1
EXHIBIT 10.6
EXECUTION COPY
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AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
dated as November 21, 1997
among
EINSTEIN/NOAH BAGEL CORP.,
THE LENDERS NAMED HEREIN,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
as Agent and Issuing Lender,
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Co-Agent
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II AMOUNT AND TERMS OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1. Loan Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.2. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3. Funding Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6. Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.7. Prepayments; Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.8. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.9. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.11. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.12. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.13. Change in Rate of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.14. Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.15. Changes in Law Rendering Certain Loans Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.16. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.17. Right of Lenders to Fund Through Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.18. Discretion of Lenders as to Manner of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.19. Mitigation of Circumstances; Replacement of
Affected Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.20. Conclusiveness of Statements; Survival of
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IIA THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.1A LC Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.2A Request for Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3A Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4A Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.5A Notification of Demand for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.6A Funding by Issuing Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.7A NonConforming Demand For Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.8A Return of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.9A Reimbursement Agreement of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.10A Funding By Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.11A Return of Funds Related to NonConforming
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.12A Obligation to Reimburse for or Participate in
Letter of Credit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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2.13A Mandatory Payment to Agent of LC Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.14A Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.15A Voluntary Reduction of the LC Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.16A Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.17A Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.1. Condition Precedent to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.2. Conditions Precedent to All Loans and Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.1. Incorporation, Good Standing, and Due
Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2. Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.3. Legally Enforceable Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.5. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.7. No Defaults on Outstanding Judgments or Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.8. Governmental and Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.9. Ownership and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.10. Subsidiaries etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.11. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.14. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.15. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.16. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.17. Pledged Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.18. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.19. Financed Franchisee/Subsidiary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.20. Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.21. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1. Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2. Maintenance of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.4. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.5. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.6. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.7. Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.8. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.9. Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.10. Notes, Certificates and Other Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.11. Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.12. Subsidiary Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.13. Credit Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.14. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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5.15. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VI NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.1. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.3. Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.4. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.5. Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.6. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.7. Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.8. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.9. Guaranties, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.10. Transactions With Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.11. Subsidiary, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.12. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.13. Financed Franchisee Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.14. Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.15. Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.16. Take or Pay Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.17. Credit Agreement Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VII FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.1. Net Store Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.2. Senior Indebtedness to System EBITDAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.3. Total Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.4. Proforma Store Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.5. Proforma System Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.2. Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE IX THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.2. Liability of the Agent to the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.3. Bank of America and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.4. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.7. Duties of the Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1. Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.3. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.5. Assignments and Participations; Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.6. Costs, Expenses, and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.7. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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10.9. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.11. SUBMISSION TO JURISDICTION; WAIVER OF VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.12. General Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.13. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.14. SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.16. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.17. Reaffirmation, Restatement and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
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SCHEDULES
Schedule 1.1(A) Requirements for Financed Franchisee Loan Documents
Schedule 1.1(B) Percentages
Schedule 1.1(C) Existing Letter of Credit
Schedule 4.6 Litigation
Schedule 4.10 Subsidiaries, etc.
Schedule 4.14 Existing Debt
Schedule 4.17 Pledged Collateral
Schedule 4.18 Real Property
Schedule 4.19 Financed Franchisee Information
Schedule 6.1 Liens
Schedule 6.2 Permitted Debt
Schedule 6.9 Permitted Guaranties
EXHIBITS
EXHIBIT A-1 Form of Revolving Note (Section 2.6)
EXHIBIT A-2 Form of Term Note (Section 2.6)
EXHIBIT B Form of Borrowing Request (Section 2.2(1))
EXHIBIT C Form of Continuation/Conversion Notice (Section 2.2(2))
EXHIBIT D Form of Opinion of Counsel for the Borrower and the
Subsidiaries (Section 3.1)
EXHIBIT E Form of Guaranty (Section 3.1)
EXHIBIT F-1 Form of Security Agreement (Section 1.1)
EXHIBIT F-2 Form of Trademark Security Agreement (Section 1.1)
EXHIBIT F-3 Form of Collateral Assignment Servicing Agreements (Section 1.1)
EXHIBIT G Form of Pledge Agreement (Section 1.1)
EXHIBIT H Form of Collateral Assignment of Lease (Section 1.1)
EXHIBIT I Form of Landlord's Consent (Section 1.1)
EXHIBIT J Form of Collateral Assignment of Loan (Section 1.1)
EXHIBIT K Form of BCI Subordination Agreement (Section 1.1)
EXHIBIT L Form of Affirmation and Amendment (Section 1.1)
EXHIBIT M Form of Compliance Certificate (Section 5.8(4))
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AMENDED AND RESTATED
SECURED CREDIT AGREEMENT
THIS AMENDED AND RESTATED SECURED CREDIT AGREEMENT dated as of
November 21, 1997, among EINSTEIN/NOAH BAGEL CORP., a Delaware corporation (the
"Borrower"), the lenders whether as original signatories or pursuant to Section
10.5 party hereto (herein, together with any assignees thereof, collectively
called the "Lenders" and each individually called a "Lender"), GENERAL ELECTRIC
CAPITAL CORPORATION, as coagent for the Lenders (herein in such capacity,
together with any successors thereto in such capacity, called the "Co-Agent'")
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (as successor by
merger to Bank of America Illinois) (together with any successor thereto, "Bank
of America"), as agent for the Lenders (herein in such capacity, together with
any successors thereto in such capacity, called the "Agent") and as Issuing
Lender (as hereinafter defined).
WHEREAS, the Borrower, the Agent, the Issuing Lender and the
Lenders are parties to that certain Secured Credit Agreement dated as of May
17, 1996 (as heretofore amended or modified, the "Original Credit Agreement")
pursuant to which the Lenders made Revolving Loans to, and issued Letters of
Credit for the account of the Borrower from time to time;
WHEREAS, the Borrower, the Agent, the Co-Agent, the Issuing
Lender and the Lenders now desire to amend and restate the Original Credit
Agreement to, among other things, (i) extend the Termination Date of the
Agreement, (ii) provide for the Term Loan, (iii) amend certain covenants and
(iv) make certain other changes to the Original Credit Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. 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):
"Affected Lender" - See Section 2.15.
"Affirmation and Amendment" means the Affirmation and
Amendment of Loan Documents substantially in the form of Exhibit
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8
L, to be delivered by the Borrower and its Subsidiaries under the terms of this
Agreement.
"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 Borrower 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 Borrower 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 Borrower 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 Borrower and a Person shall not, by itself, evidence that
such Person is controlled by the Borrower nor shall the Financed Franchisee
Loan Documents executed by a Franchisee evidence that such Franchisee is an
Affiliate of the Borrower prior to the acquisition by the Borrower 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).
"Agent" - see Preamble.
"Agreement" means this Amended and Restated Secured Credit
Agreement, as amended, supplemented, modified, restated, refinanced, refunded
or renewed from time to time.
"Annualized Store EBITDAL" means, for each fiscal period of
the Borrower, (1) Store EBITDAL for such fiscal quarter divided by the number
of Retail Periods which occur in such fiscal quarter, multiplied by (2)
thirteen (13).
"Annualized System EBITDAL" means, for each fiscal quarter of
the Borrower, the product of (1) System EBITDAL for such fiscal quarter divided
by the number of Retail Periods which occur in such fiscal quarter, multiplied
by (2) thirteen (13).
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9
"Applicable Margin" means with respect to Eurodollar Loans and
Floating Rate Loans, as the case may be, a margin as follows:
Applicable Applicable Floating Rate
Eurodollar Rate Margin
Cash Flow Ratio Margin
Greater than or equal to 2.00:1 3.25% 0.50%
Greater than or equal to 1.50:1 2.75% 0.25%
but less than 2.00:1
Greater than or equal to 1.00:1 2.25% 0.00%
but less than 1.50:1
Less than 1.00:1 1.75% 0.00%
The Applicable Margin with respect to Eurodollar Loans and
Floating Rate Loans, as the case may be, shall be adjusted (1) on the date on
or after the Revolving Loan Effective Date but prior to receipt by the Agent of
the certificate required pursuant to subsection 5.8(4) with respect to the
Borrower's first fiscal quarter, 1998 on which Revolving Loans shall be
available under Section 5.13 and (2) at all time thereafter on the first day of
the calendar month following receipt by the Agent of the certificate required
pursuant to subsection 5.8(4), in each case, based on the Cash Flow Ratio as of
the last day of the fiscal quarter most recently ended; it being understood
that if the Borrower fails to timely deliver the certificate in accordance with
subsection 5.8(4), then until five days following receipt of such certificate
by the Agent, the Applicable Margin shall be 3.25% with respect to Eurodollar
Loans and 0.50% with respect to Floating Rate Loans. It is hereby acknowledged
that as of the Restatement Effective Date, the Applicable Margin for Eurodollar
Loans is 3.25% and for Floating Rate Loans is 0.50%.
"Authorized Officer" means any one of the following officers
of the Borrower: Chairman, President and Chief Executive Officer, Vice
President or Chief Financial Officer.
"Bank of America" - see Preamble.
"BCI" means Boston Chicken, Inc., a Delaware corporation.
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"BCI Control Stock" means common stock of BCI registered with
the Securities and Exchange Commission which is acquired by the Borrower in
exchange for the issuance by the Borrower to BCI of the Borrower's common
stock.
"BCI Exempted Stock" means common stock of BCI registered with
the Securities and Exchange Commission which is issued to the Borrower in lieu
of funding a borrowing under the BCI Subordinated Debt with immediately
available funds.
"BCI Subordinated Debt" means the Debt incurred pursuant to an
Amended and Restated Loan Agreement dated as of May 17, 1996, as amended,
between the Borrower and BCI, as lender, pursuant to which BCI agreed to make
an unsecured loan to the Borrower in the maximum principal amount of
$50,000,000, as such Amended and Restated Loan Agreement is in effect on the
Restatement Effective Date.
"BCI Subordination Agreement" means a Subordination Agreement
executed by BCI with respect to the BCI Subordinated Debt in substantially the
form of Exhibit K.
"Beneficiary" means any beneficiary under any Letter of
Credit.
"Borrowing" means, on any Borrowing Date, a borrowing
hereunder consisting of Loans made to the Borrower at the same time by the
Lenders pursuant to Section 2. A Borrowing may be a Floating Rate Borrowing or
a Eurodollar Borrowing.
"Borrowing Date" means any Business Day specified in a notice
pursuant to Section 2.2 as a date on which the Borrower requests the Lenders to
make Loans hereunder.
"Borrowing Request" see Section 2.2.
"Business Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks in Chicago, Illinois are authorized or
required to close under the laws of the State of Illinois.
"Capital Lease" means all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Cash Flow Ratio" - see Section 7.2.
"Change of Control" shall be deemed to have occurred at such
time after the Restatement Effective Date as (1) BCI, the officers and
directors of BCI, and the officers and directors of the Borrower shall fail to
own at, collectively in aggregate, at least 40% of the voting stock of the
Borrower, (2) BCI shall fail
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11
to own at lease 25% of the voting stock of the Borrower, (3) any Person or
group of Persons (within the meaning of Section 13 or 14 of the Exchange Act)
other than BCI, the officers and directors of BCI, or the officers and
directors of the Borrower, shall acquire at any time beneficial ownership
(within the meaning of Section 13 of the Exchange Act) of 10% or more of the
voting stock of the Borrower or (4) individuals who as of the date hereof
constitute the Borrower's Board of Directors (together with any new director
whose election or appointment was approved by a vote of or recommended by at
least a majority 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. For purposes of this
definition, "Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder, all as amended from time to time.
"Co-Agent" - see Preamble.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property which is subject to, or is to
be subject to, the Lien granted by each Security Agreement, each Trademark
Security Agreement, the Collateral Assignment of Servicing Agreements, the
Pledge Agreement, any Collateral Assignment of Lease, any Landlord's Consent,
any Collateral Assignment of Loan or any other Loan Documents.
"Collateral Assignment of Lease" means any Collateral
Assignment of Tenant's Rights in Lease in substantially the form of Exhibit H
to be delivered by the Borrower or a Subsidiary under the terms of the Original
Credit Agreement or to be delivered by the Borrower or a Subsidiary under the
terms of this Agreement, as the same may be amended, modified, reaffirmed or
restated from time to time, including, without limitation, as amended and
reaffirmed pursuant to the Affirmation and Amendment.
"Collateral Assignment of Loan" means a Collateral Assignment
of Loan Documentation in the form of Exhibit J delivered by the Borrower under
the terms of the Original Credit Agreement, as the same may be amended,
modified, reaffirmed or restated from time to time, including, without
limitation, as amended and reaffirmed pursuant to the Affirmation and
Amendment.
"Collateral Assignment of Servicing Agreements" means the
Collateral Assignment of Servicing Agreements in the form of Exhibit F-3,
delivered by the Borrower under the terms of the Original Credit Agreement, as
the same may be amended, modified, reaffirmed or restated from time to time,
including, without
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12
limitation, as amended and reaffirmed pursuant to the Affirmation and
Amendment.
"Collateral Documents" means each Security Agreement, each
Trademark Security Agreement, the Collateral Assignment of Servicing
Agreements, each Pledge Agreement, each Collateral Assignment of Lease and
Landlord's Consent, each Collateral Assignment of Loan and each mortgage or
deed of trust delivered from time to time in connection with this Agreement.
"Combined Overhead" means, for each fiscal period of the
Borrower, the sum of field operating overhead plus support center overhead
(exclusive of transaction costs, severance costs, store closing costs and
onetime non recurring charges), in each case, of the Borrower, its
Subsidiaries and the Financed Franchisees.
"Commitment" means, at any time as to any Lender, collectively
such Lender's Revolving Loan Commitment, Term Loan Commitment and LC Commitment
then in effect.
"Continuation/Conversion Notice" see Section 2.2.
"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; (7) obligations
secured by any Lien on property owned by such Person, whether or not the
obligations have been assumed; and (8) obligations in respect of Hedging
Agreements.
"Default" means any of the events specified in Section 8.1,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
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"Dollars" and the sign "$" shall mean lawful money of the
United States of America.
"Effective Date" means May 17, 1996.
"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 Borrower would be treated as a single
employer under Section 4001 of ERISA.
"Eurocurrency Reserve Percentage" means, with respect to any
Eurodollar Loan for any Interest Period, a percentage (expressed as a decimal)
equal to the daily average during such Interest Period, as prescribed by the
Federal Reserve Board, for determining the aggregate maximum reserve
requirements (including all basic, supplemental, marginal and other reserves)
applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other
then applicable regulation of the Federal Reserve Board which prescribes
reserve requirements applicable to "Eurocurrency liabilities," as defined in
Regulation D, as applicable to the class of banks of which the Agent is a
member. Without limiting the effect of the foregoing, the Eurocurrency Reserve
Percentage shall reflect any other reserves required to be maintained by the
Agent against (i) any category of liabilities that includes deposits by
reference to which the Eurodollar Rate (Reserve Adjusted) is to be determined,
or (ii) any category of extensions of credit or other assets that includes
Eurodollar Loan. For purposes of this Agreement, any Eurodollar Loan hereunder
shall be deemed to be "Eurocurrency liabilities," as defined in Regulation D,
and, as such, shall be deemed to be subject to such reserve requirements
without the benefit of, or credit for, proration, exceptions or offsets which
may be available to the Agent from time to time under Regulation D.
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"Eurodollar Loan" or "Eurodollar Borrowing" means any Loan
which bears interest at a rate determined by reference to the Eurodollar Rate
(Reserve Adjusted).
"Eurodollar Rate" means, with respect to any Eurodollar Loan
for any Interest Period, the rate per annum equal to the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) rate per annum at which
Dollar deposits in immediately available funds are offered by the Lending
Office of the Agent two Business Days prior to the beginning of such Interest
Period to prime banks in the interbank eurodollar market as at or about the
relevant local time of such Lending Office, for delivery on the first day of
such Interest Period, for the number of days comprised therein and in an amount
equal or comparable to the amount of the Eurodollar Loan of the Agent for such
Interest Period. As used herein, "relevant local time" shall mean 11:00 A.M.,
London time, when the Lending Office of the Agent is located in Europe, or
10:00 A.M., New York time, when such Lending Office is located in North America
or otherwise outside of Europe.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to
any Eurodollar Loan for any Interest Period, a rate per annum (rounded upward,
if necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
"Event of Default" means any of the events specified in
Section 8.1; provided, that any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"Existing Letters of Credit" means the letters of credit
issued by the Issuing Lender under the Original Credit Agreement prior to the
Restatement Effective Date which remain outstanding on the Restatement
Effective Date and listed on Schedule 1.1(C).
"Existing Revolving Loans" means, Revolving Loans made under
the Original Credit Agreement prior to the Restatement Effective Date.
"Existing Revolving Note" means the promissory note issued
under the Original Credit Agreement prior to the Restatement Effective Date.
"Federal Funds Rate" means at any time an interest rate per
annum equal to the weighted average of the rates for overnight Federal funds
transactions with members of the Federal
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Reserve System arranged by Federal funds brokers, as published for such day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day for
such transactions received by the Issuing Lender from three Federal funds
brokers of recognized standing selected by it, it being understood that the
Federal Funds Rate for any day which is not a Business Day shall be the Federal
Funds Rate for the next preceding Business Day.
"Financed Franchisee" means any Franchisee (other than a
Subsidiary); provided that each such Person has duly executed and delivered
Financed Franchisee Loan Documents.
"Financed Franchisee Loan Documents" means loan documents
entered into between the Borrower, as lender, and a Franchisee, as borrower,
which, taken as a whole, meet each of the requirements set forth on Schedule
1.1(A).
"Financed Subsidiary" means any Subsidiary which (1) is a
Franchisee and (2) was formerly a Financed Franchisee.
"Financed Subsidiary Loan Documents" means loan documents
entered into between the Borrower, 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 (11) of Section
6.1) 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); it being understood
that such loan documents may permit the Borrower 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 6.2(6)), provided, that
the Borrower 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 LC Commitment Fee" see Section 2.14A(1)(b).
"Financial Lease" means with respect to any Person at any
date, any Capital Lease of such Person and any operating
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lease of such Person entered into outside of the ordinary course of business.
"Financial Lease Debt" as of any date means (1) with respect
to any Capital Lease under which the Borrower or any of its Subsidiaries is the
lessee, the principal amount thereof as of such date as determined in
accordance with GAAP; and (2) with respect to any other Financial Lease under
which the Borrower or any of its Subsidiaries is the lessee, the present value
(using a market rate of interest) as of such date of all remaining rental
payments of the Borrower or such Subsidiary under such Financial Leases.
"Financial Lease Payments" means, for any period, all payments
made by the Borrower or any of its Subsidiaries with respect to Financial
Leases during such period.
"Financial Letter of Credit" means any Letter of Credit
determined by the Issuing Lender to be a "financial guaranty-type standby
letter of credit" as defined in footnote 13 to Appendix A to the Risk Based
Capital Guidelines issued by the Comptroller of the Currency.
"Fixtures" means all fixtures of the Borrower, each
Subsidiary, and each Financed Franchisee 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.
"Floating Rate" means the higher of (1) the rate of interest
announced by Bank of America from time to time at its Head Office as its
reference rate, which rate is not intended to be the lowest rate of interest
charged by Bank of America to its borrowers, and (2) the Federal Funds Rate
plus 1/2 of 1% per annum.
"Floating Rate Loan" or "Floating Rate Borrowing" means any
Loan which bears interest at a rate determined by reference to the Floating
Rate.
"Franchisee" means any Person (excluding the Borrower but
including any Subsidiary) who is party to a then existing Franchise Agreement,
Area Development Agreement or similar agreement with the Borrower or who is
otherwise authorized to operate a Store.
"GAAP" means generally accepted accounting principles in the
United States applied by the Borrower 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 Lender).
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"Guaranty" means a guaranty issued by a Subsidiary in favor of
the Agent for the benefit of the Lenders in substantially the form of Exhibit
E, as the same may be amended, modified, reaffirmed or restated from time to
time, including, without limitation, with respect to Guaranties outstanding on
the Restatement Effective Date, as amended and reaffirmed pursuant to the
Affirmation and Amendment.
"Head Office" means the principal office of Bank of America at
000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, XX 00000 or such other place as designated
by the Agent.
"Hedging Agreement" means any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designed to protect a Person
against fluctuations in interest rates, currency exchange rates or commodity
prices.
"Interest Period" see Section 2.4(3).
