EXHIBIT 4.2
EXECUTION COPY
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AMENDED AND RESTATED
FACILITIES AGREEMENT
dated as of October 24, 1997
among
BOSTON CHICKEN, INC.,
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
As Agent For Certain Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
For Itself And As Agent For Certain Lease Participants
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The following Table of Contents has been inserted for convenience only and does
not constitute a part of this Agreement.
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS........................ 2
1.1 Defined Terms........................................... 2
1.2 Accounting Terms........................................ 16
ARTICLE II REPRESENTATIONS AND WARRANTIES.......................... 16
2.1 Incorporation, Good Standing, and Due Qualification..... 16
2.2 Corporate Power and Authority........................... 17
2.3 Legally Enforceable Agreement........................... 17
2.4 Financial Statements.................................... 17
2.5 Other Agreements........................................ 18
2.6 Litigation.............................................. 18
2.7 No Defaults on Outstanding Judgments or Orders.......... 19
2.8 Governmental and Regulatory Approvals................... 19
2.9 Ownership and Liens..................................... 19
2.10 ERISA................................................... 19
2.11 Hazardous Materials..................................... 19
2.12 Taxes................................................... 20
2.13 Debt.................................................... 20
2.14 Investment Company Act.................................. 20
2.15 Public Utility Holding Company Act...................... 21
2.16 Pledged Collateral...................................... 21
2.17 Real Property........................................... 21
2.18 Financed Franchisee/Subsidiary Information.............. 21
2.19 Collateral Documents.................................... 22
2.20 Solvency................................................ 23
ARTICLE III AFFIRMATIVE COVENANTS................................... 23
3.1 Maintenance of Existence................................ 23
3.2 Maintenance of Records.................................. 23
3.3 Maintenance of Properties............................... 23
3.4 Conduct of Business..................................... 23
3.5 Maintenance of Insurance................................ 24
3.6 Compliance With Laws.................................... 24
3.7 Right of Inspection..................................... 24
3.8 Reporting Requirements.................................. 25
3.9 Environmental Laws...................................... 31
PAGE
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3.10 Credit Usage.......................................... 31
3.11 Notes, Certificates and Other Collateral.............. 32
3.12 Financing Statements.................................. 32
3.13 Real Property......................................... 32
3.14 Further Assurances.................................... 34
ARTICLE IV NEGATIVE COVENANTS.................................... 35
4.1 Liens................................................. 35
4.2 Debt.................................................. 37
4.3 Mergers, Etc.......................................... 40
4.4 Lease ................................................ 41
4.5 Sale and Leaseback.................................... 42
4.6 Dividends............................................. 42
4.7 Sale of Assets........................................ 42
4.8 Investments........................................... 45
4.9 Guaranties, Etc....................................... 49
4.10 Insactions With Affiliate............................. 50
4.11 Subsisiary, Etc....................................... 50
4.12 Real Property......................................... 51
4.13 Subordinated Debt..................................... 51
4.14 Financed Franchisee................................... 52
4.15 Use of Proceeds....................................... 52
ARTICLE V FINANCIAL COVENANTS................................... 52
5.1 Maximum Senior Secured Leverage Ratio................. 52
5.2 Fixed Charge Coverage Ratio........................... 53
5.3 Store Revenue......................................... 53
5.4 Total Overhead........................................ 53
5.5 Minimum System EBITDAL................................ 54
ARTICLE VI EVENTS OF DEFAULT..................................... 54
6.1 Events of Default..................................... 54
6.2 Effect of Event of Default............................ 58
ARTICLE VII MISCELLANEOUS......................................... 58
7.1 Waivers and Amendments................................ 58
7.2 Notices, Etc.......................................... 58
7.3 No Waiver; Remedies................................... 59
7.4 Successors and Assigns................................ 59
7.5 Costs, Expenses, and Taxes............................ 59
7.6 Governing Law......................................... 60
7.7 Severability of Provisions............................ 60
PAGE
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7.8 Headings.............................................. 60
7.9 SUBMISSION TO JURISDICTION; WAIVER OF VENUE........... 60
7.10 General Indemnity..................................... 61
7.11 WAIVER OF JURY TRIAL.................................. 62
7.12 SERVICE OF PROCESS.................................... 62
SCHEDULES
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Schedule 1.1A - BWRE Parcels ((S)1.1)
Schedule 1.1B - Requirements for Financed Franchisee Loan Documents ((S)1.1)
Schedule 1.1C - Lender Collateral ((S)1.1)
Schedule 2.6 - Litigation ((S)2.6)
Schedule 2.13 - Debt ((S)2.13)
Schedule 2.16 - Pledged Collateral ((S)2.16)
Schedule 2.17 - Real Property ((S)2.17)
Schedule 2.18 - Financed Franchisee/Subsidiary Information ((S)2.18)
Schedule 3.13 - Excluded Real Property ((S)3.13)
Schedule 4.2 - Permitted Debt ((S)4.2)
EXHIBITS
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EXHIBIT A - Form of Collateral Assignment of Lease
EXHIBIT B - Form of Collateral Assignment of Loan
EXHIBIT C - Form of Guaranty
EXHIBIT D - Form of Landlord's Consent
EXHIBIT E - Form of Mortgage
EXHIBIT F - Form of Pledge Agreement
EXHIBIT G - Form of Security Agreement
EXHIBIT H - Form of Trademark Security Agreement
EXHIBIT I - Form of Compliance Certificate
AMENDED AND RESTATED FACILITIES AGREEMENT
THIS AMENDED AND RESTATED FACILITIES AGREEMENT dated as of October 24, 1997
is among BOSTON CHICKEN, INC., a Delaware corporation (the "Company"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (as successor by merger to Bank
of America Illinois), as agent for the Lenders and the Issuing Lender referred
to below (in such capacity, together with its successors and assigns, the "Loan
Agent"), GENERAL ELECTRIC CAPITAL CORPORATION, for itself and as agent for the
Lease Participants referred to below (in its individual capacity, "GECC"; and in
such dual capacity, together with its successors and assigns, the "Lease Agent")
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the initial
Common Collateral Agent.
WHEREAS, the Company has entered into that certain Secured Revolving Credit
Agreement dated as of December 9, 1996 (as amended, supplemented, modified,
restated, refinanced, refunded or renewed from time to time in accordance with
the terms of the Intercreditor Agreement referred to below, the "Credit
Agreement") among the Company, the financial institutions from time to time
party thereto (the "Lenders"), Bank of America National Trust and Savings
Association, as letter of credit issuing bank (in such capacity, the "Issuing
Lender"), and the Loan Agent;
WHEREAS, the Company has entered into that certain Master Lease Agreement
No. 2, dated as of December 9, 1996 (as amended, supplemented, modified,
restated, refinanced, refunded or renewed from time to time in accordance with
the terms of the Intercreditor Agreement referred to below, the "1996 Master
Lease Agreement") between the Company and the Lease Agent;
WHEREAS, subject to the terms of the 1996 Master Lease Agreement, GECC has
heretofore and may hereafter convey to certain financial institutions
(collectively with GECC, the "Lease Participants") participation interests in
its rights, duties and obligations under the 1996 Master Lease Agreement;
WHEREAS, in connection with the execution and delivery of the Credit
Agreement and the 1996 Master Lease Agreement, the Company entered into that
certain Facilities Agreement, dated as of December 9, 1996 (as modified by that
certain First Amendment dated February 28, 1997 and that certain Waiver of
Compliance dated September 5, 1997, the "Original Facilities Agreement") among
the Company, the Loan Agent and the Lease Agent;
WHEREAS, concurrently herewith, the Company, the Loan Agent, the Lease
Agent and the Common Collateral Agent are entering into that certain Amended and
Restated Intercreditor Agreement dated as of even date herewith (as further
amended, supplemented, modified or restated from time to time, the
"Intercreditor Agreement") which sets forth certain agreements among the
Lenders, the Issuing Lender, the Loan Agent, the Lease Agent and the Lease
Participants with respect to, among other things, voting rights and collateral
issues; and
WHEREAS, the Company, the Lenders, the Lease Participants, the Loan Agent
and the Lease Agent now wish to
1
amend and restate the Original Facilities Agreement in its entirety to, among
other things, modify certain financial covenants and to further secure the
Company's obligations arising under the Credit Agreement and the 1996 Master
Lease Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other good and valuable consideration, the parties hereto agree as
follows:
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
Defined Terms. As used in this Agreement the following terms have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
"Affiliate" means any Person other than a Financed Franchisee: (1)
which directly or indirectly controls, or is controlled by, or is under common
control with, the Company or a Subsidiary; (2) which directly or indirectly
beneficially owns or holds, at the time of determination, outstanding shares
representing ten percent (10%) or more of any class of capital stock,
partnership units or other equity interests of the Company or any Subsidiary
(including, on a fully diluted basis, any options, warrants and other rights to
acquire capital stock, partnership units or other equity interests which are
exercisable at the time of determination, but excluding any options, warrants
and other rights to acquire capital stock, partnership units or other equity
interests which are not then exercisable); or (3) ten percent (10%) or more of
the capital stock, partnership units or other equity interests of which
(calculated in accordance with the foregoing clause (2)) is directly or
indirectly beneficially owned or held by the Company or a Subsidiary. For
purposes of this definition only, the term control means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise; provided, that for purposes hereof, the
existence of a Franchise Agreement, Area Development Agreement or similar
agreement between the Company and a Person shall not, by itself,
2
evidence that such Person is controlled by the Company nor shall the Financed
Franchisee Loan Documents executed by a Franchisee evidence that such Franchisee
is an Affiliate of the Company prior to the acquisition by the Company of an
equity interest therein of in excess of ten percent (10%), whether such
acquisition occurs by conversion of debt, exercise of any equity option, or
otherwise (including acquisition by foreclosure following an acceleration under
the Financed Franchisee Loan Documents).
"Agency Agreement" means that certain Agency Agreement dated as of
September 25, 1996 among the Lease Agent, the Company, BC Real Estate
Investments, Inc. and certain Financed Franchisees.
"Agents" means, collectively, the Common Collateral Agent, the Loan
Agent and the Lease Agent; and "Agent" means the Loan Agent or the Lease Agent.
"Agreement" means this Amended and Restated Facilities Agreement, as
amended, supplemented, modified, restated, refinanced, refunded or renewed from
time to time in accordance with the Intercreditor Agreement.
"Annualized Store EBITDAL" means, for each fiscal quarter of the
Company the product of (1)(a) the quotient obtained by dividing Store EBITDAL
for such fiscal quarter by (b) the number of Retail Periods which occur in such
fiscal quarter, multiplied by (2) thirteen (13).
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized or required to close under the laws
of the States of Colorado, Illinois or New York.
"BWRE" means Boston West Real Estate Investments, L.L.C., a Delaware
limited liability company.
"BWRE Guaranty" means that certain Guaranty dated February 16, 1996 of
the Company in favor of Sanwa Business Credit Corporation, as the same may be
amended from time to time.
3
"BWRE Parcels" means those certain parcels of real property and
improvements located thereon, the locations of which are set forth on Schedule
1.1A hereto.
"Capital Lease" means all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Change of Control" shall be deemed to have occurred at such time
after the date hereof as (i) any person or group of persons (within the meaning
of Section 13 or 14 of the Exchange Act) shall acquire at any time after the
date hereof beneficial ownership of more than 25% of the fully diluted common
stock of the Company or (ii) individuals who as of the date hereof constitute
the Company's Board of Directors (together with any new director whose election
by the Company's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved), for any reason, cease to constitute a majority of the directors at
any time then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Assignment of Lease" means any Collateral Assignment of
Tenant's Rights in Lease in substantially the form of Exhibit A executed by the
Company or any Restricted Subsidiary in favor of the Common Collateral Agent for
the benefit of the Creditors.
"Collateral Assignment of Loan" means a Collateral Assignment of Loan
Documentation in substantially the form of Exhibit B executed by the Company in
favor of the Common Collateral Agent for the benefit of the Creditors.
"Combined Overhead" means, for each fiscal period of the Company, the
sum of field operating overhead plus field development overhead plus support
center overhead (exclusive of transaction costs, severance costs, store closing
costs and one-time non-recurring charges), in each case, of the Company, its
Restricted Subsidiaries and Financed Franchisees minus fees paid to the Company
by ENBC in connection with the performance by the
Company of accounting, administrative, financing, real estate, computer and
communication services.
"Common Collateral Agent" means the Loan Agent, provided, that at such
time as the Credit Agreement shall no longer be in effect, Common Collateral
Agent shall mean the Lease Agent.
"Common Collateral Documents" means, collectively, (i) the Security
Agreements, the Trademark Security Agreement, the Collateral Assignment of Loan,
the Mortgages, the Collateral Assignments of Lease, the Landlord's Consents, the
Pledge Agreement and all other security agreements, mortgages, deeds of trust,
patent and trademark assignments, lease assignments, guarantees and other
similar agreements between the Company, any Guarantor or their respective
Subsidiaries and the Common Collateral Agent for the benefit of the Creditors
now or hereafter delivered to the Common Collateral Agent pursuant to or in
connection with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed in accordance with
the Uniform Commercial Code or comparable law) against the Company, any
Guarantor or their respective Subsidiaries, as debtor, in favor of the Common
Collateral Agent for the benefit of the Creditors, as secured party, and (ii)
any amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Consolidated Fixed Charges" means, for any period, the sum of cash
interest expense (including all imputed interest related to any Capital Lease)
plus gross rental payments (excluding, in any event, payments of purchase
amounts under Financial Lease Debt and under Capital Leases of Financed
Subsidiaries existing on the date each Financed Franchisee becomes a Financed
Subsidiary) related to any Financial Leases other than Capital Leases of the
Company and its consolidated Restricted Subsidiaries for such period.
"Credit Agreement" has the meaning set forth in the Recitals.
"Credit Documents" means, collectively, this Agreement, the Loan
Documents, the 1996 Lease Documents, the Common Collateral Documents and the
Intercreditor Agreement; and "Credit
Document" means any of the foregoing agreements, instruments or documents.
"Creditors" means, collectively, the Loan Agent, the Lenders, the
Issuing Lender, the Lease Agent, the Lease Participants and the Common
Collateral Agent; and "Creditor" means any of the foregoing Persons.
"Current Pay Subordinated Debt" means Debt of the Company which (1) is
subordinated in priority of payment to the Debt of the Company under the Loan
Documents and the 1996 Lease Documents (including refinancings of and post-
petition interest on the Credit Documents); (2) does not have any principal
payment (but may provide for interest payments) prior to the ninety-first (91st)
day succeeding the Termination Date; (3) contains no financial maintenance
covenants other than (a) one or more financial maintenance covenants which are
substantially identical to those contained in this Agreement, provided that such
financial maintenance covenants are less restrictive than the corresponding
covenants contained in this Agreement and (b) such other financial maintenance
covenants which are reasonably acceptable to the Required Creditors; (4)
contains no cross default clause but may contain a cross acceleration clause;
(5) contains no negative pledge clause (other than any such clause that does not
prohibit or otherwise restrict Liens securing Debt under the Credit Documents);
(6) distinguishes between payment and non-payment defaults for purposes of
suspending payments with respect to such subordinated Debt; and (7) contains a
"fish or cut bait" provision with respect to non-payment defaults of at least 89
days (it being understood that the Company's 4 1/2% Convertible Subordinated
Debentures due 2004 and the Company's 7-3/4% Convertible Subordinated Debentures
due 2004 constitute Current Pay Subordinated Debt).
