FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
among
CKE RESTAURANTS, INC.,
THE LENDERS NAMED HEREIN
and
BNP PARIBAS,
As Agent
Dated as of January 31, 2002
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS..................................................................... 1
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Section 1.1 Definitions.................................................................. 1
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SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES........................................... 28
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Section 2.1 [Intentionally Omitted]...................................................... 28
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Section 2.2 Revolving Loans.............................................................. 28
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Section 2.3 Notice of Borrowing.......................................................... 29
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Section 2.4 Disbursement of Funds........................................................ 29
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Section 2.5 Notes........................................................................ 30
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Section 2.6 Interest..................................................................... 30
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Section 2.7 Interest Periods............................................................. 31
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Section 2.8 Minimum Amount of Eurodollar Loans........................................... 32
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Section 2.9 Conversion or Continuation................................................... 32
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Section 2.10 Voluntary Reduction of Commitments.......................................... 33
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Section 2.11 Voluntary Prepayments....................................................... 33
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Section 2.12 Mandatory Prepayments....................................................... 33
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Section 2.13 Application of Prepayments.................................................. 35
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Section 2.14 Method and Place of Payment................................................. 36
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Section 2.15 Fees........................................................................ 36
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Section 2.16 Interest Rate Unascertainable, Increased Costs, Illegality.................. 37
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Section 2.17 Funding Losses.............................................................. 38
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Section 2.18 Increased Capital........................................................... 39
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Section 2.19 Taxes....................................................................... 39
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Section 2.20 Use of Proceeds............................................................. 41
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Section 2.21 Collateral Security......................................................... 41
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Section 2.22 Replacement of Certain Lenders.............................................. 44
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SECTION 3. LETTERS OF CREDIT............................................................... 44
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Section 3.1 Issuance of Letters of Credit, etc........................................... 44
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Section 3.2 Letter of Credit Fees........................................................ 46
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Section 3.3 Obligation of Borrower Absolute, etc......................................... 47
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SECTION 4. CONDITIONS PRECEDENT............................................................ 49
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Section 4.1 [Intentionally Omitted]...................................................... 49
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Section 4.2 Conditions Precedent to the Effectiveness of this Agreement.................. 49
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Section 4.3 Conditions Precedent to All Loans............................................ 57
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SECTION 5. REPRESENTATIONS AND WARRANTIES.................................................. 58
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Section 5.1 Corporate Status............................................................. 58
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Section 5.2 Corporate Power and Authority................................................ 58
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Section 5.3 No Violation................................................................. 58
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Section 5.4 Litigation. ................................................................. 59
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Section 5.5 Financial Statements; Financial Condition; etc............................... 59
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Section 5.6 Solvency..................................................................... 59
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Section 5.7 Projections.................................................................. 59
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Section 5.8 Material Adverse Change...................................................... 59
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Section 5.9 Use of Proceeds; Margin Regulations.......................................... 59
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Section 5.10 Governmental and Other Approvals............................................ 60
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Section 5.11 Security Interests and Liens................................................ 60
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Section 5.12 Tax Returns and Payments.................................................... 60
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Section 5.13 ERISA....................................................................... 61
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Section 5.14 Investment Company Act; Public Utility Holding Company Act.................. 61
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Section 5.15 Dissolved Subsidiaries; Previously Material Subsidiaries, etc............... 61
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Section 5.16 Representations and Warranties in Transaction Documents..................... 62
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Section 5.17 True and Complete Disclosure................................................ 62
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Section 5.18 Corporate Structure; Capitalization......................................... 62
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Section 5.19 Environmental Matters....................................................... 63
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Section 5.20 Intellectual Property....................................................... 64
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Section 5.21 Ownership of Property; Restaurants.......................................... 64
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Section 5.22 No Default.................................................................. 64
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Section 5.23 Licenses, etc............................................................... 65
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Section 5.24 Compliance with Law......................................................... 65
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Section 5.25 No Burdensome Restrictions.................................................. 65
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Section 5.26 Brokers' Fees............................................................... 65
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Section 5.27 Labor Matters............................................................... 65
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Section 5.28 Indebtedness of the Borrower and Its Subsidiaries........................... 65
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Section 5.29 Other Agreements............................................................ 65
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Section 5.30 Immaterial Subsidiaries..................................................... 65
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Section 5.31 Franchise Agreements and Franchisees........................................ 66
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SECTION 6. AFFIRMATIVE COVENANTS........................................................... 66
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Section 6.1 Information Covenants........................................................ 66
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Section 6.2 Books, Records and Inspections............................................... 71
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Section 6.3 Maintenance of Insurance..................................................... 72
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Section 6.4 Taxes........................................................................ 72
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Section 6.5 Corporate Franchises......................................................... 72
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Section 6.6 Compliance with Law.......................................................... 72
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Section 6.7 Performance of Obligations................................................... 72
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Section 6.8 Maintenance of Properties.................................................... 73
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Section 6.9 Compliance with Terms of Leaseholds.......................................... 73
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Section 6.10 Compliance with Environmental Laws.......................................... 73
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Section 6.11 Subsidiary Guarantors....................................................... 73
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Section 6.12 Immaterial Subsidiaries..................................................... 74
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Section 6.13 Additional Mortgages........................................................ 74
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Section 6.14 Title Policies.............................................................. 74
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Section 6.15 Aeroways Aircraft Mortgage.................................................. 75
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SECTION 7. NEGATIVE COVENANTS.............................................................. 75
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Section 7.1 Financial Covenants.......................................................... 75
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Section 7.2 Indebtedness................................................................. 79
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Section 7.3 Liens........................................................................ 81
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Section 7.4 Restriction on Fundamental Changes........................................... 83
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Section 7.5 Sale of Assets............................................................... 84
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Section 7.6 Contingent Obligations....................................................... 85
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Section 7.7 Dividends.................................................................... 86
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Section 7.8 Advances, Investments and Loans.............................................. 86
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Section 7.9 Transactions with Affiliates................................................. 90
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Section 7.10 Limitation on Voluntary Payments and Modifications of Certain
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Documents.................................................................... 91
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Section 7.11 Changes in Business......................................................... 92
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Section 7.12 Certain Restrictions........................................................ 92
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Section 7.13 Lease Obligations........................................................... 93
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Section 7.14 Hedging Agreements.......................................................... 95
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Section 7.15 Plans....................................................................... 95
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Section 7.16 Fiscal Year; Fiscal Quarter................................................. 95
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Section 7.17 Partnerships................................................................ 95
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Section 7.18 Excluded Resales............................................................ 95
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Section 7.19 Designated Senior Indebtedness.............................................. 95
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Section 7.20 Instruments................................................................. 95
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SECTION 8. EVENTS OF DEFAULT............................................................... 96
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Section 8.1 Events of Default............................................................ 96
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Section 8.2 Rights and Remedies.......................................................... 99
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SECTION 9. THE AGENT.......................................................................100
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Section 9.1 Appointment..................................................................100
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Section 9.2 Delegation of Duties.........................................................101
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Section 9.3 Exculpatory Provisions.......................................................101
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Section 9.4 Reliance by Agent............................................................101
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Section 9.5 Notice of Default............................................................102
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Section 9.6 Non-Reliance on Agent and Other Lenders......................................102
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Section 9.7 Indemnification..............................................................102
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Section 9.8 Agent in its Individual Capacity.............................................103
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Section 9.9 Successor Agent..............................................................103
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SECTION 10. MISCELLANEOUS...................................................................103
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Section 10.1 Payment of Expenses, Indemnity, etc........................................103
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Section 10.2 Right of Setoff............................................................105
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Section 10.3 Notices....................................................................105
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Section 10.4 Successors and Assigns; Participation; Assignments.........................105
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Section 10.5 Amendments and Waivers.. ..................................................108
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Section 10.6 No Waiver; Remedies Cumulative.............................................110
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Section 10.7 Sharing of Payments........................................................110
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Section 10.8 Application of Collateral Proceeds.........................................110
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Section 10.9 Governing Law; Submission to Jurisdiction..................................111
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Section 10.10 Counterparts...............................................................112
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Section 10.11 Financial Advisor..........................................................112
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Section 10.12 Amendment and Restatement..................................................112
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Section 10.13 [Intentionally Omitted]....................................................113
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Section 10.14 Headings Descriptive.......................................................113
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Section 10.15 Marshalling; Recapture.....................................................113
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Section 10.16 Severability...............................................................113
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Section 10.17 Independence of Covenants..................................................113
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Section 10.18 Survival...................................................................114
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Section 10.19 Domicile of Loans..........................................................114
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Section 10.20 Limitation of Liability....................................................114
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Section 10.21 Calculations; Computations.................................................114
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Section 10.22 WAIVER OF TRIAL BY JURY....................................................114
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Section 10.23 Reference..................................................................114
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Exhibits, Schedules and Annexes
Exhibit A - Intentionally Omitted
Exhibit B - Form of Revolving Note
Exhibit C - Form of Borrower Pledge Agreement
Exhibit D - Form of Borrower Security Agreement
Exhibit E - Form of Guaranty
Exhibit F - Form of Subsidiary Pledge Agreement
Exhibit G - Form of Subsidiary Security Agreement
Exhibit H - Form of Opinion of Stradling, Yocca, Carlson and Rauth
Exhibit I - Form of Assignment Agreement
Exhibit J - Form of Notice of Borrowing
Schedule 1.1 - Commitments
Schedule 1.2 - Consolidated EBITDA
Schedule 4.1(l) - Closing Title Policies
Schedule 4.2(b) - Local Counsel
Schedule 5.10 - Governmental Approvals
Schedule 5.11 - Prior Liens
Schedule 5.13 - ERISA
Schedule 5.15 - Dissolved Entities
Schedule 5.18 - Capital Structure
Schedule 5.19 - Phase I Environmental Reports
Schedule 5.21 - Real Property
Schedule 5.27 - Labor Matters
Schedule 5.29 - Joint Ventures; Non-Competition Agreements
Schedule 5.30 - Immaterial Subsidiaries
Schedule 5.31 - Franchisees/Licensees
Schedule 7.2 - Existing Indebtedness
Schedule 7.3 - Existing Liens
Schedule 7.5 - Proposed Restaurant Closures and Sales
Schedule 7.6 - Existing Contingent Obligations
Schedule 7.8 - Existing Investments
Schedule 7.17 - Existing Partnerships
Annex I - Lending Offices
vi
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 31,
2002, among CKE Restaurants, Inc., a Delaware corporation (the "Borrower"), the
Lenders (as hereinafter defined) and BNP Paribas, a bank organized under the
laws of France acting through its Chicago branch (as successor in interest to
Paribas) ("BNP Paribas"), as acting in its capacity as agent for the Lenders.
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms shall
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have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.
"Acquiring Subsidiary" shall have the meaning provided in Section 2.21(b).
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"Acquisition" shall mean any transaction, or any series of related
transactions, consummated after the Closing Date, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or assets of any Person or
division thereof (other than assets acquired by the Borrower or any of its
Subsidiaries in the ordinary course of its business), whether through purchase
of assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of related
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors or a
majority (by percentage or voting power) of the outstanding partnership
interests of a partnership or of the outstanding equity interests of a limited
liability company or other corporate entity.
"Adjusted Leverage Ratio" shall mean with respect to the Borrower on a
consolidated basis with its Subsidiaries, at any date, the ratio of (a)(i)
Consolidated Total Debt plus (ii) the product of (A) seven multiplied by (B) an
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amount equal to Consolidated Rentals for the period of four (4) consecutive
fiscal quarters of the Borrower (taken as one accounting period) most recently
ended on or prior to such date to (b) Consolidated EBITDAR for the period of
four (4) consecutive fiscal quarters most recently ended on or prior to such
date.
"Affected Lender" shall have the meaning provided in Section 2.22.
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"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person),
controlled by, or under direct or indirect common control with such Person. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to (i) vote 10% or more of the Voting Stock of
such other Person or (ii) direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise. No Lender shall be deemed to be an
Affiliate of the Borrower as a result of its being a party to this Agreement.
"Agent" shall mean BNP Paribas (and its successors) acting in its capacity
as agent for the Lenders and any successor agent appointed in accordance with
Section 9.9.
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"Agent's Office" shall mean the office of the Agent located at Chicago,
Illinois, or such other office as the Agent may hereafter designate in writing
as such to the other parties hereto.
"Agreement" shall mean this Fourth Amended and Restated Credit Agreement,
as the same may from time to time hereafter be modified, restated, supplemented
or amended.
"Aircraft Mortgage" shall mean a mortgage and security agreement, in form
and substance satisfactory to the Agent, pursuant to which the Borrower or any
of its Subsidiaries pledges aircraft as Collateral.
"Applicable Margin" shall mean, with respect to the Commitment Fee and each
Eurodollar Loan or Base Rate Loan, the rate of interest per annum shown below
for the range of Leverage Ratio specified below:
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Leverage Ratio Eurodollar Loans Base Rate Loans Commitment Fee
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less than or equal to 3.5 to 1.0 3.50% 2.00% 0.500%
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greater than 3.5 to 1.0, but
less than or equal to 4.0 to 1.0 3.75% 2.25% 0.500%
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greater than 4.0 to 1.0 4.00% 2.50% 0.500%
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The Leverage Ratio shall be calculated as of the end of each fiscal quarter of
the Borrower, commencing with the fiscal quarter ending January 28, 2002 and
shall be reported to the Agent pursuant to a Compliance Certificate delivered by
the Borrower in accordance with Section 6.1(e). Not later than two (2) Business
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Days after receipt by the Agent of each
2
Compliance Certificate delivered by the Borrower in accordance with Section
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6.1(e) for each fiscal quarter or fiscal year of the Borrower, as applicable,
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the Agent shall determine the Leverage Ratio for the applicable period and shall
promptly notify the Borrower and the Lenders of such determination and of any
change in each Applicable Margin resulting therefrom. Each Applicable Margin
shall be adjusted (upwards or downwards, as appropriate), if necessary, based on
the Leverage Ratio as of the end of the fiscal quarter immediately preceding the
date of determination; provided, however, that for the period commencing on the
Closing Date and ending on the date of the delivery of a Compliance Certificate
in accordance with Section 6.1(e) for the first fiscal quarter of the Borrower
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ending after the Closing Date, the Leverage Ratio shall be deemed to be greater
than 4.0 to 1.0. The adjustment, if any, to the Applicable Margin shall be
effective commencing on the third (3rd) Business Day after the receipt by the
Agent of such quarterly or annual financial statements delivered in accordance
with Sections 6.1(a) and 6.1(b) and such related Compliance Certificate of the
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Borrower delivered in accordance with Section 6.1(e) and shall be effective from
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and including the third (3rd) Business Day after the date the Agent receives
such Compliance Certificate to but excluding the third (3rd) Business Day after
the date on which the next Compliance Certificate is required to be delivered
pursuant to Section 6.1(e); provided, however, that, in the event that the
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Borrower shall fail at any time to furnish to the Lenders such financial
statements and any such Compliance Certificate required to be delivered pursuant
to Sections 6.1(a), 6.1(b) and 6.1(e), for purposes of determining the
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Applicable Margin, the Leverage Ratio shall be deemed to be greater than 4.0 to
1.0 at all times until the third (3rd) Business Day after such time as all such
financial statements and each such Compliance Certificate are so received by the
Agent and the Lenders. Each determination of the Leverage Ratio and each
Applicable Margin by the Agent in accordance with this definition shall be
conclusive and binding on the Borrower and the Lenders absent manifest error.
"Asset Disposition" shall mean any conveyance, sale, lease, license,
transfer or other disposition by the Borrower or any of its Subsidiaries
subsequent to the Closing Date of any asset (including by way of (i) a sale and
leaseback transaction, (ii) the sale or other transfer of any of the capital
stock or other equity interest of any Subsidiary of the Borrower and (iii) any
total or partial loss, destruction or condemnation of any asset), but excluding
(A) sales of inventory in the ordinary course of business, (B) licenses of
intellectual property to franchisees in the ordinary course of business, (C)
leases and subleases of real and personal property of the Borrower or any of its
Subsidiaries to any of their respective franchisees in the ordinary course of
business and consistent with past practices, (D) sales, transfers or other
dispositions of any property or assets by the Borrower or any of its
wholly-owned Subsidiaries to the Borrower or any of its wholly-owned Domestic
Subsidiaries, provided, that (i) all documents or opinions required to be
delivered to the Agent pursuant to Section 2.21 have been delivered to the Agent
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and the Borrower has provided the Agent with written notice of such sale,
transfer or other disposition at least ten (10) days prior to the date of any
such sale, transfer or other disposition, (ii) the Agent and Lenders
3
shall not be deemed to have released their security interest in any such
property or assets, and (iii) the aggregate of all Santa Barbara Investments
does not exceed $12,500,000; and (E) sales, transfers and other dispositions of
any property or assets by the Borrower or any of its Subsidiaries in connection
with the Charbroiler Credit Program in an aggregate amount not exceed $2,000,000
for all such dispositions occurring after the Closing Date).
"Assignee" shall have the meaning provided in Section 10.4(c).
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"Assignment Agreement" shall have the meaning provided in Section 10.4(d).
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"Authorized Officer" of any Person shall mean any of the President, the
Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, any Senior Vice President, any Executive Vice President, any Vice
President, the Controller, the Treasurer or Assistant Treasurer of such Person,
acting singly.
"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes.
"Base Rate" shall mean, at any particular date, the higher of (i) the rate
of interest publicly announced by BNP Paribas in its office in New York, New
York from time to time as its "base rate" changing as and when such base rate
changes and (ii) the Federal Funds Rate plus 0.50%. The base rate is not
intended to be the lowest rate of interest charged by BNP Paribas in connection
with extensions of credit to debtors.
"Base Rate Loans" shall mean Loans made and/or being maintained at a rate
of interest based upon the Base Rate.
"Borrower" shall have the meaning provided in the first paragraph of this
Agreement.
"Borrower Pledge Agreement" shall mean a pledge agreement substantially in
the form of the Second Amended and Restated Borrower Pledge Agreement set forth
as Exhibit C hereto, as the same may be amended, restated, modified or
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supplemented from time to time.
"Borrower Security Agreement" shall mean a security agreement substantially
in the form of the Second Amended and Restated Borrower Security Agreement set
forth as Exhibit D hereto duly executed and delivered to the Agent by the
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Borrower, as the same may be amended, restated, modified or supplemented from
time to time.
4
"Borrowing" shall mean the incurrence of one Type of Loan from all the
Lenders on a given date (or resulting from conversions or continuations on a
given date) having, in the case of Eurodollar Loans, the same Interest Period.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in Chicago, Los Angeles or New York City a legal holiday or a day on which
banking institutions are authorized or required by law or other government
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks for U.S. dollar deposits in the relevant London
interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, all expenditures
(whether paid in cash or accrued as a liability, including the portion of
Capitalized Leases of the Borrower and its Subsidiaries originally incurred
during such period that is capitalized on the consolidated balance sheet of the
Borrower and its Subsidiaries) by the Borrower and its Subsidiaries during such
period that, in conformity with GAAP, are included in "capital expenditures",
"additions to property, plant or equipment" or comparable items in the
consolidated financial statements of the Borrower and its Subsidiaries
(excluding any expenditures for assets that would be included in "capital
expenditures," "additions to property, plant or equipment" or in comparable
items in the consolidated financial statements of the Borrower and its
Subsidiaries in conformity with GAAP which assets are acquired in a Permitted
Acquisition).
"Capital Stock" shall mean any and all shares of, or interests or
participations in, corporate stock (or other instruments or securities
evidencing ownership).
"Capitalized Lease" shall mean with respect to any Person, (i) any lease of
property, real or personal, the obligations under which are capitalized on the
consolidated balance sheet of such Person, and (ii) any other such lease of such
Person to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capitalized Lease Obligations" with respect to any Person, shall mean at
any time of determination all obligations of such Person under or in respect of
Capitalized Leases of such Person.
"Cash Collateralize" shall mean the pledge and deposit with or delivery to
the Agent, for the benefit of the Agent, the Issuing Bank and the Lenders, cash
or deposit account balances pursuant to documentation in form and substance
reasonably satisfactory to the Agent and the Issuing Bank; such documentation
shall irrevocably authorize the
5
Agent to apply such cash collateral to reimbursement of the Issuing Bank for
draws under Letters of Credit as and when occurring, and in all cases to payment
of other Obligations as and when due. Cash collateral shall be maintained in
blocked deposit accounts at the Agent or a Lender.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 360 days from the date of acquisition, (ii) time deposits and certificates
of deposit of any Lender or any domestic commercial bank of recognized standing
having capital and surplus in excess of $200,000,000 with maturities of not more
than 180 days from the date of acquisition, (iii) fully secured repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) entered into with any bank meeting the
qualifications specified in clause (ii) above, and (iv) commercial paper issued
by the parent corporation of any Lender or any domestic commercial bank of
recognized standing having capital and surplus in excess of $500,000,000 and
commercial paper rated at least A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or at least P-1 or the equivalent thereof by Moody's
Investor Services, Inc. and in each case maturing within 180 days after the date
of acquisition.
"Charbroiler Credit Program" shall mean the Borrower's existing promotional
program to induce franchisees of the Borrower's Hardee's Restaurants to convert
their Restaurants to the "Star Hardee's" concept (as described in the Borrower's
SEC filings) whereby the Borrower, through Hardee's, purchases charbroilers for
such converted Restaurant, whether directly or through reimbursement to the
franchisee or a credit against the franchisee's royalty payments to the Borrower
or Hardee's.
"Closing Date" shall mean January 31, 2002.
"Closing EBITDA" shall mean, with respect to the Borrower and its
Subsidiaries for the 13 Retail Periods ended immediately prior to the Closing
Date and all determined on a consolidated basis and in accordance with GAAP, the
sum of (i) Consolidated Net Income for such period, plus (ii) to the extent
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deducted in the calculation of Consolidated Net Income for such period,
Consolidated Interest Expense for such period, plus (iii) to the extent deducted
----
in the calculation of Consolidated Net Income for such period, federal and state
income taxes for such period, plus (iv) to the extent deducted in the
----
calculation of Consolidated Net Income for such period, depreciation and
amortization expense for such period, plus (v) to the extent deducted in the
----
calculation of Consolidated Net Income for such period, all extraordinary losses
for such period, minus (vi) to the extent included in the calculation of
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Consolidated Net Income for such period, all extraordinary gains for such
period, provided, that such sum shall be adjusted to give effect to such amounts
for such period attributable to any business or Person disposed of or closed by
the Borrower or any
6
Subsidiary during such period as if such business or Person had been so disposed
of on the first day of such period.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute.
"Collateral" shall mean all property and interests in property now owned or
hereafter acquired in or upon which a Lien has been or is purported or intended
to have been granted to the Agent or any Lender or any Interest Rate Hedge
Provider under any of the Security Documents.
"Commitment Fee" shall have the meaning provided in Section 2.15(b).
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"Compliance Certificate" shall have the meaning provided in Section 6.1(e).
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"Consents" shall have the meaning provided in Section 4.2(u).
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"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period minus the amount of such
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Consolidated Interest Expense for such period not paid or payable in cash.
"Consolidated EBITDA" shall mean, for any Person during any period, the sum
of (i) Consolidated Net Income for such period, plus (ii) to the extent deducted
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in the calculation of Consolidated Net Income for such period, Consolidated
Interest Expense for such period, plus (iii) to the extent deducted in the
----
calculation of Consolidated Net Income for such period, federal and state income
taxes for such period, plus (iv) to the extent deducted in the calculation of
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Consolidated Net Income for such period, depreciation and amortization expense
for such period, plus (v) to the extent deducted in the calculation of
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Consolidated Net Income for such period, all extraordinary losses for such
period, minus (vi) to the extent included in the calculation of Consolidated Net
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Income for such period, all extraordinary gains for such period, all determined
on a consolidated basis for such Person and its Subsidiaries in accordance with
GAAP, provided, however, that for purposes of calculating Consolidated EBITDA of
the Borrower and its consolidated Subsidiaries as of the last day of any fiscal
period of the Borrower ending prior to the date that is the first anniversary of
the Closing Date, Consolidated EBITDA shall be an amount equal to (x) the
aggregate amount of actual Consolidated EBITDA calculated in accordance with the
foregoing clause of this definition for each month that has elapsed since the
Closing Date, plus (y) "Consolidated EBITDA" for the remaining months occurring
prior to the Closing Date as determined by reference to Schedule 1.2, provided,
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further, that upon consummation of the Santa Barbara Acquisition in accordance
with the terms hereof, the foregoing sum for the relevant calculation period
shall be adjusted to give effect to the Consolidated EBITDA for such
7
period attributable to the business of Santa Barbara Restaurant Group, Inc.
during such period as if such business had been acquired on the first day of
such period.
"Consolidated EBITDAR" shall mean, during any period (i) Consolidated
EBITDA for the Borrower and its Subsidiaries for such period plus (ii) to the
----
extent deducted in the calculation of Consolidated Net Income of the Borrower
and its Subsidiaries for such period, Consolidated Rentals for such period.
"Consolidated Interest Expense" shall mean, for any Person and for any
period, the total interest expense (including, without limitation, interest
expense attributable to Capitalized Leases in accordance with GAAP, but
excluding any non-cash interest expense attributable to the amortization or
write-off of deferred financing costs) of such Person and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean for any Person and for any period the
net income (or loss) of such Person and its Subsidiaries on a consolidated basis
for such period (taken as a single accounting period) as determined in
accordance with GAAP minus to the extent included in the calculation of
-----
Consolidated Net Income for such period, gains for such period (net of any
applicable state or federal expense) resulting from any sale by the Borrower or
any of its Subsidiaries of a Restaurant of the Borrower or such Subsidiary plus
----
to the extent included in the calculation of Consolidated Net Income for such
period, losses for such period (net of any applicable state or federal tax
benefit) resulting from any sale by the Borrower or any of its Subsidiaries of a
Restaurant of the Borrower or such Subsidiary, plus any reserves (net of any
----
applicable state or federal tax benefit) established in accordance with GAAP for
closures of Restaurants or non-cash reductions in the carrying value of
Restaurant-related assets (including goodwill and other intangible assets).
"Consolidated Rentals" shall mean, for the Borrower and its Subsidiaries
for any period, the aggregate rent expense for the Borrower and its Subsidiaries
for such period, minus rental income received from franchisees and third parties
-----
pursuant to (i) subleases to such franchisees or third parties, as the case may
be, and (ii) leases that have been assigned to such franchisees or third
parties, as the case may be, in which the Borrower or its Subsidiary, as
applicable, remains liable for the payment of rent under such lease to the
extent that rent payments are actually made, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean, at any time, the excess of
(i) the total assets of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, minus goodwill and any other items
-----
that are classified as intangibles in accordance with GAAP, minus (ii) all
-----
liabilities of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
8
"Consolidated Total Debt" shall mean, at any time, all Indebtedness of the
Borrower and its Subsidiaries (other than undrawn amounts under letters of
credit issued for the account of the Borrower or any of its Subsidiaries) as
determined on a consolidated basis.
"Contingent Obligation" as to any Person shall mean any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Controlling Stockholders" shall mean (i) William P. Foley II, (ii) Cannae
Limited Partnership, a Nevada Limited Partnership, (iii) Fidelity National
Financial, Inc., a Delaware corporation and (iv) any other Person that, directly
or indirectly, controls, is controlled by or is under common control with any of
the foregoing. For purposes of this definition, the term "control" (including
the terms "controlled by" and "under common control with") of a Person means the
possession, directly or indirect, of (A) the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise or (B) the power to vote 51%
or more of the Voting Stock of such Person. No Lender shall be deemed to be a
Controlling Stockholder as a result of its being a party to this Agreement.
"Conversion" shall have the meaning provided in Section 2.21(b).
---------------
"Convertible Subordinated Note Indenture" shall mean that certain Indenture
between the Borrower and Chase Manhattan Bank and Trust Company, N.A., as
trustee, dated as of March 13, 1998, as the same may be amended, restated,
supplemented or otherwise modified in accordance with the terms of this
Agreement.
9
"Convertible Subordinated Notes" shall mean the Convertible Subordinated
Notes issued by the Borrower pursuant to the Convertible Subordinated Note
Indenture, in the original aggregate principal amount of $197,225,000, as the
same may be amended, restated, supplemented or otherwise modified in accordance
with the terms of this Agreement; provided that such Convertible Subordinated
Notes shall at all times be subordinated in respect of the Obligations on
subordination terms contained in the Convertible Subordinated Note Indenture.
"Credit Exposure" shall have the meaning provided in Section 10.4(b).
---------------
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning provided in Section 2.6(c).
--------------
"Dividends" shall have the meaning provided in Section 7.7.
-----------
"Domestic Lending Office" shall mean, as to any Lender, the office of such
Lender designated as such on Annex I, or such other office designated by such
Lender from time to time by written notice to the Agent and the Borrower.
"Domestic Subsidiary" shall mean any wholly-owned Subsidiary of the
Borrower that is organized under the laws of a state of the United States of
America, and which is a party to the Subsidiary Security Agreement, the Guaranty
and, if required pursuant to Section 2.21, a Subsidiary Pledge Agreement.
------------
"EBITDA CapEx Amount" shall mean, for any fiscal year of the Borrower, an
amount, if positive, equal to (i) .80 multiplied by (ii) the difference, if any,
---------- --
between Consolidated EBITDA for such fiscal year and $110,0000,000.
"Employee Stock Loan" shall mean a loan made by the Borrower or any of its
Subsidiaries to an employee or director of the Borrower or any of its
Subsidiaries, the purpose of which is to finance the acquisition by such
employee or director of the capital stock of the Borrower.
"Environmental Affiliate" shall mean, with respect to any Person, any other
Person whose liability for any Environmental Claim such Person has or may have
retained, assumed or otherwise become liable for (contingently or otherwise),
either contractually or by operation of law.
10
"Environmental Approvals" shall mean any permit, license, approval, ruling,
variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person, any notice,
claim, demand or similar communication (written or oral) by any other Person
alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and foreign laws
and regulations relating to pollution or protection of human health, safety or
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"Equity Interests" shall mean Capital Stock and warrants, options or other
rights to acquire Capital Stock.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA, as in
effect at the Closing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" means a group consisting of any ERISA Person and
all members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control with such Person that,
together with such Person, are treated as a single employer under regulations of
the PBGC.
"ERISA Person" shall have the meaning set forth in Section 3(9) of ERISA
------------
for the term "person."
"ERISA Plan" means (i) any Plan that (x) is not a Multiemployer Plan and
(y) has Unfunded Benefit Liabilities in excess of $2,000,000 and (ii) any Plan
that is a Multiemployer Plan.
"Eurocurrency Reserve Requirements" shall mean, with respect to each day
during an Interest Period for Eurodollar Loans, that percentage (expressed as a
decimal)
11
which is in effect on such day, as prescribed by the Federal Reserve Board or
other governmental authority or agency having jurisdiction with respect thereto
for determining the maximum reserves (including, without limitation, basic,
supplemental, marginal and emergency reserves) for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D) maintained
by a member bank of the Federal Reserve System.
