Exhibit 10.1
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$175,000,000
CREDIT AGREEMENT
among
FRIENDLY ICE CREAM CORPORATION,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto
and
SOCIETE GENERALE,
as Arranger and Administrative Agent
and
Dated as of _____________, 1997
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms.................................................... 1
1.2 Other Definitional Provisions.................................... 23
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................ 23
2.1 Term Loan Commitments............................................ 24
2.2 Procedure for Term Loan Borrowing................................ 24
2.3 Repayment of Term Loans.......................................... 24
2.4 Revolving Credit Commitments..................................... 26
2.5 Procedure for Revolving Credit Borrowing......................... 27
2.6 Repayment of Loans; Evidence of Debt............................. 27
2.7 Commitment Fees, etc. ........................................... 28
2.8 Termination or Reduction of Revolving Credit Commitments......... 28
2.9 Optional Prepayments............................................. 28
2.10 Mandatory Prepayments and Commitment Reductions................. 29
2.11 Conversion and Continuation Options............................. 30
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches....... 30
2.13 Interest Rates and Payment Dates................................ 31
2.14 Computation of Interest and Fees................................ 31
2.15 Inability to Determine Interest Rate............................ 32
2.16 Pro Rata Treatment and Payments................................. 32
2.17 Requirements of Law............................................. 34
2.18 Taxes........................................................... 35
2.19 Indemnity....................................................... 37
2.20 Change of Lending Office........................................ 37
2.21 Replacement of Lenders under Certain Circumstances.............. 38
SECTION 3. LETTERS OF CREDIT.............................................. 38
3.1 L/C Commitment................................................... 38
3.2 Procedure for Issuance of Letter of Credit....................... 39
3.3 Commissions, Fees and Other Charges.............................. 39
3.4 L/C Participations............................................... 39
3.5 Reimbursement Obligation of the Borrower......................... 40
3.6 Obligations Absolute............................................. 41
3.7 Letter of Credit Payments........................................ 41
3.8 Applications..................................................... 41
SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 41
4.1 Financial Condition.............................................. 41
4.2 No Change........................................................ 42
4.3 Corporate Existence; Compliance with Law......................... 42
4.4 Corporate Power; Authorization; Enforceable Obligations.......... 42
4.5 No Legal Bar..................................................... 43
4.6 No Material Litigation........................................... 43
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4.7 No Default....................................................... 43
4.8 Ownership of Property; Liens..................................... 43
4.9 Intellectual Property............................................ 44
4.10 Taxes........................................................... 44
4.11 Federal Regulations............................................. 44
4.12 Labor Matters................................................... 44
4.13 ERISA........................................................... 44
4.14 Investment Company Act; Other Regulations....................... 45
4.15 Subsidiaries.................................................... 45
4.16 Use of Proceeds................................................. 45
4.17 Environmental Matters........................................... 45
4.18 Accuracy of Information, etc.................................... 46
4.19 Security Documents.............................................. 47
4.20 Solvency........................................................ 47
4.21 Regulation H.................................................... 47
4.22 Material Contracts.............................................. 47
SECTION 5. CONDITIONS PRECEDENT........................................... 48
5.1 Conditions to Initial Extension of Credit........................ 48
5.2 Conditions to Each Extension of Credit........................... 51
SECTION 6. AFFIRMATIVE COVENANTS.......................................... 52
6.1 Financial Statements............................................. 52
6.2 Certificates; Other Information.................................. 52
6.3 Payment of Obligations........................................... 54
6.4 Conduct of Business and Maintenance of Existence, etc. .......... 54
6.5 Maintenance of Property; Insurance............................... 54
6.6 Inspection of Property; Books and Records; Discussions........... 55
6.7 Notices.......................................................... 55
6.8 Environmental Laws............................................... 56
6.9 Interest Rate Protection......................................... 56
6.10 Additional Collateral, etc...................................... 56
6.11 Mortgage Recording Taxes........................................ 57
SECTION 7. NEGATIVE COVENANTS............................................. 58
7.1 Financial Condition Covenants.................................... 58
7.2 Limitation on Indebtedness....................................... 60
7.3 Limitation on Liens.............................................. 62
7.4 Limitation on Fundamental Changes................................ 63
7.5 Limitation on Sale of Assets..................................... 64
7.6 Limitation on Dividends.......................................... 64
7.7 Limitation on Capital Expenditures............................... 65
7.8 Limitation on Investments, Loans and Advances.................... 65
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc................................................. 66
7.10 Limitation on Transactions with Affiliates...................... 67
7.11 Limitation on Sales and Leasebacks.............................. 67
7.12 Limitation on Changes in Fiscal Periods......................... 67
7.13 Limitation on Negative Pledge Clauses........................... 67
7.14 Limitation on Restrictions on Subsidiary Distributions.......... 67
7.15 Limitation on Lines of Business................................. 69
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SECTION 8. EVENTS OF DEFAULT.............................................. 69
SECTION 9. THE AGENT...................................................... 72
9.1 Appointment...................................................... 72
9.2 Delegation of Duties............................................. 72
9.3 Exculpatory Provisions........................................... 72
9.4 Reliance by Agent................................................ 73
9.5 Notice of Default................................................ 73
9.6 Non-Reliance on Agent and Other Lenders.......................... 73
9.7 Indemnification.................................................. 74
9.8 Agent in Its Individual Capacity................................. 74
9.9 Successor Agent.................................................. 75
9.10 Authorization to Release Liens.................................. 75
SECTION 10. MISCELLANEOUS................................................. 75
10.1 Amendments and Waivers.......................................... 75
10.2 Notices......................................................... 76
10.3 No Waiver; Cumulative Remedies.................................. 77
10.4 Survival of Representations and Warranties...................... 77
10.5 Payment of Expenses............................................. 77
10.6 Successors and Assigns; Participations and Assignments.......... 78
10.7 Adjustments; Set-off............................................ 80
10.8 Counterparts.................................................... 81
10.9 Severability.................................................... 81
10.10 Integration.................................................... 81
10.11 GOVERNING LAW.................................................. 81
10.12 Submission To Jurisdiction; Waivers............................ 81
10.13 Acknowledgements............................................... 82
10.14 WAIVERS OF JURY TRIAL.......................................... 82
10.15 Confidentiality................................................ 82
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ANNEXES:
A Pricing Grid
B ECF Percentage Grid
C Permitted Capital Expenditure Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Properties
1.1C Management Permitted Holders
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
4.22 Material Contracts
5.1(p) Plant and Headquarters Properties
7.1 Financial Covenant Calculations
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
7.8(h) Existing Investments
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D-1 Form of Mortgage (Leasehold)
D-2 Form of Mortgage (Fee)
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Mayer, Brown & Platt
F-2 Form of Legal Opinion of Larry W. Browne, Esq.
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
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CREDIT AGREEMENT, dated as of _____________, 1997, among FRIENDLY ICE
CREAM CORPORATION, a Massachusetts corporation (the "BORROWER"), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the "LENDERS") and SOCIETE GENERALE, as arranger and
administrative agent for the Lenders hereunder.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, certain subsidiaries of the Borrower, the
financial institutions party thereto and BankBoston, N.A. (formerly known as The
First National Bank of Boston), as administrative agent, collateral agent and
issuing bank, are parties to the Second Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of January 1, 1996 and as amended,
supplemented or otherwise modified (the "EXISTING CREDIT FACILITY");
WHEREAS, the Borrower desires to refinance the indebtedness
outstanding under the Existing Credit Facility;
WHEREAS, concurrently with the initial extension of credit under this
Agreement the Borrower is offering to the public (a) $175,000,000 aggregate
principal amount of its unsecured senior notes due 2007 (the "SENIOR NOTE
OFFERING"), and (b) 5,000,000 shares of its common stock (the "COMMON STOCK
OFFERING" and, together with the Senior Note Offering, the "OFFERINGS");
WHEREAS, the Borrower has requested that the Lenders make credit
facilities available to it in an aggregate principal amount of up to
$175,000,000 consisting of (a) a $55,000,000 five-year revolving credit
facility, (b) a $15,000,000 five-year letter of credit facility (to be
implemented together with the Revolving Credit Facility), (c) a $40,000,000
five-year term loan facility, (d) a $40,000,000 seven-year term loan facility
and (e) a $25,000,000 eight-year term loan facility (collectively, the "CREDIT
FACILITIES" and, together with the Offerings and the application of the net
proceeds hereunder and thereunder, the "RECAPITALIZATION"); and
WHEREAS, the Lenders are willing to make the Credit Facilities
available upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
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"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall mean the
rate of interest per annum publicly announced from time to time by the
Reference Lender as its prime rate in effect at its principal office in New
York City (the Prime Rate not being intended to be the lowest rate of
interest charged by the Reference Lender in connection with extensions of
credit to debtors). Any change in the ABR due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.
"ABR LOANS": Loans the rate of interest applicable to which is based
upon the ABR.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"AFFILIATE": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"AGENT": Societe Generale, together with its affiliates, as the
arranger of the Commitments and as the administrative agent for the Lenders
under this Agreement and the other Loan Documents.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Eurodollar ABR
Loans Loans
---------- -----
Revolving Credit Loans 2.25% 0.75%
Tranche A Term Loans 2.25% 0.75%
Tranche B Term Loans 2.50% 1.00%
Tranche C Term Loans 2.75% 1.25% ;
PROVIDED, that on and after the first Adjustment Date occurring after the
completion of four full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin with respect to Revolving Credit Loans and
Tranche A Term Loans will be determined pursuant to the Pricing Grid.
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"APPLICATION": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit, and specifying the date on which such Letter of Credit is to be
issued, the expiration date of such Letter of Credit, the name and address
of the beneficiary of such Letter of Credit, whether such Letter of Credit
is to be a Trade Letter of Credit or a Standby Letter of Credit and such
other information as may be necessary or desirable to complete such Letter
of Credit.
"ASSET SALE": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c), (d) or (g) of Section 7.5) which yields gross
proceeds to the Borrower or any of its Subsidiaries (valued at the initial
principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case
of other non-cash proceeds) in excess of $100,000.
"ASSIGNEE": as defined in Section 10.6(c).
"ASSIGNOR": as defined in Section 10.6(c).
"AUTHORIZED SIGNATORY": the chief executive officer, president, chief
administrative officer or chief financial officer of the Borrower, or
their respective designees notified to the Agent in writing, but in any
event, with respect to financial matters, the chief financial officer of
the Borrower.
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment OVER (b) such Lender's Revolving
Extensions of Credit.
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BORROWING DATE": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"BUSINESS": as defined in Section 4.17.
"BUSINESS DAY": (a) for all purposes other than as covered by clause
(b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (b) 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 (a) and which is also a day for
trading by and between banks in Dollar deposits in the interbank eurodollar
market.
"BUSINESS-SUSTAINING CAPITAL EXPENDITURES": for any period of four
consecutive fiscal quarters, Capital Expenditures during such period in an
amount equal to $15,000,000, constituting the amount of Capital
Expenditures necessary to maintain the
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then existing Property of the Borrower and its Subsidiaries in good working
order and condition (excluding payments in respect of the principal amount
of Indebtedness incurred in connection with such expenditures).
"CAPITAL EXPENDITURES": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of
the foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of six months or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of an issuer rated at least A-1 by Standard & Poor's
Ratings Services ("S&P") or P-1 by Moody's Investors Service, Inc.
("MOODY'S"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within nine
months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any
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Lender or any commercial bank satisfying the requirements of clause (b) of
this definition; or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition or which comply with the risk limiting
conditions of Rule 2a-7 or any successor rule of the Securities and
Exchange Commission under the Investment Company Act of 1940.
"CLOSING DATE": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"COMMITMENT": as to any Lender, the sum of the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment, the Tranche C Term Loan
Commitment and the Revolving Credit Commitment of such Lender.
"COMMITMENT FEE RATE": 1/2 of 1% per annum; PROVIDED, that on and
after the first Adjustment Date occurring after the completion of four full
fiscal quarters of the Borrower after the Closing Date, the Commitment Fee
Rate will be determined pursuant to the Pricing Grid.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"COMMON STOCK": the Borrower's common stock, par value $0.01 per
share.
"COMMON STOCK OFFERING": as defined in the recitals to this
Agreement.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a Authorized
Signatory substantially in the form of Exhibit B.
"CONSOLIDATED CASH INTEREST EXPENSE": for any period, total cash
interest expense (including that attributable to Capital Lease Obligations)
of the Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Protection Agreements to the extent such
net costs are allocable to such period in accordance with GAAP); PROVIDED
that for purposes of calculating Consolidated Cash Interest Expense of the
Borrower and its Subsidiaries for the fourth fiscal quarter of the
Borrower's 1997 fiscal year, cash interest expense with respect to
Indebtedness created in connection with the Recapitalization shall be
included on a PRO FORMA basis for such fiscal quarter
6
(assuming that the consummation of the Recapitalization and the incurrence
of such Indebtedness occurred on the first day of such fiscal quarter and
that the rate applicable to any floating rate Indebtedness from the first
day of such fiscal quarter to the Closing Date is the 30-day Eurodollar
Rate in effect on the Closing Date).
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for
such period PLUS, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) interest expense, amortization or
writeoff of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness
(including the Loans), (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or non-recurring
expenses or losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary course of
business) and (f) any other non-cash charges, and MINUS, to the extent
included in the statement of such Consolidated Net Income for such period,
the sum of (a) interest income, (b) any extraordinary, unusual or
non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the
ordinary course of business (it being understood that sales of restaurants
in an aggregate amount up to $2,500,000 in any fiscal year are deemed to be
in the ordinary course of business)) and (c) any other non-cash income, all
as determined on a consolidated basis.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period, the ratio
of (a) Consolidated EBITDA for such period MINUS (i) Business-Sustaining
Capital Expenditures for such period and (ii) cash income taxes for such
period to (b) Consolidated Fixed Charges for such period.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without
duplication) of (a) Consolidated Cash Interest Expense for such period, (b)
scheduled payments made during such period on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including
scheduled principal payments in respect of the Term Loans) and (c)
scheduled payments (excluding interest expense attributable to such Capital
Lease Obligations) made during such period on account of Capital Lease
Obligations.
"CONSOLIDATED INTEREST COVERAGE RATIO": for any period, the ratio of
(a) Consolidated EBITDA MINUS (i) Business-Sustaining Capital Expenditures
for such period and (ii) cash income taxes for such period to (b)
Consolidated Cash Interest Expense for such period.
