferred, and all other assets utilized in all other
business lines or segments discontinued, either (x) constituted more than 10% of
Consolidated Total Assets at the end of the most recent Fiscal Year immediately
preceding such Fiscal Quarter, or (y) contributed more than 10% of Consolidated
Operating Profits during such Fiscal Quarter and the three (3) Fiscal Quarters
immediately preceding such Fiscal Quarter.
(b) Dissolution. In addition to the foregoing, the Borrower shall
not, and shall not permit any Obligor to, wind-up, dissolve or liquidate, except
through corporate reorganization to the extent permitted by Section 7.02(a).
SECTION 7.03 CHANGE IN FISCAL YEAR; ACCOUNTING POLICIES; CAPITAL STOCK.
The Borrower will not, and will not permit the Parent to, (i) change its Fiscal
Year, (ii) change its accounting policies except as permitted under Section 1.02
or (iii) change its capital structure including any revision of the terms of its
outstanding Capital Stock, from the Fiscal Year, the accounting policies and the
capital structure in existence on the Closing Date without the prior written
consent of the Administrative Agent; provided that the Parent may issue
additional Capital Stock without the prior written consent of the Administrative
Agent.
SECTION 7.04 CHANGE IN NATURE OF BUSINESS. The Borrower will not, and
will not permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and the Subsidiaries on the date hereof.
SECTION 7.05 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Subsidiary to, enter into, or be a party to, any transaction
with any Affiliate of the Borrower or any Subsidiary, except as permitted by law
and in the ordinary course of business and pursuant to reasonable terms which
are no less favorable to the Borrower or such Subsidiary than would be obtained
in a comparable arm's length transaction with a Person which is not an
Affiliate.
SECTION 7.06 RESTRICTED PAYMENTS. The Borrower will not, and will not
permit the Parent to, declare or make any Restricted Payments; provided,
however, that the Parent may:
(a) repurchase, redeem or otherwise retire for value warrants or
common stock of the Parent pursuant to a warrant or stock repurchase plan duly
approved by the Board of Directors of the Parent; and
(b) during any Fiscal Year, the Parent may declare and pay
dividends on its common stock in an amount not to exceed 50% of Consolidated Net
Income for the immediately preceding Fiscal Year;
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provided, further, that after giving effect to the payment of any such
Restricted Payment, no Default shall be in existence or be created thereby.
SECTION 7.07 INVESTMENTS. The Borrower will not, and will not permit
the Parent or any Subsidiary to, make or permit to exist Investments in any
Person except:
(a) advances to employees for reasonable business and travel
expenses incurred in the ordinary course of business;
(b) loans or advances to employees not exceeding $1,400,000 in the
aggregate principal amount outstanding at any time, in each case made in the
ordinary course of business and consistent with practices existing on the
Closing Date;
(c) loans or advances to Subsidiary Guarantors or the Affiliate
Guarantor;
(d) deposits required by government agencies or public utilities
in the ordinary course of business;
(e) Investments made in accordance with the Investment Policy
attached hereto as Schedule 7.07(e) as in effect on the date hereof without
giving effect to any modifications thereto and without giving effect to any
Investments not expressly permitted by Schedule 7.07(e) that are authorized by
the Investment Committee or any other Person;
(f) Investments in Joint Ventures and loans or advances to Krispy
Kreme franchisees or doughnut and bakery store operators made in the ordinary
course of business; provided that Non-Guarantor Joint Venture Investments and
loans or advances to Krispy Kreme franchisees or doughnut and bakery store
operators shall not at any time exceed in the aggregate 35% of Consolidated
Tangible Net Worth;
(g) Permitted Acquisitions (exclusive of Investments permitted
under clause (f) above);
(h) any Acquisition pursuant to a collateral repurchase agreement
in favor of any Krispy Kreme franchisee or its lenders entered into in the
ordinary course of business and consistent with practices existing on the
Closing Date; and
(i) Investments made in the form of Guarantees to the extent
permitted under Section 7.10(d).
SECTION 7.08 ACQUISITIONS. Neither the Borrower nor any of its
Subsidiaries will consummate, or enter into any agreement providing for the
consummation by the Borrower or any of its Subsidiaries of, any Acquisition
other than a Permitted Acquisition.
SECTION 7.09 LIMITATION ON LIENS. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
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(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement and listed on Schedule 7.09;
(b) any Lien existing on any specific fixed asset of any Person at
the time such Person becomes a Subsidiary and which is not created in
contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that (i) such Lien attaches to such asset
concurrently with or within eighteen (18) months after the acquisition or
completion of construction thereof, (ii) such Lien does not at any time encumber
any other Property and (iii) the amount of the Debt secured by such asset is not
increased;
(d) any Lien on any specific fixed asset of any Person existing at
the time such Person is merged or consolidated with or into the Borrower or a
Subsidiary and which is not created in contemplation of such event;
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by the Borrower or a Subsidiary and which is not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary or the Affiliate
Guarantor to the Borrower;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section 7.09, provided that (x) such Debt is not secured by
any additional assets, and (y) the amount of such Debt secured by any such Lien
is not increased;
(h) Liens incidental to the conduct of the Borrower's business or
the ownership of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(i) Liens not otherwise permitted by the foregoing paragraphs of
this Section 7.09 securing Debt (other than indebtedness represented by the
Notes) in an aggregate principal amount at any time outstanding not to exceed
2.5% of Consolidated Tangible Net Worth.
Provided the aggregate amount of Debt secured by Liens permitted by the
foregoing paragraphs (a) through (e) and (g) through (i) shall at no time exceed
an aggregate amount greater than 5% of Consolidated Tangible Net Worth, without
duplication.
SECTION 7.10 LIMITATION ON DEBT. The Borrower will not, and will not
permit any Consolidated Subsidiary to, create, incur, assume or suffer to exist
any Debt, except:
(a) Debt under the Loan Documents;
(b) Debt outstanding on the date hereof and listed on Schedule
7.10 and any refinancings, refundings, renewals or extensions thereof; provided
that the amount of such Debt is not increased at the time of such refinancing,
refunding, renewal or extension;
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(c) Guarantees of the Borrower or any Subsidiary in respect of
Debt otherwise permitted hereunder of the Borrower or any Wholly-Owned
Subsidiary;
(d) Guarantees of the Borrower in respect of Debt incurred by
Joint Ventures in an aggregate principal amount outstanding at any time not to
exceed (i) $75,000,000 through the Fiscal Year 2005 and (ii) $120,000,000
thereafter;
(e) obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under any Swap Agreement;
(f) Debt in respect of Liens permitted under Section 7.09;
(g) unsecured Debt in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding;
(h) Subordinated Debt;
(i) Debt of Glazed Investments, LLC and New England Dough, LLC (A)
existing on the Closing Date and reflected on Schedule 7.10; (B) incurred as an
Investment from the Parent, the Borrower or another Subsidiary as permitted
under Section 7.07(f); or (C) incurred after the Closing Date in an aggregate
principal amount not to exceed $20,000,000 per Fiscal Year; and
(j) intercompany Debt resulting from Investments made pursuant to
clauses (c) or (f) of Section 7.07.
SECTION 7.11 SALE-LEASEBACKS; SYNTHETIC LEASES. The Borrower will not,
and will not permit any Subsidiary to, engage in any sale-leaseback, Synthetic
Lease or similar transaction involving any of its assets; provided that the
Borrower and its Subsidiaries may engage in sale-leaseback transactions so long
as each such transaction is treated as a sale, lease or other transfer of assets
subject to the limits of Section 7.02.
SECTION 7.12 OTHER NEGATIVE PLEDGE. The Borrower will not, and will not
permit any Subsidiary to, become a party to any agreement, note, indenture or
instrument, or take any other action, that would prohibit the creation of a Lien
on any of its Properties in favor of the Lenders, as additional collateral for
the Obligations.
SECTION 7.13 FINANCIAL COVENANTS.
(a) Fixed Charge Coverage Ratio. As at the end of each Fiscal
Quarter, the Fixed Charge Coverage Ratio as of the last day of the Fiscal
Quarter just ended, calculated on a rolling four quarter basis, shall not be
less than 1.5 to 1.0.
(b) Consolidated Leverage Ratio. As at the end of each Fiscal
Quarter, the Consolidated Leverage Ratio will not exceed, during each period,
the ratio set forth below:
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MAXIMUM CONSOLIDATED
PERIOD LEVERAGE RATIO
- --------------------------------------------------
Closing Date through the
end of Fiscal Year 2004 2.5 to 1.00
- --------------------------------------------------
Thereafter 2.25 to 1.00
- --------------------------------------------------
(c) Minimum Consolidated Tangible Net Worth. Consolidated Tangible
Net Worth will at no time be less than $175,000,000 (the "Minimum Consolidated
Tangible Net Worth") plus the sum of (i) 50% of the cumulative Reported Net
Income of the Parent and its Consolidated Subsidiaries during any period after
August 3, 2003 (taken as one accounting period), calculated quarterly at the end
of each Fiscal Quarter but excluding from such calculations of Reported Net
Income for purposes of this Section 7.13(c), any Fiscal Quarter in which the
Reported Net Income of the Parent and its Consolidated Subsidiaries is negative
plus (ii) 50% of the aggregate increases in Stockholders' Equity after the date
hereof by reason of the issuance and sale of capital stock of the Parent in
connection with a secondary public offering (including upon any conversion of
debt securities of the Parent into such capital stock).
ARTICLE VIII.
DEFAULTS
SECTION 8.01 EVENTS OF DEFAULT. If one or more of the following events
(each an "Event of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or any Reimbursement Obligations with respect to any Letter of Credit or
shall fail to pay any interest on any Loan within three (3) Domestic Business
Days after such interest shall become due, or shall fail to pay any fee or other
amount payable hereunder within three (3) Domestic Business Days after such fee
or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 6.01(j), 6.02(ii), 6.03, 6.04, 6.09(a) or 6.09(c), or
Article VII; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other than
those covered by paragraph (a) or (b) above) and such failure shall not have
been cured within thirty (30) days after the earlier to occur of (i) written
notice thereof has been given to the Borrower by the Administrative Agent at the
request of any Lender or (ii) the Borrower otherwise becomes aware of any such
failure; or
(d) any representation, warranty, certification or statement made
(or deemed made) by the Parent, the Borrower or any of their respective
Subsidiaries in Article V of this Agreement, in any other Loan Document or in
any certificate, financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
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(e) the Borrower, any Guarantor or any Material Subsidiary shall
fail to make any payment in respect of Debt outstanding in an aggregate
principal amount equal to or greater than $1,000,000 (other than the Notes) when
due or within any applicable grace period; or
(f) the Parent, the Borrower or any of their respective
Subsidiaries defaults under any Swap Agreement with the Administrative Agent or
any Lender or any Affiliate of the Administrative Agent or any Lender; or
(g) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding in an aggregate principal
amount equal to or greater than $1,000,000 of the Borrower, any Guarantor or any
Material Subsidiary (including, without limitation, any required mandatory
prepayment or "put" of such Debt to the Borrower, any Guarantor or any Material
Subsidiary) or enables (or, with the giving of notice or lapse of time or both,
would enable) the holders of such Debt or commitment or any Person acting on
such holders' behalf to accelerate the maturity thereof or terminate any such
commitment (including, without limitation, any required mandatory prepayment or
"put" of such Debt to the Borrower, any Guarantor or any Material Subsidiary);
or
(h) the Borrower, any Guarantor or a Material Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally, or shall admit in writing its inability, to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(i) an involuntary case or other proceeding shall be commenced
against the Borrower, any Guarantor or any Material Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of sixty (60) days; or an order for relief shall be entered against the
Borrower, any Guarantor or any Material Subsidiary under the federal bankruptcy
laws as now or hereafter in effect; or
(j) the Borrower or any member of the Controlled Group shall fail
to pay when due any material amount which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans shall be filed under Title IV of ERISA by the Borrower, any
member of the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within thirty (30) days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or
- 56 -
(k) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the Borrower,
any Guarantor or any Material Subsidiary and such judgment or order shall
continue unsatisfied, unstayed or unbonded for a period of thirty (30) days; or
(l) a federal tax lien shall be filed against the Borrower, any
Guarantor or any Material Subsidiary under Section 6323 of the Code or a lien of
the PBGC shall be filed against the Borrower or any Subsidiary under Section
4068 of ERISA and in either case such lien shall remain undischarged for a
period of twenty-five (25) days after the date of filing; or
(m) (i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
20% or more of the outstanding shares of the voting stock of the Borrower; or
(ii) as of any date a majority of the Board of Directors of the Borrower
consists of individuals who were not either (A) directors of the Borrower as of
the corresponding date of the previous year, (B) selected or nominated to become
directors by the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A), or (C) selected or nominated
to become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and individuals
described in clause (B); or
(n) any Obligor shall fail to observe or perform any covenant or
agreement contained in any Loan Document to which it is a party or any Loan
Document shall cease, for any reason, to be in full force and effect or any
Obligor shall so assert.
THEN, and in every such event, (i) the Administrative Agent shall, if requested
by the Required Lenders, by notice to the Borrower terminate the Revolving
Credit Commitments and they shall thereupon terminate and (ii) the
Administrative Agent shall, if requested by the Required Lenders, by notice to
the Borrower declare the Loans (together with accrued interest thereon), and all
other amounts payable hereunder and under the other Loan Documents, to be, and
the Loans, including the Swing Loan (together with accrued interest thereon),
and all other amounts payable hereunder and under the other Loan Documents shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower, together with interest at the Default Rate accruing on the principal
amount thereof from and after the date of such Event of Default; provided that
if any Event of Default specified in paragraph (h) or (i) above occurs with
respect to any Obligor, without any notice to the Obligors or any other act by
the Administrative Agent or the Lenders, the Revolving Credit Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon) and
all other amounts payable hereunder and under the other Loan Documents (except
Obligations due under any Swap Agreements) shall automatically and without
notice become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Obligors,
together with interest thereon at the Default Rate accruing on the principal
amount thereof from and after the date of such Event of Default. In addition to
the foregoing, if an Event of Default shall have occurred and be continuing, the
Borrower shall be obligated to deposit with the Administrative Agent cash
collateral in an amount equal to 105% of the undrawn amount available under
outstanding
- 57 -
Letters of Credit. Notwithstanding the foregoing, the Administrative Agent shall
have available to it all other remedies at law or equity.
ARTICLE IX.
THE ADMINISTRATIVE AGENT
SECTION 9.01 APPOINTMENT; POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its
Administrative Agent hereunder and under the other Loan Documents with such
powers as are specifically delegated to the Administrative Agent by the terms
hereof and thereof, together with such other powers as are reasonably incidental
thereto. The Administrative Agent: (a) shall have no duties or responsibilities
except as expressly set forth in this Agreement and the other Loan Documents,
and shall not by reason of this Agreement or any other Loan Document be a
trustee for any Lender; (b) makes no warranty or representation to any Lender
and shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or in any certificate or other document referred to or provided for
in, or received by any Lender under, this Agreement or any other Loan Document,
or for the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or any other document referred to
or provided for herein or therein or for any failure by the Borrower to perform
any of its obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Lenders,
and then only on terms and conditions satisfactory to the Administrative Agent,
and (d) shall not be responsible for any action taken or omitted to be taken by
it hereunder or under any other Loan Document or any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ such agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such sub-agents or attorneys-in-fact selected by it with reasonable care.
The provisions of this Article IX are solely for the benefit of the
Administrative Agent and the Lenders, and the Borrower shall not have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and under the other Loan Documents,
the Administrative Agent shall act solely as Administrative Agent of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower regardless
of whether a Default has occurred and is continuing. The duties of the
Administrative Agent shall be ministerial and administrative in nature, and the
Administrative Agent shall not have by reason of this Agreement or any other
Loan Document a fiduciary relationship in respect of any Lender.
SECTION 9.02 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon any certification, notice or other communication (including any thereof by
telephone, telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Administrative Agent. As to any
matters not expressly provided for by this Agreement or any other Loan Document,
the Administrative
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Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and thereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders in any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders.
SECTION 9.03 DEFAULTS. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default or an Event of Default (other than
the nonpayment of principal of or interest on the Loans) unless the
Administrative Agent has received notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice of the occurrence of a Default or an Event of Default, the Administrative
Agent shall give prompt notice thereof to the Lenders. The Administrative Agent
shall (subject to Section 11.06) take such action hereunder with respect to such
Default or Event of Default as shall be directed by the Required Lenders,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
SECTION 9.04 RIGHTS OF ADMINISTRATIVE AGENT AND ITS AFFILIATES AS A
LENDER. With respect to its Revolving Credit Commitment and its Term Loan
Commitment and the Loans made by it and any of its Affiliates, Wachovia (and any
successor acting as Administrative Agent hereunder) in its capacity as a Lender
hereunder and any Affiliate of Wachovia in its capacity as a Lender hereunder
shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as the Administrative Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Wachovia in its individual capacity and any Affiliate of the
Administrative Agent in its individual capacity. Wachovia (and any successor
acting as Administrative Agent hereunder) and any Affiliate thereof may (without
having to account therefor to any Lender) accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with the
Borrower (and any of the Borrower's Affiliates) as if it were not acting as the
Administrative Agent, and Wachovia and any Affiliate thereof may accept fees and
other consideration from the Borrower or any Subsidiary or Affiliate thereof for
services in connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Lenders.
SECTION 9.05 INDEMNIFICATION. Each Lender severally agrees to indemnify
the Administrative Agent, to the extent the Administrative Agent shall not have
been reimbursed by the Borrower, ratably in accordance with its Revolving Credit
Exposure and the outstanding principal amount of its Term Loans, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses that the Borrower is obligated to pay under Section 11.03 or any amount
the Borrower is obligated to pay under Section 11.04, but excluding, unless a
Default has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof
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or thereof or any such other documents; provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Administrative Agent. If any indemnity furnished to
the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
SECTION 9.06 CONSEQUENTIAL DAMAGES. THE ADMINISTRATIVE AGENT SHALL NOT
BE RESPONSIBLE OR LIABLE TO ANY LENDER, THE BORROWER OR ANY OTHER PERSON OR
ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED
AS A RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.07 REGISTERED HOLDER OF LOAN TREATED AS OWNER. The
Administrative Agent may deem and treat each Person in whose name a Loan is
registered on its books as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Administrative Agent and the provisions of Section 11.08(c) have
been satisfied. Any requests, authority or consent of any Person who at the time
of making such request or giving such authority or consent is the holder of any
Loan shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Loan.
SECTION 9.08 NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. The
Administrative Agent shall not be required to keep itself (or any Lender)
informed as to the performance or observance by the Borrower of this Agreement
or any of the other Loan Documents or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Borrower or
any other Person. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any other Person (or any of their
Affiliates) which may come into the possession of the Administrative Agent or
any of its Affiliates.
SECTION 9.09 FAILURE TO ACT. Except for action expressly required of
the Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 9.05 against any and all liability and expense which
may be incurred
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by the Administrative Agent by reason of taking, continuing to take, or failing
to take any such action.
SECTION 9.10 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent
may resign at any time by giving notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint
a successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
resignation, such resignation shall nonetheless become effective and (i) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and (ii) the Required Lenders shall perform the duties of
the Administrative Agent (and all payments and communications provided to be
made by, to or through the Administrative Agent shall instead be made by or to
each Lender directly) until such time as the Required Lenders appoint a
successor agent as provided for above in this paragraph. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring (or retired) Administrative Agent shall
be discharged from its duties and obligations hereunder if not already
discharged therefrom as provided above in this paragraph. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent hereunder.
SECTION 9.11 OTHER AGENTS. The Borrower and each Lender hereby
acknowledges that any Lender designated as an "Agent" on the signature pages
hereof (other than the Administrative Agent) shall not have any obligations,
duties or liabilities hereunder other than in its capacity as a Lender.