"Debt" means with respect to any Person at any date, without
duplication: (1) indebtedness or liability for borrowed money, or for the
deferred purchase price of property or services (including trade obligations)
owed by such Person; (2) obligations of such Person as lessee under Financial
Leases; (3) current liabilities of such Person in respect of unfunded vested
benefits under any Plan; (4) obligations under letters of credit issued for the
account of such Person; (5) all obligations arising under bankers' acceptance
facilities issued for the account of such Person; (6) all guaranties by such
Person of the
Debt or of operating leases of a third party, endorsements (other than for
collection or deposit in the ordinary course of business), and other contingent
obligations of such Person to purchase primarily for the purpose of enabling a
third party to make payment of Debt or payments with respect to operating leases
of such third party, to provide funds for payment of the Debt or of operating
leases of a third party, to supply funds to invest in a third party, or
otherwise to assure a creditor of a third party against loss with respect to the
Debt or operating leases of such third party; and (7) obligations secured by any
Lien on property owned by such Person, whether or not the obligations have been
assumed.
"Default" means any of the events specified in Section 6.1, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Effective Date" means October 24, 1997.
"ENBC" means Einstein/Noah Bagel Corp., a Delaware corporation.
"ENBC Credit Agreement" means that certain Secured Credit Agreement
dated as of May 17, 1996 among ENBC, the lenders from time to time party thereto
and Bank of America Illinois, as agent for such lenders, as the same may be
amended, modified or restated from time to time.
"ENBC Event of Default" means any "Event of Default" as such term is
defined in the ENBC Credit Agreement.
"Environmental Laws" means any and all federal, state, local laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published governmental
interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with the Company would be treated as a single
employer under Section 414(b) or (c) of the Code.
"Event of Default" means any of the events specified in Section 6.1;
provided, that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Financed Franchisee" means any Franchisee (other than a Subsidiary)
which has duly executed and delivered Financed Franchisee Loan Documents.
"Financed Franchisee Loan Documents" means loan documents entered into
between the Company, as lender, and a Franchisee, as borrower, which, taken as a
whole, meet each of the requirements set forth on Schedule 1.1B.
"Financed Subsidiary" means any Restricted Subsidiary which (1) is a
Franchisee and (2) was formerly a Financed Franchisee.
"Financed Subsidiary Loan Documents" means loan documents entered into
between the Company, as lender, and a Financed Subsidiary, as borrower, which
provide for loans that are secured by a perfected Lien (subject only to the
types of Liens described in clauses (1) through (10) of Section 4.1) on all of
the assets of the Financed Subsidiary including, without limitation, all real
and personal property of such Financed Subsidiary and all leasehold interests of
such Financed Subsidiary (unless after such Financed Subsidiary's best efforts
(which shall not require unreasonable efforts) such Financed Subsidiary is
unable to obtain the consent of the respective landlord for such leasehold to
the extent such consent is required) but excluding any assets subject to any
Sublease; it being understood that such loan documents may permit the Company to
subordinate the indebtedness evidenced by such loan documents and its perfected
Lien securing such indebtedness to the loan and
Lien of a third party lender (to the extent such third party loan is permitted
pursuant to Section 4.2(6)), provided, that the Company shall not agree to
subordinate to the loan and Lien of such third party lender (a) any of its
rights of payment from the Financed Subsidiary arising with respect to
royalties, leases or software or (b) prior to a payment default under the
indebtedness owed by such Financed Subsidiary to a third party lender, the
interest payments on the indebtedness evidenced by such loan documents.
"Financial Lease" means with respect to any Person at any date, any
Capital Lease of such Person and any operating lease of such Person entered into
outside of the ordinary course of business (including, without limitation, the
Master Leases).
"Financial Lease Debt" means, as of any date, (1) with respect to any
Capital Lease under which the Company or any of its Restricted Subsidiaries is
the lessee, the principal amount thereof as of such date as determined in
accordance with GAAP, but specifically excluding Capital Leases of Financed
Subsidiaries existing on the date each Financed Franchisee becomes a Financed
Subsidiary; (2) with respect to the 1996 Master Lease Agreement and the 1995
Master Lease Agreement, the termination value (as defined therein) as of such
date; and (3) with respect to any other Financial Lease under which the Company
or any of its Restricted Subsidiaries is the lessee, the present value (using a
market rate of interest) as of such date of all remaining rental payments of the
Company or such Restricted Subsidiary under such Financial Leases.
"Fixtures" means all fixtures of the Company and each Restricted
Subsidiary of every description and all substitutions and replacements of any
thereof which are not by law or by contract the property of any landlord of real
property to which such fixtures are attached.
"Franchisee" means any Person (excluding the Company but including any
Subsidiary) who is party to a then existing Franchise Agreement, Area
Development Agreement or similar agreement with the Company or who is otherwise
authorized to operate a Store.
"GAAP" means generally accepted accounting principles in the United
States applied by the Company consistent with past
practice (subject to changes in accounting policies permitted by such generally
accepted accounting principles which have been or are contemporaneously
disclosed in writing to each Agent).
"GECC" has the meaning set forth in the Preamble.
"Guarantor" means any Person which from time to time executes a
Guaranty.
"Guaranty" means a guaranty issued by a Restricted Subsidiary in favor
of either the Loan Agent for the benefit of the Lenders or in favor of the Lease
Agent for the benefit of GECC and the Participants, in each case in
substantially the form of Exhibit C.
"Indemnified Liabilities" has the meaning set forth in Section 7.10.
"Indemnitee" has the meaning set forth in Section 7.10.
"Intercreditor Agreement" has the meaning set forth in the Recitals.
"Issuing Lender" has the meaning set forth in the Recitals.
"Investment" means, with respect to any Person, any loan or advance to
such Person, any purchase or other acquisition of any capital stock, obligations
or other securities of such Person, any capital contribution to such Person or
any other investment in or acquisition of any interest in such Person.
"Landlord's Consent" means any Landlord's Consent in substantially the
form of Exhibit D (or in such other form as the Common Collateral Agent shall
agree in response to negotiations with the respective landlord) executed in
favor of the Common Collateral Agent for the benefit of the Creditors.
"Lease Agent" has the meaning set forth in the Preamble.
"Lease Participants" has the meaning set forth in the Recitals.
"Lenders" or "Lender" shall have the meaning assigned to such term in
the Recitals and shall include Bank of America Illinois while acting in the
capacity of a Lender, unless otherwise expressly indicated herein.
"Lender Mortgages" means, collectively, the Mortgages (as such term is
defined in the Credit Agreement) on the real property and associated Fixtures
which are described by postal address on Schedule 1.1C hereto.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement, or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"Loan Agent" has the meaning set forth in the Preamble.
"Loan Documents" has the meaning assigned thereto in the Credit
Agreement (as the same may be amended, supplemented, modified, reinstated,
refinanced, refunded or renewed from time to time in accordance with the terms
of the Intercreditor Agreement).
"Master Lease" means either the 1995 Master Lease Agreement or the
1996 Master Lease Agreement; and "Master Leases" means both the 1995 Master
Lease Agreement and the 1996 Master Lease Agreement.
"Material Adverse Change" means a material adverse change in the
condition (financial or otherwise), business, operations or prospects of the
Company and its Restricted Subsidiaries, taken as a whole.
"Mortgage" means a mortgage or deed of trust in substantially the form
of Exhibit E executed by the Company or a Restricted Subsidiary in favor of the
Common Collateral Agent.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA and covered by Title IV of ERISA which covers employees of the Company or
any ERISA Affiliate.
"1995 Lease Documents" means the 1995 Master Lease Agreement, the
associated Subleases and all documents ancillary to the foregoing; provided,
that the term "1995 Lease Documents" shall not include any amendment or other
modification thereto (other than Permitted Changes) without the prior written
consent of the Required Creditors.
"1995 Master Lease Agreement" means that certain Master Lease
Agreement dated as of September 27, 1995 between the Company and GECC for itself
and as agent for certain participants, as amended by certain amendments dated
September 28, 1995 and as of even date herewith; provided that the term "1995
Master Lease Agreement" shall not include any amendment or other modification
thereto (other than Permitted Changes) without the prior written consent of the
Required Creditors.
"1996 Master Lease Agreement" has the meaning set forth in the
Recitals.
"1996 Lease Documents" means the 1996 Master Lease Agreement, the
associated Subleases, the respective Guaranties, the Facilities Agreement, the
Agency Agreement and all other agreements, instruments and documents (including,
without limitation, mortgages, deeds of trust, chattel mortgages and security
agreements) delivered from time to time to GECC with respect to the foregoing
(as amended, supplemented, modified, restated, refinanced, refunded or renewed
from time to time in accordance with the terms of the Intercreditor Agreement).
"Non-Current Pay Subordinated Debt" means Debt of the Company which
(1) is subordinated in priority of payment to the Debt of the Company under the
Loan Documents, the 1995 Lease Documents and the 1996 Lease Documents (including
refinancings of and post-petition interest on the Credit Documents); (2) does
not have its (a) any interest payment prior to the earlier to occur of the third
anniversary of the date such Debt is issued or the ninety-first (91st) day
succeeding the Termination Date or (b) any principal payment prior to the
ninety-first (91st) day succeeding the Termination Date; (3) contains no
financial maintenance covenants other than (a) one or more financial
maintenance covenants which are substantially identical to those contained in
this Agreement, provided that such financial maintenance covenants are less
restrictive than the corresponding covenants contained in this Agreement and (b)
such other financial maintenance covenants which are reasonably acceptable to
the Required Creditors; (4) contains no cross-default clause but may contain a
cross-acceleration clause; (5) contains no negative pledge clause (other than
any such clause that does not prohibit or otherwise restrict Liens securing Debt
of the Company or any Guarantor under the Credit Documents); (6) distinguishes
between payment and non-payment defaults for purposes of suspending payments
with respect to such subordinated debt; and (7) contains a "fish or cut bait"
provision with respect to non-payment defaults of at least 89 days.
"Original Facilities Agreement" has the meaning set forth in the
Recitals.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Changes" means (i) waivers in the ordinary course of
business, (ii) amendments and modifications necessary or appropriate to reflect
additions and changes to the assets and related rental obligations covered by
the 1995 Master Lease Agreement and the associated Subleases, as contemplated by
the respective 1995 Lease Documents, (iii) amendments and modifications effected
in connection with the waiver of a default in payment obligations of the Company
under the 1995 Master Lease Agreement, which amendments and modifications would
not constitute or result in a failure of the Company or any Guarantor to perform
or observe any term, covenant or agreement in the Credit Documents as in effect
immediately prior to the effectiveness of such amendments or modifications and
(iv) other amendments and modifications that do not change the substance of the
transactions contemplated by the 1995 Lease Documents taken as a whole.
"Person" means 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" means any plan (as defined in Section 3(3) of ERISA and covered
by ERISA) established, maintained, or to which contributions have been made by
the Company or any ERISA Affiliate, which definition, as of the date hereof, the
Company believes does not encompass the following arrangements: Company's
Amended and Restated 1991 Employee Stock Option Plan, Company's Amended and
Restated 1991 Stock Option Plan for Non-Employee Directors, as amended,
Company's 1995 Employee Stock Option Plan and its deferred compensation to
market partners, managing partners or others pursuant to similar agreements.
"Pledge Agreement" means Amended and Restated Pledge Agreement in
substantially the form of Exhibit F executed by the Company and certain
Restricted Subsidiaries in favor of the Common Collateral Agent.
"Preferred Stock" means preferred stock of the Company which (1) does
not have scheduled cash dividend payments prior to the second anniversary of its
issuance, (2) does not have any mandatory redemptions occurring prior to the
ninety-first (91st) day succeeding the Termination Date, (3) does not require
the payment of cash dividends or of any mandatory redemptions during the
occurrence and continuance of a Default or an Event of Default and (4) subject
to compliance with the provisions of Section 4.2, may be exchangeable at the
option of the Company into Subordinated Debt.
"Prohibited Transaction" means any non-exempt transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA other than those events as to which the 30-day notice period is waived
under the regulations thereunder.
"Required Creditors" means Creditors sufficient to amend this
Agreement in accordance with the Intercreditor Agreement.
"Restricted Subsidiary" means, with respect to the Company, any
Subsidiary which is not an Unrestricted Subsidiary.
"Retail Period" means any of the thirteen consecutive four-week
periods used by the Company for accounting purposes
which begin on or about the Monday after the last Sunday in December of each
year and ending on the last Sunday in December of the next year.
"Revolving Notes" shall have the meaning assigned thereto in the
Credit Agreement.
"Security Agreement" means any Security Agreement in substantially the
form of Exhibit G executed by the Company or any Restricted Subsidiary in favor
of the Common Collateral Agent for the benefit of the Creditors.
"Senior Secured Indebtedness" means, at any time, the aggregate
principal amount of revolving loans and letter of credit obligations (including,
without limitation, the unreimbursed amount of any draws under the letters of
credit) then outstanding under the Credit Agreement plus the aggregate amount of
all Financial Lease Debt then outstanding.
"Significant Subsidiary" means a Restricted Subsidiary which would be
a "significant subsidiary" under either clause (2) or clause (3) of the
definition of "significant subsidiary" in Rule 1-02 of Regulation S-X under the
Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, as
such Regulation is in effect on the date hereof, assuming that the Company is
the "registrant" referred to in such definition.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Federal Bankruptcy Reform Act of 1978 and, in the alternative,
for purposes of the New York Uniform Fraudulent Transfer Act; (b) the present
fair saleable value of the property of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"Special Purpose Subsidiary" means any Restricted Subsidiary (which is
not a Franchisee): (1) of which the Company owns, directly or indirectly through
one or more intermediaries, or both, all of the issued and outstanding voting
stock, general partner's interests or other equity interests having ordinary
voting power to elect the board of directors or other managers of such
Restricted Subsidiary; (2) which has executed and delivered to each of the Loan
Agent and the Lease Agent a Guaranty; and (3) the only assets of which are real
property, leases of real property (in which such Restricted Subsidiary is the
landlord) to the extent permitted by Section 4.7 or general partner interests in
Financed Subsidiaries.
"Store" means a retail food service outlet operating under the
tradename of "Boston Market" or "Boston Xxxxxx."
"Store EBITDAL" means, for each fiscal period of the Company, (1) the
combined net revenue (i.e. gross revenue net of customer coupons and discounts)
generated by all Stores operated by the Company, its Restricted Subsidiaries and
each Financed Franchisee minus (2) the sum of (a) food and paper costs plus (b)
Store employee wages, salaries and benefit payments plus (c) other Store
operating and occupancy costs plus (d) the amount of required media
contributions at the Store level, in each case, of the Company, its Restricted
Subsidiaries and the Financed Franchisees, calculated using the same methodology
as used in the Company's 10K or 10Q for such fiscal period filed with the
Securities and Exchange Commission (or any governmental authority which may be
substituted therefor).