"Eurodollar Base Rate" shall mean, with respect to each day during an
Interest Period for Eurodollar Loans, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of one-sixteenth of one percent)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in United States Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period. If for any reason such rate is
not available, the term "Eurodollar Base Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of one-sixteenth of one percent)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in United States Dollars at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
whole multiple of one-sixteenth of one percent). If, for any reason, neither of
such rates is available, then "Eurodollar Base Rate" shall mean the rate per
annum at which deposits in United States Dollars, as determined by the Agent,
are being offered by the principal office of each of the Reference Banks in
London, England to prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to such Reference Bank's Eurodollar Loan
comprising part of such Borrowing to be outstanding during such Interest Period
and for a period equal to such Interest Period and the Eurodollar Base Rate for
any Interest Period for each Eurodollar Loan comprising part of the same
Borrowing shall be determined by the Agent on the basis of applicable rates
furnished to and received by the Agent from the Reference Banks two Business
Days before the first day of such Interest Period, subject, however, to the
------- -------
provisions of Section 2.7.
-----------
"Eurodollar Lending Office" shall mean, as to any Lender, the office of
such Lender designated as such on Annex I, or such other office designated by
such Lender from time to time by written notice to the Agent and the Borrower.
"Eurodollar Loans" shall mean Loans made and/or being maintained at a rate
of interest based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean with respect to each day during an Interest
Period for Eurodollar Loans, a rate per annum determined for such day in
accordance with the
12
following formula (rounded upwards to the nearest whole multiple of 1/100th of
one percent):
Eurodollar Base Rate
--------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall have the meaning provided in Section 8.
---------
"Excluded Resales" shall mean any sale by the Borrower or any of its
Subsidiaries of a Restaurant of the Borrower or such Subsidiary so long as (i)
such Restaurant was acquired by the Borrower or such Subsidiary from a
franchisee with the intent of reselling such Restaurant and (ii) such sale
occurs within twelve (12) months of the acquisition of such Restaurant by the
Borrower or such Subsidiary.
"Existing Debt" shall have the meaning provided in Section 4.2(r)(ii).
------------------
"Existing Property Sale and Leaseback Transaction" shall have the meaning
provided in Section 7.13(a).
---------------
"Federal Funds Rate" shall mean, for any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System as constituted from time to time.
"Fee Letters" shall mean, collectively, (i) that certain fee letter entered
into between the Borrower and the Agent for the benefit of the Lenders dated as
of January 31, 2002, as amended, restated or otherwise modified from time to
time, and (ii) that certain fee letter entered into between the Borrower and the
Agent for its account dated as of January 31, 2002, as amended, restated or
otherwise modified from time to time.
"Fees" shall have the meaning set forth in Section 2.15(c).
---------------
"Financial Advisor" has the meaning set forth in Section 10.11.
-------------
13
"Fixed Charges" shall mean, without duplication, with respect to the
Borrower and its Subsidiaries for any period, (i) all Consolidated Cash Interest
Expense (excluding in respect of Capitalized Leases of the Borrower and its
Subsidiaries) for such period, plus (ii) all federal and state income taxes paid
----
in cash by the Borrower or any of its Subsidiaries for such period, plus (iii)
----
all scheduled amortization during such period (including principal and interest)
of Capitalized Leases under which the Borrower or any of its Subsidiaries is the
lessee, all determined on a consolidated basis for the Borrower and its
Subsidiaries for such period, plus (iv) the net usage of the Borrower's store
----
closure reserve for such period, determined in accordance with GAAP.
"Franchise Agreements" shall mean any and all agreements that create a
franchise or license to which the Borrower or any of its Subsidiaries is a party
(as franchisee, licensee, franchisor or licensor) relating to the operation or
development of any Restaurant or Restaurants, including such franchise and/or
license agreements to which any of Borrower or any of its Subsidiaries is a
party as of the Closing Date and such franchise and/or license agreements
entered into from time to time after the Closing Date by the Borrower or any of
its Subsidiaries and shall include all other rights under such agreements
regardless of their nature.
"Franchisee Construction Debt" shall have the meaning provided in Section
-------
7.2(j).
- ------
"GAAP" shall mean (i) for purposes of determining compliance with the
covenants set forth in Section 7 hereof, United States generally accepted
---------
accounting principles as in effect on the Closing Date and consistent with those
utilized in the preparation of the financial statements referred to in Section
-------
5.5 and (ii) for all other purposes, United States generally accepted accounting
- ---
principles as in effect as of the date of determination.
"Green Burrito" shall mean, collectively, GB Grill Franchise Corporation, a
California corporation, and Green Burrito, Inc., a California corporation.
"Guarantor" shall mean each Subsidiary of the Borrower that shall be
required by the terms of this Agreement to enter into a Guaranty from time to
time.
"Guaranty" shall mean a guaranty substantially in the form of the Second
Amended and Restated Guaranty set forth as Exhibit E hereto duly executed and
---------
delivered to the Agent for itself, the Lenders and any Interest Rate Hedge
Providers by each Subsidiary of the Borrower (other than Immaterial Subsidiaries
which are not Subordinated Guarantors), as the same may be amended, restated,
modified or supplemented from time to time.
"Hardee's" shall mean Hardee's Food Systems, Inc., a North Carolina
corporation or any successor entity permitted pursuant to the terms of this
Agreement.
14
"Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended.
"Hedging Agreements" shall mean any interest rate protection agreements
(including, without limitation, any interest rate swaps, caps, floors, collars,
options, futures and similar agreements) and swaps (including, without
limitation, any caps, floors, collars, options, futures and similar agreements)
relating to currencies, commodities or securities, and similar agreements.
"Immaterial Investments" shall mean, at any time, (a) any Investment owned
by the Borrower or any Subsidiary consisting of Capital Stock of any Person that
is not a Subsidiary of the Borrower and which, when added to all other
Investments held by the Borrower and/or its Subsidiaries consisting of Capital
Stock of such Person does not exceed $1,000,000 at any one time outstanding and
(b) any Investment owned by the Borrower or any Subsidiary consisting of an
Instrument payable by any Person that is not a Subsidiary of the Borrower and
which, when added to all other Investments held by the Borrower and/or its
Subsidiaries consisting of Instruments payable by such Person does not exceed
$2,000,000 at any one time outstanding.
"Immaterial Subsidiaries" shall mean any Subsidiary of the Borrower with
assets of less than $1,500,000 (as determined in accordance with GAAP), which is
designated by the Borrower as an Immaterial Subsidiary on Schedule 5.30 or
-------------
pursuant to Section 6.12; provided that the aggregate amount of assets of all
------------
Subsidiaries designated as Immaterial Subsidiaries shall not at any time exceed
$10,000,000 (as determined in accordance with GAAP).
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 90 days or
less incurred in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture, acceptance or
similar instrument, (iii) the principal component of all Capitalized Lease
Obligations of such Person, (iv) the face amount of all letters of credit issued
for the account of such Person and, without duplication, all unreimbursed
amounts drawn thereunder, and all obligations of such Person, contingent or
otherwise, under acceptances or similar facilities, (v) all indebtedness of any
other Person secured by any Lien on any property owned by such Person, whether
or not such indebtedness has been assumed in an amount equal to the lesser of
the fair market value at such date of such property subject to such Lien
securing such Indebtedness and the amount of the Indebtedness secured by such
Lien, (vi) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), (vii)
15
all Contingent Obligations of such Person, (viii) all payment obligations,
whether absolute or contingent, matured or unmatured, present or future, due or
to become due, now existing or hereafter arising, of such Person under any
Hedging Agreements, (ix) all Redeemable Stock and (x) all indebtedness and other
obligations of the types specified in clauses (i) through (ix) above of any
joint venture or partnership for which such Person is liable.
"Indemnitee" shall have the meaning provided in Section 10.1(c).
---------------
"INS" shall mean the United States Immigration and Naturalization Service
or any governmental body succeeding to its functions.
"Instrument" shall have the meaning ascribed thereto in the UCC.
"Intellectual Property" has the meaning set forth in Section 5.20.
------------
"Interest Period" shall have the meaning provided in Section 2.7.
-----------
"Interest Rate Agreements" shall mean any and all interest rate protection
agreements, including, without limitation, any interest rate swaps, caps,
collars, floors and similar agreements.
"Interest Rate Hedge Providers" shall mean any Lender that provides an
Interest Rate Agreement to the Borrower as permitted pursuant to Section 7.14(a)
---------------
and that executes and delivers an agency agreement, in form and substance
satisfactory to the Agent.
"Investment" of a Person shall mean any loan, advance, extension of credit
or commitment to make any such loan, advance or extension of credit (other than
accounts receivable arising in the ordinary course of business), deposit account
or contribution of capital by such Person to any other Person or any investment
in, or purchase or other acquisition (whether by purchase, merger, consolidation
or otherwise) of, the stock, partnership interests, notes, bonds, debentures or
other securities, including options and warrants, of, or other ownership
interests in, any other Person made by such Person (whether for cash, property,
services, securities or otherwise).
"Issue" shall mean, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Bank" shall mean BNP Paribas or, with the consent of BNP Paribas,
any other Lender (and their respective successors), in its capacity as issuer of
one or more Letters of Credit hereunder.
16
"La Salsa" shall mean, collectively, La Salsa, Inc., a California
corporation, La Salsa Franchise, Inc., a California corporation, and La Salsa of
Nevada, Inc., a Nevada corporation.
"L/C Amendment Application" shall mean an application form for amendment of
outstanding Letters of Credit as shall at any time be in use at the Issuing
Bank, as the Issuing Bank shall request.
"L/C Application" shall mean an application form for issuance of Standby
Letters of Credit or Trade Letters of Credit, as appropriate, as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Commitment" shall mean the commitment of the Issuing Bank to Issue,
and the commitment of the Lenders severally to participate in, Letters of Credit
from time to time Issued or outstanding under Section 3, in an aggregate amount
---------
not to exceed on any date the amount of $75,000,000, provided, that the L/C
Commitment is part of the Total Revolving Loan Commitment, rather than a
separate, independent commitment.
"L/C Obligations" shall mean at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
----
all unreimbursed drawings under all Letters of Credit.
"L/C Related Documents" shall mean the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for standby or commercial letter of credit issuances, as appropriate.
"Lenders" shall mean the persons listed on Schedule 1.1 hereto and the
------------
persons which from time to time become a party hereto in accordance with Section
-------
10.4(d).
- -------
"Letters of Credit" shall mean any letters of credit Issued by the Issuing
Bank pursuant to Section 3.
---------
"Leverage Ratio" shall mean, with respect to the Borrower on a consolidated
basis with its Subsidiaries, at any date, the ratio of (a) Consolidated Total
Debt of the Borrower and its Subsidiaries to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for the period of four (4) consecutive fiscal
quarters most recently ended on or prior to such date, all determined on a
consolidated basis for the Borrower and its Subsidiaries for such period.
17
"Lien" shall mean any mortgage, deed of trust, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security agreement of any
kind or nature whatsoever, whether or not filed, recorded or otherwise perfected
under applicable law, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same effect as any of the foregoing and the filing of any financing statement or
similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.
"Liquidating Distribution" shall mean any extraordinary, liquidating or
other distribution in return of capital with respect to any Equity Interest of
any Person (other than a Subsidiary of any Domestic Subsidiary) owned by a Loan
Party which Equity Interest is pledged pursuant to any of the Security
Documents.
"Loan Documents" shall mean this Agreement, the Notes, the Guaranty, each
Letter of Credit, each L/C Related Document, the Fee Letters, the Security
Documents, each Interest Rate Agreement permitted to be entered into pursuant to
Section 7.14(a) and all other documents, instruments and agreements executed
- ---------------
and/or delivered in connection herewith or therewith or required or contemplated
hereunder or thereunder, as the same may be amended, restated, modified or
supplemented and in effect from time to time.
"Loan Party" shall mean and include the Borrower and each Guarantor.
"Loans" shall mean and include the Revolving Loans.
"Margin Stock" shall have the meaning provided such term in Regulation U of
the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect upon (i) the
business, operations, properties, assets, performance, prospects or condition
(financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole,
or (ii) the ability of any Loan Party to perform, or of the Agent or any of the
Lenders to enforce, any of such Loan Party's material Obligations under any Loan
Document to which it is or is to be a party, or (iii) the validity, perfection
or priority of any Lien in favor of the Agent for the benefit of the Lenders on
any material portion of the Collateral.
"Material Leases" shall have the meaning provided in Section 6.9.
-----------
"Materials of Environmental Concern" shall mean and include chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products, asbestos and radioactive materials.
18
"Mortgages" shall mean collectively, each mortgage, deed of trust,
leasehold mortgage, leasehold deed of trust or other similar instrument executed
and delivered by the Borrower or any of its Subsidiaries to the Agent for the
benefit of the Lenders from time to time (including, without limitation, all
Mortgages delivered prior to the Closing Date) and granting or purporting to
grant a Lien on the real property of the Borrower or such Subsidiary identified
therein, as the same may be amended, restated, supplemented or otherwise
modified.
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
------------------
"Net Debt Proceeds" means all cash proceeds received by the Borrower or any
of its Subsidiaries from the incurrence of, or the issuance of any instruments
relating to, any Indebtedness (other than (i) Indebtedness borrowed by the
Borrower under this Agreement, (ii) Indebtedness permitted to be incurred
pursuant to Section 7.2(g), (iii) Indebtedness permitted to be incurred pursuant
--------------
to Section 7.2(i), (iv) Indebtedness permitted to be incurred pursuant to
--------------
Section 7.2(m) with respect to Sale and Leaseback Transactions), and (v)
- --------------
Indebtedness incurred in connection with the Permitted Refinancing to the extent
the proceeds of such Indebtedness are used to consummate such Permitted
Refinancing; in each case net of reasonable and customary underwriting fees and
discounts, brokerage commissions and other similar reasonable and customary
costs and expenses directly attributable to such issuance or incurrence.
"Net Equity Proceeds" shall mean all cash proceeds received by the Borrower
or any of its Subsidiaries from any capital contribution or the issuance of any
Equity Interests or other equity securities of the Borrower or any of its
Subsidiaries (other than the issuance of common stock (A) of the Borrower issued
to employees, consultants or directors of the Borrower or any of its
Subsidiaries pursuant to an employee stock option or purchase plan approved by
the Board of Directors of the Borrower or (B) of any Subsidiary of the Borrower
to the Borrower or any wholly-owned Subsidiary of the Borrower), net of any
reasonable and customary brokerage commissions, underwriting fees and discounts
and any other similar reasonable and customary costs or expenses directly
attributable to such issuance.
"Net Sale Proceeds" shall mean, with respect to (a) any Asset Disposition,
all proceeds in the form of cash or cash equivalents received by the Borrower or
any of its Subsidiaries from or in respect of such Asset Disposition (including
any cash proceeds received as income or other proceeds of any noncash proceeds
of such Asset Disposition and including any insurance payment or condemnation
award in respect of any assets of the Borrower or any of its Subsidiaries) and
(b) any Liquidating Distribution, all proceeds in the form of cash or cash
equivalents received by the Borrower or any of its Subsidiaries from or in
respect of any Liquidating Distribution, in the case of the foregoing clauses
(a) and (b),
19
net of (i) reasonable and customary expenses incurred or reasonably
expected to be incurred in connection with such Asset Disposition or Liquidating
Distribution, (ii) any income, franchise, transfer or other tax payable by the
Borrower or such Subsidiary in connection with such Asset Disposition or
Liquidating Distribution and (iii) any Indebtedness secured by a Lien on such
property or assets and required to be repaid as a result of such Asset
Disposition, in each case with respect to the foregoing clause (i) to the
extent, but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash or cash equivalents, actually paid to a Person that is not
an Affiliate and are properly attributable to such transaction or to the asset
that is the subject thereof; provided, however, that Net Sale Proceeds shall not
include any such proceeds from Excluded Resales.
"New Property Sale and Leaseback Transaction" shall have the meaning
provided in Section 7.13(a).
---------------
"New Subordinated Note Indenture" shall mean that certain Indenture among
the Borrower, certain Subsidiaries of the Borrower, and Chase Manhattan Bank and
Trust Company, National Association, as trustee, dated as of March 4, 1999, as
the same may be amended, restated, supplemented or otherwise modified in
accordance with the terms of this Agreement.
"New Subordinated Notes" shall mean the Senior Subordinated Notes issued by
the Borrower pursuant to the New Subordinated Note Indenture, in a maximum
principal amount not to exceed $287,500,000 in the aggregate, of which
$200,000,000 were issued as of the Closing Date at the rate of 9-1/8% and due
2009 (the "Original Notes") and of which up to an additional $87,500,000 may be
issued at the Borrower's option at any time after the Closing Date on terms no
less favorable to the Borrower than the terms of the Original Notes and with a
maturity date of February 28, 2005, or thereafter, as the same may be amended,
restated, supplemented or otherwise modified in accordance with the terms of
this Agreement; provided, that such New Subordinated Notes shall at all times be
subordinated in respect of the Obligations on subordination terms contained in
the New Subordinated Note Indenture; provided, further, that the term "New
Subordinated Notes" shall include any notes or instruments exchanged for then
outstanding New Subordinated Notes pursuant to the New Subordinated Note
Indenture.
"Note" means a Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section 2.3(a).
--------------
"Notice of Conversion or Continuation" shall have the meaning provided in
Section 2.9(b).
- --------------
20
"Obligations" shall mean all obligations, liabilities and indebtedness of
every kind, nature and description of the Borrower and the other Loan Parties
from time to time owing to the Agent or any Lender or any Indemnitee under or in
connection with this Agreement or any other Loan Document, whether direct or
indirect, primary or secondary, joint or several, absolute or contingent, due or
to become due, now existing or hereafter arising and however acquired and shall
include, without limitation, all principal and interest on the Loans and, to the
extent chargeable under any Loan Document, all charges, expenses, fees and
attorney's fees.
"Original Credit Agreement" shall mean that certain Third Amended and
Restated Credit Agreement dated as of November 24, 1999, among the Borrower, the
lenders party thereto and BNP Paribas (as successor to Paribas), as Agent, as
amended prior to the date hereof.
"Participant" shall have the meaning provided in Section 10.4(b).
---------------
"Payment Date" shall mean the fifteenth day of each March, June, September
and December of each year.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Permitted Acquisition" shall mean (i) any Acquisition by the Borrower or
any of its Subsidiaries of a Carl's Jr. or a Hardee's (and, if the Santa Barbara
Acquisition is consummated, a Timber Lodge, a Green Burrito or a La Salsa)
Restaurant from a franchisee that has been approved by the board of directors
(or other governing body, if applicable) of the Person which is the subject of
such Acquisition and (ii) the Santa Barbara Acquisition, provided, that all
applicable waiting periods, including without limitation, those under the
Hart-Scott-Rodino Act, in connection with the Santa Barbara Acquisition shall
have expired.
"Permitted Redemption" shall mean the redemption or repurchase by the
Borrower of Convertible Subordinated Notes for a purchase price not to exceed
$10,000,000 in the aggregate, provided, that any such Convertible Subordinated
Notes that are redeemed or repurchased by the Borrower shall then be cancelled
in accordance with the terms of the Convertible Subordinated Note Indenture and
shall not be reissued.
"Permitted Refinancing" shall mean the conversion, redemption, exchange,
repurchase or refinancing by the Borrower of Convertible Subordinated Notes on
or after January 31, 2002 provided, that (i) in the case of a redemption or
repurchase, the purchase price paid shall not exceed the then outstanding
aggregate principal amount of such
21
Convertible Subordinated Notes, plus customary underwriting fees and discounts,
brokerage commissions and other similar reasonable and customary costs and
expenses directly attributable to such redemption or repurchase, and any such
Convertible Subordinated Notes that are redeemed or repurchased by the Borrower
shall then be cancelled in accordance with the terms of the Convertible
Subordinated Note Indenture, and shall not be reissued, and (ii) in the case of
a refinancing or exchange, (w) the aggregate principal amount of the resulting
Indebtedness shall not exceed the then outstanding aggregate principal amount of
such Convertible Subordinated Notes, (x) no principal payment with respect to
the resulting Indebtedness shall be due prior to the date that is one year and
one day after the Revolving Loan Maturity Date, (y) the refinancing shall be
consummated with a third-party, unaffiliated with the Borrower or any of its
Affiliates and (z) the resulting Indebtedness shall be subordinated as to
exercise of remedies and in right of payment to the Obligations under the Loan
Documents on, and is otherwise subject to, terms and conditions reasonably
approved by the Agent and the Required Lenders in writing.
"Permitted Subordinated Debt" shall mean Indebtedness of the Borrower or
any Subsidiary of the Borrower incurred after the Closing Date, (A) with respect
to which no principal payments are due prior to the date which is one year and
one day after the Revolving Loan Maturity Date and (B) which is subordinated as
to exercise of remedies and in right of payment to the Borrower's Obligations
and such Subsidiary's Obligations, respectively, under the Loan Documents on,
and is otherwise subject to, terms and conditions (including, without
limitation, terms in respect of maturities, covenants, defaults and remedies and
interest rates) approved in writing by the Agent and in any event shall not
include Indebtedness issued pursuant to the Subordinated Notes.
"Person" shall mean and include any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise or any government or political subdivision or agency, department or
instrumentality thereof.
"Plan" means any employee benefit plan covered by Title IV of ERISA, the
funding requirements of which:
(i) were the responsibility of the Borrower or a
member of its ERISA Controlled Group at any time within the six
years immediately preceding the Closing Date,
(ii) are currently the responsibility of the
Borrower or a member of its ERISA Controlled Group, or
(iii) hereafter become the responsibility of the
Borrower or a member of its ERISA Controlled Group,
22
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
"Prepayment" shall have the meaning provided in Section 7.10.
------------
"Pro Rata Share" as to any Lender shall mean the percentage obtained by
dividing (i) such Lender's Revolving Loan Commitment (or the aggregate
outstanding principal balance of such Lender's Revolving Loans and all L/C
Obligations in which such Lender has an interest, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement) by
(ii) the Total Revolving Loan Commitment (or the aggregate outstanding principal
balance of the Revolving Loans and all L/C Obligations, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement).
"Purchasing Lenders" shall have the meaning provided in Section 10.4(d).
---------------
"Rate Hedging Obligations" shall mean any and all obligations of any Loan
Party to any Interest Rate Hedge Provider under Interest Rate Agreements
permitted pursuant to Section 7.14(a).
--------------
"Real Estate Collateral" shall mean Collateral subject to or purported to
be subject to the Lien of the Mortgages.
"Redeemable Stock" shall mean any Equity Interest which, by its terms, or
upon the happening of any event matures, is mandatorily redeemable or
repurchaseable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to one year and one day after the Revolving Loan
Maturity Date, or is, by its terms or upon the happening of any event, required
to be redeemed or repurchased, redeemable or repurchaseable at the option of the
holder thereof, in whole or in part, at any time prior to one year and one day
after the Revolving Loan Maturity Date.
"Reference Banks" shall mean BNP Paribas, First Bank and Trust, Fleet
National Bank, U.S. Bank National Association and Wells Fargo Bank, National
Association and their respective successors.
"Regulation D" shall mean Regulation D of the Federal Reserve Board as from
time to time in effect and any successor to all or any portion thereof.
"Replacement Lender" shall have the meaning provided in Section 2.22.
------------
23
"Reportable Event" has the meaning set forth in Section 4043(b) of ERISA
---------------
(other than a Reportable Event as to which the provision of 30 days notice to
the PBGC is waived under applicable regulations), or is the occurrence of any of
the events described in Section 4068(f) or 4063(a) of ERISA.
---------------
"Required Lenders" shall mean (i) at any time there are five Lenders or
less party to this Agreement, all Lenders whose Pro Rata Shares, in the
aggregate, are greater than 75% and (ii) at any time there are more than five
Lenders party to this Agreement, all Lenders whose Pro Rata Shares, in the
aggregate, are greater than 66 2/3%.
"Restaurant" shall mean a Timber Lodge restaurant or any quick service
restaurant.
"Retail Period" means any of the thirteen consecutive four week or five
week periods used by the Borrower for accounting purposes which begin on or
about the Tuesday after the last Monday in January of each year and ending on
the last Monday in January of the next year.
"Revolving Loan Commitment" shall mean at any time, for any Lender, the
amount set forth opposite such Lender's name on Schedule 1.1 hereto under the
------------
heading "Revolving Loan Commitment," as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"Revolving Loan Maturity Date" shall mean December 14, 2003; provided, that
such date shall be extended until November 15, 2006 effective upon consummation
of the Permitted Refinancing, provided, that (i) the Borrower has requested such
extension in writing prior to consummation of the Permitted Refinancing, (ii) no
Default or Event of Default exists immediately before or after consummation of
the Permitted Refinancing and (iii) no Material Adverse Change shall have
occurred in the reasonable opinion of the Lenders at the time of consummation of
the Permitted Refinancing.
"Revolving Loans" shall have the meaning provided in Section 2.2(a).
--------------
"Revolving Note" shall have the meaning provided in Section 2.5(a).
--------------
"Sale and Leaseback Transactions"shall mean Existing Property Sale and
Leaseback Transactions and New Property Sale and Leaseback Transactions, in each
case, permitted to be entered into by the Borrower or any of its Subsidiaries
pursuant to Section 7.13(a).
---------------
24
"Santa Barbara Acquisition" shall mean the acquisition by the Borrower of
the business and assets of Santa Barbara Restaurant Group, Inc. pursuant to and
in accordance with the Agreement and Plan of Merger dated as of December 20,
2001, by and among the Borrower and Santa Barbara Restaurant Group, Inc. and
upon terms publicly disclosed in the Borrower's filings related thereto with the
Securities and Exchange Commission prior to the Closing Date.
"Santa Barbara Group" shall mean, upon consummation of the Santa Barbara
Acquisition, each Person acquired in connection with such acquisition, including
Santa Barbara Restaurant Group, Inc. and each of its Subsidiaries.
"Santa Barbara Investments" shall mean the sum of (a) all intercompany
loans made on or after the Closing Date to any member of the Santa Barbara Group
from either the Borrower or any Subsidiary of the Borrower (other than any
member of the Santa Barbara Group), (b) all Investments made on or after the
Closing Date in any member of the Santa Barbara Group by either the Borrower or
any Subsidiary of the Borrower (other than any member of the Santa Barbara
Group) and (c) the fair market value of all assets sold, transferred, or
otherwise conveyed to any member of the Santa Barbara Group from either the
Borrower or any Subsidiary of the Borrower (other than any member of the Santa
Barbara Group).
"Santa Barbara Loan Repayment Amount" shall have the meaning set forth in
Section 7.10(a)(iii).
- --------------------
"Secured Parties" shall have the meaning provided in the Borrower Security
Agreement and the Subsidiary Security Agreement.
"Security Documents" shall mean and include the Borrower Security
Agreement, the Subsidiary Security Agreement, the Guaranty, the Borrower Pledge
Agreement, the Subsidiary Pledge Agreements, the Aircraft Mortgage, the
Mortgages and all other security agreements, pledge agreements, mortgages,
leasehold mortgages, assignments and similar agreements executed in connection
with the Loan Documents.
"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of
25
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. With respect to any such
contingent liabilities, such liabilities shall be computed at the amount which,
in light of all the facts and circumstances existing at the time, represents the
amount which can reasonably be expected to become an actual or matured
liability.
"Standby Letter of Credit" shall mean any standby letter of credit issued
by the Issuing Bank pursuant to Section 3 and which is not a Trade Letter of
---------
Credit.
"Subordinated Debt Documents" shall mean the Subordinated Notes and the
Subordinated Note Indentures.
"Subordinated Guarantor" shall mean each Subsidiary of the Borrower that
guarantees any Indebtedness or other obligations of the Borrower or any
Subsidiary of the Borrower under or with respect to any of the New Subordinated
Notes.
"Subordinated Note Indentures" shall mean the Convertible Subordinated Note
Indenture and the New Subordinated Note Indenture.
"Subordinated Notes" shall mean the Convertible Subordinated Notes and the
New Subordinated Notes.
"Subsidiary" of any Person shall mean and include (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned or controlled by such Person
directly or indirectly through one or more Subsidiaries and (ii) any
partnership, limited liability company, association, joint venture or other
entity in which such Person, directly or indirectly through one or more
Subsidiaries, is either a general partner or has a more than 50% equity interest
at the time. Unless otherwise expressly provided, all references to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Subsidiary Pledge Agreement" shall mean each pledge agreement
substantially in the form of the Second Amended and Restated Subsidiary Pledge
Agreement set forth as Exhibit F hereto duly executed and delivered to the Agent
---------
by each Subsidiary of the Borrower which owns any equity interest of any Person,
as the same may be amended, restated, modified or supplemented from time to
time.
"Subsidiary Security Agreement" shall mean a security agreement
substantially in the form of the Second Amended and Restated Subsidiary Security
Agreement set forth as
26
Exhibit G hereto duly executed and delivered to the Agent by each Subsidiary of
- ---------
the Borrower (other than Immaterial Subsidiaries), as the same may be amended,
restated, modified or supplemented from time to time.
"Surviving Debt" shall have the meaning provided in Section 4.2(r).
--------------
"Taxes" has the meaning set forth in Section 2.19(a).
---------------
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
------------
terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan.
"Timber Lodge" shall mean Timber Lodge Steakhouse, Inc., a Minnesota
corporation.
"Total Revolving Loan Commitment" shall have the meaning set forth in
Section 2.2(a).
- --------------
"Trade Letter of Credit" shall mean any Letter of Credit that is issued
pursuant to Section 3 for the benefit of a supplier of inventory to the Borrower
---------
or any of its Subsidiaries to effect payment for such inventory.
"Transaction Costs" shall mean all costs and expenses paid or payable by
any Loan Party relating to the Transactions including, without limitation,
investment banking fees, financing fees, advisory fees, appraisal fees, legal
fees and accounting fees.
"Transaction Documents" shall mean the Loan Documents.
"Transactions" shall mean each of the transactions contemplated by the
Transaction Documents.
"Transferee" shall have the meaning provided in Section 10.4(e).
---------------
"Type" shall mean any type of Loan determined with respect to the interest
option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
----
"Unfunded Benefit Liabilities" means with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all benefit liabilities
under such Plan as
27
defined in Section 4001(a)(16) of ERISA, exceeds (ii) the fair market value of
-------------------
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan (on the basis of assumptions prescribed by
the PBGC for the purpose of Section 4044 of ERISA).
------------
"Unused Portion" shall mean at any time with respect to the Revolving
Loans, the amount by which the Total Revolving Loan Commitment in effect at such
time exceeds the sum of (i) the aggregate principal amount of the Revolving
Loans outstanding at such time and (ii) the aggregate amount of L/C Obligations
outstanding at such time.
"Voting Stock" shall mean capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.
-------------------------------------
Section 2.1 [Intentionally Omitted].