ARTICLE X.
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 10.01 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If on or prior to the first day of any Interest Period:
(a) the Administrative Agent determines that deposits in Dollars
(in the applicable amounts) are not being offered in the relevant market for
such Interest Period, or
(b) the Required Lenders advise the Administrative Agent that the
London Interbank Offered Rate as determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Lenders of funding Euro-Dollar
Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Lenders, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, the
obligations of the Lenders to make Euro-Dollar Loans specified in such notice,
or to permit continuations or conversions into Euro-Dollar Loans, shall be
suspended. Unless the Borrower notifies the Administrative Agent at least 2
Euro-
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Dollar Business Days before the date of any Borrowing of Euro-Dollar Loans for
which a Notice of Borrowing has previously been given, or continuation or
conversion into such Euro-Dollar Loans for which a Notice of Continuation or
Conversion has previously been given, that it elects not to borrow or so
continue or convert on such date, such Borrowing shall instead be made as a Base
Rate Borrowing, or such Euro-Dollar Loan shall be converted to a Base Rate Loan.
SECTION 10.02 ILLEGALITY. If, after the date hereof, the adoption of
any applicable Governmental Requirement, or any change therein or any existing
or future Governmental Requirement, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (any such agency being referred to as
an "Authority" and any such event being referred to as a "Change of Law"), or
compliance by any Lender (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Authority shall make it unlawful
or impossible for any Lender (or its Lending Office) to make, maintain or fund
its Euro-Dollar Loans and such Lender shall so notify the Administrative Agent,
the Administrative Agent shall forthwith give notice thereof to the other
Lenders and the Borrower, whereupon until such Lender notifies the Borrower and
the Administrative Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Lender to make or permit continuations
or conversions of Euro-Dollar Loans shall be suspended. Before giving any notice
to the Administrative Agent pursuant to this Section, such Lender shall
designate a different Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such Lender shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity, and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each Euro-Dollar Loan of
such Lender, together with accrued interest thereon and any amount due such
Lender pursuant to Section 10.05. Concurrently with prepaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Lender (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Lenders), and such Lender shall make such a Base Rate Loan.
SECTION 10.03 INCREASED COST AND REDUCED RETURN.
(a) If after the date hereof, a Change of Law or compliance by any
Lender (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority:
(i) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of, or
credit extended by, any Lender (or its Lending Office); or
(ii) shall impose on any Lender (or its Lending Office) or
on the London interbank market any other condition affecting its
Euro-Dollar Loans, its Notes or its obligation to make Euro-Dollar
Loans;
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and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
under this Agreement or under its Notes, if any, with respect thereto, by an
amount deemed by such Lender to be material, then, within fifteen (15) days
after demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduction.
(b) If any Lender shall have determined that after the date hereof
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office or
the parent or bank holding company of which such Lender is a Subsidiary) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any Authority, has or would have the effect of reducing the
rate of return on such Lender's (or such parent's or bank holding company's)
capital as a consequence of its obligations hereunder to a level below that
which such Lender (or such parent or bank holding company) could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's (or such parent's or bank holding company's) policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, within 15 days after demand by such Lender, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
(or such parent or bank holding company) for such reduction.
(c) Each Lender will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
Section and will designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Lender, be otherwise disadvantageous to such Lender. A
certificate of any Lender claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
(d) The provisions of this Section 10.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any calculations
required by such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 10.04 BASE RATE LOANS SUBSTITUTED FOR EURO-DOLLAR LOANS. If (i)
the obligation of any Lender to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 10.02 or (ii) any Lender has demanded compensation
under Section 10.03, and the Borrower shall, by at least five (5) Euro-Dollar
Business Days' prior notice to such Lender through the Administrative Agent,
have elected that the provisions of this Section shall apply to such Lender,
then, unless and until such Lender notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Lender as, or
permitted to be continued as or converted into Euro-Dollar Loans shall instead
be made as or converted into
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Base Rate Loans, (in all cases interest and principal on such Loans shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Lenders), and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans instead.
SECTION 10.05 COMPENSATION. Upon the request of any Lender, delivered
to the Borrower and the Administrative Agent, the Borrower shall pay to such
Lender such amount or amounts as shall compensate such Lender for any loss, cost
or expense incurred by such Lender as a result of:
(a) any payment or prepayment of a Euro-Dollar Loan on a date
other than the last day of an Interest Period for such Loan; or
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on
the date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on
the date for the Borrowing of which such Euro-Dollar Loan is a part specified in
the applicable Notice of Borrowing delivered pursuant to Section 2.02;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar Loan provided for herein over
(y) the amount of interest (as reasonably determined by such Lender) such Lender
would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading lenders in the London
interbank market (if such Loan is a Euro-Dollar Loan).
SECTION 10.06 REPLACEMENT OF LENDERS. If any Lender (a "Notice Lender")
makes demand for amounts owed under Section 10.03 (other than due to any change
in the Eurodollar Reserve Percentage), or gives notice under Section 10.02 that
it can no longer participate in Euro-Dollar Loans, then in each case the
Borrower shall have the right, if no Default or Event of Default exists, and
subject to the terms and conditions set forth in Section 11.08(c), to designate
an assignee (a "Replacement Lender") to purchase the Notice Lender's share of
outstanding Revolving Credit Loans, Term Loans and all other obligations
hereunder and to assume the Notice Lender's obligations to the Borrower under
this Agreement; provided, that, any Replacement Lender must be reasonably
acceptable to the Administrative Agent and the Required Lenders (and, in any
event, may not be an Affiliate of the Borrower). Subject to the foregoing, the
Notice Lender agrees to assign without recourse to the Replacement Lender its
share of outstanding Revolving Credit Exposure, Term Loans and its Revolving
Credit Commitment, and to delegate to the Replacement Lender its obligations to
the Borrower under this Agreement and its future obligations to the
Administrative Agent under this Agreement.
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Upon such sale and delegation by the Notice Lender and the purchase and
assumption by the Replacement Lender, and compliance with the provisions of
Section 11.08(c), the Notice Lender shall cease to be a "Lender" hereunder and
the Replacement Lender shall become a "Lender" under this Agreement; provided,
however, that any Notice Lender shall continue to be entitled to the
indemnification provisions contained elsewhere herein.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01 NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given to such party at its address or facsimile number set
forth as follows (or such other address or facsimile number as such party may
hereafter specify for such purpose by notice to each other party):
- ---------------------------------------------------------------------------------------------
Borrower/Parent/Subsidiary Guarantors Administrative Agent
- ---------------------------------------------------------------------------------------------
c/o Krispy Kreme Doughnut Corporation Wachovia Bank, National Association
370 Knollwood Street, Suite 500 One Wachovia Center
Winston-Salem, North Carolina 27103 301 South College Street
Attn: Randy Casstevens, Chief Financial Officer Charlotte, North Carolina 28288-0760
Fax: (336) 733-3791 Attn: David Hauglid
Phone: (336) 733-3730 Fax: [(704) 383-6647]
Phone: (704) 383-3544
- ---------------------------------------------------------------------------------------------
With a copy to: With a copy to each of:
- ---------------------------------------------------------------------------------------------
c/o Krispy Kreme Doughnut Corporation Wachovia Bank, National Association
370 Knollwood Street, Suite 500 100 North Main Street, NC 6713
Winston-Salem, North Carolina 27103 Winston-Salem, North Carolina 27150
Attn: Frank Murphy, General Counsel Attn: Rachel Adams
Phone: (336) 726-8877 Fax: (336) 732-4833
Phone: (336) 732-2789
Kilpatrick Stockton LLP
1001 West Fourth Street Womble, Carlyle, Sandridge & Rice, PLLC
Winston-Salem, NC 27101-2400 3500 One Wachovia Center
Attn: Peter S. Brunstetter, Esq. 301 South College Street
Charlotte, North Carolina 28202
Attn: James E. Lilly, Esq.
- ---------------------------------------------------------------------------------------------
Notices to a Lender, to it at its address (or email or facsimile number) set
forth in its Administrative Details Reply Form.
Each such notice, request or other communication shall be effective (i) if given
by facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section and the confirmation is received, (ii) if given by
mail, 72 hours after such communication is deposited in
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the mail with first class postage prepaid, addressed as aforesaid or (iii) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article II or
Article X shall not be effective until received.
SECTION 11.02 NO WAIVERS. No failure or delay by the Administrative
Agent or any Lender in exercising any right, power or privilege hereunder or
under any Note or other Loan Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 11.03 EXPENSES; DOCUMENTARY TAXES. The Borrower shall pay (i)
all out-of-pocket expenses of the Administrative Agent, including fees and
disbursements of special counsel for the Administrative Agent, in connection
with the development, preparation, negotiation, execution and administration of
this Agreement and the other Loan Documents, the syndication of the Loans, any
waiver or consent hereunder or thereunder or any amendment hereof or thereof or
any Default or alleged Default hereunder or thereunder and (ii) if a Default
occurs, all out-of-pocket expenses incurred by the Administrative Agent and the
Lenders, including fees and disbursements of counsel, in connection with such
Default and collection and other enforcement proceedings resulting therefrom,
including out-of-pocket expenses incurred in enforcing this Agreement and the
other Loan Documents. The Borrower shall indemnify the Administrative Agent and
each Lender against any transfer taxes, documentary taxes, assessments or
charges made by any Authority by reason of the execution and delivery of this
Agreement or the other Loan Documents.
SECTION 11.04 INDEMNIFICATION. The Borrower shall indemnify the
Administrative Agent, the Lenders and each Affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages to which
any of them may become subject, insofar as such losses, liabilities, claims or
damages arise out of or result from any transaction contemplated by this
Agreement or any other Loan Document or any actual or proposed use by the
Borrower of the proceeds of any extension of credit by any Lender hereunder or
breach by the Borrower of this Agreement or any other Loan Document or from any
investigation, litigation (including, without limitation, any actions taken by
the Administrative Agent or any of the Lenders to enforce this Agreement or any
of the other Loan Documents) or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Administrative Agent and each Lender, and each
Affiliate thereof and their respective directors, officers, employees and
Administrative Agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or
expenses which are determined by a final, non-appealable judgment of a court to
have been incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified. Such indemnity shall be effective as to any
investigation, litigation or proceeding brought by the Borrower or any
Subsidiary or Affiliate thereof, or any of their respective directors,
shareholders, or creditors, and whether or not any transaction contemplated by
this Agreement or any other Loan Document is consummated but only if, in such
investigation, litigation or proceeding brought by the Borrower or a Subsidiary
or Affiliate thereof, the Administrative Agent, the
- 66 -
Lenders and each Affiliate thereof or person(s) indemnified pursuant to this
paragraph is the prevailing party(ies) therein. Without in any way limiting
Section 9.05, the Borrower agrees, on its own behalf and on behalf of each of
its Subsidiaries and Affiliates, not to assert any claim against the
Administrative Agent, any Lender, any of their respective Affiliates, or any of
their respective directors, officers, employees, attorneys, agents and advisors,
on any theory of liability, for special, indirect, consequential or punitive
damages arising out of otherwise relating to this Agreement or any of the other
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of any of the Loans.
SECTION 11.05 SETOFF; SHARING OF SETOFFS; APPLICATION OF PAYMENTS;
SUBORDINATION.
(a) The Borrower hereby grants to the Administrative Agent and
each Lender and to the Swing Lender as to the Swing Loan Note, a lien for all
indebtedness and obligations owing to them from the Borrower upon all deposits
or deposit accounts, of any kind, or any interest in any deposits or deposit
accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned
to the Administrative Agent or any such Lender or otherwise in the possession or
control of the Administrative Agent or any such Lender for any purpose for the
account or benefit of the Borrower and including any balance of any deposit
account or of any credit of the Borrower with the Administrative Agent or any
such Lender, whether now existing or hereafter established hereby, authorizing
the Administrative Agent and each Lender at any time or times with or without
prior notice to apply such balances or any part thereof to such of the
indebtedness and obligations owing by the Borrower to the Lenders and/or the
Administrative Agent then past due and in such amounts as they may elect, and
whether or not the collateral, if any, or the responsibility of other Persons
primarily, secondarily or otherwise liable may be deemed adequate. For the
purposes of this paragraph, all remittances and property shall be deemed to be
in the possession of the Administrative Agent or any such Lender as soon as the
same may be put in transit to it by mail or carrier or by other bailee.
(b) Each Lender agrees that if it shall, by exercising any right
of setoff or counterclaim or resort to collateral security or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest owing
with respect to the Loans held by it which is greater than the proportion
received by any other Lender in respect of the aggregate amount of all principal
and interest owing with respect to the Loans held by such other Lender, the
Lender receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Lenders owing to such other
Lenders, and such other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to the Loans held by
the Lenders owing to such other Lenders shall be shared by the Lenders pro rata;
provided that (i) nothing in this Section shall impair the right of any Lender
to exercise any right of setoff or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under this Agreement and the other Loan Documents,
and (ii) if all or any portion of such payment received by the purchasing Lender
is thereafter recovered from such purchasing Lender, such purchase from each
other Lender shall be rescinded and such other Lender shall repay to the
purchasing Lender the purchase price of such participation to the extent of such
recovery together with an amount equal to such other Lender's ratable share
(according to the proportion of (x) the amount of such other Lender's required
repayment to (y) the total amount so recovered from the purchasing
- 67 -
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect of the total amount so recovered. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation, whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of setoff or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
(c) Prior to the occurrence of a Default, the Administrative Agent
shall apply all payments and prepayments in respect of the obligations of any
Obligor under this Agreement or any other Loan Document in such order as shall
be specified by Section 2.10 or 2.11, as applicable. After the occurrence of a
Default, the Administrative Agent shall, unless otherwise specified at the
direction of the Required Lenders which direction shall be consistent with the
last two sentences of this paragraph (c), apply all payments and prepayments in
respect of any obligations of the Obligors under this Agreement or any other
Loan Document and all proceeds of collateral, if any, in the following order:
(i) first, to pay interest on and then principal of any
portion of the Loans which the Administrative Agent may have advanced
on behalf of any Lender for which the Administrative Agent has not then
been reimbursed by such Lender or the Borrower;
(ii) second, to pay obligations of the Borrower in respect
of any fees, expenses, reimbursements or indemnities then due to the
Administrative Agent;
(iii) third, to pay obligations of the Borrower in respect
of any fees, expenses, reimbursements or indemnities then due to the
Lenders and the Issuing Lender;
(iv) fourth, to pay interest due in respect of Swing
Loans;
(v) fifth, to pay interest due in respect of Loans (other
than Swing Loans) and Letter of Credit Obligations;
(vi) sixth, to the ratable payment or prepayment of
principal outstanding on Swing Loans;
(vii) seventh, to the ratable payment of principal
outstanding on the Term Loans, the Revolving Credit Loans, the
Reimbursement Obligations and any obligations of the Borrower under or
in connection with Swap Agreements with the Administrative Agent, any
Lender or any Affiliate of the Administrative Agent or any Lender;
(viii) eighth, to provide cash collateral in an amount equal
to 105% of the undrawn amount available under outstanding Letters of
Credit pursuant to Section 8.01; and
(ix) ninth, to the ratable payment of all other
obligations of the Obligors under this Agreement or any other Loan
Document.
Unless otherwise designated (which designation shall only be applicable prior to
the occurrence of a Default) by the Borrower, all principal payments in respect
of Loans (other than Swing
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Loans) shall be applied first, to repay outstanding Base Rate Loans, and then to
repay outstanding Euro-Dollar Loans with those Loans which have earlier expiring
Interest Periods being repaid prior to those which have later expiring Interest
Periods. The order of priority set forth in clauses (i) and (ii) of this
paragraph (c) and the related provisions of this Agreement are set forth solely
to determine the rights and priorities of the Administrative Agent and may be
changed only with the prior written consent of the Administrative Agent. The
order of priority set forth in clauses (iii) through (viii) of this paragraph
(c) may at any time and from time to time be changed by the Required Lenders
without necessity of notice to or consent of or approval by the Borrower or any
other Obligor, or any other Person; provided, that the order of priority of
payments in respect of (A) Swing Loans may be changed only with the prior
written consent of the Swing Lender and (B) fees payable to the Issuing Lender
may be changed only with the prior written consent of the Issuing Lender.
(d) After the occurrence of a Default, the Borrower hereby agrees
that any Debt of any Guarantor now or hereafter held by the Borrower is hereby
subordinated in right of payment to the prior payment in full of the
Obligations. If any amount shall erroneously be paid to the Borrower on account
of any such Debt of any Guarantor, such amount shall be held in trust for the
benefit of the Lenders and shall forthwith be paid to the Administrative Agent
to be credited against payment of the Obligations, whether matured or unmatured,
in accordance with the terms of this Agreement.
SECTION 11.06 AMENDMENTS AND WAIVERS. Any provision of this Agreement,
the Notes or any other Loan Documents may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the Borrower and the
Required Lenders (and, if the rights or duties of the Administrative Agent are
affected thereby, by the Administrative Agent); provided that, no such amendment
or waiver shall, unless signed by each Lender directly affected thereby (i)
increase the Commitment of any Lender, (ii) reduce the principal of or the rate
of interest on any Loan or any fees (other than fees payable to the
Administrative Agent) hereunder, (iii) extend the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv) reduce the
amount of principal, interest or fees due on any date fixed for the payment
thereof, (v) change the definition of Required Lenders, (vi) change the pro rata
application among the Lenders of any payments received for the account of the
Lenders as required by Section 2.12(a), (vii) release or substitute all or any
substantial part of the collateral (if any) held as security for the Loans,
(viii) release any Guarantee given to support payment of the Loans, (ix) modify
this Section 11.06, or (x) change Section 11.08(b) without the consent of each
Lender that has assigned all or a portion of its Revolving Credit Commitment or
Loans to one or more Related Funds.
SECTION 11.07 INDEPENDENCE OF COVENANTS. All covenants under this
Agreement and the other Loan Documents shall be given independent effect so that
if a particular action or condition is not permitted by any such covenant, the
fact that it would be permitted by an exception to, or would be otherwise
allowed by, another covenant shall not avoid the occurrence of a Default if such
action is taken or such condition exists.
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SECTION 11.08 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not assign or otherwise
transfer any of their respective rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void) and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except
(i) to an Eligible Assignee in accordance with the provisions of paragraph (b)
of this Section, (ii) by way of participation in accordance with the provisions
of paragraph (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of paragraph (f) of this Section.
Nothing in this Agreement, expressed, or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly contemplated hereby, the
Affiliates of each of the Administrative Agent and the Lenders or any Related
Fund) any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Any Lender may assign to one or more Eligible Assignees (each
an "Assignee") all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment and the
Loans at the time owing to it); provided that (i) except in the case of an
assignment of the entire remaining amount of the assigning Lender's Revolving
Credit Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or a Related Fund with
respect to a Lender, the aggregate amount of the Revolving Credit Commitment
(which for this purpose includes Loans outstanding thereunder) or, if the
applicable Revolving Credit Commitment is not then in effect, the principal
outstanding balance of the Loan of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent or, if "Trade Date"
is specified in the Assignment and Assumption, as of the Trade Date) shall not
be less than $5,000,000, in the case of any assignment in respect of a revolving
facility, or $1,000,000, in the case of any assignment in respect of a term
facility, unless each of the Administrative Agent and, so long as no Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld or delayed), (ii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement with respect to the Loan or the
Revolving Credit Commitment assigned, except that this clause (ii) shall not
apply to rights in respect of outstanding Term Loans or prohibit any Lender from
assigning all or a portion of its rights and obligations with respect to its
Term Loans on a non-pro rata basis with respect to its Revolving Credit
Exposure, and (iii) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500. Subject to acceptance and recording
thereof by the Administrative Agent pursuant to paragraph (c) of this Section,
from and after the effective date specified in each Assignment and Acceptance,
the Eligible Assignee thereunder (if not already a Lender) shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under the Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and
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obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.12(c), 10.03,
10.05, 11.03, 11.04 and 11.05). Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this paragraph
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (d) of
this Section.