"Store Revenue" has the meaning set forth in Section 5.3 hereof.
"Subleases" means subleases of equipment and/or real property entered
into between the Company, as lessor, and a Franchisee, as lessee, pursuant to
any Master Lease.
"Subordinated Debt" means Current Pay Subordinated Debt and Non-
Current Pay Subordinated Debt.
"Subsidiary" means, as to the Company, a Person (other than an
individual) of which shares of stock, partnership units or other equity
interests having ordinary voting power (other than shares 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 Person are at the time owned, directly or
indirectly through one or more intermediaries, or both, by the Company. For
purposes hereof, the existence of a Franchise Agreement, Area Development
Agreement or similar agreement between the Company and a Person shall not, by
itself, evidence that such Person is controlled by the Company, nor shall the
Financed Franchisee Loan Documents executed by a Franchisee evidence such
control prior to the acquisition by the Company of an equity interest therein
having power to elect or control the majority of the board of directors or other
managers of the Financed Franchisee, whether such acquisition occurs by
conversion of debt, exercise of any equity option, or otherwise, including upon
acceleration under the Financed Franchisee Loan Documents.
"System EBITDAL" means for each fiscal period of the Company, the
Store EBITDAL for such fiscal period minus the Combined Overhead for such fiscal
period.
"System EBITDAL Commencement Quarter" means the earlier of (1) the
fiscal quarter of the Company immediately succeeding the first consecutive four
fiscal quarter period of the Company ending after the Effective Date in which
the System EBITDAL equals or exceeds $85,0000,000 and (2) the Company's first
fiscal quarter, 1999.
"Termination Date" means the date upon which no Debt of the Company or
any Guarantor shall be outstanding under any of the Credit Documents and no
Creditor has any contractual obligations under any Credit Document to extend
credit of any nature to the Company.
"Trademark Security Agreement" means a Trademark Security Agreement
substantially in the form of Exhibit H executed by the Company or any Restricted
Subsidiary in favor of the Common Collateral Agent for the benefit of the
Creditors.
"Unrestricted Subsidiary" means ENBC, but only so long as ENBC is a
Subsidiary.
Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with that applied
in the preparation of the financial statements referred to in Section 2.4, and
all financial data prepared by the Company and submitted pursuant to this
Agreement shall be prepared in accordance with such principles except for the
financial data submitted pursuant to Section 3.8(1) and such other financial
data which the Company expressly states has not been prepared in accordance with
such principles.
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Creditors that:
Incorporation, Good Standing, and Due Qualification. The Company and
each of its Restricted Subsidiaries: (1) is a corporation, partnership or
limited liability company, as the case may be, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization or
formation; (2) has the power and authority and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
to transact the business in which it is now engaged or proposed to be engaged;
and (3) is duly qualified as a foreign corporation, partnership or limited
liability company, as the case may be, and in good standing under the laws of
each other jurisdiction in which the failure to so qualify would result in a
Material Adverse Change.
Corporate Power and Authority. The execution, delivery, and
performance by the Company and each Guarantor of each of the Credit Documents to
which it is a party and the granting by the Company and each Guarantor of Liens
pursuant to the Credit Documents have been duly authorized by all necessary
corporate or other constitutional action on the part of the Company or such
Guarantor, as the case may be, and do not and will not (1) contravene or
conflict with the organizational
documents of the Company or such Guarantor; (2) violate any provision of, or
cause the Company or such Guarantor to be in default under, any law, rule,
regulation (including, without limitation, Regulation U of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination, or award currently in effect having applicability to the
Company or such Guarantor; (3) result in a breach of, or constitute a default
under, any material indenture or loan or credit agreement or any other material
agreement, lease, or instrument to which the Company or such Guarantor is a
party or by which it or its properties may be bound or affected; or (4) result
in, or require, the creation or imposition of any Lien (except as permitted
pursuant to Section 4.1), upon or with respect to any of the properties now
owned or hereafter acquired by the Company or such Guarantor.
Legally Enforceable Agreement. This Agreement is, and each of the
other Credit Documents will be, legal, valid, and binding obligations of the
Company and each of the Guarantors (to the extent they are parties to such
Credit Documents) enforceable against the Company and such Guarantor (as
applicable) in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors' rights generally and by general principles of
equity.
Financial Statements. The Company's audited consolidated financial
statements as at December 29, 1996 (the "Audited Statements") and its unaudited
consolidated financial statements as at July 14, 1997, ("Unaudited Statements")
have been furnished to each Creditor. The Audited Statements have been prepared
in conformity with GAAP and fairly present the financial condition of the
Company and its Subsidiaries as at such dates and the results of operations for
the periods then ended. The Unaudited Statements have been prepared in a manner
consistent (except for changes in accounting policies permitted by GAAP which
have been or are contemporaneously disclosed in writing to each Creditor) with
the Audited Statements, except for the lack of normal year-end accruals,
reclassifications, and audit adjustments and financial statement footnotes.
Since the date of the most recent financial statements supplied to each Creditor
pursuant to either Section 3.8(2) or (3), whichever is the most recently
delivered, there has been no Material Adverse
Change. No information, exhibit, or report furnished by the Company to the
Creditors in connection with the negotiation of this Agreement, considered as a
whole with all other information, exhibits and reports furnished to the
Creditors in connection with the negotiation of this Agreement at the time it
was furnished (and as modified or superseded by any information, exhibits and
reports subsequently furnished to the Creditors), contained any material
misstatement of fact or omitted to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not materially misleading; provided, that except as expressly provided
below, the Company makes no representation, warranty, or guaranty as to (1) any
projections furnished to the Creditors (it being understood that such
projections have been prepared by management of the Company on the basis of
assumptions which such management believed were reasonable as of the date of
such projections in light of the historical financial performance of the
business of the Company and of current and reasonably foreseeable business
conditions) or (2) any information supplied by Franchisees or contained in
analyst reports or other reports prepared by third parties or derived therefrom
unless in the case of this clause (2) the Company has actual knowledge at the
time such information is delivered to the Creditors that such information
contains a material misstatement of fact or omits to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not materially misleading.
Other Agreements. Neither the Company nor any Restricted Subsidiary is
a party to any material indenture, loan, or credit agreement, or to any material
lease or other agreement or instrument, or subject to any charter or corporate
restriction which would be breached or accelerated by entering into the Credit
Documents or which would have a material adverse effect on the ability of the
Company to carry out its obligations under the Credit Documents. Neither the
Company nor any Restricted Subsidiary is in default in any respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument which would result in a
Material Adverse Change.
Litigation. Except as set forth on Schedule 2.6, there is no pending
or (to the Company's knowledge) threatened action or proceeding against or
affecting the Company or any Restricted Subsidiary before any court,
governmental agency, or arbitrator, which, in any one case or in the aggregate,
is material to the Company and its Restricted Subsidiaries, taken as a whole, or
would materially and adversely affect the ability of the Company to perform its
respective obligations under the Credit Documents.
No Defaults on Outstanding Judgments or Orders. To the best of the
Company's knowledge, the Company and its Restricted Subsidiaries have satisfied
all material final judgments, and neither the Company nor any Restricted
Subsidiary is in default with respect to any final judgment, writ, injunction,
decree, rule, or regulation of any court, arbitrator, or federal, state,
municipal, or other governmental authority, commission, board, bureau, agency,
or instrumentality, domestic or foreign, which default would result in a
Material Adverse Change.
Governmental and Regulatory Approvals. No authorizations, approvals
or consents of, and no filings or registrations with, any governmental or
regulatory authority or agency are necessary for the execution, delivery or
performance by the Company or any Guarantor, as the case may be, of the Credit
Documents to which it is a party or for the validity or enforceability thereof,
except for filings necessary to perfect Liens granted pursuant to the Credit
Documents.
Ownership and Liens. The Company and each Restricted Subsidiary has
title to, or valid leasehold interests in, all of its properties and assets,
real and personal, and none of the properties and assets owned by the Company or
any Restricted Subsidiary and none of their leasehold interests is subject to
any Lien, except such as may be permitted pursuant to Section 4.1 of this
Agreement.
ERISA. The Company and the ERISA Affiliates are in compliance in all
material respects with the applicable provisions of ERISA.
Hazardous Materials. (1) The Company and each of its Subsidiaries
have obtained all permits, licenses and other authorizations which are required
to be obtained by the Company or such Subsidiary under all Environmental Laws,
except to the extent failure to have any such permit, license or authorization
would not result in a Material Adverse Change. Except as disclosed pursuant to
clause (3) below, the Company and each of its Subsidiaries are in compliance
with the terms and conditions of all such permits, licenses and authorizations,
and are also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent that any such failure
to comply would not result in a Material Adverse Change.
There have been no material environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or which are in the
possession of the Company or any of its Subsidiaries in relation to any property
or facility now or previously owned or leased by the Company or any of its
Subsidiaries which have not been made available to the Creditors.
The Company has informed the Creditors in writing of all material non-
compliance of the Company and each of its Subsidiaries with the terms and
conditions of all (a) permits, licenses or authorizations required under all
Environmental Laws and (b) other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any applicable regulation,
code, plan, order, decree, judgment, injunction notice or demand letter issued,
entered, promulgated or approved thereunder, except for such instances of
noncompliance which would not result in a Material Adverse Change.
Taxes. The Company and each Subsidiary have filed all material tax
returns (federal, state, and local) required to be filed and have paid all
taxes, assessments, and governmental charges and levies thereon which it is
aware are due, including
interest and penalties, except to the extent the validity thereof is being
contested in good faith and by appropriate proceedings.
Debt. As of the Effective Date, Schedule 2.13 sets forth a complete
and correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases, and other investments, agreements, and arrangements
currently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
bankers' acceptance financing) in respect of which the Company or any Restricted
Subsidiary is in any manner directly or contingently obligated; and the maximum
principal or face amounts of the credit in question, which are outstanding and
which can be outstanding, are correctly stated, and all Liens of any nature
given or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
Investment Company Act. Neither the Company nor any of its
Subsidiaries is, and each Financed Franchisee has duly represented to the
Company that it is not, an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Public Utility Holding Company Act. Neither the Company nor any of its
Subsidiaries is a "holding company," or an "affiliate" of a "holding company" or
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company act of 1935, as amended.
Pledged Collateral. Schedule 2.16 sets forth as of the Effective Date
(and as of the date of delivery pursuant to Section 3.8(6) of any subsequent
Schedule 2.16) a true and correct list of the following information:
All capital stock, partnership units or other equity interests of
any Person owned by the Company and its Restricted Subsidiaries (on which
Schedule the Company has indicated by an asterisk ("*") any capital
stock, partnership units or other equity interest owned by the Company or a
Restricted Subsidiary which is not subject to a perfected Lien in favor of
the Common Collateral Agent for the benefit of the Creditors pursuant to
the Pledge Agreement);
Any Debt owed by each Person to the Company or any Restricted
Subsidiary which is evidenced by a promissory note or other instrument (on
which Schedule the Company has indicated by an asterisk ("*") those
promissory notes or other instruments which have not been delivered to the
Common Collateral Agent pursuant to a Pledge Agreement).
Real Property. Schedule 2.17 hereto sets forth, as of the Friday
immediately preceding the Effective Date (and as of the Friday immediately
preceding any date of delivery pursuant to Section 3.8(6) of any subsequent
Schedule 2.17), a complete and accurate list of the addresses of each parcel of
real property owned or leased by the Company or any Restricted Subsidiary (on
which Schedule the Company has indicated by an asterisk ("*") (i) any real
property owned by the Company or a Restricted Subsidiary which is not subject to
the Master Lease, the Lender Mortgages or a Mortgage or otherwise set forth on
Schedule 3.13 and (ii) any real property leased by the Company or a Restricted
Subsidiary which has not been collaterally assigned to the Lease Agent pursuant
to the Master Lease or to the Common Collateral Agent pursuant to a Collateral
Assignment of Lease).
Financed Franchisee/Subsidiary Information. Schedule 2.18 hereto sets
forth, as of the Effective Date (and as of the date of delivery pursuant to
Section 3.8(6) of any subsequent Schedule 2.18), a true and complete list of the
following information:
All Financed Franchisee Loan Documents and Financed Subsidiary
Loan Documents then in effect between the Company and any Franchisee or
Subsidiary;
Any Liens granted by each Person to the Company or any Restricted
Subsidiary to secure Debt covered by the foregoing clause (1) and the
filing offices in which the Company has filed Financing Statements (UCC-
1's), mortgages or deeds of trust to perfect such Liens and the
acknowledgement numbers or other recording information of such Financing
Statements, mortgages or deeds of trust;
provided, that, in the case of the Schedule 2.18 attached hereto (but no future
Schedules delivered pursuant to Section 3.8(6)), the Lien portion of such
Schedule may be preliminary subject to delivery to the Common Collateral Agent
of a final version within thirty (30) days of the Effective Date.
Collateral Documents. (a) The provisions of each of the Common
Collateral Documents are effective to create in favor of the Common Collateral
Agent for the benefit of the Creditors, a legal, valid and enforceable security
interest in all right, title and interest of the Company and its Restricted
Subsidiaries in the collateral described therein; and proper financing
statements have been delivered to the Common Collateral Agent for filing in the
offices in all of the jurisdictions listed in the schedule to the Security
Agreements.
Each Mortgage when delivered will be effective to grant to the Common
Collateral Agent for the benefit of the Creditors, a legal, valid and
enforceable Lien on all the right, title and interest of the mortgagor under
such Mortgage in the mortgaged property described therein. When each such
Mortgage is duly recorded in the offices listed on the schedule to such Mortgage
and the mortgage recording fees and taxes in respect thereof are paid and
compliance is otherwise had with the formal requirements of state law applicable
to the recording of real estate mortgages generally, each such mortgaged
property, subject to the encumbrances and exceptions to title set forth therein
and except as noted in the title policies delivered to the Common Collateral
Agent in connection therewith, will be subject to a legal, valid, enforceable
and perfected first priority Lien.
All representations and warranties of the Company and any of its
Restricted Subsidiaries party thereto contained in the Collateral Documents are
true and correct in all material respects.
Each of the Common Collateral Documents secure the "Secured
Obligations" as such term is defined in the Security Agreement executed by the
Company.
Solvency. As of the Effective Date, the Company and each Restricted
Subsidiary is Solvent.
AFFIRMATIVE COVENANTS
---------------------
From and after the date hereof, so long as any Debt of the Company or
any Guarantor arising under the Credit Documents shall remain unpaid or any
Creditor shall have any contractual obligation under any Credit Document to
extend credit of any nature to the Company, the Company will:
Maintenance of Existence. Except as otherwise permitted by Section
4.3, preserve and maintain, and cause each Restricted Subsidiary to preserve and
maintain, its legal existence and good standing in the jurisdiction of its
organization or formation, and qualify and remain qualified, and cause each
Restricted Subsidiary to qualify and remain qualified, as a foreign entity in
each jurisdiction in which the failure to so qualify would result in a Material
Adverse Change.
Maintenance of Records. Keep, and cause each Subsidiary to keep,
adequate records and books of account.