"CONSOLIDATED LEVERAGE RATIO": as at the last day of any period, the
ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA
for such period; PROVIDED that for purposes of calculating Consolidated
EBITDA of the Borrower and its Subsidiaries for any period, the
Consolidated EBITDA of any Person acquired by
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the Borrower or its Subsidiaries during such period shall be included on a
PRO FORMA basis for such period (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if the
consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period preceding the acquisition of such
Person and the related consolidated statements of income and stockholders'
equity and of cash flows for the period in respect of which Consolidated
EBITDA is to be calculated (i) have been previously provided to the Agent
and the Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit or a "going concern" or
like qualification or exception by independent certified public accountants
of nationally recognized standing or (B) have been found acceptable by the
Agent.
"CONSOLIDATED NET INCOME": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Borrower) in
which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"CONSOLIDATED NET WORTH": at any date, all amounts which would, in
conformity with GAAP, be included on a consolidated balance sheet of the
Borrower and its Subsidiaries under stockholders' equity at such date.
"CONSOLIDATED TOTAL DEBT": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"CONTINUING DIRECTORS": the directors of the Borrower on the Closing
Date, after giving effect to the Recapitalization and the other
transactions contemplated hereby, and each other director, if, in each
case, such other director's nomination for election to the board of
directors of the Borrower is recommended by at least a majority of the then
Continuing Directors or such other director receives the vote of the
Permitted Holders in his or her election by the shareholders of the
Borrower.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
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"DEFAULT": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"DISPOSITION": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "DISPOSE" and "DISPOSED OF" shall have correlative
meanings.
"DISQUALIFIED STOCK": means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening or any
event (a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (b) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (c) is redeemable at the option of
the holder thereof, in whole or in part, in each case prior to the Tranche
C Maturity Date.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States of America.
"ECF PERCENTAGE": 80%; PROVIDED, that on and after the first ECF
Percentage Adjustment Date occurring after the completion of four fiscal
quarters of the Borrower after the Closing Date, the ECF Percentage will be
determined pursuant to the ECF Percentage Grid.
"ECF PERCENTAGE ADJUSTMENT DATE": as defined in the ECF Percentage
Grid.
"ECF PERCENTAGE GRID": the Grid attached hereto as Annex B.
"ENVIRONMENTAL LAWS": any and all foreign, federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
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"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
Service (or otherwise on such service), the "EURODOLLAR BASE RATE" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as
may be selected by the Agent or, in the absence of such availability, by
reference to the rate at which the Agent is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where
its eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward, if
necessary, to the nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8,
PROVIDED that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"EXCESS CASH FLOW": for any fiscal year of the Borrower, the excess,
if any, of (a) Consolidated EBITDA for such fiscal year, over (b) the sum,
without duplication, of (i) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account of
Capital Expenditures (excluding the principal amount of Indebtedness
incurred in connection with such expenditures and any such expenditures
financed with the proceeds of any Reinvestment Deferred Amount), (ii) the
aggregate amount of all prepayments of Revolving Credit Loans during such
fiscal year to the extent accompanying permanent optional reductions of the
Revolving Credit Commitments and all optional prepayments of the Term Loans
during such fiscal year, (iii) the aggregate amount of all regularly
scheduled principal payments of Funded Debt (including, without limitation,
the Term Loans) of the Borrower and its Subsidiaries made during such
fiscal year (other than in respect of any revolving credit
10
facility to the extent there is not an equivalent permanent reduction in
commitments thereunder) and (iv) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account of
income taxes.
"EXCLUDED FOREIGN SUBSIDIARIES": any Foreign Subsidiary the pledge of
all of whose Capital Stock as Collateral would, in the good faith judgment
of the Borrower, result in adverse tax consequences to the Borrower.
"EXISTING CREDIT FACILITY": as defined in the recitals to this
Agreement.
"FACILITY": each of (a) the Tranche A Term Loan Commitments and the
Tranche A Term Loans made thereunder (the "TRANCHE A TERM LOAN FACILITY"),
(b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "TRANCHE B TERM LOAN FACILITY"), (c) the Tranche C Term
Loan Commitments and the Tranche C Term Loans made thereunder (the "TRANCHE
TERM LOAN FACILITY") and (d) the Revolving Credit Commitments and the
extensions of credit made thereunder (the "REVOLVING CREDIT FACILITY").
"FEDERAL FUNDS EFFECTIVE RATE"; for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders
to extend credit during a period of more than one year from such date,
including, without limitation, all current maturities and current sinking
fund payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans.
"FUNDING OFFICE": the office of the Agent set forth in Section 10.2.
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules
and regulations of the Securities and Exchange Commission, or in such other
statements by such other entity as may be in general use
11
by significant segments of the accounting profession, which are applicable
to the circumstances of the Borrower as of the date of determination,
except that for purposes of Section 7.1, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the most recent audited financial
statements delivered pursuant to Section 4.1(b).
"GOVERNMENTAL AUTHORITY": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Guarantor,
substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "PRIMARY OBLIGATIONS") of any other third Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing 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 (1) for the purchase or payment of any such primary
obligation or (2) 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 any such primary obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"GUARANTORS": each Subsidiary of the Borrower other than any Excluded
Foreign Subsidiary and other than RIC.
"INCUR": as defined in Section 7.2.
12
"INDEBTEDNESS": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than current trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even though 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), (e)
all Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party under acceptance
facilities and all obligations of such Person in respect of unreimbursed
drawings under any letter of credit facility, (g) all obligations of such
Person, contingent or otherwise, to purchase, redeem, retire or otherwise
acquire for value any Capital Stock (other than common stock) of such
Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above; (i)
all obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing
right, contingent or otherwise, to be secured by) any Lien on Property
(including, without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the
payment of such obligation, and (j) for the purposes of Sections 7.2 and
8(e) only, all obligations of such Person in respect of Interest Rate
Protection Agreements.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, the fifteenth day of
each January, April, July and October to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other than
any Revolving Credit Loan that is an ABR Loan), the date of any repayment
or prepayment made in respect thereof, but only to the extent of the
portion prepaid or repaid.
13
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrower in its notice of borrowing
or notice of conversion, as the case may be, given with respect thereto;
and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or beyond the date final payment is
due on the Tranche A Term Loans, the Tranche B Term Loans or the
Tranche C Term Loans, as the case may be, shall end on the Revolving
Credit Termination Date or such due date, as applicable;
(iii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"INTEREST RATE PROTECTION AGREEMENT": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Borrower or any of its Subsidiaries is a party or a beneficiary on the date
hereof or becomes a party or a beneficiary after the date hereof.
"ISSUING LENDER": Societe Generale, in its capacity as issuer of any
Letter of Credit.
"L/C COMMITMENT": $25,000,000.
"L/C FEE PAYMENT DATE": the fifteenth day of each January, April,
July and October and the last day of the Revolving Credit Commitment
Period.
14
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 3.5.
"L/C PARTICIPANTS": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"LETTERS OF CREDIT": any Standby Letter of Credit or Trade Letter of
Credit issued pursuant to Section 3.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any
of the foregoing).
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Guarantee and
Collateral Agreement and each other Security Document.
"LOAN PARTIES": the Borrower and each Subsidiary of the Borrower
which is a party to a Loan Document.
"MAJORITY FACILITY LENDERS": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Term Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit Commitments, the
holders of more than 50% of the Total Revolving Credit Commitments).
"MAJORITY REVOLVING CREDIT FACILITY LENDERS": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"MAJOR MORTGAGED PROPERTIES": as defined in Section 5.1(p).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
Recapitalization, (b) the business, assets, property, condition (financial
or otherwise), operations, performance or prospects of the Borrower and its
Subsidiaries taken as a whole or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents against the Borrower or any
Guarantor party thereto or the rights or remedies of the Agent or the
Lenders hereunder or thereunder.
15
"MATERIAL ENVIRONMENTAL AMOUNT": an amount payable by the Borrower
and/or its Subsidiaries in excess of $5,000,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MORTGAGED PROPERTIES": the real properties listed on Schedule 1.1B,
as to which the Agent for the benefit of the Lenders shall be granted a
Lien pursuant to the Mortgages.
"MORTGAGES": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Agent for the benefit of
the Lenders, substantially in the form of Exhibit D (with such changes
thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of (i) attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith, (ii)
taxes paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax
sharing arrangements) and (iii) appropriate amounts to be provided by the
Borrower or any Subsidiary, as the case may be, as a reserve, in accordance
with GAAP, against any liabilities associated with such Asset Sale and
retained by the Borrower or any Subsidiary, as the case may be, after such
Asset Sale, including pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale
(provided that, if and to the extent that such reserves are no longer
required to be maintained in accordance with GAAP, such amounts shall
constitute Net Cash Proceeds) and (b) in connection with any issuance or
sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment
16
banking fees, accountants' fees, underwriting discounts and commissions and
other customary fees and expenses actually incurred in connection
therewith.
"NON-EXCLUDED TAXES": as defined in Section 2.18(a).
"NON-U.S. LENDER": as defined in Section 2.18(d).
"NOTES": the collective reference to any promissory note evidencing
Loans.
"OBLIGATIONS": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Agent or to any Lender (or, in the case of Interest Rate
Protection Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any other Loan Document, the Letters of Credit, any
Interest Rate Protection Agreement entered into with any Lender or any
affiliate of any Lender or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees, charges and
disbursements of counsel to the Agent or to any Lender that are required to
be paid by the Borrower pursuant hereto) or otherwise.
"OFFERINGS": as defined in the recitals to this Agreement.
"OTHER TAXES": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
"PARTICIPANT": as defined in Section 10.6(b).
"PAYMENT OFFICE": the office of the Agent set forth in Section 10.2.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED CAPITAL EXPENDITURE ADJUSTMENT DATE": as defined in the
Permitted Capital Expenditure Grid.
"PERMITTED CAPITAL EXPENDITURE AMOUNT": with respect to any fiscal
year, the amount set forth opposite such fiscal year under the caption
"Capital Expenditure Amount" on the Permitted Capital Expenditure Grid;
PROVIDED that on and after the first Permitted Capital Expenditure
Adjustment Date occurring after the Closing Date,
17
the Permitted Capital Expenditure Amount with respect to the Borrower's
1999 fiscal year and each subsequent fiscal year shall be an amount equal
to the product of (a) the Capital Expenditure Amount otherwise applicable
for such fiscal year and (b) the relevant Permitted Capital Expenditure
Percentage from the Permitted Capital Expenditure Grid.
"PERMITTED CAPITAL EXPENDITURE GRID": the grid attached hereto as
Annex C.
"PERMITTED HOLDERS": the collective reference to Donald N. Smith,
Harrah's Operating Company, Inc., The Equitable Life Assurance Society of
the U.S., the members of the Borrower's existing senior management listed
on Schedule 1.1C and their respective Affiliates.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PRICING GRID": the pricing grid attached hereto as Annex A.
"PRO FORMA BALANCE SHEET": as defined in Section 4.1(a).
"PROJECTIONS": as defined in Section 6.2(c).
"PROPERTIES": as defined in Section 4.17.
"PROPERTY": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"RATIO OF CONSOLIDATED EBITDA TO CONSOLIDATED EBITDA TARGET": as at
the last day of any period of four consecutive fiscal quarters, the ratio
of (a) Consolidated EBITDA for such period to (b) the "Consolidated EBITDA
Target" set forth for such period on the Permitted Capital Expenditure
Grid.
"REAL PROPERTY": all real property owned or leased by the Borrower or
any of its Subsidiaries and all improvements thereon.
"RECAPITALIZATION": as defined in the recitals to this Agreement.
"RECOVERY EVENT": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of the
18
Borrower or any of its Subsidiaries which yields gross proceeds to the
Borrower or any of its Subsidiaries in excess of $100,000.
"REFERENCE LENDER": Societe Generale.
"REGISTER": as defined in Section 10.6(d).
"REGULATION G": Regulation G of the Board as in effect from time to
time.
"REGULATION U": Regulation U of the Board as in effect from time to
time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"REINVESTMENT DEFERRED AMOUNT": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Borrower or any of
its Subsidiaries in connection therewith which are not applied to prepay
the Term Loans or reduce the Revolving Credit Commitments pursuant to
Section 2.10(b) as a result of the delivery of a Reinvestment Notice.
"REINVESTMENT EVENT": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"REINVESTMENT NOTICE": a written notice executed by an Authorized
Signatory stating that no Event of Default has occurred and is continuing
and that the Borrower (directly or indirectly through a Subsidiary) intends
and expects to use all or a specified portion of the Net Cash Proceeds of
an Asset Sale or Recovery Event to acquire assets useful in its business.
"REINVESTMENT PREPAYMENT AMOUNT": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.
"REINVESTMENT PREPAYMENT DATE": with respect to any Reinvestment
Event, the earlier of (a) the date occurring 180 days after such
Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire assets useful
in the Borrower's business with all or any portion of the relevant
Reinvestment Deferred Amount.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsection .22, .23, .25, .27 or .28 of PBGC Reg. Section
4043.
19
"REQUIRED LENDERS": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the Total
Revolving Credit Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"REQUIRED PREPAYMENT LENDERS": the Majority Facility Lenders in
respect of each Facility.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"RIC": Restaurant Insurance Corporation, a Vermont corporation, and
its successors.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and participate in
Letters of Credit, in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading "Revolving Credit Commitment"
opposite such Lender's name on Schedule 1.1A, as the same may be changed
from time to time pursuant to the terms hereof. The original amount of the
Total Revolving Credit Commitments is $70,000,000.
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"REVOLVING CREDIT LENDER": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"REVOLVING CREDIT LOANS": as defined in Section 2.4.
"REVOLVING CREDIT PERCENTAGE": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"REVOLVING CREDIT TERMINATION DATE": November 15, 2002.
"REVOLVING EXTENSIONS OF CREDIT": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
and (b) such Lender's Revolving Credit Percentage of the L/C Obligations
then outstanding.
20
"SALE/LEASEBACK TRANSACTION": an arrangement relating to property now
owned or hereafter acquired whereby the Borrower or any of its Subsidiaries
transfers such property to a Person and the Borrower or any of its
Subsidiaries leases it from such Person.
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Agent granting a Lien on any Property of any
Person to secure the obligations and liabilities of any Loan Party under
any Loan Document.
"SENIOR NOTE INDENTURE": the Indenture entered into by the Borrower,
Friendly's Restaurants Franchise, Inc., the Borrower's franchise
Subsidiary, and The Bank of New York, as Trustee, in connection with the
issuance of the Senior Notes, together with all instruments and other
agreements entered into by the Borrower or such Subsidiary in connection
therewith, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with Section 7.9.
"SENIOR NOTE OFFERING": as defined in the recitals to this Agreement.
"SENIOR NOTES": the senior notes due 2007 of the Borrower issued on
the Closing Date pursuant to the Senior Note Indenture.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
"STANDBY LETTER OF CREDIT": an irrevocable letter of credit (other
than a Trade Letter of Credit) for the account of the Borrower and for the
benefit of any holder of obligations of the Borrower or any Subsidiary.