(c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Charlotte, North
Carolina, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Revolving Credit Commitment of, and principal amount of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Any Lender may, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to one or more banks
or other entities (a "Participant") in all or a portion of such Lender's rights
and/or obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment and/or other Loans owing to it); provided that (i)
such Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the proviso in Section
11.06 that affects such Participant. Subject to paragraph (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.12(c), 10.03, 10.05 and 11.04 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 11.05(a) as though it were a Lender,
provided such Participant agrees to be subject to Section 11.05(b) as though it
were a Lender.
(e) A Participant shall not be entitled to receive any greater
payment under Sections 2.12(c) and 10.03 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that is not organized
under the laws of the United States or any state thereof shall not be entitled
to the benefits of Section 2.12(c) unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.12(c) as though it were a
Lender.
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(f) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(g) Subject to the provisions of Section 11.09, the Borrower
authorizes each Lender to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee which has
executed on LSTA Confidentiality Agreement any and all financial information in
such Lender's possession concerning the Borrower which has been delivered to
such Lender by the Borrower pursuant to this Agreement or which has been
delivered to such Lender by the Borrower in connection with such Lender's credit
evaluation prior to entering into this Agreement.
(h) Notwithstanding anything to the contrary contained herein, if
at any time Wachovia assigns all of its Revolving Credit Commitment and Loans
pursuant to subsection (b) above, Wachovia may, upon thirty (30) days' notice to
the Borrower and the Lenders, resign as Issuing Lender. In the event of any such
resignation as Issuing Lender, the Borrower shall be entitled to appoint from
among the Lenders a successor Issuing Lender hereunder; provided, however, that
no failure by the Borrower to appoint any such successor shall affect the
resignation of Wachovia as Issuing Lender hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as Issuing
Lender and all Letter of Credit Obligations with respect thereto (including the
right to require the Lenders to make Base Rate Loans or fund risk participations
in unrepaid amounts pursuant to Section 3.06).
SECTION 11.09 CONFIDENTIALITY. Each Lender agrees to exercise
commercially reasonable efforts to keep any information delivered or made
available by any Obligor to it which is clearly indicated to be confidential
information ("Information"), confidential from anyone other than persons
employed or retained by such Lender who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans; provided that
nothing herein shall prevent any Lender from disclosing such Information (i) to
any other Lender or to an Affiliate of such Lender, (ii) upon the order of any
court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Lender, (iv) to the
extent such Information (A) has been publicly disclosed other than by breach of
this paragraph or (B) become available to the Administrative Agent or any Lender
on a non-confidential basis from a source other than an Obligor, (v) to the
extent reasonably required in connection with any litigation to which the
Administrative Agent, any Lender or their respective Affiliates may be a party,
(vi) to the extent reasonably required in connection with the exercise of any
remedy hereunder, (vii) to such Lender's legal counsel and independent auditors,
and (viii) to any actual or proposed Participant, Assignee or other Transferee
of all or part of its rights hereunder in accordance with Section 11.08(g);
provided that should disclosure of any such Information be required by virtue of
clause (ii) of the immediately preceding sentence, to the extent permitted by
law, any relevant Lender shall promptly notify the Borrower of same so as to
allow the Borrower to seek a protective order or to take any other appropriate
action; provided, further, that, no Lender shall be required to delay compliance
with any directive to disclose any such Information so as to allow the Borrower
to effect any such action.
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Notwithstanding anything herein to the contrary, "Information" shall not
include, and the Borrower, the Administrative Agent and each Lender (and each
employee, representative or other agent of the Borrower, the Administrative
Agent and each Lender) may disclose to any and all persons, without limitation
of any kind, any information with respect to U.S. federal income tax treatment
and U.S. federal income tax structure of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are provided to the Borrower, the Administrative Agent or such Lender relating
to such tax treatment and tax structure.
SECTION 11.10 REPRESENTATION BY LENDERS. Each Lender hereby represents
that it is a commercial lender or financial institution which makes loans in the
ordinary course of its business and that it will make its Loans hereunder for
its own account in the ordinary course of such business; provided that, subject
to Section 11.08, the disposition of the Loans held by that Lender shall at all
times be within its exclusive control.
SECTION 11.11 OBLIGATIONS SEVERAL. The obligations of each Lender
hereunder are several, and no Lender shall be responsible for the obligations or
commitment of any other Lender hereunder. Nothing contained in this Agreement
and no action taken by the Lenders pursuant hereto shall be deemed to constitute
the Lenders to be a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to each Lender shall
be a separate and independent debt, and each Lender shall be entitled to protect
and enforce its rights arising out of this Agreement or any other Loan Document
and it shall not be necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
SECTION 11.12 GOVERNING LAW. This Agreement and each Note shall be
construed in accordance with and governed by the law of the State of North
Carolina (without giving effect to its conflict of laws rules).
SECTION 11.13 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement, the Notes or any of the other Loan Documents should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
SECTION 11.14 INTEREST. In no event shall the amount of interest, and
all charges, amounts or fees contracted for, charged or collected pursuant to
this Agreement, any Notes or the other Loan Documents and deemed to be interest
under applicable law (collectively, "Interest") exceed the highest rate of
interest allowed by applicable law (the "Maximum Rate"), and in the event any
such payment is inadvertently received by any Lender, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the Borrower shall
notify such Lender in writing that it elects to have the Excess returned
forthwith. It is the express intent hereof that the Borrower not pay and the
Lenders not receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may legally be paid by the Borrower under applicable
law. The right to accelerate maturity of any of the Loans does not include the
right to accelerate any interest that has not otherwise accrued on the date of
such acceleration, and the Administrative Agent and the Lenders do not intend to
collect any unearned interest in the event
- 73 -
of any such acceleration. All monies paid to the Administrative Agent or the
Lenders hereunder or under any of the Notes or the other Loan Documents, whether
at maturity or by prepayment, shall be subject to rebate of unearned interest as
and to the extent required by applicable law. By the execution of this
Agreement, the Borrower covenants, to the fullest extent permitted by law, that
(i) the credit or return of any Excess shall constitute the acceptance by the
Borrower of such Excess, and (ii) the Borrower shall not seek or pursue any
other remedy, legal or equitable, against the Administrative Agent or any
Lender, based in whole or in part upon contracting for charging or receiving any
Interest in excess of the Maximum Rate. For the purpose of determining whether
or not any Excess has been contracted for, charged or received by the
Administrative Agent or any Lender, all interest at any time contracted for,
charged or received from the Borrower in connection with this Agreement, any
Notes or any of the other Loan Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Revolving Credit Commitments. The Borrower, the
Administrative Agent and each Lender shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee or premium rather than as Interest and (ii) exclude voluntary prepayments
and the effects thereof. The provisions of this Section shall be deemed to be
incorporated into each Note and each of the other Loan Documents (whether or not
any provision of this Section is referred to therein). All such Loan Documents
and communications relating to any Interest owed by the Borrower and all figures
set forth therein shall, for the sole purpose of computing the extent of
obligations hereunder and under the Notes and the other Loan Documents be
automatically recomputed by the Borrower, and by any court considering the same,
to give effect to the adjustments or credits required by this Section.
SECTION 11.15 INTERPRETATION. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any Governmental Authority by reason of such
party having or being deemed to have structured or dictated such provision.
SECTION 11.16 ARBITRATION; WAIVER OF JURY TRIAL.
(a) Arbitration.
(i) Upon demand of any party hereto, whether made before
or after institution of any judicial proceeding, any claim or
controversy arising out of or relating to this Agreement or any other
document executed in connection herewith between parties hereto (a
"Dispute") shall be resolved by binding arbitration conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the
"AAA") and the Federal Arbitration Act. Disputes may include, without
limitation, tort claims, counterclaims, a dispute as to whether a
matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon
the award may be entered in any court having jurisdiction.
Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to Swap Agreements.
(ii) All arbitration hearings shall be conducted in
Charlotte, North Carolina. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall
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conclude within 120 days of demand for arbitration. These time
limitations may not be extended unless a party shows cause for
extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000. Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable
Federal or state substantive law except as provided herein.
(iii) Notwithstanding the preceding binding arbitration
provisions, the parties agree to preserve, without diminution, certain
remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in
any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to
foreclose against any real or personal property or other security by
exercising a power of sale or under applicable law by judicial
foreclosure including a proceeding to confirm the sale; (ii) all rights
of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment
of receiver and filing an involuntary bankruptcy proceeding; and (iv)
when applicable, a judgment by confession of judgment. Any claim or
controversy with regard to any party's entitlement to such remedies is
a Dispute.
(iv) The parties agree that they shall not have a remedy
of punitive or exemplary damages against other parties in any Dispute
and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
(b) Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING
TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO
JURY TRIAL WITH REGARD TO A DISPUTE.
SECTION 11.17 COUNTERPARTS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 11.18 SOURCE OF FUNDS - ERISA. Each of the Lenders hereby
severally (and not jointly) represents to the Borrower that no part of the funds
to be used by such Lender to fund the Loans hereunder from time to time
constitutes (i) assets allocated to any separate account maintained by such
Lender in which any employee benefit plan (or its related trust) has any
interest nor (ii) any other assets of any employee benefit plan. As used in this
Section, the terms "employee benefit plan" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, under seal, by their respective authorized officers as of the day
and year first above written.
BORROWER:
KRISPY KREME DOUGHNUT CORPORATION, a
North Carolina corporation
By: /s/ Randy S. Casstevens (SEAL)
----------------------------------
Name: Randy S. Casstevens
Title: Chief Financial Officer
ADMINISTRATIVE AGENT:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent, an Issuing
Lender and as a Lender
By: /s/ Greg H. Jones (SEAL)
----------------------------------
Name: Greg H. Jones
Title: Vice President
LENDERS:
BRANCH BANKING & TRUST COMPANY, as
Syndication Agent and as a Lender
By: /s/ Jennifer Cudd (SEAL)
----------------------------------
Name: Jennifer Cudd
Title: Vice President
BANK OF AMERICA, N.A., as
Co-Documentation Agent
By: /s/ J. Thomas Johnson, Jr. (SEAL)
----------------------------------
Name: J. Thomas Johnson, Jr.
Title: Senior Vice President
ROYAL BANK OF CANADA, as Co-Documentation
Agent
By: /s/ Gordon MacArthur (SEAL)
----------------------------------
Name: Gordon MacArthur
Title: Authorized Signatory
CIBC INC.
By: /s/ Gerald Girardi (SEAL)
----------------------------------
Name: Gerald Girardi
Title: Executive Director
CIBC World Markets Corp, AG Agent
THE BANK OF NOVA SCOTIA
By: /s/ Chris J. Allen (SEAL)
----------------------------------
Name: Chris J. Allen
Title: Managing Director & Office Head
EXHIBIT A-1
REVOLVING CREDIT LOAN NOTE
Charlotte, North Carolina
$___________ October 31, 2003
For value received, KRISPY KREME DOUGHNUT CORPORATION, a North
Carolina corporation (the "Borrower"), promises to pay to the order of
___________________________ (the "Lender"), for the account of its Lending
Office, the principal sum of _______________________________________ and No/100
Dollars ($______________), or such lesser amount as shall equal the unpaid
principal amount of each Revolving Credit Loan made by the Lender to the
Borrower pursuant to the Credit Agreement referred to below, on the dates and in
the amounts provided in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of this Revolving Credit Loan Note on
the dates and at the rate or rates provided for in the Credit Agreement.
Interest on any overdue principal of and, to the extent permitted by law,
overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Wachovia Bank,
National Association, 301 South College Street, Charlotte, North Carolina
28288-0760, or such other address as may be specified from time to time pursuant
to the Credit Agreement.
All Revolving Credit Loans made by the Lender, the respective
maturities thereof, the interest rates from time to time applicable thereto and
all repayments of the principal thereof shall be recorded by the Lender and,
prior to any transfer hereof, endorsed by the Lender on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Lender to make, or any error of the
Lender in making, any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This Revolving Credit Loan Note is one of the Revolving Credit
Loan Notes referred to in the Credit Agreement dated as of October 31, 2003,
among the Borrower, the Lenders party thereto and their successors and assigns
and Wachovia Bank, National Association, as Administrative Agent (as the same
may be amended or modified from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment and
the repayment hereof and the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided for
in the Credit Agreement.
The Borrower agrees, in the event that this Revolving Credit
Loan Note or any portion hereof is collected by law or through an attorney at
law, to pay all reasonable costs of collection, including, without limitation,
reasonable attorneys' fees.
A-1-1
IN WITNESS WHEREOF, the Borrower has caused this Revolving
Credit Loan Note to be duly executed under seal, by its duly authorized officer
as of the day and year first above written.
KRISPY KREME DOUGHNUT CORPORATION
By: _____________________________________ (SEAL)
Title: _________________________________
A-1-2
Revolving Credit Loan Note (cont'd)
Amount of
Type of Interest Amount of Principal Maturity Notation
Date Loan(1) Rate Loan Repaid Date Made By
- ---- ------- -------- --------- --------- -------- --------
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
- ----------------------------
(1) i.e., a Base Rate, or Euro-Dollar Loan.
A-1-3
EXHIBIT A-2
SWING LOAN NOTE
Charlotte, North Carolina
October 31, 2003
For value received, KRISPY KREME DOUGHNUT CORPORATION, a North Carolina
corporation (the "Borrower"), promises to pay to the order of WACHOVIA BANK,
NATIONAL ASSOCIATION (the "Swing Lender"), for the account of its Lending
Office, the principal sum of Ten Million and No/100 Dollars ($10,000,000), or
such lesser amount as shall equal the unpaid principal amount of each Swing Loan
made by the Swing Lender to the Borrower pursuant to the Credit Agreement
referred to below, on the dates and in the amounts provided in the Credit
Agreement. The Borrower promises to pay interest on the unpaid principal amount
of this Swing Loan Note at the rate provided for Base Rate Loans on the dates
provided for in the Credit Agreement. Interest on any overdue principal of and,
to the extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Wachovia Bank, National Association, 301 South College Street,
Charlotte, North Carolina 28288-0760 or such other address as may be specified
from time to time pursuant to the Credit Agreement.
All Swing Loans made by the Swing Lender, the respective maturities
thereof, and all repayments of the principal thereof shall be recorded by the
Swing Lender and, prior to any transfer hereof, endorsed by the Swing Lender on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Swing Lender to make
any such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Credit Agreement.
This Swing Loan Note is the Swing Loan Note referred to in the Credit
Agreement dated as of even date herewith among the Borrower, the Lenders party
thereto and Wachovia Bank, National Association, as Administrative Agent (as the
same may be amended and modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional and
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof.
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
The Borrower agrees, in the event that this Swing Loan Note or any
portion hereof is collected by law or through an attorney at law, to pay all
reasonable costs of collection, including, without limitation, reasonable
attorneys' fees.
A-2-1
IN WITNESS WHEREOF, the Borrower has caused this Swing Loan Note to be
duly executed, under seal, by its duly authorized officer as of the day and year
first above written.
KRISPY KREME DOUGHNUT CORPORATION
By: __________________________________________
Title: ___________________________________
A-2-2
Swing Loan Note (continued)
LOANS AND PAYMENTS OF PRINCIPAL
AMOUNT OF
PRINCIPAL NOTATION MADE
DATE AMOUNT OF LOAN REPAID MATURITY DATE BY
- ---- -------------- --------- ------------- -------------
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
A-2-3
EXHIBIT A-3
TERM LOAN NOTE
Charlotte, North Carolina
October 31, 2003
For value received, KRISPY KREME DOUGHNUT CORPORATION, a North
Carolina corporation (the "Borrower"), promises to pay to the order of
___________________________ (the "Lender"), for the account of its Lending
Office, the principal sum of _______________________________________ and No/100
Dollars ($______________), or such lesser amount as shall equal the unpaid
principal amount of the Term Loan made by the Lender to the Borrower pursuant to
the Credit Agreement referred to below, on the dates and in the amounts provided
in the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of this Term Loan Note on the dates and at the rate or rates
provided for in the Credit Agreement. Interest on any overdue principal of and,
to the extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Wachovia Bank, National Association, 301 South College Street,
Charlotte, North Carolina 28288-0760, or such other address as may be specified
from time to time pursuant to the Credit Agreement.
The Term Loan made by the Lender, the maturity thereof, the
interest rate from time to time applicable thereto and all repayments of the
principal thereof shall be recorded by the Lender and, prior to any transfer
hereof, endorsed by the Lender on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided that
the failure of the Lender to make, or any error of the Lender in making, any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This Term Loan Note is one of the Term Loan Notes referred to
in the Credit Agreement dated as of October 31, 2003, among the Borrower, the
Lenders party thereto and their successors and assigns and Wachovia Bank,
National Association, as Administrative Agent (as the same may be amended or
modified from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment and the repayment hereof and
the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided for
in the Credit Agreement.
The Borrower agrees, in the event that this Term Loan Note or
any portion hereof is collected by law or through an attorney at law, to pay all
reasonable costs of collection, including, without limitation, reasonable
attorneys' fees.
A-3-1
IN WITNESS WHEREOF, the Borrower has caused this Term Loan
Note to be duly executed under seal, by its duly authorized officer as of the
day and year first above written.
KRISPY KREME DOUGHNUT CORPORATION
By: __________________________________ (SEAL)
Title: ___________________________
A-3-2
Term Loan Note (cont'd)
Amount of
Type of Interest Amount of Principal Maturity Notation
Date Loan(2) Rate Loan Repaid Date Made By
- ---- ------- -------- --------- --------- -------- --------
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
- ------------------
(2) i.e., a Base Rate, or Euro-Dollar Loan.
A-3-3
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
October 31, 2003
To the Lenders and the Administrative Agent, Referred to Below
c/o Wachovia Bank, National Association, as Administrative Agent
301 South College Street
Charlotte, North Carolina 28288-0760
Attn: David Haugild
Dear Sirs:
We have acted as counsel for (i) Krispy Creme Doughnut Corporation, a
North Carolina corporation (the "Borrower") in connection with the Credit
Agreement dated as of October 31, 2003 (the "Credit Agreement"), among the
Borrower, the Lenders party thereto and Wachovia Bank, National Association, as
Administrative Agent; (ii) Krispy Kreme Doughnuts, Inc., a North Carolina
corporation (the "Parent") in connection with the Parent Guaranty Agreement
dated as of October 31, 2003 (the "Parent Guaranty") made by the Parent for the
benefit of the Administrative Agent and the Lenders; (iii) Montana Mills Bread
Co., Inc., a Delaware corporation (the "Affiliate Guarantor"), in connection
with the Affiliate Guaranty dated as of October 31, 2003 (the "Affiliate
Guaranty") made by the Affiliate Guarantor for the benefit of the Administrative
Agent and the Lenders; and (iv) Freedom Rings, LLC, a __________ limited
liability company, and Golden Gate Doughnuts, LLC, a _________ limited liability
company (collectively, the "Subsidiary Guarantors"; the Borrower, the Parent,
and the Affiliate Guarantor and referred to herein in, collectively with the
Subsidiary Guarantors, as the "Obligors") in connection with the Subsidiary
Guaranty Agreement dated as of October 31, 2003 (the "Subsidiary Guaranty") made
by the Subsidiary Guarantors for the benefit of the Administrative Agent and the
Lenders. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion. We have assumed for purposes of our opinions set forth
below that the execution and delivery of the Credit Agreement by each Lender and
by the Administrative Agent have been duly authorized by each Lender and by the
Administrative Agent.
Upon the basis of the foregoing, we are of the opinion that:
1. Each of the Obligors is a [corporation] [limited liability
company] duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has all [corporate] powers required to
carry on its business as now conducted.