"Issuing Lender" means Bank of America, in its capacity as the
issuer of Letters of Credit for the Borrower's account pursuant to the terms of
this Agreement.
"Landlord's Consent" means a Landlord's Consent, in
substantially the form of Exhibit I.
"LC Administrative Fees" - see Section 2.14A(2).
"LC Application" means a letter of credit application in the
form then used by the Issuing Lender for the type of letter of credit requested
(with appropriate adjustments to indicate that any letter of credit issued
thereunder is to be issued pursuant to, and subject to the terms and conditions
of, this Agreement).
"LC Commitment" - see Section 2.1A.
"LC Commitment Fees" means collectively, the Financial LC
Commitment Fee and the Non-Financial LC Commitment Fee.
"LC Obligations" means any and all obligations of every
description of the Borrower in connection with the Letters of Credit issued
pursuant to this Agreement, including without limitation all reimbursement
obligations (whether absolute or contingent) under this Agreement, and all
obligations in respect of related fees or expenses.
"Lenders" or "Lender" shall have the meaning assigned to such
term in the Preamble.
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"Lending Office" means, with respect to any Lender, any office
designated (whether or not notice is given to the Borrower) by such Lender in
its sole discretion as a Lending Office for purposes hereunder. A Lender may
designate separate Lending Offices for the purposes of making, maintaining or
continuing Floating Rate Loans, or Eurodollar Loans and, with respect to
Eurodollar Loans, such Lending Office may be a foreign branch or an affiliate
of such Lender or such Lender's holding company.
"Letters of Credit" - see Section 2.1A.
"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 Documents" means this Agreement, the Notes, each
Guaranty, each LC Application, the BCI Subordination Agreement, the Collateral
Documents, the Affirmation and Amendment and all other agreements, instruments
and documents delivered from time to time to the Agent or the Issuing Lender
with respect to this Agreement or with respect to any liabilities arising in
connection herewith.
"Loans" mean, collectively, Revolving Loans and Term Loan and
"Loan" means any of the Revolving Loans and Term Loan.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
"Material Adverse Change" means a material adverse change in
the condition (financial or otherwise), business, operations or prospects of
the Borrower and its Subsidiaries, taken as a whole.
"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 Borrower or any ERISA Affiliate.
"Non-Financial LC Commitment Fee" - see Section 2.14A(1)(a).
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"Non-Financial Letters of Credit" means any standby Letter of
Credit other than a Financial Letter of Credit.
"Notes" means, collectively, the Revolving Note and the Term
Note, and "Note" means either the Revolving Note or the Term Note.
"Original Credit Agreement" - see Preamble.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Percentage" means as to any Lender the percentage set forth
opposite since Lender's name on Schedule 1.1(B).
"Person" means an individual, partnership, corporation,
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 Borrower or any ERISA Affiliate.
"Pledge Agreement" means any Pledge Agreement in substantially
the form of Exhibit G, delivered by the Borrower or a Subsidiary under the
terms of the Original Credit Agreement or this Agreement, as the same may be
amended, modified, reaffirmed or restated from time to time, including, without
limitation, as reaffirmed pursuant to the Affirmation and Amendment.
"Proforma Fixed Charges" means, as of any date of
determination, the cash interest expense (including all imputed interest
related to any Capital Lease) and principal payments projected to be incurred
by the Borrower and its consolidated Subsidiaries over the subsequent 13 Retail
Periods. For purposes of calculating cash interest expense with respect to any
indebtedness, multiply (a) the amount of indebtedness outstanding as of such
date by (b) the then applicable interest rate on such indebtedness on the date
of determination.
"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.
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"Required Lenders" means Lenders whose aggregate Commitments
represent greater than 50% of the Percentages; provided, that: (1) Required
Lenders shall never be less than two Lenders; (2) for purposes of amending,
waiving or otherwise modifying the provisions of Article 7, Required Lenders
shall mean Lenders whose aggregate Percentages represent greater than 66 2/3%
of all Commitments; and (3) for purposes of waiving or curing an Event of
Default, changing the rate of interest or fees, amending any provisions of
Sections 10.6 or 10.12, amending this definition of "Required Lenders",
releasing Collateral (other than as may be permitted under the Loan Documents)
or extending the Termination Date of this Agreement, Required Lenders shall
mean all Lenders.
"Restatement Effective Date" - see Section 3.1.
"Retail Period" means any of the thirteen consecutive
four-week periods used by the Borrower 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 Loan(s)" shall have the meaning assigned to such
term in Section 2.1(1).
"Revolving Loan Commitment" means, at any time as to any
Lender, obligations to make Revolving Loans to the Borrower pursuant to Section
2.1(1) in an aggregate amount, for each Lender, not to exceed such Lender's
Percentage of the Total Revolving Loan Commitment Amount then in effect.
"Revolving Loan Effective Date" means April 7, 1998.
"Revolving Note" shall have the meaning assigned to such term
in Section 2.6.
"Security Agreement" means any Security Agreement in
substantially the form of Exhibit F-1, delivered by the Borrower or a
Subsidiary under the terms of the Original Credit Agreement or this Agreement,
as the same may be amended, modified, reaffirmed or restated from time to time,
including, without limitation, as amended by the respective Amendment to
Security Agreement dated as of the Restatement Effective Date.
"Senior Indebtedness" means, at any time, the sum of (i) the
aggregate principal amount of Loans then outstanding plus (ii) the aggregate
face amount of Letters of Credit issued and outstanding or drawn and not
reimbursed.
"Significant Subsidiary" means a Subsidiary, including its
Subsidiaries, which meets either of the following conditions:
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(1) The Borrower's and its other Subsidiaries' investments in
and advances to the Subsidiary exceed 10 percent of the total assets
of the Borrower and its Subsidiaries consolidated as of the end of the
most recently completed fiscal year; or
(2) The Borrower's and its other Subsidiaries' proportionate
share of the total assets (after intercompany eliminations) of the
Subsidiary exceeds 10 percent of the total assets of the Borrower and
its Subsidiaries consolidated as of the end of the most recently
completed fiscal year.
"Special Purpose Subsidiary" means any Subsidiary (which is
not a Franchisee): (1) of which the Borrower 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
Subsidiary; (2) which has executed and delivered to the Agent a Guaranty and
all other documents which are set forth in Section 3.1(6); and (3) the only
assets of which are real property and leases of real property (in which such
Subsidiary is the landlord) to the extent permitted by Section 6.7; it is
acknowledged that Xxxxxxxx Brothers, Inc., a Utah corporation, shall be deemed
a "Special Purpose Subsidiary".
"Store" means a bagel store operated under one of the
trademarks owned by the Borrower or any of its Subsidiaries.
"Store EBITDAL" means, for each fiscal period of the Borrower,
(1) the combined net revenue (i.e. gross revenue net of customer coupons and
discounts) generated by all Stores operated by the Borrower, its 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, occupancy and advertising costs, in each case, of the Borrower, its
Subsidiaries and the Financed Franchisees.
"Subordinated Debt" means Debt of the Borrower (1) (a) which
is subordinated in priority of payment to the Debt of the Borrower under this
Agreement and the Notes in a manner consistent with the BCI Subordination
Agreement and (b) which shall not mature prior to the Termination Date (the
Lenders acknowledge that, (i) the BCI Subordinated Debt shall constitute
"Subordinated Debt", and (ii) any other Debt owed to BCI by the Borrower
existing as of the Restatement Effective Date and covered by the terms and
conditions of the BCI Subordination Agreement shall constitute "Subordinated
Debt"), and (2) pursuant to the Convertible Subordinated Debentures (the "2004
Subordinated Debt") due 2004 issued pursuant to the terms and conditions of a
certain Indenture (the "2004 Indenture") dated as
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of May 29, 1997 between the Borrower and Bankers Trust Company, a banking
corporation duly organized and existing under the laws of the state of New
York, as trustee.
"Subsidiary" means, as to the Borrower, 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, or
the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by the Borrower, provided, however, that
"Subsidiary" shall not include any Person in which the Borrower does not own,
directly or indirectly through one or more intermediaries, an equity interest.
"Subsidiary Default" shall have the meaning assigned to such
term in Section 8.1(8).
"System EBITDAL" means for each fiscal period of the Borrower,
the Store EBITDAL for such fiscal period minus the Combined Overhead for such
fiscal period.
"Termination Date" means October 31, 2000.
"Term Loan(s)" shall have the meaning assigned to such term in
Section 2.1(2).
"Term Loan Commitment" means, at any time as to any Lender,
obligations to make a Term Loan to the Borrower pursuant to Section 2.1(2) in
an aggregate amount, for each Lender, not to exceed the respective amount set
forth opposite such Lender's name on Schedule 1.1(C) for such point in time.
"Term Note" shall have the meaning assigned to such term in
Section 2.6.
"Total Revolving Loan Commitment Amount" means, at any time,
the commitments of the Lenders to make Revolving Loans pursuant to Section
2.1(1), in the aggregate amount set forth on Schedule I, as the same may be
amended pursuant to Section 2.7(2).
"Total Term Loan Commitment Amount" means $30,000,000.
"Trademark Security Agreement" means any Trademark Security
Agreement substantially in the form of Exhibit F-2, to be delivered by the
Borrower or a Subsidiary under the terms of the Original Credit Agreement or
this Agreement, as the same may be amended, modified, reaffirmed or restated
from time to time, including, without limitation, as amended by the respective
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Amendment to Trademark Security Agreement dated as of the Restatement Effective
Date.
"2004 Indenture" shall have the meaning assigned to such term
in the definition of "Subordinated Debt."
"2004 Subordinated Debt" shall have the meaning assigned to
such term in the definition of "Subordinated Debt."
"Type" - see Section 2.1(2). The Types of Loans or Borrowings
under this Agreement are: Floating Rate Loans or Borrowings and Eurodollar
Loans or Borrowings.
"Wholly-Owned Subsidiary" means any Subsidiary of which the
Borrower owns, directly or indirectly through one or more intermediaries, or
both, all of the issued and outstanding voting stock.
SECTION 1.2. 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 4.4, and all financial data prepared by the Borrower and
submitted pursuant to this Agreement shall be prepared in accordance with such
principles except for the financial data submitted pursuant to Section 5.8(1)
and such other financial data which the Borrower expressly states has not been
prepared in accordance with such principles.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.1. Loan Commitment.
(1) Revolving Loan Commitment. Subject to the terms and
conditions set forth in this Agreement and the other Loan Documents, each of
the Lenders, severally and for itself alone, agrees to make loans to the
Borrower on a revolving basis (herein collectively called the "Revolving
Loans," and individually called a "Revolving Loan") from time to time from the
Restatement Effective Date to but not including the Termination Date, at such
times and in an amount equal to such Lender's Percentage of such aggregate
amounts as the Borrower may request from all of the Lenders; provided, however,
the Lenders shall not make Revolving Loans prior to the Revolving Loan
Effective Date. The aggregate principal amount of Revolving Loans which any
Lender shall be committed to have outstanding to the Borrower, when added to
the amount of such Lender's participation in the Letters of Credit issued and
outstanding pursuant to Section 2.1A or drawn and not reimbursed pursuant to
Section 2.9A, shall not exceed at any time
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such Lender's Percentage of the Total Revolving Loan Commitment Amount then in
effect. The aggregate principal amount of all Revolving Loans which all the
Lenders shall be committed to have outstanding to the Borrower, when added to
the aggregate face amount of Letters of Credit issued and outstanding pursuant
to Section 2.1A or drawn and not reimbursed pursuant to Section 2.9A, shall not
at any one time exceed the Total Revolving Loan Commitment Amount then in
effect. In the event the aggregate outstanding principal balance of all
Revolving Loans plus the aggregate face amount of Letters of Credit issued and
outstanding or drawn and not reimbursed at any one time exceeds the Total
Revolving Loan Commitment Amount, the Borrower shall, unless all the Lenders
shall otherwise consent, without notice or demand of any kind, immediately make
such repayments of the Revolving Loans or pledge cash collateral to the Agent
(pursuant to documentation reasonably satisfactory to the Required Lenders, the
Issuing Lender and the Agent) in an amount equal to such excess or take such
other actions as shall be necessary to eliminate such excess. All Revolving
Loans shall be repaid by the Borrower on the Termination Date, unless paid or
payable sooner pursuant to the provisions of this Agreement.
(2) (a) Term Loan Commitment. Each of the Lenders, severally
and for itself alone, agrees to make a loan (herein collectively called the
"Term Loan") to the Borrower on the Restatement Effective Date in such Lender's
Percentage of the Total Term Loan Commitment Amount. Each Lender shall provide
to the Agent such Lender's Percentage of the Term Loan and the Agent shall
disburse the Term Loan in one drawing on the Restatement Effective Date. The
foregoing commitment of each Lender is herein called its "Term Loan Commitment"
and for all Lenders the "Term Loan Commitments."
(b) The Term Loan shall be paid in 12 quarterly installments,
with such installments payable on the first day of each March, June, September
and December commencing with March 1, 1998 and on the Termination Date, with
each installment being payable in such Lender's Percentage of the following
amounts:
Aggregate
Date of Installment Quarterly Installment Amount
------------------- ----------------------------
3/1/98 $1,500,000
6/1/98 $1,500,000
9/1/98 $1,500,000
12/1/98 $1,500,000
3/1/99 $1,500,000
6/1/99 $1,500,000
9/1/99 $1,500,000
12/1/99 $1,500,000
3/1/00 $1,500,000
6/1/00 $1,500,000
9/1/00 $1,500,000
10/31/00 $13,500,000
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Notwithstanding the foregoing, the payment on October 31, 2000 shall be in an
amount sufficient to pay in full the Term Loan and all obligations related
thereto.
(3) Various Types of Loans. Each Revolving Loan shall be,
and the Term Loan may be divided into tranches which are, either a Floating
Rate Loan or a Eurodollar Loan (each being herein called a "Type" of Loan), as
the Borrower shall specify in the related Borrowing Request or
Continuation/Conversion Notice pursuant to Section 2.2. Eurodollar Loans
having the same Interest Period are sometimes called a "Group" or collectively
"Groups". Floating Rate Loans and Eurodollar Loans may be outstanding at the
same time, provided that (a) in the case of Eurodollar Loans, not more than ten
(10) different Interest Periods shall be outstanding at any one time for all
such Loans, and (b) the Borrower shall specify Loans and Interest Periods such
that no payment or prepayment of any principal on any Loan shall result in a
breakage of any Interest Period. All borrowings, conversions and repayments of
Loans shall be effected so that each Lender will have a pro rata share
(according to its Percentage) of all Types and Groups of Revolving Loans and
the Term Loan, as applicable.
SECTION 2.2. Borrowing Procedure.
(1) Any Authorized Officer of the Borrower may request a
Revolving Loan on behalf of the Borrower on any Business Day after the
Effective Date and prior to the Termination Date and the Term Loan on behalf of
the Borrower on the Restatement Effective Date in United States dollars by
giving the Agent telephonic, telex or facsimile notice (which notice shall be
irrevocable once given and shall be promptly confirmed in writing if given
telephonically) in the form of Exhibit B ("Borrowing Request") or such other
form as shall be acceptable to the Agent. Each Borrowing Request must be
received by the Agent prior to 10:00 A.M., Chicago time, on the proposed date
of such Borrowing (which must be a Business Day) in the case of Floating Rate
Loans and prior to 12:00 Noon, Chicago time, three (3) Business Days prior to
the proposed date of such Borrowing (which must be a Business Day) in the case
of Eurodollar Loans and in each case shall specify (a) the principal amount of
such Borrowing, (b) the proposed date of Borrowing (which must be a Business
Day), (c) the Type of Borrowing and (d) in the case of a Eurodollar Borrowing,
the initial Interest Period for such Borrowing. Promptly upon receipt of such
Borrowing Request, the Agent shall advise each Lender thereof. On the date of
a proposed Borrowing, each Lender shall provide the Agent at the Head Office
with immediately available funds in an amount equal to such Lender's
Percentage, of the principal amount of the proposed Borrowing specified in the
Borrowing Request. Each Floating Rate Loan
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which is a Revolving Loan shall be in a principal amount of $100,000 or an
integral multiple thereof (or such lesser amount equal to the unadvanced
portion of the Total Revolving Loan Commitment Amount available under Section
2.1(1)); each Eurodollar Loan which is a Revolving Loan shall be in a principal
amount of $500,000 or an integral multiple of $250,000 (or such lesser amount
equal to the unadvanced portion of the Total Revolving Loan Commitment Amount
available under Section 2.1(1)). All Borrowings shall be pro rata among the
Lenders in accordance with their respective Commitments. Not later than 1:00
P.M., Chicago time, on the proposed date of Borrowing specified in the
Borrowing Request, subject to the satisfaction of the applicable conditions
precedent set forth in Article III hereof, the Agent shall make the proceeds of
each Revolving Loan available to the Borrower by causing an amount of
immediately available funds equal to the principal amount of such Revolving
Loan to be credited to the account of the Borrower at Bank of America unless
otherwise required pursuant to the terms of this Agreement.
(2) Conversion and Continuation of Loans. Subject to Section
2.16, the Borrower may, by delivery to the Agent of a notice
("Continuation/Conversion Notice") in the form of Exhibit C attached hereto
with appropriate insertions, before 10:00 A.M., Chicago time, three (3)
Business Days (or in the case of Clause (i) below, one (1) Business Day) prior
to conversion or continuation, convert or continue Loans as follows: (i)
convert Eurodollar Loans into Floating Rate Loans, (ii) convert Floating Rate
Loans into Eurodollar Loans, and (iii) continue a Eurodollar Loan into a
subsequent Interest Period of the same duration or of any other duration
permitted hereunder, subject to the following:
(a) the Interest Period applicable to any Eurodollar Loan
resulting from a conversion shall be specified by the Borrower in the
Continuation/ Conversion Notice delivered pursuant to this Section;
provided, that if no such Interest Period shall be specified, the
Borrower shall be deemed to have selected an Interest Period of one
month's duration. If the Borrower shall not have given timely notice
to continue any Eurodollar Loan into a subsequent Interest Period and
shall not otherwise have given notice to convert such Eurodollar Loan,
such Eurodollar Loan unless repaid pursuant to the terms hereof shall
automatically be converted into a Floating Rate Loan;
(b) if less than all Revolving Loans at the time outstanding
shall be converted or continued, such conversion or continuation shall
be made pro rata among the Lenders, as applicable, in accordance with
the respective principal amounts of Revolving Loans of such Type (and
having the same Interest Period) held by such Lenders immediately
prior to such conversion or continuation;
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(c) in the case of a conversion or continuation of the Term
Loan (or a tranche therof) or of less than all Revolving Loans, the
aggregate principal amount of such Loans converted or continued shall
be not less than $500,000 or any larger integral multiple of $250,000;
(d) if any Eurodollar Loan is converted at a time other than
the last day of an Interest Period applicable thereto, the Borrower
shall at the time of conversion pay any loss or expense (including,
without limitation, breakage losses and expenses) associated therewith
pursuant to Section 2.16;
(e) any portion of a Eurodollar Loan required to be paid on
any principal payment date occurring in less than one month after the
end of the then-current Interest Period applicable to such Loan shall
be automatically converted at the end of such Interest Period into a
Floating Rate Loan.
Notwithstanding the foregoing, so long as any Default or Event of Default shall
exist, no Loans shall be converted to or continued as Eurodollar Loans.
SECTION 2.3. Funding Reliance. Unless the Agent shall have
been notified by telephone, confirmed in writing, by any Lender by 9:00 A.M.
(or 12:00 Noon with respect to Floating Rate Loans), Chicago time, on the day
of a Borrowing that such Lender will not make available the amount which would
constitute its Percentage of such Borrowing on the date specified therefor, the
Agent may assume, subject to the satisfactory fulfillment by the Borrower of
the conditions precedent set forth in Article III, that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such Lender
and the Borrower severally agree to repay the Agent forthwith on demand the sum
of (1) such corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to the Borrower to the date
such amount is repaid to the Agent (a) by such Lender, at the Federal Funds
Rate from time to time in effect, or (b) by the Borrower, at the interest rate
applicable at the time to the Loans comprising such borrowing, plus (2) a
compensatory amount equal to $200.
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SECTION 2.4. Interest.