21
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"TERM LOAN LENDERS": the collective reference to the Tranche A Term
Loan Lenders, the Tranche B Term Loan Lenders and the Tranche C Term Loan
Lenders.
"TERM LOANS": the collective reference to the Tranche A Term Loans,
Tranche B Term Loans and the Tranche C Term Loans.
"TOTAL REVOLVING CREDIT COMMITMENTS": at any time, the aggregate
amount of the Revolving Credit Commitments at such time.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the aggregate
amount of the Revolving Extensions of Credit of all the Revolving Credit
Lenders at such time.
"TRADE LETTER OF CREDIT": a documentary, trade or commercial letter
of credit in respect of the purchase of goods or services issued for the
account of the Borrower and for the benefit of any holder of obligations of
the Borrower or any Subsidiary incurred in the ordinary course of business.
"TRANCHE A MATURITY DATE": November 15, 2002.
"TRANCHE A TERM LOAN": as defined in Section 2.1.
"TRANCHE A TERM LOAN COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make a Tranche A Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth under
the heading "Tranche A Term Loan Commitment" opposite such Lender's name on
Schedule 1.1A. The original aggregate amount of the Tranche A Term Loan
Commitments is $40,000,000.
"TRANCHE A TERM LOAN LENDER": each Lender which has a Tranche A Term
Loan Commitment or which has made a Tranche A Term Loan.
"TRANCHE A TERM LOAN PERCENTAGE": as to any Lender at any time, the
percentage which such Lender's Tranche A Term Loan Commitment then
constitutes of the aggregate Tranche A Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche A Term Loans then outstanding constitutes
of the aggregate principal amount of the Tranche A Term Loans then
outstanding).
22
"TRANCHE B MATURITY DATE": November 15, 2004.
"TRANCHE B TERM LOAN": as defined in Section 2.1.
"TRANCHE B TERM LOAN COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make a Tranche B Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth under
the heading "Tranche B Term Loan Commitment" opposite such Lender's name on
Schedule 1.1A. The original aggregate amount of the Tranche B Term Loan
Commitments is $40,000,000.
"TRANCHE B TERM LOAN LENDER": each Lender which has a Tranche B Term
Loan Commitment or which has made a Tranche B Term Loan.
"TRANCHE B TERM LOAN PERCENTAGE": as to any Lender at any time, the
percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of the aggregate Tranche B Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche B Term Loans then outstanding constitutes
of the aggregate principal amount of the Tranche B Term Loans then
outstanding); PROVIDED, that solely for purposes of calculating the amount
of each installment of Tranche B Term Loans (other than the last
installment) payable to a Term Loan Lender pursuant to Section 2.3(b), such
Term Loan Lender's Tranche B Term Loan Percentage shall be calculated
without giving effect to any portion of any prior mandatory or optional
prepayment attributable to such Term Loan Lender's Tranche B Term Loans
which shall have been declined by such Term Loan Lender (or, in the case of
any Term Loan Lender which shall have acquired its Tranche B Term Loans by
assignment from another Person, by such other Person).
"TRANCHE C MATURITY DATE": November 15, 2005.
"TRANCHE C TERM LOAN": as defined in Section 2.1.
"TRANCHE C TERM LOAN COMMITMENT": as to any Lender, the obligation of
such Lender, if any, to make a Tranche C Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth under
the heading "Tranche C Term Loan Commitment" opposite such Lender's name on
Schedule 1.1A. The original aggregate amount of the Tranche C Term Loan
Commitments is $25,000,000.
"TRANCHE C TERM LOAN LENDER": each Lender which has a Tranche C Term
Loan Commitment or which has made a Tranche C Term Loan.
"TRANCHE C TERM LOAN PERCENTAGE": as to any Lender at any time, the
percentage which such Lender's Tranche C Term Loan Commitment then
constitutes of the aggregate Tranche C Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche C Term Loans then outstanding constitutes
of the aggregate principal amount of the Tranche C Term Loans then
outstanding); PROVIDED, that solely for purposes of
23
calculating the amount of each installment of Tranche C Term Loans (other
than the last installment) payable to a Term Loan Lender pursuant to
Section 2.3(c), such Term Loan Lender's Tranche C Term Loan Percentage
shall be calculated without giving effect to any portion of any prior
mandatory or optional prepayment attributable to such Term Loan Lender's
Tranche C Term Loans which shall have been declined by such Term Loan
Lender (or, in the case of any Term Loan Lender which shall have acquired
its Tranche C Term Loans by assignment from another Person, by such other
Person).
"TRANSFEREE": as defined in Section 10.15.
"TYPE": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication
No. 500, as the same may be amended from time to time.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law or shares required by law to be held by foreign nationals
representing not more than 2% of such Capital Stock) is owned by such
Person directly and/or through other Wholly Owned Subsidiaries.
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Guarantor that is a Wholly
Owned Subsidiary of the Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
24
2.1 TERM LOAN COMMITMENTS. Subject to the terms and conditions
hereof, (a) each Tranche A Term Loan Lender severally agrees to make a term loan
(a "TRANCHE A TERM LOAN") to the Borrower on the Closing Date in an amount not
to exceed the amount of the Tranche A Term Loan Commitment of such Lender, (b)
each Tranche B Term Loan Lender severally agrees to make a term loan (a "TRANCHE
B TERM LOAN") to the Borrower on the Closing Date in an amount not to exceed the
amount of the Tranche B Term Loan Commitment of such Lender and (c) each Tranche
C Term Loan Lender severally agrees to make a term loan (a "TRANCHE C TERM
LOAN") to the Borrower on the Closing Date in an amount not to exceed the amount
of the Tranche C Term Loan Commitment of such Lender. The Term Loans may from
time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and
notified to the Agent in accordance with Sections 2.2 and 2.11.
2.2 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
10:00 A.M., New York City time, (a) three Business Days prior to the anticipated
Closing Date if all or any part of the Term Loans are to be initially Eurodollar
Loans or (b) one Business Day prior to the anticipated Closing Date otherwise)
requesting that the Term Loan Lenders make the Term Loans on the Closing Date
and specifying (i) the amount to be borrowed, (ii) whether the Term Loans are to
be initially Eurodollar Loans, ABR Loans or a combination thereof and (iii) if
the Term Loans are to be entirely or partly Eurodollar Loans, the amount
thereof. The Term Loans made on the Closing Date shall initially be ABR Loans,
and no Term Loan may be converted into or continued as a Eurodollar Loan having
an Interest Period in excess of one month prior to the date which is 60 days
after the Closing Date. Upon receipt of such notice the Agent shall promptly
notify each Term Loan Lender thereof. Not later than 12:00 Noon, New York City
time, on the Closing Date each Term Loan Lender shall make available to the
Agent at the Funding Office an amount in immediately available funds equal to
the Term Loan or Term Loans to be made by such Lender. The Agent shall make
available to the Borrower the aggregate of the amounts made available to the
Agent by the Term Loan Lenders in immediately available funds.
2.3 REPAYMENT OF TERM LOANS. (a) The Tranche A Term Loan of each
Tranche A Lender shall mature in 15 consecutive quarterly installments,
commencing on April 15, 1999, to be followed by a final installment on the
Tranche A Maturity Date, each of which shall be in an amount equal to such
Lender's Tranche A Term Loan Percentage multiplied by the amount set forth below
opposite such installment:
INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
April 15, 1999 $1,333,333.33
July 15, 1999 1,333,333.33
October 15, 1999 1,333,333.34
January 15, 2000 2,500,000.00
April 15, 2000 2,500,000.00
July 15, 2000 2,500,000.00
October 15, 2000 2,500,000.00
January 15, 2001 3,000,000.00
April 15, 2001 3,000,000.00
25
July 15, 2001 3,000,000.00
October 15, 2001 3,000,000.00
January 15, 2002 3,500,000.00
April 15, 2002 3,500,000.00
July 15, 2002 3,500,000.00
Tranche A Maturity Date 3,500,000.00
(b) The Tranche B Term Loan of each Tranche B Lender shall mature in
23 consecutive quarterly installments, commencing on April 15, 1999, to be
followed by a final installment on the Tranche B Maturity Date, each of which
shall be in an amount equal to such Lender's Tranche B Term Loan Percentage
multiplied by the amount set forth below opposite such installment:
INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
April 15, 1999 $133,333.33
July 15, 1999 133,333.33
October 15, 1999 133,333.34
January 15, 2000 100,000.00
April 15, 2000 100,000.00
July 15, 2000 100,000.00
October 15, 2000 100,000.00
January 15, 2001 100,000.00
April 15, 2001 100,000.00
July 15, 2001 100,000.00
October 15, 2001 100,000.00
January 15, 2002 100,000.00
April 15, 2002 100,000.00
July 15, 2002 100,000.00
October 15, 2002 100,000.00
January 15, 2003 4,600,000.00
April 15, 2003 4,600,000.00
July 15, 2003 4,600,000.00
October 15, 2003 4,600,000.00
January 15, 2004 5,000,000.00
April 15, 2004 5,000,000.00
July 15, 2004 5,000,000.00
Tranche B Maturity Date 5,000,000.00
(c) The Tranche C Term Loan of each Tranche C Lender shall mature in
27 consecutive quarterly installments, commencing on April 15, 1999, to be
followed by a final installment on the Tranche C Maturity Date, each of which
shall be in an amount equal to such Lender's Tranche C Term Loan Percentage
multiplied by the amount set forth below opposite such installment:
INSTALLMENT PRINCIPAL AMOUNT
----------- ----------------
26
April 15, 1999 $83,333.33
July 15, 1999 83,333.33
October 15, 1999 83,333.34
January 15, 2000 62,500.00
April 15, 2000 62,500.00
July 15, 2000 62,500.00
October 15, 2000 62,500.00
January 15, 2001 62,500.00
April 15, 2001 62,500.00
July 15, 2001 62,500.00
October 15, 2001 62,500.00
January 15, 2002 62,500.00
April 15, 2002 62,500.00
July 15, 2002 62,500.00
October 15, 2002 62,500.00
January 15, 2003 62,500.00
April 15, 2003 62,500.00
July 15, 2003 62,500.00
October 15, 2003 62,500.00
January 15, 2004 62,500.00
April 15, 2004 62,500.00
July 15, 2004 62,500.00
October 15, 2004 62,500.00
January 15, 2005 5,875,000.00
April 15, 2005 5,875,000.00
July 15, 2005 5,875,000.00
Tranche C Maturity Date 5,875,000.00
2.4 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("REVOLVING CREDIT LOANS") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the L/C Obligations then outstanding does not exceed the
amount of such Lender's Revolving Credit Commitment; PROVIDED, HOWEVER, that in
no event shall the aggregate principal amount of Revolving Credit Loans exceed
$55,000,000 less the amount of any reduction in the Revolving Credit Commitments
pursuant to Sections 2.8 and 2.10. During the Revolving Credit Commitment
Period the Borrower may use the Revolving Credit Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof. The Revolving Credit Loans
may from time to time be Eurodollar Loans or ABR Loans, as determined by the
Borrower and notified to the Agent in accordance with Sections 2.5 and 2.13,
PROVIDED that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit Loans
on the Revolving Credit Termination Date.
27
2.5 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, PROVIDED that the Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
12:00 Noon, New York City time, (a) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior
to the requested Borrowing Date, in the case of ABR Loans), specifying (i) the
amount and Type of Revolving Credit Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Loan and the respective lengths of the initial Interest
Period therefor. Any Revolving Credit Loans made on the Closing Date shall
initially be ABR Loans, and no Revolving Credit Loan may be made as, converted
into or continued as a Eurodollar Loan having an Interest Period in excess of
one month prior to the date which is 60 days after the Closing Date. Each
borrowing under the Revolving Credit Commitments shall be in an amount equal to
(x) in the case of ABR Loans, $1,000,000 or a whole multiple thereof (or, if the
then aggregate Available Revolving Credit Commitments are less than $1,000,000,
such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a
whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice
from the Borrower, the Agent shall promptly notify each Revolving Credit Lender
thereof. Each Revolving Credit Lender will make the amount of its pro rata
share of each borrowing available to the Agent for the account of the Borrower
at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing
Date requested by the Borrower in funds immediately available to the Agent.
Such borrowing will then be made available to the Borrower by the Agent
crediting the account of the Borrower on the books of the Funding Office with
the aggregate of the amounts made available to the Agent by the Revolving Credit
Lenders and in like funds as received by the Agent.
2.6 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower hereby
unconditionally promises to pay to the Agent for the account of the appropriate
Revolving Credit Lender or Term Loan Lender, as the case may be, (i) the then
unpaid principal amount of each Revolving Credit Loan of such Revolving Credit
Lender on the Revolving Credit Termination Date (or such earlier date on which
the Loans become due and payable pursuant to Section 8) and (ii) the principal
amount of each Term Loan of such Term Loan Lender in installments according to
the amortization schedules set forth in Section 2.3 (or on such earlier date on
which the Loans become due and payable pursuant to Section 8). The Borrower
hereby further agrees to pay interest on the unpaid principal amount of the
Loans from time to time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Agent, on behalf of the Borrower, shall maintain the Register
pursuant to Section 10.6(e), and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Loan made hereunder and any Note
evidencing such Loan, the Type thereof and each Interest Period applicable
thereto, (ii) the amount of any principal or interest
28
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Agent hereunder
from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.6(b) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or the Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to such Borrower by
such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by any
Lender, the Borrower will execute and deliver to such Lender a promissory note
of the Borrower evidencing any Term Loans or Revolving Credit Loans, as the case
may be, of such Lender, substantially in the forms of Exhibit G-1 or G-2,
respectively, with appropriate insertions as to date and principal amount.
2.7 COMMITMENT FEES, ETC. (a) The Borrower agrees to pay to the Agent
for the account of each Revolving Credit Lender a commitment fee for the period
from and including the Closing Date to the last day of the Revolving Credit
Commitment Period, computed at the Commitment Fee Rate on the average daily
amount of the Available Revolving Credit Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the fifteenth
day of each January, April, July and October and on the Revolving Credit
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(b) The Borrower agrees to pay to the Agent the fees in the amounts
and on the dates previously agreed to, and from time to time agreed to, in
writing by the Borrower and the Agent.
2.8 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than three Business Days' notice to
the Agent, to terminate the Revolving Credit Commitments or, from time to time,
to reduce the amount of the Revolving Credit Commitments; PROVIDED that no such
termination or reduction of Revolving Credit Commitments shall be permitted if,
after giving effect thereto and to any prepayments of the Revolving Credit Loans
made on the effective date thereof, the Total Revolving Extensions of Credit
would exceed the Total Revolving Credit Commitments. Any such reduction shall
be in an amount equal to $1,000,000, or a whole multiple thereof, and shall
reduce permanently the Revolving Credit Commitments then in effect.