----------------------
Section 2.2 Revolving Loans. (a) Subject to and upon the terms and
---------------
conditions herein set forth, each Lender severally and not jointly agrees, at
any time and from time to time on and after the Closing Date and prior to the
Revolving Loan Maturity Date, to make revolving loans (collectively, "Revolving
Loans") to the Borrower, which Revolving Loans shall not exceed in aggregate
principal amount at any time outstanding (i) the Revolving Loan Commitment of
such Lender at such time minus (ii) such Lender's Pro Rata Share of the L/C
Obligations at such time; provided that at no time shall the aggregate
outstanding principal amount of the Revolving Loans of all of the Lenders plus
the L/C Obligations of all of the Lenders exceed the Total Revolving Loan
Commitment. The sum of the Revolving Loan Commitments of all of the Lenders (the
"Total Revolving Loan Commitment") as of the date hereof shall be reduced to
$100,000,000. In the event that as of the date hereof, the aggregate outstanding
principal amount of the Revolving Loans exceeds the Total Revolving Loan
Commitment, the Borrower shall immediately prepay the Revolving Loans in the
amount of any such excess. The Revolving Loans of each Lender made on the
Closing Date shall be initially made as a Base Rate Loan or a Eurodollar Loan
(subject to the other terms of this Agreement, including without limitation,
Section 2.3 and Section 2.17) and may thereafter be maintained at the option of
- ----------- -------------
the Borrower as a Base Rate Loan or a Eurodollar Loan, in accordance with the
provisions hereof.
(b) Revolving Loans may be voluntarily prepaid pursuant to
Section 2.11, and, subject to the other provisions of this Agreement, any
- ------------
amounts so prepaid may be reborrowed. Each Lender's Revolving Loan Commitment
shall expire, and each
28
Revolving Loan shall mature on, the Revolving Loan Maturity Date, without
further action on the part of the Lenders or the Agent.
(c) Each Borrowing of Revolving Loans shall be in the aggregate
minimum amount of $500,000 or any integral multiple of $500,000 in excess
thereof.
Section 2.3 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
borrow Revolving Loans hereunder, it shall give the Agent at the Agent's Office
prior to 12:00 Noon, Chicago time, on the Business Day of such borrowing by
telex, facsimile or telephonic notice (promptly confirmed in writing) of each
Base Rate Loan, and at least three Business Days' prior telex, facsimile or
telephonic notice (promptly confirmed in writing) of each Eurodollar Loan to be
made hereunder. Each such notice shall be in the form of Exhibit J hereto (a
---------
"Notice of Borrowing") shall be irrevocable and shall specify (i) the aggregate
principal amount of the requested Revolving Loans, (ii) the date of Borrowing
(which shall be a Business Day), and (iii) whether such Loans shall consist of
Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial
Interest Period to be applicable thereto (provided, that no Eurodollar Loan may
be requested or made when any Default or Event of Default has occurred and is
continuing).
(b) Promptly after receipt of a Notice of Borrowing, the Agent
shall provide each Lender with a copy thereof and inform each Lender as to its
Pro Rata Share of the Loans requested thereunder.
Section 2.4 Disbursement of Funds. (a) No later than 2:00 P.M.,
---------------------
Chicago time, on the date specified in each Notice of Borrowing, each Lender
will make available its Pro Rata Share of the Loans requested to be made on such
date, in U.S. dollars and immediately available funds, at the Agent's Office.
After the Agent's receipt of the proceeds of such Loans, the Agent will make
available to the Borrower by depositing in the Borrower's account at the Agent's
Office the aggregate of the amounts so made available in the type of funds
actually received.
(b) Unless the Agent shall have been notified by any Lender prior
to the date of a Borrowing that such Lender does not intend to make available to
the Agent its portion of the Loans to be made on such date, the Agent may assume
that such Lender has made such amount available to the Agent on such date and
the Agent in its sole discretion may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Lender and the Agent has made
such amount available to the Borrower, the Agent shall be entitled to recover
such corresponding amount on demand from such Lender. If such Lender does not
pay such corresponding amount forthwith upon the Agent's demand therefor, the
Agent shall promptly notify the Borrower and the Borrower shall immediately
repay such corresponding amount to the Agent. The Agent shall also be entitled
to recover
29
from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to the
then applicable rate of interest, calculated in accordance with Section 2.6, for
-----------
the respective Loans. Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Lender as a result of any default by
such Lender hereunder. Notwithstanding anything contained herein or in any other
Loan Document to the contrary, the Agent may apply all funds and proceeds of
Collateral available for the payment of any Obligations first to repay any
amount owing by any Lender to the Agent as a result of such Lender's failure to
fund its Loans hereunder.
Section 2.5 Notes. (a) The Borrower's obligation to pay the principal
-----
of, and interest on, each Lender's Loans shall be evidenced by a promissory note
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, a "Revolving Note") duly executed and delivered by the Borrower
substantially in the form of Exhibit B hereto in a principal amount equal to
---------
such Lender's Revolving Loan Commitment, with blanks appropriately completed in
conformity herewith. Each Note issued to a Lender shall (x) be payable to the
order of such Lender, (y) be dated the date such Note was issued, and (z) mature
on the Revolving Loan Maturity Date.
(b) Each Lender is hereby authorized, at its option, either (i)
to endorse on the schedule attached to its Revolving Note (or on a continuation
of such schedule attached to such Revolving Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Revolving Loan
evidenced thereby and the date and amount of each principal and interest payment
in respect thereof, or (ii) to record such Revolving Loans and such payments in
its books and records. Such schedule or such books and records, as the case may
be, shall constitute prima facie evidence of the accuracy of the information
contained therein.
Section 2.6 Interest. (a) The Borrower agrees to pay interest in
--------
respect of the unpaid principal amount of each Base Rate Loan from the date of
the making of such Loan until such Loan shall be paid in full at a rate per
annum which shall be equal to (i) the Applicable Margin plus (ii) the Base Rate
in effect from time to time, such rate to change as and when the Base Rate
changes, such interest to be computed on the basis of a 365 or 366-day year, as
the case may be, and paid for the actual number of days elapsed, subject to the
provisions of clause (c) of this Section 2.6.
-----------
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of the making of such
Loan until such Loan shall be paid in full at a rate per annum which shall be
equal to the sum of (i) the Applicable Margin plus (ii) the relevant Eurodollar
Rate, such interest to be computed on
30
the basis of a 360-day year and paid for the actual number of days elapsed,
subject to the provisions of clause (c) of this Section 2.6.
-----------
(c) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of all
Loans and, to the extent permitted by law, overdue interest in respect of all
Loans, shall bear interest at a rate per annum (the "Default Rate") equal to (x)
the sum of two percent (2%) plus (y) the Applicable Margin applicable to Base
Rate Loans plus (z) the Base Rate in effect from time to time, and shall be
payable on demand.
(d) Interest on each Loan shall accrue from and including the
date of the Borrowing thereof to but excluding the date of any repayment thereof
(provided that any Loan borrowed and repaid on the same day shall accrue one
day's interest) and shall be payable (i) in respect of each Base Rate Loan,
quarterly in arrears on each Payment Date, (ii) in respect of each Eurodollar
Loan, on the last day of each Interest Period applicable to such Loan and, in
the case of an Interest Period of six months, on the date occurring three months
from the first day of such Interest Period and on the last day of such Interest
Period, and (iii) in the case of all Loans, on any prepayment or conversion (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand. Each determination by the Agent
of an interest rate hereunder shall, except for manifest error, be final,
conclusive and binding for all purposes.
(e) In the event that the Eurodollar Base Rate is to be
determined by reference to the Reference Banks, each Reference Bank agrees to
furnish to the Agent timely information for the purpose of determining each
Eurodollar Base Rate. If any one or more of the Reference Banks shall not
furnish such timely information to the Agent for the purpose of determining any
such interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.6(b), and the rate, if
--------------
any, furnished by each Reference Bank for the purpose of determining the
interest rate under Section 2.6(b).
--------------
Section 2.7 Interest Periods. (a) The Borrower shall, in each Notice
----------------
of Borrowing or Notice of Conversion or Continuation in respect of the making
of, conversion into or continuation of a Eurodollar Loan, select the interest
period (each an "Interest Period") applicable to such Eurodollar Loan, which
Interest Period shall, at the option of the Borrower, be either a one-month,
two-month, three-month or six-month period, provided that:
(i) the initial Interest Period for any Eurodollar
Loan shall commence on the date of the making of such Loan
(including the date of any conversion from a Base Rate Loan) and
each Interest Period
31
occurring thereafter in respect of such Loan shall commence
on the date on which the next preceding Interest Period
expires;
(ii) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided, however,
that if any Interest Period would otherwise expire on a day which
is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day;
(iii) if any Interest Period begins on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month; and
(iv) no Interest Period in respect of any
Revolving Loan shall extend beyond the Revolving Loan Maturity
Date.
(b) If upon the expiration of any Interest Period, the Borrower
has failed to elect a new Interest Period to be applicable to the respective
Eurodollar Loan as provided above, the Borrower shall be deemed to have elected
to convert such Eurodollar Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
Section 2.8 Minimum Amount of Eurodollar Loans. All borrowings,
----------------------------------
conversions, continuations, payments, prepayments and selection of Interest
Periods hereunder shall be made or selected so that, after giving effect
thereto, (i) the aggregate principal amount of any Borrowing comprised of
Eurodollar Loans shall not be less than $3,000,000 or an integral multiple of
$500,000 in excess thereof, and (ii) there shall be no more than twelve (12)
Borrowings comprised of Eurodollar Loans outstanding at any time.
Section 2.9 Conversion or Continuation. (a) Subject to the other
--------------------------
provisions hereof, the Borrower shall have the option (i) to convert at any time
all or any part of outstanding Base Rate Loans which comprise part of the same
Borrowing to Eurodollar Loans, (ii) to convert all or any part of outstanding
Eurodollar Loans which comprise part of the same Borrowing to Base Rate Loans,
on the expiration date of the Interest Period applicable thereto, or (iii) to
continue all or any part of outstanding Eurodollar Loans which comprise part of
the same Borrowing as Eurodollar Loans for an additional Interest Period, on the
expiration of the Interest Period applicable thereto; provided, that no Loan may
be continued as, or converted into, a Eurodollar Loan when any Default or Event
of Default has occurred and is continuing.
32
(b) In order to elect to convert or continue a Loan under this
Section 2.9, the Borrower shall deliver an irrevocable notice thereof (a "Notice
- -----------
of Conversion or Continuation") to the Agent no later than 12:00 Noon, Chicago
time, (i) on the Business Day of the proposed conversion date in the case of a
conversion to a Base Rate Loan and (ii) at least three Business Days in advance
of the proposed conversion or continuation date in the case of a conversion to,
or a continuation of, a Eurodollar Loan. A Notice of Conversion or Continuation
shall specify (w) the requested conversion or continuation date (which shall be
a Business Day), (x) the amount and Type of the Loan to be converted or
continued, (y) whether a conversion or continuation is requested, and (z) in the
case of a conversion to, or a continuation of, a Eurodollar Loan, the requested
Interest Period. Promptly after receipt of a Notice of Conversion or
Continuation under this Section 2.9(b), the Agent shall provide each Lender with
--------------
a copy thereof.
Section 2.10 Voluntary Reduction of Commitments. Upon at least three
----------------------------------
Business Day's prior irrevocable written notice (or telephonic notice promptly
confirmed in writing) to the Agent (which notice the Agent shall promptly
transmit to each of the Lenders), the Borrower shall have the right, without
premium or penalty, to permanently reduce each Lender's Pro Rata Share of all or
part of the Total Revolving Loan Commitment, provided that any such partial
reduction shall be in the minimum aggregate amount of $1,000,000 or any integral
multiple of $500,000 in excess thereof.
Section 2.11 Voluntary Prepayments. The Borrower shall have the right
---------------------
to prepay the Loans in whole or in part from time to time on the following terms
and conditions: (i) the Borrower shall give the Agent written notice (or
telephonic notice promptly confirmed in writing), which notice shall be
irrevocable, of its intent to prepay the Loans, at least three Business Days
prior to a prepayment of Eurodollar Loans and on the Business Day of a
prepayment of Base Rate Loans, which notice shall specify the amount of such
prepayment and what Types of Loans are to be prepaid and, in the case of
Eurodollar Loans, the specific Borrowing(s) pursuant to which made, and which
notice the Agent shall promptly transmit to each of the Lenders and (ii) each
prepayment shall be in an aggregate principal amount of $1,000,000 or any
integral multiple of $500,000 in excess thereof; provided that if any prepayment
of Eurodollar Loans is made pursuant to this Section 2.11 on a day which is not
------------
the last day of the Interest Period applicable thereto, the Borrower shall pay
to each Lender all amounts due in connection with such prepayment pursuant to
Section 2.17.
- ------------
Section 2.12 Mandatory Prepayments. (a) Upon the consummation of any
---------------------
Asset Disposition or upon the receipt by any Loan Party of any Liquidating
Distribution after the Closing Date, in each case within 270 days after the
Borrower or any of its Subsidiaries receives any Net Sale Proceeds, the Borrower
shall prepay the outstanding Loans in an amount equal to 100% of the amount of
such Net Sale Proceeds, in accordance with the provisions of Section 2.13;
------------
provided, however, that such Net Sale Proceeds which
33
the Borrower or such Subsidiary shall, within 270 days after receipt thereof,
use to reinvest in the business of the Borrower of its Subsidiaries, shall not
be included in determining the aggregate Net Sale Proceeds for such period;
provided, further that, if an Event of Default shall have occurred and be
continuing on the date such Net Sale Proceeds are received by the Borrower or
any of its Subsidiaries or at any time during such applicable 270 day period,
then the Borrower shall prepay the outstanding Loans in an amount equal to 100%
of such Net Sale proceeds (or, if any portion of such proceeds shall have been
reinvested prior to the occurrence of such Event of Default, 100% of such
remaining amount of Net Sale Proceeds not so reinvested) on the later of the
date such Net Sale Proceeds are received by the Borrower or any of its
Subsidiaries or the date of the occurrence of such Event of Default.
(b) On each date on which the Borrower or any of its Subsidiaries
receives any Net Equity Proceeds, the Borrower shall prepay the outstanding
Loans in an amount equal to (i) 50% of such Net Equity Proceeds if both (A) the
Leverage Ratio as of the end of the fiscal quarter immediately preceding such
date as to which financial statements are required to have been delivered
pursuant to Section 6.1(a) and 6.1(b), as applicable, on a pro forma basis after
-------------------------
giving effect to any prepayment made by the Borrower pursuant to clause (ii)(A)
of this Section 2.12(b), is less than 2.0 to 1.0 and (B) no Default or Event of
---------------
Default has occurred or is continuing as a result of the Borrower's failure to
deliver any financial statement or Compliance Certificate as and when required
pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable and (ii) 75% of such
--------------------------------
Net Equity Proceeds if either (A) the Leverage Ratio as of the end of the fiscal
quarter immediately preceding such date as to which financial statements are
required to have been delivered pursuant to Section 6.1(a) or 6.1(b), as
------------------------
applicable, is greater than or equal to 2.0 to 1.0 (but only until the Leverage
Ratio is less than 2.0 to 1.0, at which time clause (i) of this Section 2.12(b)
---------------
shall apply (unless clause (ii)(B) of this Section 2.12(b) shall then be
---------------
applicable)) or (B) any Default or Event of Default has occurred and is
continuing as a result of the Borrower's failure to deliver any financial
statement or Compliance Certificate as and when required pursuant to Section
-------
6.1(a), 6.1(b) or 6.1(e), as applicable, in each case in accordance with the
- ------- ------ ------
provisions of Section 2.13.
------------
(c) On each date on which the Borrower or any of its Subsidiaries
receives any Net Debt Proceeds or becomes or remains liable with respect to
Indebtedness with respect to Capitalized Leases in excess of $100,000,000 in the
aggregate at any one time outstanding for the Borrower and its Subsidiaries, the
Borrower shall prepay the outstanding Loans in an amount equal to 100% of such
Net Debt Proceeds or 100% of the amount by which the aggregate amount of
Indebtedness of the Borrower and its Subsidiaries with respect to Capitalized
Leases exceeds $100,000,000 on such date, respectively, in accordance with the
provisions of Section 2.13.
------------
(d) On each day on which the Total Revolving Loan Commitment is
reduced pursuant to Section 2.10 the Borrower shall prepay the Revolving Loans
------------
to the
34
extent, if any, that the outstanding principal amount of the Revolving
Loans exceeds such reduced Total Revolving Loan Commitment.
(e) If at any time and for any reason the aggregate principal
amount of Revolving Loans plus the L/C Obligations then outstanding are greater
than the Total Revolving Loan Commitment, the Borrower shall immediately prepay
the Revolving Loans in an amount equal to such excess. In addition, to the
extent at any time and for any reason, the Total Revolving Loan Commitment minus
the aggregate principal amount of Revolving Loans then outstanding, is less than
the amount of L/C Obligations outstanding at such time, the Borrower shall Cash
Collateralize the L/C Obligations in an amount equal to the amount by which such
L/C Obligations exceed the amount equal to the difference between the Total
Revolving Loan Commitment and such aggregate principal amount of Revolving
Loans.
(f) Nothing in this Section 2.12 shall be construed to constitute
------------
the Lenders' consent to any transactions referred to in Sections 2.12(a),
----------------
2.12(b) or 2.12(c) above which transaction is not expressly permitted by the
- ------- -------
terms of this Agreement.
Section 2.13 Application of Prepayments. (a) All prepayments of the
--------------------------
Loans required by clauses (a) through (d) of Section 2.12 shall be applied
------------
first, to prepay the Revolving Loans until such Revolving Loans shall have been
- -----
repaid in full, together with accrued and unpaid interest thereon, and second,
------
to Cash Collateralize the then outstanding Letters of Credit and, third, to all
-----
other outstanding Obligations. If (i) at the time of any prepayment of the
principal amount of the Revolving Loans pursuant to the preceding sentence
(other than any prepayment required by Section 2.12(a)) either (A) the Leverage
----------------
Ratio as of the end of the fiscal quarter immediately preceding such date as to
which financial statements are required to have been delivered pursuant to
Section 6.1(a) or 6.1(b), as applicable, is greater than or equal to 2.0 or (B)
- ------------------------
any Default has occurred and is continuing as a result of the Borrower's failure
to deliver any financial statement or Compliance Certificate as and when
required pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable, then
--------------------------------
simultaneously with any prepayment of the principal amount of the Revolving
Loans pursuant to the preceding sentence, each Lender's Revolving Loan
Commitment shall be permanently reduced by such Lender's Pro Rata Share of such
prepayment and, (ii) at the time of any prepayment of the principal amount of
the Revolving Loans pursuant to the preceding sentence (other than any
prepayment required by Section 2.12(a)), both (A) the Leverage Ratio as of the
----------------
end of the fiscal quarter immediately preceding such date as to which financial
statements are required to have been delivered pursuant to Section 6.1(a) and
------------------
6.1(b), as applicable, is less than 2.0 and (B) no Default has occurred or is
- ------
continuing as a result of the Borrower's failure to deliver any financial
statement or Compliance Certificate as and when required pursuant to Section
-------
6.1(a), 6.1(b) or 6.1(e), as applicable, then, any Revolving Loans repaid
- ------------------------
pursuant to the preceding sentence may be reborrowed, subject to the other terms
of this Agreement.
35
(b) Simultaneously with any prepayment of the principal amount of
Revolving Loans pursuant to Section 2.12(a), each Lender's Revolving Loan
---------------
Commitment shall be permanently reduced by such Lender's Pro Rata Share of such
prepayment.
Section 2.14 Method and Place of Payment. (a) Except as otherwise
---------------------------
specifically provided herein, all payments and prepayments under this Agreement
and the Notes shall be made to the Agent for the account of the Lenders entitled
thereto not later than 2:00 P.M., Chicago time, on the date when due and shall
be made in lawful money of the United States of America in immediately available
funds at the Agent's Office, and any funds received by the Agent after such time
shall, for all purposes hereof (including the following sentence), be deemed to
have been paid on the next succeeding Business Day. Except as otherwise
specifically provided herein, the Agent shall thereafter cause to be distributed
on the date of receipt thereof to each Lender in like funds its Pro Rata Share
of payments so received.
(b) Whenever any payment to be made hereunder or under any Note
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable at the applicable rate
during such extension.
(c) All payments made by the Borrower hereunder and under the
other Loan Documents shall be made irrespective of, and without any reduction
for, any setoff or counterclaims.
Section 2.15 Fees. (a) The Borrower agrees to pay the fees in the
----
amounts and on the dates specified in the Fee Letters.
(b) The Borrower agrees to pay to the Agent for the account of
each Lender a commitment fee (the "Commitment Fee") for each day computed at the
per annum rate equal to the Applicable Margin (determined for the Commitment Fee
in accordance with the definition of Applicable Margin) multiplied by each such
Lender's Pro Rata Share of the average daily Unused Portion, from and including
the Closing Date to the Revolving Loan Maturity Date.
(c) The Commitment Fee shall accrue from and including the
Closing Date to but excluding the Revolving Loan Maturity Date. Accrued fees
under this Section 2.15 shall be payable on the Closing Date and payable
------------
quarterly in arrears on each Payment Date, commencing March 15, 2002, and on the
Revolving Loan Maturity Date or such earlier date, if any, on which the
Revolving Loan Commitments shall terminate in accordance with the terms hereof.
The Commitment Fee and all other fees due under the Loan Documents (collectively
the "Fees") shall be calculated on the basis of a 360-day year for the actual
number of days elapsed.
36
Section 2.16 Interest Rate Unascertainable, Increased Costs,
-----------------------------------------------
Illegality. (a) In the event that the Agent, in the case of clause (i) below, or
- ----------
any Lender, in the case of clauses (ii) and (iii) below, shall have determined
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the Eurodollar
Rate for any Interest Period, that by reason of any changes
arising after the Closing Date affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the
definition of the Eurodollar Rate; or
(ii) at any time, that the relevant Eurodollar
Rate applicable to any of its Loans shall not represent the
effective pricing to such Lender for funding or maintaining a
Eurodollar Loan, or such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder in
respect of any Eurodollar Loan, in any such case because of (x)
any change since the Closing Date in any applicable law or
governmental rule, regulation, guideline or order or any
interpretation thereof and including the introduction of any new
law or governmental rule, regulation, guideline or order (such as
for example but not limited to a change in official reserve
requirements, but, in all events, excluding reserves required
under Regulation D of the Federal Reserve Board to the extent
included in the computation of the Eurodollar Rate), whether or
not having the force of law and whether or not failure to comply
therewith would be unlawful, and/or (y) other circumstances
affecting such Lender or the interbank Eurodollar market or the
position of such Lender in such market; or
(iii) at any time, that the making or continuance
by it of any Eurodollar Loan has become unlawful by compliance by
such Lender in good faith with any law or governmental rule,
regulation, guideline or order (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful) or has become impracticable as a result of a
contingency occurring after the Closing Date which materially and
adversely affects the interbank Eurodollar market;
then, and in any such event, the Agent or such Lender shall, promptly after
making such determination, give notice (by telephone promptly confirmed in
writing) to the Borrower and (if applicable) the Agent of such determination
(which notice the Agent shall promptly transmit to each of the other Lenders).
Thereafter (x) in the case of clause (i) above, the Borrower's right to request
Eurodollar Loans shall be suspended, and any Notice of Borrowing or Notice of
Conversion or Continuation given by the Borrower with respect to
37
any Borrowing of Eurodollar Loans which has not yet been made shall be deemed
cancelled and rescinded by the Borrower, (y) in the case of clause (ii) above,
the Borrower shall pay to such Lender, upon such Lender's delivery of a written
demand therefor to the Borrower with a copy to the Agent, such additional
amounts (in the form of an increased rate of interest, or a different method of
calculating interest, or otherwise, as such Lender in its sole discretion shall
determine) as shall be required to compensate such Lender for such increased
costs or reduction in amounts received or receivable hereunder and (z) in the
case of clause (iii) above, the Borrower shall take one of the actions specified
in clause (b) below as promptly as possible and, in any event, within the time
period required by law. The written demand provided for in clause (y) shall
demonstrate in reasonable detail the calculation of the amounts demanded and
shall, absent manifest error, be final and conclusive and binding upon all of
the parties hereto.
(b) In the case of any Eurodollar Loan or requested Eurodollar
Loan affected by the circumstances described in clause (a)(ii) above, the
Borrower may, and in the case of any Eurodollar Loan affected by the
circumstances described in clause (a)(iii) above the Borrower shall, either (i)
if any such Eurodollar Loan has not yet been made but is then the subject of a
Notice of Borrowing or a Notice of Conversion or Continuation, be deemed to have
cancelled and rescinded such notice, or (ii) if any such Eurodollar Loan is then
outstanding, require the affected Lender to convert each such Eurodollar Loan
into a Base Rate Loan at the end of the applicable Interest Period or such
earlier time as may be required by law, in each case by giving the Agent notice
(by telephone promptly confirmed in writing) thereof on the Business Day that
the Borrower was notified by the Lender pursuant to clause (a) above; provided,
however, that all Lenders whose Eurodollar Loans are affected by the
circumstances described in clause (a) above shall be treated in the same manner
under this clause (b).
(c) In the event that the Agent determines at any time following
its giving of notice based on the conditions described in clause (a)(i) above
that none of such conditions exist, the Agent shall promptly give notice thereof
to the Borrower and the Lenders, whereupon the Borrower's right to request
Eurodollar Loans from the Lenders and the Lenders' obligation to make Eurodollar
Loans shall be restored.
(d) In the event that a Lender determines at any time following
its giving of a notice based on the conditions described in clause (a)(iii)
above that none of such conditions exist, such Lender shall promptly give notice
thereof to the Borrower and the Agent, whereupon the Borrower's right to request
Eurodollar Loans from such Lender and such Lender's obligation to make
Eurodollar Loans shall be restored.
Section 2.17 Funding Losses. The Borrower shall compensate each
--------------
Lender, upon such Lender's delivery of a written demand therefor to the
Borrower, with a copy to the Agent (which demand shall set forth the basis for
requesting such amounts and
38
shall, absent manifest error, be final and conclusive and binding upon all of
the parties hereto), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by such
Lender in connection with the liquidation or reemployment of deposits or funds
required by it to make or carry its Eurodollar Loans), that such Lender
sustains: (i) if for any reason (other than a default by such Lender) a
Borrowing of, or conversion from or into, or a continuation of, Eurodollar Loans
does not occur on a date specified therefor in a Notice of Borrowing or Notice
of Conversion or Continuation (whether or not rescinded, cancelled or withdrawn
or deemed rescinded, cancelled or withdrawn, pursuant to Section 2.16(a) or
------------------
2.16(b) or otherwise), (ii) if any prepayment or repayment (including, without
- -------
limitation, payment after acceleration) or conversion of any of its Eurodollar
Loans occurs on a date which is not the last day of the Interest Period
applicable thereto, (iii) if any prepayment of any of its Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the Borrower,
or (iv) as a consequence of any default by the Borrower in repaying its
Eurodollar Loans or any other amounts owing hereunder in respect of its
Eurodollar Loans when required by the terms of this Agreement. Calculation of
all amounts payable to a Lender under this Section 2.17 shall be made on the
------------
assumption that such Lender has funded its relevant Eurodollar Loan through the
purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an
amount equal to the amount of such Eurodollar Loan with a maturity equivalent to
the Interest Period applicable to such Eurodollar Loan, and through the transfer
of such Eurodollar deposit from an offshore office of such Lender to a domestic
office of such Lender in the United States of America, provided that each Lender
may fund its Eurodollar Loans in any manner that it in its sole discretion
chooses and the foregoing assumption shall only be made in order to calculate
amounts payable under this Section 2.17.
------------
Section 2.18 Increased Capital. If any Lender shall have determined
-----------------
that compliance with any applicable law, rule, regulation, guideline, request or
directive (whether or not having the force of law) of any governmental
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital or assets of such Lender or any
Person controlling such Lender as a consequence of its commitments or
obligations hereunder, then from time to time, upon such Lender's delivering a
written demand therefor to the Agent and the Borrower (with a copy to the
Agent), the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Person for such reduction.
Section 2.19 Taxes. (a) All payments made by the Borrower under this
-----
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority excluding, in the case of the Agent and each Lender, net income and
franchise taxes imposed on the Agent or such Lender by the jurisdiction under
the laws of which the Agent or such Lender is organized or any political
39
subdivision or taxing authority thereof or therein, or by any jurisdiction in
which such Lender's Domestic Lending Office or Eurodollar Lending Office, as the
case may be, is located or any political subdivision or taxing authority thereof
or therein (all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or under
the Notes, the amounts so payable to the Agent or such Lender shall be increased
to the extent necessary to yield to the Agent or such Lender (after payment of
all Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the Borrower, as promptly as possible thereafter, the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this Section 2.19 shall survive the termination
------------
of this Agreement and the payment of the Notes and all other Obligations.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (including each Purchasing Lender
that becomes a party to this Agreement pursuant to Section 10.4) agrees that,
------------
prior to the first date on which any payment is due to it hereunder, it will
deliver to the Borrower and the Agent (i) two duly completed copies of United
States Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable
form, as the case may be, certifying in each case that such Lender is entitled
to receive payments under this Agreement and the Notes payable to it, without
deduction or withholding of any United States federal income taxes, and (ii) an
Internal Revenue Service Form W-8 (or W-8BEN) or W-9 or successor applicable
form, as the case may be, to establish an exemption from United States backup
withholding tax. Each Lender which delivers to the Borrower and the Agent a Form
W-8BEN or W-8ECI and Form W-8 (or W-8BEN) or W-9 pursuant to the preceding
sentence further undertakes to deliver to the Borrower and the Agent two further
copies of the said letter and Form W-8BEN or W-8ECI and Form W-8 (or W-8BEN) or
W-9, or successor applicable forms, or other manner of certification, as the
case may be, on or before the date that any such letter or form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent letter and form previously delivered by it to the Borrower, and such
extensions or renewals thereof as may reasonably be requested by the Borrower,
certifying in the case of a Form W-8BEN or W-8ECI that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless in any such case an event (including,
without limitation, any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent
40
such Lender from duly completing and delivering any such letter or form
with respect to it and such Lender advises the Borrower that it is not capable
of receiving payments without any deduction or withholding of United States
federal income tax, and in the case of a Form W-8 (or W-8BEN) or W-9,
establishing an exemption from United States backup withholding tax.
Section 2.20 Use of Proceeds. The proceeds of the Loans shall be used
---------------
for the Borrower's working capital and general corporate purposes which shall
include, but not be limited to, Restaurant renovations and Permitted
Acquisitions.
Section 2.21 Collateral Security.
-------------------------
(a) As security for the payment of the Obligations, the Borrower
shall cause to be granted to the Agent, for the ratable benefit of the Lenders,
a first priority perfected Lien on and security interest in all of the
following, whether now or hereafter existing or acquired subject only to the
Liens permitted to be incurred pursuant to Section 7.3 hereof: (i) all of the
-----------
shares of capital stock (or other equity interests of each Subsidiary if such
Subsidiary is not a corporation) of each Subsidiary of the Borrower now or
hereafter directly or indirectly owned by the Borrower and all proceeds thereof,
all as more specifically described in the Borrower Pledge Agreement and the
Subsidiary Pledge Agreements; (ii) certain of the assets of the Borrower and all
proceeds thereof, all as more specifically described in the Borrower Security
Agreement and the Mortgages; and (iii) certain of the assets of each Subsidiary
now or hereafter directly or indirectly owned by the Borrower and all proceeds
thereof, all as more specifically described in the Subsidiary Security Agreement
and the Mortgages. To the extent the Agent for the benefit of the Lenders does
not have a first priority perfected security interest in any assets of the
Borrower or any other Loan Party required to be pledged as described above which
is of the type described in the Borrower Security Agreement, the Borrower Pledge
Agreement, the Subsidiary Pledge Agreement or the Subsidiary Security Agreement
or which consists of real property of the type described in subsection (c)
below, the Borrower will grant, and cause each other Loan Party to grant, to the
Agent for itself and the benefit of the Lenders a first priority perfected
security interest in such assets subject only to the Liens permitted pursuant to
Section 7.3 hereof. In connection with any sales of assets permitted hereunder,
- -----------
the Agent will release and terminate the liens and security interests granted
under the Security Documents with respect to such assets and no further consent
of the Lenders will be required with respect to any such release.