(1) Interest Rates. With respect to each Loan, the Borrower
hereby promises to pay interest on the unpaid principal amount thereof for the
period commencing on the date of such Loan until such Loan is paid in full, as
follows:
(a) At all times while such Loan is a Floating Rate Loan, at
a rate per annum equal to the Floating Rate from time to time in
effect plus the Applicable Margin for Floating Rate Loans; and
(b) At all times while such Loan is a Eurodollar Loan, for
each Interest Period, at a rate per annum equal to the Eurodollar Rate
(Reserve Adjusted) applicable to such Interest Period, plus the
Applicable Margin for Eurodollar Loans.
(2) Interest Payment Dates. Accrued interest on each
Floating Rate Loan shall be due and payable quarterly in arrears on the first
Business Day of each of March, June, September and December of each year and at
maturity. Accrued interest on each Eurodollar Loan shall be payable on the
last day of each Interest Period relating to such Loan and at maturity. After
maturity, accrued interest on all Loans shall be payable on demand.
(3) Interest Periods. Each "Interest Period" for a
Eurodollar Loan shall commence on the date such Eurodollar Loan was made or
converted from a Loan of a different Type, or on the expiration of the
immediately preceding Interest Period for such Eurodollar Loan, and shall end
on the date which is 1, 2 or 3 months thereafter, as the Borrower may specify
pursuant to Section 2.2(1) or (2) hereof. Each "Interest Period" for a
Eurodollar Loan which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (unless such next succeeding
Business Day is the first Business Day of a calendar month, in which case such
Interest Period shall end on the next preceding Business Day).
(4) Setting and Notice of Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Agent, and notice
thereof shall be given by the Agent promptly to the Borrower and each Lender.
Each determination of the applicable Eurodollar Rate by the Agent shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. If the Agent is unable to determine such a rate, the provisions of
Section 2.14 shall apply. The Agent shall, upon written request of the
Borrower or any Lender, deliver to the Borrower or such Lender a statement
showing the computations used by the Agent in determining any applicable
Eurodollar Rate hereunder.
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(5) Default Interest. Any principal payments on the Loans
not paid when due, whether at stated maturity, by notice of repayment, by
acceleration or otherwise, shall, to the extent permitted by applicable law,
thereafter bear interest (compounded monthly and payable upon demand) at a rate
which is 2% per annum in excess of the rate of interest otherwise payable under
this Agreement in respect of such principal amount until such unpaid amount has
been paid in full (whether before or after judgment).
SECTION 2.5. Fees. (1) Unused Commitment Fee. The Borrower
agrees to pay to the Agent, for the benefit of the Lenders, a nonrefundable
unused commitment fee at the rate of .50% per annum on the average daily amount
by which the Total Revolving Loan Commitment Amount exceeds the outstanding
Revolving Loans plus the undrawn face amount of the Letters of Credit, for the
period commencing on the Revolving Loan Effective Date and continuing to but
not including the Termination Date, payable quarterly in arrears on the first
Business Day of March, June, September and December of each year and at
maturity, payable to the Agent for the account of each Lender in accordance
with such Lender's Percentage.
(2) Agent's Fee. The Borrower agrees to pay to the Agent
such fees provided for in the Letter Agreement dated October 29, 1997.
SECTION 2.6. Notes. (1) Revolving Note. The Revolving Loans
of each Lender under the Original Credit Agreement were evidenced by the
Existing Revolving Note. After the Restatement Effective Date, the Loans of
each Lender shall be evidenced by, and repaid with interest in accordance with,
a single replacement Revolving Note dated the Restatement Effective Date (or
such other date as shall be satisfactory to the Agent) substantially the form
of Exhibit A1 duly completed, in the principal amount of Forty Million Dollars
($40,000,000.00), payable to the Agent for the benefit of the Lenders (the
"Revolving Note"). The Agent is hereby authorized by the Borrower and each
Lender to endorse on the schedule attached to the Revolving Note the amount of
each Revolving Loan and of each payment of principal received by the Agent on
account of the Revolving Loans, which endorsement shall, in the absence of
demonstrable error, be conclusive as to the outstanding balance of the
Revolving Loans made by the Lenders; provided, however, that the failure to
make such notation with respect to any Revolving Loan or payment shall not
limit or otherwise affect the obligations of the Borrower or the Lender under
this Agreement or the Revolving Note.
(2) Term Note. The Term Loan made by the Lenders under this
Agreement shall be evidenced by, and repaid with interest in accordance with, a
single promissory note of the Borrower in substantially the form of Exhibit A-2
duly completed, in the
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principal amount of Thirty Million Dollars ($30,000,000.00), payable to the
Agent for the benefit of the Lenders (the "Term Note"). The Agent is hereby
authorized by the Borrower and each Lender to endorse on the schedule attached
to the Term Note the amount of each payment of principal received by the Agent
on account of the Term Loan, which endorsement shall, in the absence of
demonstrable error, be conclusive as to the outstanding balance of the Term
Loan made by the Lenders; provided, that the failure to make such notation with
respect to any payment shall not limit or otherwise affect the obligations of
the Borrower or the Lender under this Agreement or the Term Note.
SECTION 2.7. Prepayments; Reduction of Commitment. (1) The
Borrower may prepay at any time the Loans in whole or in part without premium
or penalty with accrued interest to the date of such prepayment on the amount
prepaid; provided, that (a) any prepayment of a Eurodollar Loan shall be made
subject to the Borrower's payment obligations set forth in Section 2.16, (b)
each partial prepayment shall be in a principal amount not less than twenty-
five thousand Dollars ($25,000) and (c) the Borrower has given notice to the
Agent of such prepayment no later than 11:00am the day of such prepayment. In
the event of any prepayments of Revolving Loans, such amounts prepaid may be
reborrowed hereunder to the extent outstanding amounts hereunder shall not
exceed the Total Revolving Loan Commitment Amount or such lesser amount as
required pursuant to Section 5.13 at such time and Term Loan repaid may not be
reborrowed.
(2) The Borrower shall have the right, at any time from
time to time, without premium or penalty, to permanently reduce the Total
Revolving Loan Commitment Amount hereunder; provided, that any such reduction
in the Total Revolving Loan Commitment Amount shall reduce the Revolving Loan
Commitment of each Lender pro rata based on its Percentage; and provided
further, that no such reduction shall reduce the Total Revolving Loan
Commitment Amount to an amount less than the sum of the then outstanding
Revolving Loans and the aggregate face amount of Letters of Credit issued and
outstanding pursuant to Section 2.1A (other than Letters of Credit with respect
to which the Borrower has pledged cash collateral to the Agent) or drawn and
not reimbursed pursuant to Section 2.9A. The right of the Borrower to
voluntarily reduce the Total Revolving Loan Commitment Amount shall be
exercisable by delivery of written notice (including by facsimile) or
telephonic notice (thereafter promptly confirmed in writing) to the Agent prior
to 12:00 noon, Chicago time, at least two Business Days prior to the proposed
reduction in the Total Revolving Loan Commitment Amount, which notice shall
specify the amount by which the Borrower proposes to reduce the Total Revolving
Loan Commitment Amount and the proposed date of such reduction.
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SECTION 2.8. Mandatory Prepayments. (1) The Borrower shall
promptly prepay Revolving Loans in an aggregate principal amount equal to the
excess, if any, of the Revolving Loans then outstanding plus the aggregate face
amount of Letters of Credit issued and outstanding or drawn and not reimbursed
over the Total Revolving Loan Commitment Amount or such lesser amount as
required by Section 5.13.
(2) If the Borrower or any Subsidiary shall at any time or
from time to time sell, lease, assign, transfer, or otherwise dispose of any of
its now owned or hereafter acquired assets pursuant to Section 6.7(6), then (i)
the Borrower shall promptly notify the Agent of such proposed disposition
(including the amount of the estimated net proceeds to be received by the
Company or such Subsidiary in respect thereof) and (ii) promptly upon, and in
no event later than 5 days after, receipt by the Borrower or the Subsidiary of
the net proceeds of such disposition, the Borrower shall prepay any Revolving
Loans then outstanding in an aggregate amount equal to the amount of such net
proceeds.
SECTION 2.9. Method of Payment. The Borrower shall make each
payment under this Agreement and under the Notes not later than 12:00 Noon,
Chicago time, on the date when due in lawful money of the United States to the
Agent for the account of the Lenders pro rata according to their respective
Percentages. The Agent shall promptly remit to each Lender its pro rata share
(based on its Percentage) of all such payments received in collected funds by
the Agent for the benefit of such Lender. The Borrower hereby authorizes the
Agent, if and to the extent payment is not made when due under this Agreement
or under the Notes, to charge from time to time against any account of the
Borrower with the Agent any amount so due. Whenever any payment to be made
under this Agreement or under the Notes shall be stated to be due on a day that
is not a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time in such case shall be included in the
computation of the payment of interest. All payments under Sections 2.12, 2.13
and 2.16 shall be made by the Borrower directly to the Lender or Lenders
entitled thereto. All interest payable hereunder shall be calculated on the
basis of a year of 360 days for the actual number of days lapsed; provided,
that, interest with respect to Floating Rate Loans and fees shall be calculated
on the basis of a year of 365 (or 366 as applicable) days for the actual number
of days lapsed.
SECTION 2.10. Use of Proceeds. The proceeds of the Revolving
Loans and the Term Loan shall be used by the Borrower for general corporate
purposes, including the payment of fees and expenses arising under any of the
Loan Documents. The Borrower will not, directly or indirectly, use any part of
such proceeds for the purpose of purchasing or carrying any Margin Stock or to
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extend credit to any Person for the purpose of purchasing or carrying any such
Margin Stock.
SECTION 2.11. Sharing of Payments.
(1) If any Lender shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of offset or
otherwise) on account of any Loan in excess of its pro rata share
(based on its Percentage) of payments and other recoveries obtained by
all Lenders of Loans on account of principal of and interest on Loans,
such Lender shall purchase from the other Lenders such participations
in the Loans as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them;
provided, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender's ratable share
(according to the proportion of (a) the amount of such selling
Lender's required repayment to the purchasing Lender to (b) the total
amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered.
(2) The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to Section 2.11(1) may, to
the fullest extent permitted by law, exercise all of its rights of
payment with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a
setoff pursuant to Section 10.7, such Lender shall, to the extent
practicable, exercise its rights in respect to such secured claim in a
manner consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery of such secured
claim.
SECTION 2.12. Increased Costs. If after the date hereof, (1)
Regulation D of the Board of Governors of the Federal Reserve System, or (2)
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
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Lender (or any Lending Office of such Lender) with any request or directive
(whether or not having the force of law) or any such authority, central bank or
comparable agency,
(a) shall subject any Lender (or any Lending Office of such
Lender) to any tax, duty or other charge with respect to its
Eurodollar Loans or its obligation to make Eurodollar Loan, its LC
Obligations or its obligation to issue Letters of Credit, or shall
change the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Loans or any other amounts
due under this Agreement in respect of its Eurodollar Loans or its
obligation to make Eurodollar Loans or its LC Obligations (except for
changes in the rate of tax on the overall gross or net income of such
Lender or its Lending Office); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
1), special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Lender (or any
Lending Office of such Lender); or
(c) shall impose on any Lender (or its Lending Office) any
other condition affecting its Eurodollar Loans or the LC Obligations;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D referred to above, to impose a cost on) such Lender (or
any Lending Office of such Lender) of making or maintaining any Eurodollar
Loan, any Letter of Credit or the LC Commitment or to reduce the amount of any
sum received or receivable by such Lender (or the Lending Office or such
Lender) under this Agreement or under its Loans with respect thereto, then upon
demand by such Lender (which demand shall be made within 45 days after such
Lender has actual knowledge of such additional cost or reduced sum receivable
and shall be accompanied by a statement setting forth the basis of such
demand), the Borrower shall pay directly to such Lender such additional amount
or amounts as will reimburse such Lender for such increased cost or such
reduction.
SECTION 2.13. Change in Rate of Return. If, after the date
hereof, any change in, or the introduction, adoption, effectiveness,
interpretation, reinterpretation or Phase-in of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other governmental authority
affects or would
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affect the amount of capital required or expected to be maintained by any
Lender or any person controlling such Lender, and such Lender reasonably
determines that the rate of return on its or such controlling person's capital
as a consequence of its Commitments or the Loans or the Letters of Credit made
by such Lender is reduced to a level below that which such Lender or such
controlling person could have achieved but for the occurrence of any such
circumstance, then, in any such case the Borrower shall, upon demand by such
Lender (which demand shall be made within 45 days after such Lender has actual
knowledge of such increase in capital or reduction in rate of return) pay
directly to such Lender additional amounts sufficient to compensate such Lender
or such controlling person for such reduction in rate of return. A statement
of such Lender as to any such additional amount or amounts shall be prepared in
good faith (including calculations thereof in reasonable detail) and shall, in
the absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, such Lender may use any method of averaging and
attribution that it shall deem reasonably applicable. Each Lender shall notify
the Borrower of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to this Section
2.13.
SECTION 2.14. Basis for Determining Interest Rate Inadequate
or Unfair. If with respect to any Interest Period:
(1) the Agent is advised by any Lender that deposits in
Dollars (in the applicable amounts) are not being offered to such
Lender in the relevant market for such Interest Period, or the Agent
otherwise determines (which determination shall be binding and
conclusive on all parties) that by reason of circumstances affecting
the interbank eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable Eurodollar Rate; or
(2) any Lender advises the Agent that the Eurodollar Rate
(Reserve Adjusted), as determined by the Agent, will not adequately
and fairly reflect the cost to such Lender of maintaining or funding
such Loans for such Interest Period, or that the making or funding of
Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of
such Lender materially changes such Loans,
then, so long as such circumstances shall continue: (a) the Agent shall
promptly notify the other parties thereof, (b) no Lender shall be under any
obligation to make or convert into Eurodollar Loan, and (c) on the last day of
the then current Interest Period for Eurodollar Loans, such Eurodollar Loans
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shall, unless then repaid in full, automatically convert to Floating Rate
Loans. If conditions subsequently change so that the foregoing conditions no
longer exist, the Agent in the case of Clause (1) or such Lender in the case of
Clause (2) will promptly notify the Borrower and the Lenders thereof, and upon
the receipt of such notice, the obligations of all Lenders to make or continue
Eurodollar Loan shall be reinstated.
SECTION 2.15. Changes in Law Rendering Certain Loans
Unlawful. In the event, after the date hereof, that any change in (including
the adoption of any new) applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any governmental or other
regulatory body charged with the administration thereof, should make it
unlawful for a Lender or the Lending Office of such Lender ("Affected Lender")
to make, maintain or fund Eurodollar Loans, then (a) the Affected Lender shall
promptly notify each of the other parties hereto, (b) the obligation of all
Lenders to make or convert into Eurodollar Loans shall, upon the effectiveness
of such event, be suspended for the duration of such unlawfulness, and (c) on
the last day of the current Interest Period for each Eurodollar Loan (or, in
any event, if the Affected Lender so requests, on such earlier date as may be
required by the relevant law, regulation or interpretation), such Eurodollar
Loan shall, unless then repaid in full, automatically convert to Floating Rate
Loans. If conditions subsequently change so that the foregoing conditions no
longer exist, such Lender will promptly notify the Borrower and the other
Lenders thereof, and upon the receipt of such notice, the obligations of all
Lenders to make or continue Eurodollar Loans shall be reinstated.
SECTION 2.16. Funding Losses. The Borrower hereby agrees
that upon demand by any Lender (which demand shall be accompanied by a
statement setting forth the basis for the calculations of the amount being
claimed) the Borrower will indemnify such Lender against any net loss or
expense which such Lender may sustain or incur (including, without limitation,
any net loss or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund or maintain
Eurodollar Loans), as reasonably determined by such Lender, as a result of (a)
any payment or prepayment or conversion of any Eurodollar Loan of such Lender
on a date other than the last day of an Interest Period for such Eurodollar
Loan, or (b) any failure of the Borrower to borrow or convert any Loans on a
date specified therefor in a Borrowing Request or Continuation/Conversion
Notice pursuant to this Agreement. For this purpose, all notices to the Agent
pursuant to this Agreement shall be deemed to be irrevocable.
SECTION 2.17. Right of Lenders to Fund Through Other Offices.
Each Lender may, if it so elects, fulfill its Commitment as to any Eurodollar
Loan by causing its Lending
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Office to make such Loan, provided that in such event for the purposes of this
Agreement, such Eurodollar Loan shall be deemed to have been made by such
Lender and the obligation of the Borrower to repay such Eurodollar Loan shall
nevertheless be to such Lender and shall be deemed held by it, to the extent of
such Eurodollar Loan, for the account of such branch or affiliate.
SECTION 2.18. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if
such Lender had actually funded and maintained each Eurodollar Loan during each
Interest Period for such Loan through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the Eurodollar Rate, for such Interest Period.
SECTION 2.19. Mitigation of Circumstances; Replacement of
Affected Lender. (1) Each Lender shall promptly notify the Borrower and the
Agent of any event of which it has knowledge which will result in, and will
promptly thereafter use all reasonable commercial efforts available to it (and
not, in such Lender's good faith judgment, otherwise disadvantageous to such
Lender) to mitigate or avoid, (i) any obligation by the Borrower to pay any
amount pursuant to Section 2.12 or 2.13 or (ii) the occurrence of any
circumstances of the nature described in Section 2.14 or 2.15 (and, if any
Lender has given notice of any such event described in Clause (i) or (ii) above
and thereafter such event ceases to exist, such Lender shall promptly so notify
the Borrower and the Agent). Without limiting the foregoing, each Lender will
designate a different Lending Office if such designation will avoid (or reduce
the cost to the Borrower of) any event described in Clause (i) or (ii) of the
preceding sentence and such designation will not, in such Lender's reasonable
judgment, be otherwise materially disadvantageous to such Lender.
(2) At any time any Lender is an Affected Lender, the Borrower may
replace such Affected Lender as a party to this Agreement with one or more
other bank(s) or financial institution(s) reasonably satisfactory to the Agent,
such bank(s) or financial institution(s) to have a Commitment in such amounts
as shall be reasonably satisfactory to the Agent (and upon notice from the
Borrower such Affected Lender shall assign, without recourse or warranty, its
Commitment, its Loans, and all of its other rights and obligations hereunder to
such replacement bank(s) or other financial institution(s) for a purchase price
equal to the sum of the principal amount of the Loans so assigned, all accrued
and unpaid interest thereon, its ratable share of all accrued and unpaid
nonuse fees, any amounts payable
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under Section 2.16 as a result of such Lender receiving payment of any
Eurodollar Loan prior to the end of an Interest Period therefor and all other
obligations owed to such Affected Lender hereunder).
SECTION 2.20. Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of any Lender pursuant to Sections
2.12, 2.13, 2.14, 2.15 or 2.16 shall be conclusive absent demonstrable error.
The provisions of Sections 2.12, 2.13 and 2.14 shall survive termination of
this Agreement.
ARTICLE IIA
THE LETTERS OF CREDIT
SECTION 2.1A LC Commitment. Subject to the terms and
conditions set forth in this Agreement and the other Loan Documents, the
Issuing Lender agrees for itself and the Lenders to issue from time to time
after the Revolving Loan Effective Date and before the Termination Date such
standby letters of credit (such letters of credit, together with Existing
Letters of Credit, being herein collectively called "Letters of Credit" and
individually a "Letter of Credit") as the Borrower may request, it being
understood that, pursuant to Section 2.4A, concurrently with the issuance of
each such Letter of Credit (or in the case of Existing Letters of Credit, on
the Effective Date) each Lender shall be deemed to have automatically purchased
from the Issuing Lender a participation in such Letter of Credit. The
aggregate face amount of all Letters of Credit issued and outstanding pursuant
to this Section 2.1A and all Letters of Credit drawn and not reimbursed
pursuant to Section 2.9A shall not at any one time exceed $5,000,000 (or such
reduced amount as may be fixed by the Borrower pursuant to Section 2.15A). The
foregoing commitment of each Lender is herein called its "LC Commitment" and
collectively the "LC Commitments."
SECTION 2.2A Request for Issuance of Letters of Credit. The
Borrower shall give the Agent and the Issuing Lender at least five (5) Business
Days' prior written notice of a request for issuance of each Letter of Credit,
each such request to be accompanied by an LC Application duly executed by the
Borrower and in all respects in form and substance satisfactory to the Agent
and the Issuing Lender, together with such other documentation as the Agent or
the Issuing Lender may reasonably request in support thereof. The Agent shall
promptly notify each Lender of the Borrower's request that such Letter of
Credit be issued.