2.9 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Agent at least three Business Days prior
thereto in the case of Eurodollar Loans and at least one Business Day prior
thereto in the case of ABR Loans, which notice shall specify the date and amount
of prepayment and whether the prepayment is of Eurodollar Loans or ABR Loans;
PROVIDED, that if a Eurodollar Loan is prepaid on any day
29
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.19. Upon receipt of any
such notice the Agent shall promptly notify each relevant Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with (except in the case of
Revolving Credit Loans which are ABR Loans) accrued interest to such date on the
amount prepaid. Partial prepayments of Term Loans and Revolving Credit Loans
shall be in an aggregate principal amount of $1,000,000 or a whole multiple
thereof.
2.10 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS. (a) Unless the
Required Prepayment Lenders shall otherwise agree, if any Indebtedness shall be
issued or Incurred by the Borrower or any of its Subsidiaries (excluding any
Indebtedness Incurred in accordance with Section 7.2 as in effect on the date of
this Agreement), an amount equal to 100% of the Net Cash Proceeds thereof shall
be applied on the date of such issuance or Incurrence toward the prepayment of
the Term Loans and the reduction of the Revolving Credit Commitments as set
forth in Section 2.10(d); PROVIDED, HOWEVER, that if any such subordinated
Indebtedness in an aggregate principal amount not to exceed $100,000,000 shall
be issued or Incurred by the Borrower on terms and conditions (including,
without limitation, terms of subordination) satisfactory to the Required
Lenders, as evidenced by their prior written consent, which consent shall not be
unreasonably withheld, an amount equal to 50% of the Net Cash Proceeds thereof
shall be applied on the date of such issuance or Incurrence toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date, the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.10(d); PROVIDED
that, notwithstanding the foregoing, (i) the Borrower may exclude from the
requirements of this paragraph the first $7,500,000 of aggregate Net Cash
Proceeds from Asset Sales and Recovery Events and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if,
for any fiscal year of the Borrower commencing with the fiscal year ending
December 31, 1998, there shall be Excess Cash Flow, the Borrower shall apply the
ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans
as set forth in Section 2.10(d) on a date no later than five days after the
earlier of (i) the date on which the financial statements of the Borrower
referred to in Section 6.1(a), for the fiscal year with respect to which such
prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 2.10 shall be applied, FIRST, to
the prepayment of the Term Loans and, SECOND, to reduce permanently the
Revolving Credit Commitments; PROVIDED
30
that no Excess Cash Flow shall be applied to reduce the Revolving Credit
Commitments. Any such reduction of the Revolving Credit Commitments shall be
accompanied by prepayment of the Revolving Credit Loans to the extent, if any,
that the Total Revolving Extensions of Credit exceed the amount of the Total
Revolving Credit Commitments as so reduced, PROVIDED that if the aggregate
principal amount of Revolving Credit Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Agent. The application of any
prepayment pursuant to Section 2.10 shall be made first to ABR Loans and second
to Eurodollar Loans. Each prepayment of the Loans under Section 2.10 (except in
the case of Revolving Credit Loans that are ABR Loans) shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
2.11 CONVERSION AND CONTINUATION OPTIONS.(a) The Borrower may elect
from time to time to convert Eurodollar Loans to ABR Loans by giving the Agent
at least two Business Days' prior irrevocable notice of such election, PROVIDED
that any such conversion of Eurodollar Loans may only be made on the last day of
an Interest Period with respect thereto. The Borrower may elect from time to
time to convert ABR Loans to Eurodollar Loans by giving the Agent at least three
Business Days' prior irrevocable notice of such election (which notice shall
specify the length of the initial Interest Period therefor), PROVIDED that no
ABR Loan under a particular Facility may be converted into a Eurodollar Loan (i)
when any Event of Default has occurred and is continuing and the Agent has or
the Majority Facility Lenders in respect of such Facility have determined in its
or their sole discretion not to permit such conversions or (ii) after the date
that is one month prior to the final scheduled termination or maturity date of
such Facility. Upon receipt of any such notice the Agent shall promptly notify
each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Agent, in accordance with the applicable provisions of
the term "Interest Period" set forth in Section 1.1, of the length of the next
Interest Period to be applicable to such Loans, PROVIDED that no Eurodollar Loan
under a particular Facility may be continued as such (i) when any Event of
Default has occurred and is continuing and the Agent has or the Majority
Facility Lenders in respect of such Facility have determined in its or their
sole discretion not to permit such continuations or (ii) after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility, and PROVIDED, FURTHER, that if the Borrower shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Agent shall promptly
notify each relevant Lender thereof.
2.12 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF EURODOLLAR TRANCHES.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans
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comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than ten Eurodollar
Tranches shall be outstanding at any one time.
2.13 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of the Loans, the rate applicable to ABR Loans
under the relevant Facility PLUS 2% or (y) in the case of Reimbursement
Obligations, the rate applicable to ABR Loans under the Revolving Credit
Facility PLUS 2%, and (ii) if all or a portion of any interest payable on any
Loan or Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate applicable to ABR Loans under the relevant Facility
PLUS 2% (or, in the case of any such other amounts that do not relate to a
particular Facility, the ABR PLUS 2.75%), in each case, with respect to clauses
(i) and (ii) above, from the date of such non-payment until such amount is paid
in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this Section
2.13 shall be payable from time to time on demand.
2.14 COMPUTATION OF INTEREST AND FEES. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR Loans
the rate of interest on which is calculated on the basis of the Prime Rate, the
interest thereon shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed. The Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error. The Agent shall, at the
request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
Section 2.13(a).
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2.15 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Majority Facility
Lenders in respect of the relevant Facility that the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately
and fairly reflect the actual cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans
during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the relevant Lenders as soon as practicable thereafter. If such notice is given
(x) any Eurodollar Loans under the relevant Facility requested to be made on the
first day of such Interest Period shall be made as ABR Loans, (y) any Loans
under the relevant Facility that were to have been converted on the first day of
such Interest Period to Eurodollar Loans shall be continued as ABR Loans and (z)
any outstanding Eurodollar Loans under the relevant Facility shall be converted,
on the first day of such Interest Period, to ABR Loans. Until such notice has
been withdrawn by the Agent, no further Eurodollar Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurodollar Loans.
2.16 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Tranche A Term Loan Percentages,
Tranche B Term Loan Percentages, Tranche C Term Loan Percentages or Revolving
Credit Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Loan Lenders (except as otherwise provided in Section 2.16(d)).
The amount of each principal prepayment of the Term Loans shall be applied to
reduce the then remaining installments of the Tranche A Term Loans, Tranche B
Term Loans and Tranche C Term Loans, as the case may be, in the inverse order of
maturity. Amounts prepaid on account of the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
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(d) Notwithstanding anything to the contrary in Section 2.10 or
elsewhere in this Section 2.16, so long as any Tranche A Term Loans are
outstanding, each Tranche B Term Loan Lender and each Tranche C Term Loan Lender
may, at its option, decline the portion of any optional prepayment or mandatory
payment applicable to the Tranche B Term Loans or, as the case may be, Tranche C
Term Loans of such Lender; accordingly, with respect to the amount of any
mandatory prepayment described in Section 2.10 that is allocated to Tranche B
Term Loans or, as the case may be, Tranche C Term Loans (such amount, the
"TRANCHE B PREPAYMENT AMOUNT" or, as the case may be, the "TRANCHE C PREPAYMENT
AMOUNT"), at any time when Tranche A Term Loans remain outstanding, the Borrower
will, in lieu of applying such amount to the prepayment of Tranche B Term Loans
or, as the case may be, Tranche C Term Loans, as provided in paragraph Section
2.10(d), on the date specified in Section 2.10 for such prepayment, give the
Agent telephonic notice (promptly confirmed in writing) requesting that the
Agent prepare and provide to each Tranche B Term Loan Lender and each Tranche C
Term Loan Lender a notice (each, a "PREPAYMENT OPTION NOTICE") as described
below. As promptly as practicable after receiving such notice from the
Borrower, the Agent will send to each Tranche B Term Loan Lender and each
Tranche C Term Loan Lender a Prepayment Option Notice, which shall be in the
form of Exhibit H, and shall include an offer by the Borrower to prepay on the
date (each, a "PREPAYMENT DATE") that is 10 Business Days after the date of the
Prepayment Option Notice, the Tranche B Term Loans or, as the case may be,
Tranche C Term Loans of such Lender by an amount equal to the Tranche B
Prepayment Amount or, as the case may be, Tranche C Prepayment Amount indicated
in such Lender's Prepayment Option Notice. On the Prepayment Date, (A) the
Borrower shall pay to the Agent the aggregate amount necessary to prepay that
portion of the outstanding Tranche B Term Loans and Tranche C Term Loans in
respect of which Tranche B Term Loan Lenders and Tranche C Term Loan Lenders
have accepted prepayment as described above (such Lenders, the "ACCEPTING
LENDERS"), and such amount shall be applied to reduce the Tranche B Prepayment
Amounts and the Tranche C Prepayment Amounts, respectively, with respect to each
Accepting Lender and (B) the Borrower shall pay to the Agent an amount equal to
the portion of the Tranche B Prepayment Amount and the Tranche C Prepayment
Amount not accepted by the Accepting Lenders, and such amount shall be applied
to the prepayment of the Tranche A Term Loans.
(e) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Agent, for the account of the
Lenders, at the Payment Office, in Dollars and in immediately available funds.
The Agent shall distribute such payments to the Lenders promptly upon receipt in
like funds as received. If any payment hereunder (other than payments on the
Eurodollar Loans) becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day. If any
payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day. In the case of any extension of any payment
of principal pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.
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(f) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its share of such borrowing available to the Agent, the Agent may
assume that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts owing under this Section 2.16(f) shall
be conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Agent by such Lender within three
Business Days of such Borrowing Date, the Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans under the relevant Facility, on demand, from the Borrower.
(g) Unless the Agent shall have been notified in writing by the
Borrower prior to the date of any payment being made hereunder that the Borrower
will not make such payment to the Agent, the Agent may assume that the Borrower
is making such payment, and the Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
PRO RATA shares of a corresponding amount. If such payment is not made to the
Agent by the Borrower within three Business Days of such required date, the
Agent shall be entitled to recover, on demand, from each Lender to which any
amount which was made available pursuant to the preceding sentence, such amount
with interest thereon at the rate per annum equal to the daily average Federal
Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the
Agent or any Lender against the Borrower.
2.17 REQUIREMENTS OF LAW. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.18 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the actual cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or
35
maintaining Eurodollar Loans or issuing or participating in Letters of Credit,
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender, within 15 days of
demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable; PROVIDED that the Borrower shall
not be required to compensate a Lender pursuant to this paragraph for any
amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor;
and PROVIDED FURTHER that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.17, it shall promptly notify the
Borrower (with a copy to the Agent) of the event by reason of which it has
become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction; PROVIDED
that the Borrower shall not be required to compensate a Lender pursuant to this
paragraph for any amounts incurred more than six months prior to the date that
such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor; and PROVIDED FURTHER that, if the circumstances giving
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) Any Lender claiming reimbursement or compensation under this
Section 2.17 shall deliver to the Borrower a certificate (with a copy to the
Agent) setting forth in reasonable detail the basis for such claim and a
calculation of the amount payable to such Lender in connection therewith. Such
certificate shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section 2.17 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.18 TAXES. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction 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 net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Agent or any Lender as a result of a present or
former connection between the Agent or such Lender and the jurisdiction of the
36
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Lender having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("NON-EXCLUDED TAXES") or Other Taxes are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder, 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 Non-Excluded Taxes and Other Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
PROVIDED, HOWEVER, that the Borrower shall not be required to increase any such
amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that
are attributable to such Lender's failure to comply with the requirements of
paragraph (d) or (e) of this Section 2.18 or (ii) that are United States
withholding taxes imposed on amounts payable to such Lender at the time the
Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this Section 2.18(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Agent for the account of the Agent or relevant 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 Non-Excluded Taxes or Other
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 2.18 shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(d) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "NON-U.S. LENDER") shall
deliver to the Borrower and the Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or, in
the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding
tax under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest" a statement substantially in the form of Exhibit I and a
Form W-8, or any subsequent versions thereof or successors thereto properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In
37
addition, each Non-U.S. Lender shall deliver such forms or successors thereto
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower
at any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.18(d), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.18(d) that
such Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate, PROVIDED that such Lender is legally entitled
to complete, execute and deliver such documentation and in such Lender's
reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
2.19 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
OVER (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section 2.21
submitted to the Borrower by the Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.20 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.17 or 2.18(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; PROVIDED that such
38
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and PROVIDED, FURTHER, that nothing in this Section 2.20 shall
affect or postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to Section 2.17 or 2.18(a).
2.21 REPLACEMENT OF LENDERS UNDER CERTAIN CIRCUMSTANCES. The Borrower
shall be permitted to replace any Lender which requests reimbursement for
amounts owing pursuant to Section 2.17 or 2.18 with a replacement financial
institution; PROVIDED that (a) such replacement does not conflict with any
Requirement of Law, (b) no Event of Default shall have occurred and be
continuing at the time of such replacement, (c) prior to any such replacement,
such Lender shall have taken no action under Section 2.20 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.17 or 2.18,
(d) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (e) the Borrower shall be liable to such replaced Lender under
Section 2.19 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(f) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Agent, (g) the replaced Lender shall be obligated
to make such replacement in accordance with the provisions of Section 10.6
(provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (h) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.17 or 2.18, as the case may be, and (i) any such
replacement shall not be deemed to be a waiver of any rights which the Borrower,
the Agent or any other Lender shall have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue Letters of Credit for the
account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Issuing Lender; PROVIDED that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment, (ii) the L/C Obligations in respect
of all Standby Letters of Credit would exceed $20,000,000, (iii) the L/C
Obligations in respect of all Trade Letters of Credit would exceed $5,000,000 or
(iv) the aggregate amount of the Available Revolving Credit Commitments would be
less than zero. Each Letter of Credit shall (i) be denominated in Dollars and
(ii) expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date which is 30 days prior to the Revolving Credit
Termination Date, PROVIDED that any Standby Letter of Credit with a one-year
term may provide for the renewal thereof for additional one-year periods (which
shall in no event extend beyond the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New York.
39
(c) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Agent, which shall in turn
promptly furnish to the Lenders, notice of the issuance of each Letter of Credit
(including the amount thereof).