Maintenance of Properties. Maintain, keep, and preserve, and cause
each Restricted Subsidiary to maintain, keep, and preserve, all of its material
properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and
tear excepted; provided, however, the Company and each Restricted Subsidiary may
close Stores in the ordinary course of business, in which event the Company
shall give prompt written notice to each Agent.
Conduct of Business. Except (1) for the ownership and operation of
Unrestricted Subsidiaries and any Investments permitted therein by clause (3) of
Section 4.8 and (2) to the extent otherwise permitted pursuant to clause (5) of
Section 4.8, continue, and cause each Restricted Subsidiary to continue (unless
causing to so continue would constitute a breach of fiduciary duty), to engage
in the operation of Stores and/or in the franchising of Stores to other Persons
(and other matters and operations incidental to the foregoing, including, but
not limited to, the holding of real estate or leasehold interests for Store
locations and the distribution of Store supplies or inventory items), and no
other line of business; provided, that after each acquisition by the Company or
a Restricted Subsidiary of preexisting operating assets, the Company or such
Restricted Subsidiary, as the case may be, shall have a reasonable period of
time in which to dispose of any assets so acquired which do not relate, or are
not being converted, to the operation of Stores or the franchising of Stores to
other Persons and other matters and operations incidental to the foregoing (and
the Common Collateral Agent shall promptly execute and deliver to the Company
all documents reasonably requested by the Company in order to release any
existing Liens in favor of the Common Collateral Agent on any such assets).
Maintenance of Insurance. Maintain, and cause each Restricted
Subsidiary to maintain, insurance with commercially reasonable and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.
Compliance With Laws. Comply, and cause each Subsidiary to comply, in
all material respects with all material applicable laws, rules, regulations, and
orders, such compliance to include, without limitation, paying before the same
become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property except to the extent the validity thereof is being contested
in good faith and by appropriate proceedings.
Right of Inspection. At any reasonable time and from time to time,
permit any Creditor or any agent or representative thereof to examine and make
copies of and abstracts from the records and books of account of, and visit the
properties of, the Company and any Subsidiary, and to discuss the affairs,
finances, and accounts of the Company and any Subsidiary with any of their
respective officers, directors and employees and the Company's independent
accountants, and to take samples from the air, water, soil or building materials
at, on or under any property of the Company or any Subsidiary, which is
mortgaged, hypothecated or pledged as Collateral (as such term is defined in the
Intercreditor Agreement); provided, that upon the occurrence and during the
continuance of a Default, any Creditor may exercise the foregoing rights set
forth in this Section at any time and at the expense of the Company.
Reporting Requirements. Furnish to each of the Loan Agent and the
Lease Agent (in such number of copies of each as may be specified by the
Agents):
Retail Period financial statements. As soon as available and in any
event within twenty (20) days after the end of each Retail Period of the
Company (or in the case of the last Retail Period of each fiscal quarter of
the Company, within forty-five (45) days after the end of such Retail
Period), consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as at the end of such Retail Period,
consolidated and consolidating statements of operations of the Company and
its Restricted Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such Retail Period and for
the period commencing at the end of the previous Retail Period and ending
with the end of such Retail Period, and consolidated and consolidating
statements of cash flows of the Company
and its Restricted Subsidiaries for the portion of the fiscal year ended
with the last day of such Retail Period and for the period commencing at
the end of the previous Retail Period and ending with the end of such
Retail Period, all in reasonable detail and for statements of operations,
stating in comparative form the respective budget figures for the
corresponding period, and a "flash" report of sales by week by unit in the
most complete form as previously delivered to each of the Loan Agent and
the Lease Agent; provided, however, that the Company shall be under no
obligation to deliver to the Loan Agent or the Lease Agent consolidating
financial statements prior to any Creditor's written request therefor or if
the Company has no Significant Subsidiary;
Quarterly financial statements. As soon as available and in any event
within forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, consolidated and consolidating
balance sheets of the Company and its Restricted Subsidiaries as at the end
of such fiscal quarter, consolidated and consolidating statements of
operations of the Company and its Restricted Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end
of such fiscal quarter, consolidated and consolidating statements of cash
flows of the Company and its Restricted Subsidiaries for the portion of the
fiscal year ended with the last day of such fiscal quarter and combined
statements of operations of the Company, its Restricted Subsidiaries and
the Financed Franchisees, all in reasonable detail and stating in
comparative form the respective consolidated and consolidating or combined
figures for the corresponding date and period in the previous fiscal year
and, in the case of the consolidated and consolidating statements,
certified by the Chief Financial Officer, Chief Accounting Officer, Vice
President - Finance or any Senior Vice President of the Company (in his or
her capacity as such, without personal liability therefor) as being
prepared consistent with the Company's audited annual financial statements
(subject (a) to year-end
adjustments and changes in accounting policies permitted by GAAP which have
been disclosed in writing to the Agents, and (b) to adjustments necessary
to factor out the consolidated results of operations and financial position
of ENBC from such financial statements); provided, however, that the
Company shall be under no obligation to deliver to the Loan Agent or the
Lease Agent consolidating financial statements prior to any Creditor's
written request therefor or if the Company has no Significant Subsidiary;
Annual financial statements. As soon as available and in any event
within ninety (90) days after the end of each fiscal year of the Company,
(a) a consolidated and consolidating balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year, consolidated and
consolidating statements of operations of the Company and its Subsidiaries
for such fiscal year, and consolidated and consolidating statements of cash
flows of the Company and its Subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the prior
fiscal year and all prepared in accordance with GAAP and as to the
consolidated statements accompanied by an unqualified opinion thereon,
except for such qualifications as may be reasonably acceptable to the
Required Creditors, by Xxxxxx Xxxxxxxx & Co. or other independent
accountants selected by the Company and reasonably acceptable to the
Required Creditors, and (b) consolidated and consolidating balance sheet of
the Company and its Restricted Subsidiaries as at the end of such fiscal
year, consolidated and consolidating statements of operations of the
Company and its Restricted Subsidiaries for such fiscal year, consolidated
and consolidating statements of cash flows of the Company and its
Restricted Subsidiaries for such fiscal year and combined statements of
operations of the Company, its Restricted Subsidiaries and the Financed
Franchisees, all in reasonable detail and stating in comparative form the
respective consolidated figures for the corresponding date and period in
the prior
fiscal year and, in the case of the consolidated and consolidating
statements, certified by the Chief Financial Officer, Chief Accounting
Officer, Vice President - Finance or any Senior Vice President of the
Company (in his or her capacity as such, without personal liability
therefor) as being prepared consistent with the Company's audited annual
financial statements (subject to adjustments necessary to factor out the
consolidated results of operations and financial position of ENBC from such
financial statements); provided, however, that in no event shall the
Company be obligated to deliver to the Loan Agent and the Lease Agent
consolidating financial statements prior to any Creditor's written request
therefor or if the Company has no Significant Subsidiary and ENBC is not
then a Subsidiary;
Certificate of No Default. Together with the financial statements
furnished by the Company under the preceding clauses (2) and (3), a duly
completed compliance certificate in the form of Exhibit I signed by the
Chief Financial Officer, Chief Accounting Officer, Vice President - Finance
or any Senior Vice President of the Company (in his or her capacity as
such, and without personal liability therefor);
Accountant's reports. (a) Together with the financial statements
furnished by the Company under the preceding clause (3), a certificate of
the independent public accountants who audited such statements to the
effect that, in making the examination necessary for the audit of such
statements, they have obtained no knowledge of any condition or event which
constitutes a Default or Event of Default, or if such accountants shall
have obtained knowledge of any such condition or event, specify in such
certificate each such condition or event of which they have knowledge and
the nature and status thereof; and (b) promptly upon receipt thereof,
copies of any reports submitted to the Company or any Significant
Subsidiary by independent certified public accountants in connection with
examination of
the financial statements of the Company or any Significant Subsidiary made
by such accountants;
Updated Schedules. As soon as reasonably available in final form and
in any event within forty-five (45) days after the end of each fiscal
quarter of the Company (or if requested in writing by any Agent within
forty-five (45) days after the end of each Retail Period), updated
Schedules 2.16, 2.17 and 2.18 hereto which updated schedules shall be
deemed as of the date of delivery to amend and restate (a) the previously
delivered Schedules 2.16, 2.17 and 2.18 in their entirety, (b) in the case
of Schedule 2.16, Attachment I to the Pledge Agreement in its entirety
(provided, that the following items listed on Schedule 2.16 shall be
deleted before such schedule shall be deemed to be Attachment I to the
Pledge Agreement: (A) the equity interests designated with an asterisk
("*") on the initial Schedule 2.16 attached hereto and (B) notes or other
instruments evidencing loans and advances permitted by clause (ii) of
Section 4.8), (c) in the case of Schedule 2.17, Schedule I to the Security
Agreement in its entirety and (d) in the case of Schedule 2.18, Schedule I
to the Collateral Assignment of Loan in its entirety;
Notice of litigation. Promptly after the commencement thereof, notice
of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic
or foreign, affecting the Company or any Subsidiary, which, in any one case
or in the aggregate, are material to the Company and its Restricted
Subsidiaries taken as a whole, or adversely affect the ability of the
Company or any Guarantor to perform its obligations under the Credit
Documents;
Notice of Defaults and Events of Default. (a) Promptly after the
Company becomes aware of the occurrence of a default (as such term is used
in the 1995 Master Lease Agreement) or any event which with
the passage of time, the giving of notice or both would constitute such a
Default, and (b) as soon as possible and in any event within three (3)
Business Days after the Company becomes aware of the occurrence of any
other Default or Event of Default, a written notice setting forth the
details of such Default or Event of Default and the action which is
proposed to be taken by the Company with respect thereto;
ERISA reports. Promptly after the filing or receiving thereof, copies
of all substantive reports, including annual reports, with respect to each
Plan for which the Company or a Subsidiary is the plan sponsor and material
notices which the Company or any Subsidiary files with or receives from the
PBGC or the U.S. Department of Labor under ERISA; and as soon as possible
and in any event within thirty (30) days after the Company or any
Subsidiary knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the
PBGC or the Company or any Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, the Company will
deliver to each of the Loan Agent and the Lease Agent a certificate of the
Chief Financial Officer, Chief Accounting Officer, Vice President - Finance
or any Senior Vice President of the Company (in his or her capacity as such
and with no personal liability therefor) setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination and the
action the Company proposes to take with respect thereto;
Reports to other creditors. Promptly after the furnishing thereof,
copies of any material statement or report furnished to any other creditor
of the Company pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to the Loan
Agent and the Lease Agent pursuant to any other clause of this Section 3.8;
Proxy statements, etc. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements, reports and
prospectus (whether preliminary or final) which the Company or any
Restricted Subsidiary is required under applicable securities laws to send
to its stockholders, and copies of all regular, periodic, and special
reports, and all registration statements which the Company or any
Restricted Subsidiary files with the Securities and Exchange Commission (or
any governmental authority which may be substituted therefor) or with any
national securities exchange;
Financed Franchisee Loan Documents. Promptly after the execution and
delivery (a) by a Financed Franchisee of any Financed Franchisee Loan
Documents, copies of such Financed Franchisee Loan Documents and (b) by a
Financed Subsidiary of any Financed Subsidiary Loan Documents, copies of
such Financed Subsidiary Loan Documents;
Financed Franchisee and Financed Subsidiary quarterly financial
statements. As soon as available and in any event within forty-five (45)
days after the end of each of the first three fiscal quarters of each
fiscal year of each Financed Franchisee and each Financed Subsidiary, and
as soon as available and in any event within ninety (90) days after the end
of each fiscal year of each Financed Franchisee and each Financed
Subsidiary, balance sheets of each such Financed Franchisee and each such
Financed Subsidiary as at the end of such fiscal quarter or fiscal year,
statements of operations of each such Financed Franchisee and each such
Financed Subsidiary for the period commencing at the end of the previous
fiscal year and ending with the end of such fiscal quarter or fiscal year,
and statements of cash flows of each such Financed Franchisee and each such
Financed Subsidiary for the portion of the fiscal year ended with the last
day of such fiscal quarter or fiscal year, all in reasonable detail and
stating in comparative form the respective figures for the corresponding
date and
period in the previous fiscal year and either (A) certified by the Chief
Financial Officer, Chief Accounting Officer, Vice President - Finance or
any Senior Vice President of the Company (in his or her capacity as such,
without personal liability therefor) as being, to the best of such
officer's knowledge, prepared in accordance with GAAP or (B) certified to
the Creditors by the chief executive officer, the chief financial officer
or treasurer of such Financed Franchisee or Financed Subsidiary as
accurate, subject to changes resulting from normal, recurring year-end
adjustments;
Contingent Lease Liabilities. Together with the financial statements
furnished by the Company under the preceding clauses (2) and (3), a report
showing the aggregate amount of payments due during the twelve-month period
succeeding the date of such financial statements under all leases of
Financed Franchisees with respect to which the Company is primarily liable
pursuant to leases transferred to Financed Franchisees in accordance with
clause (4) of Section 4.7; and
General information. Such other information respecting the condition
or operations, financial or otherwise, of the Company or any Subsidiary as
any of the Loan Agent, the Lease Agent, Documentation Agent or the Required
Creditors may from time to time reasonably request.
Environmental Laws. Use and operate, and cause each Subsidiary to use
and operate, all of its facilities and properties in material compliance with
all Environmental Laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all hazardous substances
in material compliance with all applicable Environmental Laws, except to the
extent the failure to comply with the foregoing would not result in a Material
Adverse Change; and provide such information and certifications which any
Creditors may reasonably request from time to time to evidence compliance with
this Section.
Credit Usage.
------------
At the time of each incurrence, and after giving effect thereto, of
Debt under the Credit Agreement or the 1996 Master Lease Agreement during
any fiscal period set forth below (but only at such times and at no other
times) demonstrate to the Loan Agent or the Lease Agent that the ratio of
(1) Senior Secured Indebtedness to (2) Annualized Store EBITDAL, for the
fiscal quarter then most recently ended for which financial statements have
been delivered to the Loan Agent and the Lease Agent pursuant to Section
3.8, does not exceed the ratio set forth below opposite such fiscal period:
Fiscal Period(s) Ratio
---------------- -----
Q4 1997 - Q1 1998 2.50:1.00
Q2 1998 2.25:1.00
Q3 1998 - Q4 1998 2.00:1.00
Thereafter 1.75:1.00
In the event the Company receives any proceeds from the incurrence of
Debt under the Credit Agreement or the 1996 Master Lease Agreement on a day
when, after giving effect to such incurrence, the ratio set forth in the
preceding clause was exceeded, the Company shall repay to the Loan Agent
and/or the Lease Agent, as the case may be, proceeds from the incurrence of
such Debt in an amount sufficient to cause compliance with such ratio as of
the date of such incurrence, such repayment to be made promptly, but in no
event later than 5 Business Days of written notice from the Loan Agent or
the Lease Agent, as the case may be, requiring such repayment.