B-1
2. The execution, delivery and performance by each Obligor of its
obligations under the Loan Documents to which it is a party (i) are within such
Obligor's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of, or filing with,
any governmental body, agency or official, (iv) do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of such Obligor or of any agreement,
judgment, injunction, order, decree or other instrument which to our knowledge
is binding upon such Obligor and (v) to our knowledge, except as provided in the
Credit Agreement, do not result in the creation or imposition of any Lien on any
asset of such Obligor or any of its Subsidiaries.
3. Each Loan Document constitutes a valid and binding agreement
of each Obligor party thereto, enforceable against such Obligor in accordance
with its terms, except as such enforceability may be limited by: (i) bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
4. To our knowledge, there is no action, suit or proceeding
pending, or threatened, against or affecting any Obligor or any Obligor's
Subsidiary before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, consolidated financial position
or consolidated results of operations of the Parent and its Consolidated
Subsidiaries, considered as a whole, or which in any manner questions the
validity or enforceability of any Loan Document.
5. Each of the Obligors' Subsidiaries is a [corporation] [limited
liability company] duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and has all [corporate] powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
6. Neither the Parent nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
7. Neither the Parent nor any of its Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
This opinion is limited to the laws of the State of North Carolina, the
corporate laws of the State of Delaware, and the laws of the United States of
America that are, in our experience, normally applicable to the transactions of
the type contemplated in the Loan Documents, and we are expressing no opinion as
to the effect of the laws of any other jurisdiction.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you, any Assignee, Participant
or other Transferee under the Credit Agreement, and [______________________]
without our prior written consent.
Very truly yours,
B-2
EXHIBIT C
NOTICE OF BORROWING
_________________ ____, 20___
Wachovia Bank, National Association, as Administrative Agent
301 South College Street
Charlotte, North Carolina 28288-0760
Attention: Syndications Group
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of October 31, 2003, by and
among Krispy Kreme Doughnut Corporation, the Lenders from time
to time parties thereto, and Wachovia Bank, National
Association, as Administrative Agent.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Credit Agreement.
The Borrower hereby requests a [Revolving Credit Loan] [Swing Loan]
[Term Loan] in the aggregate principal amount of $__________ to be made on
______________, 20____, and for interest to accrue thereon at the rate
established by the Credit Agreement for [Euro-Dollar Loans] [Base Rate Loans].
[The duration of the Interest Period with respect thereto shall be [1 month] [2
months] [3 months] [6 months]].
The Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer this _________ day of ______________,
20____.
KRISPY KREME DOUGHNUT CORPORATION
By: _________________________________________
Title:
EXHIBIT D
NOTICE OF CONTINUATION OR CONVERSION
_____________________, 20____
Wachovia Bank, National Association, as Administrative Agent
301 South College Street
Charlotte, North Carolina 28288-0760
Attention: Syndications Group
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of October 31, 2003, by and
among Krispy Kreme Doughnut Corporation, the Lenders from time
to time parties thereto, and Wachovia Bank, National
Association, as Administrative Agent.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Continuation or Conversion is delivered to you pursuant
to Section 2.03 of the Credit Agreement.
With respect to the [Base Rate Loans] [Euro-Dollar Loans] in the
aggregate amount of $___________ [which has an Interest Period ending on
_____________], the Borrower hereby requests that such loan be [converted to a]
[Base Rate Loan] [Euro-Dollar Loan] [continued as a] [Euro-Dollar Loan] in the
aggregate principal amount of $__________ to be made on such date, and for
interest to accrue thereon at the rate established by the Credit Agreement for
[Base Rate Loans] [Euro-Dollar Loans]. [The duration of the Interest Period with
respect thereto shall be [1 month] [2 months] [3 months] [6 months]].
The Borrower has caused this Notice of Continuation or Conversion to be
executed and delivered by its duly authorized officer this ______ day of
____________, 20___.
KRISPY KREME DOUGHNUT CORPORATION
By: _________________________________________
Title:
EXHIBIT E
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of October 31, 2003
(as modified and supplemented and in effect from time to time, the "Credit
Agreement") by and among Krispy Kreme Doughnut Corporation, the Lenders from
time to time parties thereto, and Wachovia Bank, National Association, as
Administrative Agent. Capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement; all amounts shown herein, unless
expressly set forth to the contrary, shall be without duplication.
Pursuant to Section 6.01(c) of the Credit Agreement, _____________, the
duly authorized __________ of the Parent, hereby certifies to the Administrative
Agent and the Lenders that (i) the information contained in the Compliance Check
List attached hereto is true, accurate and complete as of _________, _____, (ii)
to the best of our knowledge, no Default is in existence on and as of the date
hereof, and (iii) the Leverage Ratio as of the most recent Performance Pricing
Determination Date is ___ to 1.0 and the Applicable Margin in effect as a result
thereof is ___% for Euro-Dollar Loans and ____% for Base Rate Loans.
KRISPY KREME DOUGHNUTS, INC.
By: _________________________________________
Title:
COMPLIANCE CHECKLIST
1. Consolidations, Mergers and Sales of Assets (Section 7.02)
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The Borrower will not, and will not
permit any Subsidiary to, consolidate or merge with or into, or sell, lease or
otherwise transfer all or any substantial part of its assets to, any other
Person, or discontinue or eliminate any business line or segment, provided that
(i) the Borrower may merge with another Person if (A) such Person is organized
under the laws of the United States of America or one of its states, (B) the
Borrower is the Person surviving such merger and (C) immediately after giving
effect to such merger, no Default shall have occurred and be continuing, (ii)
Subsidiaries of the Borrower may merge with one another, provided that if either
party to the merger is a Subsidiary Guarantor, the surviving entity must be a
Subsidiary Guarantor, (iii) any Subsidiary may merge with another Person if such
merger is a Permitted Acquisition and the Subsidiary is the Person surviving
such merger, and (iv) the foregoing limitation on the sale, lease or other
transfer of assets and on the discontinuation or elimination of a business line
or segment shall not prohibit, during any Fiscal Quarter, a transfer of assets
or the discontinuance or elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the aggregate assets
to be so transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued, either (x)
constituted more than 10% of Consolidated Total Assets at the end of the most
recent Fiscal Year immediately preceding such Fiscal Quarter, or (y) contributed
more than 10% of Consolidated Operating Profits during such Fiscal Quarter and
the three (3) Fiscal Quarters immediately preceding such Fiscal Quarter.
THERE WERE NO CONSOLIDATIONS, MERGERS OR SALES OF ASSETS DURING THE QUARTER
ENDED ___________, 200___, THAT WERE NOT PERMITTED PURSUANT TO SECTION 7.02,
EXCEPT: ______________________________________________________.
2. Restricted Payments (Section 7.06)
RESTRICTED PAYMENTS. The Borrower will not, and will not permit the Parent to,
declare or make any Restricted Payments; provided, however, that the Parent may:
(a) repurchase, redeem or otherwise retire for value warrants or
common stock of the Parent pursuant to a warrant or stock repurchase plan duly
approved by the Board of Directors of the Parent; and
(b) during any Fiscal Year, the Parent may declare and pay
dividends on its common stock in an amount not to exceed 50% of Consolidated Net
Income for the immediately preceding Fiscal Year;
provided, further, that after giving effect to the payment of any such
Restricted Payment, no Default shall be in existence or be created thereby.
PLEASE SEE THE ATTACHED SCHEDULE "RESTRICTED PAYMENTS (SECTION 7.06)" AND
RELATED ATTACHED SCHEDULES FOR COMPLIANCE INFORMATION.
3. Investments (Section 7.07)
INVESTMENTS. The Borrower will not, and will not permit the Parent or any
Subsidiary to, make or permit to exist Investments in any Person except:
(a) advances to employees for reasonable business and travel
expenses incurred in the ordinary course of business;
(b) loans or advances to employees not exceeding $1,400,000 in the
aggregate principal amount outstanding at any time, in each case made in the
ordinary course of business and consistent with practices existing on the
Closing Date;
(c) loans or advances to Subsidiary Guarantors or the Affiliate
Guarantor;
(d) deposits required by government agencies or public utilities
in the ordinary course of business;
(e) Investments made in accordance with the Investment Policy
attached hereto as Schedule 7.07(e) as in effect on the date hereof without
giving effect to any modifications thereto and without giving effect to any
Investments not expressly permitted by Schedule 7.07(e) that are authorized by
the Investment Committee or any other Person;
(f) Investments in Joint Ventures and loans or advances to Krispy
Kreme franchisees or doughnut and bakery store operators made in the ordinary
course of business; provided that Non-Guarantor Joint Venture Investments and
loans or advances to Krispy Kreme franchisees or doughnut and bakery store
operators shall not at any time exceed in the aggregate 35% of Consolidated
Tangible Net Worth;
(g) Permitted Acquisitions (exclusive of Investments permitted
under clause (f) above);
(h) any Acquisition pursuant to a collateral repurchase agreement
in favor of any Krispy Kreme franchisee or its lenders entered into in the
ordinary course of business and consistent with practices existing on the
Closing Date; and
(i) Investments made in the form of Guarantees to the extent
permitted under Section 7.10(d).
PLEASE SEE THE ATTACHED SCHEDULE "INVESTMENTS (SECTION 5.19)" AND RELATED
ATTACHED SCHEDULES FOR COMPLIANCE INFORMATION.
4. Liens (Section 7.09)
LIMITATION ON LIENS. Neither the Borrower nor any Subsidiary will create, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement and listed on Schedule 7.09;
(b) any Lien existing on any specific fixed asset of any Person at
the time such Person becomes a Subsidiary and which is not created in
contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that (i) such Lien attaches to such asset
concurrently with or within eighteen (18) months after the acquisition or
completion of construction thereof, (ii) such Lien does not at any time encumber
any other Property and (iii) the amount of the Debt secured by such asset is not
increased;
(d) any Lien on any specific fixed asset of any Person existing at
the time such Person is merged or consolidated with or into the Borrower or a
Subsidiary and which is not created in contemplation of such event;
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by the Borrower or a Subsidiary and which is not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary or the Affiliate
Guarantor to the Borrower;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section 7.09, provided that (x) such Debt is not secured by
any additional assets, and (y) the amount of such Debt secured by any such Lien
is not increased;
(h) Liens incidental to the conduct of the Borrower's business or
the ownership of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(i) Liens not otherwise permitted by the foregoing paragraphs of
this Section 7.09 securing Debt (other than indebtedness represented by the
Notes) in an aggregate principal amount at any time outstanding not to exceed
2.5% of Consolidated Tangible Net Worth.
Provided the aggregate amount of Debt secured by Liens permitted by the
foregoing paragraphs (a) through (e) and (g) through (i) shall at no time exceed
an aggregate amount greater than 5% of Consolidated Tangible Net Worth, without
duplication.
NONE OF THE BORROWER'S OR ANY SUBSIDIARY'S PROPERTY IS SUBJECT TO ANY LIEN WHICH
IS NOT PERMITTED BY PARAGRAPHS (a) THROUGH (i) ABOVE.
5. Debt (Section 7.10)
LIMITATION ON DEBT. The Borrower will not, and will not permit any Consolidated
Subsidiary to, create, incur, assume or suffer to exist any Debt, except:
(a) Debt under the Loan Documents;
(b) Debt outstanding on the date hereof and listed on Schedule
7.10 and any refinancings, refundings, renewals or extensions thereof; provided
that the amount of such Debt is not increased at the time of such refinancing,
refunding, renewal or extension;
(c) Guarantees of the Borrower or any Subsidiary in respect of
Debt otherwise permitted hereunder of the Borrower or any Wholly-Owned
Subsidiary;
(d) Guarantees of the Borrower in respect of Debt incurred by
Joint Ventures in an aggregate principal amount outstanding at any time not to
exceed (i) $75,000,000 through the Fiscal Year 2005 and (ii) $120,000,000
thereafter;
(e) obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under any Swap Agreement;
(f) Debt in respect of Liens permitted under Section 7.09;
(g) unsecured Debt in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding;
(h) Subordinated Debt; and
(i) Debt of Glazed Investments, LLC and New England Dough, LLC (A)
existing on the Closing Date and reflected on Schedule 7.01; (B) incurred as an
Investment from the Parent, the Borrower or another Subsidiary as permitted
under Section 7.07(f); or (C) incurred after the Closing Date in an aggregate
principal amount not to exceed $20,000,000 per Fiscal Year.
NEITHER THE BORROWER NOR ANY CONSOLIDATED SUBSIDIARY IS OBLIGATED ON ANY DEBT
WHICH IS NOT PERMITTED BY PARAGRAPHS (a) THROUGH (i) ABOVE.
6. Fixed Charge Coverage Ratio (Section 7.13(a))
FIXED CHARGE COVERAGE RATIO. As at the end of each Fiscal Quarter, the Fixed
Charge Coverage Ratio as of the last day of the Fiscal Quarter just ended,
calculated on a rolling four quarter basis, shall not be less than 1.5 to 1.0.
PLEASE SEE THE ATTACHED SCHEDULE "FIXED CHARGE COVERAGE RATIO (SECTION 7.13(A))"
AND RELATED ATTACHED SCHEDULES FOR COMPLIANCE INFORMATION.
7. Consolidated Leverage Ratio (Section 7.13(b))
CONSOLIDATED LEVERAGE RATIO. As at the end of each Fiscal Quarter, the
Consolidated Leverage Ratio will not exceed, during each period, the ratio set
forth below:
MAXIMUM CONSOLIDATED LEVERAGE
PERIOD RATIO
- ------------------------------- -----------------------------
Closing Date through the end of
Fiscal Year 2004 2.5 to 1.00
Thereafter 2.25 to 1.00
PLEASE SEE THE ATTACHED SCHEDULE "LEVERAGE RATIO (SECTION 7.13(b))" AND RELATED
ATTACHED SCHEDULES FOR COMPLIANCE INFORMATION.
8. Minimum Consolidated Tangible Net Worth (Section 7.13(c))
MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Consolidated Tangible Net Worth will at
no time be less than $175,000,000 (the "Minimum Consolidated Tangible Net
Worth") plus the sum of (i) 50% of the cumulative Reported Net Income of the
Parent and its Consolidated Subsidiaries during any period after August 3, 2003
(taken as one accounting period), calculated quarterly at the end of each Fiscal
Quarter but excluding from such calculations of Reported Net Income for purposes
of this Section 7.13(c), any Fiscal Quarter in which the Reported Net Income of
the Parent and its Consolidated Subsidiaries is negative plus (ii) 50% of the
aggregate increases in Stockholders' Equity after the date hereof by reason of
the issuance and sale of capital stock of the Parent in connection with a
secondary public offering (including upon any conversion of debt securities of
the Parent into such capital stock).
PLEASE SEE THE ATTACHED SCHEDULE "MINIMUM CONSOLIDATED TANGIBLE NET WORTH
(SECTION 7.13(c))" AND RELATED ATTACHED SCHEDULES FOR COMPLIANCE INFORMATION.
* * * * * * * * * *
If there are any questions or comments about this information, please contact
Randy Casstevens at (336) 733-3730.
EXHIBIT F
KRISPY KREME DOUGHNUT CORPORATION
CLOSING CERTIFICATE
Reference is made to the Credit Agreement (the "Credit Agreement")
dated as of October 31, 2003, among Krispy Kreme Doughnut Corporation (the
"Borrower"), the Lenders listed therein, and Wachovia Bank, National
Association, as Administrative Agent. Capitalized terms used herein have the
meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 4.01(d) of the Credit Agreement,
___________________________, the duly authorized ____________ of the Borrower
hereby certifies to the Administrative Agent and the Lenders that (i) no Default
has occurred and is continuing as of the date hereof, (ii) the representations
and warranties of each Borrower contained in Article V of the Credit Agreement
are true on and as of the date hereof, (iii) Consolidated EBITDA for the
twelve-month period ending August 3, 2003 is not less than $95,000,000, (iv) the
Consolidated Leverage Ratio (calculated on the basis of Consolidated Total Debt
as of August 3, 2003 and Consolidated EBITDA for the twelve-month period ending
August 3, 2003) does not exceed 1.70 to 1.00, (v) the Borrower is in compliance
with Section 7.13 on a pro forma basis on the Closing Date after giving affect
to the transactions contemplated by, and the first Borrowing under, the Credit
Agreement, and (vi) since February 2, 2003 there has been no event, act,
condition or occurrence having, or which could reasonably be expected to have,
alone or in the aggregate, a Material Adverse Effect.
Certified as of this 31st day of October, 2003.
By: ____________________________________________
Printed Name: ______________________________
Title: _______________________
EXHIBIT G
[NAME OF OBLIGOR]
OFFICER'S CERTIFICATE
The undersigned, _______________________, ______________________,
Secretary of _______________________, a _________________________ corporation
(the "Company"), hereby certifies that [s]he has been duly elected, qualified
and is acting in such capacity and that, as such, [s]he is familiar with the
facts herein certified and is duly authorized to certify the same, and hereby
further certifies, in connection with the Credit Agreement dated as of October
31, 2003, among Krispy Kreme Doughnut Corporation, Wachovia Bank, National
Association, as Administrative Agent and as a Lender, and certain other Lenders
party thereto, that:
1. Attached hereto as Exhibit A is a complete and correct copy of
the [Articles/Certificate of Incorporation] [Certificate of Organization] of the
Company as in full force and effect on the date hereof as certified by the
Secretary of State of the State of ________________, the Company's jurisdiction
of organization.
2. Attached hereto as Exhibit B is a complete and correct copy of
the [Articles of Organization] [Bylaws] of the Company as in full force and
effect on the date hereof.
3. Attached hereto as Exhibit C is a complete and correct copy of
the [Certificate of Existence/Good Standing] of the Company as in full force and
effect on the date hereof.
4. Attached hereto as Exhibit D is a complete and correct copy of
the resolutions duly adopted by the [Board of Directors] [Members] of the
Company on ____________ ___, 2003 approving, and authorizing the execution and
delivery of, the Loan Documents to which the Company is a party. Such
resolutions have not been repealed or amended and are in full force and effect,
and no other resolutions or consents have been adopted by the [Board of
Directors] [Members] of the Company in connection therewith.
5. __________________, who is ______________________ of the
Company signed the Loan Documents to which the Company is a party, was duly
elected, qualified and acting as such at the time [s]he signed the Loan
Documents to which the Company is a party, and [his/her] signature appearing on
the Loan Documents to which the Company is a party is [his/her] genuine
signature.
G-1
IN WITNESS WHEREOF, the undersigned has hereunto set [his/her] hand as
of October 31, 2003.
By: ________________________________
Title: _____________________________
G-2
EXHIBIT H
PARENT GUARANTY AGREEMENT
THIS PARENT GUARANTY AGREEMENT (this "Guaranty") is made as of the 31st
day of October, 2003, by the undersigned (hereinafter referred to as
"Guarantor"), to and for the benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association in its capacity as Administrative Agent (the
"Administrative Agent") for itself and the Lenders (as defined in the Credit
Agreement referred to below) and their successors and assigns.