3.3 COMMISSIONS, FEES AND OTHER CHARGES. (a) The Borrower will pay a
commission on the undrawn amount of all outstanding Letters of Credit at a per
annum rate equal to the Applicable Margin then in effect with respect to
Eurodollar Loans under the Revolving Credit Facility, shared ratably among the
Revolving Credit Lenders and payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date. In addition, the Borrower shall pay to
the Issuing Lender for its own account a fronting fee of 1/4 of 1% per annum,
payable quarterly in arrears on each L/C Fee Payment Date after the Issuance
Date.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C PARTICIPATIONS. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving
40
Credit Percentage of the amount of such draft, or any part thereof, which is not
so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii)the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans under the Revolving Credit Facility. A certificate of
the Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its PRO
RATA share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its PRO RATA share thereof;
PROVIDED, HOWEVER, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be made
to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this Section from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until the date that is two
Business Days after such draft is so paid at the rate set forth in Section
2.13(b) and thereafter until payment in full at the rate set forth in Section
2.13(c). Each drawing under any Letter of Credit shall (unless an event of the
type described in clause (i) or (ii) of Section 8(f) shall have occurred and be
continuing with respect to the Borrower, in which case the procedures specified
in Section 3.4 for funding by L/C Participants shall apply) constitute a request
by the Borrower to the Agent for a borrowing pursuant to Section 2.5 of ABR
Loans in the amount of such drawing. The Borrowing Date with respect to such
borrowing shall be the date of such drawing.
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3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions that resulted from the gross negligence or willful misconduct of the
Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 APPLICATIONS. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, the
Borrower hereby represents and warrants to the Agent and each Lender that:
4.1 FINANCIAL CONDITION. (a) The unaudited PRO FORMA consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at September
28, 1997 (including the notes thereto) (the "PRO FORMA BALANCE SHEET"), copies
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Recapitalization, (ii) the use of proceeds of the Loans to be made, and the
Senior Notes and Common Stock to be issued, on the Closing Date and (iii) the
payment of fees and expenses in connection with the foregoing. The Pro
42
Forma Balance Sheet has been prepared based on the best information available to
the Borrower as of the date of delivery thereof, and presents fairly on a PRO
FORMA basis the estimated financial position of Borrower and its consolidated
Subsidiaries as at September 28, 1997, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at January 1, 1995, December 31, 1995 and December
29, 1996, and the related consolidated statements of income and of cash flows
for the fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from Arthur Andersen LLP, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at such
dates, and the consolidated results of its operations and its consolidated cash
flows for the respective fiscal years then ended. The unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at
September 28, 1997, and the related unaudited consolidated statements of income
and cash flows for the nine-month period ended on such date, present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the nine-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
the aforementioned firm of accountants and disclosed therein). The Borrower and
its Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, which are not reflected in the most recent financial
statements referred to in this paragraph (b). During the period from December
29, 1996 to and including the date hereof there has been no Disposition by the
Borrower or any of its consolidated Subsidiaries of any material part of its
business or Property, other than its sale of Properties to DavCo Restaurants,
Inc. on July 14, 1997.
4.2 NO CHANGE. Since September 28, 1997 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law, except, in the case of clauses (b), (c) and (d), to the extent that the
failure to do so could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform
43
the Loan Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder. Each Loan Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party and, in the case of the Borrower, to authorize the borrowings on
the terms and conditions of this Agreement. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the
Recapitalization and the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) consents, authorizations, filings and notices described in
Schedule 4.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 4.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party thereto. This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party thereto, enforceable against each such Loan Party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Borrower or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.6 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby or (b) as to which there is a reasonable
possibility of an adverse determination and which could reasonably be expected
to have a Material Adverse Effect.
4.7 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each of
its Subsidiaries has title in fee simple to, or a valid leasehold interest in,
all its Real Property, and good title to, or a valid leasehold interest in, all
its other Property, except for such defects in title as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and none of such Property is subject to any Lien except as permitted
44
by Section 7.3. The Borrower has previously furnished to the Agent a list of
all Real Property and such list, and the information set forth thereon, is true
and complete in all material respects.
4.9 INTELLECTUAL PROPERTY. Each of the Borrower and each of its
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted, except for such
Intellectual Property the failure to so own or be licensed to use could not
reasonably be expected to have a Material Adverse Effect. To the Borrower's
knowledge, no material claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity
or effectiveness of any Intellectual Property, nor does Borrower know of any
valid basis for any such claim. To the Borrower's knowledge, the use of
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person in any material respect.
4.10 TAXES. Each of the Borrower and each of its Subsidiaries has
filed or caused to be filed all federal, state and other material tax returns
which are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
Property and all other taxes, fees or other charges imposed on it or any of its
Property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U as now
and from time to time hereafter in effect or for any purpose which violates the
provisions of such Regulations of the Board. If requested by any Lender or the
Agent, the Borrower will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form
U-1 referred to in Regulation G or Regulation U, as the case may be.
4.12 LABOR MATTERS. There are no strikes or other labor disputes
against the Borrower or any of its Subsidiaries pending or, to the knowledge of
the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from
the Borrower or any of its Subsidiaries on account of employee health and
welfare insurance that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect if not paid have been paid or accrued
as a liability on the books of the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has
45
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
which has resulted or could reasonably be expected to result in a material
liability under ERISA, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 SUBSIDIARIES. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date hereof.
4.16 USE OF PROCEEDS. The proceeds of the Term Loans, together with
the proceeds of the Offerings, shall be used to repay all outstanding
obligations under, and terminate, the Existing Credit Facility and to pay
related fees and expenses. The proceeds of the Revolving Credit Loans and the
Letters of Credit shall be used for general corporate purposes.
4.17 ENVIRONMENTAL MATTERS.
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "PROPERTIES") do not contain, and to
the Borrower's knowledge have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under circumstances which
(i) constitute or constituted a violation of, or (ii) could give rise to
liability under, any Environmental Law, except in either case insofar as such
violation or liability, or any aggregation thereof, could not reasonably be
expected to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in
material compliance, and have to the Borrower's knowledge in the last five years
been in material compliance, with all applicable Environmental Laws, and to the
Borrower's knowledge there is no contamination at, under or about the Properties
or violation of any Environmental Law with respect to the Properties or the
business operated by the Borrower or any of its Subsidiaries (the "BUSINESS")
which to the Borrower's knowledge could materially interfere
46
with the continued operation of the Properties or materially impair the fair
saleable value thereof. Neither the Borrower nor any of its Subsidiaries has
assumed any material liability of any other Person under Environmental Laws.
(c) Neither the Borrower nor any of its Subsidiaries has received or
is aware of any written notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower have knowledge or reason to believe that any such notice
will be received or is being threatened, except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that could reasonably be expected to result in the payment of a Material
Environmental Amount.
(d) Materials of Environmental Concern have not to the Borrower's
knowledge been transported or disposed of from the Properties in violation of,
or in a manner or to a location which could give rise to liability under, any
Environmental Law, nor to the Borrower's knowledge have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on or
under any of the Properties in violation of, or in a manner that could give rise
to liability under, any applicable Environmental Law, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, could not reasonably be expected to result in the payment of a Material
Environmental Amount.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business, except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, could not reasonably be expected to result in the payment
of a Material Environmental Amount.
(f) To the Borrower's knowledge, there has been no release or threat
of release of Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any Subsidiary in
connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws, except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, could not reasonably
be expected to result in the payment of a Material Environmental Amount.
4.18 ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished to the Agent or the Lenders or any of them,
by or on behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished,
considering each in the context in which it was made and taken as a whole with
all other statements and information provided, any untrue statement of a
material fact or
47
omitted to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which made, not
misleading; PROVIDED that the Borrower's representation and warranty as to the
projections and PRO FORMA financial information contained in the materials
referenced above is based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact, that actual results during the period
or periods covered by such financial information may differ from the projected
results set forth therein by a material amount and that no assurance can be
given that such projected results will be realized. There is no fact known to
any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan Documents
or in any other documents, certificates and statements furnished to the Agent
and the Lenders for use in connection with the transactions contemplated hereby
and by the other Loan Documents.
4.19 SECURITY DOCUMENTS. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Collateral described
therein and proceeds thereof. In the case of the Pledged Stock described in the
Guarantee and Collateral Agreement, when stock certificates representing such
Pledged Stock are delivered to the Agent, and in the case of the other
Collateral described in the Guarantee and Collateral Agreement, when financing
statements in appropriate form are filed in the offices specified on
Schedule 4.19(a), the Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement).
(b) Each of the Mortgages is effective to create in favor of the
Agent, for the benefit of the Lenders, a legal, valid and enforceable Lien on
the Mortgaged Properties described therein and proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 4.19(b), each such
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties
and the proceeds thereof, as security for the Obligations (as defined in the
relevant Mortgage).
4.20 SOLVENCY. Each Loan Party is, and after giving effect to the
Recapitalization and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be, Solvent.
4.21 REGULATION H. No Mortgage encumbers improved Real Property which
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act
of 1968.
4.22 MATERIAL CONTRACTS. Set forth on Schedule 4.22 is a complete
list as of the date hereof of all material agreements, instruments and
undertakings to which the
48
Borrower or any of its Subsidiaries is a party or by which any of their
respective Properties are bound.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) LOAN DOCUMENTS. The Agent shall have received (i) this Agreement,
executed and delivered by a duly authorized officer of the Borrower, (ii)
the Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of the Borrower and each Guarantor, (iii) Mortgages
covering each of the Mortgaged Properties, each executed and delivered by a
duly authorized officer of each party thereto, and (iv) for the account of
each relevant Lender, Notes conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Borrower.
(b) OFFERINGS. Each of the Offerings shall have been consummated, in
each case on terms and conditions reasonably satisfactory to the Lenders,
for gross cash proceeds of at least $275,000,000 of which not less than
$75,000,000 shall consist of the gross cash proceeds from the Common Stock
Offering.
(c) APPROVALS. All governmental and third party approvals (including
landlords' and other consents) necessary in connection with the
Recapitalization, the continuing operations of the Borrower and its
Subsidiaries and the transactions contemplated hereby shall have been
obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Recapitalization or the financing contemplated
hereby.
(d) RELATED AGREEMENTS. The Agent shall have received (in a form
reasonably satisfactory to it), with a copy for each Lender, true and
correct copies, certified as to authenticity by the Borrower, of the Senior
Note Indenture and such other documents or instruments as may be reasonably
requested by the Agent, including, without limitation, a copy of any other
debt instrument, security agreement or other material contract to which the
Loan Parties may be a party.
(e) EXISTING CREDIT FACILITY. The Agent shall have received evidence
satisfactory to it that the Existing Credit Facility shall be
simultaneously terminated or assigned to the Lenders, all amounts
thereunder shall be simultaneously paid in full or assigned to the Lenders
and arrangements satisfactory to the Agent shall have been made for the
termination of Liens and security interests granted in connection
therewith.
49
(f) FEES. The Lenders and the Agent shall have received all fees
required to be paid, and all expenses for which invoices have been
presented, on or before the Closing Date.
(g) BUSINESS PLAN. The Lenders shall have received a satisfactory
business plan for fiscal years 1997 through 2002 and a satisfactory written
analysis of the business and prospects of the Borrower and its Subsidiaries
for the period from the Closing Date through December 31, 2002.
(h) SOLVENCY ANALYSIS. The Lenders shall have received a reasonably
satisfactory solvency analysis certified by the chief financial officer of
the Borrower which shall document the solvency of the Borrower and its
Subsidiaries considered as a whole after giving effect to the transactions
contemplated hereby.
(i) BUDGET. The Lenders shall have received a budget for the Borrower
and its Subsidiaries for the 1998 fiscal year.
(j) LIEN SEARCHES. The Agent shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Loan
Parties are located, and such search shall reveal no liens on any of the
assets of the Borrower or its Subsidiaries except for liens permitted by
Section 7.3 and liens to be terminated on the Closing Date.
(k) EXPENSES. The Agent shall have received satisfactory evidence
that the fees and expenses to be incurred in connection with the
Recapitalization and the financing thereof shall not exceed $25,000,000.
(l) CLOSING CERTIFICATE. The Agent shall have received, with a
counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments.
(m) LEGAL OPINIONS. The Agent shall have received the following
executed legal opinions:
(i) the legal opinion of Mayer, Brown & Platt, special counsel
to the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-1;
(ii) the legal opinion of Larry W. Browne, Esq., General Counsel
of the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-2;
(iii) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the Offerings
accompanied by a reliance letter in favor of the Lenders; and
(iv) the legal opinion of Choate, Hall & Stewart, special
Massachusetts counsel to the Borrower and its Subsidiaries.
50
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require.
(n) PLEDGED STOCK; STOCK POWERS. The Agent shall have received the
certificates representing the shares of Capital Stock pledged pursuant to
the Guarantee and Collateral Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof.
(o) FILINGS, REGISTRATIONS AND RECORDINGS. Each document (including,
without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to
create in favor of the Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted by
Section 7.3), shall be in proper form for filing, registration or
recordation.
(p) MORTGAGES, ETC. (i) The Agent shall have received, and the title
insurance company issuing the policy referred to in Section 5.1(p)(ii) (the
"TITLE INSURANCE COMPANY") shall have received to the extent reasonably
requested by the Agent, maps or plats of an as-built survey of the sites of
the Mortgaged Properties listed on Schedule 5.1(p) (the "MAJOR MORTGAGED
PROPERTIES") certified to the Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the Agent and the
Title Insurance Company by an independent professional licensed land
surveyor satisfactory to the Agent and the Title Insurance Company, which
maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title
Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1992,
and, without limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the following: (A) the
locations on such sites of all the buildings, structures and other
improvements and the established building setback lines; (B) the lines of
streets abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the site is described as being on a filed
map, a legend relating the survey to said map; and (G) the flood zone
designations, if any, in which the Major Mortgaged Properties are located.
(ii) The Agent shall have received in respect of each Major Mortgaged
Property a mortgagee's title insurance policy (or policies) or marked up
unconditional binder for such insurance. Each such policy shall (A) be in
an amount equal to the fair market value of such Major Mortgaged Property;
(B) be issued at ordinary rates; (C) insure that the Mortgage insured
thereby creates a valid first Lien on such Major Mortgaged Property free
and clear of all defects and encumbrances, except as disclosed therein; (D)
name the Agent for the benefit of the Lenders as the insured
51
thereunder; (E) be in the form of 1992 ALTA Loan Policy (or equivalent
policies); (F) contain such endorsements and affirmative coverage as the
Agent may reasonably request; and (G) be issued by title companies
satisfactory to the Agent (including any such title companies acting as
co-insurers or reinsurers, at the option of the Agent). The Agent shall
have received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all related
expenses, if any, have been paid.
(iii) If reasonably requested by the Agent, the Agent shall have
received (A) a policy of flood insurance which (1) covers any parcel of
improved Real Property located in a flood hazard zone and which is
encumbered by any Mortgage, (2) is written in an amount not less than the
outstanding principal amount of the indebtedness secured by such Mortgage
which is reasonably allocable to such Real Property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (3)
has a term ending not later than the maturity of the Indebtedness secured
by such Mortgage; and (B) confirmation that the Borrower has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the Board.