Notes, Certificates and Other Collateral. Deliver to the Common
Collateral Agent promptly and in no event more than
ten (10) Business Days after receipt (a) all promissory notes and other
instruments evidencing any Debt owed by any Financed Franchisee or Financed
Subsidiary to the Company or any Restricted Subsidiary, and (b) all certificates
(together with duly executed undated blank stock powers; or in the case of
uncertificated securities, registration of pledges or appropriate financing
statements (UCC-1's), to the extent required by applicable law) evidencing
capital stock, partnership units or other equity interests of any Subsidiary,
which are owned by the Company or any Restricted Subsidiary; and, simultaneously
with the delivery of such promissory notes, instruments or certificates, an
updated Attachment 1 to the Pledge Agreement indicating, as appropriate, such
Person as a "Pledged Note Issuer" and/or a "Pledged Unit Issuer" (as such terms
are defined in the Pledge Agreement). All such promissory notes, instruments and
certificates shall be held by the Common Collateral Agent in accordance with,
and subject to, the Pledge Agreement; provided, that the Common Collateral Agent
shall take such action with respect to the foregoing promissory notes,
instruments and certificates as the Company or such Restricted Subsidiary may
reasonably instruct so long as such action is either (x) in the case of
promissory notes or instruments, mandatory pursuant to the documentation by
which the Company or such Restricted Subsidiary holds such promissory notes or
instruments or (y) is consistent with the terms of this Agreement and the other
Loan Documents.
Financing Statements. Concurrently with the delivery pursuant to
Section 3.8(6) of a subsequent Schedule 2.17 setting forth addresses of real
property owned or leased by the Company or any Restricted Subsidiary which are
located in jurisdictions for which the Company or such Restricted Subsidiary, as
the case may be, has not then provided to the Common Collateral Agent financing
statements (UCC-1's), deliver to the Common Collateral Agent financing
statements (UCC-1's) for filing in such jurisdictions duly executed by the
Company or Restricted Subsidiary, as the case may be, listing the Company or
such Restricted Subsidiary, as the case may be, as debtor, and the Common
Collateral Agent, as secured party, and setting forth a description of
collateral reasonably acceptable to the Common Collateral Agent.
Real Property.
-------------
Within ninety (90) days of the Effective Date, deliver to the Common
Collateral Agent (a) with respect to each of the parcels of real property
referenced on Schedule 2.17 hereto as owned by the Company or any
Restricted Subsidiary and designated with an asterisk ("*") and not set
forth on Schedule 3.13 hereto, each of the documents set forth in clause
(2) below and (b) with respect to each of the parcels of real property
referenced on Schedule 2.17 hereto as leased by the Company or any
Restricted Subsidiary and designated with an asterisk ("*") and not set
forth on Schedule 3.13 hereto, each of the documents set forth in clause
(3) below; provided, that the Common Collateral Agent may decline to accept
such documents if in its determination a parcel is or may have been in
violation of any Environmental Laws.
Mortgages duly executed by the Company or the Restricted
Subsidiary, as the case may be, together with:
where required by applicable state law, a separate environmental
indemnity agreement;
an ALTA loan title insurance policy (or marked-up title insurance
commitment) issued by First American Title Insurance Company with
respect to such parcels and any access or similar easements
appurtenant thereto specified by Common Collateral Agent, which policy
or commitment shall (a) insure the priority of the Mortgage as a valid
and enforceable first lien, subject only to Liens permitted by Section
4.1 and such matters that are acceptable to Common Collateral Agent in
its reasonable judgment, (b) contain such endorsements and affirmative
coverages as Common Collateral Agent shall reasonably require,
including without limitation where available, comprehensive, doing
business, usury, tie-in, last dollar, contiguity (if appropriate) and
revolving credit endorsements where available, and (c) delete, where
possible, any general survey exception
and/or provide affirmative coverage over any matter that a current
ALTA survey of such parcel would disclose;
where available, a Phase I environmental audit with respect to
such parcel (and such further environmental audits or evidence of the
absence of hazardous wastes as Common Collateral Agent reasonably
shall deem necessary), which audit must be satisfactory in Common
Collateral Agent's sole discretion as to form and substance, together
with a reliance letter for the benefit of Common Collateral Agent from
the environmental consultant performing such audit;
such Uniform Commercial Code financing statements or statements
of termination, release or partial release with respect to the
fixtures encumbered by the Mortgages as Common Collateral Agent may
reasonably require;
such environmental disclosure documents, mortgage tax affidavits
or allocation statements, or such other documents as Common Collateral
Agent may reasonably request; and
evidence of insurance to the extent required by the Mortgages.
Collateral Assignment of Lease duly executed by the Company or
the Restricted Subsidiary, as the case may be, (unless despite the
reasonable efforts of the Company or such Restricted Subsidiary, as the
case may be, such Collateral Assignment has not been consented to by the
landlord, where such consent is required by such lease) together with:
such financing statements as the Common Collateral Agent shall
reasonably request as necessary to perfect the Common Collateral
Agent's
security interest in all Fixtures and leasehold improvements duly
executed by the Company or such Restricted Subsidiary, as the case may
be;
Landlord's Consent executed by the landlord thereof (unless
despite the reasonable efforts the Company or such Restricted
Subsidiary, as the case may be, such Landlord's Consent cannot be
obtained or unless otherwise waived by the Common Collateral Agent),
which Landlord's Consent, if any, shall be delivered to the Common
Collateral Agent; and
such other documentation as shall be necessary in the reasonable
determination of the Common Collateral Agent to effect the assignment
of the rights, title and interest of the Company or such Restricted
Subsidiary, as the case may be, in and to such leased real property.
Further Assurances. Promptly upon request by the Common Collateral
Agent or the Required Creditors, the Company shall (and shall cause any of its
Subsidiaries to) do, execute, acknowledge where necessary, deliver, record, re-
record, file, re-file, register and re-register, any and all such further acts,
deeds, conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments as the Common Collateral Agent or such Required Creditors, as the
case may be, may reasonably require from time to time in order (i) to carry out
more effectively the intent and purposes of this Agreement or any other Common
Collateral Document, (ii) to subject to the Liens created by any of the Common
Collateral Documents any of the properties, rights or interests covered by any
of the Common Collateral Documents, and (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Common Collateral Documents
and the Liens intended to be created thereby.
NEGATIVE COVENANTS
------------------
From and after the date hereof, so long as any Debt of the Company or
any Guarantor arising under any of the Credit Documents shall remain unpaid or
any Creditor shall have any contractual obligation under any Credit Document to
extend credit of any nature to the Company, the Company will not:
Liens. Create, incur, assume, or suffer to exist, or permit any
Restricted Subsidiary to create, incur, assume, or suffer to exist (unless
failure to so permit would constitute a breach of fiduciary duty), any Lien upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
Liens securing obligations of a Restricted Subsidiary to the Company
or a Guarantor;
Liens for taxes or assessments or other government charges or levies
if not yet delinquent or, if due and payable, if they are being contested
in good faith by appropriate proceedings and for which appropriate reserves
are maintained;
Liens imposed by law, such as mechanics', materialmen's, landlords',
warehousemen's, and carriers' Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past
due for more than thirty (30) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have
been established;
Liens under workers' compensation, unemployment insurance, social
security, or similar legislation;
Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted
under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or
other similar obligations arising in the ordinary course of business;
Judgment and other similar Liens arising in connection with court
proceedings, provided, that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
Easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation,
use, and enjoyment by the Company or any Restricted Subsidiary of the
property or assets encumbered thereby in the normal course of its business
or materially impair the value of the property subject thereto;
Liens securing Debt of the types permitted by clauses (6) and (12) of
Section 4.2, provided, that with respect to Debt of the type permitted by
clause (12) of Section 4.2, such Liens are in existence on the assets so
acquired immediately prior to the consummation of the respective Investment
or other acquisition permitted by clause (12) of Section 4.2, such Liens
were not created in anticipation of such Investment or other acquisition
and such Liens only attached to the specific assets which are the subject
of such Investment or other acquisition;
Purchase money Liens on any property owned or hereafter acquired or
the assumption of any Lien on property existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or
other title retention agreement or a Capital Lease, provided, that:
Any property subject to any of the foregoing is acquired by the
Company or any Restricted Subsidiary in the ordinary course of its
respective business and the Lien on any such property is created
contemporaneously with or prior to such acquisition;
The obligation secured by any Lien so created, assumed, or existing
shall not exceed ninety percent (90%) of the lesser of cost or fair market
value as of the time of acquisition of the property covered thereby to the
Company or Restricted Subsidiary acquiring the same;
Each such Lien shall attach only to the property so acquired and fixed
improvements thereon; and
The Debt of the Company which is secured by such Liens plus the Debt
of all Restricted Subsidiaries secured by such Liens arising after such
Persons become Restricted Subsidiaries shall not exceed at any time
outstanding in the aggregate Three Million Dollars ($3,000,000);
and the Common Collateral Agent shall promptly execute and deliver to the
Company all documents reasonably requested by the holder of such purchase money
Lien in order to release any existing Liens in favor of the Common Collateral
Agent on any assets to be subject to such purchase money Lien;
Liens arising pursuant to (a) the Credit Documents, and (b) the 1995 Lease
Documents, provided, that at no time shall the Financial Lease Debt arising from
the 1995 Lease Documents exceed in principal amount One Hundred Twenty Million
Dollars ($120,000,000);
Other Liens not of the type permitted by the foregoing clauses (1)
through (10), provided, that the aggregate amount of Debt secured by such
Liens shall in no event exceed Ten Million Dollars ($10,000,000).
Debt. Create, incur, assume, or suffer to exist, or permit any
Restricted Subsidiary to create, incur, assume, or suffer to exist (unless
failure to so permit would constitute a breach of fiduciary duty), any Debt,
except:
Debt of the Company under the Credit Documents, provided, that at no
time shall (a) Debt arising from the Credit Agreement exceed $150,000,000
or (b) Debt arising from the 1996 Master Lease Agreement exceed
$300,000,000;
Debt described in Schedule 4.2, but no renewals, extensions, or
refinancings thereof;
Accounts payable to trade creditors for goods or services which are
not aged more than ninety (90) days from billing date incurred in the
ordinary course of business and paid within the specified time, unless
contested in good faith and by appropriate proceedings;
Debt of any Restricted Subsidiary to the Company provided such Debt
complies with any applicable requirements set forth in Section 4.8;
Debt of the Company arising with respect to Company's commitment to
provide funds to any Financed Franchisee or to any Financed Subsidiary so
long as such commitment to provide funds complies with the requirements set
forth in Section 4.8;
Debt which constitutes indebtedness for borrowed money owed by a
Financed Franchisee to a Person other
than the Company (including, without limitation, any funding by landlords
of leasehold improvements) which indebtedness is in existence on the date
such Financed Franchisee becomes a Financed Subsidiary, and any renewal,
extension or refinancing of such Debt, provided, that both before and after
giving effect to such Financed Franchisee becoming a Financed Subsidiary no
Default or Event of Default shall exist or be continuing, and provided
further, that the outstanding principal amount of such Debt shall at no
time exceed the principal amount of such Debt outstanding on the date such
Financed Franchisee becomes a Financed Subsidiary;
Debt which is secured by Liens of the type described in clauses (9) or
(10) of Section 4.1;
Debt which constitutes Current Pay Subordinated Debt, provided, that
(a) both before and after giving effect to the incurrence of such Debt no
Default or Event of Default shall have occurred or be continuing, (b) if
such Current Pay Subordinated Debt had been incurred as of the last day of
the then most recently ended fiscal quarter of the Company, after giving
effect to the incurrence of such Debt no Default or Event of Default would
have existed, (c) the sum of the aggregate principal amount of such Debt
plus the aggregate principal amount of Debt of the type permitted by clause
(9) of this Section which, in each case, is incurred after the Effective
Date shall not exceed $100,000,000 at any time and (d) except in the case
where such Subordinated Debt is issued in exchange for Preferred Stock, the
net proceeds of such Debt shall only be used for capital expenditures,
retirement of Debt not constituting Subordinated Debt and other general
corporate purposes not inconsistent with the foregoing;
Debt which constitutes Non-Current Pay Subordinated Debt, provided
that (a) both before and after giving effect to the incurrence of any such
Non-
Current Pay Subordinated Debt no Default or Event of Default shall exist or
be continuing (b) the sum of the aggregate principal amount of such Debt
plus the aggregate principal amount of Debt of the type permitted by clause
(8) of this Section which, in each case, is incurred after the Effective
Date shall not exceed $100,000,000 at any time and (c) except in the case
where such Subordinated Debt is issued in exchange for Preferred Stock, the
net proceeds of such Debt shall only be used for capital expenditures,
retirement of Debt not constituting Subordinated Debt and other general
corporate purposes not inconsistent with the foregoing;
Debt of the type permitted by Sections 4.4, 4.5, 4.8(1)(b), (c) and
(d) and 4.9;
Debt of the Company arising under the BWRE Guaranty, provided, that
(a) the principal amount of indebtedness guaranteed by the BWRE Guaranty
shall at no time exceed $7,350,000 and (b) so long as the BWRE Guaranty
shall remain outstanding, (i) the only assets of BWRE shall be the BWRE
Parcels, those certain Land and Building Leases, each dated February 16,
1996, between Boston West, L.L.C., as tenant, and BWRE, as landlord,
relating to the BWRE Parcels and all rights as landlord arising under such
Land and Building Leases and (ii) Stores shall be operated on the BWRE
Parcels;
Debt incurred or assumed in connection with Investments and other
acquisitions permitted under this Agreement, provided, that the aggregate
principal amount of such Debt shall not exceed $25,000,000 at any one time
outstanding; and
Unsecured Debt not of the type described in the foregoing clauses (1)
through (12) in an aggregate principal amount not to exceed at any one time
outstanding Twenty-Five Million Dollars ($25,000,000), provided, that (i)
before and after giving effect to the incurrence of such Debt no Default or
Event of
Default shall have occurred or be continuing and (ii) if such unsecured
Debt had been incurred as of the last day of the then most recently ended
fiscal quarter of the Company, after giving effect to the incurrence of
such unsecured Debt no Default or Event of Default would have existed.
Mergers, Etc. Merge or consolidate with, or sell, assign, lease,
liquidate, dissolve or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
of the assets or the business of any Person, or permit any Restricted Subsidiary
to do so (unless failure to so permit would constitute a breach of fiduciary
duty), except that:
any Restricted Subsidiary may merge into or consolidate with or
transfer assets to the Company or a Guarantor, provided, that in the case
of a Guarantor which is a Special Purpose Subsidiary the only assets of the
Subsidiary so merged, consolidated or transferred shall be assets of the
type permitted pursuant to the definition of "Special Purpose Subsidia ry";
any Restricted Subsidiary which is not a Guarantor may be dissolved;
the Company, any Guarantor, any Financed Subsidiary or Special Purpose
Subsidiary may acquire all or substantially all of the assets or the
business of any Person, provided, that (i) in the case of a Special Purpose
Subsidiary the only assets so acquired shall be of a type permitted
pursuant to the definition of "Special Purpose Subsidiary" and (ii) as of
and after giving effect to such acquisition no Default or Event of Default
shall exist or be continuing;
the Company or any Guarantor may acquire capital stock, partnership
units or other equity interests of a
Financed Franchisee or a Restricted Subsidiary in compliance with clause
(2) of Section 4.8; and
the Company or any Guarantor may merge with BC Equity Funding, L.L.C.,
a Delaware limited liability company, and/or Market Partners, L.L.C., a
Delaware limited liability company, provided, that the Company or such
Guarantor, as the case may be, survives such merger.