WHEREAS, the Lenders have extended credit to Krispy Kreme Doughnut
Corporation (the "Borrower") under that certain Credit Agreement dated as of
October 31, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among the Borrower, the Lenders from time to time
party thereto, and Wachovia Bank, National Association, as Administrative Agent;
and
WHEREAS, capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement; and
WHEREAS, the Lenders require additional assurances and guarantees by
the Parent as one of the conditions for extending credit to the Borrower
pursuant to the Credit Agreement; and
WHEREAS, Guarantor is the Parent of the Borrower; and
WHEREAS, Guarantor acknowledges the receipt of substantial direct
benefits by the making of the Loans to the Borrower pursuant to the Credit
Agreement;
NOW THEREFORE, in consideration of the Loans to be extended by the
Lenders to the Borrower under the Credit Agreement, the receipt and sufficiency
of which are hereby acknowledged, Guarantor agrees as follows:
1. Guaranty. Guarantor hereby unconditionally, absolutely,
jointly and severally, guarantees to the Administrative Agent and the Lenders
and their respective successors, endorsees and assigns (a) the due and punctual
payment by the Borrower of: (i) the principal of, premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and any renewals, modifications or extensions thereof, in whole or in
part; and (ii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) of the Borrower to the
Administrative Agent and the Lenders under the Credit Agreement and the other
Loan Documents to which the Borrower is or is to be a party and any renewals,
modifications or extensions thereof, in whole or in part; (b) the due and
punctual
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payment and performance of all other obligations of the Borrower under or
pursuant to the Credit Agreement and the other Loan Documents, and any renewals,
modifications or extensions thereof, in whole or in part; (c) the due and
punctual payment and performance of all obligations of Guarantor under this
Guaranty and the other Loan Documents to which it is or is to be a party and any
and all renewals, modifications or extensions thereof, in whole or in part; (d)
all future advances and re-advances that may subsequently be made to Borrower by
Administrative Agent and the Lenders, evidenced by the Credit Agreement, any
Notes or any other Loan Document, and all renewals, replacements, extensions or
modifications thereof; and (e) all other indebtedness of the Borrower to the
Administrative Agent, now or hereafter existing, hereunder or under any other
Loan Document, whether direct or indirect, plus interest thereon and all charges
and expenses of collection incurred by Administrative Agent hereunder, including
court costs, and reasonable attorneys' fees (the liabilities, obligations and
indebtedness described in clauses (a) through (e), inclusive, of this paragraph
are herein collectively referred to as the "Obligations").
2. Guaranty Absolute. This Guaranty is an absolute,
unconditional, continuing and unlimited guaranty of the full and punctual
payment and performance by the Borrower of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Administrative Agent or any Lender first attempt to collect any of the
Obligations from the Borrower, Guarantor, the Affiliate Guarantor, the
Subsidiary Guarantors or any other Person, or resort to any security for the
Obligations or this Guaranty or to other means of obtaining payment of any of
the Obligations which the Administrative Agent or any Lender now has or may
acquire after the date hereof, or upon any other contingency whatsoever, and the
Administrative Agent and the Lenders may proceed hereunder against Guarantor in
the first instance to collect the Obligations when due, without first proceeding
against the Borrower or any other Person and without first resorting to any
security or other means of obtaining payment. The obligations of Guarantor
hereunder are irrevocable, absolute and unconditional, irrespective of
genuineness, validity, regularity or enforceability of the Obligations or any
security given therefor or in connection therewith or any other circumstance
(except payment to, or express, written waiver, release or consent by, the
Administrative Agent and the Lenders) which might otherwise constitute a legal
or equitable discharge of a surety or guarantor. This Guaranty shall be in
addition to any other guaranty or other security for the Obligations, and it
shall not be prejudiced or rendered unenforceable by the invalidity of any such
other guaranty or security. The liability of Guarantor hereunder shall in no way
be affected or impaired by any acceptance by the Administrative Agent and the
Lenders of any direct or indirect security for, or other guaranties of, the
Obligations or any other indebtedness, liability or obligations of the Borrower,
Guarantor or other Person to the Administrative Agent or any Lender or by any
failure, delay, neglect or omission of the Administrative Agent or any Lender to
realize upon or protect any Obligations or any such other indebtedness,
liability or obligation or any notes or other instruments evidencing the same or
any direct or indirect security therefor, or by any approval, consent, waiver or
other action taken or omitted to be taken by the Administrative Agent or any
Lender. Upon any default by the Borrower in the payment and performance of the
Obligations (and after the expiration of any applicable grace period provided in
the Credit Agreement), the liabilities and obligations of Guarantor hereunder
shall, at the option of the Required Lenders, become forthwith due and payable
to the Administrative Agent and the Lenders without demand or notice of any
nature, all of which are expressly waived by Guarantor; provided that if any
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Event of Default specified in clause (h) or (i) of Section 8.01 of the Credit
Agreement occurs, without any notice to Guarantor or any other act by the
Administrative Agent or any Lender, the liabilities and obligations of Guarantor
hereunder shall automatically become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Guarantor. Payments by Guarantor hereunder may be required by
the Administrative Agent and the Lenders on any number of occasions.
3. No Impairment. Guarantor agrees that its obligations hereunder
shall not be impaired, modified, changed, released or limited in any manner
whatsoever by any impairment, modification, change, release or limitation of
liability of the Borrower or its estates by reason of the commencement of any
case, proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of the Borrower or its
property under any law relating to bankruptcy, insolvency, reorganization,
relief of debtors or seeking appointment of a receiver, trustee, custodian or
similar official for the Borrower or for all or part of its property.
4. Guarantor's Further Agreement to Pay. Guarantor further agrees
to pay to the Administrative Agent and the Lenders forthwith upon demand, in
funds immediately available to the Administrative Agent, all costs and expenses
(including court costs and reasonable attorneys' fees) incurred or expended by
the Administrative Agent and the Lenders in connection with the enforcement of
this Guaranty.
5. Termination of Guaranty. It is the intention hereof that
Guarantor shall remain liable under this Guaranty until all of the Obligations
have been fully paid and performed notwithstanding any act, omission or thing
(except payment to, or express, written waiver, release or consent by, the
Administrative Agent and the Lenders) which might otherwise operate as a legal
or equitable discharge of Guarantor. Notwithstanding anything contained herein
to the contrary, Guarantor agrees that to the extent all or any part of any
payment of any of the Obligations previously received by the Administrative
Agent or any Lender pursuant to the Credit Agreement or any Loan Document or
otherwise is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, recovered, rescinded or is required to be retained by
or repaid to a trustee, receiver, or any other person under any bankruptcy code,
common law, or equitable cause, or otherwise required to be returned by the
Administrative Agent or any Lender for any reason, whether by court order,
administrative order or settlement, this Guaranty and the obligation or part
thereof intended to be satisfied shall be revived and reinstated and continued
in full force and effect as to Guarantor's obligations hereunder, and Guarantor
agrees that it shall immediately pay to the Administrative Agent or such Lender
the amount of such payment, notwithstanding any termination of this Guaranty or
any cancellation of the Credit Agreement or the Notes.
6. Security; Setoff. Guarantor hereby grants to the
Administrative Agent and the Lenders, as security for the full and punctual
payment and performance of Guarantor's obligations hereunder, a continuing lien
on and security interest in all deposits and other sums credited by or due from
the Administrative Agent or any Lender to Guarantor or subject to withdrawal by
Guarantor. Regardless of the adequacy of any collateral or other means of
obtaining repayment of the Obligations, the Administrative Agent or any Lender
may at any time upon or after the occurrence of any Default, and without notice
to Guarantor, set off the whole or
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any portion or portions of any or all such deposits and other sums credited by
or due from the Administrative Agent or any Lender to Guarantor or subject to
withdrawal by Guarantor against amounts payable under this Guaranty, whether or
not any other person or persons could also withdraw money therefrom. Guarantor
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not acquired pursuant
to the terms of the Credit Agreement, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of Guarantor in the amount
of such participation.
7. Administrative Agent and the Lenders' Freedom to Deal with
Borrower and Other Parties. The Administrative Agent and the Lenders shall be at
liberty, without giving notice to or obtaining the assent of Guarantor, or any
of them, and without relieving Guarantor of any liability hereunder, to deal
with the Borrower, the Affiliate Guarantor, the Subsidiary Guarantors and with
each other party who is now, or after the date hereof becomes, liable in any
manner for any of the Obligations (including, without limitation, any
co-guarantor), in such manner as the Administrative Agent and the Lenders in
their sole discretion deem fit and to this end Guarantor hereby gives to the
Administrative Agent and the Lenders full authority in their sole discretion to
do any or all of the following things: (a) extend credit, make loans and afford
other financial accommodations to the Borrower or to any such other party at
such times, in such amounts and on such terms as the Administrative Agent and
the Lenders may approve, (b) vary the terms and grant extensions or renewals of
any present or future indebtedness or obligation of the Borrower or of any such
other party to the Administrative Agent and the Lenders, (c) grant extensions of
time, waivers and other indulgences in respect thereof, (d) vary, exchange,
release or discharge, wholly or partially, or delay in or abstain from
perfecting and enforcing any security or guaranty or other means of obtaining
payment of any of the Obligations or any liability under this Guaranty, which
security or guaranty the Administrative Agent and the Lenders now have or
acquire after the date hereof, (e) accept partial payments from the Borrower or
such other party, (f) release or discharge, wholly or partially, any endorser or
guarantor, and (g) compromise or make any settlement or other arrangement with
the Borrower or any such other party.
8. Representations and Warranties of Guarantor. To induce the
Lenders to extend credit to the Borrower, Guarantor represents and warrants to
the Administrative Agent and the Lenders that all representations and warranties
relating to it contained in the Credit Agreement are true and correct. Guarantor
also represents and warrants that a portion of the proceeds from the Credit
Agreement, will be used for the benefit of, and invested in, the Affiliate
Guarantor.
9. Covenants. Guarantor covenants and agrees that, from the date
hereof and until payment in full of the Obligations, Guarantor shall, unless the
Administrative Agent otherwise consents in writing, comply with all of the
covenants contained in the Credit Agreement (as it may be amended from time to
time) as applicable to Guarantor and shall deliver to the Administrative Agent
and the Lenders:
(a) within five Business Days after Guarantor becomes
aware of the occurrence of any Default, a certificate of a principal
financial officer or a principal accounting officer of Guarantor
setting forth the details thereof and the action which Guarantor is
taking or proposes to take with respect thereto; and
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(b) from time to time, such additional information
regarding the financial position or business of Guarantor as the
Administrative Agent or any Lender may reasonably request.
10. Events of Default. Each of the following shall constitute an
"Event of Default" hereunder:
(a) Failure of Guarantor to pay on demand by the
Administrative Agent or any Lender any principal of, premium, if any,
or interest on the Obligations after the same shall become due, whether
by acceleration or otherwise;
(b) Failure of Guarantor to observe or perform any of its
covenants, conditions or agreements under this Guaranty (other than set
forth in paragraph (a) above) for a period of thirty (30) days after
notice specifying such failure and requesting that it be remedied is
given by the Administrative Agent to Guarantor;
(c) Any representation, warranty, certification or
statement made by Guarantor in any certificate, financial statement or
other document delivered pursuant to this Guaranty shall prove to have
been incorrect in any material respect when made; or
(d) The Guarantor shall at any time fail to own, directly
or indirectly, at least 100% of the issued and outstanding shares of
voting stock of the Borrower.
Whenever any Default shall have occurred, the Administrative Agent (if
requested by the Required Lenders) may declare the entire unpaid principal of,
premium, if any, and interest on the Obligations to be immediately due and
payable without presentation, demand, protest and notice of any kind, all of
which are hereby expressly waived; provided that if any Event of Default
specified in clause (h) or (i) of Section 8.01 of the Credit Agreement occurs,
without any notice to Guarantor or any other act by the Administrative Agent or
any Lender, the liabilities and obligations of Guarantor hereunder shall
automatically become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
Guarantor. As used herein, the term "Default" means any condition or event which
constitutes an Event of Default or which with the giving of notices or lapse of
time or both would, unless cured or waived, become an Event of Default.
No failure or delay by the Administrative Agent or any Lender to
exercise any right, power or privilege hereunder shall operate as a waiver of
any such right, power or privilege nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
11. Waivers by Guarantor. Guarantor hereby waives: (a) acceptance
or notice of acceptance of this Guaranty by the Administrative Agent and the
Lenders; (b) notice of any action taken or omitted by the Administrative Agent
and the Lenders in reliance hereon; (c) any duty on the part of the
Administrative Agent or any Lender to disclose to Guarantor any facts it may now
or hereafter know regarding the Borrower, the Affiliate Guarantor or any
Subsidiary Guarantor; (d) notice of presentment and demand for payment or
performance of any of the
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Obligations; (e) protest and notice of dishonor or of default to Guarantor or to
any other party with respect to the payment or performance of the Obligations
hereby guaranteed; (f) any and all other notices whatsoever from the
Administrative Agent or any Lender to which Guarantor might otherwise be
entitled; and (g) any requirement that the Administrative Agent or any Lender be
diligent or prompt in making demands hereunder, giving notice of any default by
the Borrower or asserting any other right of the Administrative Agent or any
Lender hereunder. Guarantor also irrevocably waives, to the fullest extent
permitted by law, and agrees not to assert or take advantage of any and all
defenses which at any time may be available in respect of Guarantor's
obligations to the Administrative Agent and the Lenders hereunder by virtue of:
(i) the statute of limitations in any action hereunder or for the collection or
the performance of any of the Obligations; (ii) the lack of authority of
Guarantor or any other Person, or the failure of the Administrative Agent or any
Lender to file or enforce a claim against the estates (in bankruptcy or any
other proceeding) of the Borrower, the Guarantor, the Affiliate Guarantor, any
Subsidiary Guarantor or any other Person; (iii) the failure of the
Administrative Agent or any Lender to give notice of any action or non-action on
the part of any other person whomsoever, in connection with any of the
Obligations; (iv) an election of remedies by the Administrative Agent or any
Lender which destroys or otherwise impairs any subrogation rights of Guarantor,
the right of Guarantor to proceed against the Borrower for reimbursement, or the
right of Guarantor to seek contribution from any co-guarantor, or all or any
combination of such rights; (v) the failure of the Administrative Agent or any
Lender to commence an action against the Borrower, Guarantor, the Affiliate
Guarantor, any Subsidiary Guarantor or any other Person; (vi) any valuation,
stay, moratorium law or other similar law now or hereafter in effect; (vii) any
defense based on lack of due diligence by the Administrative Agent or any Lender
in collection, protection or realization upon any collateral securing the
Obligations; (viii) any and all rights Guarantor may now or hereafter have
arising under N.C.G.S. Section 26-7 or Section 26-12; (ix) the amendment of,
supplement to or waiver of any provision of the Credit Agreement, the Note or
any other Loan Documents, (x) the failure of Guarantor to receive any benefit
from or as a result of its execution, delivery and performance of this Guaranty;
and (xi) any other legal or equitable defenses whatsoever to which Guarantor
might otherwise be entitled.
12. No Contest with Administrative Agent and the Banks. So long as
any Obligation remains unpaid or undischarged, no Guarantor will, by paying any
sum recoverable hereunder (whether or not demanded by the Administrative Agent
or any Lender) or by any means or on any other ground, claim any right of
subrogation, contribution, reimbursement or indemnity with respect to any of the
Obligations guaranteed hereby or to any collateral now or hereafter granted to
secure the Obligations or claim any setoff or counterclaim against the Borrower
in respect of any liability of Guarantor to the Borrower or of the Borrower to
Guarantor or in proceedings under any federal or state bankruptcy code or
insolvency proceedings of any nature, proceed in competition with the
Administrative Agent or any Lender in respect of payment hereunder or be
entitled to have the benefit of any counterclaim or proof of claim or dividend
or payment by or on behalf of the Borrower or the benefit of any other security
for any Obligation which, now or hereafter, the Administrative Agent or any
Lender may hold or in which it may have any share. In addition, any indebtedness
of the Borrower, the Affiliate Guarantor, or any Subsidiary Guarantor now or
hereafter held by the Guarantor is hereby subordinated in right of payment to
the prior payment in full of the Obligations. If any amount shall erroneously be
paid to the Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar
H-6
right or (ii) any such indebtedness of the Borrower, the Affiliate Guarantor, or
any Subsidiary Guarantor, such amount shall be held in trust for the benefit of
the Lenders and shall forthwith be paid to the Administrative Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
13. Remedies Cumulative. Each right, privilege, power and remedy
of the Administrative Agent and the Lenders under this Guaranty, the Credit
Agreement, the Notes or any other Loan Document, or under any other instrument
of any other party securing or guaranteeing any of the Obligations or under
applicable laws shall be cumulative and concurrent and the exercise of any one
or more of them shall not preclude the simultaneous or later exercise by the
Administrative Agent and the Lenders of any or all such other rights,
privileges, powers and remedies.
14. Demands and Notices. All notices, requests and other
communications to the parties hereunder shall be in writing and shall be given
(i) to Guarantor in care of the Borrower at the address for the Borrower set
forth in the Credit Agreement, (ii) to the Administrative Agent at its address
set forth in the Credit Agreement, and (iii) to the respective Lenders at their
respective addresses set forth in the Credit Agreement. All notices shall be
given in the manner specified in the Credit Agreement
15. Amendments, Waiver, Etc. No provision of this Guaranty can be
changed, waived or discharged or terminated except by an instrument in writing
signed by the Administrative Agent and Guarantor and consented to by the Lenders
as required by the Credit Agreement. No course of dealing or delay or omission
on the part of either party in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto.
16. Counterparts. This Guaranty may be executed in any number of
counterparts. Each of the counterparts will be considered an original, and all
counterparts constitute but one and the same instrument.
17. Pari Passu Obligations. Guarantor warrants and represents that
payment obligations and liabilities of Guarantor under this Guaranty shall at
all times rank pari passu with all other unsecured and unsubordinated payment
obligations and liabilities (including contingent obligations and liabilities)
of Guarantor (other than those which are mandatorily preferred by laws or
regulations of general application). Guarantor shall assure that the
representation set forth herein is true and correct at all times.
18. Indemnity. Guarantor agrees to indemnify the Administrative
Agent and the Lenders against, and hold the Administrative Agent and the Lenders
harmless from, any loss, cost, charge, expense (including reasonable attorneys'
fees), claims, demands, suits, damages, penalties, taxes, fines, levies and
assessments which may be asserted or imposed against, or suffered or incurred
by, the Administrative Agent or any Lender as a direct or indirect result of any
representation or warranty of the Borrower in the Credit Agreement or of
Guarantor herein being untrue or inaccurate in any respect or as a direct or
indirect result of the failure by the Borrower or Guarantor to observe, perform
or comply with any of its respective covenants,
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undertakings or obligations set forth in the Credit Agreement, this Guaranty or
any other Loan Document.
19. Financial Information. The liability of Guarantor under this
Guaranty shall be reflected in the consolidated financial statements (or the
notes thereto) of the Guarantor in accordance with GAAP.
20. Miscellaneous Provisions. This Guaranty is intended to take
effect as a sealed instrument to be governed by and construed in accordance with
the laws of the State of North Carolina (but not including the choice of law
rules thereof). This Guaranty shall bind the successors and assigns of Guarantor
and shall inure to the benefit of the Lenders, their successors and assigns. All
words herein shall be deemed to refer to the singular, plural, masculine,
feminine or neuter as the identity of the person or entity may require. The
descriptive headings of the several paragraphs of this Guaranty are inserted for
convenience only and do not constitute a part of this Guaranty.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
day and year first above written.
GUARANTOR:
KRISPY KREME DOUGHNUTS, INC., a
North Carolina corporation
ATTEST:
__________________________ By:___________________________SEAL)
Its: Secretary Name:
Title:
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EXHIBIT I
SUBSIDIARY GUARANTY AGREEMENT
THIS SUBSIDIARY GUARANTY AGREEMENT (this "Guaranty") is made as of the
31st day of October, 2003, by the undersigned (hereinafter collectively referred
to as the "Guarantors" and individually as a "Guarantor"), to and for the
benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association
in its capacity as Administrative Agent (the "Administrative Agent") for itself
and the Lenders (as defined in the Credit Agreement referred to below) and their
successors and assigns.