SECTION 2.3A Expiration. Each Letter of Credit may expire
before, on or after the Termination Date; provided, that
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with respect to each Letter of Credit expiring after the Termination Date, the
Borrower hereby agrees to pledge cash collateral to the Agent, no later than
thirty (30) days prior to the Termination Date, in an amount, and pursuant to
documentation, reasonably satisfactory to the Issuing Lender and the Agent. If
the Borrower shall fail to pledge such cash collateral to the Agent, the
Lenders shall make Revolving Loans in an amount reasonably satisfactory to the
Issuing Lender and the Agent which shall be held as cash collateral with
respect to each such Letter of Credit.
SECTION 2.4A Participation. Concurrently with the issuance
of each Letter of Credit (or in the case of Existing Letters of Credit, on the
Effective Date), the Issuing Lender shall be deemed to have sold and
transferred to each other Lender, and each Lender shall be deemed irrevocably
and unconditionally to have automatically purchased and received from the
Issuing Lender, without recourse or warranty, an undivided interest and
participation, to the extent of such other Lender's Percentage, in such Letter
of Credit and the Borrower's related LC Obligations.
SECTION 2.5A Notification of Demand for Payment. The Issuing
Lender shall promptly notify the Agent, who shall in turn promptly notify the
Borrower and each Lender of the amount of each demand for payment under a
Letter of Credit and of the date on which such payment is to be made.
SECTION 2.6A Funding by Issuing Lender. With respect to each
demand for payment pursuant to a Letter of Credit, the Issuing Lender shall,
promptly following its receipt thereof, examine all documents purporting to
represent such demand to ascertain that the same appear on their face to be in
conformity with the terms and conditions of such Letter of Credit. If the
Issuing Lender determines that a demand for payment under a Letter of Credit
conforms to the terms and conditions of such Letter of Credit, then the Issuing
Lender shall make payment to the Beneficiary in accordance with the terms of
such Letter of Credit.
SECTION 2.7A Non-Conforming Demand For Payment. If, after
examination of a demand for payment under a Letter of Credit, the Issuing
Lender shall have determined that such demand does not conform to the terms and
conditions of such Letter of Credit, then the Issuing Lender shall, as soon as
reasonably practicable, give notice to the related Beneficiary and to the
Borrower to the effect that demand was not in accordance with the terms and
conditions of such Letter of Credit, stating the reasons therefor and that the
relevant document is being held at the disposal of the Beneficiary or is being
returned to the Beneficiary, as the Issuing Lender may elect. The Beneficiary
may attempt to correct any such non-conforming demand for payment
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under such Letter of Credit if, and to the extent that, the Beneficiary is
entitled (without regard to the provisions of this sentence) and able to do so.
SECTION 2.8A Return of Letter of Credit. With respect to
each Letter of Credit, the Issuing Lender shall have the right, provided the
Issuing Lender is not then in default under such Letter of Credit by reason of
its having wrongfully failed to honor a demand for payment previously made by a
Beneficiary under such Letter of Credit, to require such Beneficiary to
surrender such Letter of Credit to the Issuing Lender on the stated expiration
date. The Borrower agrees, if necessary, to use its best efforts to cause the
Beneficiary to surrender such Letter of Credit.
SECTION 2.9A Reimbursement Agreement of the Borrower. The
Borrower hereby unconditionally and irrevocably agrees to reimburse the Issuing
Lender for each payment or disbursement made by the Issuing Lender under a
Letter of Credit honoring a demand for payment made by the Beneficiary
thereunder, in each case on the date that such payment or disbursement is made.
Subject to Borrower's ability to satisfy the conditions precedent set forth in
Section 3.2, if any amount shall not be reimbursed by the Borrower on the date
of such payment or disbursement, the Borrower automatically shall be deemed to
have requested as of the immediately preceding Business Day a Floating Rate
Revolving Loan pursuant to Section 2.2 in the amount of such payment or
disbursement (which need not be in the principal amount of $100,000 or an
integral multiple thereof); provided, that if at the time of such request
Revolving Loans are not then available to the Borrower, such request shall not
be granted and the Borrower's reimbursement obligations set forth above shall
remain in place and shall accrue interest at the rate from time to time
applicable to Floating Rate Loans (including any default margin pursuant to
Section 2.4(5)).
SECTION 2.10A Funding By Lenders. If the Issuing Lender
makes any payment or disbursement under any Letter of Credit and the Borrower
has not reimbursed the Issuing Lender in full for such payment or disbursement
or a Revolving Loan in the amount of such payment or disbursement has not been
made pursuant to Section 2.9A, on the date on which payment is made under a
Letter of Credit, or if any reimbursement received by the Issuing Lender from
the Borrower is or must be returned or rescinded upon or during any bankruptcy
or reorganization of the Borrower or otherwise, each other Lender shall provide
the Agent, for the account of the Issuing Lender at the Head Office with
immediately available funds in an amount equal to such Lender's Percentage of
the amount of such payment or disbursement. If and to the extent any Lender
shall not have made such amount available to the Agent on any such date, such
Lender agrees to pay interest on such amount to the Agent, for the account of
the Issuing Lender,
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forthwith on demand for each day from and including the date on which such
payment was made to but excluding the date such amount is made available to the
Agent for the account of the Issuing Lender. Such interest shall be determined
at a rate per annum equal to the Federal Funds Rate from time to time in
effect, based upon a year of 360 days.
SECTION 2.11A Return of Funds Related to NonConforming
Demand. If the Issuing Lender does not disburse funds to the Beneficiary for
any reason after the Agent has received such funds from any Lender pursuant to
Section 2.10A, the Issuing Lender shall promptly return such funds to the
Agent, who shall promptly return such funds to such other Lenders, together
with interest on such funds from and including the date on which the Agent
received such funds to but excluding the day on which the Agent so returns such
funds to the other Lenders at the Federal Funds Rate for each such day, based
upon a year of 360 days.
SECTION 2.12A Obligation to Reimburse for or Participate in
Letter of Credit Payments. The Borrower's obligation to reimburse the Issuing
Lender for payments made by the Issuing Lender under any Letter of Credit
honoring a demand for payment by the Beneficiary thereunder, and each Lender's
obligation to participate in and make available to the Agent its Percentage of
such payments in accordance with this Agreement, shall be irrevocable, absolute
and unconditional under any and all circumstances including, without
limitation, any of the following circumstances:
(1) any lack of legality, validity, regularity or
enforceability of this Agreement, any Letter of Credit or any other
Loan Document;
(2) the existence of any claim, setoff, defense or other
right which the Borrower may have or have had at any time against any
Beneficiary, the Agent, the Issuing Lender any other Lender, any
transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting) or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transaction between the Borrower and the Beneficiary of any
Letter of Credit);
(3) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
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(4) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(5) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate or other document that
does not comply with the terms of such Letter of Credit unless such
payment by the Issuing Lender constituted gross negligence or willful
misconduct of the Issuing Lender; or
(6) the occurrence of any Default or Event of Default;
provided, however, that the Borrower shall not be obligated to reimburse the
Issuing Lender for, and no Lender shall be obligated to participate in, any
wrongful payment made by the Issuing Lender under any Letter of Credit as a
result of acts or omissions constituting gross negligence or willful misconduct
on the part of the Issuing Lender or any of its officers, employees or agents.
SECTION 2.13A Mandatory Payment to Agent of LC Obligations.
The Borrower agrees that, on any termination of the LC Commitments pursuant to
Section 2.15A or Section 8.2, it will pay to the Agent for the account of the
Issuing Lender and the other Lenders in Dollars and in same day funds an amount
equal to the amount of all LC Obligations, whether or not the related Letter of
Credit has been drawn (which amount shall be retained by the Agent in a
separate collateral account as security for the LC Obligations and the
outstanding principal amount of the Revolving Note, all interest thereon, and
all other amounts payable under this Agreement and the other Loan Documents)
plus the then aggregate accrued amount of unpaid fees arising under Section
2.14A.
SECTION 2.14A Fees. The Borrower agrees to pay the following
fees (all such fees being non-refundable):
(1) The Borrower agrees to pay to the Agent for the account
of each Lender a fee for each (a) Non-Financial Letter of Credit (the
"Non-Financial LC Commitment Fee"), from the date of issuance thereof
to the earlier to occur of the expiration or termination thereof or
the date of final and complete payment by the Agent thereunder, at a
rate per annum equal to one-half of the Applicable Margin with respect
to Eurodollar Loans times the aggregate outstanding face amount of
each such Non-Financial Letter of Credit, and (b) Financial Letter of
Credit (the "Financial LC Commitment Fee"), from the date of issuance
thereof to the earlier to occur of the expiration or termination
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42
thereof or the date of final and complete payment by the Agent
thereunder, at a rate per annum equal to the Applicable Margin with
respect to Eurodollar Loans times the aggregate outstanding face
amount of each such Financial Letter of Credit, such fees to be
payable in arrears on the last Business Day of each calendar quarter
(or at such other times as the Agent shall request, for any period
prior to such date or time for which such LC Commitment Fees shall not
have been theretofore paid).
(2) The Borrower agrees to pay to the Agent for the sole
account of the Issuing Lender, an issuance fee equal to .25% of the
face amount of each Letter of Credit, payable upon the issuance
thereof.
(3) The Borrower agrees to pay to the Issuing Lender such
other standard fees and amounts ("LC Administrative Fees") as the
Issuing Lender shall customarily require in connection with the
issuance, negotiation, processing and/or administration of Letters of
Credit in similar situations, such fees to be in addition to the fees
payable under Section 2.14A(1), with respect to the issuance and/or
negotiation of each Letter of Credit.
SECTION 2.15A Voluntary Reduction of the LC Commitments. The
Borrower may from time to time on at least two (2) Business Days' prior written
notice to the Agent permanently reduce the amount of the LC Commitments to an
amount not less than the maximum amount of the Letters of Credit then
outstanding or drawn and not reimbursed. The Borrower may at any time on like
notice terminate the LC Commitments upon payment to the Agent in accordance
with Section 2.13A of all LC Obligations (whether absolute or contingent) in
connection with the Letters of Credit.
SECTION 2.16A Cash Collateral. If, on any date, the
aggregate face amount of Letters of Credit issued and outstanding or drawn and
not reimbursed shall exceed the LC Commitments, the Borrower shall pledge cash
collateral to the Agent (pursuant to documentation reasonably satisfactory to
the Required Lenders, the Issuing Lender and the Agent) in an amount equal to
such excess.
SECTION 2.17A Making of Payments. Except as otherwise
provided, all payments (including those made pursuant to Section 2.14A or
Section 2.16A) in respect of the Letters of Credit shall be made by the
Borrower to the Agent for the account of the Lenders pro rata according to
their respective Percentages of the LC Obligations held by them. The Agent
shall promptly remit to each Lender its pro rata share (based on its
Percentage) of all
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such payments received in collected funds by the Agent for the benefit of such
Lender. The Borrower hereby authorizes the Agent, if and to the extent payment
is not made when due under this Agreement to charge from time to time against
any account of the Borrower with the Agent any amount so due. All such
payments shall be made to the Agent at its Head Office, not later than 12:00
Noon, Chicago time, on the date due; and funds received after that hour shall
be deemed to have been received by the Agent on the next following Business
Day. The Agent shall promptly remit to each Lender its pro rata share (based
on its Percentage) of all such payments received in collected funds by the
Agent for the account of such Lender.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Condition Precedent to Agreement. The terms and
provisions of this Agreement (including, without limitation, the Commitment of
each Lender hereunder) shall become effective (the "Restatement Effective
Date"), on such date upon which the Agent shall have received (i) for debt and
equity capital structuring and advisory services rendered by the Lenders, from
the Borrower for the account of each Lender in accordance with such Lender's
Percentage, a nonrefundable advisory fee of $2,800,000, fully earned upon
closing and paid pursuant to that certain Commitment Letter dated October 29,
1997 among the Agent, the Co-Agent, LaSalle National Bank and the Borrower and
(ii) each of the following, each dated the Restatement Effective Date and in
form and substance reasonably satisfactory to the Agent and its counsel and
each in sufficient number of signed counterparts (other than in the case of the
Notes) to provide one for each Lender:
(1) Revolving Note. The Revolving Note duly executed by the
Borrower;
(2) Term Note. The Term Note duly executed by the Borrower;
(3) Security Agreements. Amendments to the Security
Agreements duly executed by the Borrower and each Subsidiary, together
with duly executed amendments to existing UCC financing statements to
be filed under the Uniform Commercial Code of the chief executive
office of the Borrower and each Subsidiary, respectively;
(4) Trademark Security Agreements. Amendments to the
Trademark Security Agreements duly executed by the Borrower and each
Subsidiary;
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(5) [Reserved]
(6) Affirmation and Amendment. Affirmation and Amendment
executed by the Borrower and each Subsidiary;
(7) Subordination Agreement. (a) A reaffirmation of the BCI
Subordination Agreement duly executed by the Borrower and BCI; and (b)
an amendment to the the documentation evidencing BCI Subordinated Debt
duly executed by Borrower and BCI;
(8) Certificate of the Borrower. A certificate or
certificates of the Secretary or Assistant Secretary of the Borrower
certifying: (a) a copy of the Certificate of Incorporation of the
Borrower, as theretofore amended; (b) a copy of the bylaws of the
Borrower, as theretofore amended; (c) copies of all corporate action
taken by the Borrower, including resolutions of its board of
directors, authorizing the execution, delivery, and performance of the
Loan Documents by the Borrower and each other document to be delivered
pursuant to this Agreement and authorizing borrowings by each of the
Authorized Officers; and (d) the names and true signatures of the
officers of the Borrower authorized to sign the Loan Documents to
which it is a party and the other documents to be delivered by the
Borrower under this Agreement;
(9) Certified Charter and Good Standing. A certificate of the
due incorporation, legal existence and good standing of the Borrower in
its state of incorporation, issued by the appropriate authorities of
such jurisdiction, and certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which the failure to so quali[Cfy would result in a Material
Adverse Change;
(10) Certificate of each Subsidiary. A certificate or
certificates of the Secretary or Assistant Secretary of each Subsidiary
certifying: (a) a copy of the organizational documents of such
Subsidiary, as theretofore amended; (b) copies of all corporate or
partnership action of such Subsidiary taken by such Subsidiary,
authorizing the execution, delivery and performance by such Subsidiary
of the Loan Documents to which it is a party and each other document to
be delivered pursuant to this Agreement; and (c) the names and true
signatures of the officers of such Subsidiary authorized to sign the
Loan Documents to which it is a party and the other
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documents to be delivered by such Subsidiary under this Agreement;
(11) Certified Charter and Good Standing. A certificate
of the due organization, legal existence and good standing of each
Subsidiary in its state of organization, issued by the appropriate
authorities of such jurisdiction, and certificates of such
Subsidiary's good standing and due qualification to do business,
issued by appropriate officials in any states in which the failure to
so qualify would result in a Material Adverse Change;
(12) Opinion of counsel for Borrower and its Subsidiaries.
An opinion of Holme Xxxxxxx & Xxxx LLP, counsel for the Borrower and
its Subsidiaries, in substantially the form of Exhibit D and as to
such other matters as the Agent and its counsel may reasonably
request;
(13) Fees. Evidence of payment of fees, costs and expenses
due and payable in connection with this Agreement (including, without
limitation such fees, costs and expenses payable to the Agent and its
Affiliates); and
(14) Miscellaneous. Such other approvals, opinions or
documents as the Agent may reasonably request.
SECTION 3.2. Conditions Precedent to All Loans and Letters of
Credit. The obligation of the Lenders to make each Loan (including the initial
Loans) and of the Issuing Lender to issue Letters of Credit shall be subject to
the further conditions precedent that on the date of such Loan or Letter of
Credit:
(1) The following statements shall be true:
(a) The representations and warranties contained in
Article IV of this Agreement are correct in all material
respects on and as of the date of such Loan or Letter of Credit
as though made on and as of such date (except to the extent
such representations and warranties expressly refer to an
earlier date);
(b) No Default or Event of Default has occurred and
is continuing, or would result from the borrowing of such Loan
or the issuance of such Letter of Credit; and
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(c) Borrower is in compliance with the provisions of
Section 5.13 hereof.
The acceptance by the Borrower of the proceeds of such Loan or the
issuance of such Letter of Credit shall constitute a representation
and warranty by the Borrower that on the date of such Loan or the
issuance of such Letter of Credit (both immediately before and after
giving effect to such Loan or the issuance of such Letter of Credit)
the statements set forth in this Section 3.2(1) are true and correct.
(2) The Agent or the Issuing Lender shall have received such
other approvals, opinions, or documents as the Agent or the Issuing
Lender may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 4.1. Incorporation, Good Standing, and Due
Qualification. The Borrower and each of its Subsidiaries: (1) is a
corporation or partnership, 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 corporate or partnership power and
authority, as the case may be, 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 or partnership, 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.
SECTION 4.2. Corporate Power and Authority. The execution,
delivery, and performance by the Borrower and each Subsidiary of each of the
Loan Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not (1) contravene or conflict
with the organizational documents of the Borrower or such Subsidiary; (2)
violate any provision of, or cause the Borrower or such Subsidiary 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 Borrower or such Subsidiary; (3) result in a breach
of, or constitute a default under, any material indenture or loan or credit
agreement or any other
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47
material agreement, lease, or instrument to which the Borrower or such
Subsidiary 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 6.1), upon or with respect to any of
the properties now owned or hereafter acquired by the Borrower or such
Subsidiary.
SECTION 4.3. Legally Enforceable Agreement. This Agreement
is, and each of the other Loan Documents will be, legal, valid, and binding
obligations of the Borrower and each of the Subsidiaries (to the extent they
are parties to such Loan Documents) enforceable against the Borrower and such
Subsidiary (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.
SECTION 4.4. Financial Statements. The Borrower's audited
consolidated financial statements as at December 31, 1996, and the Borrower's
unaudited financial statements as at October 5, 1997, have been furnished to
each Lender. These financial statements have been prepared in conformity with
GAAP and fairly present the financial condition of the Borrower and its
Subsidiaries as at such dates and the results of operations for the periods
then ended. The unaudited financial 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 Lender) with
the audited financial 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 Lender pursuant to either Section 5.8(1), (2) or (3), whichever is the
most recently delivered, there has been no Material Adverse Change. No
information, exhibit, or report furnished by the Borrower to the Lenders in
connection with the negotiation of this Agreement, considered as a whole with
all other information, exhibits and reports furnished to the Lenders in
connection with the negotiation of this Agreement or any predecessor agreement,
if any, at the time it was furnished (and as modified or superseded by any
information, exhibits and reports subsequently furnished to the Lenders),
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 notwithstanding anything else contained in this Agreement, the Borrower
makes no representation, warranty, or guaranty as to (1) any financial
projections furnished to the Lenders (it being understood that such financial
projections have been prepared by management of the Borrower on the basis of
assumptions which such management believed were reasonable as of the date of
such financial projections in light of the historical financial
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48
performance of the business of the Borrower 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 Borrower has actual
knowledge at the time such information is delivered to the Lenders 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.
SECTION 4.5. Other Agreements. Neither the Borrower nor any
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 Loan Documents or which would have a material adverse effect
on the ability of the Borrower to carry out its obligations under the Loan
Documents. Neither the Borrower nor any Subsidiary is in default in any
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
which would result in a Material Adverse Change.
SECTION 4.6. Litigation. Except as set forth on Schedule
4.6, there is no pending or (to the Borrower's knowledge) threatened action or
proceeding against or affecting the Borrower or any Subsidiary before any
court, governmental agency, or arbitrator, which, in any one case or in the
aggregate, is material to the Borrower and its Subsidiaries, taken as a whole,
or would adversely affect the ability of the Borrower or any Subsidiary (as
applicable) to perform their respective obligations under any Loan Documents
(to the extent a party thereto, and other than with respect to any Subsidiary's
ability to perform its payment obligations thereunder due to the financial
wherewithal of such Subsidiary).
SECTION 4.7. No Defaults on Outstanding Judgments or Orders.
To the best of the Borrower's knowledge, the Borrower and its Subsidiaries have
satisfied all material final judgments, and neither the Borrower nor any
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.