Leases. Create, incur, assume, or suffer to exist, or permit any
Restricted Subsidiary to create, incur, assume, or suffer to exist (unless
failure to so permit would constitute a breach of fiduciary duty), any
obligation as lessee for the rental or hire of any real or personal property,
except:
operating leases of personal property and Capital Leases which do not
give rise to any Lien except those permitted by Section 4.1 and leases
which would be Capital Leases except that because of their immateriality
GAAP does not require them to be capitalized on the books of the lessee,
provided, that in the case of Capital Leases, the sum as of any date of (i)
the aggregate amount of payments due during the twelve month period
succeeding such date under all such Capital Leases which do not give rise
to any Lien plus (ii) the aggregate amount of payments due during the
twelve month period succeeding such date under all such Capital Leases
which give rise to a Lien permitted only by clauses (11) of Section 4.1
shall at no time exceed Ten Million Dollars ($10,000,000);
any leases of real property on which the Company or a Franchisee
operates or plans to operate a Store or which the Company or any Restricted
Subsidiary uses or intends to use for office space or similar purposes;
provided, that with respect to any leases to which the Company or a
Restricted Subsidiary is a party, the term of which exceeds six months and
on which a Lien has not previously been granted either pursuant to a Master
Lease or pursuant to the respective lease itself to
secure the landlord's funding of leasehold improvements, the Company or
such Restricted Subsidiary, as the case may be, shall have delivered to the
Common Collateral Agent each of the documents set forth in clause (3) of
Section 3.13;
leases between the Company and any Restricted Subsidiary or between
any Restricted Subsidiaries; and
the Master Leases, any Sublease and any other Financial Lease Debt
permitted hereunder.
Sale and Leaseback. Sell, transfer, or otherwise dispose of, or permit
any Restricted Subsidiary to sell, transfer, or otherwise dispose of (unless
failure to so permit would constitute a breach of fiduciary duty), any real or
personal property or fixtures to any Person and thereafter directly or
indirectly lease back the same or similar property, except any sale and
subsequent lease back of real or personal property and Fixtures consummated in
accordance with the 1996 Master Lease Agreement or the Subleases associated
therewith (and the Common Collateral Agent shall promptly execute and deliver to
the Company all documents reasonably requested by the Lease Agent in order to
release any existing Liens in favor of the Common Collateral Agent on any such
property), provided, that (1) no real property or Fixtures subject to the Lender
Mortgages may be sold and subsequently leased back and (2) the Company shall
require any net proceeds from such sale which are received on or about the
effective date of such Financial Lease Debt and which are paid directly or
indirectly to a Financed Franchisee to be used by such Financed Franchisee to
reduce such Financed Franchisee's Debt to the Company.
Dividends. Declare or pay any dividends; or purchase, redeem, retire,
or otherwise acquire for value any of its capital stock now or hereafter
outstanding; or make any distribution of assets to its stockholders as such
whether in cash, assets, or obligations of the Company; or allocate or otherwise
set apart any sum for the payment of any dividend or distribution on, or for the
purchase, redemption, or retirement of, any shares of its capital stock; or make
any other
distribution by reduction of capital or otherwise in respect of any shares of
its capital stock; or permit any of its Restricted Subsidiaries (unless failure
to so permit would constitute a breach of fiduciary duty) to purchase or
otherwise acquire for value any stock of the Company or another Restricted
Subsidiary, except that (1) the Company may declare and deliver dividends and
make distributions payable solely in capital stock of the Company, (2) the
Company may declare and pay scheduled dividends, whether in cash or in kind, on
any Preferred Stock, provided, that both before and after giving effect to the
payment of any cash dividends no Default or Event of Default shall have occurred
and be continuing and (3) Guarantors may purchase or otherwise acquire for value
stock of the Company, provided, that any such Guarantor shall either (x) sell
such stock at its fair market price within twenty Business Days of its
acquisition thereof or (y) use such stock as consideration for or in connection
with any acquisition permitted pursuant to this Agreement.
Sale of Assets. Sell, lease, assign, transfer, or otherwise dispose
of, or permit any Restricted Subsidiary to sell, lease, assign, transfer, or
otherwise dispose of (unless failure to so permit would constitute a breach of
fiduciary duty), any of its now owned or hereafter acquired assets (including,
without limitation, shares of stock and indebtedness of Restricted Subsidiaries,
receivables, leasehold interests, franchise agreements, trademarks, trade names,
copyrights, licenses and other general intangible interests), except:
for assets disposed of in the ordinary course of business;
for the sale or other disposition of assets no longer used or useful
in the conduct of its business;
for (a) the sale, leasing or other disposition of real property or the
subleasing of leasehold interests to an Unrestricted Subsidiary or a
franchisee of an Unrestricted Subsidiary for the operation of a retail
bagel outlet or (b) the leasing of real property or the subleasing of
leasehold interests to any other Person, provided, that the Company and its
Restricted
Subsidiaries may not lease or sublease more than 30,000 square feet of
retail space to Persons (other than retail space leased to an Unrestricted
Subsidiary or its franchisees to be operated as retail bagels outlets)
during any fiscal year;
that any Restricted Subsidiary may sell, lease, assign, or otherwise
transfer its assets to the Company or any Guarantor unless in the case of a
Guarantor which is a Special Purpose Subsidiary, such assets are not of a
type permitted pursuant to the definition of "Special Purpose Subsidiary";
that the Company or any Restricted Subsidiary may sell, lease, assign
or otherwise transfer to a Franchisee any real property, leasehold
interests or personal property associated with the operation of Stores,
provided that such sale, lease, assignment or transfer is on commercially
reasonable terms negotiated at arms' length and that after giving effect to
such sale, lease, assignment or transfer no Default or Event of Default
shall exist or be continuing;
that the Company may sell the capital stock of ENBC which it owns (and
the Common Collateral Agent shall promptly release any Liens in favor of
the Common Collateral Agent on such capital stock); provided, that (a) any
non-cash proceeds received by the Company are pledged to the Common
Collateral Agent pursuant to the Pledge Agreement and (b) net cash proceeds
received by the Company from such sale up to the lesser of all net cash
proceeds received from such sale or the Hold-Back Amount are deposited with
the Common Collateral Agent and pledged to the Common Collateral Agent for
the benefit of the Creditors pursuant to documentation reasonably
acceptable to the Common Collateral Agent; provided further, that (x) upon
the written request of the Company the Common Collateral Agent shall
release to the Company, for prompt disposition by the Company, any such
non-cash proceeds the fair market value of which exceeds the difference of
the Hold-Back Amount
less any cash held by the Common Collateral Agent pursuant to the foregoing
clause (b) and (y) thereafter, (A) at any time after the Company shall have
delivered financial statements to the Agents pursuant to clauses (2) or (3)
of Section 3.8 which indicate a System EBITDAL of $100,000,000 or greater
for any four consecutive fiscal quarter period of the Company ending after
the Effective Date, the Common Collateral Agent shall release to the
Company upon the written request of the Company, any cash then held by the
Common Collateral Agent pursuant to the foregoing clause (b) and any non-
cash proceeds referenced in the foregoing clause (a) for prompt disposition
by the Company and (B) in lieu of borrowing a revolving loan under the
Credit Agreement, upon the written request of the Company, at any time when
the Company and its Subsidiaries shall have no Investments of the type
described in clauses (6), (7), (8) or (9) of Section 4.8, the Collateral
Agent shall disburse to the Company a portion of the Hold-Back Amount as
directed by the Company in an amount not to exceed the amount of revolving
loans then available for borrowing under the Credit Agreement (as limited
by Section 3.10 of this Agreement); for purposes of this clause, "Hold-Back
Amount" shall mean the lesser of (i) twenty-five percent (25%) of the net
proceeds received by the Company from the sale of the capital stock of ENBC
or (ii) $50,000,000, in each case whether in the form of cash, securities
or some combination thereof; when calculating the Hold-Back Amount, the
value of non-cash proceeds at any time shall be the then fair market value
of such non-cash proceeds.
for any issuances or sales of the capital stock, partnership units or
other equity interests of any Restricted Subsidiary or other Person
permitted pursuant to Section 4.11;
for any sale, lease, assignment, transfer or other disposition
permitted or required by any Master Lease or the Agency Agreement;
for sales permitted under Section 4.5 and any disposition of
operating assets permitted by the proviso in Section 3.4;
for any transfer by the Company to a Guarantor of the Company's
conversion rights, options, first refusal rights or preemptive rights
provided in any Financed Franchisee Loan Documents or otherwise, provided
that such conversion rights are exercised by the Guarantor within 10 days
after such transfer; and
for other dispositions by the Company or any Restricted Subsidiary not
of the type described in the foregoing clauses (1) through (10), provided,
that the aggregate amount of all such dispositions shall not exceed
$5,000,000 during the term of this Agreement;
and in the case of any such sale, assignment, transfer or other disposition of
title, the Common Collateral Agent shall promptly execute, at the Company's
expense, all documents reasonably necessary to release any Lien in favor of the
Common Collateral Agent on the disposed assets.
Investments. Make, or permit any Restricted Subsidiary to make
(unless failure to so permit would constitute a breach of fiduciary duty), any
Investment in any Person except:
loans and advances made by the Company to (a) Financed Franchisees;
provided, that (i) the initial loans or advances to any Financed Franchisee
are or have been made pursuant to Financed Franchisee Loan Documents in
which the Common Collateral Agent for the benefit of the Creditors shall
have been granted a security interest pursuant to, and which Financed
Franchisee Loan Documents are subject to the terms of, the Collateral
Assignment of Loan, (ii) such loans or advances are evidenced by promissory
notes pledged to the Common Collateral Agent for the benefit of the
Creditors pursuant to the Pledge Agreement, (iii) all such loans and
advances to Financed Franchisees shall
be secured in the manner described in paragraph (3) of Schedule V, (iv) all
Liens in favor of the Company securing such loans and advances are duly
perfected within 30 days of the initial loan or advance to such Financed
Franchisee, and (v) the aggregate principal amount of all loans and
advances made by the Company to any Financed Franchisee under the Financed
Franchisee Loan Documents shall not exceed at any time an amount equal to
the products of four (4) multiplied by the aggregate amount of all capital
contributions theretofore made to such Financed Franchisee; (b) Financed
Subsidiaries; provided, that (i) such loans and advances are made pursuant
to Financed Subsidiary Loan Documents in which the Common Collateral Agent
for the benefit of the Creditors shall have been granted a security
interest pursuant to, and which Financed Subsidiary Loan Documents are
subject to the terms of, the Collateral Assignment of Loan, (ii) such loans
or advances are evidenced by promissory notes pledged to the Common
Collateral Agent for the benefit of the Creditors pursuant to the Pledge
Agreement and (iii) all Liens in favor of the Company securing such loans
and advances are duly perfected prior to the initial loan or advance
thereunder; (c) Guarantors; provided, that such loans and advances are
evidenced by promissory notes pledged to the Common Collateral Agent for
the benefit of the Creditors pursuant to the Pledge Agreement; and (d) to
the extent and only to the extent a Sublease may be deemed to be a loan or
advance, to Franchisees or Financed Subsidiaries as lessees under a
Sublease;
the acquisition by the Company or any Guarantor of (a) the capital
stock, partnership units or other equity interests of any Financed
Franchisees, Financed Subsidiaries or Guarantor and (b) all of the equity
interest of BC Equity Funding, L.L.C., a Delaware limited liability
company, and/or Market Partners, L.L.C., a Delaware limited liability
company, whether by merger or otherwise; provided, that with respect to
both clauses (a) and (b) above, (x) in the case of a Guarantor which is a
Special Purpose Subsidiary, such capital stock, partnership units or equity
interests
are of a type permitted pursuant to the definition of "Special Purpose
Subsidiary," (y) before and after giving effect to such acquisition no
Default or Event of Default shall exist or be continuing and (z) such
capital stock, partnership units or other equity interests are pledged to
the Common Collateral Agent for the benefit of the Creditors pursuant to
the Pledge Agreement; provided further, that with respect to clause (b)
above, the consideration paid for such acquisition shall include not more
than $10,000,000 of cash or cash equivalents;
Investments in Unrestricted Subsidiaries, provided, that (a) all such
Investments (whether in the form of equity or Debt) are pledged to the
Common Collateral Agent for the benefit of the Creditors pursuant to the
Pledge Agreement, (b) the aggregate amount of all Investments by the
Company and its Restricted Subsidiaries in ENBC (which may be subordinated
to Debt of ENBC owed to third parties) after December 9, 1996 shall at no
time exceed the sum of (i) $50,000,000 plus (ii) the lesser of (x) the
product of $25,000,000 multiplied by the number of anniversaries of the
date hereof which have then occurred and (y) 150% of the cumulative net
income (minus any net loss) of ENBC for each full fiscal quarter of ENBC
occurring after July 31, 1996 plus (iii) in the case of Investments
consisting of the acquisition of capital stock of ENBC, such additional
amounts as shall be necessary for the Company to maintain ownership of
greater than 50% of the issued and outstanding voting capital stock of
ENBC; (c) upon the occurrence of an ENBC Event of Default which constitutes
a default in payment, no further Investments may thereafter be made in
ENBC; (d) upon the occurrence of an ENBC Event of Default which does not
constitute a default in payment, (i) for so long as such ENBC Event of
Default remains uncured and unwaived (in accordance with the terms of the
ENBC Credit Agreement), no further Investments may be made in ENBC and (ii)
following the waiver or cure of such ENBC Event of Default (in accordance
with the terms of the ENBC Credit Agreement), additional Investments
thereafter made may not exceed in the aggregate $10,000,000; and (e) in no
event shall the aggregate amount of Investments in ENBC made by the Company
after the date hereof exceed $125,000,000;
loans and advances made by the Company to an employee in connection
with the relocation of such employee provided such loans and advances are
consistent with past practices, which loans and advances need not be
pledged to the Common Collateral Agent pursuant to the Pledge Agreement;
(a) Investments in Progressive Food Concepts, Inc., a Delaware
corporation, (b) loans and advances by the Company or Progressive Food
Concepts, Inc. to Harry's Xxxxxx'x Market, Inc., a Georgia corporation, in
a maximum outstanding principal amount not to exceed at any time the amount
of loans and advances which are outstanding on, or for which commitments
have otherwise been made as of, the Effective Date, (c) non-hostile
strategic Investments reasonably related to the Company's existing business
and approved by the Board of Directors of the Company consisting of
purchases or other acquisitions for non-cash consideration of capital
stock, obligations or other securities of any Person or non-cash capital
contributions to or other non-cash Investments or acquisitions of any
interest in any Person, and (d) commencing on the first day of the
Company's fiscal quarter immediately succeeding two consecutive fiscal
quarters of the Company occurring after the Effective Date in which the
average weekly Store Revenue for each such fiscal quarter was at least
$20,000, other non-hostile strategic Investments approved by the Board of
Directors of the Company consisting of purchases or other acquisitions of
capital stock, obligations or other securities of any Person or capital
contributions to or other investments or acquisitions of any interest in
any Person in an aggregate amount for all such Persons not in excess of
$25,000,000 from such date through the Termination Date, provided, that (i)
all such Investments (whether in the form of equity or Debt) are pledged to
the
Common Collateral Agent for the benefit of the Creditors pursuant to the
Pledge Agreement, (ii) in the case of the foregoing clause (d), such
strategic investments are reasonably related to the Company's existing
business at the time of such investment;
direct obligations of (or obligations fully guaranteed or insured by)
the United States or any agency thereof with maturities of one year or less
from the date of acquisition held in accounts maintained with any Creditor;
certificates of deposit with maturities of one year or less from the
date of acquisition issued by any commercial bank having capital and
surplus in excess of One-Hundred Million Dollars ($100,000,000) held in
accounts maintained with any Creditor;
commercial paper and variable and fixed rate notes issued by any
commercial bank having capital and surplus in excess of One Hundred Million
Dollars ($100,000,000) held in accounts maintained with any Creditor;
commercial paper and variable rate notes issued by, or guaranteed by,
any industrial or financial company with a short term commercial paper
rating of at least A-2 or the equivalent thereof by Standard & Poor's
Corporation or at least P-2 or the equivalent thereof by Xxxxx'x Investors
Service, Inc., and in each case maturing within one year after the date of
acquisition held in accounts maintained with any Creditor;
stock, obligations, or securities received in settlement of debts
(created in the ordinary course of business) owing to the Company or any
Restricted Subsidiary; and
loans and advances not of the type described in the foregoing clauses
(1) through (10) in the aggregate principal amount not to exceed at any one
time outstanding Six Million Dollars ($6,000,000), which loans and advances
need not be pledged to the Common Collateral Agent pursuant to the Pledge
Agreement.