WHEREAS, the Lenders have extended credit to Krispy Kreme Doughnut
Corporation (the "Borrower") under that certain Credit Agreement dated as of
October 31, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the Lenders from time to time
party thereto, and Wachovia Bank, National Association, as Administrative Agent;
and
WHEREAS, capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement; and
WHEREAS, the Lenders require additional assurances and guarantees by
certain Subsidiaries as one of the conditions for extending credit to the
Borrower pursuant to the Credit Agreement; and
WHEREAS, each Guarantor is a Subsidiary of the Borrower; and
WHEREAS, each Guarantor acknowledges the receipt of substantial direct
benefits by the making of the Loans to the Borrower;
NOW THEREFORE, in consideration of the Loans to be extended by the
Lenders to the Borrower under the Credit Agreement, and for other consideration,
the receipt and sufficiency of which are hereby acknowledged, each Guarantor
agrees as follows:
1. Guaranty. Each Guarantor hereby unconditionally, absolutely,
jointly and severally, guarantees to the Administrative Agent and the Lenders
and their respective successors, endorsees and assigns (a) the due and punctual
payment by the Borrower of: (i) the principal of, premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and any renewals, modifications or extensions thereof, in whole or in
part; and (ii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) of the Borrowers to the
Administrative Agent and the Lenders
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under the Credit Agreement and the other Loan Documents to which the Borrower is
or is to be a party and any renewals, modifications or extensions thereof, in
whole or in part; (b) the due and punctual payment and performance of all other
obligations of the Borrower under or pursuant to the Credit Agreement and the
other Loan Documents, and any renewals, modifications or extensions thereof, in
whole or in part; (c) the due and punctual payment and performance of all
obligations of each Guarantor under this Guaranty and the other Loan Documents
to which it is or is to be a party and any and all renewals, modifications or
extensions thereof, in whole or in part; (d) all future advances and re-advances
that may subsequently be made to Borrower by Administrative Agent and the
Lenders, evidenced by the Credit Agreement, any Notes or any other Loan
Document, and all renewals, replacements, extensions or modifications thereof;
and (e) all other indebtedness of the Borrower to the Administrative Agent, now
or hereafter existing, hereunder or under any other Loan Document, whether
direct or indirect, plus interest thereon and all charges and expenses of
collection incurred by Administrative Agent hereunder, including court costs,
and reasonable attorneys' fees (the liabilities, obligations and indebtedness
described in clauses (a) through (e), inclusive, of this paragraph are herein
collectively referred to as the "Obligations").
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render such
Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to Borrower or any
Affiliate of Borrower to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (b) under
any Guarantee of senior unsecured indebtedness or Debt subordinated in right of
payment to the Obligations which Guarantee contains a limitation as to maximum
amount similar to that set forth in this paragraph, pursuant to which the
liability of such Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving effect as assets to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, contribution, reimbursement,
indemnity or similar rights of such Guarantor pursuant to applicable law.
2. Guaranty Absolute. This Guaranty is an absolute,
unconditional, continuing and unlimited guaranty of the full and punctual
payment and performance by the Borrower of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Administrative Agent or any Lender first attempt to collect any of the
Obligations from the Borrower, the Parent, the Affiliate Guarantor, any other
Guarantor, or any other Person, or resort to any security for the Obligations or
this Guaranty or to other means of obtaining payment of any of the Obligations
which the Administrative Agent or any Lender now has or may acquire after the
date hereof, or upon any other contingency whatsoever, and the Administrative
Agent and the Lenders may proceed hereunder against any Guarantor in the first
instance to collect the Obligations when due, without first proceeding against
the Borrower or any other Person and without first resorting to any security or
other means of obtaining payment.
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The obligations of each Guarantor hereunder are irrevocable, absolute and
unconditional, irrespective of genuineness, validity, regularity or
enforceability of the Obligations or any security given therefor or in
connection therewith or any other circumstance (except payment to, or express,
written waiver, release or consent by, the Administrative Agent and the Lenders)
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor. This Guaranty shall be in addition to any other guaranty or other
security for the Obligations, and it shall not be prejudiced or rendered
unenforceable by the invalidity of any such other guaranty or security. The
liability of each Guarantor hereunder shall in no way be affected or impaired by
any acceptance by the Administrative Agent and the Lenders of any direct or
indirect security for, or other guaranties of, the Obligations or any other
indebtedness, liability or obligations of the Borrower, any Guarantor or other
Person to the Administrative Agent or any Lender or by any failure, delay,
neglect or omission of the Administrative Agent or any Lender to realize upon or
protect any Obligations or any such other indebtedness, liability or obligation
or any notes or other instruments evidencing the same or any direct or indirect
security therefor, or by any approval, consent, waiver or other action taken or
omitted to be taken by the Administrative Agent or any Lender. Upon any default
by the Borrower in the payment and performance of the Obligations (and after the
expiration of any applicable grace period provided in the Credit Agreement), the
liabilities and obligations of the Guarantors hereunder shall, at the option of
the Lenders, become forthwith due and payable to the Administrative Agent and
the Lenders without demand or notice of any nature, all of which are expressly
waived by each Guarantor; provided that if any Event of Default specified in
clause (h) or (i) of Section 8.01 of the Credit Agreement occurs, without any
notice to any Guarantor or any other act by the Administrative Agent or any
Lender, the liabilities and obligations of the Guarantors hereunder shall
automatically become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Guarantors. Payments by the Guarantors, or any of them, hereunder may be
required by the Administrative Agent and the Lenders on any number of occasions.
3. No Impairment. Each Guarantor agrees that its obligations
hereunder shall not be impaired, modified, changed, released or limited in any
manner whatsoever by any impairment, modification, change, release or limitation
of liability of the Borrower or its estates by reason of the commencement of any
case, proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of the Borrower or its
property under any law relating to bankruptcy, insolvency, reorganization,
relief of debtors or seeking appointment of a receiver, trustee, custodian or
similar official for the Borrower or for all or part of its property.
4. Guarantors' Further Agreement to Pay. Each Guarantor further
agrees to pay to the Administrative Agent and the Lenders forthwith upon demand,
in funds immediately available to the Administrative Agent, all costs and
expenses (including court costs and reasonable attorneys' fees) incurred or
expended by the Administrative Agent and the Lenders in connection with the
enforcement of this Guaranty.
5. Contribution and Subrogation. Each Guarantor (referred to
herein as a "Contributing Guarantor") agrees (subject to Paragraph 6) that, in
the event a payment shall be made by any other Guarantor under this Guaranty and
such other Guarantor (the "Claiming Guarantor") shall not have been fully
indemnified by the Borrower, the Contributing Guarantor
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shall indemnify the Claiming Guarantor in an amount equal to the amount of such
payment in each case multiplied by a fraction of which the numerator shall be
the net worth of the Contributing Guarantor on the date hereof and the
denominator shall be the aggregate net worth of all the Guarantors (other than
the Borrower) on the date hereof. Any Contributing Guarantor making any payment
to a Claiming Guarantor pursuant to this Paragraph 5 shall be subrogated to the
rights of such Claiming Guarantor to the extent of such payment.
6. Subordination. Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Paragraph 6 and all other
rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of the Obligations. No failure on the part of any Guarantor to make the
payments required by Paragraph 6 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to its obligations hereunder, and each
Guarantor shall remain liable for the full amount of the obligations of such
Guarantor hereunder.
7. Termination of Guaranty. It is the intention hereof that the
Guarantors shall remain liable under this Guaranty until all of the Obligations
have been fully paid and performed notwithstanding any act, omission or thing
(except payment to, or express, written waiver, release or consent by, the
Administrative Agent and the Lenders) which might otherwise operate as a legal
or equitable discharge of the Guarantors. Notwithstanding anything contained
herein to the contrary, each Guarantor agrees that to the extent all or any part
of any payment of any of the Obligations previously received by the
Administrative Agent or any Lender pursuant to the Credit Agreement or any Loan
Document or otherwise is subsequently invalidated, voided, declared to be
fraudulent or preferential, set aside, recovered, rescinded or is required to be
retained by or repaid to a trustee, receiver, or any other person under any
bankruptcy code, common law, or equitable cause, or otherwise required to be
returned by the Administrative Agent or any Lender for any reason, whether by
court order, administrative order or settlement, this Guaranty and the
obligation or part thereof intended to be satisfied shall be revived and
reinstated and continued in full force and effect as to each Guarantor's
obligations hereunder, and each Guarantor agrees that it shall immediately pay
to the Administrative Agent or such Lender the amount of such payment,
notwithstanding any termination of this Guaranty or any cancellation of the
Credit Agreement or the Notes.
8. Security; Setoff. Each Guarantor hereby grants to the
Administrative Agent and the Lenders, as security for the full and punctual
payment and performance of such Guarantor's obligations hereunder, a continuing
lien on and security interest in all deposits and other sums credited by or due
from the Administrative Agent or any Lender to a Guarantor or subject to
withdrawal by a Guarantor. Regardless of the adequacy of any collateral or other
means of obtaining repayment of the Obligations, the Administrative Agent or any
Lender may at any time upon or after the occurrence of any Default, and without
notice to any Guarantor, set off the whole or any portion or portions of any or
all such deposits and other sums credited by or due from the Administrative
Agent or any Lender to a Guarantor or subject to withdrawal by a Guarantor
against amounts payable under this Guaranty, whether or not any other person or
persons could also withdraw money therefrom. Each Guarantor agrees, to the
fullest extent it may effectively do so under applicable law, that any holder of
a participation in a Note, whether
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or not acquired pursuant to the terms of the Credit Agreement, may exercise
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of such Guarantor in the amount of such participation.
9. Administrative Agent and the Lenders' Freedom to Deal with
Borrower and Other Parties. The Administrative Agent and the Lenders shall be at
liberty, without giving notice to or obtaining the assent of the Guarantors, or
any of them, and without relieving any Guarantor of any liability hereunder, to
deal with the Borrower, the Parent, the Affiliate Guarantor, any other Guarantor
and with each other party who is now, or after the date hereof becomes, liable
in any manner for any of the Obligations (including, without limitation, any
co-guarantor), in such manner as the Administrative Agent and the Lenders in
their sole discretion deem fit and to this end each Guarantor hereby gives to
the Administrative Agent and the Lenders full authority in their sole discretion
to do any or all of the following things: (a) extend credit, make loans and
afford other financial accommodations to the Borrower or to any such other party
at such times, in such amounts and on such terms as the Administrative Agent and
the Lenders may approve, (b) vary the terms and grant extensions or renewals of
any present or future indebtedness or obligation of the Borrower or of any such
other party to the Administrative Agent and the Lenders, (c) grant extensions of
time, waivers and other indulgences in respect thereof, (d) vary, exchange,
release or discharge, wholly or partially, or delay in or abstain from
perfecting and enforcing any security or guaranty or other means of obtaining
payment of any of the Obligations or any liability under this Guaranty, which
security or guaranty the Administrative Agent and the Lenders now have or
acquire after the date hereof, (e) accept partial payments from the Borrower or
such other party, (f) release or discharge, wholly or partially, any endorser or
guarantor, and (g) compromise or make any settlement or other arrangement with
the Borrower or any such other party.
10. Representations and Warranties of Guarantors. To induce the
Lenders to extend credit to the Borrower, each Guarantor represents and warrants
to the Administrative Agent and the Lenders that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
11. Covenants. Each Guarantor covenants and agrees that, from the
date hereof and until payment in full of the Obligations, such Guarantor shall,
unless the Administrative Agent otherwise consents in writing, comply with all
of the covenants contained in the Credit Agreement (as it may be amended from
time to time) as applicable to such Guarantors and shall deliver to the
Administrative Agent and the Lenders:
(a) within five Business Days after such Guarantor
becomes aware of the occurrence of any Default, a certificate of a
principal financial officer or a principal accounting officer of such
Guarantor setting forth the details thereof and the action which such
Guarantor is taking or proposes to take with respect thereto; and
(b) from time to time, such additional information
regarding the financial position or business of such Guarantor as the
Administrative Agent or any Lender may reasonably request.
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12. Events of Default. Each of the following shall constitute an
"Event of Default" hereunder:
(a) Failure of any Guarantor to pay on demand by the
Administrative Agent or any Lender any principal of, premium, if any,
or interest on the Obligations after the same shall become due, whether
by acceleration or otherwise;
(b) Failure of any Guarantor to observe or perform any of
its covenants, conditions or agreements under this Guaranty (other than
set forth in paragraph (a) above) for a period of thirty (30) days
after notice specifying such failure and requesting that it be remedied
is given by the Administrative Agent to such Guarantor;
(c) Any representation, warranty, certification or
statement made by any Guarantor in any certificate, financial statement
or other document delivered pursuant to this Guaranty shall prove to
have been incorrect in any material respect when made; or
(d) The Borrower shall at any time fail to own, directly
or indirectly, at least (i) 70% of the ownership interests in Freedom
Rings, LLC, (ii) 67% of the ownership interests in Golden Gate
Doughnuts, LLC, and (iii) 100% of the issued and outstanding shares of
voting stock of (or other ownership interests in) each of the other
Guarantors.
Whenever any Default shall have occurred, the Administrative Agent (if
requested by the Lenders) may declare the entire unpaid principal of, premium,
if any, and interest on the Obligations to be immediately due and payable
without presentation, demand, protest and notice of any kind, all of which are
hereby expressly waived; provided that if any Event of Default specified in
clause (h) or (i) of Section 8.01 of the Credit Agreement occurs, without any
notice to any Guarantor or any other act by the Administrative Agent or any
Lender, the liabilities and obligations of the Guarantors hereunder shall
automatically become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Guarantors. As used herein, the term "Default" means any condition or event
which constitutes an Event of Default or which with the giving of notices or
lapse of time or both would, unless cured or waived, become an Event of Default.
No failure or delay by the Administrative Agent or any Lender to
exercise any right, power or privilege hereunder shall operate as a waiver of
any such right, power or privilege nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
13. Waivers by Guarantors. Each Guarantor hereby waives: (a)
acceptance or notice of acceptance of this Guaranty by the Administrative Agent
and the Lenders; (b) notice of any action taken or omitted by the Administrative
Agent and the Lenders in reliance hereon; (c) any duty on the part of the
Administrative Agent or any Lender to disclose to the Guarantors, or any of
them, any facts it may now or hereafter know regarding the Borrower, the Parent,
the Affiliate Guarantor or any other Guarantor; (d) notice of presentment and
demand for payment or performance of any of the Obligations; (e) protest and
notice of dishonor or of default to the
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Guarantors, or any of them, or to any other party with respect to the payment or
performance of the Obligations hereby guaranteed; (f) any and all other notices
whatsoever from the Administrative Agent or any Lender to which the Guarantors,
or any of them, might otherwise be entitled; and (g) any requirement that the
Administrative Agent or any Lender be diligent or prompt in making demands
hereunder, giving notice of any default by the Borrower or asserting any other
right of the Administrative Agent or any Lender hereunder. Each Guarantor also
irrevocably waives, to the fullest extent permitted by law, and agrees not to
assert or take advantage of any and all defenses which at any time may be
available in respect of such Guarantor's obligations to the Administrative Agent
and the Lenders hereunder by virtue of: (i)the statute of limitations in any
action hereunder or for the collection or the performance of any of the
Obligations; (ii) the lack of authority of any Guarantor or any other Person, or
the failure of the Administrative Agent or any Lender to file or enforce a claim
against the estates (in bankruptcy or any other proceeding) of the Borrower, any
Guarantor, the Parent, the Affiliate Guarantor or any other Person; (iii) the
failure of the Administrative Agent or any Lender to give notice of any action
or non-action on the part of any other person whomsoever, in connection with any
of the Obligations; (iv) an election of remedies by the Administrative Agent or
any Lender which destroys or otherwise impairs any subrogation rights of the
Guarantors, or any of them, the right of a Guarantor to proceed against the
Borrower for reimbursement, or the right of a Guarantor to seek contribution
from any co-guarantor, or all or any combination of such rights; (v) the failure
of the Administrative Agent or any Lender to commence an action against the
Borrower, any Guarantor, the Parent, the Affiliate Guarantor or any other
Person; (vi) any valuation, stay, moratorium law or other similar law now or
hereafter in effect; (vii) any defense based on lack of due diligence by the
Administrative Agent or any Lender in collection, protection or realization upon
any collateral securing the Obligations; (viii) any and all rights the
Guarantors, or any of them, may now or hereafter have arising under N.C.G.S.
Section 26-7 or Section 26-12; (ix) the amendment of, supplement to or waiver of
any provision of the Credit Agreement, the Note or any other Loan Documents, (x)
the failure of any Guarantor to receive any benefit from or as a result of its
execution, delivery and performance of this Guaranty; and (xi) any other legal
or equitable defenses whatsoever to which the Guarantors, or any of them, might
otherwise be entitled.
14. No Contest with Administrative Agent and the Banks. So long as
any Obligation remains unpaid or undischarged, no Guarantor will, by paying any
sum recoverable hereunder (whether or not demanded by the Administrative Agent
or any Lender) or by any means or on any other ground, claim any right of
subrogation, contribution, reimbursement or indemnity with respect to any of the
Obligations guaranteed hereby or to any collateral now or hereafter granted to
secure the Obligations or claim any setoff or counterclaim against the Borrower
in respect of any liability of the Guarantors, or any of them, to the Borrower
or of the Borrower to the Guarantors, or any of them, or, in proceedings under
any federal or state bankruptcy code or insolvency proceedings of any nature,
proceed in competition with the Administrative Agent or any Lender in respect of
payment hereunder or be entitled to have the benefit of any counterclaim or
proof of claim or dividend or payment by or on behalf of the Borrower or the
benefit of any other security for any Obligation which, now or hereafter, the
Administrative Agent or any Lender may hold or in which it may have any share.
In addition, any indebtedness of the Borrower, the Parent, the Affiliate
Guarantor or any other Guarantor now or hereafter held by any Guarantor is
hereby subordinated in right of payment to the prior payment in full of the
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Obligations. If any amount shall erroneously be paid to any Guarantor on account
of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness of the Borrower, the Parent, the Affiliate
Guarantor or any other Guarantor, such amount shall be held in trust for the
benefit of the Lenders and shall forthwith be paid to the Administrative Agent
to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.
15. Remedies Cumulative. Each right, privilege, power and remedy
of the Administrative Agent and the Lenders under this Guaranty, the Credit
Agreement, the Notes or any other Loan Document, or under any other instrument
of any other party securing or guaranteeing any of the Obligations or under
applicable laws shall be cumulative and concurrent and the exercise of any one
or more of them shall not preclude the simultaneous or later exercise by the
Administrative Agent and the Lenders of any or all such other rights,
privileges, powers and remedies.
16. Demands and Notices. All notices, requests and other
communications to the parties hereunder shall be in writing and shall be given
(i) to a Guarantor in care of the Borrower at the address for the Borrower set
forth in the Credit Agreement, (ii) to the Administrative Agent at its address
set forth in the Credit Agreement, and (iii) to the respective Lenders at their
respective addresses set forth in the Credit Agreement. All notices shall be
given in the manner specified in the Credit Agreement
17. Amendments, Waiver, Etc. No provision of this Guaranty can be
changed, waived or discharged or terminated except by an instrument in writing
signed by the Administrative Agent and each Guarantor and consented to by the
Lenders as required by the Credit Agreement. No course of dealing or delay or
omission on the part of either party in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto.
18. Counterparts. This Guaranty may be executed in any number of
counterparts. Each of the counterparts will be considered an original, and all
counterparts constitute but one and the same instrument.
19. Pari Passu Obligations. Each Guarantor warrants and represents
that payment obligations and liabilities of such Guarantor under this Guaranty
shall at all times rank pari passu with all other unsecured and unsubordinated
payment obligations and liabilities (including contingent obligations and
liabilities) of such Guarantor (other than those which are mandatorily preferred
by laws or regulations of general application). Each Guarantor shall assure that
the representation set forth herein is true and correct at all times.