SECTION 4.8. 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 Borrower or any Subsidiary, as the
case may be, of the
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49
Loan Documents to which it is a party or for the validity or enforceability
thereof.
SECTION 4.9. Ownership and Liens. The Borrower and each
Subsidiary has title to, or valid leasehold interests in, all of its material
properties and assets, real and personal, and none of the properties and assets
owned by the Borrower or any Subsidiary and none of their leasehold interests
is subject to any Lien, except, in each case, such as may be permitted pursuant
to Section 6.1 of this Agreement.
SECTION 4.10. Subsidiaries etc. Schedule 4.10 sets forth as
of the Restatement Effective Date of this Agreement a true and correct list of
all capital stock, partnership units or other equity interests of any Person
owned or otherwise held (including capital stock, partnership units or other
equity interests held as collateral) by the Borrower and its Subsidiaries and
indicates whether such capital stock, partnership units or other equity
interests are owned or held in some other capacity by the Borrower or such
Subsidiary.
SECTION 4.11. ERISA. The Borrower and the ERISA Affiliates
are in compliance in all material respects with the applicable provisions of
ERISA.
SECTION 4.12. Hazardous Materials. The Borrower and each of
its Subsidiaries have obtained all permits, licenses and other authorizations
which are required 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. The Borrower 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 Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by the Borrower or any
of its Subsidiaries which have not been made available to the Lenders.
The Borrower has informed the Lenders in writing of all
material non-compliance of the Borrower and each of its Subsidiaries with the
terms and conditions of all (1) permits, licenses or authorizations required
under all Environmental Laws
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50
and (2) 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.
SECTION 4.13. Taxes. The Borrower 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.
SECTION 4.14. Debt. As of the Restatement Effective Date,
Schedule 4.14 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 Borrower or any 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.
SECTION 4.15. Investment Company Act. Neither the Borrower
nor any of its Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.16. Public Utility Holding Company Act. Neither
the Borrower 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.
SECTION 4.17. Pledged Collateral. Schedule 4.17 sets forth
as of the Restatement Effective Date (and as of the date of delivery pursuant
to Section 5.8(6) of any subsequent Schedule 4.17) a true and correct list of
the following information:
(a) All capital stock, partnership units or other equity
interests of any Person owned by the Borrower and its Subsidiaries (on
which Schedule the Borrower has indicated by an asterisk ("*") any
capital stock, partnership units or other equity interest owned by the
Borrower or a Subsidiary which is not subject to a
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51
perfected Lien in favor of the Agent pursuant to the Pledge
Agreement);
(b) Any Debt owed by each Person to the Borrower or any
Subsidiary which is evidenced by a promissory note or other instrument
(on which Schedule the Borrower has indicated by an asterisk ("*")
those promissory notes or other instruments which have not been
delivered to the Agent pursuant to a Pledge Agreement).
SECTION 4.18. Real Property. Schedule 4.18 hereto sets
forth, as of the Friday immediately preceding the Restatement Effective Date
(and as of the Friday immediately preceding any date of delivery pursuant to
Section 5.8(6) of any subsequent Schedule 4.18), a complete and accurate list
of the addresses of each parcel of real property owned or leased by the
Borrower or any Subsidiary (on which Schedule the Borrower has indicated by an
asterisk ("*") (i) any real property owned by the Borrower or a Subsidiary
which is not subject to a mortgage and (ii) any real property leased by the
Borrower or a Subsidiary which has not been collaterally assigned to the Agent
pursuant to a Collateral Assignment of Lease).
SECTION 4.19. Financed Franchisee/Subsidiary Information.
Schedule 4.19 hereto sets forth, as of the Restatement Effective Date (and as
of the date of delivery pursuant to Section 5.8(6) of any subsequent Schedule
4.19), a true and complete list of the following information:
(a) All Financed Franchisee Loan Documents and Financed
Subsidiary Loan Documents then in effect between the Borrower and any
Franchisee or Subsidiary;
(b) Any Liens granted by each Person to the Borrower or
any Subsidiary to secure Debt covered by the foregoing clause (1) and
the filing offices in which the Borrower 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.
SECTION 4.20. Collateral Documents. (a) The provisions of
each of the Collateral Documents are effective to create in favor of the Agent,
a legal, valid and enforceable security interest in all right, title and
interest of the Borrower and its Subsidiaries in the collateral described
therein; and proper financing statements have been delivered to the Agent for
filing in the offices in all of the jurisdictions listed in the schedule to the
Security Agreements.
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52
(b) Each mortgage when delivered will be effective to grant to the
Agent, 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 Agent in connection therewith, will be subject to a legal, valid,
enforceable and perfected first priority Lien.
(c) All representations and warranties of the Borrower and any of
its Subsidiaries party thereto contained in the Collateral Documents are true
and correct in all material respects, except to the extent any relate solely to
an earlier date.
SECTION 4.21. Solvency. As of the Restatement Effective
Date, the Borrower and each Subsidiary is Solvent.
ARTICLE V
AFFIRMATIVE COVENANTS
Unless otherwise consented to in writing by the Required
Lenders, so long as any of the Notes shall remain unpaid or the Lenders shall
have any Commitment under this Agreement or any Letter of Credit remains
outstanding or any LC Obligations remain unpaid, the Borrower will:
SECTION 5.1. Maintenance of Existence. Except as otherwise
permitted by Section 6.3, preserve and maintain, and cause each Subsidiary to
preserve and maintain, its corporate, partnership or other legal entity
existence, as the case may be, and good standing in the jurisdiction of its
organization or formation, and qualify and remain qualified, and cause each
Subsidiary to qualify and remain qualified, as a foreign corporation,
partnership or other legal entity, as the case may be, in each jurisdiction in
which the failure to so qualify would result in a Material Adverse Change.
SECTION 5.2. Maintenance of Records. Keep, and cause each
Subsidiary to keep, adequate records and books of account.
SECTION 5.3. Maintenance of Properties. Maintain, keep, and
preserve, and cause each 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
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53
tear excepted; provided, however, the Borrower and each Subsidiary may close
Stores in the ordinary course of business, in which event the Borrower shall
give prompt written notice to the Agent.
SECTION 5.4. Conduct of Business. Continue, and cause each
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 production of
bagels, cream cheese and other related food products, the holding of real
estate or leasehold interests for Store locations, commissaries and production
facilities and the distribution of Store supplies or inventory items), and no
other line of business; provided, that after each acquisition by the Borrower
or a Subsidiary of preexisting operating assets, the Borrower or such
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, and 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).
SECTION 5.5. Maintenance of Insurance. Maintain, and cause
each 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.
SECTION 5.6. 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.
SECTION 5.7. Right of Inspection. At any reasonable time and
from time to time, permit the Agent and the Lenders 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 Borrower and
any Subsidiary, and to discuss the affairs, finances, and accounts of the
Borrower and any Subsidiary with any of their respective officers, directors
and employees and the Borrower's independent accountants.
SECTION 5.8. Reporting Requirements. Furnish to the Agent
and the Co-Agent (and any Lender which requests any of the following
documents):
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54
(1) 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 Borrower (or in the case of the last Retail Period of
each fiscal quarter of the Borrower, within thirty (30) days after the
end of such Retail Period), consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as at the end of such
Retail Period, consolidated and consolidating statements of operations
of the Borrower and its 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 Borrower and its
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 the Agent;
(2) Quarterly financial statements. As soon as available and
in any event within fortyfive (45) days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower,
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such fiscal quarter, consolidated and
consolidating statements of operations of the Borrower and its
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
Borrower and its Subsidiaries for the portion of the fiscal year ended
with the last day of such fiscal quarter and combined statements of
operations of the Borrower, its Subsidiaries and the Financed
Franchisees, all in reasonable detail and stating in comparative form
the respective consolidated, 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 or any Vice President of the Borrower (in
his or her capacity as such, without personal liability therefor) as
being prepared consistent with the Borrower's audited annual financial
statements (subject to year-end adjustments and changes
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55
in accounting policies permitted by GAAP which have been disclosed in
writing to the Lenders);
(3) Annual financial statements. As soon as available and in
any event within ninety (90) days after the end of each fiscal year of
the Borrower, a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year,
consolidated and consolidating statements of operations of the
Borrower and its Subsidiaries for such fiscal year, consolidated and
consolidating statements of cash flows of the Borrower and its
Subsidiaries for such fiscal year and combined statements of
operations of the Borrower, its Subsidiaries and the Financed
Franchisees, all in reasonable detail and stating in comparative form
the respective consolidated, consolidating or combined figures for the
corresponding date and period in the prior fiscal year and, in the
case of the consolidated and consolidating statements, all prepared in
accordance with GAAP and as to the consolidated statements accompanied
by an opinion thereon reasonably acceptable to the Required Lenders by
Xxxxxx Xxxxxxxx & Co. or other independent accountants selected by the
Borrower and reasonably acceptable to the Required Lenders;
(4) Certificate of No Default. Together with the financial
statements furnished by the Borrower under the preceding Clauses (2)
and (3), a duly completed compliance certificate in the form of
Exhibit M signed by the Chief Financial Officer or any Vice President
of the Borrower (in his or her capacity as such, and without personal
liability therefor);
(5) Accountant's reports. (a) Simultaneously with the
delivery of the annual financial statements referred to in Section
5.8(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 Borrower or any Significant Subsidiary by
independent certified public accountants in connection with
examination of the financial
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56
statements of the Borrower or any Significant Subsidiary made by such
accountants;
(6) 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 Borrower (or if requested in writing by
any Agent within forty-five (45) days after the end of each Retail
Period), updated Schedules 4.17, 4.18 and 4.19 hereto which updated
schedules shall be deemed as of the date of delivery to amend and
restate (a) the previously delivered Schedules 4.17, 4.18 and 4.19 in
their entirety, (b) in the case of Schedule 4.17, Attachment I to the
Pledge Agreement in its entirety, (c) in the case of Schedule 4.18,
Schedule I to the Security Agreement in its entirety and (d) in the
case of Schedule 4.19, Schedule I to the Collateral Assignment of Loan
in its entirety;
(7) 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 Borrower or any
Subsidiary, which, in any one case or in the aggregate, are material
to the Borrower and its Subsidiaries taken as a whole, or adversely
affect the ability of the Borrower to perform its obligations under
the Loan Documents;
(8) Notice of Defaults and Events of Default. As soon as
possible and in any event within three (3) Business Days after the
Borrower becomes aware of the occurrence of any 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
Borrower with respect thereto;
(9) ERISA reports. Promptly after the filing or receiving
thereof, copies of all substantive reports, including annual reports,
and notices which the Borrower or any Subsidiary files with or
receives from the PBGC or the U.S. Department of Labor under ERISA;
and as soon as possible and in any event within thirty (30) days after
the Borrower or any Subsidiary knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with respect
to any Plan or that the PBGC or the Borrower or any Subsidiary has
instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, the Borrower will deliver to the Agent a
certificate of the Chief
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57
Financial Officer or Vice President - Finance of the Borrower (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 Borrower proposes
to take with respect thereto;
(10) Reports to other creditors. Promptly after the
furnishing thereof, copies of any material statement or report
furnished to any other creditor (other than BCI) of the Borrower
pursuant to the terms of any indenture, loan, or credit or similar
agreement and not otherwise required to be furnished to the Agent or
the Lenders pursuant to any other clause of this Section 5.8;
(11) Proxy statements, etc. Promptly after the sending or
filing thereof, copies of all proxy statements, financial statements,
and reports which the Borrower or any Subsidiary sends to its
stockholders, and copies of all regular, periodic, and special
reports, and all registration statements which the Borrower or any
Subsidiary files with the Securities and Exchange Commission (or any
governmental authority which may be substituted therefor) or with any
national securities exchange;
(12) 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;
(13) Financed Franchisee and Financed Subsidiary financial
statements. As soon as available and in any event within thirty (30)
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
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58
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 or Vice
President - Finance of the Borrower (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 Lenders by the chief financial officer or treasurer of such
Financed Franchisee or Financed Subsidiary as accurate, subject to
changes resulting from normal, recurring yearend adjustments; and
(14) General information. Such other information respecting
the condition or operations, financial or otherwise, of the Borrower
or any Subsidiary as the Agent or any Lender may from time to time
reasonably request.
SECTION 5.9. 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 the Agent or any Lender may reasonably
request from time to time to evidence compliance with this Section.
SECTION 5.10. Notes, Certificates and Other Collateral.
Deliver to the 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 Borrower or
any 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 Borrower or
any 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 Share Issuer" (as such terms are defined in the Pledge Agreement).
All such promissory notes, instruments and certificates shall be held by the
Agent in accordance with, and subject to, the Pledge
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Agreement; provided, that the Agent shall take such action with respect to the
foregoing promissory notes, instruments and certificates as the Borrower or
such 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 Borrower or such Subsidiary holds such promissory
notes or instruments or (y) is consistent with the terms of this Agreement and
the other Loan Documents.
SECTION 5.11. Financing Statements. As soon as reasonably
practicable after the delivery pursuant to Section 5.8(6) of a subsequent
Schedule 4.18 setting forth addresses of real property owned or leased by the
Borrower or any Subsidiary which are located in jurisdictions for which the
Borrower or such Subsidiary, as the case may be, has not then provided to the
Agent financing statements (UCC-1's), deliver to the Agent financing statements
(UCC-1's) for filing in such jurisdictions duly executed by the Borrower or
Subsidiary, as the case may be, listing the Borrower or such Subsidiary, as the
case may be, as debtor, and the Agent, as secured party, and setting forth a
description of collateral reasonably acceptable to the Agent.
SECTION 5.12. Subsidiary Defaults. Upon the occurrence of
any Subsidiary Default, allow the Agent to participate in any negotiations
conducted between the affected Subsidiary and the lender of the affected
indebtedness.
SECTION 5.13. Credit Usage.
(1) At the time of each incurrence, and after giving
effect thereto, of Debt under the Agreement during any fiscal period
set forth below (but only at such times and at no other times)
demonstrate to the Agent that the ratio of (a) Senior Indebtedness
outstanding immediately after such incurrence to (b) Annualized System
EBITDAL, for the fiscal quarter then most recently ended for which
financial statements have been delivered to the Agent pursuant to
Section 5.8, does not exceed the ratio set forth below opposite such
fiscal period:
Fiscal Period(s) Ratio
--------------- -----
Q1 1998 2.75:1.00
Q2 1998 2.75:1.00
Q3 1998 2.25:1.00
Q4 1998 2.00:1.00
Fiscal 1999 1.75:1.00
Fiscal 2000 1.50:1.00
; provided, that for purposes of calculating the Annualized System
EBITDAL (i) for the Borrower's first fiscal quarter,
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1998, the financial information from the first Retail Period in such
fiscal quarter shall not be used and such fiscal quarter shall be
deemed to consist of only three Retail Periods and (ii) for the period
commencing on the Revolving Loan Effective Date and ending on the date
upon which the Borrower delivers to the Agent the compliance
certificate required pursuant to Section 5.8(4) with respect to the
Borrower's first fiscal quarter, 1998, the financial information for
the first three Retail Periods of 1998 shall be deemed to constitute a
fiscal quarter.
(2) In the event the Borrower receives any proceeds from the
incurrence of Debt under this Agreement on a day when, after giving
effect to such incurrence, the ratio set forth in the preceding clause
was exceeded, the Borrower shall repay to the Agent 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 Agent requiring such repayment.
SECTION 5.14. Real Property.
(1) Within ninety (90) days of the Restatement Effective
Date, deliver to the Agent with respect to each of the parcels of real
property referenced on the initial Schedule 4.18 hereto as leased by
the Borrower or any Subsidiary and designated with an asterisk ("*")
(and not designated as "grandfathered"), each of the documents set
forth in clause (4) below; provided, that the Agent may decline to
accept such documents if in its determination a parcel is or may have
been in violation of any Environmental Laws.
(2) Within ninety (90) days of the date on which a Financed
Franchisee becomes a Financed Subsidiary, deliver to the Agent (a)
with respect to each of the parcels of real property owned by such
Financed Subsidiary on such date, each of the documents set forth in
clause (3) below and (b) with respect to each of the parcels of real
property leased by such Financed Subsidiary on such date, each of the
documents set forth in clause (4) below; provided, that the Agent may
decline to accept such documents if in its determination a parcel is
or may have been in violation of any Environmental Laws.
(3) Mortgages or deeds of trust, as appropriate, in form and
substance reasonably acceptable to the Agent duly executed by the
Borrower or the Subsidiary, as the case may be, together with:
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(a) where required by applicable state law, a
separate environmental indemnity agreement;
(b) to the extent requested by the Agent, an ALTA
loan title insurance policy (or marked-up title insurance
commitment) issued by a title company reasonably acceptable to
the Agent with respect to such parcels and any access or
similar easements appurtenant thereto specified by the Agent,
which policy or commitment shall (i) insure the priority of
such mortgage or deed of trust as a valid and enforceable
first lien, subject only to Liens permitted by Section 6.1 and
such matters that are acceptable to the Agent in its
reasonable judgment, (b) contain such endorsements and
affirmative coverages as the Agent shall reasonably require,
including without limitation where available, comprehensive,
doing business, usury, tiein, 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;
(c) 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 the
Agent reasonably shall deem necessary), which audit must be
satisfactory in the Agent's sole discretion as to form and
substance, together with a reliance letter for the benefit of
Agent from the environmental consultant performing such audit;
(d) such Uniform Commercial Code financing
statements or statements of termination, release or partial
release with respect to the fixtures encumbered by such
mortgages as the Agent may reasonably require;
(e) such environmental disclosure documents,
mortgage tax affidavits or allocation statements, or such
other documents as the Agent may reasonably request; and
(f) evidence of insurance to the extent required by
the mortgages or deed of trust.
(4) Collateral Assignment of Lease duly executed by the
Borrower or the Subsidiary, as the case may be, (unless despite the
reasonable efforts of the Borrower or such Subsidiary, as the case may
be, such Collateral Assignment has not been consented to by the
landlord,
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where such consent is required by such lease) together with:
(a) such financing statements as the Agent shall
reasonably request as necessary to perfect the Agent's
security interest in all Fixtures and leasehold improvements
duly executed by the Borrower or such Subsidiary, as the case
may be;
(b) Landlord's Consent executed by the landlord
thereof (unless despite the reasonable efforts the Borrower or
such Subsidiary, as the case may be, such Landlord's Consent
cannot be obtained or unless otherwise waived by the Agent),
which Landlord's Consent, if any, shall be delivered to the
Agent; and
(c) such other documentation as shall be necessary in
the reasonable determination of the Agent to effect the
assignment of the rights, title and interest of the Borrower
or such Subsidiary, as the case may be, in and to such leased
real property.
SECTION 5.15. Further Assurances. Promptly upon request by
the Agent or the Required Lenders, the Borrower 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 Agent or such Required Lenders, 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 Collateral
Document, (ii) to subject to the Liens created by any of the Collateral
Documents any of the properties, rights or interests covered by any of the
Collateral Documents, and (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby.
ARTICLE VI
NEGATIVE COVENANTS
From and after the date hereof, so long as any of the Notes
shall remain unpaid or any Lender shall have any Commitment under this
Agreement or any Letter of Credit remains outstanding or any LC Obligations
remain unpaid, the Borrower will not:
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SECTION 6.1. Liens. Create, incur, assume, or suffer to
exist, or permit any 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:
(1) Liens in existence on the Restatement Effective Date and
described in Schedule 6.1;
(2) As to property which is Collateral, any Liens in favor
of the Agent arising under the Collateral Documents;
(3) Liens securing obligations of a Subsidiary to the
Borrower or a Wholly-Owned Subsidiary;
(4) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or, if due and payable,
if they are being contested in good faith by appropriate proceedings
and for which appropriate reserves are maintained;
(5) Liens imposed by law, such as mechanics', repairmen's,
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;
(6) Liens under workmen's compensation, unemployment
insurance, social security, or similar legislation;
(7) 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;
(8) 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;
(9) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with
the occupation, use, and
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enjoyment by the Borrower or any 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;
(10) Liens securing Debt of the types permitted by Clauses
(6) of Section 6.2;; and
(11) 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:
(a) Any property subject to any of the foregoing is
acquired by the Borrower or any 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;
(b) 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 Borrower or
Subsidiary acquiring the same;
(c) Each such Lien shall attach only to the property so
acquired and fixed improvements thereon; and
(d) The Debt of the Borrower which is secured by
such Liens plus the Debt of all Subsidiaries secured by such
Liens arising after such Persons become Subsidiaries shall not
exceed at any time outstanding in the aggregate $500,000;
and the Agent shall promptly execute and deliver to the Borrower all
documents reasonably requested by the holder of such purchase money
Lien in order to release any existing Liens in favor of the Agent on
any assets to be subject to such purchase money Lien.