(b) Concurrently with the consummation of any Permitted
Acquisition or any other acquisition of any asset (whether by purchase, merger,
contribution, license or otherwise) which is of the type described in the
Borrower Security Agreement, the Subsidiary Security Agreement, the Borrower
Pledge Agreement or the Subsidiary Pledge Agreement by the Borrower or any
Subsidiary of the Borrower (other
41
than a Subsidiary which, after giving effect to any such acquisition, is an
Immaterial Subsidiary, except as otherwise provided in Section 6.11 or any
------------
Security Document) (an "Acquiring Subsidiary") or the formation of any new
Subsidiary (other than a Subsidiary which, after giving effect to any such
acquisition, is an Immaterial Subsidiary, except as otherwise provided in
Section 6.11 or any Security Document) of the Borrower or upon an Immaterial
- ------------
Subsidiary ceasing to qualify or be designated as an Immaterial Subsidiary
(conversion from the status of an Immaterial Subsidiary to a Subsidiary which is
not an Immaterial Subsidiary is hereinafter referred to as a "Conversion"), the
Borrower shall:
(i) in the case of a Permitted Acquisition of
stock or other equity interest or any other acquisition of stock
or other equity interest (whether by purchase, merger,
contribution, license or otherwise) by the Borrower or any such
Acquiring Subsidiary of the Borrower or the formation of such a
new Subsidiary or a Conversion: (A) deliver or cause to be
delivered to the Agent all of the certificates representing the
capital stock (or other equity interest if such equity interests
are represented by a certificate or certificates) of such new
Subsidiary which is being acquired or formed or converted (or
Investment if such Investment is not an Immaterial Investment),
beneficially owned by the Borrower or such Acquiring Subsidiary,
as additional collateral for the Obligations, to be held by the
Agent in accordance with the terms of the Borrower Pledge
Agreement or a Subsidiary Pledge Agreement, as the case may be;
and (B) cause such Acquiring Subsidiary (which is not already a
party thereto) or new Subsidiary which is being acquired or
formed or converted to deliver to the Agent (1) duly executed
counterpart signature pages to each of the Guaranty, and the
Subsidiary Security Agreement, in the forms attached respectively
thereto as Annex I, together with the authorization to the Agent
and the Lenders to attach such signature pages to the Guaranty
and the Subsidiary Security Agreement, respectively, the effect
of which shall be that as of the date set forth on such signature
pages such Acquiring Subsidiary or such new or converted
Subsidiary, as the case may be, shall become a party to each such
agreement and be bound by the terms thereof and any revisions to
the schedules to the Subsidiary Security Agreement necessary in
connection therewith, (2) if such new or converted Subsidiary
owns any capital stock or other equity interest or if such
Acquiring Subsidiary is not already a party to a Subsidiary
Pledge Agreement, a Subsidiary Pledge Agreement duly executed by
such new or converted Subsidiary or such Acquiring Subsidiary, as
the case may be, or if such new or converted Subsidiary owns any
copyrights, trademarks, patents or other intellectual property,
such additional Security Documents as requested by the Agent, (3)
such Uniform Commercial Code financing statements as shall be
required to perfect the security interest of the Agent and the
Lenders in
42
the Collateral being pledged by such new Subsidiary pursuant to
the Subsidiary Security Agreement, and (4) ten (10) days prior
written notice of any such Permitted Acquisition, other
acquisition, formation or Conversion.
(ii) in the case of a Permitted Acquisition of
assets or any other acquisition of assets (including equity
interests of a Person other than a corporation) (whether by
purchase, merger, contribution, license or otherwise) by the
Borrower or any such Acquiring Subsidiary which is of the type
described in the Borrower Security Agreement or the Subsidiary
Security Agreement or the formation of such a new Subsidiary or a
Conversion into a Person which in either case is not a
corporation, deliver or cause to be delivered by the Borrower or
such Acquiring Subsidiary acquiring such assets or forming such
new Subsidiary, (A) such Uniform Commercial Code financing
statements as shall be required to perfect the security interest
of the Agent and the Lenders in the assets being so acquired, (B)
if such assets include copyrights, trademarks, patents or other
intellectual property, such additional Security Documents as
requested by the Agent, (C) any additional instruments or
documents evidencing the security interest of the Agent
reasonably required by the Agent and (D) ten (10) days prior
written notice of any such Permitted Acquisition, other
acquisition, formation or Conversion; and
(iii) in any case (A) provide such other
documentation, including, without limitation, one or more
opinions of counsel reasonably satisfactory to the Agent,
articles of incorporation, by-laws and resolutions (or equivalent
organizational and authorization documents), which in the
reasonable opinion of the Agent is necessary or advisable in
connection with such Permitted Acquisition or formation of such
new Subsidiary or other acquisition (whether by purchase, merger,
contribution or otherwise) or Conversion, (B) cause any newly
formed or acquired Immaterial Subsidiary which is or is to become
a Subordinated Guarantor, to execute and deliver a counterpart to
the Guaranty, and (C) if, as a result of the consummation of any
transaction or transactions, there is a significant change in the
information provided by the Borrower on Schedule 5.18, promptly
-------------
provide the Agent with a new schedule which reflects the then
current corporate structure of the Borrower and its Subsidiaries
certified by an Authorized Officer of the Borrower.
(c) Concurrently with the acquisition of any interest (including
a leasehold interest) in any real property by the Borrower or any Subsidiary of
the Borrower in any state that does not at the time of acquisition assess a
mortgage recording tax, the Borrower shall deliver or cause to be delivered to
the Agent, Mortgages with respect to such
43
real property interest, together with title insurance policies, surveys,
appraisals, opinions of counsels and such other documentation as the Agent may
reasonably request.
Section 2.22 Replacement of Certain Lenders. If a Lender ("Affected
------------------------------
Lender") shall have requested compensation from the Borrower under Sections
--------
2.16, 2.18 or 2.19 to recover Taxes or other additional costs incurred by such
- ---- ---- ----
Lender which are not being incurred generally by the other Lenders, or delivered
a notice pursuant to Section 2.16(a)(iii) claiming that such Lender is unable to
--------------------
extend Eurodollar Loans to the Borrower for reasons not generally applicable to
the other Lenders, then, in any such case, so long as no Default or Event of
Default exists, the Borrower may make written demand on such Affected Lender
(with a copy to the Agent) for the Affected Lender to assign, and such Affected
Lender shall assign pursuant to one or more duly executed assignment and
acceptance agreements in substantially the form of Exhibit I thirty (30)
---------
Business Days after the date of such demand, to one or more financial
institutions that comply with the provisions of Section 10.4(c) and 10.4(d) (and
------------------
that are reasonably acceptable to the Agent) which the Borrower shall have
engaged for such purpose ("Replacement Lender"), all of such Affected Lender's
rights and obligations under this Agreement and the other Loan Documents
(including its Revolving Loan Commitment, all Loans owing to it, all of its
participation interests in outstanding Letters of Credit, and its obligation to
participate in additional Letters of Credit hereunder) in accordance with
Section 10.4(c) and 10.4(d). Further, with respect to any such assignment, the
- -------------- ------
Affected Lender shall have concurrently received, in cash, all amounts due and
owing to such Affected Lender hereunder or under any other Loan Document,
including the aggregate outstanding principal amount of the Loans owed to such
Lender, together with accrued interest thereon through the date of such
assignment from the Replacement Lender, amounts payable under Sections 2.16,
-------------
2.18 and 2.19 with respect to such Affected Lender and compensation payable
- ---- ----
under Section 2.15; provided, that upon such Affected Lender's replacement, such
------------
Affected Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.16, 2.17, 2.18, 2.19 and 10.1 accruing
------------- ---- ---- ---- ----
with respect to such Affected Lender prior to the date such Affected Lender is
replaced, as well as to any fees accrued for its account hereunder prior to
being replaced and not yet paid, and shall continue to be obligated under
Section 9.7.
- -----------
SECTION 3. LETTERS OF CREDIT.
Section 3.1 Issuance of Letters of Credit, etc. (a) Subject to the
----------------------------------
terms and conditions hereof, at any time and from time to time from the Closing
Date through the day prior to the Revolving Loan Maturity Date, the Issuing Bank
shall issue such Letters of Credit for the account of the Borrower or any
Subsidiary of the Borrower which is a party to the Guaranty as Borrower may
request by an L/C Application; provided that, giving effect to such Letter of
Credit, (x) the sum of the L/C Obligations then outstanding plus the then
--- ----
outstanding aggregate principal amount of the Revolving Loans shall not exceed
the Total Revolving Loan Commitment and (y) the aggregate L/C Obligations then
outstanding shall
44
not exceed the L/C Commitment. Unless all the Lenders and the Issuing Bank
otherwise consent in writing, the Borrower and its Subsidiaries shall not
request any Letter of Credit (i) whose term exceeds 12 months or (ii) which
expires after the Revolving Loan Maturity Date unless such Letter of Credit is
Cash Collateralized at least two (2) Business Days prior to the Revolving Loan
Maturity Date. No Letter of Credit shall be issued except in the ordinary course
of business of the Borrower or any of its Subsidiaries or in connection with
Permitted Acquisitions with respect to which the conditions set forth in Section
-------
7.8(f) have been satisfied, each Letter of Credit shall be used solely (a) to
- ------
support obligations of the Borrower and its Subsidiaries not prohibited
hereunder, other than Indebtedness for borrowed money, and (b) for the purposes
described in the definition of "Trade Letter of Credit".
(b) The Borrower shall submit the L/C Application for the
Issuance of any Letter of Credit to the Issuing Bank at least five Business Days
prior to the date when required. Upon Issuance of a Letter of Credit, the
Issuing Bank shall promptly notify the Lenders of the amount and terms thereof.
(c) Upon the Issuance of a Letter of Credit, each Lender that has
made a Revolving Loan Commitment shall be deemed to have purchased a pro rata
participation, from the Issuing Bank in an amount equal to that Lender's Pro
Rata Share, in the Letter of Credit. Without limiting the scope and nature of
each Lender's participation in any Letter of Credit, to the extent that the
Issuing Bank has not been reimbursed by the Borrower for any payment to a
beneficiary of a Letter of Credit in respect of a drawing under such Letter of
Credit made by the Issuing Bank under any Letter of Credit, each Lender shall,
pro rata according to its Pro Rata Share, reimburse the Issuing Bank promptly
upon demand for the amount of such payment. The obligation of each Lender to so
reimburse the Issuing Bank shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower to reimburse the Issuing Bank for the
amount of any payment made by the Issuing Bank under any Letter of Credit
together with interest as hereinafter provided.
(d) Upon the making of any payment with respect to any Letter of
Credit by the Issuing Bank, the Borrower shall be deemed to have submitted a
Notice of Borrowing for a Revolving Loan consisting of a Base Rate Loan in the
amount of such payment, and the Agent shall without notice to or the consent of
Borrower cause Revolving Loans to be made by the Lenders in an aggregate amount
equal to the amount paid by the Issuing Bank on that Letter of Credit, but not
exceeding the Total Revolving Loan Commitment minus the then outstanding
-----
principal amount of Revolving Loans and minus all other then outstanding L/C
-----
Obligations, and for this purpose, the conditions precedent set forth in Section
-------
4 hereof shall not apply. The proceeds of such Revolving Loans shall be paid to
- -
the Issuing Bank to reimburse it for the payment made by it under the Letter of
45
Credit. Promptly following any Revolving Loans made under this Section 3.1(d),
--------------
the Agent shall notify the Borrower thereof.
(e) To the extent that any Loans made pursuant to Section 3.1(d)
-------------
are insufficient to reimburse the Issuing Bank in full, the Borrower agrees to
pay to the Issuing Bank with respect to each Letter of Credit, within one
Business Day after demand therefor, a principal amount equal to any payment made
by the Issuing Bank under that Letter of Credit, together with interest on such
amount from the date of any payment made by the Issuing Bank through the date of
payment by the Borrower at the Default Rate. The principal amount of any such
payment made by the Borrower to the Issuing Bank shall be used to reimburse the
Issuing Bank for the payment made by it under the Letter of Credit. Each Lender
that has reimbursed the Issuing Bank pursuant to Section 3.1(d) for its Pro Rata
-------------
Share of any payment made by the Issuing Bank under a Letter of Credit shall
thereupon acquire a pro rata participation, to the extent of such reimbursement,
in the claim of the Issuing Bank against the Borrower under this Section 3.1(e).
--------------
(f) The Issuance of any supplement, modification, amendment,
renewal or extension to or of any Letter of Credit shall be treated in all
respects the same as the Issuance of a new Letter of Credit.
Section 3.2 Letter of Credit Fees. The Borrower shall pay (i) a letter
---------------------
of credit fee to the Agent equal to (x) a per annum rate equal to the then
effective Applicable Margin for Eurodollar Loans minus 0.50% times (y) the
stated amount of each Standby Letter of Credit for the term of each such Letter
of Credit for the account of the Lenders who have made Revolving Loan
Commitments, according to their respective Pro Rata Shares, in each case payable
quarterly in arrears on each Payment Date, commencing on March 15, 2002, and
(ii) a letter of credit fee to the Agent equal to (x) a per annum rate equal to
the then effective Applicable Margin for Eurodollar Loans minus 0.50% times (y)
the stated amount of each Trade Letter of Credit as of the date of Issuance
thereof, payable for the account of the Lenders who have made Revolving Loan
Commitments, according to their respective Pro Rata Shares, in each case payable
quarterly in arrears on each Payment Date, commencing on March 15, 2002. Upon
(A) the issuance of each Letter of Credit, the Borrower shall also pay to the
Agent for the account of the Issuing Bank an amount equal to the greater of (i)
$500 or (ii) 0.125% of the stated amount of such Letter of Credit as an issuance
fee; (B) the amendment of each Letter of Credit, the Borrower shall pay to the
Agent for the account of the Issuing Bank the amendment fees, in each case, as
the Issuing Bank normally charges in connection with a Letter of Credit and
activity pursuant thereto, in either case which fees shall be solely for the
account of the Issuing Bank; and (C) the incurrence of any reasonable
out-of-pocket costs and expenses in connection with the maintenance of any
Letter of Credit, the Borrower shall pay to the Agent for the account of the
Issuing Bank the amount of such out-of-pocket costs and expenses so incurred.
46
Section 3.3 Obligation of Borrower Absolute, etc. (a) The obligation
-------------------------------------
of the Borrower to pay to the Issuing Bank the amount of any payment made by the
Issuing Bank under any Letter of Credit shall be absolute, unconditional and
irrevocable. Without limiting the foregoing, such obligation of the Borrower
shall not be affected by any of the following circumstances:
(1) any lack of validity or enforceability of
the Letter of Credit, this Agreement or any other agreement or
instrument relating thereto;
(2) any amendment or waiver of or any consent
to departure from the Letter of Credit, this Agreement or any
other agreement or instrument relating thereto;
(3) the existence of any claim, setoff,
defense or other rights which the Borrower or any Subsidiary of
the Borrower may have at any time against the Issuing Bank, any
Lender, the Agent, any beneficiary of the Letter of Credit (or
any Persons for whom any such beneficiary may be acting) or any
other Person, whether in connection with the Letter of Credit,
this Agreement or any other agreement or instrument relating
thereto, or any unrelated transactions;
(4) any demand, statement or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever so long as any such document appeared to comply with
the terms of the Letter of Credit;
(5) payment by the Issuing Bank in good faith
under the Letter of Credit against presentation of a draft or any
accompanying document which does not strictly comply with the
terms of the Letter of Credit;
(6) the existence, character, quality,
quantity, condition, packing, value or delivery of any property
purported to be represented by documents presented in connection
with any Letter of Credit or for any difference between any such
property and the character, quality, quantity, condition or value
of such property as described in such documents;
(7) the time, place, manner, order or
contents of shipments or deliveries of property as described in
documents
47
presented in connection with any Letter of Credit or the
existence, nature and extent of any insurance relative thereto;
(8) the solvency or financial responsibility
of any party issuing any documents in connection with a Letter of
Credit;
(9) any failure or delay in notice of
shipments or arrival of any property; and
(10) any other circumstances whatsoever.
(b) As among the Borrower, the Lenders, the Issuing Bank and the
Agent, the Borrower assumes all risks of the acts and omissions of, or misuse of
such Letter of Credit by, the beneficiary of any Letter of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the Letter of Credit applications and Letter of Credit reimbursement agreements
executed by the Borrower at the time it requests any Letter of Credit, the
Agent, the Issuing Bank and the Lenders shall not be responsible:
(i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of the
Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason;
(iii) for the failure of the beneficiary of a
Letter of Credit to comply duly with conditions required in order
to draw upon such Letter of Credit;
(iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, or other similar form of
teletransmission or otherwise;
(v) for errors in interpretation of technical
trade terms;
48
(vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of
a Letter of Credit of the proceeds of any drawing under such
Letter of Credit; and
(viii) for any consequences arising from causes
beyond the control of the Agent, the Issuing Bank and the Lenders
including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future de jure or de
-- ---- --
facto government or governmental authority.
-----
None of the above shall affect, impair, or prevent the vesting of any of the
Issuing Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Issuing Bank under or in connection with Letters of Credit issued by it or any
related certificates shall not, in the absence of gross negligence or willful
misconduct, put the Issuing Bank under any resulting liability to the Borrower
or relieve the Borrower of any of its obligations hereunder to any such Person.
(d) The Issuing Bank shall be entitled to the protection accorded
to the Agent pursuant to Section 9, mutatis mutandis.
--------- ------- --------
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1 [Intentionally Omitted].
---------------------
Section 4.2 Conditions Precedent to the Effectiveness of this
--------------------------------------------------
Agreement. This Agreement shall become effective as of the Closing Date upon the
- ---------
satisfaction on or before the Closing Date of the following conditions
precedent:
(a) Loan Documents.
--------------
(i) Credit Agreement. The Borrower and the Lenders
----------------
shall have executed and delivered this Agreement to the Agent.
49
(ii) Notes. The Borrower shall have executed and
-----
delivered to each of the Lenders the appropriate Notes in the
amount, maturity and as otherwise provided herein.
(iii) Borrower Security Agreement. The Borrower
---------------------------
shall have executed and delivered to the Agent the Borrower
Security Agreement.
(iv) Subsidiary Security Agreement. Each
-----------------------------
Subsidiary of the Borrower (other than any such Subsidiary which
is an Immaterial Subsidiary) shall have duly executed and
delivered to the Agent the Subsidiary Security Agreement.
(v) Borrower Pledge Agreement. The Borrower shall
-------------------------
have executed and delivered to the Agent the Borrower Pledge
Agreement.
(vi) Subsidiary Pledge Agreements. Each Subsidiary
----------------------------
of the Borrower that owns any Equity Interest in any Person as of
the Closing Date (other than an equity interest in Boston West,
L.L.C. and other than in an Immaterial Subsidiary) shall have
duly executed and delivered to the Agent a Subsidiary Pledge
Agreement.
(vii) Guaranty. Each Subsidiary of the Borrower
--------
(other than any Immaterial Subsidiary that is not a Subordinated
Guarantor) shall have executed and delivered to the Agent the
Guaranty.
(viii) Fee Letters. The Borrower shall have
-----------
executed and delivered to the Agent the Fee Letters.
(ix) Borrower Trademark Security Agreement. The
-------------------------------------
Borrower shall have executed and delivered to the Agent an
amended and restated Borrower Trademark Security Agreement,
amending and restating that certain Borrower Trademark Security
Agreement, dated as of July 15, 1997, by the Borrower in favor of
the Agent.
(x) Subsidiary Trademark, Patent and Copyright
-------------------------------------------
Security Agreements. Each Subsidiary of the Borrower party to the
-------------------
Subsidiary Trademark Security Agreement, Subsidiary Patent
Security Agreement or Subsidiary Copyright Security Agreement (as
applicable), each dated as of July 15, 1997 in favor of the
Agent, shall have executed and delivered to the Agent an amended
and restated version of each such
50
agreement, and each Subsidiary of the Borrower not party to any
of such agreements that owns any Intellectual Property shall have
executed and delivered to the Agent a security agreement
substantially in the form of each such previously delivered
agreement (as applicable).
(b) Opinions of Counsel. The Agent shall have received (A) a
-------------------
legal opinion, dated the Closing Date, from Stradling Yocca Carlson & Rauth,
counsel to the Loan Parties, substantially in the form set forth as Exhibit H-
hereto, (B) legal opinions, dated the Closing Date, from each of the local
counsel to the Loan Parties identified on Schedule 4.2(b), in form and substance
--------------
satisfactory to the Agent and (C) such other legal opinions, each dated the
Closing Date, from local counsel to the Loan Parties as requested by the Agent
with respect to such matters as requested by the Agent and in form and substance
satisfactory to the Agent.
(c) Corporate Documents. The Agent shall have received the
-------------------
certificate of incorporation, certificate of limited partnership, certificate of
formation or other similar organizational document of each of the Loan Parties
as amended, modified or supplemented to the Closing Date, (other than in the
case of a general partnership) certified to be true, correct and complete by the
appropriate Secretary of State as of a date not more than ten Business Days
prior to the Closing Date, together with a good standing certificate from such
Secretary of State and a good standing certificate from the Secretaries of State
(or the equivalent thereof) of each other State in which each of them is
required to be qualified to transact business, each to be dated a date not more
than ten Business Days prior to the Closing Date and a bring-down good standing
certificate or telephonic confirmation from the appropriate Secretary of State
in each jurisdiction of organization of each Loan Party dated the Closing Date.
(d) Certified Resolutions, etc. The Agent shall have received a
--------------------------
certificate of the Secretary or Assistant Secretary of each of the Loan Parties
or of a general partner in the case of each Loan Party which is a general
partnership and dated the Closing Date certifying (i) the names and true
signatures of the incumbent officers of such Person authorized to sign the
applicable Loan Documents, (ii) the By-Laws, partnership agreement, limited
liability company agreement or other similar organizational document of such
Person as in effect on the Closing Date, (iii) the resolutions of such Person's
Board of Directors (or other governing body, as applicable) approving and
authorizing the execution, delivery and performance of all Transaction Documents
executed by such Person, and (iv) that there have been no changes in the
certificate of incorporation, certificate of limited partnership, certificate of
formation or other similar organizational document of such Person since the date
of the most recent certification thereof by the appropriate Secretary of State
or, in the case of a partnership or other similar entity, the partnership
agreement or other similar organizational document.
51
(e) Existing Indebtedness. The Agent shall have received copies
---------------------
of all documents relating to existing Indebtedness for borrowed money or
evidenced by a note, bond, debenture, acceptance or similar instrument of the
Borrower and its Subsidiaries that shall be outstanding in each case in a
principal amount in excess of $2,000,000 on and after the Closing Date,
including, without limitation, terms of amortization, interest, premiums, fees,
expenses, maturity, amendments, covenants, events of default and remedies,
certified as of the Closing Date as such by the President or Vice President of
the Borrower.
(f) Process Agent. Each Loan Party shall have appointed an agent
-------------
satisfactory to the Agent for service of process in connection with any action
or proceeding arising under or relating to the Loan Documents, and such agent
shall have accepted such appointment in writing.
(g) Officer's Certificate. The Agent and the Lenders shall have
---------------------
received a certificate of the President or Vice President of the Borrower, dated
the Closing Date, certifying that (i) the Subordinated Debt Documents are in
full force and effect and no material term or condition thereof has been amended
from the form thereof delivered to the Agent, or waived, except as disclosed to
the Agent or its counsel prior to the execution of this Agreement, (ii) each of
the Loan Parties and, to the best of his or her knowledge, the other parties to
the Subordinated Debt Documents, have performed or complied in all material
respects with all agreements and conditions contained in such Subordinated Debt
Documents, (iii) subject to the foregoing, neither any Loan Party nor, to the
best of his or her knowledge, any such other party is in default in the
performance or compliance with any of the material terms or provisions thereof,
except to the extent that performance thereof or compliance therewith or default
has been waived with the prior written consent of the Lenders, (iv) all of the
representations and warranties of the Borrower and each other Loan Party
contained in the Subordinated Debt Documents and the Loan Documents are true and
correct, (v) no Default or Event of Default has occurred and is continuing and
no default or event of default has occurred and is continuing under the
Subordinated Debt Documents and (vi) since January 29, 2001, no event or change
has occurred that has caused or evidences a Material Adverse Effect.
(h) Closing Compliance Certificate. The Agent shall have received
------------------------------
a certificate signed by the chief financial officer of the Borrower (i)
containing conclusions that the Borrower and its Subsidiaries are Solvent before
and after giving effect to the Transactions and that Closing EBITDA equals at
least $100,000,000, (ii) setting forth the calculation of the amounts set forth
on Schedule 1.2 and (iii) setting forth the calculations required to establish
------------
the Leverage Ratio calculated as of the end of the Retail Period of the Borrower
ending December 31, 2001.
(i) Insurance. The Agent shall have received a certificate of
---------
insurance demonstrating insurance coverage in respect of each of the Loan
Parties of types,
52
in amounts, with insurers and with other terms reasonably satisfactory to the
Agent and which name the Agent as an additional insured or loss payee, as
applicable.
(j) Lien Search Reports. The Agent shall have received
-------------------
satisfactory reports of UCC, tax lien, judgment and litigation searches with
respect to the Borrower and each of the other Loan Parties in each of the
locations requested by the Agent.
(k) UCC-1 Financing Statements. The Agent shall have received
--------------------------
originals of each UCC-1 financing statement (i) duly executed by an Authorized
Officer of the Borrower as debtor naming the Agent as secured party and filed in
the jurisdictions set forth in Schedule I to the Borrower Security Agreement and
----------
(ii) duly executed by an Authorized Officer of each other Loan Party as debtor
naming the Agent as secured party and filed in the appropriate jurisdictions set
forth in Schedule I to the Subsidiary Security Agreement.
----------
(l) Title Policies. The Agent shall have received mortgagee's
--------------
loan policies (or pro-forma title commitments signed by the title insurance
company and obligating such title insurance company to issue mortgagee's loan
policies in a form identical to such pro-forma title commitments), together with
all endorsements required by the Agent with respect to the Real Estate
Collateral identified on Schedule 4.1(l), issued by or on behalf of a title
insurance company acceptable to the Agent, in form and substance satisfactory to
the Agent and insuring the Liens created by the Mortgages on such Real Estate
Collateral.
(m) UCC Authorizations. The Agent shall have received UCC
------------------
authorizations from each of Aeroways, LLC, Burger Chef Systems, Inc., Carl's Jr.
Region VIII, Inc., Carl Karcher Enterprises, Inc., HED, Inc. and Spardee's
Realty, Inc.
(n) Pledged Collateral. The Agent shall have received (i) the
------------------
original stock, membership interest or partnership interest certificates
evidencing the Pledged Stock (as defined in the Borrower Pledge Agreement and
each Subsidiary Pledge Agreement) pursuant to the Borrower Pledge Agreement and
each Subsidiary Pledge Agreement (other than certificates representing any
shares of Pledged Stock of any Immaterial Subsidiary and any shares of Pledged
Stock which evidence an Immaterial Investment), together with undated stock
powers or similar instruments of assignment duly executed in blank in connection
therewith and (ii) each original Instrument pursuant to the Borrower Pledge
Agreement and each Subsidiary Pledge Agreement (other than any Instrument
evidencing an Immaterial Investment).
(o) Corporate Structure. The corporate structure of the Loan
-------------------
Parties shall be satisfactory to the Lenders and the Agent shall have received a
corporate
53
structure chart with respect to the Borrower and all of its Subsidiaries
(certified by an Authorized Officer of the Borrower).
(p) [Intentionally Omitted].
---------------------
(q) Funded Debt and Capitalization. The Total Revolving Loan
------------------------------
Commitment minus the aggregate principal amount of the Revolving Loans
-----
outstanding on the Closing Date minus the amount of any L/C Obligations then
-----
outstanding including any Letters of Credit to be issued on the Closing Date
shall equal at least $25,000,000. The Leverage Ratio for the four fiscal
quarters ended immediately prior to the Closing Date shall not exceed 4.5 to 1.
The assets and liabilities of the Borrower and its consolidated Subsidiaries
shall be materially consistent with the projections dated October 1, 2001 and
previously delivered by the Borrower to the Agent.
(r) Existing Indebtedness. The Agent shall have received evidence
---------------------
satisfactory to the Agent and the Lenders that, after giving effect to the
consummation of the Transactions, (i) the Borrower and its Subsidiaries shall
not be liable for or have outstanding any Indebtedness which is of the type of
Indebtedness which would appear as a liability on (or would be required to
appear as a liability on) the consolidated balance sheet of the Borrower (and
not of the type required solely to be included in the footnotes thereto) and
which Indebtedness shall include, without limitation, Indebtedness for borrowed
money and Capitalized Lease Obligations, other than (A) the Loans outstanding
hereunder as contemplated by Section 4.2(q) and (B) Indebtedness permitted under
-----------
Section 7.2 (but excluding Indebtedness described in Section 7.2(a))
- ----------- -----------
(collectively, the "Surviving Debt"), and (ii) the Borrower and each of its
Subsidiaries shall have paid in full all other Indebtedness of the Borrower and
each of its Subsidiaries existing prior to the making of the initial Loans
hereunder (all of the foregoing Indebtedness described in the foregoing clause
(i) and (ii) referred to collectively as "Existing Debt"). The Agent shall be
satisfied that the execution and delivery of, and the performance by each of the
Borrower and its Subsidiaries of its respective obligations under, each
Transaction Document to which it is a party and consummation of the Transactions
does not violate, conflict with or cause a default under any document or
instrument evidencing Existing Debt. The Agent shall have received (i) payoff
and lien termination and release agreements, in form and substance satisfactory
to the Agent, from each creditor of the Borrower and its Subsidiaries with
respect to Existing Debt other than Surviving Debt, and (ii) such Form UCC-3 (or
its equivalent), intellectual property lien releases in recordable form in all
applicable jurisdictions, and other lien and mortgage release and termination
agreements, evidence of release of federal and state tax liens, all in form and
substance satisfactory to the Agent, as the Agent shall request, duly executed
by the appropriate Person in favor of which such Liens were granted.