Guaranties, Etc. Assume, guarantee, endorse, or otherwise be or become
directly or contingently responsible or liable, or permit any Restricted
Subsidiary to assume, guarantee, endorse, or otherwise be or become directly or
contingently responsible or liable (unless failure to so permit would constitute
a breach of fiduciary duty) for obligations of any Person (including, but not
limited to, an agreement to purchase any obligation, stock, assets, goods, or
services primarily for the purpose of enabling such Person to make payment of
such obligations, or to supply or advance any funds, assets, goods, or services
primarily for such purpose, or to maintain or cause such Person to maintain a
minimum working capital or net worth, or otherwise to assure the creditors of
any Person against loss), except:
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
primary liability for (a) leases transferred to Financed Franchisees
in accordance with clause (5) of Section 4.7 and (b) Subleases pursuant to
the Master Leases;
other guaranties of lease payments of Franchisees, provided that as
of any date the aggregate amount of all payments due during the twelve
month period succeeding such date under all real property leases of
Franchisees which are the subject of such other guaranties do not exceed
$8,000,000 through fiscal year 1997, $10,000,000 during fiscal year 1998,
with annual increases in this limit thereafter of $1,000,000;
guaranties of Debt permitted solely by clause (11) and (13) of
Section 4.2; and
any Guaranty.
Transactions With Affiliate. Enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the rendering
of any service, with any Financed Franchisee or Affiliate, or permit any
Restricted Subsidiary to enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Financed Franchisee or Affiliate, except pursuant to the
reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms not materially less favorable to the
Company or such Restricted Subsidiary than similar transactions entered into
with a Person not a Financed Franchisee or Affiliate; provided that, the
foregoing shall not prohibit any transaction effected in accordance with the
respective Financed Franchisee Loan Documents, Financed Subsidiary Loan
Documents or Subleases.
Subsidiary, Etc.
---------------
Create, acquire or otherwise permit to exist any Subsidiaries other
than: (a) Special Purpose Subsidiaries; (b) Financed Subsidiaries; (c) other
Restricted Subsidiaries the acquisition of which is permitted by Section 4.8(5);
(d) the Unrestricted Subsidiaries; and (e) a Restricted Subsidiary, the purpose
of which is to consummate the acquisition contemplated by clause (2)(b) of
Section 4.8; provided, that (x) the equity interest owned directly or indirectly
by the Company are pledged to the Common Collateral Agent for the benefit of the
Creditors pursuant to the Pledge Agreement and (y) each such Restricted
Subsidiary shall have executed Guaranties in favor of the Loan Agent and the
Lease Agent and shall have granted to the Common Collateral Agent for the
benefit of the Creditors a perfected security interest in all of such
Subsidiary's assets pursuant to such Common Collateral Documents as may be
reasonably required by the Common Collateral Agent;
Permit any Restricted Subsidiary to issue any additional shares of its
capital stock, partnership units or other equity interest, other than in
connection with stock splits, stock dividends or similar issuances, except
directors qualifying shares or shares, partnership units or other units or
interests issued: (a) for fair consideration; (b) to the Company or any
Guarantor upon exercise of the Company's or such Guarantor's conversion rights,
options, first refusal rights or preemptive rights provided in the Financed
Franchisee Loan Documents or otherwise; or (c) to employees of such Subsidiary
upon exercise of employee stock, unit or other equity options, provided, that at
the time such options are granted the exercise price is not less than the fair
market value of such stock, unit or other equity interest and, provided, further
that after giving effect to the issuance of stock, units or other equity
interest upon exercise of such options, the issuer would continue to be a
Subsidiary.
Real Property. Purchase or otherwise acquire, or permit any Restricted
Subsidiary to purchase or otherwise acquire, title to any real property
(excluding leases of real property and leasehold improvements), except:
the Company, any Guarantor, any Financed Subsidiary or any Special
Purpose Subsidiary may purchase or acquire real property (a) in accordance
with the terms and provisions of the 1996 Master Lease Agreement and the
Agency Agreement or (b) on which Stores are to be operated;
the Company, or any Restricted Subsidiary may purchase or acquire
real property to be used for office space or similar purposes, including
without limitation the Denver Support Center;
the Company or any Restricted Subsidiary may purchase and acquire real
property in connection with the sale, lease or other disposition of such
property in accordance with clause (3) of Section 4.7; and
the Company, any Financed Subsidiary and any Special Purpose
Subsidiary may purchase or acquire real property in connection with an
acquisition permitted pursuant to clause (3) of Section 4.3 or clause (5)
of Section 4.8;
provided, that (x) concurrent with such acquisition, the Common Collateral Agent
shall have received each of the documents set forth in clause (2) of Section
3.13 and (y) at no time shall the book value of all real property owned by the
Company and its Restricted Subsidiaries on a consolidated basis (less the book
value of any leasehold improvements thereon) exceed an aggregate amount equal to
fifty percent (50%) of the Company's then total consolidated assets.
Subordinated Debt. Make any payment or prepayment with respect to
Subordinated Debt except that (1) interest may be paid on Current Pay
Subordinated Debt and Non-Current Pay Subordinated Debt (to the extent permitted
by the terms of such Current Pay Subordinated Debt or Non-Current Pay
Subordinated Debt, including the subordination provisions thereof) and (2)
Subordinated Debt and interest thereon may be converted into equity of the
Company or may be prepaid solely from the proceeds of a substantially
contemporaneous issuance of equity or Subordinated Debt (provided that such
Subordinated Debt shall be Non-Current Pay Subordinated Debt if the Subordinated
Debt so prepaid is Non-Current Pay Subordinated Debt) of the Company.
Financed Franchisee. (1) Amend, modify or otherwise waive in any
respect the terms, conditions or provisions of any Financed Franchisee Loan
Document if but for such amendment, modification or waiver and any previous
amendments, modifications or waivers, the Financed Franchisee party to such
Financed Franchisee Loan Documents would have outstanding payment defaults
aggregate in excess of $100,000 thereunder or if such amendment, modification or
waiver would otherwise cause such documents to no longer meet each of the
requirements set forth on Schedule V and (2) permit the aggregate principal
amount of Debt of all Financed Franchisees which is owed to Persons other than
the Company and which is senior to any Debt of such Financed Franchisee owed to
the Company to exceed at any time (a) prior to December 9, 1997,
$75,000,000, (b) on or after December 9, 1997 but prior to December 9, 1998,
$100,000,000 and (c) on or after December 9, 1998, $125,000,000.
Use of Proceeds. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the credit accommodations extended
by the Creditors, directly or indirectly, (i) to purchase or carry "margin
stock" as such term is defined in Regulation G, T, U or X of the Internal
Reserve Board, (ii) to repay or otherwise refinance indebtedness of the Company
or others incurred to purchase or carry margin stock, (iii) to extend credit for
the purpose of purchasing or carrying any margin stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
FINANCIAL COVENANTS
-------------------
Notwithstanding the Effective Date of this Agreement, commencing with
the Company's third fiscal quarter 1997 (ending on October 5, 1997) and so long
as any Debt of the Company or any Guarantor arising under any of the Credit
Documents shall remain unpaid or any Creditor shall have any contractual
obligation under any Credit Document to extend credit of any nature to the
Company, the Company will:
Maximum Senior Secured Leverage Ratio. Maintain, as of the last day of
each fiscal quarter occurring during the respective fiscal periods set forth
below, a ratio of (1) Senior Secured Indebtedness to (2) Annualized Store
EBITDAL, for the fiscal quarter then most recently ended, of not greater than
the ratio set forth below opposite such fiscal period:
Fiscal Period(s) Covenant Level
---------------- --------------
Q3 1997 - Q1 1998 2.75:1.00
Q2 1998 2.50:1.00
Q3 1998 - Q4 1998 2.25:1.00
Thereafter 2.00:1.00
Fixed Charge Coverage Ratio. Maintain, as of the last day of each
fiscal quarter occurring during the respective fiscal periods set forth below, a
ratio of (1) Store EBITDAL for the four consecutive fiscal quarters then ended
to (2) Consolidated Fixed Charges, for such four consecutive fiscal quarter
period, of not less than the ratio set forth below opposite such fiscal period:
Fiscal Period(s) Covenant Level
---------------- --------------
Q3, Q4 1997 1.75:1.00
X0, X0, X0 0000 1.50:1.00
Q4 1998 - Q1 1999 1.75:1.00
Thereafter 2.00:1.00
Store Revenue. Maintain, during each fiscal quarter occurring during
the respective fiscal periods set forth below, an average weekly net revenue
(i.e. gross revenue net of customer coupons and discounts) during such fiscal
quarter per Store for all such Stores (whether operated by the Company or a
Franchisee) ("Store Revenue") of not less than the amount set forth below
opposite such fiscal period:
Fiscal Period(s) Covenant Level
---------------- --------------
Q3 1997 - Q1 1998 $17,500
Q2 1998 $18,000
Q3 1998 $18,500
Q4 1998 - Q1 1999 $19,000
Thereafter $20,000
Total Overhead. Prior to the System EBITDAL Commencement Quarter,
maintain, as of the last day of each fiscal quarter set forth below, a Combined
Overhead for the four consecutive fiscal quarters then ended of not greater than
the amount set forth below opposite such fiscal quarter:
Fiscal Period(s) Covenant Level
----------------- --------------
Q4 1997 $230,000,000
Q1 1998 $180,000,000
Q2 1998 $160,000,000
Q3 1998 $145,000,000
Q4 1998 $125,000,000
During and after the System EBITDAL Commencement Quarter, the provisions of this
Section 5.4 shall no longer apply.
Minimum System EBITDAL. Commencing with the System EBITDAL
Commencement Quarter, maintain, as of the last day of each fiscal quarter
occurring during the fiscal periods set forth below, a System EBITDAL for the
four consecutive fiscal quarters then ended of not less than the amount set
forth below opposite such fiscal period:
Fiscal Period(s) Covenant Level
---------------- --------------
Q3 1997 - Q1 1999 $ 85,000,000
Q2 1999 $ 90,000,000
Q3 1999 $ 95,000,000
Thereafter $100,000,000
EVENTS OF DEFAULT
-----------------
Events of Default. If any of the following events ("Events of
Default") shall occur:
Any representation or warranty made or deemed made (pursuant to any
Credit Document) by the Company or any Subsidiary in this Agreement or any
other Credit Document or which is contained in any certificate, document,
opinion, or financial or other statement furnished at any time under or in
connection with any Credit Document shall prove, in light of the
circumstances under which it was made, to have been incorrect in any
material respect on or as of the date made or deemed made;
The Company or any Subsidiary shall fail to perform or observe any
term, covenant or agreement contained in Sections 4.3, 4.4, or 4.6 through
4.14 of this Agreement applicable thereto;
The Company or any Subsidiary shall fail to perform or observe any
term, covenant or agreement contained in Sections 4.1, 4.2, 4.5 or in
Article V of this Agreement and such failure shall continue for four (4)
Business Days after the earlier of discovery, notification or final
calculation thereof applicable thereto;
The Company or any Subsidiary shall fail to perform or observe any
other term, covenant, or agreement contained in any Credit Document
applicable thereto (other than those Sections referenced in the foregoing
clauses (2) and (3)) on its part to be performed or observed and such
failure shall continue for fifteen (15) Business Days following notice
thereof from any of the Loan Agent, the Lease Agent or the Required
Creditors;
The Company or any Restricted Subsidiary shall (i) fail to make any
payment of principal, interest, premium, rents or fees with respect to any
indebtedness for borrowed money (including, without limitation, the
Revolving Notes) or any Financial Lease Debt (including, without
limitation, the Master Leases) of the Company or such Restricted Subsidiary
in an amount in excess of $1,000,000, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and any
applicable grace periods shall have expired (and in the case of
indebtedness for borrowed money, other than the Revolving Notes, or
Financial Lease Debt, other than the Master Leases, the amount which the
Company or any Restricted Subsidiary so fails to pay is in excess of
$1,000,000), or (ii) fail to perform or observe any term, covenant, or
condition on its part to be performed or observed under any
agreement or instrument relating to any indebtedness for borrowed money
(including, without limitation, the Revolving Note) or any Financial Lease
Debt (including, without limitation, the Master Leases) of the Company or
such Restricted Subsidiary in an amount in excess of $1,000,000, when
required to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the acceleration, after
the giving of notice, of the maturity of such indebtedness, unless such
failure to perform or observe shall be waived by the holder of such
indebtedness or Financial Lease Debt without any material payment or other
material accommodation on the part of the Company or such Restricted
Subsidiary; or any such indebtedness or Financial Lease Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity
thereof;
The Company, any of its Significant Subsidiaries or any aggregation of
its Subsidiaries which together would constitute a Significant Subsidiary
(a) shall generally not, or shall be unable to, or shall admit in writing
its inability to pay its debts as such debts become due; or (b) shall make
an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver, or trustee for it or
a substantial part of its assets; or (c) shall commence any proceeding
under any bankruptcy, reorganization, arrangements, readjustment of debt,
dissolution, or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; or (d) shall have any such petition or application
filed or any such proceeding commenced against it in which an order for
relief is entered or adjudication or appointment is made and which remains
undismissed for a period of sixty (60) days or more; or (e) by any act or
omission shall indicate its consent to, approval of, or knowing
acquiescence in any such petition, application, or proceeding, or order for
relief, or the appointment of a custodian, receiver, or trustee for all or
any substantial part of its properties; or (f) shall suffer any such
custodianship, receivership, or trusteeship to
continue undischarged for a period of sixty (60) days or more;
Any Financed Franchisee shall fail to pay any sum owed to the Company
in connection with indebtedness for borrowed money (including any interest
or premium thereon) in an aggregate amount in excess of two million dollars
($2,000,000) when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and any applicable grace period shall
have expired;
One or more judgments, decrees, or orders for the payment of money in
excess of the greater of 3% of the consolidated net worth of the Company
and its Restricted Subsidiaries at such time or of two million Dollars
($2,000,000) in the aggregate shall be rendered against the Company or any
of its Subsidiaries, and such judgments, decrees, or orders shall continue
unsatisfied and in effect for a period of twenty (20) consecutive days
without being vacated, discharged, satisfied, escrowed, stayed or bonded
pending appeal;
Any of the following events occur or exist with respect to the Company
or any ERISA Affiliate: (a) any Prohibited Transaction involving any Plan;
(b) any Reportable Event with respect to any Plan; (c) the filing under
Section 4041 of ERISA of a notice of intent to terminate any Plan or the
termination of any Plan; (d) any event or circumstance that might
reasonably constitute grounds entitling the PBGC to institute proceedings
under Section 4042 of ERISA for the termination of, or for the appointment
of a trustee to administer, any Plan, or the institution by the PBGC of any
such proceedings; (e) complete or partial withdrawal under Section 4201 or
4204 of ERISA from a Multiemployer Plan or the reorganization, insolvency,
or termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if any,
would be reasonably likely in the opinion of either the Loan Agent or the
Lease Agent to subject the Company to any tax, penalty, or other liability
to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed two million Dollars ($2,000,000) and
such event or condition remains unsatisfied after fifteen (15) Business
Days from its initial occurrence or results in a Lien (subject to Liens
permitted under Section 4.1) on Company's assets;
Any Guaranty shall, at any time after its execution and delivery and
for any reason cease to be in full force and effect or shall be declared
null and void, or the validity or enforceability thereof shall be contested
by the respective Guarantor, or the respective Guarantor shall deny it has
any further liability or obligation under or shall fail to perform its
material obligations under such Guaranty (subject to any applicable grace
periods set forth therein);
With respect to any Common Collateral Document:
any such Common Collateral Document shall for any reason cease to
be valid and binding on or enforceable against the Company or any
Subsidiary party thereto or the Company or any Subsidiary shall so
state in writing or bring an action to limit its obligations or
liabilities thereunder; or
such Common Collateral Documents shall for any reason (other than
pursuant to the terms thereto) cease to create a valid security
interest in the Collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and
first priority security interest subject only to Permitted Liens
(other than as a result of a release).