SECTION 6.2. Debt. Create, incur, assume, or suffer to
exist, or permit any Subsidiary to create, incur, assume, or suffer to exist,
any Debt, except:
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(1) Debt of the Borrower under this Agreement or the Notes;
(2) Debt described in Schedule 6.2, but no renewals,
extensions, or refinancings thereof;
(3) 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;
(4) Debt of any Subsidiary to the Borrower provided such Debt
complies with any applicable requirements set forth in Section 6.8;
(5) Debt of the Borrower arising with respect to Borrower'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 6.8;
(6) Debt which constitutes indebtedness for borrowed money
owed by a Financed Franchisee to a Person other than the Borrower
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 as of 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;
(7) Debt which is secured by Liens of the type described in
Clause (11) of Section 6.1;
(8) Debt of the type permitted by Sections 6.4 and 6.9;
(9) the BCI Subordinated Debt, the 2004 Subordinated Debt and
other Subordinated Debt, provided, that (a) after giving effect to the
incurrence of such Subordinated Debt, no Default or Event of Default
shall exist or be continuing and (b) if such Subordinated Debt had
been incurred on the last day of the most recent fiscal period for
which financial statements have been delivered to the Agent pursuant
to Section 5.8(2) or (3), no Default or Event
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of Default arising under Article VII would have existed;
(10) Debt incurred in connection with Hedging Agreements
entered into by the Borrower or any Subsidiary;
(11) The Debt described as item 8 on Schedule 4.14, provided,
that such Debt may only be repaid (a) by the issuance of common stock
of the Borrower or (b) in cash if after the Restatement Effective Date
but prior to such payment the Borrower has received in cash marketing
support funds from its vendors in an aggregate amount of not less than
the principal amount of such Debt; and
(12) Unsecured Debt not of the type described in the
foregoing Clauses (1) through (11) in an aggregate principal amount
not to exceed at any one time $2,500,000.
SECTION 6.3. 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
Subsidiary to do so, except that:
(1) any Subsidiary may merge into or consolidate with or
transfer assets to the Borrower or a Wholly-Owned Subsidiary,
provided, that in the case of a Subsidiary 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 Subsidiary";
(2) any Wholly-Owned Subsidiary may be dissolved;
(3) the Borrower or any Subsidiary may acquire all or
substantially all of the assets or the business of any Person,
provided that 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 provided further, that
as of and after giving effect to such acquisition no Default or Event
of Default shall exist or be continuing;
(4) the Borrower may acquire capital stock, partnership units
or other equity interests of a Financed Franchisee or a Subsidiary in
compliance with Clause (2) of Section 6.8; and
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(5) any Financed Subsidiary may merge into or consolidate
with or transfer assets to any other Financed Subsidiary.
SECTION 6.4. Leases. Create, incur, assume, or suffer to
exist, or permit any Subsidiary to create, incur, assume, or suffer to exist,
any obligation as lessee for the rental or hire of any real or personal
property, except:
(1) operating leases of personal property and Capital Leases
which do not give rise to any Lien except those permitted by Section
6.1 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;
(2) leases existing on the date of this Agreement and any
extensions or renewals thereof;
(3) any leases of real property entered into after the
Effective Date on which the Borrower or a Franchisee operates or plans
to operate a Store or which the Borrower or any Subsidiary uses or
intends to use for office space, commissary or production facilities
or similar purposes; provided, that (a) subject to the provisions of
Clauses (1) and (2) of Section 5.15, with respect to any leases to
which the Borrower or any Subsidiary is a party and the term of which
exceeds six months, the Borrower or such Subsidiary, as the case may
be, shall have theretofore delivered to the Agent each of the
documents set forth in Clause (4) of Section 5.15 and (b) within one
year from the rent commencement date for such lease, the Borrower or a
Franchisee shall be operating a Store, office, commissary or
production facility on the premises covered by such lease unless the
operation of such Store is delayed due to local zoning, licensing or
permitting issues, acts of God or other matters which are not within
the control of the Borrower or Franchisee, as the case may be; and
(4) leases between the Borrower and any Subsidiary or between
any Subsidiaries.
SECTION 6.5. Sale and Leaseback. Sell, transfer, or
otherwise dispose of, or permit any Subsidiary to sell, transfer, or otherwise
dispose of, any real or personal property or fixtures to any Person and
thereafter directly or indirectly lease back the same or similar property.
SECTION 6.6. Dividends. Declare or pay, or permit any of its
Subsidiaries (other than any of its Wholly-Owned
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Subsidiaries) to 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 Borrower; 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 Subsidiaries
to do any of the foregoing or to purchase or otherwise acquire for value any
stock of the Borrower or another Subsidiary (other than a Wholly-Owned
Subsidiary); except that (i) the Borrower may declare and deliver dividends and
make distributions payable solely in capital stock of the Borrower, (ii) any
Subsidiaries of the Borrower may redeem shares of its capital stock held by a
shareholder (other than the Borrower) solely in exchange for the cancellation
of Debt owed by such shareholder to such Subsidiary, (iii) the Borrower may
purchase from any Financed Subsidiary capital stock of the Borrower required to
be delivered to optionees under stock option plans of such Financed Subsidiary
assumed by the Borrower for a purchase price not to exceed the exercise price
of such options, such price to be payable solely by cancellation of Debt of the
Financed Subsidiary to the Borrower, and (iv) any Subsidiary of the Borrower
which is organized in a form which requires it to pass through its income and
losses to its equity holders for Federal income tax purposes may declare and
pay dividends in amounts not to exceed its Permitted Tax Distributions,
provided, that both before and after giving effect to such Permitted Tax
Distribution no Default or Event of Default shall have occurred and be
continuing. For the purposes of this Section 6.6, "Permitted Tax Distribution"
means, with respect to any Subsidiary for any taxable year, the maximum
aggregate amount of Federal and applicable state taxes which would be payable
for such taxable year by the shareholders of such Subsidiary with respect to
income or losses of such Subsidiary calculated at the maximum Federal and
applicable state income tax rates then in effect, without reference to the
actual income tax returns of such shareholders.
SECTION 6.7. Sale of Assets. Sell, lease, assign, transfer,
or otherwise dispose of, or permit any Subsidiary to sell, lease, assign,
transfer, or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock and indebtedness of
Subsidiaries, receivables, and leasehold interests), except:
(1) for assets sold, leased, assigned, transferred or
otherwise disposed of in the ordinary course of business;
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(2) for the sale or other disposition of assets no longer
used or useful in the conduct of its business;
(3) that (a) the Borrower may convey to Noah's New York
Bagels, Inc. a ninety-nine percent participating interest in the Debt
of Noah's Pacific, L.L.C. evidenced by the Financed Franchisee Loan
Documents executed by Noah's Pacific, L.L.C. in favor of the Borrower
and (b) any Subsidiary may sell, lease, assign, or otherwise transfer
its assets to the Borrower or any Wholly-Owned Subsidiary unless in
the case of a Subsidiary which is a Special Purpose Subsidiary, such
assets are not of a type permitted pursuant to the definition of
"Special Purpose Subsidiary";
(4) that the Borrower or any 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, offices, commissaries or production facilities; 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;
(5) for any issuances or sales of the capital stock,
partnership units or other equity interests of any Subsidiary or other
Person permitted pursuant to Section 6.11;
(6) for other dispositions by the Borrower or any Subsidiary
not of the type described in the foregoing Clauses (1) through (5)
provided that the aggregate amount of all such dispositions shall not
exceed $1,000,000 during the term of this Agreement and the net
proceeds of such dispositions are applied pursuant to Section 2.8(2);
and
(7) the Borrower may sell the BCI Exempted Stock and the BCI
Control Stock in accordance with Clause (5) of Section 6.8;
and in the case of any such sale, assignment, transfer or other disposition of
title, the Agent shall promptly execute, at the Borrower's expense, all
documents reasonably necessary to release any Lien in favor of the Agent on the
disposed assets.
SECTION 6.8. Investments. Make, or permit any Subsidiary to
make, any loan or advance to any Person, or
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purchase or otherwise acquire, or permit any Subsidiary to purchase or
otherwise acquire, any capital stock, obligations, or other securities of, make
any capital contribution to, or otherwise invest in or acquire any interest in
any Person except:
(1) loans and advances made by the Borrower 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 Agent for the benefit of the
Lenders 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 duly pledged to the Agent under the
Pledge Agreement, (iii) all such loans and advances to Financed
Franchisees shall be secured in the manner described in paragraph (3)
of Schedule 1.1(A), (iv) all Liens in favor of the Borrower 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
Borrower 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 Agent
for the benefit of the Lenders 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
Agent for the benefit of the Lenders pursuant to the Pledge Agreement
and (iii) all Liens in favor of the Borrower securing such loans and
advances are duly perfected prior to the initial loan or advance
thereunder and which Liens shall be assigned to the Agent for the
benefit of the Lenders following the written request of the Agent to
the Borrower which request may be made at any time; and (c)
Guarantors; provided, that such loans and advances are evidenced by
promissory notes pledged to the Agent for the benefit of the Lenders
pursuant to the Pledge Agreement;
(2) the acquisition by the Borrower of the capital stock,
partnership units or other equity interests of any Financed
Franchisees, Financed Subsidiaries or Subsidiary; provided, that (a)
in the case of a
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Financed Franchisee such Financed Franchisee is not then in default of
any payment amount in aggregate in excess of $50,000 to the Borrower
under the respective Financed Franchisee Loan Documents and (b) as of
and after giving effect to such acquisition no Default or Event of
Default shall exist or be continuing;
(3) loans and advances made by the Borrower to an employee,
which loans and advances need not be pledged to the Agent pursuant to
the Pledge Agreement; provided, that such loans and advances are (a)
consistent with past practices and (b) do not exceed an aggregate
principal amount at any one time outstanding of $100,000 with respect
to such employee or of $250,000 with respect to all employees of the
Borrower;
(4) strategic investments 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 made by the Borrower solely
in exchange for its capital stock, as approved by the Board of
Directors of the Borrower, provided, that such strategic investments
are reasonably related to the Borrower's existing business at the time
of such investment;
(5) the acquisition of BCI Exempted Stock and BCI Control
Stock provided such stock is not owned for more than fifteen (15)
Business Days;
(6) 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 Lender;
(7) 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 Lender;
(8) 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 Lender;
(9) commercial paper and variable rate notes issued by, or
guaranteed by, any industrial or financial company with a short term
commercial paper
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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 by any
Lender;
(10) stock, obligations, or securities received in settlement
of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary;
(11) unsecured loans or advances made by any Subsidiary to the
Borrower;
(12) loans or advances not otherwise permitted by the
foregoing Clauses (1) through (11) in an aggregate principal amount
not to exceed at any one time $1,500,000; and
(13) (a) the Borrower may make a capital contribution to
Noah's New York Bagels, Inc. of the participating interest described
in Clause (3)(a) of Section 6.7, (b) Noah's New York Bagels, Inc. may
fund its obligations to the Borrower from time to time with respect to
the participating interest described in Clause (3)(a) of Section 6.7
and (c) the Borrower may make capital contributions from time to time
to Noah's New York Bagels, Inc. to permit Noah's New York Bagels, Inc.
to fund its obligations referenced in the immediately preceding Clause
(12)(b).
SECTION 6.9. Guaranties, Etc. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable, or
permit any Subsidiary to assume, guarantee, endorse, or otherwise be or become
directly or contingently responsible or liable 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:
(1) guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course
of business;
(2) guaranties in existence on the Restatement Effective Date
and described in Schedule 6.9;
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(3) primary liability for leases transferred to Financed
Franchisees in accordance with Clause (4) of Section 6.7;
(4) other guaranties of the lease payments of Franchisees and
guaranties of Franchisee's liabilities arising under Hedging
Agreements to which such Franchisee is a party, provided, that as of
the date such guaranty is issued and after giving effect to such
guaranty, the sum of the aggregate amount of payments due under all
such leases described in this Clause (4) during the twelvemonth
period succeeding such date plus 20% of the aggregate notional amount
as of such date of all such Hedging Agreements shall not exceed
$1,000,000; and
(5) guaranties of Debt permitted solely by Clauses (10) and
(12) of Section 6.2.
SECTION 6.10. 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 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 Borrower's or such Subsidiary's
business and upon fair and reasonable terms not materially less favorable to
the Borrower or such 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 or the respective Financed Subsidiary Loan
Documents.
SECTION 6.11. Subsidiary, Etc.
(1) Create, acquire or otherwise permit to exist any
Subsidiaries other than: (a) Special Purpose Subsidiaries; (b) Financed
Subsidiaries; (c) Wholly-Owned Subsidiaries acquired in conformity with Section
6.8; provided, that (x) the equity interests owned directly or indirectly by
the Borrower are pledged to the Agent for the benefit of the Lenders pursuant
to the Pledge Agreement and (y) each such Subsidiary shall have executed
Guaranties in favor of the Agent and, subject to Clause (2) of Section 5.15,
shall have granted to the Agent for the benefit of the Lenders a perfected
security interest in all of such Subsidiary's assets pursuant to such
Collateral Documents as may be reasonably required by the Agent;
(2) Sell or otherwise dispose of any shares of the capital
stock, partnership units or other equity interests of any
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Subsidiary or other Person or permit any Subsidiary to issue any additional
shares of its capital stock, partnership units or other equity interest, other
than: (a) in connection with stock splits, stock dividends or similar
issuances, (b) directors qualifying shares, (c) shares, partnership units or
other units issued (i) for fair consideration, (ii) to the Borrower upon
exercise of the Borrower's conversion rights, options, first refusal rights or
preemptive rights provided in the Financed Franchisee Loan Documents or
otherwise, or (iii) to employees of such Subsidiary upon exercise of employee
stock, unit or other equity options; provided, that in the case of the
foregoing Clause (c)(iii), 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, or (d) pursuant to a merger of one
Subsidiary into another Subsidiary that would be permitted under Section 6.3.
SECTION 6.12. Real Property. Purchase or otherwise acquire,
or permit any Subsidiary to purchase or otherwise acquire, title to any real
property (excluding leasehold improvements) without the prior written consent
of the Required Lenders, except that (1) the Borrower, any Financed Subsidiary
or any Special Purpose Subsidiary may purchase or acquire real property on
which Stores, offices, commissaries or production facilities are to be
operated, (2) the Borrower or any Subsidiary may purchase or acquire real
property to be used for office space or similar purposes, and (3) the Borrower,
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 6.3; provided, that in each case, (i) subject to the
provisions of Clauses (1) and (2) of Section 5.15, concurrently with such
acquisition, the Agent shall have received each of the documents set forth in
Clause (3) of Section 5.15 and (ii) at no time shall the book value of all real
property owned by the Borrower on a consolidated basis (less the book value of
any leasehold improvements thereon) exceed an aggregate amount equal to one
percent (1%) of the Borrower's then total consolidated assets.
SECTION 6.13. Financed Franchisee Loan Documents. 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 $50,000 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 1.1(A).
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SECTION 6.14. Subordinated Debt. Make any payment or
prepayment with respect to any Subordinated Debt, except that (i) interest may
be paid on Subordinated Debt to the extent permitted by the terms of such
Subordinated Debt (including without limitation the BCI Subordination Agreement
or the 2004 Indenture if applicable), including without limitation the
subordination provisions thereof, and (ii) prior to an Event of Default,
Subordinated Debt and interest thereon may be converted into equity of the
Borrower or may be prepaid solely from the proceeds of a substantially
contemporaneous issuance of equity or Subordinated Debt of the Borrower;
provided, that within fifteen (15) Business Days of the receipt of any BCI
Exempted Stock, the Borrower may prepay principal of the BCI Subordinated Debt
by an amount equal to the net cash proceeds received from the disposition of
such BCI Exempted Stock.
SECTION 6.15. Use of Proceeds; Margin Regulations. Use (or
suffer or permit any Subsidiary to use) any portion of the Loan proceeds or any
Letter of Credit, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Borrower 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
Securities Exchange Act of 1934, and regulations promulgated thereunder. The
proceeds of the Loans and the Letters of Credit are to be used solely for the
purposes set forth in and permitted by Section 2.10.
SECTION 6.16. Take or Pay Contracts. Enter, and will not
permit any of its Subsidiaries to enter, into or be a party to any arrangement
for the purchase of materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by the Borrower
or such Subsidiary regardless of whether such materials, supplies, other
property or services are delivered or furnished to it.
SECTION 6.17. Credit Agreement Payments. Except as expressly
permitted hereby, at any time after the Restatement Effective Date make any
direct payment with respect to the Loans or the Commitments (including, without
limitation, any fees or commissions thereon) to any Person other than the Agent
without the consent of the Agent.
ARTICLE VII
FINANCIAL COVENANTS
From and after the date hereof, so long as any of the Notes
shall remain unpaid or any Lender shall have any Commitment
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under this Agreement or any Letter of Credit remains outstanding or any LC
Obligations remain unpaid, the Borrower will:
SECTION 7.1. Net Store Revenue. Maintain as of the last day
of each fiscal quarter, an average weekly net revenue (i.e., gross revenue net
of customer coupons and discounts) during such fiscal quarter per Store for all
Stores (whether operated by the Borrower or a Franchisee) of not less than the
amount set forth below opposite such fiscal period:
Fiscal Quarter/Year Covenant Level
------------------- --------------
4th/1997, 1st/1998 $12,000
2nd, 3rd/1998 $12,300
4th/1998, 1st/1999 $12,600
2nd, 3rd, 4th/1999 and
1st/2000 $13,000
2nd/2000 $13,200
Thereafter $13,500
SECTION 7.2. Senior Indebtedness to System EBITDAL. Maintain
as of the last day of each fiscal quarter of the Borrower occurring during the
fiscal periods set forth below, a ratio of (1) Senior Indebtedness as of such
date to (2) Annualized System EBITDAL for such fiscal quarter (the "Cash Flow
Ratio") of not greater than the ratio set forth below opposite the respective
fiscal period:
Fiscal Quarter/Year Covenant Level
------------------- --------------
2nd and 3rd/1998 2.50:1.00
4th/1998 2.25:1.00
fiscal 1999 2.00:1.00
fiscal 2000 1.75:1.00
SECTION 7.3. Total Overhead. Maintain, as of the last day of
each fiscal quarter set forth below, a Combined Overhead of not greater than
the amount set forth below opposite such fiscal quarter:
Fiscal Period(s) Covenant Level
---------------- --------------
Q4/1997 $16,000,000
Q1/1998 $14,000,000
SECTION 7.4. Proforma Store 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) Annualized Store
EBITDAL for such fiscal quarter to (2) Proforma Fixed Charges as of such date,
of not less than the ratio set forth below opposite such fiscal period:
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Fiscal Period(s) Covenant Level
---------------- --------------
Q4/1997 2.25:1.00
Q1/1998 2.75:1.00
Q2/1998 3.25:1.00
SECTION 7.5. Proforma System 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) Annualized System
EBITDAL for such fiscal quarter to (2) Proforma Fixed Charges, as of such date,
of not less than the ratio set forth below opposite such fiscal period:
Fiscal Period(s) Covenant Level
---------------- --------------
Q3/1998 1.50:1.00
Q4/1998 1.75:1.00
Q1 Q4 1999 2.00:1.00
Q1 Q4 2000 3.00:1.00
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Events of Default. If any of the following
events ("Events of Default") shall occur:
(1) The Borrower should fail to pay (a) the principal of, or
interest or fee on, the Notes as and when due and payable and in the
case of interest or fees such failure shall continue for two (2)
Business Days or (b) any reimbursement obligation, interest or fee
with respect to any LC Obligation which is not satisfied by a deemed
disbursement of a Floating Rate Revolving Loan or otherwise as
provided under Section 2.9A and such failure shall continue for seven
(7) Business Days;
(2) Any representation or warranty made or deemed made
(pursuant to Sections 3.2(1)(a) or 5.8(6)) by the Borrower in this
Agreement or any other Loan 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 Loan 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;
(3) The Borrower or any Subsidiary shall fail to perform or
observe any term, covenant or agreement contained in Sections 2.3A,
6.3, 6.6, 6.9, 6.10, 6.12, 6.13, and 6.14 of this Agreement applicable
thereto;
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(4) The Borrower or any Subsidiary shall fail to perform or
observe any term, covenant or agreement contained in Sections 6.1,
6.2, 6.5, 6.7, 6.8, 6.11, 7.1 through 7.5, 10.6 or 10.12 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;
(5) The Borrower or any Subsidiary shall fail to perform or
observe any other term, covenant, or agreement contained in any Loan
Document applicable thereto (other than the Notes and those Sections
referenced in the foregoing Clauses (3) and (4)) on its part to be
performed or observed and such failure shall continue for fifteen (15)
Business Days following notice thereof from the Agent or the Required
Lenders;
(6) the Borrower or any Subsidiary shall (a) fail to make any
payment of principal, interest, premium, rents or fees with respect to
any indebtedness for borrowed money (other than the Notes) of the
Borrower or such Subsidiary in an amount in excess of $100,000, when
due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and any applicable grace periods shall have
expired, or (b) 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 (other
than the Notes) of the Borrower or such Subsidiary in an amount in
excess of $500,000, 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 Borrower or such 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;
[(7) THIS CLAUSE IS INTENTIONALLY RESERVED]
(8) The Borrower or any of its Significant Subsidiaries (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
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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 (the foregoing Events of Defaults set forth in this
Section 8.1(8) with respect to any Subsidiary, each a "Subsidiary
Default");
(9) Any Financed Franchisee shall fail to pay any sum owed to
the Borrower in connection with indebtedness for borrowed money
(including any interest or premium thereon) in an aggregate amount in
excess of $250,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and any
applicable grace period shall have expired;
(10) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Article VII of this Agreement as of
the end of the most recent fiscal period for which financial statements
have been delivered to the Lenders pursuant to Section 5.8(2) or (3),
as adjusted to reflect any loss, reserve, writeoffs or contingency for
any event described in this Section 8.1(10), as calculated on a
preliminary basis as of no later than the fifth Business Day following
the occurrence of any of the following events: Any Financed Franchisee
(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
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(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; (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;
(11) One or more judgments, decrees, or orders for the
payment of money in excess of $100,000 in the aggregate shall be
rendered against the Borrower 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;
(12) Any of the following events occur or exist with respect
to the Borrower 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 the Agent to subject the
Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed $100,000 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 6.1) on Borrower's assets;
(13) Any Guaranty shall, at any time after its execution and
delivery and for any reason cease to be
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in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the
respective Subsidiary, or the respective Subsidiary 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);
(14) The BCI Subordination Agreement 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 BCI, or BCI shall deny it
has any further liability or obligation under or shall fail to perform
its material obligations under the BCI Subordination Agreement; or
(15) With respect to any Security Agreement, Trademark
Security Agreement, Pledge Agreement, Collateral Assignment of
Servicing Agreements or Collateral Assignment of Loan:
(a) any such Collateral Document shall for any
reason cease to be valid and binding on or enforceable against
the Borrower or any Subsidiary party thereto or the Borrower
or any Subsidiary shall so state in writing or bring an action
to limit its obligations or liabilities thereunder; or
(b) such 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).