(s) Environmental Matters. The Agent shall have received, if the
---------------------
Agent deems it necessary, a written report of an investigation, conducted to the
Agent's
54
satisfaction, from an environmental consultant acceptable to the Agent, as to
any environmental, health or safety violations, hazards or liabilities which it
deems material. The Agent shall (i) be satisfied that neither the Borrower nor
any of its Subsidiaries nor any other Loan Party is subject to any present or
contingent liability deemed material by the Agent in its reasonable judgment in
connection with any past or present treatment, storage, recycling, disposal or
release or threatened release, at any property location regardless of whether
owned or operated by the Borrower or any of its Subsidiaries or any other Loan
Party, of any Materials of Environmental Concern or in connection with any
Environmental Law or other health or safety laws or regulations, and that their
operations taken as a whole comply in all material respects (in the Agent's
reasonable judgment) with all Environmental Laws or other health or safety laws
or regulations, (ii) be satisfied that neither the Borrower nor any of its
Subsidiaries, nor any other Loan Party nor any property owned or operated by any
such Person is the subject of any federal or state investigation evaluating
whether any remedial action, involving a material expenditure (in the opinion of
the Agent) is needed to respond to any release or other presence of Materials of
Environmental Concern and (iii) have received a list of all of the properties
operated, owned or leased by the Borrower and each of its Subsidiaries as to
which Phase I environmental audit reports have been completed within ten (10)
years prior to the Closing Date and have received copies of those Phase I audit
reports which identify, or which recommend a subsequent Phase II investigation
as to, any material environmental health or safety violations, hazards or
potential liabilities relating to the properties and business of the Borrower
and each of its Subsidiaries, the other Loan Parties (if applicable) and each of
their Environmental Affiliates of which the Borrower or any of its Subsidiaries
have knowledge.
(t) Fees and Expenses. The Agent shall have received, for its
-----------------
account and for the account of each Lender, as applicable, all Fees and other
fees and expenses due and payable hereunder and under the other Loan Documents
on or before the date hereof, including, without limitation, the reasonable fees
and expenses accrued through the date hereof, of Skadden, Arps, Slate, Meagher &
Flom (Illinois) and any other counsel retained by the Agent.
(u) Consents, Licenses, Approvals; Compliance with Laws. All
---------------------------------------------------
consents, licenses, orders, permits, authorizations, validations, certificates,
filings and approvals (collectively, "Consents"), if any, required in connection
with the execution, delivery and performance by the Borrower or any of its
Subsidiaries, and the validity and enforceability of the Transaction Documents,
or in connection with any of the Transactions, including, without limitation,
all shareholder Consents and all Consents required by any federal, state, local
regulatory or governmental authority including, without limitation, all Consents
required pursuant to the Hart-Scott-Rodino Act, shall have been obtained or made
and shall be in full force and effect and copies thereof shall in each case have
been delivered to the Agent. The Borrower shall have delivered to the Agent such
evidence as the Agent shall have requested, evidencing compliance by the
Borrower, its Subsidiaries and the other
55
Loan Parties with all applicable laws, rules and regulations before and after
giving effect to the Transactions (including, without limitation, all applicable
corporate and securities laws and all ERISA, environmental and health and safety
laws, rules and regulations).
(v) Management Contracts. The Borrower shall have delivered to
--------------------
the Agent and each Lender copies of each written agreement that it or any of its
Subsidiaries has or contemplates entering into with its officers or other
members of management as requested by the Agent certified by an officer of the
Borrower, and each such contract shall be satisfactory in form and substance to
the Agent.
(w) Franchise Agreements. The Borrower shall deliver to the Agent
--------------------
copies of representative forms of Franchise Agreements, which represent the
various forms of all Franchise Agreements to which the Borrower or any of its
Subsidiaries as of the Closing Date is the franchisor or licensor in each case
certified by the general counsel of the Borrower.
(x) No Material Adverse Change; No Default. No event, act or
---------------------------------------
condition shall have occurred after January 29, 2001, that has had a Material
Adverse Effect. No Default or Event of Default shall have occurred and be
continuing or shall result from the consummation of the Transactions on the
Closing Date.
(y) Reduction in Outstanding Balance. The aggregate balance of
--------------------------------
all outstanding Loans shall not exceed $75,000,000.
(z) Appraisals. The Agent shall have received fair market
----------
appraisals of the Real Estate Collateral in existence on the Closing Date from a
firm acceptable to the Agent.
(aa) Management/Ownership. The composition of the management of
--------------------
the Borrower and its strategic plans shall be satisfactory to the Agent.
(bb) No Litigation. There shall not be any material action, suit,
-------------
investigation, arbitration, litigation or proceeding pending or threatened
against the Borrower or any of its Subsidiaries, before any court, arbitrator or
governmental or administrative body, agency or official.
(cc) Termination of Commitments of Terminating Lenders. The Agent
-------------------------------------------------
shall have received an acknowledgment from each "Lender" party to the Original
Credit Agreement that such Lender's "Commitment" thereunder is terminated and
that such Lender has no further obligations thereunder or hereunder.
56
(dd) Additional Matters. The Agent shall have received such other
------------------
certificates, opinions, documents and instruments relating to the Transactions
as may have been reasonably requested by the Agent or any Lender, and all
corporate and other proceedings and all other documents (including, without
limitation, all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Transactions shall be
satisfactory in form and substance to the Lenders.
Section 4.3 Conditions Precedent to All Loans. The obligation of
---------------------------------
each Lender to make any Loan at any time on or after the date hereof and of the
Issuing Bank to issue any Letter of Credit is subject to the satisfaction on the
date such Loan is made or such Letter of Credit is Issued of the following
conditions precedent:
(a) Representations and Warranties. The representations and
------------------------------
warranties contained herein and in the other Loan Documents (other than
representations and warranties which expressly speak only as of a different
date) shall be true and correct in all material respects on such date both
before and after giving effect to the making of such Loans or the Issuance of
such Letter of Credit.
(b) No Default or Event of Default. No Default or Event of
------------------------------
Default shall have occurred and be continuing on such date either before or
after giving effect to the making of such Loans or the Issuance of such Letter
of Credit.
(c) No Injunction. No law or regulation shall have been adopted,
-------------
no order, judgment or decree of any governmental authority shall have been
issued, and no litigation shall be pending or threatened, which in the
reasonable judgment of the Lenders would enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condition upon, the making
or repayment of the Loans, the Issuance of such Letter of Credit or the
reimbursement of any amounts with respect thereto or the consummation of the
Transactions.
(d) No Material Adverse Change. No event, act or condition shall
--------------------------
have occurred after January 29, 2001 which, in the judgment of the Required
Lenders, has had or could have a Material Adverse Effect.
(e) Notice of Borrowing or Issuance. The Agent or the Issuing
-------------------------------
Bank shall have received a fully executed Notice of Borrowing or L/C
Application, as appropriate, in respect of the Loans to be made or Letters of
Credit to be Issued, respectively, on such date.
The acceptance of the proceeds of each Loan and of the Issuance of
each Letter of Credit shall constitute a representation and warranty by the
Borrower to the Agent and each of the Lenders that all of the conditions
required to be satisfied under this Section
-------
57
4 in connection with the making of such Loan or the Issuance of such Letter of
- -
Credit have been satisfied.
All of the Notes, certificates, agreements, legal opinions and other
documents and papers referred to in this Section 4, unless otherwise specified,
shall be delivered to the Agent for the account of each of the Lenders and,
except for the Notes, in sufficient counterparts for each of the Lenders, and
shall be satisfactory in form and substance to the Agent and each Lender in its
sole discretion.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to
make the Loans and to induce the Issuing Bank to issue Letters of Credit, the
Borrower makes the following representations and warranties, which shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and the Issuance of the Letters of Credit:
Section 5.1 Corporate Status. Each Loan Party (i) is duly organized
----------------
and validly existing and in good standing under the laws of the jurisdiction of
its organization, (ii) has the corporate or other requisite power and authority
to own its property and assets and to transact the business in which it is
engaged or presently proposes to engage and (iii) has duly qualified and is
authorized to do business and is in good standing as a foreign entity in every
jurisdiction in which it owns or leases real property or in which the nature of
its business requires it to be so qualified, except in the case of clause (iii),
where the failure to so qualify, individually or in the aggregate, could not
have a Material Adverse Effect.
Section 5.2 Corporate Power and Authority. Each Loan Party has the
-----------------------------
corporate or other requisite power and authority to execute, deliver and carry
out the terms and provisions of each of the Transaction Documents to which it is
a party and has taken all necessary corporate or other requisite action to
authorize the execution, delivery and performance by it of such Transaction
Documents. Each Loan Party has duly executed and delivered each such Transaction
Document, and each such Transaction Document constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms.
Section 5.3 No Violation. Neither the execution, delivery or
------------
performance by any Loan Party of the Transaction Documents to which it is a
party, nor compliance by it with the terms and provisions thereof nor the
consummation of the Transactions, (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality or (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents)upon
58
any of the property or assets of any Loan Party pursuant to the terms of, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Loan Party is a party or by which it or any of its property or assets
is bound or to which it may be subject, or (iii) will violate any provision of
its certificate of incorporation, by-laws, partnership agreement or limited
liability company agreement (or other relevant organizational documents) of any
Loan Party.
Section 5.4 Litigation. There are no actions, suits, governmental
----------
investigations, arbitrations or proceedings pending or threatened (i) with
respect to any of the Transactions or the Transaction Documents or (ii) that
could, individually or in the aggregate, result in a Material Adverse Effect.
Section 5.5 Financial Statements; Financial Condition; etc. Each of
----------------------------------------------
the financial statements and financial certificates delivered pursuant to
Sections 4.2(l) and 4.2(h) were prepared in accordance with GAAP consistently
- --------------- ------
applied and fairly present the financial condition and the results of operations
of the entities covered thereby on the dates and for the periods covered
thereby, except as disclosed in the notes thereto and, with respect to interim
financial statements, subject to normally recurring year-end adjustments. No
Loan Party has any material liability (contingent or otherwise) not reflected in
such financial statements or in the notes thereto.
Section 5.6 Solvency. On the Closing Date and at all times after the
--------
Closing Date, after giving effect to the Transactions, each Loan Party is and
will be Solvent.
Section 5.7 Projections. The projections delivered to the Lenders
-----------
dated October 1, 2001, were prepared on the basis of the assumptions
accompanying them, and such projections and assumptions, as of the date of
preparation thereof and as of the Closing Date, are reasonable and represent the
Borrower's good faith estimate of its future financial performance, it being
understood that nothing contained in this Section shall constitute a
-------
representation or warranty that such future financial performance or results of
operations will in fact be achieved.
Section 5.8 Material Adverse Change. Since January 29, 2001, there has
-----------------------
occurred no event, act, condition or liability which has had, or could have, a
Material Adverse Effect.
Section 5.9 Use of Proceeds; Margin Regulations. All proceeds of each
-----------------------------------
Loan, and each Letter of Credit, will be used by the Borrower only in accordance
with the provisions of Section 2.20. No part of the proceeds of any Loan, or any
------------
Letter of Credit, will be used by the Borrower to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. Neither the making of any Loan, nor the Issuance of any Letter
of Credit, nor the use of the proceeds thereof will
59
violate or be inconsistent with the provisions of Regulations T, U or X of the
Federal Reserve Board. Following the application of the proceeds of each Loan,
less than 25% of the value (as determined by any reasonable method) of the
assets of the Borrower and its Subsidiaries (on a consolidated and an
unconsolidated basis) have been and will continue to be, represented by Margin
Stock.
Section 5.10 Governmental and Other Approvals. No order, consent,
--------------------------------
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, or any other Person, is required to
authorize, or is required in connection with (i) the execution, delivery and
performance of any Transaction Document or the consummation of any of the
Transactions or (ii) the legality, validity, binding effect or enforceability of
any Transaction Document or the exercise by the Agent or any Lender of any of
its rights under any Loan Document, except those listed on Schedule 5.10 that
-------------
have already been duly made or obtained and remain in full force and effect and
except for the filing of financing statements pursuant to the Security
Documents. All applicable waiting periods including, without limitation, those
under the Hart-Scott-Rodino Act in connection with each Permitted Acquisition
and the other transactions contemplated thereby have expired without any action
having been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the rights of the Loan Parties or their
Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien
on, any properties now owned or hereafter acquired by any of them.
Section 5.11 Security Interests and Liens. The Security Documents
----------------------------
create, as security for the Obligations, valid and enforceable security
interests in and Liens on all of the Collateral, in favor of the Agent for the
ratable benefit of the Lenders, and subject to no other Liens (other than Liens
expressly permitted by Section 7.3 hereof). Upon the satisfaction of the
-----------
conditions precedent described in Sections 4.2(k) and 4.2(n), such security
--------------- ------
interests in and Liens on the Collateral shall be superior to and prior to the
rights of all third parties (except as disclosed on Schedule 5.11), and no
-------------
further recordings or filings are or will be required in connection with the
creation, perfection or enforcement of such security interests and Liens, other
than the filing of continuation statements in accordance with applicable law.
Section 5.12 Tax Returns and Payments. Each Loan Party has filed all
------------------------
tax returns required to be filed by it and has paid all taxes and assessments
payable by it which have become due, other than (i) those not yet delinquent or
those that are reserved against in accordance with GAAP which are being
diligently contested in good faith by appropriate proceedings or (ii) where the
failure to so pay has not resulted and could not reasonably be expected to
result in liability in excess of $1,000,000 in the aggregate for all of the Loan
Parties.
60
Section 5.13 ERISA. Neither the Borrower nor any of its Subsidiaries
-----
have any Plans other than those listed on Schedule 5.13. No accumulated funding
-------------
deficiency (as defined in Section 412 of the Code or Section 302 of ERISA) or
----------- -----------
Reportable Event has occurred with respect to any Plan. There are no Unfunded
Benefit Liabilities under any Plan. The Borrower and each member of its ERISA
Controlled Group have complied with the requirements of Section 515 of ERISA
-----------
with respect to each Multiemployer Plan and is not in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.
- ------------------
The aggregate potential total withdrawal liability, and the aggregate potential
annual withdrawal liability payments of the Borrower and the members of its
ERISA Controlled Group as determined in accordance with Title IV of ERISA as if
the Borrower and the members of its ERISA Controlled Group had completely
withdrawn from all Multiemployer Plans is not greater than $2,000,000. To the
best knowledge of the Borrower and each member of its ERISA Controlled Group, no
Multiemployer Plan is or is likely to be in reorganization (as defined in
Section 4241 of ERISA or Section 418 of the Code) or is insolvent (as defined in
- ------------ -----------
Section 4245 of ERISA). No material liability to the PBGC (other than required
- ------------
premium payments), the Internal Revenue Service, any Plan or any trust
established under Title IV of ERISA has been, or is expected by the Borrower or
any member of its ERISA Controlled Group to be, incurred by the Borrower or any
member of its ERISA Controlled Group. Neither the Borrower nor any member of its
ERISA Controlled Group has any contingent liability with respect to any
post-retirement benefit under any "welfare plan" (as defined in Section 3(1) of
------------
ERISA), other than liability for continuation coverage under Part 6 of Title I
of ERISA and other than contingent liabilities under Hardee's Retiree Medical
Insurance Plan, and the aggregate present value of all post-retirement benefit
liabilities of the Borrower and its Subsidiaries under Hardee's Retiree Medical
Insurance Plan as of the Closing Date does not exceed $4,800,000. No lien under
Section 412(n) of the Code or 302(f) of ERISA or requirement to provide security
- --------------
under Section 401(a)(29) of the Code or Section 307 of ERISA has been or is
------------------ -----------
reasonably expected by the Borrower or any member of its ERISA Controlled Group
to be imposed on the assets of the Borrower or any member of its ERISA
Controlled Group.
Section 5.14 Investment Company Act; Public Utility Holding Company
------------------------------------------------------
Act. No Loan Party is (x) an "investment company" or a company "controlled" by
- ---
an "investment company," within the meaning of the Investment Company Act of
1940, as amended, (y) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (z) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
Section 5.15 Dissolved Subsidiaries; Previously Material Subsidiaries,
--------------------------------------------------------
etc.. Schedule 5.15 sets forth a list of previous Subsidiaries that have been
- -------------------
dissolved (the "Dissolved Entities"). All of the assets and property (including,
without limitation, all real
61
property for which title was previously vested in Leased Restaurant Partners) of
each Dissolved Entity have been transferred to the Borrower or a Subsidiary of
the Borrower party to the Subsidiary Security Agreement and Guaranty. In
addition, substantially all of the assets and property of Fast Food Restaurants,
Inc., HFS Georgia, Inc., Central Iowa Foods Systems, Inc. and Boston Pacific,
Inc. have been transferred to the Borrower or a Subsidiary of the Borrower party
to the Subsidiary Security Agreement and Guaranty. None of Boston Pacific, Inc.,
HFS Georgia, Inc., Central Iowa Food Systems, Inc. or Fast Food Restaurants,
Inc. has any obligation as a "Subsidiary Guarantor" under and as defined in the
New Subordinated Note Indenture.
Section 5.16 Representations and Warranties in Transaction Documents.
-------------------------------------------------------
All representations and warranties made by any Loan Party in the Subordinated
Debt Documents, and, to the best of the Borrower's knowledge, all
representations made by each other Person in such Subordinated Debt Documents,
are true and correct in all material respects. None of such representations and
warranties is inconsistent in any material respect with the representations and
warranties of any Loan Party made herein or in any other Loan Document.
Section 5.17 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) furnished by or on behalf of any Loan Party in writing to the
Agent or any Lender on or prior to the Closing Date, for purposes of or in
connection with this Agreement or any of the Transactions is, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any Loan Party in writing to the Agent or any Lender will be, true and accurate
in all material respects on the date as of which such information is dated or
furnished and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time. As of the
Closing Date, there are no facts, events or conditions known to any Loan Party
which, individually or in the aggregate, have or could be expected to have a
Material Adverse Effect.
Section 5.18 Corporate Structure; Capitalization. Schedule 5.18 hereto
----------------------------------- -------------
sets forth as of the Closing Date, the jurisdiction of incorporation or
organization of the Borrower, each of its Subsidiaries, each other Loan Party
and each Subsidiary of such Loan Party, the number of authorized and issued
shares of capital stock or other outstanding equity interests of the Borrower
and each of its Subsidiaries and of each other Loan Party and each Subsidiary of
such Loan Party, the par value thereof and (other than with respect to the
Borrower) the registered owner(s) thereof. All of such stock has been duly and
validly issued and is fully paid and non-assessable and (except for the stock of
the Borrower) is, together with all such other equity interests, owned by such
Loan Party free and clear of all Liens. Except for the Convertible Subordinated
Notes or as disclosed in Schedule 5.18, neither any Loan Party nor any such
-------------
Subsidiary has outstanding any securities convertible into or exchangeable for
its capital stock or other outstanding equity interest nor does any Loan Party
or any such Subsidiary have outstanding any rights to subscribe for or to
62
purchase, or any options for the purchase of, warrants or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or other
outstanding equity interest.
Section 5.19 Environmental Matters. (a) (i) Each of the Loan Parties
---------------------
and their Environmental Affiliates are in compliance with all applicable
Environmental Laws except where noncompliance, individually or in the aggregate,
could not have a Material Adverse Effect, (ii) each of the Loan Parties and
their Environmental Affiliates have all Environmental Approvals required to
operate their businesses as presently conducted or as reasonably anticipated to
be conducted except where the failure to obtain any such Environmental Approval,
individually or in the aggregate, could not have a Material Adverse Effect,
(iii) none of the Loan Parties nor any of their Environmental Affiliates has
received any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that such Loan
Party or Environmental Affiliate is not in full compliance with all
Environmental Laws and where such noncompliance, individually or in the
aggregate, could have a Material Adverse Effect, and (iv) to the Borrower's best
knowledge after due inquiry, there are no circumstances that may prevent or
interfere with such full compliance in the future except where such
noncompliance, individually or in the aggregate, could not have a Material
Adverse Effect.
(b) There is no Environmental Claim pending or threatened against
any Loan Party or its Environmental Affiliate, which, individually or in the
aggregate, could have a Material Adverse Effect.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Material of Environmental
Concern, that could form the basis of any Environmental Claims against any of
the Loan Parties or any of their Environmental Affiliates, which Environmental
Claims, individually or in the aggregate, could have a Material Adverse Effect.
(d) Schedule 5.19 sets forth a list of all of the properties
-------------
operated, owned or leased by the Borrower and each of its Subsidiaries as to
which Phase I environmental audit reports have been completed as of the Closing
Date and the Borrower has delivered copies of those Phase I audit reports which
identify, or which recommend a subsequent Phase II investigation as to, any
material environmental, health or safety violations, hazards or potential
liabilities relating to the properties and business of the Borrower, each of its
Subsidiaries, the other Loan Parties (if applicable) and each of their
Environmental Affiliates of which the Borrower or any of its Subsidiaries have
knowledge.
(e) The Borrower has caused to be completed Phase I audit reports
with respect to each property owned, operated or leased by the Borrower or any
of its
63
Subsidiaries, upon which a business or operation other than a Restaurant has
been conducted at any time during the six (6) years immediately preceding the
Closing Date and with respect to which a Phase I audit report had not been
completed in the eleven (11) year period immediately preceding the Closing Date.
The Borrower has delivered all such Phase I audit reports to the Agent which
were obtained pursuant to the preceding sentence which identified, or which
recommended a subsequent Phase II investigation as to, any material
environmental, health or safety violations, hazards or potential liabilities
relating to the properties and business of any Loan Party or any of their
Environmental Affiliates.
Section 5.20 Intellectual Property. Each of the Loan Parties owns or
---------------------
has the valid right to use all patents, trademarks, service marks, domain names,
trade names, copyrights, trade secrets and other intangible rights (the
"Intellectual Property"), which are used in or necessary for the operation of
its business, free and clear of all Liens. Schedule V to the Borrower Security
----------
Agreement and Schedule V to the Subsidiary Security Agreement together set forth
----------
a complete and accurate list thereof with respect to each Loan Party as of the
Closing Date, of all applications and registrations for Intellectual Property
owned by such Loan Party and all license agreements to or from third parties to
which such Loan Party is a party or is otherwise bound. Each Loan Party is the
record owner of all registrations and applications which it owns and all such
registrations for Intellectual Property are valid and enforceable. To the best
of each Loan Party's knowledge, no service, product, process, component or other
material presently offered, sold or employed by any Loan Party infringes upon or
dilutes any Intellectual Property of any other Person, and no such claims have
been made by any other Person against any Loan Party. There is no pending or, to
the best of each Loan Party's knowledge, threatened claim or litigation against
or affecting any Loan Party contesting its rights to own or use any Intellectual
Property or the validity or enforceability thereof.
Section 5.21 Ownership of Property; Restaurants. Schedule 5.21 sets
---------------------------------- -------------
forth all the real property owned or leased by the Loan Parties as of the
Closing Date and identifies the street address, the current owner (and current
record owner, if different) and whether such property is leased or owned. The
Loan Parties have good and marketable fee simple title to or valid leasehold
interests in all of such real property and good title to all of their personal
property subject to no Lien of any kind except Liens permitted hereby. Schedule
--------
5.21 also sets forth a list of each Restaurant and the street address thereof
- ----
which is owned or operated as of the Closing Date by any Loan Party or any of
its Subsidiaries. The Loan Parties enjoy peaceful and undisturbed possession
under all of their respective leases.
Section 5.22 No Default. No Loan Party is in default under or with
----------
respect to any Transaction Document or any other agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound in any respect which could result in a Material Adverse Effect. No Default
or Event of Default exists.
64
Section 5.23 Licenses, etc. The Loan Parties have obtained and hold in
-------------
full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted.
Section 5.24 Compliance with Law. Each Loan Party is in compliance
-------------------
with all applicable laws, rules, regulations, orders, judgments, writs and
decrees except where such non-compliance, individually or in the aggregate,
could not have a Material Adverse Effect.
Section 5.25 No Burdensome Restrictions. No Loan Party is a party to
--------------------------
any agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could have a Material Adverse Effect.
Section 5.26 Brokers' Fees. None of the Loan Parties has any
-------------
obligation to any Person in respect of any finder's, brokers, investment banking
or other similar fee in connection with any of the Transactions.
Section 5.27 Labor Matters. Except as set forth on Schedule 5.27,
------------- -------------
there are no collective bargaining agreements or Multiemployer Plans covering
the employees of the Borrower, any of its Subsidiaries or any of the other Loan
Parties, and none of such Persons has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years. No
proceedings are pending against the Borrower or any of its Subsidiaries before
the INS which could reasonably be expected to have a Material Adverse Effect.
Section 5.28 Indebtedness of the Borrower and Its Subsidiaries. Set
-------------------------------------------------
forth on Schedule 7.2 hereto is a complete and accurate list of all Indebtedness
------------
of the Borrower and each of its Subsidiaries existing as of the Closing Date,
showing the principal amount outstanding thereunder as of the Closing Date.
Section 5.29 Other Agreements. Schedule 5.29 sets forth a complete and
---------------- -------------
accurate list as of the Closing Date of (i) all joint venture and partnership
agreements to which the Borrower or any of its Subsidiaries is a party, and (ii)
all covenants not to compete restricting the Borrower or any of its Subsidiaries
to which the Borrower or any of its Subsidiaries is a party or by which the
Borrower or any of its Subsidiaries is bound.
Section 5.30 Immaterial Subsidiaries. The Subsidiaries of the Borrower
-----------------------
designated as Immaterial Subsidiaries on the Closing Date are set forth on
Schedule 5.30. The assets of each Subsidiary of the Borrower designated as an
- -------------
Immaterial Subsidiary by the Borrower do not exceed $1,500,000 and the assets of
all of the Subsidiaries of the
65
Borrower designated as Immaterial Subsidiaries by the Borrower do not in the
aggregate exceed $10,000,000, in each case as determined in accordance with
GAAP.
Section 5.31 Franchise Agreements and Franchisees. None of the
------------------------------------
Franchise Agreements to which the Borrower or any of its Subsidiaries is a party
as a franchisor or a licensor prohibit or restrict in any manner the assignment
of such Franchise Agreement to the Agent for the benefit of the Secured Parties
or require any consent of any Person in connection with any such assignment.
Schedule 5.31 sets forth a complete and accurate list of each Person who is a
- -------------
franchisee or licensee of the Borrower or any of its Subsidiaries as of the
Closing Date.
SECTION 6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that until all of the Revolving Loan
Commitments of each of the Lenders have terminated, each of the Letters of
Credit has expired or been terminated, and the Obligations are paid in full:
Section 6.1 Information Covenants. The Borrower will furnish to the
---------------------
Agent, with sufficient copies for each Lender:
(a) Quarterly Financial Statements. Within 45 days after the
------------------------------
close of each of the first three (3) quarterly accounting periods in each fiscal
year of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly period and the related consolidated
statements of income and cash flow for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly period, and
in each case setting forth comparative figures for the related periods in the
prior fiscal year.
(b) Annual Financial Statements. Within 90 days after the close
---------------------------
of each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and cash flow for such fiscal year, setting
forth comparative figures for the preceding fiscal year and, with respect to
such consolidated financial statements, certified without qualification by KPMG
LLP or other independent certified public accountants of recognized national
standing reasonably acceptable to the Agent and the Required Lenders and
indicating that its audit of the consolidated financial statements of the
Borrower was conducted in accordance with generally accepted auditing standards.
In addition, the Borrower agrees to furnish the foregoing information within the
time period specified above with respect to its fiscal year ended January 28,
2002.
66
(c) Management Letters. Promptly after the Borrower's receipt
------------------
thereof, a copy of any "management letter" or other material report received by
the Borrower from its certified public accountants.
(d) Budgets. Within 60 days after the first day of each fiscal
-------
year of the Borrower (including the fiscal year 2003 commencing on January 29,
2002), a budget and financial forecast of results of operations and sources and
uses of cash (in form reasonably satisfactory to the Agent) prepared by the
Borrower for such fiscal year, accompanied by a written statement of the
assumptions used in connection therewith, together with a certificate of the
chief financial officer of the Borrower to the effect that such budget and
financial forecast and, to the best of such officer's knowledge, assumptions,
are reasonable and were prepared in good faith. The financial statements
required to be delivered pursuant to clauses (a) and (b) above shall be
accompanied by a comparison of the actual financial results set forth in such
financial statements to those contained in the forecasts delivered pursuant to
this clause (d) together with an explanation of any material variations from the
results anticipated in such forecasts.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements under clauses (a) and (b) above, a certificate of the chief
financial officer of the Borrower which certifies (x) that such financial
statements fairly present the financial condition and the results of operations
of the Borrower and its Subsidiaries on the dates and for the periods indicated,
subject, in the case of interim financial statements, to normally recurring
year-end adjustments, and that such financial statements were prepared in
accordance with GAAP and (y) that such officer has reviewed the terms of the
Loan Documents and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the business and condition of the Borrower and
its Subsidiaries during the accounting period covered by such financial
statements, and that as a result of such review such officer has concluded that
no Default or Event of Default has occurred during the period commencing at the
beginning of the accounting period covered by the financial statements
accompanied by such certificate and ending on the date of such certificate or,
if any Default or Event of Default has occurred, specifying the nature and
extent thereof and, if continuing, the action the Borrower proposes to take in
respect thereof (the "Compliance Certificate"). Such certificate shall set forth
the calculations required to establish whether the Borrower was in compliance
with the provisions of Sections 6.11, 6.12, 7.1, 7.2, 7.3, 7.7, 7.8 and 7.18
------------- ----- --- --- --- --- --- ----
during and as at the end of the accounting period covered by the financial
statements accompanied by such certificate.
(f) Notice of Default. Promptly and in any event within one
-----------------
Business Day after any Loan Party obtains knowledge thereof, notice (i) of the
occurrence of any Default or Event of Default together with a certificate of an
Authorized Officer of the Borrower specifying the nature and period of existence
thereof and the Borrower's proposed response thereto, (ii) that any holder of
Indebtedness of the Borrower or any Subsidiary of
67
the Borrower having an outstanding principal balance exceeding $5,000,000 has
given any written notice to the Borrower or any Subsidiary of the Borrower or
taken any other action with respect to a claimed default or event or condition
of the type referred to in Section 8.1(d) specifying (A) the nature and period
--------------
of existence of any such claimed default, condition or event, (B) the notice
given or action taken by such Person in connection therewith, and (C) the
Borrower's proposed response thereto and (iii) of the occurrence of any default
or event of default under any Subordinated Debt Document specifying (A) the
nature and period of existence of any such default, condition or event, (B) any
notice given or action taken by any holder or trustee thereunder in connection
therewith, and (C) the Borrower's proposed response thereto.
(g) Notice of Litigation. Promptly after (i) the occurrence
--------------------
thereof, notice of the institution of, or any material development in, any
action, suit, litigation, proceeding, investigation or arbitration, before any
court or arbitrator or any governmental or administrative body, agency or
official, against the Borrower, any of its Subsidiaries or any material property
of any thereof which, individually or in the aggregate, could have a Material
Adverse Effect, or (ii) actual knowledge thereof, notice of the threat of any
such action, suit, proceeding, investigation or arbitration.
(h) ERISA.