(iv) The Agent shall have received a copy of all recorded documents
referred to, or listed as exceptions to title in, the title policy or
policies referred to in Section 5.1(p)(ii).
(q) INSURANCE. The Agent shall have received insurance certificates
satisfying the requirements of Section 6.5.
(r) APPRAISALS. The Agent shall have received and be satisfied with
the form and content of asset appraisal reports with respect to the
Property owned by the Borrower and its Subsidiaries.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date, except for representations and
warranties expressly stated to relate to a specific earlier date, in which
case such representations and warranties shall continue to be true and
correct in all material respects as of such earlier date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
52
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Agent hereunder, the Borrower shall and shall cause
each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to the Agent:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by Arthur Andersen LLP or other independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by an Authorized Signatory as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein). Notwithstanding the foregoing, it is understood and
agreed that so long as the Borrower is required to file Forms 10-K and 10-Q (or
any successor forms) with the Securities and Exchange Commission (or any
successor agency), the Borrower may deliver copies of such Forms with respect to
the relevant time periods in lieu of the deliveries specified in Sections 6.1(a)
and (b).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Agent or, in the
case of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
53
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of an Authorized Signatory
stating that, to the best of such Authorized Signatory's knowledge, each
Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Authorized Signatory
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate containing all
information necessary for determining compliance by the Borrower and its
Subsidiaries with the provisions of this Agreement referred to therein as
of the last day of the fiscal quarter or fiscal year of the Borrower, as
the case may be, and (y) to the extent not previously disclosed to the
Agent, a listing of any county or state within the United States where any
Loan Party keeps inventory or equipment and of any Intellectual Property
acquired by any Loan Party since the date of the most recent list delivered
pursuant to this clause (y) (or, in the case of the first such list so
delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45 days after
the end of each fiscal year of the Borrower, a detailed consolidated budget
for the following fiscal year (including a projected consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of the following
fiscal year, and the related consolidated statements of projected cash
flow, projected changes in financial position and projected income), and,
as soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"PROJECTIONS"), which Projections shall in each case be accompanied by a
certificate of an Authorized Signatory stating that such Projections are
based on reasonable estimates, information and assumptions and that such
Authorized Signatory has no reason to believe that such Projections are
incorrect or misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year;
(e) no later than ten Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior Note
Indenture;
(f) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to the holders of any class
of its debt securities or public equity securities and within five days
after the same are filed, copies of all financial statements and reports
which the Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
54
(g) within ten days of receipt, copies of any management letter issued
or provided by the auditors of the Borrower or any Subsidiary; and
(h) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. (a) Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all
its material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be, and (b) pay
when due all real estate taxes, assessments and other charges assessed or levied
against any Real Property.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE, ETC. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; (b) comply with all Contractual
Obligations and Requirements of Law (including, without limitation, those
relating to Real Property) except to the extent that failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all Property useful
and necessary in its business (including, without limitation, all Real Property)
in good working order and condition, ordinary wear and tear excepted.
(b) Maintain with financially sound and reputable insurance companies
insurance on all its Property (including, without limitation, all Inventory,
Equipment and Vehicles) in at least such amounts and against at least such risks
(but including in any event fire, explosion, theft, such other casualties as may
be reasonably requested by the Agent, public liability, product liability and
business interruption) as are usually insured against in the same general area
by companies engaged in the same or a similar business, it being understood that
dealings with RIC in accordance with past practice shall not cause this Section
6.5 to be breached, and insuring the Borrower, its Subsidiaries, the Agent and
the Lender against liability for personal injury and property damage relating to
such Property.
(c) With respect to all Real Property, maintain casualty insurance in
an amount equal to "full replacement value", covering risks customarily insured
against in the prudent operation of a similar business.
(d) All such insurance shall (i) name the Agent as insured party,
loss payee or mortgagee, (ii) provide that 30 days' notice will be given to the
Agent for any cancellation, material reduction in amount, material change in
coverage or other modification, (iii) if reasonably requested by the Agent,
include a breach of warranty clause and (iv) be reasonably satisfactory in all
other respects to the Agent.
55
(e) The Borrower shall deliver to the Agent and the Lenders a
certificate reputable insurance broker with respect to such insurance on an
annual basis upon policy renewal and such supplemental reports with respect
thereto as the Agent may from time to time reasonably request.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a) Keep
proper books of records 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 and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time during normal business hours and upon reasonable advance notice to the
Borrower and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants; PROVIDED, HOWEVER, that
(i) the Agent and each Lender agree to use reasonable efforts to coordinate
their visits and inspections so as not to be unreasonably burdensome to the
Borrower and (ii) any discussions between a Lender or the Agent and the
Borrower's accountants shall be with the right of a representative of the
Borrower to be in attendance.
6.7 NOTICES. Promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding which, if adversely determined, could
result in a liability to the Borrower or any of its Subsidiaries of
$1,000,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan, the creation of any Lien in favor
of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, Reorganization or Insolvency of, or
termination under circumstances to which the provisions of Section 4041(c)
of ERISA apply of, any Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
56
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
an Authorized Signatory setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary proposes
to take with respect thereto.
6.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 INTEREST RATE PROTECTION. In the case of the Borrower, within 60
days after the Closing Date, enter into Interest Rate Protection Agreements to
the extent necessary to provide that at least 50% of the aggregate principal
amount of outstanding Loans and Letters of Credit is subject to either a fixed
interest rate or interest rate protection for a period of not less than two
years, which Interest Rate Protection Agreements shall have terms and conditions
reasonably satisfactory to the Agent.
6.10 ADDITIONAL COLLATERAL, ETC. (a) With respect to any Property
acquired after the Closing Date by the Borrower or any of its Subsidiaries other
than RIC and Excluded Foreign Subsidiaries (other than (x) any Property
described in paragraph (b), (c) or (d) below and (y) any Property subject to a
Lien expressly permitted by Section 7.3(g)) as to which the Agent, for the
benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and
deliver to the Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Agent deems necessary or advisable in order to
grant to the Agent, for the benefit of the Lenders, a security interest in such
Property and (ii) take all actions necessary or advisable to grant to the Agent,
for the benefit of the Lenders, a perfected security interest in such Property,
including without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Agent.
(b) With respect to any fee interest or leasehold interest in any real
estate having a value (together with improvements thereof) of at least $100,000
acquired after the Closing Date by the Borrower or any of its Subsidiaries other
than RIC and Excluded Foreign Subsidiaries (other than any such real estate
subject to a Lien expressly permitted by Section 7.3(g)), promptly (i) execute
and deliver a Mortgage in favor of the Agent, for the benefit of the Lenders,
covering such real estate, (ii) if such value is in excess of $1,000,000,
provide the Lenders with (x) title and extended coverage insurance covering such
real estate in an amount at least equal to the purchase price of such real
estate (or such other amount as shall be reasonably specified by the Agent) as
well as a current ALTA survey thereof, together with a surveyor's certificate
and (y) any consents or estoppels reasonably deemed necessary or advisable by
the Agent in connection with such mortgage or deed of trust, each of the
57
foregoing in form and substance reasonably satisfactory to the Agent, and (iii)
if requested by the Agent, deliver to the Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Agent.
(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired by the Borrower or any of its Subsidiaries after
the Closing Date (which, for the purposes of this paragraph (c), shall include
any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary),
promptly (i) execute and deliver to the Agent such amendments to the Guarantee
and Collateral Agreement as the Agent deems necessary or advisable in order to
grant to the Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is owned by
the Borrower or any of its Subsidiaries, (ii) deliver to the Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, (iii) cause such new Subsidiary
(A) to become a party to the Guarantee and Collateral Agreement and (B) to take
such actions necessary or advisable to grant to the Agent for the benefit of the
Lenders a perfected first priority security interest in the Collateral described
in the Guarantee and Collateral Agreement with respect to such new Subsidiary,
including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Agent, and (iv) if
requested by the Agent, deliver to the Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by the Borrower or any of its Subsidiaries,
promptly (i) execute and deliver to the Agent such amendments to the Guarantee
and Collateral Agreement as the Agent deems necessary or advisable in order to
grant to the Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is owned by
the Borrower or any of its Subsidiaries (other than Excluded Foreign
Subsidiaries) (provided that in no event shall more than 65% of the total
outstanding Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) deliver to the Agent the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the Borrower or such Subsidiary, as the case may be,
and take such other actions as may be necessary or, in the opinion of the Agent,
desirable to perfect the Lien thereon, and (iii) if requested by the Agent,
deliver to the Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
6.11 MORTGAGE RECORDING TAXES. The Borrower shall pay all taxes and
other charges imposed by any Governmental Authority or by any Requirement of Law
in connection with the recording or filing of any of the Mortgages, which taxes
and charges shall be paid when due or when assessed or requested by such
Governmental Authority.
58
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Agent hereunder, the Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
Fiscal quarters from and including fourth
quarter of fiscal 1997 through and including
third quarter of fiscal 1998 4.50 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 1998 through and including
third quarter of fiscal 1999 4.25 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 1999 through and including
third quarter of fiscal 2000 4.00 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2000 through and including
third quarter of fiscal 2001 3.50 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2001 through and including
third quarter of fiscal 2002 3.00 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2002 through and including
third quarter of fiscal 2003 2.50 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2003 through and including
third quarter of fiscal 2004 2.25 to 1.00
Fourth fiscal quarter of fiscal 2004 and all
fiscal quarters thereafter 2.00 to 1.00;
59
PROVIDED that, for purposes of determining the ratio described above for the
first three fiscal quarters of the Borrower following the Closing Date,
Consolidated EBITDA for each of the first three fiscal quarters of 1997 shall be
deemed to be the respective amounts set forth on Schedule 7.1.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- ---------------------
Fiscal quarters from and including fourth
quarter of fiscal 1997 through and including
third quarter of fiscal 1999 1.70 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 1999 through and including
third quarter of fiscal 2000 1.90 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2000 through and including
third quarter of fiscal 2001 2.30 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2001 through and including
third quarter of fiscal 2002 2.50 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2002 through and including
third quarter of fiscal 2003 2.90 to 1.00
Fourth fiscal quarter of fiscal 2003 and all
fiscal quarters thereafter 3.50 to 1.00;
PROVIDED that, for purposes of determining the ratio described above for the
first three fiscal quarters of the Borrower following the Closing Date,
Consolidated EBITDA, Consolidated Cash Interest Expense and cash income taxes
for each of the first three fiscal quarters of 1997 shall be deemed to be the
respective amounts set forth on Schedule 7.1.
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the Consolidated
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters
of the Borrower (or, if less, the number of full fiscal quarters subsequent to
the Closing Date) ending with any fiscal quarter set forth below to be less than
the ratio set forth below opposite such fiscal quarter:
60
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
Fiscal quarters from and including fourth
quarter of fiscal 1997 through and including
third quarter of fiscal 2000 1.50 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2000 through and including
third quarter of fiscal 2001 1.60 to 1.00
Fiscal quarters from and including fourth
quarter of fiscal 2001 through and including
third quarter of fiscal 2002 1.75 to 1.00
Fourth fiscal quarter of fiscal 2002 and all
fiscal quarters thereafter 2.00 to 1.00;
PROVIDED that, for purposes of determining the ratio described above for the
first three fiscal quarters of the Borrower following the Closing Date,
Consolidated EBITDA, Consolidated Cash Interest Expense, cash income taxes and
the other components of Consolidated Fixed Charges for each of the first three
fiscal quarters of 1997 shall be deemed to be the respective amounts set forth
on Schedule 7.1.
(d) MAINTENANCE OF NET WORTH. Permit Consolidated Net Worth as of the
last day of any fiscal quarter of the Borrower ending during any fiscal year set
forth below to be less than the amount set forth below opposite such fiscal
year:
Consolidated
Fiscal Year Net Worth
----------- ------------
1997 ($85,000,000)
1998 ($75,000,000)
1999 ($65,000,000)
2000 ($50,000,000)
2001 ($25,000,000)
2002 $10,000,000
2003 $40,000,000
2004 $80,000,000
2005 $130,000,000
7.2 LIMITATION ON INDEBTEDNESS AND DISQUALIFIED STOCK. Create, incur,
assume or suffer to exist (in each case, to "INCUR") any Indebtedness or issue
Disqualified Stock, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
61
(b) Indebtedness (i) of the Borrower to any Subsidiary, (ii) of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary
and (iii) to the extent permitted by Section 7.8(h), of any Subsidiary that
is not a Guarantor to the Borrower or any other Subsidiary;
(c) Indebtedness of the Borrower or any of its Subsidiaries incurred
to finance the acquisition, construction or improvement of fixed or capital
assets, in an aggregate principal amount at any one time outstanding not to
exceed $15,000,000, PROVIDED that such Indebtedness is incurred within 180
days after the date of such acquisition, construction or improvement and
does not exceed the fair market value of such acquired, constructed or
improved assets as determined in good faith by the Borrower's Board of
Directors;
(d) Indebtedness represented by Capital Lease Obligations in respect
of Sale/Leaseback Transactions involving the sale of restaurants within 24
months of the purchase of the associated real property, in an aggregate
principal amount not to exceed $20,000,000 at any one time outstanding;
(e) Indebtedness outstanding on the date hereof and listed on Schedule
7.2(e) and any refinancings, refundings, renewals or extensions thereof
(without any increase in the principal amount thereof);
(f) guarantees made in the ordinary course of business by the Borrower
or any of its Subsidiaries of obligations of any Subsidiary of the
Borrower, PROVIDED that, in the case of any guarantee of obligations of any
Subsidiary that is not a Guarantor, such guarantee is permitted by Section
7.8(h);
(g) guarantees made in the ordinary course of business by the Borrower
or any of its Subsidiaries of Indebtedness of franchisees of the Borrower
or any Wholly Owned Subsidiary Guarantor in an aggregate principal amount
at any one time outstanding not to exceed $20,000,000;
(h) Indebtedness incurred by the Borrower or any of its Subsidiaries
to finance the payment of property, casualty and specialty insurance
premiums in the ordinary course of the Borrower's business which is repaid
within 18 months of its incurrence, PROVIDED that such Indebtedness does
not exceed $7,500,000 in the aggregate at any one time outstanding;
(i) Indebtedness represented by guarantees of loans to employees of
the Borrower or any of its Subsidiaries for the purpose of paying
withholding taxes incurred by such employees in connection with the vesting
of stock and/or stock options granted by the Borrower, in an aggregate
amount not to exceed $3,000,000 at any one time outstanding;
(j) (i) Indebtedness of the Borrower in respect of the Senior Notes in
an aggregate principal amount not to exceed $175,000,000 and (ii) Guarantee
Obligations of any Guarantor in respect of such Indebtedness;
62
(k) interest rate protection, currency swap, commodity swap and
foreign exchange arrangements entered into in connection with bona fide
hedging operations;
(l) initial or successive refinancings of the Indebtedness permitted
by clause (j) above; PROVIDED that (i) such refinancing Indebtedness has a
stated maturity no earlier than the stated maturity of the Indebtedness
being refinanced, (ii) such refinancing Indebtedness has a weighted average
life at the time such Indebtedness is incurred that is equal to or greater
than the weighted average life of the Indebtedness being refinanced, (iii)
such refinancing Indebtedness is unsecured and (iv) such refinancing
Indebtedness is in an aggregate principal amount (or if issued with
original issue discount, an aggregate issue price) that is equal to or less
than the aggregate principal amount (or if issued with original issue
discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced; and PROVIDED FURTHER that such refinancing
Indebtedness shall not include Indebtedness of a Subsidiary of the Borrower
that refinances Indebtedness of the Borrower; and
(m) obligations with respect to customary provisions regarding
post-closing purchase price adjustments and indemnification in agreements
for the purchase or sale of a business or assets otherwise permitted by
this Agreement.