(16) There shall occur a Material Adverse Change; or
(17) There shall occur a Change of Control.
SECTION 8.2. Effect of Event of Default. If any Event of
Default described in Section 8.1(8) shall occur, automatically the Commitment
of each of the Lenders and the agreement of the Issuing Lender to issue Letters
of Credit hereunder shall immediately terminate and the outstanding principal
amount of the Notes, all interest thereon and all other amounts payable under
this Agreement and the other Loan Documents shall become immediately due and
payable; and, in the case of any other Event
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of Default, the Agent may (or shall, upon the written request of the Required
Lenders), by notice to the Borrower, (1) declare the Commitment of each of the
Lenders and the agreement of the Issuing Lender to issue Letters of Credit to
be terminated, and (2) declare the outstanding principal amount of the Notes,
all interest thereon, and all other amounts payable under this Agreement and
the other Loan Documents to be forthwith due and payable, whereupon the Notes,
all such interest, and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by the Borrower. The Agent shall
promptly notify each Lender of such declaration, but failure to notify the
Lenders shall not impair the effect of such declaration.
ARTICLE IX
THE AGENT
SECTION 9.1. Authorization and Action. Each Lender hereby
(subject to Section 9.6) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers to the extent provided
herein or in any document or instrument delivered hereunder or in connection
herewith, together with such other action as may be reasonably incidental
thereto (including, without limitation, the execution and delivery of any
releases and other instruments which the Agent is hereby authorized and
obligated to make in connection with any Collateral that is sold or otherwise
disposed of by the Borrower in accordance with the express terms and conditions
of this Agreement and the other Loan Documents). As to matters not expressly
provided for by this Agreement (including, without limitation, enforcement or
collection of this Agreement or any Loan Document) the Agent shall not be
required to exercise any discretion, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders and such instructions
shall be binding upon all Lenders. Under no circumstances shall the Agent be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or to the Loan Documents or applicable law.
SECTION 9.2. Liability of the Agent to the Lenders. Neither
the Agent nor any of its directors, officers, agents or employees shall be
liable to any Lender for any action taken or omitted to be taken by it or them
under or in connection with this Agreement and the Loan Documents, except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent (1) may treat any Lender as such until
the Agent receives an executed Assignment Agreement
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entered into between a Lender and an Assignee pursuant to Section 10.5 hereof;
(2) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts or consultants selected by it;
(3) shall not be liable for any action taken or omitted to be taken in good
faith by the Agent in accordance with the advice of counsel, accountants,
consultants or experts; (4) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any recitals, statements,
warranties or representations, whether written or oral, made in or in
connection with this Agreement or the Loan Documents; (5) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, obligations, covenants or conditions of this Agreement on the part
of the Borrower or to inspect the property (including, without limitation, any
books and records) of the Borrower; provided, that with respect to the
foregoing the Agent shall use reasonable efforts to perform the duties of an
administrative agent under a credit agreement of similar content and form; (6)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any Loan Document, any support or security, or any other document furnished in
connection with any of the foregoing; and (7) shall incur no liability under or
in respect of this Agreement or any Loan Document by action upon any written
notice, statement, certificate, order, telephone message, facsimile or other
document which the Agent believes in good faith to be genuine and correct and
to have been signed, sent or made by the proper Person.
SECTION 9.3. Bank of America and Affiliates. With respect to
Loans made by it Letters of Credit issued by it, Bank of America shall have the
same rights and powers under this Agreement and the other Loan Documents as any
other Lender and may exercise the same as though it were not the Agent or the
Issuing Lender; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Bank of America in its individual capacities.
Bank of America and its Affiliates may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower and any of its Subsidiaries and any Person who may do
business with or own securities of the Borrower or any such Subsidiary, all as
if Bank of America was not the Agent or the Issuing Lender and without any duty
to account therefor to the Lenders.
SECTION 9.4. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements referred to in Section
4.4 and such other documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
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also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
SECTION 9.5. Indemnification. The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrower), ratably according to
their Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or assessed against the Agent in any way relating to or arising
out of this Agreement or the other Loan Documents, or any action taken or
omitted by the Agent under this Agreement or the other Loan Documents;
provided, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct; and provided further, that no Lender shall be liable for
any portion of any outofpocket expenses incurred by Agent which would
otherwise be paid by the Borrower hereunder but for Agent's waiver of such
expenses. Without limiting any of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its Percentage of any
out-of-pocket expenses (including reasonable counsel fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, waiver or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under this Agreement or any other Loan Document to the extent
that the Agent is not reimbursed for such expenses by the Borrower. All
obligations provided for in this Section 9.5 shall survive termination of this
Agreement.
SECTION 9.6. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower and may
be removed at any time with or without cause by the Required Lenders upon
thirty (30) days' prior written notice to the Agent. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint a successor
Agent (which Agent shall be approved by the Borrower, which approval shall not
be unreasonably withheld). If no successor Agent shall have been so appointed
by the Required Lenders, and shall have accepted such appointment within 30
days after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent (which Agent shall be approved by the
Borrower, which approval shall not be unreasonably withheld) which shall be
either a Lender or a commercial bank having a combined capital and surplus of
at least $250,000,000. Upon the acceptance of any appointment as Agent
hereunder by a
- 78 -
85
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations in its capacity as Agent under this Agreement. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
SECTION 9.7. Duties of the Co-Agent. Notwithstanding any
other provision contained in this Agreement to the contrary, neither the
Co-Agent nor any of its assignees, in the capacity as Co-Agent, shall have any
duties or obligations with respect to this Agreement or any of the other Loan
Documents.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Waivers and Amendments. The provisions of this
Agreement and of each of the other Loan Documents may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by the Borrower and the Required Lenders, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given and; provided, further, that no such
amendment, modification or waiver:
(a) which would modify any requirement hereunder that any
particular action be taken by all Lenders or by the Required Lenders,
shall be effective without the consent of each Lender;
(b) which would modify this Section 10.1, change the
definition of "Required Lenders," change any Percentage for any Lender
(except pursuant to an assignment agreement), reduce any fees, extend
the Termination Date, or subject any Lender to any additional
obligations, shall be effective without the consent of each Lender;
(c) which would extend the due date for, or reduce the amount
of, any payment or prepayment of principal of or interest on any Loan
or any Letter of Credit Obligation, shall be effective without the
consent of each Lender;
(d) which would affect adversely the interests, rights or
obligations of the Agent (in such capacity), shall be effective
without consent of the Agent; or
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(e) shall release any Subsidiary from its obligations under
its respective Guaranty.
Upon the effectiveness of any consent, amendment, modification or waiver under
this Agreement, the Agent shall promptly give each Lender hereto written notice
(including a description) of such consent, amendment, modification or waiver.
SECTION 10.2. Notices, Etc. All notices and other
communications provided for under this Agreement and under the other Loan
Documents to which the Borrower is a party shall be in writing (including
telegraphic, telex or facsimile communication) and mailed or telecommunicated
or delivered to the address of the respective party as set forth on the
signature pages hereto (or, if applicable, the Supplemental Signature Pages, as
executed by such Party); 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 10.2. All such notices and
communications shall, when mailed or telecommunicated, be effective upon the
earlier of actual receipt, 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, except that
notices to the Agent pursuant to the provisions of Article II shall not be
effective until received by the Agent.
SECTION 10.3. 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 Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right under any Loan Documents preclude any
other or further exercise thereof or the exercise of any other right. The
remedies provided in the Loan Documents are cumulative and not exclusive of any
remedies provided by law.
SECTION 10.4. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Lenders and
their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights under any Loan Document to which the
Borrower is a party without the prior written consent of the Agent and all the
Lenders and the rights of the Lenders to make assignments or grant
participations are subject to the provisions of Sections 10.5 and 10.6.
SECTION 10.5. Assignments and Participations; Information.
Each Lender may (without the Borrower's consent) grant participations in or
(subject to the consent of the Borrower, which consent shall not be
unreasonably withheld) sell, assign, transfer or otherwise dispose of, at any
time and from time to time hereafter, such Lender's rights, titles, interests,
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87
remedies, powers and/or duties under this Agreement or any other Loan Document,
or of any portion of any thereof, (each Person to whom such participation is to
be made being herein referred to as a "Participant" and each Person to whom
such assignment, transfer or disposition is to be made being herein referred to
as an "Assignee"). Each Lender may furnish any information concerning Borrower
in the possession of such Lender from time to time to Assignees of the rights
and/or obligations of such Lender hereunder and to Participants in any Loan or
Letter of Credit (including prospective Assignees and Participants); provided,
that such Lender shall obtain Borrower's consent (which shall not be
unreasonably withheld) and a confidentiality agreement from such Assignee or
Participant in a form reasonably acceptable to the Borrower running to the
Borrower's benefit prior to disclosing any non-public information to any
prospective Participant or Assignee. Each Lender may furnish information in
response to credit inquiries consistent with general banking practice. Such
Lender shall promptly notify Borrower and Agent of such Lender's grant of any
participation in or sale, assignment, transfer or other disposition of this
Agreement or any other Loan Document, or of any portion of any thereof and in
connection with any sale or assignment shall pay to the Agent for the Agent's
account a non-refundable assignment fee equal to $2,500. Borrower shall use
its reasonable efforts (at no out-of-pocket cost to the Borrower) to assist
each Lender in its efforts to sell assignments and participations. In the case
of an assignment by a Lender of any portion of its Percentage hereunder,
following receipt by Agent of the foregoing notice and assignment fee, Schedule
1.1(B) hereto shall be deemed automatically amended to reflect such assignment
and the Agent shall promptly distribute to the Lenders a revised Schedule
1.1(B) as so amended.
Notwithstanding anything in the foregoing to the contrary, (1)
no Participant shall have any direct rights hereunder, (2) the Borrower, the
Agent, the Co-Agent, the Issuing Lender and the Lenders, other than the
assigning or selling Lender, shall deal solely with the assigning or selling
Lender and shall not be obligated to extend any rights or make any payment to,
or seek any consent of, the Participant, (3) no participation shall relieve the
assigning or selling Lender of any of its other obligations hereunder and such
Lender shall remain solely responsible for the performance thereof, and (4) no
Participant, other than an affiliate of the assigning or selling Lender, shall
be entitled to require such Lender to take or omit to take any action
hereunder, except that such Lender may agree with such Participant that such
Lender will not, without Participant's consent, take any action which would
adversely affect any principal, interest or fee in which the Participant has an
ownership or beneficial interest including, without limitation, extending the
due date for, or reducing the amount of, or waiving, any payment or prepayment
of principal or
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88
interest on any Loans, any reimbursement obligations with respect to Letters of
Credit or any fee payable hereunder or extend the Termination Date.
SECTION 10.6. Costs, Expenses, and Taxes. The Borrower
agrees to pay on demand all reasonable costs and expenses in connection with
the preparation, execution, delivery, filing, recording, and administration of
any of the Loan Documents, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent and the Co-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, if any,
in connection with the enforcement of any of the Loan Documents. In addition,
the Borrower shall pay 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 Loan Documents and the other documents to be
delivered under any such Loan Documents, and agrees to save each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay attributed to the Borrower in paying or omission to pay such
taxes and fees.
SECTION 10.7. Right of Setoff. Upon the occurrence and
during the continuance of any Event of Default, each Lender is hereby
authorized at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or
the Notes or any other Loan Document, irrespective of whether or not the Agent
shall have made any demand under this Agreement or the Notes or such other Loan
Document and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such setoff and application;
provided, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section 10.7
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Lenders may have.
SECTION 10.8. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State
of Illinois without regard to its conflict of laws provisions.
SECTION 10.9. Severability of Provisions. Any provision of
any Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or
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89
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 10.10. Headings. Article and Section headings in the
Loan Documents are included in such Loan Documents for the convenience of
reference only and shall not constitute a part of the applicable Loan Documents
for any other purpose.
SECTION 10.11. SUBMISSION TO JURISDICTION; WAIVER OF VENUE.
THE BORROWER, ON BEHALF OF ITSELF AND EACH SUBSIDIARY (A) HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING IN
CHICAGO, ILLINOIS OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, AND THE BORROWER HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL COURT AND (B) AGREES NOT TO
INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST THE AGENT, THE COAGENT, ANY
LENDER 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 10.11. THE BORROWER, ON BEHALF OF
ITSELF AND EACH SUBSIDIARY, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN ANY SUCH ACTION OR PROCEEDING (WHETHER BROUGHT BY THE BORROWER, ANY
SUBSIDIARY, THE AGENT, THE COAGENT, ANY LENDER OR OTHERWISE) IN ANY COURT
HEREINABOVE SPECIFIED IN THIS SECTION 10.11 AS WELL AS ANY RIGHT IT 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
BORROWER ON BEHALF OF ITSELF AND EACH SUBSIDIARY AGREES THAT A FINAL,
NONAPPEALABLE 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.
SECTION 10.12. General Indemnity. In addition to the payment
of expenses pursuant to Section 10.6, Borrower agrees to indemnify, pay and
hold the Agent, the Issuing Lender, the Co-Agent and each Lender, and the
officers, directors, employees, agents, and affiliates of the Agent, the
Issuing Lender, the Co-Agent and each Lender (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, any
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90
other Loan Document or any other agreements executed and delivered by the
Borrower in connection herewith, the Lenders' agreement to make the Loans
hereunder, the Issuing Lender's agreement to issue Letters of Credit, or the
use or intended use of the proceeds of any of the Loans or the LC Obligations
(the "indemnified liabilities"); provided, that Borrower 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 between the Agent, the Issuing Lender, the Co-Agent or any
Lender against an officer, director or employee of the Agent, the Issuing
Lender, the Co-Agent, or such Lender. 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 Borrower 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 10.12 shall survive satisfaction and
payment of Borrower's obligations hereunder and termination of this Agreement.
SECTION 10.13. WAIVER OF JURY TRIAL. THE BORROWER, THE
AGENT, THE CO-AGENT AND EACH OF THE LENDERS 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, ANY OTHER LOAN
DOCUMENT OR UNDER ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, 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 AGENT
ENTERING INTO THIS AGREEMENT.
SECTION 10.14. SERVICE OF PROCESS. THE BORROWER, THE AGENT,
THE CO-AGENT, AND THE LENDERS HEREBY IRREVOCABLY CONSENT TO SERVICE OF PROCESS
BY MEANS OF CERTIFIED MAIL AT THE ADDRESS PROVIDED FOR IN SECTION 10.2.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF THE LENDERS, THE AGENT, THE
CO-AGENT, OR THE BORROWER TO SERVE SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
SECTION 10.15. Counterparts. This Agreement may be executed
in any number of separate counterparts, each of which, when so executed, shall
be deemed an original, and all of said counterparts taken together shall be
deemed to constitute but one and the same instrument.
SECTION 10.16. Entire Agreement. This Agreement, together
with the other Loan Documents, embodies the entire agreement and understanding
among the Borrower, the Lenders and
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91
the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
SECTION 10.17. Reaffirmation, Restatement and Waivers. This
Agreement constitutes an amendment and restatement of the Original Credit
Agreement and the indebtedness evidenced by the Original Credit Agreement is
continuing indebtedness, and nothing herein shall be deemed to constitute a
payment, settlement or novation of the indebtedness evidenced by the Original
Credit Agreement except to the extent provided herein, or to release or
otherwise adversely affect any lien, mortgage or security interest securing
such indebtedness or any rights of the Agent or any Lender against any
guarantor, surety or other party primarily or secondarily liable for such
indebtedness.
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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.
EINSTEIN/NOAH BAGEL CORP.
By: /s/ XXXX X. XXXXXXX
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: /s/ XXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender,
and as Issuing Lender
By: /s/ XXXXXX XXXXXXX
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
GENERAL ELECTRIC CAPITAL
CORPORATION, as Co-Agent
By: /s/ XXXX XXXXXXX
------------------------------------
Name: Xxxx Xxxxxxx
Title: Senior Credit Analyst
000 Xxxx Xxxxx Xxxx
Xxxx. X, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
LASALLE NATIONAL BANK
By: /s/ XXXX X. XXXXXXXX
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Vice President
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
93
SCHEDULE 1.1(B)
Percentages (Section 1.1)
Percentage
----------
Bank of America 28.57142857%
General Electric Capital 42.85714286%
Corporation
LaSalle National Bank 28.00000000%
Total: 100%
94
SCHEDULE 1.1(A)
Requirements for Financed Franchisee Loan Documents
(1) The Franchisee shall have granted to the Borrower 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 in any financing of
the Franchisee that has any equity-type features on a fully-dilutedfp
basis;
(2) The Borrower 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; and
(3) As security for the Franchisee Debt, the Franchisee shall
have granted to the Borrower a first priority Lien (subject to the types of
Liens described in Clauses (4) through (11) of Section 6.1 of the Agreement,
without giving effect to Clause 11 (d) of such Section 6.1) 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
which are entered into after May 17, 1996 (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) which Liens shall be duly assigned to the Agent for
the benefit of the Banks following the written request of the Agent to the
Borrower which may be given at any time.
95
SCHEDULE 1.1(B)
Existing Letters of Credit (Section 1.1)
Beneficiary L/C # Amount
----------- ----- ------
Southtrust Bank of 0000000 $502,266.17
Georgia, N.A.