-----
(i) As soon as possible and in any event
within 10 days after the Borrower or any member of its ERISA
Controlled Group knows, or has reason to know, that:
(A) any Termination Event with respect
to a Plan has occurred or will occur, or
(B) any condition exists with respect to
a Plan which presents a material risk of termination of the
Plan or imposition of an excise tax or other liability on
the Borrower or any member of its ERISA Controlled Group, or
(C) the Borrower or any member of its
ERISA Controlled Group has applied for a waiver of the
minimum funding standard under Section 412 of the Code or
-----------
Section 302 of ERISA, or
-----------
(D) the Borrower or any member of its
ERISA Controlled Group has engaged in a
68
"prohibited transaction," as defined in Section 4975 of the
------------
Code or as described in Section 406 of ERISA, that is not
-----------
exempt under Section 4975 of the Code and Section 408 of
------------ -----------
ERISA, or
(E) the aggregate present value of the
Unfunded Benefit Liabilities under all Plans has in any year
increased by $500,000 or to an amount in excess of
$2,000,000, or
(F) any condition exists with respect to
a Multiemployer Plan which presents a material risk of a
partial or complete withdrawal (as described in Section 4203
------------
or 4205 of ERISA) by the Borrower or any member of its ERISA
----
Controlled Group from a Multiemployer Plan, or
(G) the Borrower or any member of its
ERISA Controlled Group is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a
-----------------
Multiemployer Plan, or
(H) a Multiemployer Plan is in
"reorganization" (as defined in Section 418 of the Code or
-----------
Section 4241 of ERISA) or is "insolvent" (as defined in
------------
Section 4245 of ERISA), or
------------
(I) the potential withdrawal liability
(as determined in accordance with Title IV of ERISA) of the
Borrower and the members of its ERISA Controlled Group with
respect to all Multiemployer Plans has in any year increased
by $500,000 or to an amount in excess of $2,000,000, or
(J) there is an action brought against
the Borrower or any member of its ERISA Controlled Group
under Section 502 of ERISA with respect to its failure to
-----------
comply with Section 515 of ERISA,
-----------
a certificate of the president or chief financial officer of the Borrower
setting forth the details of each of the events described in clauses (A) through
(J) above as applicable and the action which the Borrower or the applicable
member of its ERISA Controlled Group
69
proposes to take with respect thereto, together with a copy of any
notice or filing from the PBGC or which may be required by the PBGC or
other agency of the United States government with respect to each of
the events described in clauses (A) through (J) above, as applicable.
(ii) As soon as possible and in any event
within two Business Days after the receipt by the Borrower
or any member of its ERISA Controlled Group of a demand
letter from the PBGC notifying the Borrower or such member
of its ERISA Controlled Group of its final decision finding
liability and the date by which such liability must be paid,
a copy of such letter, together with a certificate of the
president or chief financial officer of the Borrower setting
forth the action which the Borrower or such member of its
ERISA Controlled Group proposes to take with respect
thereto.
(i) SEC Filings. Promptly upon transmission thereof, copies of
-----------
all regular and periodic financial information, proxy materials and other
information, regular, periodic and special reports and registration statements,
if any, which any Loan Party shall file with the Securities and Exchange
Commission or any governmental agencies substituted therefore or which any Loan
Party shall send to its stockholders.
(j) Environmental. Promptly and in any event within two Business
-------------
Days after the existence of any of the following conditions, a certificate of an
Authorized Officer of the Borrower specifying in detail the nature of such
condition and the applicable Loan Party's or Environmental Affiliate's proposed
response thereto: (i) the receipt by any Loan Party or any of its Environmental
Affiliates of any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that such Loan
Party or Environmental Affiliate is not in compliance with applicable
Environmental Laws where such noncompliance, individually or in the aggregate,
could have a Material Adverse Effect, (ii) any Loan Party or any of its
Environmental Affiliates shall obtain actual knowledge that there exists any
Environmental Claim pending or threatened against such Loan Party or such
Environmental Affiliate, which, individually or in the aggregate, could have a
Material Adverse Effect, or (iii) any release, emission, discharge or disposal
of any Material of Environmental Concern that could form the basis of any
Environmental Claim against any Loan Party or any of their Environmental
Affiliates, which Environmental Claim, individually or in the aggregate could
have a Material Adverse Effect.
(k) Creditor Reports. Promptly after the furnishing thereof,
----------------
copies of any statement or report furnished to any other holder of the
securities of any Loan Party
70
or of any of its Subsidiaries pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be furnished to the
Lenders pursuant to any other clause of this Section 6.1.
-----------
(l) Officer's Certificates and Financial Statements relating to
-----------------------------------------------------------
Retail Periods. Within 45 days after the close of each Retail Period of the
- --------------
Borrower, a certificate of the chief financial officer of the Borrower setting
forth the calculations required to establish whether the Borrower was in
compliance with the provisions of Section 7.1(d) during and as at the end of
--------------
such Retail Period (including, without limitation, calculations of Consolidated
EBITDA, consolidated depreciation and consolidated amortization of the Borrower
and its Subsidiaries for such Retail Period), which certificate shall be
accompanied by (i) consolidated and consolidating (by business units) statements
of income for the Borrower and its Subsidiaries for such Retail Period and for
the elapsed portion of the fiscal year ended with the last day of such Retail
Period, (ii) consolidated balance sheets of the Borrower and its Subsidiaries as
at the end of such Retail Period and the related consolidated statements of cash
flow for such Retail Period and for the elapsed portion of the fiscal year ended
with the last day of such Retail Period, (iii) comparative figures for the
related periods in the prior fiscal year for the statement of income required to
be delivered pursuant to this subsection (l) for such Retail Period and (iv)
comparative figures for the corresponding financial results contained in the
budget required to be delivered pursuant to Section 6.1(d) and prior year for
the statement of income. In addition, the Borrower agrees to furnish the
foregoing information within the time period specified above with respect to its
Retail Periods ended December 31, 2001 and January 28, 2002.
(m) Other Information. From time to time, such other information
-----------------
or documents (financial or otherwise) as any Lender may reasonably request.
Section 6.2 Books, Records and Inspections. The Borrower shall, and
------------------------------
shall cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in relation
to its business and activities. The Borrower shall, and shall cause each of its
Subsidiaries to, permit the officers and designated representatives of any
Lender or the Financial Advisor to visit and inspect any of the properties of
the Borrower or any of its Subsidiaries, and to examine the books of record and
account of the Borrower or any of its Subsidiaries and discuss the affairs,
finances and accounts of the Borrower or any of its Subsidiaries, with, and be
advised as to the same by, its and their officers and independent accountants,
all upon reasonable notice and at such reasonable times as such Lender or, in
the case of the Financial Advisor, the Agent may desire; provided that no such
prior notice shall be required if an Event of Default has occurred and is
continuing.
71
Section 6.3 Maintenance of Insurance. The Borrower shall, and shall
------------------------
cause each of its Subsidiaries to, (a) maintain with financially sound and
reputable insurance companies insurance on itself and its properties (including
all real properties leased or owned by them)in at least such amounts and against
at least such risks as are customarily insured against in the same general area
by companies engaged in the same or a similar business similarly situated, which
insurance shall in any event not provide for materially less coverage than the
insurance in effect on the Closing Date and shall name the Agent for the benefit
of the Lenders as an additional insured or loss payee, as applicable, and (b)
furnish to each Lender from time to time, upon written request, the policies
under which such insurance is issued, certificates of insurance and such other
information relating to such insurance as such Lender may request.
Section 6.4 Taxes. (a) The Borrower shall pay or cause to be paid, and
-----
shall cause each of its Subsidiaries to pay or cause to be paid, when due, all
taxes, charges and assessments and all other lawful claims required to be paid
by the Borrower or such Subsidiaries, except as contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves have been
established with respect thereto in accordance with GAAP.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated tax return
with any Person (other than the Borrower and its Subsidiaries).
Section 6.5 Corporate Franchises. Except as permitted by Section 7.4
-------------------- -----------
below, the Borrower shall, and shall cause each of its Subsidiaries to, do or
cause to be done, all things necessary to preserve and keep in full force and
effect its existence and its patents, trademarks, servicemarks, tradenames,
copyrights, franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals except where the failure to so preserve any of the
foregoing (other than existence) could not, individually or in the aggregate,
result in a Material Adverse Effect.
Section 6.6 Compliance with Law. The Borrower shall, and shall cause
-------------------
each of its Subsidiaries to, comply in all material respects with all applicable
laws, rules, statutes, regulations, decrees and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of their business and the ownership of their property,
including, without limitation, ERISA and all Environmental Laws.
Section 6.7 Performance of Obligations. The Borrower shall, and shall
--------------------------
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement, debt instrument, lease,
undertaking and contract by
72
which it or any of its properties is bound or to which it is a party, except
where the failure to perform such obligations individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
Section 6.8 Maintenance of Properties. The Borrower shall, and shall
-------------------------
cause each of its Subsidiaries to, ensure that its respective properties useful
in its respective business are kept in good repair, working order and condition,
normal wear and tear excepted.
Section 6.9 Compliance with Terms of Leaseholds. The Borrower shall
-----------------------------------
and shall cause each of its Subsidiaries to (a) make all payments and otherwise
perform all obligations in respect of all leases of the Borrower and each of its
Subsidiaries of real property, (b) keep all such leases that are useful or
material in the conduct of the business of the Borrower and its Subsidiaries
(such useful or material leases are hereinafter referred to as the "Material
Leases") in full force and effect, (c) not allow such Material Leases to lapse
or be terminated or any rights to renew such leases to be forfeited or
cancelled, and (d) notify the Agent of any default by any party with respect to
such Material Leases and cooperate with the Agent in all respects to cure any
such default.
Section 6.10 Compliance with Environmental Laws. The Borrower shall,
----------------------------------
and shall cause each of its Subsidiaries and all lessees and other Persons
occupying its properties to (a) comply in all material respects, with all
Environmental Laws and Environmental Approvals applicable to its respective
operations and properties; (b) obtain and renew all Environmental Approvals
necessary for its respective operations and properties; and (c) conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Materials of
Environmental Concern from any of its respective properties, in accordance with
the requirements of all Environmental Laws; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances, unless the
Borrower or any of its Subsidiaries is subject to an order issued by any
governmental authority requiring the Borrower or such Subsidiary to undertake
any such cleanup, removal, remedial or other action, in which case this proviso
shall not apply.
Section 6.11 Subsidiary Guarantors. The Borrower shall cause each of
--------------------
its Subsidiaries now or hereafter existing, formed or acquired (other than any
Immaterial Subsidiaries) to at all times be and remain a party to the Guaranty,
the Subsidiary Security Agreement and, if any such Subsidiary owns any Equity
Interests in any Person (other than in Boston West, L.L.C. and other than in an
Immaterial Subsidiary), a Subsidiary Pledge Agreement. The Borrower shall cause
each of its Immaterial Subsidiaries which is a Subordinated Guarantor to at all
times be and remain a party to the Guaranty so long as each
73
such Immaterial Subsidiary is a Subordinated Guarantor. The Borrower shall cause
to be delivered to the Agent a legal opinion in form and substance reasonably
satisfactory to the Agent with respect to any Subsidiary entering into the
Guaranty after the Closing Date.
Section 6.12 Immaterial Subsidiaries. If (i) the assets of any
-----------------------
Subsidiary of the Borrower then designated as an Immaterial Subsidiary shall at
any time exceed $1,500,000, then the Borrower shall immediately provide notice
to the Agent thereof, and such Subsidiary shall immediately be deemed
automatically to no longer be an Immaterial Subsidiary or (ii) the aggregate
amount of assets of all Subsidiaries of the Borrower so designated as Immaterial
Subsidiaries shall at any time exceed $10,000,000, then the Borrower shall
immediately provide notice to the Agent thereof and notice of which of such
previously designated Immaterial Subsidiaries shall no longer be deemed to be
Immaterial Subsidiaries so that the aggregate amount of assets of all such
Subsidiaries so designated as Immaterial Subsidiaries does not exceed
$10,000,000; provided that the Borrower may from time to time designate
additional Subsidiaries of the Borrower as Immaterial Subsidiaries so long as
the assets of any such Subsidiary do not exceed $1,500,000 and so long as the
aggregate amount of assets of all such Subsidiaries so designated as Immaterial
Subsidiaries does not exceed $10,000,000 (in each case as determined in
accordance with GAAP). At such time as any Subsidiary that was an Immaterial
Subsidiary is no longer an Immaterial Subsidiary, the Borrower shall thereafter
comply with the terms of this Agreement with respect to such Subsidiary relating
to or affecting Subsidiaries that are not Immaterial Subsidiaries (in addition
to those terms relating to or affecting the Borrower's Subsidiaries generally),
including, without limitation, the requirements of Section 6.11 and Section
------------ -------
2.21.
- ----
Section 6.13 Additional Mortgages. As security for the payment of the
--------------------
Obligations, the Borrower shall and shall cause each of its Subsidiaries to,
concurrently with the acquisition thereof, grant to the Agent a first priority
Lien (free and clear of all Liens other than Liens permitted to be incurred
pursuant to Section 7.3) on and security interest in, all real property
------------
(including any leasehold interest) acquired by the Borrower or any such
Subsidiary after the Closing Date in any jurisdiction that does not as of the
date of acquisition assess a mortgage recording tax, together with title
insurance policies, surveys, appraisals, opinions of counsels and such other
documentation as the Agent may reasonably request.
Section 6.14 Title Policies. Within 45 days after the Closing Date
--------------
(or, in the case of Real Estate Collateral located in the State of South
Carolina, 60 days), the Borrower shall, and shall cause each of its Subsidiaries
to, deliver to the Agent, mortgagee's loan policies (or pro-forma title
commitments signed by the title insurance company and obligating such title
insurance company to issue mortgagee's loan policies in a form identical to such
pro-forma title commitments), together with all endorsements required by the
Agent, with respect to all of the Real Estate Collateral subject to Mortgages on
the Closing Date and not previously delivered pursuant to Section 4.2(l) (other
-------------
than the Real
74
Estate Collateral listed on Schedule 7.5 if such property is sold on or before
------------
such 45th day), issued by or on behalf of a title insurance company acceptable
to the Agent, in form and substance satisfactory to the Agent and insuring the
Liens created by the Mortgages on such Real Estate Collateral. Without limiting
the foregoing, to the extent any such Mortgages require amendments or other
modifications, or new mortgages identifying the correct owner of the Real Estate
Collateral are required, or any other affidavits or other documentation are
required by the title insurance company, in each case, prior to the issuance of
loan policies in form and substance satisfactory to the Agent, within such
45-day period, the Borrower shall, and shall cause each of its Subsidiaries to,
execute and deliver all such amendments, modifications, new mortgages,
affidavits and other documentation each in form and substance satisfactory to
the Agent.
Section 6.15 Aeroways Aircraft Mortgage. Within 45 days after the
--------------------------
Closing Date, the Borrower shall cause Aeroways, LLC to execute and deliver an
Aircraft Mortgage to the Agent, together with warranty assignments, insurance
certificates, opinions of counsel and such other documents as the Agent may
reasonably request to create, perfect, establish the first priority nature of or
otherwise protect any Lien purported to be created in favor of the Agent
pursuant to the Aircraft Mortgage.
SECTION 7. NEGATIVE COVENANTS.
The Borrower covenants and agrees that until all of the Revolving Loan
Commitments of each Lender have terminated, each of the Letters of Credit has
expired or been terminated, and the Obligations are paid in full:
Section 7.1 Financial Covenants.
------------------
(a) Leverage Ratio. The Borrower shall not permit the Leverage
--------------
Ratio at any time during each of the fiscal quarters of the Borrower ending on
the date set forth below to exceed the ratio set forth opposite such date:
Quarter Ending Ratio
-------------- -----
January 28, 2002 4.60
May 20, 2002 4.60
August 12, 2002 4.50
November 4, 2002 4.50
January 27, 2003 4.30
May 19, 2003 4.20
75
Quarter Ending Ratio
-------------- -----
August 11, 2003 4.10
November 3, 2003 4.10
January 26, 2004 3.90
May 17, 2004 3.90
August 9, 2004 3.75
November 1, 2004 3.75
January 31, 2005 3.75
May 23, 2005 3.75
August 15, 2005 and each 3.50
fiscal quarter thereafter
(b) [Intentionally Omitted].
---------------------
(c) Fixed Charge Coverage Ratio. The Borrower shall not permit
---------------------------
the ratio of (i) Consolidated EBITDA of the Borrower, to (ii) Fixed Charges of
the Borrower for the period of four consecutive fiscal quarters of the Borrower
(taken as one accounting period) as determined on the last day of each of the
fiscal quarters of the Borrower ending on the dates set forth below to be less
than the ratio set forth opposite such dates:
Quarter Ending Ratio
-------------- -----
May 20, 2002 1.25
August 12, 2002 1.30
November 4, 2002 1.40
January 27, 2003 1.40
May 19, 2003 1.50
August 11, 2003 1.60
November 3, 2003 1.60
January 26, 2004 and each 1.75
fiscal quarter thereafter
76
(d) Minimum Consolidated EBITDA. The Borrower shall not permit
---------------------------
Consolidated EBITDA of the Borrower for the period of thirteen consecutive
Retail Periods of the Borrower (taken as one accounting period) as determined on
the last day of each Retail Period of the Borrower ending during each period set
forth below, to be less than the amount set forth opposite such period:
Retail Periods Amount
-------------- ------
Ending
------
December 31, 2001 $100,000,000
through December 30,
2002
January 27, 2003 through $105,000,000
April 29, 2003
May 19, 2003 through $ 107,000,00
July 14, 2003
August 11, 2003 through $110,000,000
October 6, 2003
November 3, 2003 $114,000,000
through December 29,
2003
January 26, 2004 through $117,000,000
July 12, 2004
August 9, 2004 through $125,000,000
July 18, 2005
August 15, 2005 and $140,000,000
thereafter
provided, however that the amount set forth opposite the period in which the
Santa Barbara Acquisition is consummated in accordance with the terms hereof and
each subsequent period shall be increased by $5,000,000.
(e) Adjusted Leverage Ratio. The Borrower shall not permit the
-----------------------
Adjusted Leverage Ratio to exceed at any time during each fiscal quarter of the
Borrower ending on the date set forth below, the ratio set forth opposite such
date:
77
Quarter Ending Ratio
-------------- -----
January 28, 2002 5.70
May 20, 2002 5.70
August 12, 2002 5.60
November 4, 2002 5.60
January 27, 2003 5.50
May 19, 2003 5.40
August 11, 2003 5.30
November 3, 2003 5.20
January 26, 2004 5.20
May 17, 2004 5.20
August 9, 2004 5.10
November 1, 2004 5.10
January 31, 2005 5.10
May 23, 2005 5.10
August 15, 2005 and each 5.00
fiscalquarter thereafter
(f) Capital Expenditures. The Borrower shall not make or incur,
--------------------
and shall not permit any of its Subsidiaries to make or incur, any Capital
Expenditures, except Capital Expenditures of the Borrower and its Subsidiaries
in an aggregate amount, for each fiscal year of the Borrower, not in excess of
(A), for the Borrower and all Subsidiaries other than any member of the Santa
Barbara Group, the sum of (i) $50,000,000, plus (ii) the EBITDA CapEx Amount for
such fiscal year, plus (iii) the amount of Net Sale Proceeds for Asset
Dispositions occurring during such fiscal year not required to be applied to
reduce the Loans pursuant to Section 2.12; provided, that for fiscal year 2003
------------
of the Borrower, the foregoing amount shall be increased by the excess, if any,
of $41,000,000 over the actual amount of Capital Expenditures incurred during
the fiscal year 2002 of the Borrower; and (B) for the Santa Barbara Group on a
consolidated basis, the amount of Consolidated EBITDA for the Santa Barbara
Group on a consolidated basis for such fiscal year. If the aggregate amount of
Capital Expenditures made or incurred during any fiscal year of the Borrower is
less than the amount (as reduced, if applicable) permitted to be made or
incurred pursuant to the immediately preceding sentence, then the maximum
78
amount for the following fiscal year of the Borrower and its Subsidiaries (but
not any subsequent fiscal year of the Borrower) shall be increased by the amount
of such difference. Notwithstanding any other provision of this Section 7.1(f),
------
(a) if at any time the Unused Portion of the Revolving Loans shall be less than
$15,000,000, and until such time as such Unused Portion has been restored to at
least $15,000,000, the Borrower shall not make or incur and shall not permit any
of its Subsidiaries to make or incur any Capital Expenditures (other than
Capital Expenditures otherwise permitted by this Section 7.1(f) and made or
--------------
incurred pursuant to contractual commitments to make or incur such Capital
Expenditures entered into by the Borrower or any of its Subsidiaries at a time
when such Unused Portion was at least $15,000,000).
(g) Consolidated Tangible Net Worth. The Borrower shall not
-------------------------------
permit its Consolidated Tangible Net Worth at any time to be less than the sum
of (i) $50,000,000 (or, upon consummation of the Santa Barbara Acquisition in
accordance with the terms hereof, $65,000,000); (ii) 50% of cumulative
Consolidated Net Income of the Borrower and its Subsidiaries for all fiscal
quarters of the Borrower ended after January 29, 2002 in which Consolidated Net
Income is positive (and without any deduction for any fiscal quarter in which
Consolidated Net Income is negative), plus (iii) 100% of the Net Equity Proceeds
----
of any equity offering by the Borrower.
Section 7.2 Indebtedness. The Borrower shall not, and shall not permit
------------
any of its Subsidiaries to, create, incur, assume, suffer to exist or otherwise
become or remain directly or indirectly liable with respect to, any Indebtedness
other than the following provided that none of the creation, incurrence,
assumption or existence of any of the following result in or cause a violation
or breach of, or default under, any Subordinated Debt Document:
(a) Indebtedness hereunder and under the other Loan Documents;
(b) Indebtedness outstanding on the Closing Date and set forth on
Schedule 7.2 hereto (without duplication of any other Indebtedness permitted by
- ------------
the other provisions of this Section 7.2);
------------
(c) Indebtedness permitted under Sections 7.6(a), 7.6(b) and
--------------- ------
7.6(d);
- -----
(d) Indebtedness of the Borrower of the type described in clause
(vii) of the definition of Indebtedness to the extent permitted under Section
-------
7.14;
- ----
(e) Indebtedness with respect to (i) purchase money Indebtedness
incurred solely to finance Capital Expenditures permitted under Section 7.1(f)
--------------
and any extensions, renewals, refundings or refinancings thereof, not in excess
of $5,000,000 in the aggregate at any one time outstanding for all such purchase
money Indebtedness and all
79
extensions, renewals, refundings and refinancings thereof and (ii) Capitalized
Leases permitted under Section 7.13 and any extensions, renewals, refundings or
------------
refinancings thereof so long as the terms of any such Indebtedness with respect
to Capitalized Leases is permitted under Section 7.13; provided, that (A) any
------------
such Indebtedness incurred pursuant to this clause (e) and any such extensions,
renewals, refundings or refinancings thereof shall not exceed 85% of the lesser
of the purchase price or the fair market value of the asset so financed, (B) at
the time of such incurrence, no Default or Event of Default has occurred and is
continuing or would result from such incurrence, and (C) such Indebtedness has a
scheduled maturity and is not due on demand;
(f) any extensions, renewals, refundings and refinancings of the
Indebtedness described in clause (b) above, so long as the terms of any such
extension, renewal, refunding or refinancing Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are otherwise
permitted by the Loan Documents; provided, further, that the principal amount of
such Indebtedness shall not be increased above the principal amount thereof
outstanding immediately prior to such extension, renewal, refunding or
refinancing, and the direct and contingent obligors therefor shall not be
changed, as a result of or in connection with such extension, renewal, refunding
or refinancing;
(g) Indebtedness of any Domestic Subsidiary of the Borrower owed
to the Borrower or to any Domestic Subsidiary of the Borrower, provided, that
the aggregate of all Santa Barbara Investments does not exceed $12,500,000;
(h) Permitted Subordinated Debt in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding incurred in connection with
a Permitted Acquisition with respect to which all of the conditions set forth in
Section 7.8(f) have been satisfied and incurred to pay all or part of the
- --------------
purchase price thereof which Permitted Subordinated Debt, if secured, is secured
only by Liens permitted pursuant to Section 7.3(i);
--------------
(i) Indebtedness of the Borrower incurred pursuant to (i) the
Convertible Subordinated Notes in an aggregate principal amount not to exceed
$159,225,000 and (ii) the New Subordinated Notes in an aggregate original
principal amount not to exceed $287,500,000 at any time outstanding; in each
case less all repayments, redemptions, prepayments, purchases, defeasances or
acquisitions for value with respect thereto after the Closing Date;
(j) unsecured Indebtedness of the Borrower or any of its
Subsidiaries consisting of guarantees of Indebtedness of a franchisee incurred
to finance a remodeling, construction or purchase of a retail unit of such
franchisee or capital expenditures of such franchisee ("Franchisee Construction
Debt"); provided, that (i) the
80
amount of the obligations of the Borrower and its Subsidiaries under or with
respect to guarantees of more than 20% of the principal amount of the Franchisee
Construction Debt of a franchisee shall not exceed $5,000,000 in the aggregate
outstanding at any time; and (iii) except for the guarantees described in the
foregoing clause (ii), the amount of the obligations of the Borrower and its
Subsidiaries under or with respect to guarantees of Franchisee Construction Debt
of any franchisee shall not exceed 20% of the Franchisee Construction Debt of
such franchisee;
(k) unsecured Indebtedness of the Borrower or any of its
Subsidiaries owing to former franchisees and representing the deferred purchase
price (or a deferred portion of such purchase price) payable by the Borrower or
such Subsidiary to such former franchisee in connection with the purchase by the
Borrower or such Subsidiary of one or more retail outlets from such former
franchisee in an aggregate principal amount for all such Indebtedness not to
exceed $5,000,000 at any one time outstanding;
(l) Indebtedness of any entity acquired pursuant to a Permitted
Acquisition with respect to which all of the conditions set forth in Section
-------
7.8(f) have been satisfied, which Indebtedness (i) is existing prior to such
- ------
Permitted Acquisition, (ii) is assumed by the Borrower or any Subsidiary of the
Borrower in connection with any such Permitted Acquisition and (iii) is not
incurred in contemplation of such Permitted Acquisition; provided, that the
aggregate principal amount of all such Indebtedness shall not exceed $5,000,000
at any time outstanding; and
(m) Indebtedness with respect to Sale and Leaseback Transactions
permitted under Section 7.13(a).
---------------
Section 7.3 Liens. The Borrower shall not, and shall not permit any of
-----
its Subsidiaries to, create, incur, assume or suffer to exist, directly or
indirectly, any Lien on any of its property now owned or hereafter acquired,
other than the following provided, that none of the creation, incurrence,
assumption or existence of any of the following result in the creation or
imposition of a Lien under any Subordinated Debt Document:
(a) Liens existing on the Closing Date and set forth on Schedule
--------
7.3 hereto;
- ---
(b) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves are being maintained in accordance with GAAP;
81
(c) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by Law (other than
any Lien imposed by ERISA or pursuant to any Environmental Law) created in the
ordinary course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate bonds have been posted;
(d) Liens (other than any Lien imposed by ERISA or pursuant to
any Environmental Law) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(e) Easements, licenses, rights-of-way, covenants, conditions and
restrictions, zoning and similar restrictions and other similar charges or
encumbrances not interfering with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries and which do not detract materially from the
value of the property to which they attach or impair materially the use thereof
by the Borrower or any of its Subsidiaries or materially adversely affect the
security interests of the Agent or the Lenders therein;
(f) Liens granted to the Agent for the benefit of the Lenders
pursuant to the Security Documents securing the Obligations;
(g) Liens created pursuant to Capitalized Leases and to secure
other purchase-money Indebtedness permitted pursuant to Section 7.2(e),
--------------
provided, that such Liens are only in respect of the property or assets subject
to, and secure only, the respective Capitalized Lease or other purchase-money
Indebtedness;
(h) Liens arising out of the replacement, extension or renewal of
any Lien permitted by clause (a) above upon or in the same property theretofore
subject thereto in connection with the refunding, refinancing, extension or
renewal (without increase in the amount or change in any direct or contingent
obligor) of the Indebtedness secured thereby permitted pursuant to Section
-------
7.2(f);
- ------
(i) Liens securing Permitted Subordinated Debt permitted pursuant
to Section 7.2(h) provided, that (i) such Liens are only in respect of the
--------------
assets acquired in the applicable Permitted Acquisition, (ii) the Obligations
are secured by valid first priority perfected Liens on such assets and the Liens
permitted pursuant to this Section 7.3(i) are second in priority to the Liens on
--------------
such assets securing the Obligations and (iii) the rights and remedies of any
holder of such Liens are subordinated to the rights and remedies of the Agent
and the Lenders on terms approved in writing by the Agent;
82
(j) Liens securing Indebtedness (other than Permitted
Subordinated Debt) of the Borrower and its Subsidiaries in an aggregate
principal amount not to exceed $25,000,000;
(k) Liens of a lessor covering only specific property leased by
the Borrower or any of its Subsidiaries subject to operating leases entered into
by the Borrower or any of its Subsidiaries as a lessee in the ordinary course of
business;
(l) Liens of a lessor covering only specific property leased by
the Borrower or any of its Subsidiaries subject to a Sale and Leaseback
Transaction permitted by Section 7.13(a) entered into by the Borrower or any of
---------------
its Subsidiaries as a lessee; and
(m) Liens set forth as exceptions to the title policies delivered
pursuant to Section 4.2(l) and Section 6.14.
-------------- ------------
Section 7.4 Restriction on Fundamental Changes.
-----------------------------------
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any merger or consolidation, or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution), discontinue its business
or convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or any substantial part of its business or property,
whether now or hereafter acquired, except (i) as otherwise permitted under
Section 7.5, (ii) any wholly-owned Subsidiary of the Borrower may merge into or
- -----------
convey, sell, lease or transfer all or substantially all of its assets to, the
Borrower or any other Domestic Subsidiary of the Borrower, provided, that in any
such merger involving the Borrower, the Borrower shall be the surviving
corporation and any such Subsidiary merging into the Borrower or any such
Domestic Subsidiary shall be Solvent, (iii) any Solvent Person acquired by the
Borrower or a Subsidiary of the Borrower in a Permitted Acquisition permitted
hereunder may merge with the Borrower or any wholly-owned Subsidiary of the
Borrower, provided, that in any such merger, the Borrower or such wholly-owned
Subsidiary shall be the surviving corporation, provided, further, that in each
case, (A) any such wholly-owned Subsidiary of the Borrower which is the
surviving corporation of any such merger or to which any business or property is
so transferred shall be a party to the Guaranty and the Subsidiary Security
Agreement and if required by Section 2.21, a Subsidiary Pledge Agreement, (B)
------------
the Borrower shall give the Agent at least ten (10) days prior written notice of
any such sale, merger or other transfer, (C) the Agent and Lenders shall not be
deemed to have released their security interest in any assets so transferred or
in any Subsidiary or the assets of any Subsidiary so merged and (D) no Default
or Event of Default shall have occurred or be continuing or would occur after
giving effect thereto or as a result thereof.
83
(b) Borrower shall not and shall not permit any of its
Subsidiaries to, amend its certificate of incorporation or by-laws (or other
relevant organizational and governing documents) in any manner adverse to the
interests of the Agent or the Lenders.