Any Change of Control; or
Any Material Adverse Change.
Effect of Event of Default. If any Event of Default shall occur, (1)
the Loan Agent, the Issuing Lender and the Lenders shall have all the rights and
remedies available to them under the Credit Agreement and the other Loan
Documents subject to the terms of the Intercreditor Agreement, (2) the Lease
Agent, GECC and the Lease Participants shall have all the rights and remedies
available to them under the 1996 Master Lease Agreement and the other 1996 Lease
Documents subject to the terms of the Intercreditor Agreement and (3) the Common
Collateral Agent shall have all the rights and remedies available to it under
the Common Collateral Documents.
MISCELLANEOUS
-------------
Waivers and Amendments. The provisions of this Agreement from time to
time may be amended, modified or waived in accordance with the terms of the
Intercreditor Agreement.
Upon the effectiveness of any consent, amendment, modification or
waiver under this Agreement, the Loan Agent shall promptly give each Lender and
the Lease Agent shall give each Lease Participant written notice (including a
description) of such consent, amendment, modification or waiver.
Notices, Etc. All notices and other communications provided for under
this Agreement shall be in writing (including telegraphic, telex or facsimile
communication) and mailed or telecommunicated or delivered to the address of the
respective party hereto as set forth on the signature pages hereto (or, in the
case of (1) the Issuing Lender and the Lenders, the address set forth in the
Credit Agreement, and (2) the Lease Participants, the address set forth in the
Participation Agreement); or, as to each party, at such other address as shall
be designated by such party in a written notice to the other
party complying as to delivery with the terms of this Section 7.2. All such
notices and communications shall, when mailed or telecommunicated, be effective
upon the earlier of actual receipt or three (3) Business Days after deposited in
the mails, or one (1) Business Day after transmitted by telex and the
appropriate answerback received, transmitted by facsimile or delivered to the
telegraph company, respectively, addressed as aforesaid.
No Waiver; Remedies. No failure on the part of any party to exercise,
and no delay in exercising, any right, power, or remedy under any Credit
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Credit Documents preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Credit Documents are cumulative and not exclusive of any remedies provided
by law.
Successors and Assigns. (1) This Agreement shall be binding upon and
inure to the benefit of the Company and the Creditors and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights hereunder without the prior written consent of the Loan Agent and
the Lease Agent, all the Lenders and all the Lease Participants and (2) a
Creditor may only assign its rights under this Agreement in connection with an
assignment by such Creditor of its interests under the Credit Documents.
Costs, Expenses, and Taxes. (1) Without duplication of obligations
under other Credit Documents, the Company agrees to pay on demand all reasonable
costs and expenses of the Agents in connection with the preparation, execution,
delivery, filing, recording, and administration of this Agreement and the other
Credit Documents, including, without limitation, the reasonable fees and out-of-
pocket expenses of counsel for the Agents, and local counsel who may be retained
by said counsel in connection with perfecting security interests, with respect
thereto, and all costs and expenses, if any, of the Agents and the Creditors in
connection with the enforcement of this Agreement and the other Credit
Documents.
The Company further agrees:
to pay within five Business Days after demand all reasonable costs and
expenses of the Common Collateral Agent in connection with the preparation,
execution, delivery, filing, recording, and administration of any of the
Common Collateral Documents, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Common Collateral Agent,
and local counsel who may be retained by said counsel in connection with
perfecting security interests, with respect thereto, and all costs and
expenses of the Common Collateral Agent and any Creditor, if any, in
connection with the enforcement of any of the Common Collateral Documents;
pay within five Business Days after demand any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, and recording of any of the Common Collateral
Documents and the other documents to be delivered under any such Common
Collateral Documents, and agrees to save the Common Collateral Agent
harmless from and against any and all liabilities with respect to or
resulting from any delay attributed to the Company in paying or omission to
pay such taxes and fees;
pay or reimburse the Common Collateral Agent within five Business Days
after demand for all appraisal (including the reasonable allocated cost of
internal appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and filing
costs, fees and expenses, incurred or sustained by the Common Collateral
Agent in connection with the matters referred to under subsections (a) and
(b) of this Section 7.5.
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to its
conflict of laws provisions.
Severability of Provisions. 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 or affecting the validity or
enforceability of such provision in any other jurisdiction.
Headings. Article and Section headings in this Agreement are included
herein for the convenience of reference only and shall not constitute a part
hereof for any other purpose.
SUBMISSION TO JURISDICTION; WAIVER OF VENUE. THE PARTIES HERETO, AND
EACH CREDITOR BY ENTERING INTO THE RESPECTIVE CREDIT DOCUMENTS TO WHICH IT IS A
PARTY SHALL BE DEEMED BY THE EXECUTION AND DELIVERY OF SUCH CREDIT DOCUMENTS TO,
(1) (A) WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS, HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY,
NEW YORK, AND (B) WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY MORTGAGE, SUCH OTHER STATE COURT OR FEDERAL CIRCUIT COURT
SITTING IN OR NEAREST TO THE COUNTY IN WHICH THE PROPERTY IN QUESTION SUBJECT TO
SUCH MORTGAGE IS LOCATED, (2) IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR FEDERAL
COURT SPECIFIED IN SECTION 7.9(1) AND (3) AGREE NOT TO INSTITUTE ANY LEGAL
ACTION OR PROCEEDING AGAINST ANY AGENT, ANY OTHER PARTY HERETO OR THE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR PROPERTY OF ANY THEREOF, ARISING OUT OF OR
RELATING TO THIS AGREEMENT, IN ANY COURT OTHER THAN AS HEREINABOVE SPECIFIED IN
THIS SECTION 7.9. THE PARTIES HERETO AND EACH CREDITOR BY ENTERING INTO THE
RESPECTIVE CREDIT DOCUMENTS TO WHICH IT IS A PARTY SHALL BE DEEMED BY THE
EXECUTION AND DELIVERY OF SUCH CREDIT DOCUMENTS TO, HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THEY MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING (WHETHER BROUGHT BY
SUCH PARTY OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN THIS SECTION 7.9
AS WELL AS ANY RIGHT THEY MAY NOW OR HEREAFTER HAVE, TO REMOVE ANY SUCH ACTION
OR PROCEEDING, ONCE COMMENCED, TO
ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. THE PARTIES
HERETO AND EACH CREDITOR BY ENTERING INTO THE RESPECTIVE CREDIT DOCUMENTS TO
WHICH IT IS A PARTY SHALL BE DEEMED BY THE EXECUTION AND DELIVERY OF SUCH CREDIT
DOCUMENTS TO, AGREE THAT A FINAL, NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
General Indemnity. In addition to the payment of expenses pursuant to
Section 7.5 and without duplication of obligations under the Credit Documents,
Company agrees to indemnify, pay and hold the Agents, other Creditors and the
officers, directors, employees, agents, and affiliates of the Agents and other
Creditors, (collectively, the "Indemnitees"), harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto) that
may be imposed on, incurred by, or asserted against any Indemnitee, in any
manner relating to or arising out of this Agreement or any other agreements
executed and delivered by the Company or any Subsidiary in connection herewith
(the "Indemnified Liabilities"); provided, that Company shall have no obligation
to an Indemnitee hereunder with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of such Indemnitee or from any action
by an Indemnitee against an officer, director or employee of an Indemnitee. To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it violates any law or
public policy, the Company shall contribute the maximum portion that it is
permitted to pay under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them. The
provisions of the undertakings and indemnification set out in this Section 7.10
shall survive satisfaction and payment of the Company's obligations hereunder
and termination of this Agreement.
WAIVER OF JURY TRIAL. THE PARTIES HERETO, AND EACH CREDITOR BY
ENTERING INTO THE RESPECTIVE CREDIT DOCUMENTS TO WHICH IT IS A PARTY SHALL BE
DEEMED BY THE EXECUTION AND DELIVERY OF SUCH CREDIT DOCUMENTS TO, HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND AGREE THAT ANY SUCH ACTION,
PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY;
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS ENTERING INTO THIS
AGREEMENT.
SERVICE OF PROCESS. THE PARTIES HERETO, AND EACH CREDITOR BY ENTERING
INTO THE RESPECTIVE CREDIT DOCUMENTS TO WHICH IT IS A PARTY SHALL BE DEEMED BY
THE EXECUTION AND DELIVERY OF SUCH CREDIT DOCUMENTS TO, HEREBY IRREVOCABLY
CONSENT TO SERVICE OF PROCESS BY MEANS OF CERTIFIED MAIL AT THE ADDRESS PROVIDED
FOR IN SECTION 7.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF THE
AGENTS OR THE COMPANY TO SERVE SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BOSTON CHICKEN, INC.
By: /s/ Xxxxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxxxx X. Xxxxxxx
Title: Vice President
14123 Denver Xxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attn: Xxxxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Loan Agent
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lease Agent
By: /s/ Xxx Xxxxx
------------------------------------
Name: Xxx Xxxxx
Title: Assistant Vice-President -
Structured Finance
000 Xxxx Xxxxx Xxxx, Xxxx. X, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxx Xxxxx
Telephone: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Common
Collateral Agent
By: /s/ Xxxxx A/ Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
SCHEDULE 1.1B
Requirements for Financed Franchisee Loan Documents
(1) The Franchisee shall have granted to the Company a right to
negotiate with Franchisee with respect to, or a right to participate in, or a
right of first refusal on, future financings that do not include any equity-type
features and a preemptive right to participate, on a fully-diluted basis, in any
financing of the Franchisee that has any equity-type features;
(2) The Company shall have the right, but not the obligation, to
convert the indebtedness evidenced by such loan documents (the "Franchisee
Debt") into a majority of the voting stock, partnership units or other equity
interests of the Franchisee or to obtain such position through the exercise of
an equity option at the conversion price, or both;
(3) As security for the Franchisee Debt, the Franchisee shall have
granted to the Company a first priority Lien (subject to the types of Liens
described in clauses (2) through (10) of Section 4.1 of the Agreement, without
giving effect to clause 9(d) of such Section 4.1) on all of the assets of the
Franchisee, including, without limitation, all real and personal property of
such Franchisee and all leasehold interests of such Franchisee (unless after
Franchisee's best efforts (which shall not require unreasonable efforts)
Franchisee is unable to obtain the consent of the respective landlord for such
leasehold to the extent such consent is required), but specifically excluding
(x) any assets subject to any Sublease, (y) any shares of Boston Chicken, Inc.
common stock owned by the Franchisee and (z) in the case of Boston West, L.L.C.,
its equity interest in BWRE so long as the only assets owned by BWRE are the
BWRE Parcels, those certain Land and Building Leases, each dated February 16,
1996, between Boston West L.L.C., as tenant, and BWRE, as landlord, relating to
the BWRE Parcels and all rights as landlord arising under such Land and Building
Lease; provided that, subject to paragraph (4) below, if the Company declines to
extend additional financing to the Franchisee pursuant to the foregoing clause
(1) then the Company may agree to subordinate the Franchisee Debt and its first
priority Lien securing the Franchisee Debt to the loan and Lien of a third party
lender; provided further that the Company shall require the Franchisee to
maintain at all times after such subordination a ratio of (a)
Franchisee Liabilities to (b) Franchisee Net Worth of not greater than 1.25:1.0.
For purposes of this paragraph "Franchisee Liabilities" shall mean, as of any
date of determination, all obligations of the Franchisee required by generally
accepted accounting principles to be set forth as long-term liabilities of the
Franchisee on its balance sheet (less the total Franchisee Debt that could be
incurred under the corresponding loan documents) plus, without duplication, all
liabilities owed to the Company); and "Franchisee Net Worth" shall mean as of
any date of determination, the sum on a consolidated basis of (i) all capital
stock, partnership units or other equity interests and additional paid-in
capital or equity of the Franchisee, plus (or minus, in the event of a deficit)
(ii) the surplus and retained earnings accounts of the Franchisee minus (iii)
the amount of any treasury stock, plus (iv) the total Franchisee Debt that could
be incurred under the corresponding loan documents, plus (v) the amount of all
equity capital received as a result of all exercises or conversions by Company
under the loan documents relating to such Franchisee Debt.
(4) Notwithstanding the provisions of the foregoing clause (3), the
Company shall not agree to subordinate to the Lien of such third party lender
(a) any of its rights of payment from the Franchisee arising with respect to
royalties, franchise fees, leases or software or (b) prior to a payment default
under the indebtedness owed by such Franchisee to a third party lender, the
interest payments on the Franchisee Debt.