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes, fees, assessments and other governmental charges
not yet due or which are being contested in good faith by appropriate
proceedings, PROVIDED that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, as the case
may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
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(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(e), PROVIDED that no such
Lien is spread to cover any additional Property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition,
construction or improvement of fixed or capital assets, PROVIDED that (i)
such Liens shall be created substantially simultaneously with, or within 90
days after, the acquisition, construction or improvement of such fixed or
capital assets, (ii) such Liens do not at any time encumber any Property
other than the Property financed by such Indebtedness and (iii) the amount
of Indebtedness secured thereby shall not exceed the cost of the assets or
property so acquired, constructed or improved;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business
and covering only the assets so leased;
(j) Liens securing Capital Lease Obligations permitted by Section
7.2(d), PROVIDED that (i) such Liens shall be created substantially
simultaneously with the related Sale/Leaseback Transaction, (ii) such Liens
do not at any time encumber any Property other than the Property subject to
such Sale/Leaseback Transaction and (iii) the amount of the Indebtedness
secured thereby shall not exceed the fair market value of the Property
subject to such Sale/Leaseback Transaction;
(k) Liens arising by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a depository
institution;
(l) leases or subleases granted in the ordinary course of business;
and
(m) Liens arising in the ordinary course of business out of
consignment or similar arrangements for the sale of goods.
7.4 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (PROVIDED that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation);
64
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor; and
(c) any transaction permitted by Section 7.5(f).
7.5 LIMITATION ON SALE OF ASSETS. Dispose of any of its Property or
business (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(e) Dispositions permitted by Section 7.2(d);
(f) any Asset Sale or Recovery Event, PROVIDED that at least 75% of
the consideration for any Asset Sale shall consist of cash and Cash
Equivalents and PROVIDED FURTHER that the requirements of Sections 2.10(b)
and 2.10(c) are complied with in connection with any such Asset Sale or
Recovery Event; and
(g) the license of trademarks, service marks, tradenames and other
similar intangibles in the ordinary course of business.
7.6 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
Subsidiary or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary (collectively, "RESTRICTED
PAYMENTS"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or any
Wholly Owned Subsidiary Guarantor;
(b) any Subsidiary may declare and pay pro rata cash dividends to
Persons other than the Borrower and its Subsidiaries, PROVIDED, that the
aggregate amount of payments under this paragraph shall not exceed
$5,000,000 or, if as of the last day of each of three consecutive fiscal
quarters ending subsequent to the date hereof
65
Consolidated EBITDA for the four consecutive fiscal quarters ending on such
days shall exceed $100,000,000, $10,000,000; and
(c) so long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may purchase its Common Stock or Common Stock
options from present or former officers of the Borrower or any of its
Subsidiaries upon the death, disability or termination of employment of
such officer, PROVIDED, that the aggregate amount of payments under this
paragraph during the term of this Agreement shall not exceed $2,000,000 in
any 12-month period and $5,000,000 in the aggregate.
7.7 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding the Permitted
Capital Expenditure Amount; PROVIDED, that (i) so long as no Default or Event of
Default shall have occurred and be continuing or would occur as a result
thereof, any such amount referred to above, if not so expended in the fiscal
year for which it is permitted, may be carried over for expenditure in the next
succeeding fiscal year and (ii) Capital Expenditures made pursuant to this
clause (a) during any fiscal year shall be deemed made, FIRST, in respect of
amounts carried over from the prior fiscal year pursuant to subclause (i) above
and, SECOND, in respect of amounts permitted for such fiscal year as provided
above and (b) Capital Expenditures made with the proceeds of any Reinvestment
Deferred Amount.
7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a material part of a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of the Borrower or any of its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for the Borrower and its Subsidiaries not to exceed
$2,000,000 at any one time outstanding;
(e) purchases of Common Stock and Common Stock options permitted by
Section 7.6(b);
(f) investments made by the Borrower or any of its Subsidiaries with
the proceeds of any Reinvestment Deferred Amount;
(g) investments by the Borrower or any of its Subsidiaries in any
Person that, prior to such investment, is a Guarantor;
66
(h) investments in existence on the date hereof and listed on Schedule
7.8(h) and additional investments in, and extensions of credit to, any
Subsidiary that is not a Guarantor and/or other Persons, PROVIDED that such
additional investments and extensions of credit shall not exceed an
aggregate amount of $10,000,000 or, if as of the last day of each of three
consecutive fiscal quarters ending subsequent to the date hereof
Consolidated EBITDA for the four consecutive fiscal quarters ending on such
days shall exceed $100,000,000, $20,000,000;
(i) investments by Friendly's International, Inc. or its United
Kingdom Subsidiaries in Shanghai Friendly Food Co., Ltd. as a result of the
transfer by the Borrower of its interests in Shanghai Friendly Food Co.,
Ltd. to such Person;
(j) investments in stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to
the Borrower or any of its Subsidiaries or in satisfaction of judgments and
which are readily convertible into cash in U.S. dollars in an amount equal
to the fair market value thereof as determined in good faith by the Board
of Directors of the Borrower;
(k) investments in securities of account debtors received in
settlement of obligations or pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such account
debtors;
(l) investments in foreign exchange contracts, currency swap
agreements, commodity swap agreements, commodity future agreements,
commodity hedge agreements, Interest Rate Protection Agreements and other
similar agreements entered into in the ordinary course of business,
PROVIDED that such agreements are entered into for bona fide hedging
purposes, are not for speculation or trading purposes and are designed to
protect against fluctuations in currency exchange rates, commodity prices
or interest rates, as the case may be, and, in the case of Interest Rate
Protection Agreements, any such Interest Rate Protection Agreement has a
notional amount corresponding to the Indebtedness being hedged thereby;
(m) investments in franchisees of the Borrower in an aggregate amount
at any one time outstanding not to exceed $10,000,000;
(n) investments in accounts and notes receivable from franchisees,
customers, suppliers and others in the ordinary course of business; and
(o) investments made by the Borrower or any of its Subsidiaries in
connection with a Disposition of Property permitted by Section 7.5,
PROVIDED that the aggregate amount of such investments held at any time
shall not exceed $5,000,000.
7.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS, ETC. (a) Make or offer to make any payment, prepayment,
repurchase or redemption of or otherwise defease or segregate funds with respect
to the Senior Notes (other than scheduled interest payments required to be made
in cash), or (b) amend, modify, waive or otherwise change, or consent or agree
to any amendment, modification, waiver or other change to, any
67
of the terms of the Senior Notes (other than any such amendment, modification,
waiver or other change which (i) would extend the maturity or reduce the amount
of any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon and (ii) does not involve the payment of a
consent fee), except that (x) upon any private or public offering of Capital
Stock of the Borrower (other than the Common Stock Offering and the issuance of
common stock pursuant to employee benefit plans or as compensation to
employees), the Borrower may repurchase or redeem Senior Notes with the Net Cash
Proceeds of such offering, PROVIDED that no more than $60,000,000 principal
amount of Senior Notes may be so repurchased or redeemed, and (y) the Senior
Notes may be refinanced in accordance with Section 7.2(l).
7.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Guarantor) unless such transaction is (a) otherwise permitted
under this Agreement, (b) in the ordinary course of business of the Borrower or
such Subsidiary, as the case may be, and (c) upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person which is not
an Affiliate.
7.11 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary other than the
Sale/Leaseback Transactions permitted by Sections 7.2(d) and 7.5(e).
7.12 LIMITATION ON CHANGES IN FISCAL PERIODS. Permit the fiscal year
of the Borrower to end on a day other than the last Sunday in December (unless
that day is earlier than December 27, in which case the fiscal year ends on the
following Sunday) or change the Borrower's method of determining fiscal
quarters.
7.13 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into or suffer to
exist or become effective any agreement which prohibits or limits the ability of
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, to secure the Obligations or, in the case of any Guarantor,
its obligations under the Guarantee and Collateral Agreement, other than (a)
this Agreement and the other Loan Documents and (b) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby).
7.14 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distributions in respect of any Capital Stock of
such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any
other Subsidiary of the Borrower, (b) make loans or advances to the
68
Borrower or any other Subsidiary of the Borrower or (c) transfer any of its
assets to the Borrower or any other Subsidiary of the Borrower, except for such
encumbrances or restrictions existing under or by reason of
(i) any restrictions existing under the Loan Documents,
(ii) any restrictions with respect to a Subsidiary imposed pursuant to
an agreement which has been entered into in connection with the Disposition
of all or substantially all of the Capital Stock or assets of such
Subsidiary,
(iii) any encumbrance or restriction in the Existing Credit Facility
prior to the termination thereof,
(iv) any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Subsidiary on or prior to the date on which such Subsidiary was acquired by
the Borrower or a Subsidiary and outstanding on such date (other than
Indebtedness Incurred in connection with, or in contemplation of, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary or was acquired by the Borrower or a
Subsidiary),
(v) any encumbrance or restriction pursuant to an agreement contained
in any amendment to an agreement referred to in clause (iv) of this
covenant; PROVIDED, HOWEVER, that the encumbrances and restrictions
contained in any such refinancing agreement or amendment are not materially
less favorable to the Lenders than the encumbrances and restrictions
contained in any such agreement,
(vi) in the case of clause (c), any encumbrance or restriction (A)
that restricts in a customary manner the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar
contract, (B) by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of the
Borrower or any Subsidiary not otherwise prohibited by this Agreement or
(C) contained in security agreements securing Indebtedness of a Subsidiary
to the extent such encumbrance or restrictions restrict the transfer of the
property subject to such security agreements,
(vii) any encumbrance or restriction arising under or by reason of
applicable law,
(viii) any encumbrance or restriction contained in the Senior Note
Indenture,
(ix) customary provision in joint venture agreements relating solely
to the securities, assets and revenues of such joint venture or other
business venture,
(x) any encumbrance or restriction applicable to secured Indebtedness
otherwise permitted to be Incurred under this Agreement that limits the
right of the debtor to dispose of the assets securing such Indebtedness,
and
69
(xi) customary net worth provisions contained in leases and other
agreements entered into by a Subsidiary in the ordinary course of business.
7.15 LIMITATION ON LINES OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or which
are reasonably related thereto, or permit RIC to engage in any business other
than the reinsurance of certain of the Borrower's risks (i.e. workers'
compensation, employer's liability, general liability and product liability)
from a third party insurer.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within three Business Days after any such interest or other
amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) of Section 6.4(a) (with respect to
the Borrower only), Section 6.7(a), Section 7, or Section 5.6 of the
Guarantee and Collateral Agreement or (ii) an "Event of Default" under and
as defined in any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Agent or the Required Lenders; or
(e) The Borrower or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Loans and
Reimbursement Obligations) when due (giving effect to any applicable grace
period) with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or
70
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; PROVIDED, that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $5,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the
71
Borrower or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $5,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k)(i) (A) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")), excluding the Permitted Holders, shall become, or
obtain rights (whether by means or warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act), directly or indirectly, of more than 35% of the
outstanding common stock of the Borrower and (B) the Permitted Holders
"beneficially own" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, in the aggregate a lesser percentage of total
voting power of the Voting Stock of the Borrower than such other person and
do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of the
Borrower; (ii) a majority of the board of directors of the Borrower shall
cease to consist of Continuing Directors; or (iii) there shall occur a
"Change of Control" as defined in the Senior Note Indenture; or
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility Lenders,
the Agent may, or upon the request of the Majority Revolving Credit Facility
Lenders, the Agent shall, by notice to the Borrower declare the
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Revolving Credit Commitments to be terminated forthwith, whereupon the Revolving
Credit Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Agent may, or upon the request of the Required Lenders,
the Agent shall, by notice to the Borrower, declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to this
paragraph, the Borrower shall at such time deposit in a cash collateral account
opened by the Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral account
shall be applied by the Agent to the payment of drafts drawn under such Letters
of Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
SECTION 9. THE AGENT
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, 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 shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement and 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.
9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii)
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responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
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
by the Agent 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 a party thereto to perform its 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.
9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, 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 the Borrower), 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 a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. 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 (or, if so specified by this Agreement,
all 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 (or, if so specified by this Agreement, all
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
Loans.
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
hereunder unless it 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 give notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all 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 it shall deem advisable in the best interests of the
Lenders.
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 have made any representations
or warranties to such Lender and that no act by the Agent hereinafter taken,
including any review of the affairs of a Loan Party
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or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
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, financial and other condition and creditworthiness of the
Loan Parties and their affiliates 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 the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party which may
come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Revolving Credit Percentages, Tranche A Term Loan Percentages,
Tranche B Term Loan Percentages and Tranche C Term Loan Percentages in effect on
the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by the Agent under or in connection with any of the foregoing; PROVIDED
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements which are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the Agent's
gross negligence or willful misconduct. The agreements in this Section 9.7
shall survive the payment of the Loans and all other amounts payable hereunder.
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 any Loan Party as though the Agent was not the Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, the Agent shall have the same rights and
powers under this Agreement and the other Loan Documents 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.
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9.9 SUCCESSOR AGENT. Subject to the appointment of a successor agent
as provided below, the Agent may resign as Agent upon 10 days' notice to the
Lenders and the Borrower. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 8(a) or Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or
delayed), 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 such appointment and approval, 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 Loans. After any retiring Agent's resignation as Agent,
the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Loan Documents.