Section 7.5 Sale of Assets. The Borrower shall not, and shall not
--------------
permit any of its Subsidiaries to, make, consummate or effect any Asset
Disposition (or agree to do so at any future time) with respect to all or any
part of its property or assets, except:
(a) the sale of any asset by the Borrower or any of its
Subsidiaries (excluding (i) a bulk sale of inventory and a sale of receivables
(other than delinquent accounts for collection purposes only) and (ii) a sale of
any capital stock of Carl Karcher Enterprises, Inc. or Hardee's) so long as:
(I) the purchase price paid to the Borrower or such Subsidiary
for such asset shall be no less than the fair market value of such asset at
the time of such sale,
(II) the purchase price for such asset shall be paid to the
Borrower or such Subsidiary solely in cash, Cash Equivalents or non-cash
consideration in the form of promissory notes, provided, that in the case
of non-cash consideration received in the form of promissory notes, (A)
such consideration shall not exceed 25% of the aggregate purchase price for
such asset, (B) such promissory notes shall mature no later than 3 years
after the date of issuance, (C) such promissory notes shall be pledged to
the Agent, for the benefit of the Lenders, pursuant to a pledge agreement
in form and substance satisfactory to the Agent, (D) all payments of
principal, interest and other amounts payable under such promissory notes
and that are received by the Borrower or such Subsidiary shall be applied
to prepay the outstanding Loans in accordance with Section 2.12(a) hereof
---------------
and (E) the aggregate principal amount of all promissory notes received as
consideration for all asset sales permitted under this Section 7.5(a) shall
-------------
not exceed $50,000,000 at any one time outstanding,
(III) the aggregate fair market value of such asset and all other
assets sold by the Borrower and its Subsidiaries during the same fiscal
year of the Borrower pursuant to this clause (a) shall not exceed 10% of
the total assets of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP (provided, that Excluded Resales
shall not be included in the calculation of such percentage),
(IV) the Borrower shall prepay the outstanding Loans pursuant to,
and in accordance with, Section 2.12 in an aggregate principal amount equal
------------
to the Net Sale Proceeds received by the Borrower or such Subsidiary from
the sale, transfer or other disposition of such asset,
84
(V) no Default or Event of Default has occurred and is continuing
or would result from such asset sale, and
(VI) with respect to any Asset Disposition involving Real Estate
Collateral, concurrently with such sale (or, with respect to the
disposition of any Real Estate Collateral listed on Schedule 7.5, up to 60
days after such sale), the Borrower or such Subsidiary shall, in
substitution for the Real Estate Collateral sold, pledge to the Agent for
the benefit of the Lenders and the Interest Rate Hedge Providers additional
real property of the Borrower or such Subsidiary with a fair market value,
as determined by an appraisal satisfactory to the Agent and prepared by a
firm satisfactory to the Agent at or before the time of such sale, at least
equal to the gross proceeds received from the Real Estate Collateral sold,
and deliver to the Agent such agreements, documents and instruments as the
Agent shall request to create, perfect, establish the first priority nature
of or otherwise protect any Lien purported to be created in favor of the
Agent in the real property so substituted; provided, however, that, in the
event the appraised fair market value of the real property provided as
substitute collateral exceeds the gross proceeds received from any such
Asset Disposition, the amount of the excess may be deemed to be added to
the appraised fair market value of subsequent real property to be pledged
in substitution of Real Estate Collateral later disposed of in accordance
with the foregoing; and provided, further, that, in the event the Santa
Barbara Acquisition is consummated and the Borrower and its Subsidiaries
pledge to the Agent their respective interests in the real property
acquired as part of such acquisition, the Borrower and its Subsidiaries may
conduct Asset Dispositions involving Real Estate Collateral without so
substituting other real property to the extent that the aggregate gross
proceeds of such unsubstituted dispositions do not exceed the fair market
value, as determined by an appraisal satisfactory to the Agent and prepared
by a firm satisfactory to the Agent promptly following the consummation of
the Santa Barbara Acquisition (but in any event prior to any such
unsubstituted Asset Disposition), of the real property acquired by the
Borrower in the Santa Barbara Acquisition and pledged to the Agent; and
(b) so long as no Default or Event of Default shall occur and be
continuing, the grant of any option or other right to purchase any asset in a
transaction which would be permitted under the provisions of the preceding
clause (a).
Section 7.6 Contingent Obligations. The Borrower shall not, and shall
----------------------
not permit any of its Subsidiaries to, create or become or be liable with
respect to any Contingent Obligation, except:
(a) pursuant to the Guaranty or the Security Documents;
85
(b) Contingent Obligations which are in existence on the Closing
Date and which are set forth on Schedule 7.6;
------------
(c) Contingent Obligations permitted pursuant to Section 7.2(j);
--------------
and
(d) guarantees by Subsidiaries of the Borrower pursuant to the
New Subordinated Note Indenture of obligations of the Borrower under the New
Subordinated Notes, provided, that such guarantees shall at all times be
subordinated in respect of the Obligations on subordination terms contained in
the New Subordinated Note Indenture.
Section 7.7 Dividends. The Borrower shall not, and shall not permit
---------
any of its Subsidiaries to, declare or pay any dividends, or return any capital
to, its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase, defease or otherwise acquire, directly or indirectly, any shares of
any class of its Capital Stock now or hereafter outstanding (or any options,
rights or warrants issued with respect to its Capital Stock), or set aside any
funds for any of the foregoing purposes (all the foregoing "Dividends"), except
that:
(a) Dividends may be made to the Borrower or any of its
wholly-owned Subsidiaries by any of its wholly-owned Subsidiaries; and
(b) So long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, the Borrower may declare and
deliver dividends and distributions payable only in common stock of the
Borrower; and
(c) So long as no Default or Event of Default shall have occurred
and be continuing, any Subsidiary of the Borrower that is not a wholly-owned
Subsidiary of the Borrower may declare and pay cash dividends to the extent, and
only to the extent, of any cumulative positive net income (after deducting any
negative net income) of such Subsidiary arising after the date such Subsidiary
became a Subsidiary of the Borrower so long as such dividends are payable to all
of its equity holders on a ratable basis.
Section 7.8 Advances, Investments and Loans. The Borrower shall not,
-------------------------------
and shall not permit any of its Subsidiaries to, make or suffer to exist,
directly or indirectly any Investments (including, without limitation, loans and
advances to the Borrower or any of its Subsidiaries, and other Investments in
Subsidiaries of the Borrower), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint venture,
or make any Acquisition of any interest in any Person, except that the following
shall be permitted provided, that none of the making, existence or creation of
or becoming or remaining a partner in, any of the following will not result in
or cause a violation or breach of, or default under, any Subordinated Debt
Document:
86
(a) Investments set forth on Schedule 7.8;
------------
(b) Investments by the Borrower and its Subsidiaries in
Subsidiaries of the Borrower outstanding on the Closing Date, additional
Investments (other than loans and advances) by the Borrower or any Subsidiary of
the Borrower in any Domestic Subsidiary of the Borrower which Subsidiary is
Solvent and is a party to the Guaranty, and additional Investments by the
Borrower or any wholly-owned Subsidiary of the Borrower consisting of loans and
advances to wholly-owned Domestic Subsidiaries of the Borrower to the extent
permitted by Section 7.2(g); provided, that in no event shall the aggregate of
--------------
all Santa Barbara Investments exceed $12,500,000.
(c) loans and advances by the Borrower and its Subsidiaries to
their employees in the ordinary course of its business (other than Employee
Stock Loans) not exceeding $2,000,000 in the aggregate at any one time
outstanding;
(d) the Borrower and its Subsidiaries may acquire and hold Cash
Equivalents;
(e) Investments consisting of promissory notes permitted to be
received as consideration in connection with Asset Dispositions permitted under
Section 7.5(a);
- --------------
(f) Permitted Acquisitions, provided, that, in the case of each
Permitted Acquisition, the conditions referred to in clauses (i) through (viii)
below are satisfied on or prior to the date of such Permitted Acquisition (it
being understood that, for purposes of clause (ii) below, the phrase "the
Borrower and its Subsidiaries" and the phrase "Consolidated" shall be deemed to
include the Person (and its Subsidiaries, if any, to be acquired) or assets to
be acquired as though such Person (and its Subsidiaries, if any, to be acquired)
or assets were a Subsidiary of the Borrower):
(i) the Person or assets to be acquired satisfy
the criteria set forth in either the definition of "Permitted
Acquisition" contained in Section 1;
---------
(ii) the Borrower shall have delivered to the
Agent a certificate of the chief financial officer of the
Borrower, in form and substance satisfactory to the Agent,
demonstrating:
(1) compliance by the Borrower and its
Subsidiaries with the covenants set forth in Section 7.1, on a
-----------
pro forma basis after giving effect to such Acquisition, for a
period of four consecutive fiscal quarters after the date of such
Acquisition, and
87
(2) the Consolidated EBITDA of the Person and
any of its Subsidiaries, if any, to be acquired, for the
twelve-month period most recently ended shall be a positive
number;
(iii) the representations and warranties contained
in each Loan Document are correct in all material respects on and
as of the date of such Acquisition, after giving effect to such
Acquisition, as though made on and as of such date, other than
any such representations and warranties that by their terms are
specifically made as of a date other than such date;
(iv) no event has occurred and is continuing on
the date of such Acquisition, or would result from such
Acquisition, that constitutes a Default or an Event of Default;
(v) the Total Revolving Loan Commitment minus the
aggregate principal amount of the Revolving Loans outstanding on
the date of such Permitted Acquisition, minus the amount of any
L/C Obligations outstanding on the date of such Permitted
Acquisition shall equal at least $25,000,000;
(vi) all Consents and waiting periods described in
clause (vii)(3)(D) below shall have been obtained or expired; and
(vii) the Borrower or such Subsidiary of the
Borrower making such Acquisition shall furnish or cause to be
furnished to the Agent and the Lenders the following:
(1) Certified copies of the resolutions of
the Board of Directors (or other governing body) of the Borrower
and, if any Subsidiary of the Borrower will participate in the
applicable Acquisition, of such Subsidiary (in each case, to the
extent resolutions of the Board of Directors of the Borrower or
such Subsidiary are required or advisable pursuant to applicable
law or the Borrower's or such Subsidiary's charter documents) and
of all documents evidencing other necessary corporate action or
other Consents, if any, with respect to such Acquisition;
(2) Such other financial, business and other
information regarding the Person or assets to be acquired, as the
case may be, as the Agent or the Required Lenders through the
Agent shall have reasonably requested, including, without
limitation, actual and pro forma financial statements and
projections relating to such Person or assets;
88
(3) In the case of each Permitted
Acquisition, to the extent that such Acquisition consists of the
acquisition by the Borrower or any of its Subsidiaries of stock,
partnership or other Equity Interests of any Person (or assets in
the case of clause (A) below):
(A) All documents required to be
delivered pursuant to Section 2.21 and Section 6.11;
------------ ------------
(B) A copy of the charter or other
organizational document of such Person and each amendment
thereto, if any, certified by the Secretary of State of its
jurisdiction of organization, as of a date reasonably near
the date of such Borrowing, as being a true and correct copy
thereof;
(C) An officer's certificate signed on
behalf of such Person by an appropriate officer of such
Person, certifying as to (i) the absence of any amendment to
the charter or other organizational document of such Person
since the date of the Secretary of State's certificate
referred to in clause (B) above, (ii) a true and correct
copy of the by-laws or similar organizational document of
such Person, (iii) a true and correct copy of the
resolutions adopted by the Board of Directors or equivalent
governing body of such Person approving the documents or
instruments to be delivered under this Section 7.8(f) to
--------------
which such Person is a party and the matters contemplated
thereby, (iv) the incumbency and specimen signatures of the
officers of such Person executing the documents and
instruments to be delivered under this Section 7.8(f) to
--------------
which such Person is a party, and (v) the due organization
and good standing of such Person as a Person organized under
the laws of its jurisdiction of organization;
(D) Evidence satisfactory to the Agent
and the Lenders that the Borrower, its Subsidiaries and the
Person being acquired has made and obtained all necessary
governmental and other Consents required in order to
consummate such Acquisition and that all applicable waiting
periods with respect to such Acquisition including, without
limitation, those under the
89
Hart-Scott-Rodino Act have expired without any action having
been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon
the rights of the Loan Parties or their Subsidiaries freely
to transfer or otherwise dispose of, or to create any Lien
on, any properties now owned or hereafter acquired by any of
them; and
(viii) other than the Santa Barbara Acquisition, the total
consideration, contingent or otherwise, for the Acquisition of the Person
being acquired, together with the consideration paid for each other
Acquisition consummated pursuant to this Section 7.8(f) during the same
-------------
fiscal year does not exceed, in the aggregate, $10,000,000 (including,
without limitation, securities, instruments, or promissory notes tendered
or executed in connection with such acquisition), provided, that the
consideration paid under this clause (viii) shall be included for purposes
of calculating compliance with Section 7.1(f) and all such Acquisitions
--------------
shall be permitted only to the extent they are permitted under Section
-------
7.1(f);
------
(g) Investments received as consideration in connection with
Asset Dispositions permitted under paragraph (a) of Section 7.5;
-----------
(h) Investments in Capital Stock of Checkers Drive-In
Restaurants, Inc., in an aggregate amount not to exceed $11,000,000, which
Capital Stock was acquired through the exercise of warrants, options and similar
rights owned by the Borrower;
(i) Employee Stock Loans not exceeding $10,000,000 in the
aggregate at any one time outstanding;
(j) the Santa Barbara Acquisition, provided, that at the time of
consummation thereof, no Material Adverse Change shall have occurred in the
reasonable judgement of the Agent; and
(k) if the Santa Barbara Acquisition is consummated, loans to
franchisees of Green Burrito in an aggregate amount not to exceed $900,000 for
all such loans made after the Closing Date.
Section 7.9 Transactions with Affiliates. The Borrower shall not, and
----------------------------
shall not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate, other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable at the
time in a comparable arm's-length transaction with a Person other
90
than an Affiliate; provided, however, that Employee Stock Loans otherwise
permitted by the terms hereof shall not be considered to be transactions with
Affiliates for purposes of this Section 7.9.
-----------
Section 7.10 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Certain Documents. The Borrower shall not, and shall not permit any of its
- -----------------
Subsidiaries to:
(a) make any sinking fund payment or voluntary or optional
payment or prepayment on or redemption, defeasance, purchase or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due) or exchange of any Indebtedness (excluding the Indebtedness hereunder
and under the other Loan Documents and Indebtedness permitted to be incurred
pursuant to Section 7.2(i)), provided that the Borrower may, and may permit any
--------------
of its Subsidiaries to,
(i) prepay, redeem, defease, purchase or acquire or exchange
any (collectively, a "Prepayment") Surviving Debt (other than
Indebtedness permitted to be incurred pursuant to Section 7.2(i)) only
--------------
if on the date of such Prepayment (x) no event or condition has
occurred and is continuing, or would result from such Prepayment, that
constitutes a Default or an Event of Default, and (y) after giving
effect to such Prepayment, the Total Revolving Loan Commitment minus
-----
the aggregate principal amount of the Revolving Loans outstanding on
the date of such Prepayment minus the amount of any L/C Obligations
-----
outstanding on the date of such Prepayment shall equal at least
$20,000,000; provided, however, that notwithstanding the foregoing,
the Borrower shall not, and shall not permit any of its Subsidiaries
to, make any Prepayment of any Indebtedness referred to in Section
-------
7.2(h);
---
(ii) make regularly scheduled or required repayments of
Indebtedness permitted pursuant to Section 7.2; and
-----------
(iii) concurrently with the closing of the Santa Barbara
Acquisition, terminate the credit facility governed by that certain
Credit Agreement, dated as of December 20, 2001, among Santa Barbara
Restaurant Group, Inc., and its Subsidiaries, as borrowers, the
financial institutions from time to time party thereto and Fleet
National Bank, as agent for such financial institutions, and prepay up
to $9,000,000 of the outstanding obligations under such Credit
Agreement (the actual amount so repaid, the "Santa Barbara Loan
Repayment Amount").
91
(b) amend, modify or waive, or permit the amendment, modification
or waiver of (i) the Surviving Debt (other than Indebtedness permitted to be
incurred pursuant to Section 7.2(h) or Section 7.2(i)) in any way that would be
-------------- ---------------
materially adverse to the Lenders or (ii) the Permitted Subordinated Debt or the
Subordinated Debt Documents; or
(c) make any payment in violation of any subordination terms of
any Indebtedness of the Borrower or any of its Subsidiaries; or
(d) make or offer to make any sinking fund payment, payment,
prepayment, redemption, defeasance, purchase or acquisition for value
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying when
due) or otherwise segregate funds with respect to the Subordinated Notes other
than (i) regularly scheduled semi-annual interest payments required to be made
in cash, (ii) conversions of the Convertible Subordinated Notes into common
stock of the Borrower, (iii) consummation of the Permitted Redemption, (iv)
consummation of the Permitted Refinancing and (v) the redemption or repurchase
of Convertible Subordinated Notes (other than in connection with the Permitted
Redemption), provided, that (A) the purchase price paid by the Borrower for such
Convertible Subordinated Notes shall not exceed in the aggregate, for the period
commencing January 29, 2002, and ending the last day of the last fiscal quarter
ending prior to such redemption or repurchase the sum of (1) the aggregate Net
Equity Proceeds of the Borrower for such period, plus (2) 25% of Consolidated
----
Net Income for such period (or if Consolidated Net Income for such period is a
deficit, less 100% of such deficit (which deficit for purposes of subtracting
such amount shall be deemed to be a positive number)), (B) the Borrower shall
have delivered to the Agent a certificate of the chief financial officer of the
Borrower, in form and substance satisfactory to the Agent, demonstrating that,
both before and after giving effect to such repurchase and redemption, for a
period of four consecutive fiscal quarters then ended, the Leverage Ratio shall
be less than 4.0 and Consolidated EBITDA of the Borrower and its Subsidiaries
for the 13 Retail Period most recently ended shall at least equal 120,000,000,
(C) both before and after giving effect to such redemption or repurchase, no
Default or Event of Default shall have occurred and be continuing and (D) after
giving effect to such redemption or repurchase, no Loans shall be outstanding.
Section 7.11 Changes in Business. The Borrower shall not, and shall
-------------------
not permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by the Borrower or such Loan Party,
as the case may be, on the Closing Date after giving effect to the Transactions.
Section 7.12 Certain Restrictions. The Borrower shall not, and shall
--------------------
not permit any of its Subsidiaries to, enter into or permit to exist any
agreement, instrument or other document which directly or indirectly restricts
the ability of the Borrower or any of its
92
Subsidiaries to (a) enter into amendments, modifications or waivers of the Loan
Documents, (b) sell, transfer or otherwise dispose of its assets, (c) create,
incur, assume or suffer to exist any Lien upon any of its property, (d) create,
incur, assume, suffer to exist or otherwise become liable with respect to any
Indebtedness, (e) make loans or advances to the Borrower, or (f) pay any
Dividend or repay any Indebtedness owed to the Borrower or any of its
Subsidiaries; provided, that Capitalized Leases or agreements governing purchase
money Indebtedness which contain restrictions of the types referred to in
clauses (b) or (c) with respect to the property covered thereby shall be
permitted; provided, further, that the foregoing shall not apply to restrictions
in effect on the Closing Date contained in agreements governing Surviving Debt
(other than Indebtedness arising under the Subordinated Notes) and, if such
Indebtedness is renewed, extended or refinanced, restrictions in the agreements
governing the renewed, extended or refinanced Indebtedness (as successive
renewals, extensions and refinancings thereof) if such restrictions are no more
restrictive in any material respect than those contained in the agreements
governing the Indebtedness being renewed, extended or refinanced and if such
renewals, extensions and refinancings are permitted pursuant to Section 7.2(f).
--------------
Section 7.13 Lease Obligations. The Borrower shall not, and shall not
-----------------
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
obligations as lessee:
(a) for the rental or hire of real or personal property in
connection with any sale and leaseback transaction, except:
(i) the Borrower and its Subsidiaries may sell real property or
equipment owned by the Borrower or any of its Subsidiaries on the Closing Date
and simultaneously with such sale become liable with respect to any operating
lease involving such property (each, an "Existing Property Sale and Leaseback
Transaction"), and (ii) the Borrower and its Subsidiaries may sell real property
which the Borrower or any of its Subsidiaries acquires after the Closing Date
for the purpose of building a Restaurant which the Borrower or such Subsidiary
intends to own and operate, and simultaneously with such sale become liable with
respect to any operating lease involving such property if such sale and
leaseback occurs on or before the date which is twelve (12) months after the
date of acquisition by the Borrower or one of its Subsidiaries of such real
property (each, a "New Property Sale and Leaseback Transaction") provided, that:
(1) an Affiliate of the Borrower or any of
its Subsidiaries is not a party to any such Sale and Leaseback
Transaction (except to the extent that the Borrower or any of its
Subsidiaries is the lessee);
93
(2) the Agent is provided with fully executed
documentation of each Sale and Leaseback Transaction on or prior
to the closing date of such transaction;
(3) no Default or Event of Default exists on
the closing date of any Sale and Leaseback Transaction or would
result therefrom and the Borrower shall deliver to the Agent
prior to the closing date of such transaction an officer's
certificate of the chief financial officer of the Borrower
certifying thereto;
(4) the term of each such operating lease
shall not be less than fifteen (15) years, provided, that the
Borrower and its Subsidiaries may enter into Sale and Leaseback
Transactions involving equipment in an amount not exceeding
$5,000,000 in the aggregate where the term of the operating lease
is less than fifteen (15) but greater than three (3) years;
(5) the aggregate amount of all property sold
after the Closing Date pursuant to a Sale and Leaseback
Transaction shall not exceed $25,000,000 in the aggregate; and
(6) concurrently with any Sale and Leaseback
Transaction involving Real Estate Collateral, the Borrower or
such Subsidiary shall, (i) in substitution for the real property
sold, pledge additional fee owned real property of the Borrower
or such Subsidiary to the Agent for the benefit of the Lenders
with a fair market value at least equal to the then fair market
value of the real property sold, as determined by an appraisal
performed at the time of such sale which is satisfactory to the
Agent and prepared by a firm satisfactory to the Agent and (ii)
deliver to the Agent Mortgages and such title insurance policies,
surveys and appraisals with respect to such substitution property
and the leasehold interest created as the Agent may reasonably
request, together such agreements, documents and instruments as
the Agent shall request to create, perfect, establish the first
priority nature of or otherwise protect any Lien purported to be
created in favor of the Agent in the substitution property and
the leasehold interest;
(b) for the rental or hire of other real or personal property of
any kind under leases or agreements to lease including Capitalized Leases except
for leases (including Capitalized Leases) entered into for fair market value in
the ordinary course of business of the Borrower and its Subsidiaries.
94
Section 7.14 Hedging Agreements. The Borrower shall not, and shall not
------------------
permit any of its Subsidiaries to, enter into or remain liable under any Hedging
Agreement, except (a) Interest Rate Agreements with one or more of the Lenders
pursuant to which the Borrower and its Subsidiaries have hedged their reasonably
estimated interest rate exposure and (b) Hedging Agreements relating to
commodities pursuant to which the Borrower and its Subsidiaries have hedged
their reasonably estimated commodity price exposure.
Section 7.15 Plans. The Borrower shall not, nor shall it permit any
-----
member of its ERISA Controlled Group to, take any action which would increase
the aggregate present value of the Unfunded Benefit Liabilities under all Plans
to an amount in excess of $2,000,000.
Section 7.16 Fiscal Year; Fiscal Quarter. The Borrower shall not, and
---------------------------
shall not permit any of its Subsidiaries to, change its fiscal year or any of
its fiscal quarters, except that on a one time basis either the Borrower may
change its fiscal year to match that of Hardee's, or any of the Subsidiaries of
the Borrower may change their respective fiscal years as necessary to match that
of the Borrower.
Section 7.17 Partnerships. The Borrower shall not, and shall not
------------
permit any of its Subsidiaries to, become or remain a general partner in any
general or limited partnership, or permit any of its Subsidiaries to do so,
except for any Subsidiary which is a corporation and the sole assets of which
consist of its interest in such partnership and except with respect to the
partnerships described on Schedule 7.17.
-------------
Section 7.18 Excluded Resales. The Borrower shall not, and shall not
----------------
permit any of its Subsidiaries to, acquire, purchase, hold or own any
Restaurants which the Borrower or any such Subsidiaries acquire from a
franchisee with the intent of reselling to the extent the aggregate amount of
Restaurants owned or held by the Borrower and its Subsidiaries would exceed
$20,000,000 at any one time outstanding, such amount to be measured by the
purchase price paid by the Borrower or any such Subsidiaries for such
Restaurants.
Section 7.19 Designated Senior Indebtedness. The Borrower shall not
------------------------------
designate, create or permit to exist any (a) Designated Senior Indebtedness (as
defined in the Convertible Subordinated Note Indenture) and (b) Designated
Senior Indebtedness (as defined in the New Subordinated Note Indenture), in each
case other than obligations arising under the Loan Documents.
Section 7.20 Instruments. The Borrower shall not permit any of its
-----------
Subsidiaries to own or hold, directly or beneficially, any Instrument if such
Subsidiary is not a party to a legal, valid and binding Subsidiary Pledge
Agreement.
95
SECTION 8. EVENTS OF DEFAULT
Section 8.1 Events of Default. Each of the following events, acts,
-----------------
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. The Borrower shall (i) default in
------------------------
the payment when due of any principal of the Loans or (ii) default, and such
default shall continue unremedied for two (2) or more Business Days, in the
payment when due of any interest on the Loans or in the payment when due of any
Fees or any other amounts owing hereunder.
(b) Breach of Representation or Warranty. Any representation or
------------------------------------
warranty made by any Loan Party herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made.
(c) Breach of Covenants.
--------------------
(i) The Borrower shall fail to perform or observe
any agreement, covenant or obligation arising under Section
-------
6.1(f) or Section 7.
------ ---------
(ii) The Borrower shall fail to perform or observe
any agreement, covenant or obligation arising under this
Agreement (except those described in subsections (a), (b) and
(c)(i) above), and such failure shall continue for thirty (30)
days.
(iii) Any Loan Party shall fail to perform or
observe any agreement, covenant or obligation arising under any
provision of the Loan Documents other than this Agreement, which
failure shall continue after the end of the applicable grace
period, if any, provided therein.
(d) Default Under Other Agreements. Any Loan Party or any of its
------------------------------
Subsidiaries shall default in the payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) of any amount
owing in respect of any Indebtedness of such Loan Party or any of its
96
Subsidiaries (other than the Obligations) in the aggregate principal amount of
$5,000,000 or more; or any Loan Party or any of its Subsidiaries shall default
in the performance or observance of any obligation or condition with respect to
any such Indebtedness or any other event shall occur or condition shall exist,
if the effect of such default, event or condition is to accelerate the maturity
or cause a mandatory redemption of any such Indebtedness or to permit the holder
or holders thereof, or any trustee or agent for such holders, to accelerate the
maturity or require a redemption or other repurchase thereof of any such
Indebtedness, or any such Indebtedness shall become or be declared to be due and
payable prior to its stated maturity other than as a result of a regularly
scheduled payment; or any such Indebtedness shall be declared to be due and
payable, or shall be required to be prepaid, redeemed, purchased or defeased, or
an offer to prepay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case prior to its stated maturity other than as a
result of a regularly scheduled payment.
(e) Bankruptcy, etc. (i) Any Loan Party or any of its
---------------
Subsidiaries shall commence a voluntary case concerning itself under the
Bankruptcy Code; or (ii) an involuntary case is commenced against any Loan Party
or any of its Subsidiaries and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the case; or (iii) a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Loan Party or any of its
Subsidiaries or any Loan Party or any of its Subsidiaries commences any other
proceedings under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Loan Party or
any of its Subsidiaries or there is commenced against any Loan Party or any of
its Subsidiaries any such proceeding which remains undismissed for a period of
60 days; or (iv) any order of relief or other order approving any such case or
proceeding is entered; or (v) any Loan Party or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or (vi) any Loan Party or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or (vii) any Loan Party or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or (viii) any Loan Party or any
of its Subsidiaries shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due; or (ix) any
Loan Party or any of its Subsidiaries shall call a meeting of its creditors with
a view to arranging a composition or adjustment of its debts; or (x) any Loan
Party or any of its Subsidiaries shall by any act or failure to act consent to,
approve of or acquiesce in any of the foregoing; or (xi) any corporate action is
taken by any Loan Party or any of its Subsidiaries for the purpose of effecting
any of the foregoing.
(f) ERISA. (i) Any Termination Event shall occur, or (ii) any
-----
Plan shall incur an "accumulated funding deficiency" (as defined in Section 412
-----------
of the Code or Section 302 of ERISA), whether or not waived, or (iii) the
-----------
Borrower or a member of its ERISA Controlled Group shall have engaged in a
transaction which is prohibited under Section 4975 of the Code or Section 406 of
------------ -----------
ERISA which could result in the imposition of
97
liability in excess of $2,000,000 on the Borrower or any member of its ERISA
Controlled Group, or (iv) the Borrower or any member of its ERISA Controlled
Group shall fail to pay when due an amount which it shall have become liable to
pay to the PBGC, any Plan or a trust established under Title IV of ERISA, or (v)
a condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that an ERISA Plan must be terminated or have a trustee
appointed to administer any ERISA Plan, or (vi) the Borrower or a member of its
ERISA Controlled Group suffers a partial or complete withdrawal from a
Multiemployer Plan or is in "default" (as defined in Section 4219(c)(5) of
----------------
ERISA) with respect to payments to a Multiemployer Plan, or (vii) a proceeding
shall be instituted against the Borrower or any member of its ERISA Controlled
Group to enforce Section 515 of ERISA and such proceeding shall remain
-----------
undismissed for 180 days, or (viii) any other event or condition shall occur or
exist with respect to any Plan which could subject the Borrower or any member of
its ERISA Controlled Group to any tax, penalty or other liability in excess of
$2,000,000 or (ix) the aggregate present value of all post-retirement benefit
liabilities of the Borrower and its Subsidiaries under any "welfare plan" (as
defined in Section 3(1) of ERISA), including, without limitation, Hardee's
-----------
Retiree Medical Insurance Plan, exceeds $20,000,000.
(g) Security Documents. Any of the Security Documents shall for
------------------
any reason cease to be in full force and effect, or shall cease to give the
Agent for the benefit of the Lenders the Liens, rights, powers and privileges
purported to be created thereby including, without limitation, a perfected first
priority security interest in, and Lien on, any material part of the Collateral
in accordance with the terms thereof or the Borrower or any of the Borrower's
Subsidiaries party to any Security Document seeks to repudiate its respective
obligations thereunder and the Liens created thereby are rendered, or the
Borrower or any such Subsidiary of the Borrower seeks to render such Liens,
invalid and unperfected.
(h) Guaranty. The Guaranty or any provision thereof shall cease
--------
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of a Guarantor shall deny or disaffirm all or any portion of such
Guarantor's obligations under such Guaranty.