20. Indemnity. Each Guarantor agrees to indemnify the
Administrative Agent and the Lenders against, and hold the Administrative Agent
and the Lenders harmless from, any loss, cost, charge, expense (including
reasonable attorneys' fees), claims, demands, suits, damages, penalties, taxes,
fines, levies and assessments which may be asserted or imposed against, or
suffered or incurred by, the Administrative Agent or any Lender as a direct or
indirect result of any representation or warranty of the Borrower in the Credit
Agreement or of the Guarantors herein being untrue or inaccurate in any respect
or as a direct or indirect result of the failure by
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the Borrower or any Guarantor to observe, perform or comply with any of its
respective covenants, undertakings or obligations set forth in the Credit
Agreement, this Guaranty or any other Loan Document.
21. Financial Information. The liability of each Guarantor under
this Guaranty shall be reflected in the consolidated financial statements (or
the notes thereto) of the Parent in accordance with GAAP.
22. Miscellaneous Provisions. This Guaranty is intended to take
effect as a sealed instrument to be governed by and construed in accordance with
the laws of the State of North Carolina (but not including the choice of law
rules thereof). This Guaranty shall bind the successors and assigns of each
Guarantor and shall inure to the benefit of the Lenders, their successors and
assigns. All words herein shall be deemed to refer to the singular, plural,
masculine, feminine or neuter as the identity of the person or entity may
require. The descriptive headings of the several paragraphs of this Guaranty are
inserted for convenience only and do not constitute a part of this Guaranty.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the
day and year first above written.
GUARANTORS:
_____________________________, a
____________ corporation
ATTEST:
__________________________ By:_____________________________________(SEAL)
Its: Secretary Name:
Title:
_____________________________, a
____________ corporation
ATTEST:
__________________________ By:_____________________________________(SEAL)
Its: Secretary Name:
Title:
_____________________________, a
____________ corporation
ATTEST:
__________________________ By:_____________________________________(SEAL)
Its: Secretary Name:
Title:
_____________________________, a
____________ corporation
ATTEST:
__________________________ By:_____________________________________(SEAL)
Its: Secretary Name:
Title:
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EXHIBIT J
AFFILIATE GUARANTY AGREEMENT
THIS AFFILIATE GUARANTY AGREEMENT (this "Guaranty") is made as of the
31st day of October, 2003, by the undersigned (hereinafter referred to as
"Guarantor"), to and for the benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association in its capacity as Administrative Agent (the
"Administrative Agent") for itself and the Lenders (as defined in the Credit
Agreement referred to below) and their successors and assigns.
WHEREAS, the Lenders have extended credit to Krispy Kreme Doughnut
Corporation (the "Borrower") under that certain Credit Agreement dated as of
October 31, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among the Borrower, the Lenders from time to time
party thereto, and Wachovia Bank, National Association, as Administrative Agent;
and
WHEREAS, capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement; and
WHEREAS, the Lenders require additional assurances and guarantees by
the Guarantor as one of the conditions for (i) extending credit to the Borrower
pursuant to the Credit Agreement and (ii) permitting certain proceeds thereof to
be invested in the Guarantor; and
WHEREAS, Guarantor is an Affiliate of the Borrower and a Subsidiary of
the Parent; and
WHEREAS, Guarantor acknowledges the receipt of substantial direct
benefits by the making of the Loans to the Borrower pursuant to the Credit
Agreement;
NOW THEREFORE, in consideration of the Loans to be extended by the
Lenders to the Borrower under the Credit Agreement, the receipt and sufficiency
of which are hereby acknowledged, Guarantor agrees as follows:
1. Guaranty. Guarantor hereby unconditionally, absolutely,
jointly and severally, guarantees to the Administrative Agent and the Lenders
and their respective successors, endorsees and assigns (a) the due and punctual
payment by the Borrower of: (i) the principal of, premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and any renewals, modifications or extensions thereof, in whole or in
part; and (ii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or
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other similar proceeding, regardless of whether allowed or allowable in such
proceeding) of the Borrower to the Administrative Agent and the Lenders under
the Credit Agreement and the other Loan Documents to which the Borrower is or is
to be a party and any renewals, modifications or extensions thereof, in whole or
in part; (b) the due and punctual payment and performance of all other
obligations of the Borrower under or pursuant to the Credit Agreement and the
other Loan Documents, and any renewals, modifications or extensions thereof, in
whole or in part; (c) the due and punctual payment and performance of all
obligations of Guarantor under this Guaranty and the other Loan Documents to
which it is or is to be a party and any and all renewals, modifications or
extensions thereof, in whole or in part; (d) all future advances and re-advances
that may subsequently be made to Borrower by Administrative Agent and the
Lenders, evidenced by the Credit Agreement, any Notes or any other Loan
Document, and all renewals, replacements, extensions or modifications thereof;
and (e) all other indebtedness of the Borrower to the Administrative Agent, now
or hereafter existing, hereunder or under any other Loan Document, whether
direct or indirect, plus interest thereon and all charges and expenses of
collection incurred by Administrative Agent hereunder, including court costs,
and reasonable attorneys' fees (the liabilities, obligations and indebtedness
described in clauses (a) through (e), inclusive, of this paragraph are herein
collectively referred to as the "Obligations").
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of the Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render the
Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of the
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of the Guarantor
(a) in respect of intercompany indebtedness to Borrower or any Affiliate of
Borrower to the extent that such indebtedness would be discharged in an amount
equal to the amount paid by the Guarantor hereunder and (b) under any Guarantee
of senior unsecured indebtedness or Debt subordinated in right of payment to the
Obligations which Guarantee contains a limitation as to maximum amount similar
to that set forth in this paragraph, pursuant to which the liability of the
Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of the Guarantor pursuant to applicable law.
2. Guaranty Absolute. This Guaranty is an absolute,
unconditional, continuing and unlimited guaranty of the full and punctual
payment and performance by the Borrower of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Administrative Agent or any Lender first attempt to collect any of the
Obligations from the Borrower, Guarantor, the Parent, the Subsidiary Guarantors
or any other Person, or resort to any security for the Obligations or this
Guaranty or to other means of obtaining payment of any of the Obligations which
the Administrative Agent or any Lender now has or may acquire after the date
hereof, or
J - 2
upon any other contingency whatsoever, and the Administrative Agent and the
Lenders may proceed hereunder against Guarantor in the first instance to collect
the Obligations when due, without first proceeding against the Borrower or any
other Person and without first resorting to any security or other means of
obtaining payment. The obligations of Guarantor hereunder are irrevocable,
absolute and unconditional, irrespective of genuineness, validity, regularity or
enforceability of the Obligations or any security given therefor or in
connection therewith or any other circumstance (except payment to, or express,
written waiver, release or consent by, the Administrative Agent and the Lenders)
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor. This Guaranty shall be in addition to any other guaranty or other
security for the Obligations, and it shall not be prejudiced or rendered
unenforceable by the invalidity of any such other guaranty or security. The
liability of Guarantor hereunder shall in no way be affected or impaired by any
acceptance by the Administrative Agent and the Lenders of any direct or indirect
security for, or other guaranties of, the Obligations or any other indebtedness,
liability or obligations of the Borrower, Guarantor or other Person to the
Administrative Agent or any Lender or by any failure, delay, neglect or omission
of the Administrative Agent or any Lender to realize upon or protect any
Obligations or any such other indebtedness, liability or obligation or any notes
or other instruments evidencing the same or any direct or indirect security
therefor, or by any approval, consent, waiver or other action taken or omitted
to be taken by the Administrative Agent or any Lender. Upon any default by the
Borrower in the payment and performance of the Obligations (and after the
expiration of any applicable grace period provided in the Credit Agreement), the
liabilities and obligations of Guarantor hereunder shall, at the option of the
Required Lenders, become forthwith due and payable to the Administrative Agent
and the Lenders without demand or notice of any nature, all of which are
expressly waived by Guarantor; provided that if any Event of Default specified
in clause (h) or (i) of Section 8.01 of the Credit Agreement occurs, without any
notice to Guarantor or any other act by the Administrative Agent or any Lender,
the liabilities and obligations of Guarantor hereunder shall automatically
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by Guarantor. Payments by
Guarantor hereunder may be required by the Administrative Agent and the Lenders
on any number of occasions.
3. No Impairment. Guarantor agrees that its obligations hereunder
shall not be impaired, modified, changed, released or limited in any manner
whatsoever by any impairment, modification, change, release or limitation of
liability of the Borrower or its estates by reason of the commencement of any
case, proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of the Borrower or its
property under any law relating to bankruptcy, insolvency, reorganization,
relief of debtors or seeking appointment of a receiver, trustee, custodian or
similar official for the Borrower or for all or part of its property.
4. Guarantor's Further Agreement to Pay. Guarantor further agrees
to pay to the Administrative Agent and the Lenders forthwith upon demand, in
funds immediately available to the Administrative Agent, all costs and expenses
(including court costs and reasonable attorneys' fees) incurred or expended by
the Administrative Agent and the Lenders in connection with the enforcement of
this Guaranty.
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5. Termination of Guaranty. It is the intention hereof that
Guarantor shall remain liable under this Guaranty until all of the Obligations
have been fully paid and performed notwithstanding any act, omission or thing
(except payment to, or express, written waiver, release or consent by, the
Administrative Agent and the Lenders) which might otherwise operate as a legal
or equitable discharge of Guarantor. Notwithstanding anything contained herein
to the contrary, Guarantor agrees that to the extent all or any part of any
payment of any of the Obligations previously received by the Administrative
Agent or any Lender pursuant to the Credit Agreement or any Loan Document or
otherwise is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, recovered, rescinded or is required to be retained by
or repaid to a trustee, receiver, or any other person under any bankruptcy code,
common law, or equitable cause, or otherwise required to be returned by the
Administrative Agent or any Lender for any reason, whether by court order,
administrative order or settlement, this Guaranty and the obligation or part
thereof intended to be satisfied shall be revived and reinstated and continued
in full force and effect as to Guarantor's obligations hereunder, and Guarantor
agrees that it shall immediately pay to the Administrative Agent or such Lender
the amount of such payment, notwithstanding any termination of this Guaranty or
any cancellation of the Credit Agreement or the Notes.
6. Security; Setoff. Guarantor hereby grants to the
Administrative Agent and the Lenders, as security for the full and punctual
payment and performance of Guarantor's obligations hereunder, a continuing lien
on and security interest in all deposits and other sums credited by or due from
the Administrative Agent or any Lender to Guarantor or subject to withdrawal by
Guarantor. Regardless of the adequacy of any collateral or other means of
obtaining repayment of the Obligations, the Administrative Agent or any Lender
may at any time upon or after the occurrence of any Default, and without notice
to Guarantor, set off the whole or any portion or portions of any or all such
deposits and other sums credited by or due from the Administrative Agent or any
Lender to Guarantor or subject to withdrawal by Guarantor against amounts
payable under this Guaranty, whether or not any other person or persons could
also withdraw money therefrom. Guarantor agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the terms of the Credit Agreement, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of Guarantor in the amount of such participation.
7. Administrative Agent and the Lenders' Freedom to Deal with
Borrower and Other Parties. The Administrative Agent and the Lenders shall be at
liberty, without giving notice to or obtaining the assent of Guarantor, or any
of them, and without relieving Guarantor of any liability hereunder, to deal
with the Borrower, the Parent, the Subsidiary Guarantors and with each other
party who is now, or after the date hereof becomes, liable in any manner for any
of the Obligations (including, without limitation, any co-guarantor), in such
manner as the Administrative Agent and the Lenders in their sole discretion deem
fit and to this end Guarantor hereby gives to the Administrative Agent and the
Lenders full authority in their sole discretion to do any or all of the
following things: (a) extend credit, make loans and afford other financial
accommodations to the Borrower or to any such other party at such times, in such
J - 4
amounts and on such terms as the Administrative Agent and the Lenders may
approve, (b) vary the terms and grant extensions or renewals of any present or
future indebtedness or obligation of the Borrower or of any such other party to
the Administrative Agent and the Lenders, (c) grant extensions of time, waivers
and other indulgences in respect thereof, (d) vary, exchange, release or
discharge, wholly or partially, or delay in or abstain from perfecting and
enforcing any security or guaranty or other means of obtaining payment of any of
the Obligations or any liability under this Guaranty, which security or guaranty
the Administrative Agent and the Lenders now have or acquire after the date
hereof, (e) accept partial payments from the Borrower or such other party, (f)
release or discharge, wholly or partially, any endorser or guarantor, and (g)
compromise or make any settlement or other arrangement with the Borrower or any
such other party.
8. Representations and Warranties of Guarantor. To induce the
Lenders to extend credit to the Borrower, Guarantor represents and warrants to
the Administrative Agent and the Lenders that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.
9. Covenants. Guarantor covenants and agrees that, from the date
hereof and until payment in full of the Obligations, Guarantor shall, unless the
Administrative Agent otherwise consents in writing, comply with all of the
covenants contained in the Credit Agreement (as it may be amended from time to
time) as applicable to Guarantor and shall deliver to the Administrative Agent
and the Lenders:
(a) within five Business Days after Guarantor becomes
aware of the occurrence of any Default, a certificate of a principal
financial officer or a principal accounting officer of Guarantor
setting forth the details thereof and the action which Guarantor is
taking or proposes to take with respect thereto; and
(b) from time to time, such additional information
regarding the financial position or business of Guarantor as the
Administrative Agent or any Lender may reasonably request.
10. Events of Default. Each of the following shall constitute an
"Event of Default" hereunder:
(a) Failure of Guarantor to pay on demand by the
Administrative Agent or any Lender any principal of, premium, if any,
or interest on the Obligations after the same shall become due, whether
by acceleration or otherwise;
(b) Failure of Guarantor to observe or perform any of its
covenants, conditions or agreements under this Guaranty (other than set
forth in paragraph (a) above) for a period of thirty (30) days after
notice specifying such failure and requesting that it be remedied is
given by the Administrative Agent to Guarantor;
(c) Any representation, warranty, certification or
statement made by Guarantor in any certificate, financial statement or
other document delivered
J - 5
pursuant to this Guaranty shall prove to have been incorrect in any
material respect when made; or
(d) The Parent shall at any time fail to own, directly or
indirectly, at least 100% of the issued and outstanding shares of
voting stock of the Guarantor.
Whenever any Default shall have occurred, the Administrative Agent (if
requested by the Required Lenders) may declare the entire unpaid principal of,
premium, if any, and interest on the Obligations to be immediately due and
payable without presentation, demand, protest and notice of any kind, all of
which are hereby expressly waived; provided that if any Event of Default
specified in clause (h) or (i) of Section 8.01 of the Credit Agreement occurs,
without any notice to Guarantor or any other act by the Administrative Agent or
any Lender, the liabilities and obligations of Guarantor hereunder shall
automatically become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
Guarantor. As used herein, the term "Default" means any condition or event which
constitutes an Event of Default or which with the giving of notices or lapse of
time or both would, unless cured or waived, become an Event of Default.
No failure or delay by the Administrative Agent or any Lender to
exercise any right, power or privilege hereunder shall operate as a waiver of
any such right, power or privilege nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
11. Waivers by Guarantor. Guarantor hereby waives: (a) acceptance
or notice of acceptance of this Guaranty by the Administrative Agent and the
Lenders; (b) notice of any action taken or omitted by the Administrative Agent
and the Lenders in reliance hereon; (c) any duty on the part of the
Administrative Agent or any Lender to disclose to Guarantor any facts it may now
or hereafter know regarding the Borrower, the Parent or any Subsidiary
Guarantor; (d) notice of presentment and demand for payment or performance of
any of the Obligations; (e) protest and notice of dishonor or of default to
Guarantor or to any other party with respect to the payment or performance of
the Obligations hereby guaranteed; (f) any and all other notices whatsoever from
the Administrative Agent or any Lender to which Guarantor might otherwise be
entitled; and (g) any requirement that the Administrative Agent or any Lender be
diligent or prompt in making demands hereunder, giving notice of any default by
the Borrower or asserting any other right of the Administrative Agent or any
Lender hereunder. Guarantor also irrevocably waives, to the fullest extent
permitted by law, and agrees not to assert or take advantage of any and all
defenses which at any time may be available in respect of Guarantor's
obligations to the Administrative Agent and the Lenders hereunder by virtue of:
(i) the statute of limitations in any action hereunder or for the collection or
the performance of any of the Obligations; (ii) the lack of authority of
Guarantor or any other Person, or the failure of the Administrative Agent or any
Lender to file or enforce a claim against the estates (in bankruptcy or any
other proceeding) of the Borrower, the Guarantor, the Parent, any Subsidiary
Guarantor or any other Person; (iii) the failure of the Administrative Agent or
any Lender to give notice of any action or non-action on the
J - 6
part of any other person whomsoever, in connection with any of the Obligations;
(iv) an election of remedies by the Administrative Agent or any Lender which
destroys or otherwise impairs any subrogation rights of Guarantor, the right of
Guarantor to proceed against the Borrower for reimbursement, or the right of
Guarantor to seek contribution from any co-guarantor, or all or any combination
of such rights; (v) the failure of the Administrative Agent or any Lender to
commence an action against the Borrower, Guarantor, the Parent, any Subsidiary
Guarantor or any other Person; (vi) any valuation, stay, moratorium law or other
similar law now or hereafter in effect; (vii) any defense based on lack of due
diligence by the Administrative Agent or any Lender in collection, protection or
realization upon any collateral securing the Obligations; (viii) any and all
rights Guarantor may now or hereafter have arising under N.C.G.S. Section 26-7
or Section 26-12; (ix) the amendment of, supplement to or waiver of any
provision of the Credit Agreement, the Note or any other Loan Documents, (x) the
failure of Guarantor to receive any benefit from or as a result of its
execution, delivery and performance of this Guaranty; and (xi) any other legal
or equitable defenses whatsoever to which Guarantor might otherwise be entitled.
12. No Contest with Administrative Agent and the Banks. So long as
any Obligation remains unpaid or undischarged, no Guarantor will, by paying any
sum recoverable hereunder (whether or not demanded by the Administrative Agent
or any Lender) or by any means or on any other ground, claim any right of
subrogation, contribution, reimbursement or indemnity with respect to any of the
Obligations guaranteed hereby or to any collateral now or hereafter granted to
secure the Obligations or claim any setoff or counterclaim against the Borrower
in respect of any liability of Guarantor to the Borrower or of the Borrower to
Guarantor or in proceedings under any federal or state bankruptcy code or
insolvency proceedings of any nature, proceed in competition with the
Administrative Agent or any Lender in respect of payment hereunder or be
entitled to have the benefit of any counterclaim or proof of claim or dividend
or payment by or on behalf of the Borrower or the benefit of any other security
for any Obligation which, now or hereafter, the Administrative Agent or any
Lender may hold or in which it may have any share. In addition, any indebtedness
of the Borrower, the Parent, or any Subsidiary Guarantor now or hereafter held
by the Guarantor is hereby subordinated in right of payment to the prior payment
in full of the Obligations. If any amount shall erroneously be paid to the
Guarantor on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of the Borrower, the
Parent, or any Subsidiary Guarantor, such amount shall be held in trust for the
benefit of the Lenders and shall forthwith be paid to the Administrative Agent
to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.
13. Remedies Cumulative. Each right, privilege, power and remedy
of the Administrative Agent and the Lenders under this Guaranty, the Credit
Agreement, the Notes or any other Loan Document, or under any other instrument
of any other party securing or guaranteeing any of the Obligations or under
applicable laws shall be cumulative and concurrent and the exercise of any one
or more of them shall not preclude the simultaneous or later exercise by the
Administrative Agent and the Lenders of any or all such other rights,
privileges, powers and remedies.
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14. Demands and Notices. All notices, requests and other
communications to the parties hereunder shall be in writing and shall be given
(i) to Guarantor in care of the Borrower at the address for the Borrower set
forth in the Credit Agreement, (ii) to the Administrative Agent at its address
set forth in the Credit Agreement, and (iii) to the respective Lenders at their
respective addresses set forth in the Credit Agreement. All notices shall be
given in the manner specified in the Credit Agreement
15. Amendments, Waiver, Etc. No provision of this Guaranty can be
changed, waived or discharged or terminated except by an instrument in writing
signed by the Administrative Agent and Guarantor and consented to by the Lenders
as required by the Credit Agreement. No course of dealing or delay or omission
on the part of either party in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto.