9.10 AUTHORIZATION TO RELEASE LIENS. The Agent is hereby irrevocably
authorized by each of the Lenders to release any Lien covering any Property of
the Borrower or any of its Subsidiaries that is the subject of a Disposition
which is permitted by this Agreement or which has been consented to in
accordance with Section 10.1.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party to the relevant Loan Document may, or (with
the written consent of the Required Lenders) the Agent and each Loan Party to
the relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders, or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; PROVIDED,
HOWEVER, that no such waiver and no such amendment, supplement or modification
shall (i) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Term Loan, reduce the stated rate of any interest, fee or letter
of credit commission payable hereunder or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of any
Lender's Revolving Credit Commitment, in each case without the consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 10.1 or reduce any percentage specified in the definition of
Required Lenders or Required Prepayment Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Guarantors from their
obligations under the Guarantee and Collateral Agreement, in each case without
the written consent of all Lenders; (iii)
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amend, modify or waive any condition precedent to any extension of credit under
the Revolving Credit Facility set forth in Section 5.2 (including, without
limitation, in connection with any waiver of an existing Default or Event of
Default) without the written consent of the Majority Revolving Credit Facility
Lenders; (iv) reduce the percentage specified in the definition of Majority
Facility Lenders without the written consent of all Lenders under each affected
Facility; (v) amend, modify or waive any provision of Section 9 without the
written consent of the Agent; or (vi) amend, modify or waive any provision of
Section 3 without the written consent of the Issuing Lender. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Loan Parties, the Lenders, the
Agent and all future holders of the Loans. In the case of any waiver, the Loan
Parties, the Lenders and the Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, 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.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the Agent, and as
set forth in an administrative questionnaire delivered to the Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrower: Friendly Ice Cream Corporation
1855 Boston Road
Wilbraham, Massachusetts 01095
Attention: George Roller
Telecopy: (413) 543-3186
Telephone: (413) 543-2400
with a copy to: Friendly Ice Cream Corporation
1855 Boston Road
Wilbraham, Massachusetts 01095
Attention: Aaron Parker
Telecopy: (413) 543-3282
Telephone: (413) 543-2400
The Agent: Societe Generale
1221 Avenue of the Americas
New York, New York 10020
Attention: Kateline Martinez
Telecopy: (212) 278-7490
Telephone: (212) 278-6855
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with a copy to: Societe Generale
1221 Avenue of the Americas
New York, New York 10020
Attention: Brent Johnston
Telecopy: (212) 278-7430
Telephone: (212) 278-6881
PROVIDED that any notice, request or demand to or upon the Agent or the Lenders
shall not be effective until received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 PAYMENT OF EXPENSES. The Borrower agrees (a) to pay or reimburse
the Agent for all its reasonable out-of-pocket costs and expenses incurred in
connection with the development, syndication, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and
the Agent for all their respective costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents, including, without
limitation, the fees and disbursements of counsel (including the non-duplicative
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Agent, (c) to pay, indemnify, and hold each Lender and the Agent harmless
from, any and all recording and filing fees or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other documents and (d) to pay,
indemnify, and hold each Lender and the Agent and their respective officers,
directors, employees, affiliates, agents and controlling persons (each, an
"INDEMNITEE") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower or any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the
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"INDEMNIFIED LIABILITIES"), PROVIDED, that the Borrower shall have no obligation
hereunder to any indemnitee with respect to indemnified liabilities to the
extent such indemnified liabilities resulted from the gross negligence or
willful misconduct of such indemnitee. The agreements in this Section shall
survive repayment of the Loans and all other amounts payable hereunder.
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Agent, all future holders of the Loans 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 the Agent and each Lender. Nothing expressed or implied herein is
intended to give, or shall be construed to give, any Person, other than the
parties hereto and their permitted successors and assigns hereunder, any benefit
or legal or equitable right, remedy or claim under or by virtue of this
Agreement or under or by virtue of any provision herein.
(b) Any Lender may, without the consent of the Borrower, in accordance
with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "PARTICIPANT") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents; PROVIDED
that no such participation to a Participant shall be in an aggregate principal
amount of less than $5,000,000 (other than in the case of a participation of all
of a Lender's interests under this Agreement), unless otherwise agreed by the
Borrower and the Agent. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, 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 and the other Loan Documents. In no
event shall any Participant under any such participation have any right to
approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Loans or any fees payable hereunder, or postpone the date of the final
maturity of the Loans, in each case to the extent subject to such participation.
The Borrower agrees that if amounts outstanding under this Agreement and the
Loans are due or unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of an Event of Default, each Participant shall,
to the maximum extent permitted by applicable law, be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, PROVIDED that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in Section
10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees
that each Participant shall be entitled to the benefits of Sections 2.17, 2.18
and 2.19 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; PROVIDED that, in the case
of Section 2.18, such Participant shall have complied with the requirements of
said Section and PROVIDED, FURTHER, that no Participant shall be entitled to
receive any
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greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such
participation occurred.
(c) Any Lender (an "ASSIGNOR") may, in accordance with applicable law,
at any time and from time to time assign to any Lender or any affiliate thereof
or, with the consent of the Borrower, and the Agent (which, in each case, shall
not be unreasonably withheld or delayed) (PROVIDED that no such consent need be
obtained in the case of any assignment made when any Event of Default shall have
occurred and be continuing), to an additional bank, financial institution or
other entity (an "ASSIGNEE") all or any part of its rights and obligations under
this Agreement pursuant to an Assignment and Acceptance, substantially in the
form of Exhibit E, executed by such Assignee, such Assignor and the Agent (and,
where the consent of the Borrower is required pursuant to the foregoing
provisions, by the Borrower) and delivered to the Agent for its acceptance and
recording in the Register; PROVIDED that no such assignment to an Assignee
(other than any Lender or any affiliate thereof) shall be in an aggregate
principal amount of less than $10,000,000 (or, in the case of any Tranche C Term
Loan, $5,000,000) other than in the case of an assignment of all of a Lender's
interests under this Agreement, unless otherwise agreed by the Borrower and the
Agent. Any such assignment need not be ratable as among the Facilities. Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Agent shall maintain at its address referred to in Section
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "REGISTER") for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Loans owing to, each Lender
from time to time and any Notes evidencing such Loans. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loan and any Note evidencing such
Loan recorded therein for all purposes of this Agreement. Any assignment of any
Loan whether or not evidenced by a Note shall be effective only upon appropriate
entries with respect thereto being made in the Register (and each Note shall
expressly so provide). Any assignment or transfer of all or part of a Loan
evidenced by a Note shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance, and thereupon one or
more new Notes in the same aggregate principal amount shall be issued to the
designated Assignee and the old Notes shall be returned by the Agent to the
Borrower marked "cancelled". The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
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(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof or a Person under common management with
such Lender, by the Borrower, the Agent and the Issuing Lender) together with
payment to the Agent of a registration and processing fee of $3,500 (except that
no such registration and processing fee shall be payable in the case of an
Assignee which is already a Lender or is an affiliate of a Lender or a Person
under common management with a Lender), the Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give notice
of such acceptance and recordation to the Lenders and the Borrower. On or prior
to such effective date, the Borrower, at its own expense, upon request, shall
execute and deliver to the Agent (in exchange for the Revolving Credit Note
and/or Term Notes, as the case may be, of the assigning Lender) a new Revolving
Credit Note and/or Term Notes, as the case may be, to the order of such Assignee
in an amount equal to the Revolving Credit Commitment and/or applicable Term
Loans, as the case may be, assumed or acquired by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Revolving Credit
Commitment and/or Term Loans, as the case may be, upon request, a new Revolving
Credit Note and/or Term Notes, as the case may be, to the order of the assigning
Lender in an amount equal to the Revolving Credit Commitment and/or applicable
Term Loans, as the case may be, retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Note
replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
10.7 ADJUSTMENTS; SET-OFF. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "BENEFITTED LENDER") shall at any time
receive any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans or the Reimbursement
Obligations owing to such other Lender, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans and/or of the Reimbursement
Obligations owing to each such other Lender, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
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(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower and the Agent after any such setoff and application made by such
Lender, PROVIDED that the failure to give such notice shall not affect the
validity of such setoff and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the Agent.
10.9 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. Each of the Borrower, the
Agent and each Lender hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
82
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address
of which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 10.12 any special, exemplary, punitive or consequential
damages.
10.13 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Agent and Lenders, on one hand and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
10.15 CONFIDENTIALITY. Each of the Agent and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; PROVIDED that nothing herein shall prevent the Agent or any Lender
from disclosing any such information (a) to the Agent, any other Lender or any
affiliate of any Lender, (b) to any Participant or Assignee (each, a
"TRANSFEREE") or prospective Transferee which agrees to comply with the
provisions of this Section 10.15, (c) to the employees, directors, agents,
attorneys, accountants and other
83
professional advisors of such Lender or its affiliates, (d) upon the request or
demand of any Governmental Authority having jurisdiction over the Agent or such
Lender, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) which has been publicly disclosed other than in breach
of this Section, (h) to the National Association of Insurance Commissioners or
any similar organization or any nationally recognized rating agency that
requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender, or (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document.
84
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
FRIENDLY ICE CREAM CORPORATION
By:
-------------------------------
Name:
Title:
SOCIETE GENERALE,
as Arranger, Administrative Agent and a
Lender
By:
-------------------------------
Name:
Title:
FIRST SOURCE
By:
-------------------------------
Name:
Title:
GE CAPITAL
By:
-------------------------------
Name:
Title:
PROTECTIVE ASSET MANAGEMENT
COMPANY
By:
-------------------------------
Name:
Title:
85
SANWA BUSINESS CREDIT CORP.
By:
-------------------------------
Name:
Title:
TRANSAMERICA BUSINESS CREDIT
By:
-------------------------------
Name:
Title:
NATIONSBANK, N.A.
By:
-------------------------------
Name:
Title:
BANK OF BOSTON
By:
-------------------------------
Name:
Title:
BLACK DIAMOND CAPITAL MANAGEMENT
By:
-------------------------------
Name:
Title:
86
CREDIT LYONNAIS
By:
-------------------------------
Name:
Title:
EATON VANCE
By:
-------------------------------
Name:
Title:
ANNEX A
-------
PRICING GRID FOR REVOLVING CREDIT LOANS,
TRANCHE A TERM LOANS AND COMMITMENT FEES
=========================================== ============== ==============
Applicable
Margin
Consolidated for Eurodollar Commitment
Leverage Ratio Loans Fee Rate
- ------------------------------------------- -------------- --------------
> or equal to 4.0 to 1.0 2.500% 0.500%
- ------------------------------------------- -------------- --------------
> or equal to 3.5 to 1.0 and < 4.0 to 1.0 2.250% 0.500%
- ------------------------------------------- -------------- --------------
> or equal to 3.0 to 1.0 and < 3.5 to 1.0 2.125% 0.500%
- ------------------------------------------- -------------- --------------
> or equal to 2.5 to 1.0 and < 3.0 to 1.0 1.875% 0.375%
- ------------------------------------------- -------------- --------------
< 2.5 to 1.0 1.625% 0.375%
=========================================== ============== ==============
Changes in the Applicable Margin with respect to Revolving Loans and
Tranche A Loans or in the Commitment Fee Rate resulting from changes in the
Consolidated Leverage Ratio shall become effective on the date (the "ADJUSTMENT
DATE") on which financial statements are delivered to the Lenders pursuant to
Section 6.1 (but in any event not later than the 45th day after the end of each
of the first three quarterly periods of each fiscal year or the 90th day after
the end of each fiscal year, as the case may be) and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Leverage Ratio as at the end of the fiscal period that would have
been covered thereby shall for the purposes of this definition be deemed to be
greater than 4.0 to 1.0. Each determination of the Consolidated Leverage Ratio
pursuant to this definition shall be made as at the end of and with respect to
the period of four consecutive fiscal quarters of the Borrower ending at the end
of the period covered by the relevant financial statements and shall reflect the
matters set forth in the proviso to Section 7.1(a).
ANNEX B
ECF PERCENTAGE GRID
========================================== ============
Consolidated ECF
Leverage Ratio Percentage
------------------------------------------ ------------
> or equal to 3.5 to 1.0 80%
------------------------------------------ ------------
> or equal to 3.0 to 1.0 and < 3.5 to 1.0 65%
------------------------------------------ ------------
> or equal to 2.0 to 1.0 and < 3.0 to 1.0 50%
------------------------------------------ ------------
< 2.0 to 1.0 0%
========================================== ============
Changes in the ECF Percentage resulting from changes in the
Consolidated Leverage Ratio shall become effective on the date (the "ECF
PERCENTAGE ADJUSTMENT DATE") on which audited financial statements are delivered
to the Lenders pursuant to Section 6.1(a) (but in any event not later than the
90th day after the end of each fiscal year) and shall remain in effect until the
next change to be effected pursuant to this paragraph. If any financial
statements are not delivered within the time period specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio as at
the end of the fiscal year that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 3.5 to 1.0. Each
determination of the Consolidated Leverage Ratio pursuant to this definition
shall be made as at the end of and with respect to the period of four
consecutive fiscal quarters of the Borrower ending at the end of the fiscal year
covered by the relevant financial statements.
ANNEX C
-------
PERMITTED CAPITAL EXPENDITURE GRID
=========== ============== ============= ============================ =============
Ratio of
Consolidated Permitted
Capital Consolidated EBITDA to Capital
Fiscal Expenditure EBITDA Consolidated Expenditure
Year Amount Target EBITDA Target Percentage
- ----------- -------------- ------------- ---------------------------- -------------
1998 $ $ > or equal to 1.00 to 1.00 120%
- ----------- -------------- ------------- ---------------------------- -------------
1999 $ $ < 1.00 to 1.00 100%
- ----------- -------------- ------------- and
2000 $ $ > or equal to 0.90 to 1.00
- ----------- -------------- ------------- ---------------------------- -------------
2001 $ $ < 0.90 to 1.00 80%
and
2002 $ $ > or equal to 0.80 to 1.00
- ----------- -------------- ------------- ---------------------------- -------------
2003 $ $ < 0.80 to 1.00 50%
- ----------- -------------- ------------- ---------------------------- -------------
2004 and
thereafter $ $
=========== ============== ============= ============================ =============
Changes in the Permitted Capital Expenditure Amount resulting from
changes in the Ratio of Consolidated EBITDA to Consolidated EBITDA Target shall
become effective on the date (the "PERMITTED CAPITAL EXPENDITURE ADJUSTMENT
DATE") on which audited financial statements are delivered to the Lenders
pursuant to Section 6.1(a) with respect to any fiscal year, commencing with the
Borrower's 1998 fiscal year (but in any event not later than the 90th day after
the end of each such fiscal year), and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
are not delivered within the time period specified above, then, until such
financial statements are delivered, the Ratio of Consolidated EBITDA to
Consolidated EBITDA Target as at the end of the fiscal year that would have been
covered thereby shall for the purposes of this definition be deemed to be less
than 0.80 to 1.00. Each determination of the Ratio of Consolidated EBITDA to
Consolidated EBITDA Target shall be made with respect to the period of four
consecutive quarters of the Borrower ending at the end of the fiscal year
covered by the relevant financial statements.