(i) Change of Control. (i) Any Person or two or more Persons
-----------------
acting in concert other than the Controlling Stockholders shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934), directly or
indirectly, of Voting Stock of the Borrower (or other securities convertible
into such Voting Stock) representing 20% or more of the combined voting power of
all Voting Stock of the Borrower; or (ii) during any period of up to 24
consecutive months, commencing after the Closing Date, individuals who at the
beginning of such 24-month period were directors of the Borrower shall cease for
any reason to constitute a majority of the board of directors of the Borrower;
or (iii) any Person
98
or two or more Persons acting in concert other than the Controlling Stockholders
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or their
acquisition of, the power to exercise control over Voting Stock of the Borrower
(or other securities convertible into such securities representing 20% or more
of the combined voting power of all Voting Stock of the Borrower); or (iv) a
Change in Control as defined in the New Subordinated Note Indenture shall have
occurred.
(j) Judgments. One or more judgments or decrees or awards in an
---------
aggregate amount of $5,000,000 or more shall be entered by a court or courts of
competent jurisdiction or in any arbitration proceeding against any Loan Party
or any of its Subsidiaries and (i) any such judgments or decrees or awards shall
not be stayed, discharged, paid, bonded or vacated within 30 days or (ii)
enforcement proceedings shall be commenced by any creditor on any such judgment
or decree or award.
(k) Environmental Matters. (i) Any Environmental Claim shall have
---------------------
been asserted against any Loan Party or any Environmental Affiliate thereof
which, if determined adversely, could have a Material Adverse Effect, (ii) any
release, emission, discharge or disposal of any Material of Environmental
Concern shall have occurred, and such event could form the basis of an
Environmental Claim against any Loan Party or any Environmental Affiliate
thereof which, if determined adversely, could have a Material Adverse Effect, or
(iii) any Loan Party or its Environmental Affiliate shall have failed to obtain
any Environmental Approval necessary for the management, use, control,
ownership, or operation of its business, property or assets or any such
Environmental Approval shall be revoked, terminated, or otherwise cease to be in
full force and effect, in each case, if the existence of such condition could
have a Material Adverse Effect.
(l) Ownership of Certain Assets. The Borrower and/or its
---------------------------
Subsidiaries shall sell, convey or otherwise transfer or dispose of any material
intellectual property or license agreement owned by or licensed to the Borrower
or any of its Subsidiaries or any material license agreement to which the
Borrower or any of its Subsidiaries is a party other than (A) a sale, conveyance
or other transfer (other than a Lien) to a Domestic Subsidiary, (B) licenses
pursuant to Franchise Agreements pledged to the Agent pursuant to the Security
Documents and (C) any Asset Disposition permitted by the terms of any of the
Loan Documents.
Section 8.2 Rights and Remedies. Upon the occurrence of any Event of
-------------------
Default described in Section 8.1(e), the Revolving Loan Commitments shall
--------------
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loans and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon and without presentation,
demand, or protest or other requirements of any kind
99
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by Borrower, and the
obligation of each Lender to make any Loan hereunder shall thereupon terminate;
and upon the occurrence and during the continuance of any other Event of
Default, the Agent shall at the request, or may with the consent, of the
Required Lenders, by written notice to Borrower, (i) declare that the Revolving
Loan Commitments are terminated, whereupon the Revolving Loan Commitments and
the obligation of each Lender to make any Loan hereunder shall immediately
terminate, (ii) require the Borrower to Cash Collateralize the L/C Obligations
in an amount equal to the maximum aggregate amount that is, or at any time
thereafter may become, available for drawing under any outstanding Letters of
Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to draw
under such Letters of Credit), and (iii) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Loans and any and all accrued
Fees and other Obligations to be, and the same shall thereupon be, immediately
due and payable with all additional interest from time to time accrued thereon
and without presentation, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by Borrower.
SECTION 9. THE AGENT
Section 9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints BNP Paribas as the Agent of such Lender under this Agreement and each
other Loan Document, and each such Lender irrevocably authorizes BNP Paribas as
the Agent for such Lender, to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Agreement and each other Loan Document, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Agent
shall be read into this Agreement or otherwise exist against the Agent. The
provisions of this Section 9 are solely for the benefit of the Agent and the
---------
Lenders and no Loan Party shall have any rights as a third party beneficiary or
otherwise under any of the provisions hereof. In performing its functions and
duties hereunder and under the other Loan Documents, the Agent shall act solely
as the agent of the Lenders and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for any Loan
Party or any of their respective successors and assigns.
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Section 9.2 Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Agreement or the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 9.3 Exculpatory Provisions. The Agent shall not be (i) liable
----------------------
for any action lawfully taken or omitted to be taken by it or any Person
described in Section 9.2 under or in connection with this Agreement or any other
-----------
Loan Document (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, or any other Loan Document or for any failure of any Loan
Party to perform their obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party. This Section is intended solely to govern
-------
the relationship between the Agent, on the one hand, and the Lenders, on the
other.
Section 9.4 Reliance by Agent. The Agent shall be entitled to rely,
-----------------
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Loan Party), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless the
Agent shall have received an executed Assignment Agreement in respect thereof.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in accordance with a request of the Required Lenders, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Notes.
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Section 9.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders. Subject to
the provisions of Section 10.5, the Agent shall take such action with respect to
------------
such Default or Event of Default as shall be directed by the Required Lenders;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as the
Agent shall deem advisable and in the best interests of the Lenders.
Section 9.6 Non-Reliance on Agent and Other Lenders. Each Lender
---------------------------------------
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Loan
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Lender represents and warrants to the Agent that it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Loan
Parties and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, prospects, financial and
other condition and creditworthiness of the Loan Parties. Except for notices,
reports and other documents expressly required under the Loan Documents to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, prospects, financial and other
condition or creditworthiness of the Loan Parties which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
Section 9.7 Indemnification. The Lenders agree to indemnify the Agent
---------------
and its officers, directors, employees, representatives and agents (to the
extent not reimbursed by the Loan Parties and without limiting the obligation of
the Loan Parties to do so), ratably according to their Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, the fees and disbursements of
counsel for the Agent or such Person in connection with any investigative,
102
administrative or judicial proceeding commenced or threatened, whether or not
the Agent or such Person shall be designated a party thereto) that may at any
time (including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Agent or such
Person as a result of, or arising out of, or in any way related to or by reason
of, any of the Transactions or the execution, delivery or performance of any
Loan Document or any other Transaction Document (but excluding any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or such Person as finally determined by a court of
competent jurisdiction); provided that to the extent indemnification payments
made by the Lenders pursuant to this Section 9.7 are subsequently recovered from
-----------
or for the account of the Borrower, the Agent shall promptly refund such
previously paid indemnification payments to the Lenders.
Section 9.8 Agent in its Individual Capacity. The Agent and its
--------------------------------
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Loan Parties as though the Agent were not the Agent
hereunder. With respect to Loans made or renewed by it and any Note issued to
it, the Agent shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
Section 9.9 Successor Agent. The Agent may resign as Agent upon 30
---------------
days' notice to the Borrower and the Lenders. If the Agent shall resign as Agent
under this Agreement, then the Required Lenders during such 30-day period shall
appoint from among the Lenders a successor agent, whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent and the term "Agent"
shall mean such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. Notwithstanding anything
herein to the contrary, so long as no Event of Default has occurred and is
continuing, each such successor agent shall be subject to approval by the
Borrower, which approval shall not be unreasonably withheld or delayed. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Section 9 and Section 10.1 shall inure to its benefit as to any actions taken or
- --------- ------------
omitted to be taken by it while it was Agent under this Agreement.
SECTION 10. MISCELLANEOUS
Section 10.1 Payment of Expenses, Indemnity, etc. The Borrower shall:
-----------------------------------
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the Agent in
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connection with the negotiation, preparation, execution and delivery of the Loan
Documents, the commitment letter related thereto and the Fee Letters, the
syndication of the Loans and the closing of the Transactions and the documents
and instruments referred to therein, in connection therewith, the creation,
perfection or protection of the Agent's Liens in the Collateral (including,
without limitation, fees and expenses for lien searches and filing and recording
fees and, including, without limitation, fees and expenses incurred in
connection with the transactions contemplated by Section 2.21), and any
------------
amendment, waiver or consent relating to any of the Loan Documents (including,
without limitation, as to each of the foregoing, the reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom (Illinois), special
counsel to the Agent and any other attorneys and legal assistants retained by
the Agent and allocated costs of internal counsel and legal assistants) and of
the Agent and each Lender in connection with the preservation of rights under,
and enforcement of, the Loan Documents and the documents and instruments
referred to therein or in connection with any restructuring or rescheduling of
the Obligations (including, without limitation, the reasonable fees and
disbursements of counsel for the Agent and for each of the Lenders);
(b) pay, and hold the Agent and each of the Lenders harmless from
and against, any and all present and future stamp, excise and other similar
taxes with respect to the foregoing matters and hold the Agent and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and
(c) indemnify the Agent, the Financial Advisor and each Lender,
and each of their Affiliates and their officers, directors, employees,
representatives, attorneys and agents (each an "Indemnitee") from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for such Indemnitee) that may
at any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising out of, or in any way related to or by reason of, or
in connection with the preparation for a defense of, any investigation,
litigation or proceeding arising out of, related to or in connection with (i)
any of the Transactions or the execution, delivery or performance of any Loan
Document or any other Transaction Document (including, without limitation, any
actual or proposed use by the Borrower or any Subsidiary of the Borrower of the
proceeds of any Loan or Letter of Credit), (ii) any violation by any Loan Party
or its Environmental Affiliate of any applicable Environmental Law, (iii) any
Environmental Claim arising out of the management, use, control, ownership or
operation of property or assets by any of the Loan Parties or any of their
Environmental Affiliates, including, without limitation, all on-site and
off-site activities involving Materials of Environmental Concern, (iv) the
breach of any environmental representation or warranty set forth in Section
-------
5.19, (v) the grant to
- ----
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the Agent and the Lenders of any Lien in any property or assets of any of the
Loan Parties or any stock or other equity interest in any of the Loan Parties,
and (vi) the exercise by the Agent and the Lenders of their rights and remedies
(including, without limitation, foreclosure) under any agreements creating any
such Lien (but excluding, as to any Indemnitee, any such losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements incurred solely by reason of the gross negligence or
willful misconduct of such Indemnitee as finally determined by a court of
competent jurisdiction). The Borrower's obligations under this Section shall
-------
survive the termination of this Agreement and the payment of the Obligations.
Section 10.2 Right of Setoff. In addition to any rights now or
---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to any
Loan Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at any
time held or owing by such Lender (including, without limitation, by branches
and agencies of such Lender wherever located) to or for the credit or the
account of any Loan Party against and on account of the Obligations of the Loan
Parties to such Lender under this Agreement or under any of the other Loan
Documents, including, without limitation, all interests in Obligations purchased
by such Lender pursuant to Section 9.7, and all other claims of any nature or
-----------
description arising out of or connected with this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
Section 10.3 Notices. Except as otherwise expressly provided herein,
-------
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy, telex, or cable
communication), and shall be deemed to have been duly given or made when
delivered by hand, or five days after being deposited in the United States mail,
postage prepaid, or, in the case of telex notice, when sent, answerback
received, or, in the case of telecopy notice, when sent, or, in the case of a
nationally recognized overnight courier service, one Business Day after delivery
to such courier service, addressed, in the case of each party hereto, at its
address specified opposite its signature below or on the appropriate Assignment
Agreement, or to such other address as may be designated by any party in a
written notice to the other parties hereto, provided that notices and
communications to the Agent shall not be effective until received by the Agent.
Section 10.4 Successors and Assigns; Participation; Assignments.
--------------------------------------------------
105
(a) Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the Borrower, the Lenders, the Agent, all future
holders of the Notes and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender. No Lender may
participate, assign or sell any of its Credit Exposure (as defined in clause (b)
below) except as required by operation of law, in connection with the merger,
consolidation or dissolution of any Lender or as provided in this Section 10.4.
------------
(b) Participation. Any Lender may at any time sell to one or more
-------------
Persons (each a "Participant") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Revolving Loan Commitment of such
Lender and or any other interest of such Lender hereunder (in respect of any
such Lender, its "Credit Exposure"). Notwithstanding any such sale by a Lender
of participating interests to a Participant, such Lender's rights and
obligations under this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Note for all purposes under this Agreement (except as
expressly provided below), and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. The Borrower agrees that if any Obligations
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence and during the continuance of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note provided, that such right of
setoff shall be subject to the obligations of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 10.7. The Borrower also agrees that each Participant shall be entitled
- ------------
to the benefits of Sections 2.16, 2.17 and 2.18, provided, that no Participant
------------- ---- ----
shall be entitled to receive any greater amount pursuant to such sections than
the transferor Lender would have been entitled to receive in respect of the
amount of the participating interest transferred by such transferor Lender to
such Participant had no such transfer occurred. Each Lender agrees that any
agreement between such Lender and any such Participant in respect of such
participating interest shall not restrict such Lender's right to agree to any
amendment, supplement, waiver or modification to this Agreement or any other
Loan Document, except where the result of any of the foregoing would be to
extend the final maturity of any Obligation or any regularly scheduled
installment thereof or reduce the rate or extend the time of payment of interest
thereon or reduce the principal amount thereof or release all or substantially
all of the Collateral (except as expressly provided in the Loan Documents).
(c) Assignments. Any Lender may, in accordance with applicable
-----------
law, at any time assign to any Lender or any affiliate thereof or, with the
consent of the
106
Agent, which consent shall not be unreasonably withheld, to any other Person
(each an "Assignee") all or any part of its Credit Exposure; provided, that in
the case of any such assignment to a Person that is not another Lender or an
affiliate of the assigning Lender, each such assignment shall be (i) for a
Credit Exposure not less than $5,000,000, (ii) to an Assignee approved in
writing by the Agent, which approval shall not be unreasonably withheld and
(iii) so long as no Default or Event of Default shall have occurred and be
continuing, to an Assignee approved by the Borrower, which approval shall not be
unreasonably withheld. Such consent of the Agent shall be substantially in the
form attached as Schedule II to Exhibit I hereto. The Borrower, the Agent and
----------- ---------
the Lenders agree that to the extent of any assignment the Assignee shall be
deemed to have the same rights and benefits under the Loan Documents and the
same rights of setoff and obligation to share pursuant to Section 10.7 as it
------------
would have had if it were a Lender hereunder; provided that the Borrower and the
Agent shall be entitled to continue to deal solely and directly with the
assignor Lender in connection with the interests so assigned to the Assignee
unless and until such Assignee becomes a Purchasing Lender pursuant to clause
(d) below.
(d) Assignments to Purchasing Lenders. Any Lender may at any time
---------------------------------
and from time to time assign to one or more Persons ("Purchasing Lenders") all
or any part of its Credit Exposure pursuant to a supplement to this Agreement,
substantially in the form of Exhibit I hereto (an "Assignment Agreement"),
---------
executed by such Purchasing Lender, such transferor Lender and the Agent. Upon
(i) such execution of such Assignment Agreement, (ii) delivery to the Agent of a
notice of assignment substantially in the form of Schedule I to Exhibit I hereto
---------- ---------
(a "Notice of Assignment") with a copy to the Borrower, together with any
consent required pursuant to Section 10.4(c) above, (iii) payment by such
---------------
Purchasing Lender to such transferor Lender of an amount equal to the purchase
price agreed between such transferor Lender and such Purchasing Lender and (iv)
payment of a $4,000 fee to the Agent for processing of such assignment, such
assignment shall become effective on the effective date specified in such
Assignment Agreement, which effective date shall be at least five (5) Business
Days after delivery of such Notice of Assignment to the Agent, such transferor
Lender shall be released from its obligations hereunder to the extent of such
assignment and such Purchasing Lender shall for all purposes be a Lender party
to this Agreement and shall have all the rights and obligations of a Lender
under this Agreement to the same extent as if it were an original party hereto,
and no further consent or action by the Borrower, the Lenders or the Agent shall
be required. Such Assignment Agreement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender as a Lender and the resulting adjustment of the Revolving Loan
Commitments, if any, arising from the purchase by such Purchasing Lender of all
or a portion of the Credit Exposure of such transferor Lender.
(e) Disclosure of Information. The Borrower authorizes each
-------------------------
Lender to disclose to any Participant, Assignee or Purchasing Lender (each, a
"Transferee") and any prospective Transferee any and all financial and other
information
107
in such Lender's possession concerning the Borrower which has been delivered to
such Lender by the Borrower pursuant to this Agreement or which has been
delivered to such Lender by the Borrower in connection with such Lender's credit
evaluation of the Borrower prior to entering into this Agreement.
(f) Regulation A. Notwithstanding any other provision set forth
------------
in this Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
(g) Transfer and Exchange of Notes. Promptly after the
------------------------------
consummation of any transfer to a Purchasing Lender pursuant hereto, the
transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that any Notes held by such transferor Lender shall be
surrendered to the Borrower for cancellation, one or more replacement Notes in
exchange therefor shall be issued to such transferor Lender, and one or more new
Notes shall be issued to such Purchasing Lender, in each case in notional
amounts reflecting such transfer. Each such new Revolving Note shall be payable
to the Purchasing Lender and shall be substantially in the form of Exhibit A.
---------
Section 10.5 Amendments and Waivers.
----------------------
(a) Neither this Agreement, any Note, any other Loan Document to
which the Borrower or any other Loan Party is a party nor any terms hereof or
thereof may be amended, supplemented, modified or waived except in accordance
with the provisions of this Section. The Required Lenders and the Borrower (or
such other Loan Party, as the case may be) may, from time to time, enter into
written amendments, supplements, modifications or waivers for the purpose of
adding, deleting, changing or waiving any provisions to this Agreement, the
Notes, or the other Loan Documents to which the Borrower or such other Loan
Party is a party, provided, that no such amendment, supplement, modification or
waiver shall (i) extend the Revolving Loan Maturity Date or extend the time for
payment of any installment, fee or required prepayment of any Obligations or
reduce the rate or extend the time of payment of interest on any Obligations, or
reduce the principal amount of any Obligations or reduce any fee payable to the
Lenders hereunder, or release all or substantially all of the Collateral (except
as expressly contemplated by the Loan Documents) or change the amount of any
Revolving Loan Commitment of any Lender, or amend, modify or waive any provision
of this Section 10.5 or the definition of Required Lenders, or consent to or
------------
permit the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or any other Loan Document, or modify any
provision hereof providing for the pro rata sharing of payments, in each case
without the written consent of all the Lenders, (ii) release Carl Karcher
Enterprises, Inc., Hardee's or any Subsidiary of Hardee's (other than any such
Subsidiary which is an Immaterial
108
Subsidiary), from the Guaranty and the other applicable Security Documents
(including the release of such Loan Party's stock certificates from the Borrower
Pledge Agreement or the Subsidiary Pledge Agreement, as applicable), in each
case without the written consent of all of the Lenders; or (iii) amend, modify
or waive any provision of Section 9 or any other provision of any Loan Document
---------
if the effect thereof is to affect the rights or duties of the Agent, without
the written consent of the then Agent; provided, further, that the release from
the Guaranty and the other applicable Security Documents (including the release
of such Loan Party's stock certificates from the Borrower Pledge Agreement or
the Subsidiary Pledge Agreement, as applicable) of any Subsidiary of the
Borrower (other than a Subsidiary of Hardee's) with assets of less than
$10,000,000 (as determined in accordance with GAAP) shall not require the
consent of any of the Lenders in any of the foregoing circumstances if (x) such
Subsidiary (a "Sold Guarantor") is being released from the Guaranty because all
or a portion of the assets of such Sold Guarantor are being sold or otherwise
disposed of in an Asset Disposition or the Equity Interests of such Sold
Guarantor are being sold or otherwise disposed of or an issuance of Equity
Interests of such Sold Guarantor is commenced, and immediately after giving
effect to such sale, other disposition or issuance of Equity Interests and as a
result of such sale, other disposition or issuance of Equity Interests, such
Sold Guarantor is no longer a Subsidiary of the Borrower and (y) any such Asset
Disposition or sale, other disposition or issuance of Equity Interests is
otherwise permitted and commenced in accordance with the terms of this Agreement
(and the Agent is hereby authorized by the Lenders to execute and deliver to the
Borrower all such documents evidencing any such release). Any such amendment,
supplement, modification or waiver shall apply to each of the Lenders equally
and shall be binding upon the Borrower, the Lenders, the Agent and all future
holders of the Notes. In the case of any waiver, the Borrower, the Lenders and
the Agent shall be restored to their former position and rights hereunder and
under the outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing, but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
(b) Each of the Lenders agrees that in the event that such Lender
is requested to consent to any amendment, supplement, modification or waiver of
any term or condition of or with respect to this Agreement or any other Loan
Document, the effectiveness of which requires the consent of all of the Lenders
pursuant to the first proviso of Section 10.5(a) hereof, and such Lender shall
---------------
fail or refuse to give such consent, such Lender (the "Affected Lender") shall
be obliged, at the request of the Borrower and with the consent of the Agent, to
assign all of its rights and obligations hereunder to (i) another Lender or (ii)
another qualified financial institution nominated by the Agent and reasonably
acceptable to the Borrower (the "Replacement Lender"), and willing to
participate in this Agreement through the Revolving Loan Maturity Date in the
place of such Affected Lender; provided that the Affected Lender receives
payment in full, pursuant to an Assignment Agreement, of an amount equal to such
Lender's Pro Rata Share of all unpaid principal and interest owing to the
Lenders and all accrued but unpaid fees and other costs and expenses
109
payable with respect to its Pro Rata Share. The Agent shall give written notice
to the Borrower of any such assignment.
Section 10.6 No Waiver; Remedies Cumulative. No failure or delay on
------------------------------
the part of the Agent or any Lender or any holder of a Note in exercising any
right, power or privilege hereunder or under any other Loan Document and no
course of dealing between any Loan Party and the Agent or any Lender or the
holder of any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Loan Document preclude any other or further exercise thereof of the exercise of
any other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Agent or any Lender or the holder of any Note would
otherwise have. No notice to or demand on any Loan Party in any case shall
entitle any Loan Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent, the
Lenders or the holder of any Note to any other or further action in any
circumstances without notice or demand.
Section 10.7 Sharing of Payments. Each of the Lenders agrees that if
-------------------
it should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise) which is applicable to the payment of any
Obligations, of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in such Obligations owing to such
Lenders in such amount as shall result in a proportional participation by all of
the Lenders in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 10.8 Application of Collateral Proceeds. The Agent shall,
----------------------------------
unless otherwise specified at the direction of the Required Lenders which
direction shall be consistent with the last sentence of this Section 10.8, apply
------------
all proceeds of Collateral in the following order:
(A) first, to pay Obligations in respect
of any fees, expense reimbursements or indemnities then due
to the Agent;
110
(B) second, to pay Obligations in
respect of any fees, expenses, reimbursements or indemnities
then due to the Lenders and the Issuer;
(C) third, to pay interest due in
respect of the Loans and L/C Obligations;
(D) fourth, to the ratable payment of
principal outstanding on the Loans, Obligations for
unreimbursed drawings under all Letters of Credit and net
termination amounts payable in respect of Rate Hedging
Obligations (with the order of application to the
installments of any particular Loan, Obligation for any
unreimbursed drawing under any Letter of Credit or net
termination amount payable in respect of Rate Hedging
Obligation to be determined by the Agent in its sole
discretion);
(E) fifth, to provide required cash
collateral if any pursuant to Section 8.2; and
-----------
(F) sixth, to the ratable payment of all
other Obligations.
The order of priority set forth in this Section 10.8 and the related provisions
------------
of this Agreement are set forth solely to determine the rights and priorities of
the Agent and the Lenders as among themselves. The order of priority set forth
in clauses (B) through (F) of this Section 10.8 may at any time and from time to
------------
time be changed with the consent of 100% of the Lenders without necessity of
notice to or consent of or approval by the Borrower, or any other Person. The
order of priority set forth in clause (A) of this Section 10.8 may be changed
------------
only with the prior written consent of the Agent.
Section 10.9 Governing Law; Submission to Jurisdiction. (a) THIS
-----------------------------------------
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW TO THE EXTENT SUCH PRINCIPLES
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF ILLINOIS).
111
(b) Any legal action or proceeding with respect to this Agreement
or any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of Illinois or of the
United States of America for the Northern District of Illinois, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its pro perty, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and appellate courts. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, the Borrower at its
address set forth opposite its signature below. The Borrower hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or any other Loan Document brought in the courts referred to
above and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. Nothing herein shall affect the right of
the Agent, any Lender or any holder of a Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
Section 10.10 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 10.11 Financial Advisor. The Borrower and each Lender agrees
-----------------
and acknowledges that the Agent may, in its sole discretion, from time to time
retain a financial advisor (the "Financial Advisor") for the purpose of advising
the Agent and the Lenders as to the financial condition of the Borrower and its
Subsidiaries and such other matters related to the facility provided and
contemplated hereunder as the Agent and the Lenders may desire. The Borrower
agrees to pay all reasonable fees, costs and out-of-pocket expenses of the
Financial Advisor in connection with the performance of its duties under this
Section 10.11 and to indemnify the Financial Advisor in accordance with Section
- ------------- -------
10.1(c) hereof.
- ------
Section 10.12 Amendment and Restatement. This Agreement amends and
-------------------------
restates in its entirety the Original Credit Agreement. Upon the effectiveness
of this Agreement, the terms and provisions of the Original Credit Agreement
shall, subject to this Section 10.12, be superseded hereby. Notwithstanding the
-------------
amendment and restatement of the Original Credit Agreement by this Agreement,
the Borrower shall continue to be liable to the Lenders party to the Original
Credit Agreement and the Agent with respect to agreements on the part of the
Borrower under the Original Credit Agreement to indemnify any of such Lenders or
the Agent in connection with events or conditions arising or existing
112
prior to the date hereof, including, but not limited to, those events and
conditions set forth in Section 10 thereof. This Agreement is given in
----------
substitution for the Original Credit Agreement. Upon the effectiveness of this
Agreement, each reference to the Original Credit Agreement in any other
document, instrument or agreement executed and/or delivered in connection
therewith shall mean and be a reference to this Agreement. This Agreement
amends, restates and supersedes only the Original Credit Agreement. This
Agreement is not a novation. Nothing contained herein or in any of the other
Loan Documents, unless expressly herein or therein stated to the contrary, is
intended to amend, modify or otherwise affect any other instrument, document or
agreement executed and/or delivered in connection with the Original Credit
Agreement. The principal amounts of Loans outstanding under the Original Credit
Agreement immediately prior to giving effect to this Agreement to each Lender
that is a party thereto shall be deemed to be Loans made by that Lender
hereunder. Each Letter of Credit issued under the Original Credit Agreement and
outstanding immediately prior to giving effect to this Agreement shall be deemed
to be a Letter of Credit hereunder.
Section 10.13 [Intentionally Omitted].
-----------------------
Section 10.14 Headings Descriptive. The headings of the several
--------------------
Sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
Section 10.15 Marshalling; Recapture. Neither the Agent nor any Lender
----------------------
shall be under any obligation to marshall any assets in favor of any Loan Party
or any other party or against or in payment of any or all of the Obligations. To
the extent any Lender receives any payment by or on behalf of any Loan Party,
which payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to such Loan
Party or its estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the obligation or part thereof which has
been paid, reduced or satisfied by the amount so repaid shall be reinstated by
the amount so repaid and shall be included within the liabilities of such Loan
Party to such Lender as of the date such initial payment, reduction or
satisfaction occurred.
Section 10.16 Severability. In case any provision in or obligation
------------
under this Agreement or the Notes or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 10.17 Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition is not
permitted by any
113
of such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action is taken or condition
exists.
Section 10.18 Survival. All indemnities set forth herein including,
--------
without limitation, in Sections 2.16, 2.17, 2.18, 2.19, 9.7 and 10.1 shall
------------- ---- ---- ---- --- ----
survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans hereunder.
Section 10.19 Domicile of Loans. Each Lender may transfer and carry
-----------------
its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Lender.
Section 10.20 Limitation of Liability. No claim may be made by any
-----------------------
Loan Party or any other Person against the Agent or any Lender or the
Affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other
Transactions, or any act, omission or event occurring in connection therewith;
and each Loan Party hereby waives, releases and agrees not to sue upon any claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
Section 10.21 Calculations; Computations. The financial statements to
--------------------------
be furnished to the Agent and the Lenders pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved and consistent with GAAP as used in the preparation of the financial
statements referred to in Section 5.5, and, except as otherwise specifically
-----------
provided herein, all computations determining compliance with Section 7.1 hereof
-----------
shall utilize GAAP.
Section 10.22 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
-----------------------
APPLICABLE LAW, EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
Section 10.23 References. Unless otherwise expressly specified herein,
----------
all references to "Article," "Section,""Schedule," or "Exhibit" shall mean
articles and sections of, and schedules and exhibits to, this Agreement.
(Signature Pages Follow)
114
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
CKE RESTAURANTS, INC.
By:
-----------------------------------------
Print Name:
Title:
Address: 401 W. Carl Karcher Way
Anaheim, CA 92801
Attn: General Counsel
Telephone:(714) 774-5796
Telecopy: (714) 520-4485
S-1
BNP PARIBAS (as successor-in-interest to Paribas),
as Agent and as a Lender
By:
-----------------------------------------------
Print Name: Clark C. King III
Title: Managing Director
By:
-----------------------------------------------
Print Name:
Title:
Address: 209 S. LaSalle Street
Suite 500
Chicago, IL 60604
Attn: Clark C. King III
Telephone: (312) 977-2254
Telecopy: (312) 977-1380
with a copy to:
Maureen B. Keating
BNP Paribas
787 Seventh Avenue
New York, NY 10019-6016
Telephone: (212) 841-2286
Telecopy: (212) 841-2275
S-2
FIRST BANK & TRUST
By:
------------------------------------------------
Print Name: Richard Fein
Title: Vice President
Address: 4301 MacArthur Blvd.
Newport Beach, CA 92660
Attn: Richard Fein
Telephone: (949) 475-6348
Telecopy: (949) 476-8445
S-3
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
------------------------------------------------
Print Name: Stephen Amendt
Title: Vice President
Address: 2030 Main Street
Suite 900
Irvine, CA 92614
Attn: Stephen Amendt
Telephone: (949) 251-4195
Telecopy: (949) 261-1830
S-4
FLEET NATIONAL BANK
By:
------------------------------------------------
Print Name: Alexandra A. Burke
Title: Vice President
Address:
Attn: Alexandra A. Burke
Telephone: (617) 434-5749
Telecopy: (617) 434-0637
S-5
U.S. BANK NATIONAL ASSOCIATION
By:
------------------------------------------------
Print Name:
Title:
Address: 555 S. W. Oak Street, PL-4
Portland, OR 97204
Attn: Janet Jordan
Telephone: (503) 275-5871
Telecopy: (503) 275-5428
S-6
Schedule 1.1 to Credit Agreement
--------------------------------
Lenders and Commitments
-----------------------
Name of Lender Revolving Loan Commitment
- -------------- -------------------------
First Bank and Trust $25,000,000.00
Fleet National Bank $15,000,000.00
BNP Paribas $25,000,000.00
U.S. Bank National Association $15,000,000.00
Wells Fargo Bank, National Association $20,000,000.00