16. Counterparts. This Guaranty may be executed in any number of
counterparts. Each of the counterparts will be considered an original, and all
counterparts constitute but one and the same instrument.
17. Pari Passu Obligations. Guarantor warrants and represents that
payment obligations and liabilities of Guarantor under this Guaranty shall at
all times rank pari passu with all other unsecured and unsubordinated payment
obligations and liabilities (including contingent obligations and liabilities)
of Guarantor (other than those which are mandatorily preferred by laws or
regulations of general application). Guarantor shall assure that the
representation set forth herein is true and correct at all times.
18. Indemnity. Guarantor agrees to indemnify the Administrative
Agent and the Lenders against, and hold the Administrative Agent and the Lenders
harmless from, any loss, cost, charge, expense (including reasonable attorneys'
fees), claims, demands, suits, damages, penalties, taxes, fines, levies and
assessments which may be asserted or imposed against, or suffered or incurred
by, the Administrative Agent or any Lender as a direct or indirect result of any
representation or warranty of the Borrower in the Credit Agreement or of
Guarantor herein being untrue or inaccurate in any respect or as a direct or
indirect result of the failure by the Borrower or Guarantor to observe, perform
or comply with any of its respective covenants, undertakings or obligations set
forth in the Credit Agreement, this Guaranty or any other Loan Document.
19. Financial Information. The liability of Guarantor under this
Guaranty shall be reflected in the consolidated financial statements (or the
notes thereto) of the Parent in accordance with GAAP.
20. Miscellaneous Provisions. This Guaranty is intended to take
effect as a sealed instrument to be governed by and construed in accordance with
the laws of the State of North Carolina (but not including the choice of law
rules thereof). This Guaranty shall bind the successors and assigns of Guarantor
and shall inure to the benefit of the Lenders, their successors and assigns. All
words herein shall be deemed to refer to the singular, plural, masculine,
feminine or neuter as the identity of the person or entity may
J - 8
require. The descriptive headings of the several paragraphs of this Guaranty are
inserted for convenience only and do not constitute a part of this Guaranty.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
J - 9
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
day and year first above written.
GUARANTOR:
MONTANA MILLS BREAD CO.,
Inc., a Delaware corporation
ATTEST:
__________________________ By:_____________________________________SEAL)
Its: Secretary Name:
Title:
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EXHIBIT K
GUARANTY ASSUMPTION AGREEMENT
THIS GUARANTY ASSUMPTION AGREEMENT (this "Agreement") is made as of the
_____ day of __________, 20___, by the undersigned (hereinafter referred to as
"Additional Subsidiary Guarantor"), to and for the benefit of WACHOVIA BANK,
NATIONAL ASSOCIATION, as Administrative Agent (the "Administrative Agent") for
itself and the Lenders (as defined in the Credit Agreement referred to below)
and their successors and assigns.
WHEREAS, the Lenders have extended credit to Krispy Kreme Doughnut
Corporation (the "Borrower") under that certain Credit Agreement dated as of
October 31, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the Lenders from time to time
party thereto, and Wachovia Bank, National Association, as Administrative Agent;
and
WHEREAS, capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement; and
WHEREAS, each Additional Subsidiary Guarantor is a Subsidiary of the
Borrower; and
WHEREAS, each Additional Subsidiary Guarantor acknowledges the receipt
of substantial direct benefits by the making of the Loans to the Borrower
pursuant to the Credit Agreement;
NOW THEREFORE, in consideration of the Loans extended and/or to be
extended by the Lenders to the Borrower under the Credit Agreement, and for
other consideration, the receipt and sufficiency of which are hereby
acknowledged, each Additional Subsidiary Guarantor agrees as follows:
1. Guaranty. Pursuant to Section 6.09(a) of the Credit Agreement,
the Additional Subsidiary Guarantor hereby agrees to become a "Material
Subsidiary," a "Subsidiary Guarantor" and a "Guarantor" for all purposes of the
Credit Agreement, and a "Guarantor" for all purposes of the Subsidiary Guaranty
Agreement. Without limiting the foregoing, the Additional Subsidiary Guarantor
hereby, jointly and severally with the other Subsidiary Guarantors, guarantees
to the Administrative Agent and the Lenders and their respective successors,
endorsees and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of all Obligations (as defined in
Section 1 of the Subsidiary Guaranty) in the same manner and to the same extent
as is provided in Section 2 of the Subsidiary Guaranty.
2. Representations and Warranties. In addition, the Additional
Subsidiary Guarantor hereby makes the representations and warranties set forth
in Section 11 of the
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Subsidiary Guaranty, with respect to itself and its obligations under this
Agreement, as if each reference in such Sections to the Credit Agreement
included reference to this Agreement.
3. Officer's Certificate. The Additional Subsidiary Guarantor
hereby instructs its counsel to deliver to the Administrative Agent the
certificate specified in Section 4.01(e) of the Credit Agreement with
appropriate insertions and attachments.
4. Opinion Letter. The Additional Subsidiary Guarantor hereby
instructs it counsel to deliver to the Administrative Agent any legal opinion
requested pursuant to Section 6.09(a) of the Credit Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this
Guaranty Assumption Agreement to be duly executed and delivered as of the day
and year first above written.
___________________________________________
By: ______________________________________
Name: ____________________________
Title: ___________________________
Accepted and agreed:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By_________________________________________
Name: ____________________________
Title: ___________________________
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EXHIBIT L
FORM OF NOTICE
IN RESPECT OF ISSUANCE OF LETTERS OF CREDIT
TO: The Lenders parties to the Credit Agreement, dated as of October 31,
2003 (the "Credit Agreement"), among Krispy Kreme Doughnut Corporation, such
Lenders, and Wachovia Bank, National Association, as Administrative Agent (the
"Administrative Agent").
Pursuant to Section 3.04(b) of the Credit Agreement, the Issuing Lender
hereby certifies to the Lenders that it has issued the following Letters of
Credit pursuant to Article III of the Credit Agreement:
FACE DATE OF
NUMBER AMOUNT ISSUANCE/EXPIRATION
- ------ ------ -------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
A copy of each of the Letters of Credit listed above has been attached
hereto.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meaning in this notice.
Date: ______________, ____.
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Issuing Lender
By: ____________________________________
Name:_______________________________
Title:______________________________
SCHEDULE 1.01
COMMITMENTS
LENDER REVOLVING CREDIT TERM LOAN TOTAL
Wachovia Bank, National Association $ 35,005,666.67 $ 8,994,333.33 $ 44,000,000.00
Branch Banking & Trust Company 22,276,333.33 5,723,666.67 28,000,000.00
Bank of America, N.A. 19,094,000.00 4,906,000.00 24,000,000.00
Royal Bank of Canada 19,094,000.00 4,906,000.00 24,000,000.00
CIBC Inc. 11,933,750.00 3,066,250.00 15,000,000.00
The Bank of Nova Scotia 11,933,750.00 3,066,250.00 15,000,000.00
TOTAL $119,337,500.00 $30,662,500.00 $150,000,000.00
SCHEDULE 4.01
REFINANCED DEBT
Wachovia - Effingham Loan 1495878 $ 30,710,282.39
Wachovia - Bridge Loan 1729094 55,051,822.22
BB&T - Freedom Rings 951-0754422 - Note 00002 4,360,590.62
BB&T - Golden Gate 491-0082677 - Note 13 6,733,694.19
BB&T - Golden Gate 491-0082677 - Note 15 2,712,286.91
BB&T - Golden Gate 491-0082677 - Note 17 2,894,677.75
BB&T - Golden Gate 491-0082677 - Note 19 2,978,719.58
BB&T - Golden Gate 491-0082677 - Note 12 3,592,965.11
------------------
Total $ 109,035,038.77
------------------
SCHEDULE 5.08
SUBSIDIARIES OF BORROWER
SUBSIDIARY STATE OF INCORPORATION
OR ORGANIZATION
Krispy Kreme Distributing Company, Inc. North Carolina
Krispy Kreme Canada, Inc. North Carolina
Krispy Kreme Coffee Company, LLC North Carolina
Krispy Kreme Mobile Store Company North Carolina
HD Capital Corporation Delaware
HDN Development Corporation Kentucky
North Texas Doughnuts, L.P. Texas
Panhandle Doughnuts, LLC North Carolina
Krispy Kreme International Ltd. Switzerland
Hot Doughnuts Now International Ltd. Switzerland
Freedom Rings, LLC Delaware
Glazed Investments, LLC Delaware
Golden Gate Doughnuts, LLC(1) North Carolina
(1) Material Subsidiaries
SCHEDULE 5.14
ENVIRONMENTAL MATTERS
The representations and warranties in Section 5.14 and the information in
Schedule 5.14 exclude operations of, and property owned and/or leased by,
franchised operators and the term "Property" as used in Section 5.14 and
Schedule 5.14 excludes the same.
****************************************
(1) Discharge Waste Water. A low percentage (less than 30%) discharge waste
water of Krispy Kreme doughnut shops may, from time to time, be out of
compliance or outside established ranges for sanitary waste, i.e., BOD,
TSS O&G, and PH. In most such instances, Krispy Kreme pays prescribed
surcharges for such exceedances established by Publicly Owned Treatment
Works (POTW). Some doughnut shop locations have received Notices of
Violation for such exceedances.
(2) Services Stations. The following sites, which are either owned or
leased by Borrower, were previously used as service stations and, as
such, petroleum products may have been stored or located at these
sites:
(a) 299 Cobb Parkway, South, Marietta, GA
(b) 791 Atlanta Street, Roswell, GA
(c) 6689 Highway #85, Riverdale, GA
(d) 6907 Pearl Road, Middleburg Heights, OH
(e) 917 N. Main Street, High Point, NC
(f) 2103 Elliston Place, Nashville, TN
(g) 289 Blanding Boulevard, Orange Park, FL
(3) Asbestos. Asbestos has been used or otherwise present in certain older
Krispy Kreme doughnut stores in floor tiles, pipe insulation, etc., but
Borrower is not aware of any present environmental issues presented by
such asbestos. In other instances, older buildings containing asbestos
previously located on property owned or leased by Krispy Kreme have
been demolished prior to construction of new Krispy Kreme doughnut
stores. To the best of Borrower's knowledge, all such activities were
conducted in accordance with applicable environmental standards.
(4) 42 Riverwalk Plaza, McCorkle Avenue, So. Charleston, WV (leased).
Hazardous Materials from property adjacent to Borrower's leased
location at 42 Riverwalk Plaza, McCorkle Avenue, So. Charleston, WV may
have contaminated Borrower's property. A no action letter has been
issued with respect to this site.
(5) 3401 Wilkinson Boulevard, Charlotte, NC. An American Cyanamid plant was
formerly located at this site. An unidentified structure exists near
the southeast corner of the property that was likely associated with
manufacturing operations during American
Cyanamid's occupation of the property. Any undocumented chemical spills
or release in the vicinity of this structure may have affected soil or
ground water quality in this area.
(6) 1814 Ivy Avenue, Winston-Salem, NC. The owner of property adjoining
this location is treating or in the past did treat a ground water
contamination of its property, the source of which is from an adjoining
owner's property. Also, the former Morris Oil Co. property located at
Ivy Avenue and 17th Street was used as a petroleum storage facility and
pumping station.
(7) 2600 South Cooper Street, Arlington, TX. This location has been
potentially contaminated by migrated petroleum-related contamination
from an adjacent property.
(8) 8425 North Florida Avenue, Tampa, FL. This location has had petroleum
contamination from either an underground storage tank previously
located on the property or due to migration from adjacent property. The
matter is currently being monitored. The State of Florida has indicated
that the site is eligible for cleaning using state funds, but presently
no such funds are available.
(9) Cherokee Group Waste Water Disposal. Borrower previously shipped
certain waste water from a location in Charlotte, NC to the Cherokee
Group for disposal. The Cherokee Group was found to be out of
compliance with environmental laws, and producers of the waste treated
by the Cherokee Group facility, including Borrower, were cited.
Borrower paid a de minimis amount and settled the matter.
(10) Underground Storage Tanks. Underground storage tanks that may have
contained petroleum products are or have been located on the property
owned or leased by Borrower listed below. Except as specifically
indicated on this Schedule 5.14, to the best of Borrower's knowledge
all such underground storage tanks have been removed in compliance with
applicable laws.
(a) 2103 Elliston Place, Nashville, TN
(b) 289 Blanding Boulevard, Orange Park, FL
(c) 1218 North Memorial Parkway, Huntsville, AL
(d) 295 Ponce de Leon Avenue, Atlanta, GA
(e) 6201 Kingston Pike, Knoxville, TN
(f) 5609 Brainerd Road, Chattanooga, TN
(g) 3920 Seventh Street Road, Louisville, KY
(h) 3250 Bragg Boulevard, Fayetteville, NC
(i) 549 North Person Street, Raleigh, NC
(j) 3401 Wilkinson Boulevard, Charlotte, NC
(k) 6328 Richmond Highway, Alexandria, VA
(l) 4901 Virginia Beach Boulevard, Virginia Beach, VA
(m) 4141 Melrose Avenue, Roanoke, VA
(n) 302 North Pleasantburg Drive, Greenville, SC
(o) 917 North Main Street, High Point, NC
(p) 8425 North Florida Avenue, Tampa, FL
(q) 1814 Ivy Avenue, Winston-Salem, NC
(r) 6907 Pearl Road, Middleburg Heights, OH
(s) 259 S. Stratford Road, Winston-Salem, NC
SCHEDULE 7.07(e)
INVESTMENT POLICY
KRISPY KREME DOUGHNUT CORP.
INVESTMENT POLICY
ADOPTED JULY 31, 2000
REVISED FEBRUARY 3, 2002
REVISED OCTOBER 28, 2003
I. INVESTMENT OBJECTIVES: The Corporation has established the following
objectives regarding its investment policy.
1. SAFETY: The primary objective of the investment activities of the
Corporation is preservation of principal. Each investment
transaction shall seek to first ensure that capital losses are
avoided by effectively making low risk investments.
2. LIQUIDITY: The investment portfolio will be structured to provide
sufficient liquidity to pay all obligations of the Corporation.
3. RETURN: The Corporation seeks to maximize the return on all
investments within the limits of safety and liquidity.
II. INVESTMENT POLICY AUTHORITY: The Corporation does hereby establish the
responsibility for enforcing and revising the Corporation's investment
policies with the Investment Committee. The Investment Committee shall
consist of the CFO, VP of Finance, and Director of Accounting. The
Investment Committee will meet as needed, along with the Corporation's
Investment Advisors, to review the investing activities of he
Corporation. The Committee will be charged with the responsibility of
revising, approving, and enforcing the Corporation's investment
policies, as well as, reviewing any previous investment results.
Executing the daily investment decisions, reporting, and safekeeping of
the investments in accordance with the Corporation's Investment
policies are the primary responsibility of the CFO. The CFO has further
delegated these duties to our Investment Advisors. In addition, the CFO
will provide a monthly investment report to the Chief Executive
Officer.
III. AUTHORIZED INVESTMENTS: Investment Advisors/Money Managers may buy,
sell or invest corporate funds into any of the following securities in
accordance with the established standards:
Security Description
MATURITIES LIMITATIONS
U.S. Treasuries (Bills, Notes, Bonds) 1 wk to 2 yrs 40% of portfolio
U.S. Government Agency Securities 1 wk to 2 yrs 60% of portfolio
Gov. National Mortgage Assoc (GNMA)
Federal Home Loan Mortgage Assoc. (FNMA)
Federal Home Loan Mortgage Corp (FHLMC)
Student Loan Marketing Assoc. (SLMA)
Repurchase Agreements Overnight Collateralized by Govt Securities
Eurodollars Overnight None
Master Note Overnight None
Commercial Paper 1 day to 180 days A1,P1, 10% of portfolio
Money Market Funds Daily Reviewed w/ Corporation
Certificates of Deposit 1 wk to 1 yr None
INVESTMENTS INTO SECURITIES OUTSIDE THE AUTHORIZED INVESTMENTS MUST BE
APPROVED, IN WRITING, BY THE INVESTMENT COMMITTEE.
IV. INVESTMENT QUALITY RATINGS: The credit rating on all investments shall
be determined prior to investing in any security. All references to
credit rating will be using the Standard & Poors and Moody's investment
rating services. In the event a credit rating should be downgraded by
one or both services while holding the security, the Investment
Advisors shall notify the CFO, or anyone else the CFO designates, who
will then make the decision regarding liquidation or continuing to hold
until maturity.
V. INVESTMENT TERM TO MATURITY: Term to maturity shall be governed by the
Corporation's safety and liquidity limitations. Maturities should be
timed to coincide as closely as possible with the known cash needs.
VI. SAFEKEEPING: All investments made by the Corporation will be held with
selected Bank or Brokerage Institution in custody or safekeeping. In
addition, the financial institution must provide timely
confirmation/safekeeping receipts on all investment transactions and
provide monthly transaction reports.
ANY INVESTING ACTIVITIES WHICH ARE NOT COVERED OR ARE A VIOLATION OF
AFOREMENTIONED INVESTMENT POLICY MUST BE APPROVED, IN WRITING, BY THE INVESTMENT
COMMITTEE.
SCHEDULE 7.09
EXISTING LIENS
GE Capital Business Asset Funding Corp. has a security interest in various real
property and equipment of Glazed Investments, LLC to secure the obligations of
Glazed Investments, LLC with respect to the $13,412,634 debt to GE Capital
disclosed on Schedule 7.10.
SCHEDULE 7.10
EXISTING DEBT
1. Borrower is the obligor on a promissory note to Dough-Re-Mi Co. Ltd.
used as partial payment of the purchase price in Borrower's acquisition
of substantially all of the assets of Dough-Re-Mi Co. Ltd. As of the
date of the Credit Agreement, the total amount outstanding on such
promissory note is approximately $4,910,000.
2. Glazed Investments, LLC has total outstanding debt in the amount of
$22,047,634 as follows:
- $4,520,000 owed to Krispy Kreme Doughnut Corporation
- $3,015,000 owed to Larry Jaro
- $13,412,634 owed to GE Capital Business Asset Funding Corp. for
equipment and real estate
- $1,100,000 owed to Western National Bank for real estate
Glazed Investments, LLC intends to borrow an additional $5,245,342 from
Krispy Kreme Doughnut Corporation for new store equipment under a
revolving line of credit currently being negotiated.
3. Montana Mills Bread Co., Inc. has outstanding debt owed to GMAC for
loans on four delivery vehicles in the amount of $21,195.00.
4. Borrower has the following letters of credit outstanding with BB&T as
of October 30, 2003:
NOTE # ORIGINAL L/C AMOUNT BENEFICIARY
- ------ ---------------------- -------------------------------------
26 $ 6,825,000.00 The Travelers Indemnity Company
25 $ 67,660.00 Missouri Department of Revenue
21 $ 35,200.00 Nunz Equities West, LLC
19 $ 81,000.00 Rouhollah Kalimian DBA Roy-al Company
18 $ 23,291.67 New York University
13 $ 326,000.00 Lumbermans Mutual Casualty Company
5. Freedom Rings, LLC has the following letters of credit outstanding with
BB&T as of October 30, 2003:
NOTE # ORIGINAL L/C AMOUNT BENEFICIARY
- ------ --------------------- ----------------------------------------
5 $ 107,514.00 City of Northfield, New Jersey
4 $ 395,072.00 Township of Brick, Ocean County NJ
3 $ 32,363.00 Springfield Township, Delaware County PA
6. New England Dough, LLC has outstanding loans with BB&T as follows:
- Term Loan: $5,495,496
- Revolving Line of Credit: $4,119,635