Charter Xxxxx, Ltd. 7321836 $40,000.00
96
EXHIBIT A-1
FORM OF REVOLVING NOTE
$40,000,000 November __, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Bank of America National Trust and Savings Association, in its capacity as
agent for the ratable benefit of the Lenders (as hereinafter defined) (the
"Agent") at its principal office in Chicago, Illinois, the principal amount of
FORTY MILLION DOLLARS ($40,000,000) or, if less, the aggregate unpaid principal
amount of all Revolving Loans (as defined in the Credit Agreement hereinafter
referenced) outstanding, as duly shown in the records of the Agent or, at the
Agent's option, on the schedule attached hereto (and any continuation thereof),
on the Termination Date.
The undersigned also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, in
either event at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in immediately available funds.
This Note is the Revolving Note described in, and is subject to the
terms and provisions of, the Secured Credit Agreement, dated as of May 17, 1996
and as amended and restated by that certain Amended and Restated Secured Credit
Agreement dated as of November __, 1997 (as the same may at any time be
amended, restated, modified, supplemented or renewed from time to time, the
"Credit Agreement"), among the undersigned, the lenders who are or from time to
time become party thereto (the "Lenders"), General Electric Capital
Corporation, as Co-Agent, and Bank of America National Trust and Savings
Association, as Agent for the Lenders. Terms used herein and not otherwise
defined herein are used herein as defined in the Credit Agreement.
Reference is hereby made to the Credit Agreement for a statement of
the prepayment rights and obligations of the undersigned and for a statement of
the terms and conditions under which the due date of this Note may be
accelerated. Upon the occurrence of any Event of Default as specified in the
Credit
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97
Agreement, the principal balance hereof and the interest accrued hereon may be
declared to be forthwith due and payable, and any indebtedness of the Lenders
or other holder hereof to the undersigned may be appropriated and applied
hereon.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
This Revolving Note is a restatement of the indebtedness evidenced by,
and is a replacement of, that certain Revolving Note of the Borrower dated May
17, 1996 in the face principal amount of $45,000,000 payable to the order of
the Agent, and nothing contained herein or in the Credit Agreement shall be
construed (i) to deem forgiven the unpaid principal amount of, or unpaid
accrued interest on, said Revolving Note outstanding at the time of its
replacement by this Revolving Note, or (ii) to release, cancel, terminate or
otherwise adversely affect all or any part of any lien, mortgage, deed of
trust, assignment, security interest or other encumbrance heretofore granted to
or for the benefit of the payee of said Revolving Note which has not otherwise
been expressly released.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
* * * * *
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98
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
EINSTEIN/NOAH BAGEL CORP.
By:
----------------------------
Name:
--------------------------
Title:
--------------------------
99
Schedule attached to Revolving Note dated November __, 1997 of Einstein/Noah
Bagel Corp., payable to the order of Bank of America National Trust and Savings
Association in its capacity as Agent for the ratable benefit of the Lenders.
Date of Loan, Interest
Continuation or Interest Amount of Rate Per Amount of Notation
Conversion Period Loan Annum Repayment Made By
--------------- -------- --------- -------- --------- --------
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100
TERM NOTE
$30,000,000 November 21, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Bank of America National Trust and Savings Association, in its capacity as
agent for the ratable benefit of the Lenders (as hereinafter defined) (the
"Agent") at its principal office in Chicago, Illinois, the principal amount of
THIRTY MILLION DOLLARS ($30,000,000) in accordance with the payment schedule
set forth in the Credit Agreement (hereinafter referenced).
The undersigned also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, in
either event at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in immediately available funds.
This Note is the Term Note described in, and is subject to the terms
and provisions of that certain Amended and Restated Secured Credit Agreement
dated as of November 21, 1997 (as the same may at any time be amended,
restated, modified, supplemented or renewed from time to time, the "Credit
Agreement"), among the undersigned, the lenders who are or from time to time
become party thereto (the "Lenders"), General Electric Capital Corporation, as
Co-Agent, and Bank of America National Trust and Savings Association, as Agent
for the Lenders. Terms used herein and not otherwise defined herein are used
herein as defined in the Credit Agreement.
Reference is hereby made to the Credit Agreement for a statement of
the prepayment rights and obligations of the undersigned and for a statement of
the terms and conditions under which the due date of this Note may be
accelerated. Upon the occurrence of any Event of Default as specified in the
Credit Agreement, the principal balance hereof and the interest accrued hereon
may be declared to be forthwith due and payable, and any indebtedness of the
Lenders or other holder hereof to the undersigned may be appropriated and
applied hereon.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further
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101
agrees, subject only to any limitation imposed by applicable law, to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
* * * * *
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102
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.
EINSTEIN/NOAH BAGEL CORP.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
103
Schedule attached to Term Note dated November __, 1997 of Einstein/Noah Bagel
Corp., payable to the order of Bank of America National Trust and Savings
Association in its capacity as Agent for the ratable benefit of the Lenders.
Date of Loan, Interest
Continuation or Interest Amount of Rate Per Amount of Notation
Conversion Period Loan Annum Repayment Made By
--------------- -------- --------- -------- --------- --------
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104
EXHIBIT B
FORM OF BORROWING REQUEST
Bank of America National Trust and Savings Association
individually and as Agent
for the Lenders
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Ladies and Gentlemen:
This Borrowing Request is delivered to you pursuant to Section
2.2(1) of the Secured Credit Agreement, dated as of May 17, 1996 and as amended
and restated by that certain Amended and Restated Secured Credit Agreement
dated as of November __, 1997 (as the same may at any time be amended,
restated, modified, supplemented or renewed, the "Credit Agreement"), among
Einstein/Noah Bagel Corp., a Delaware corporation (the "Borrower"), the lenders
that are or from time to time become party thereto (the "Lenders"), the
Co-Agent, and Bank of America National Trust and Savings Association, as agent
for the Lenders (in such capacity, the "Agent"). Unless otherwise defined
herein, capitalized terms used herein have the meanings provided in the Credit
Agreement.
The Borrower hereby requests that a [Revolving][Term] Loan be
made in the aggregate principal amount of $______________ on __________ __,
19__ as a [Floating Rate Loan] [Eurodollar Loan having an Interest Period of
______ months].
The Borrower hereby certifies and warrants that on the date
the [Revolving][Term] Loan requested hereby is made, after giving effect to the
making of such [Revolving][Term] Loan:
(a) No Default or Event of Default has occurred and is
continuing or will result from the borrowing of such [Revolving][Term]
Loan.
(b) The representations and warranties of the Borrower
contained in the Credit Agreement are true and correct with the same
effect as though made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date).
The Borrower agrees that if prior to the time of the
[Revolving][Term] Loan requested hereby any matter certified to herein by it
will not be true and correct at such time as if then made, it will immediately
so notify the Agent. Except to the extent, if any, that prior to the time of
the [Revolving][Term] Loan requested hereby the Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein
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shall be deemed once again to be certified as true and correct at the date of
such [Revolving][Term] Loan as if then made (except to the extent such
representations and warranties expressly refer to an earlier date).
Please make the proceeds of the [Revolving][Term] Loan
available in accordance with the instructions set forth on Annex I attached
hereto.
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The Borrower has caused this Borrowing Request to be executed
and delivered, and the certification and warranties contained herein to be
made, by an Authorized Officer this ____ day of _____________, 19__.
EINSTEIN/NOAH BAGEL CORP.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
107
ANNEX I
Instructions
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EXHIBIT C
FORM OF CONTINUATION/CONVERSION NOTICE
Bank of America National Trust
and Savings Association
individually and as Agent
for the Lenders
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Ladies and Gentlemen:
This Continuation/Conversion Notice is delivered to you
pursuant to Section 2.2(2) of the Secured Credit Agreement, dated as of May 17,
1996 and as amended and restated by that certain Amended and Restated Secured
Credit Agreement dated as of November __, 1997 (as the same may be further
amended, restated, modified, supplemented or renewed from time to time, the
"Credit Agreement"), among Einstein/Noah Bagel Corp., a Delaware corporation
(the "Borrower"), the lenders that are or from time to time become party
thereto (the "Lenders"), the Co-Agent, and Bank of America National Trust and
Savings Association, as agent for the Lenders (in such capacity, the "Agent").
Unless otherwise defined herein, capitalized terms used herein have the
meanings provided in the Credit Agreement.
The Borrower hereby requests that on ___________, 19__,
(1) $_________ of the presently outstanding principal amount
of the [Revolving Loans][Term Loan] originally made on
_______, 19__,
(2) and all presently being maintained as [Floating Rate
Loans] [Eurodollar Loans],
(3) be [converted into] [continued as],
(4) [Floating Rate Loans] [Eurodollar Loans having an
Interest Period of _____ months] .
The Borrower hereby certifies and warrants that on the date
the conversion or continuation herein requested is made, after giving effect to
the making of such conversion or continuation no Default or Event of Default
has occurred and is continuing or will result from the conversion or
continuation herein requested.
Except to the extent, if any, that prior to the time of the
continuation or conversion requested hereby the Agent shall receive written
notice to the contrary from the Borrower, each
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matter certified to herein shall be deemed to be certified at the date of such
continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to
be executed and delivered, and the certification and warranties contained
herein to be made, by an Authorized Officer this ___ day of _________, 19__.
EINSTEIN/NOAH BAGEL CORP.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
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EXHIBIT D
FORM OF OPINION OF COUNSEL
[Attach copy of Opinion]
111
EXHIBIT E
FORM OF GUARANTY
FOR VALUE RECEIVED and in consideration of any loan or other
financial accommodation heretofore or hereafter at any time made or granted to
Einstein/Noah Bagel Corp., a Delaware corporation (hereinafter called the
"Borrower"), by the lenders (the "Lenders") who are or may become party to that
certain Secured Credit Agreement, dated as of May 17, 1996 and as amended and
restated by that certain Amended and Restated Secured Credit Agreement dated as
of November __, 1997 (as the same may be further amended, restated, modified,
supplemented or renewed from time to time, the "Credit Agreement," capitalized
terms used herein and not otherwise defined herein have the respective meanings
assigned thereto in the Credit Agreement) among the Borrower, the Lenders, the
Co-Agent, and Bank of America National Trust and Savings Association, as agent
for the Lenders (herein, in such capacity, together with any successor thereto
in such capacity, called the "Agent"), the undersigned hereby unconditionally
guarantees the full and prompt payment when due, whether at stated maturity, by
required prepayment, declaration, demand, acceleration or otherwise (including
amounts that would become due but for the operation of the automatic stay under
section 362(a) of the Bankruptcy Code (11 U.S.C. Section 362(a)), and at all
times thereafter, of all obligations of the Borrower to the Lenders and the
Agent which arise out of or in connection with the Credit Agreement, the Notes
or the other Loan Documents howsoever created, arising or evidenced, whether
direct or indirect, joint or several, absolute or contingent, or now or
hereafter existing, or due or to become due (all such obligations being
hereinafter collectively called the "Liabilities"), and the undersigned further
agrees to pay all reasonable expenses (including attorneys' fees and legal
expenses) paid or incurred by the Lenders and the Agent in endeavoring to
collect the Liabilities, or any part thereof, and in enforcing this guaranty.
1. The undersigned agrees that, in the event of the
dissolution or insolvency of the Borrower, the undersigned or any Significant
Subsidiary, or the general failure to pay, or admission in writing of the
inability of the Borrower, the undersigned or any Significant Subsidiary to pay
debts as they become due, or an assignment by the Borrower, the undersigned or
any Significant Subsidiary for the benefit of creditors, or the institution of
any proceeding by or against the Borrower, the undersigned or any Significant
Subsidiary alleging that the Borrower, the undersigned or such Significant
Subsidiary is insolvent or unable to pay debts as they mature, and if such
event shall occur at a time when any of the Liabilities may not then be due and
payable, the undersigned will pay to the Agent for the benefit of the Lenders
forthwith the full amount which would be payable hereunder by the undersigned
if all Liabilities were then due and payable.
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2. To secure all obligations of the undersigned hereunder,
the Agent for the benefit of the Lenders shall have a lien upon and security
interest in (and may during the continuance of any Event of Default, without
demand or notice of any kind, at any time and from time to time when any amount
shall be due and payable by the undersigned hereunder, appropriate and apply
toward the payment of such amount, in such order of application as the Agent
may elect) any and all balances, credits, deposits, accounts or moneys of or in
the name of the undersigned now or hereafter maintained with the Agent or any
Lender and any and all property of every kind or description of or in the name
of the undersigned now or hereafter, for any reason or purpose whatsoever, in
the possession or control of, or in transit to, the Agent or the Lenders or any
agent or bailee for the Agent or the Lenders.
3. This guaranty shall in all respects be a continuing,
absolute and unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of the undersigned) until
all of the Liabilities have been paid in full, subject to discontinuance as to
the undersigned only upon actual receipt by the Agent of written notice from
the undersigned, or any person duly authorized and acting on behalf of the
undersigned, of the discontinuance hereof as to the undersigned; provided,
however, that no such notice of discontinuance shall affect or impair any of
the agreements and obligations of the undersigned hereunder with respect to any
and all Liabilities existing prior to the time of actual receipt of such notice
by the Agent, any and all Liabilities created or acquired thereafter pursuant
to any previous commitments made by the Agent or the Lenders, any and all
extensions or renewals of any of the foregoing, any and all interest on any of
the foregoing, and any and all expenses paid or incurred by the Agent and the
Lenders in endeavoring to collect any of the foregoing and in enforcing this
guaranty against the undersigned; and all of the agreements and obligations of
the undersigned under this guaranty shall, notwithstanding any such notice of
discontinuance, remain fully in effect until all such Liabilities (including
any extensions or renewals of any thereof) and all such interest and expenses
shall have been paid in full.
4. The undersigned further agrees that, if at any time all or
any part of any payment theretofore applied by the Agent or the Lenders to any
of the Liabilities is or must be rescinded or returned by the Agent or the
Lenders for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Borrower), such Liabilities
shall, for the purposes of this guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or the Lenders, and this guaranty
shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or the Lenders had not
been made.
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5. The Agent may, from time to time, whether before or after
any discontinuance of this guaranty, at its sole discretion and without notice
to the undersigned, take any or all of the following actions: (a) retain or
obtain a security interest in any property to secure any of the Liabilities or
any obligation hereunder, (b) retain or obtain from another Person the primary
or secondary obligation of any obligor or obligors, in addition to the
undersigned, (c) extend or renew for one or more periods (whether or not longer
than the original period), or alter or exchange, any of the Liabilities, or
release or compromise any obligation of the undersigned hereunder with respect
to any of the Liabilities, (d) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Liabilities or any obligation hereunder, and (e)
during the continuance of any Event of Default resort to the undersigned for
payment of any of the Liabilities, whether or not the Agent (i) shall have
resorted to any property securing any of the Liabilities or any obligation
hereunder or (ii) shall have proceeded against any other obligor primarily or
secondarily obligated with respect to any of the Liabilities (all of the
actions referred to in preceding clauses (i) and (ii) being hereby expressly
waived by the undersigned).
6. Any amounts received by the Agent from whatsoever source
on account of the Liabilities may be applied by it toward the payment of such
of the Liabilities, and in such order of application, as the Agent may from
time to time elect.
7. No payment made by or for the account of the undersigned
pursuant to this guaranty shall entitle the undersigned by subrogation or
otherwise to any payment by the Borrower or from or out of any property of the
Borrower and the undersigned shall not exercise any right or remedy against the
Borrower or any property of the Borrower by reason of any performance by the
undersigned of this guaranty. Until the indefeasible payment in full of the
Liabilities and termination of each Lender's Commitment, the undersigned
waives, to the fullest extent permitted by law, all rights of the undersigned
against the Borrower, arising out of any payment by the undersigned under this
guaranty, whether arising by way of any subrogation, contribution,
reimbursement or otherwise and agrees that, to the extent that any such rights
may not be waived under applicable law, it will contribute such rights to the
Borrower as a capital contribution concurrently with the arising of such
rights.
8. The undersigned hereby expressly waives: (a) notice of
the acceptance by the Agent of this guaranty, (b) notice of the existence or
creation or non-payment of all or any of the Liabilities, (c) presentment,
demand, notice of dishonor, protest and all other notices whatsoever, and (d)
all diligence in collection or protection of or realization upon the
Liabilities or any thereof, any obligation hereunder, or any security for or
guaranty of any of the foregoing.
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9. The Lenders may, from time to time, without notice to the
undersigned, assign or transfer any or all of the Liabilities or any interest
therein subject to Section 10.5 of the Credit Agreement; and, notwithstanding
any such assignment or transfer or any subsequent assignment or transfer
thereof, such Liabilities shall be and remain Liabilities for the purposes of
this guaranty, and each and every immediate and successive assignee or
transferee of any of the Liabilities or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the Liabilities, be
entitled to the benefits of this guaranty to the same extent as if such
assignee or transferee were a Lender.
10. The undersigned hereby warrants to the Agent and the
Lenders that the undersigned now has and will continue to have independent
means of obtaining information concerning the affairs, financial condition and
business of the Borrower. The Agent and the Lenders shall not have any duty or
responsibility to provide the undersigned with any credit or other information
concerning the affairs, financial condition or business of the Borrower which
may come into the Agent's or the Lender's possession.
11. The undersigned hereby warrants and agrees that: (a) the
undersigned is a [corporation][partnership] duly existing and in good standing
under the laws of ______________ and the undersigned is duly qualified and in
good standing and authorized to do business in each jurisdiction where, because
of the nature of its activities or properties, such qualification is required,
(b) the undersigned has full power and authority to execute and deliver this
guaranty, (c) the execution, delivery and performance by the undersigned of
this guaranty are within the undersigned's powers, have been duly authorized by
all necessary action, have received all necessary governmental approval (if any
shall be required), and do not and will not contravene or conflict with any
provision of law or of the organizational documents of the undersigned or of
any agreement binding upon the undersigned, (d) this guaranty is the legal,
valid and binding obligation of the undersigned enforceable against the
undersigned in accordance with its terms, except as enforceability may be
limited by bankruptcy or other laws relating to or affecting creditors' rights
generally or by equitable principles, and (e) this guaranty will directly or
indirectly benefit the undersigned.
12. No delay on the part of the Agent in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Agent of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy; nor shall any
modification or waiver of any of the provisions of this guaranty be binding
upon the Agent except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent for the benefit of the
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Lenders. No action of the Agent permitted hereunder shall in any way affect or
impair the rights of the Agent and the obligations of the undersigned under
this guaranty. For the purposes of this guaranty, Liabilities shall include
all obligations of the Borrower to the Agent and the Lenders, notwithstanding
any right or power of the Borrower or anyone else to assert any claim or
defense as to the invalidity or unenforceability of any such obligation, and no
such claim or defense shall affect or impair the obligations of the undersigned
hereunder. The obligations of the undersigned under this guaranty shall be
absolute and unconditional irrespective of any circumstance whatsoever which
might constitute a legal or equitable discharge or defense of the undersigned.
The undersigned hereby acknowledges that there are no conditions to the
effectiveness of this guaranty.
13. This guaranty shall be binding upon the undersigned, and
upon any successors and assigns of the undersigned.
14. THIS GUARANTY HAS BEEN DELIVERED AT CHICAGO, ILLINOIS,
AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ITS PRINCIPLES OF CHOICE OF LAW.
WHEREVER POSSIBLE EACH PROVISION OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH
MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION
OF THIS GUARANTY SHALL BE PROHIBITED BY OR INVALID UNDER SUCH LAW, SUCH
PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY,
WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING
PROVISIONS OF THIS GUARANTY.
15. The undersigned hereby irrevocably agrees that any legal
action or proceeding pertaining to this guaranty may be brought in the courts
of the State of Illinois, County of Xxxx, or of the United States of America
for the Northern District of Illinois. The undersigned hereby irrevocably
agrees that service of process in such action or proceeding may be made either
by mailing, by registered or certified mail, postage prepaid, a copy of the
summons or complaint, or other legal process in such action or proceeding to
the undersigned at the address shown on the signature page hereof. Service of
process in any such action or proceeding, effected as aforesaid, shall be
effective upon receipt by the undersigned and shall be deemed personal service
upon the undersigned and shall be legal and binding upon the undersigned for
all purposes. The undersigned hereby waives, to the fullest extent permitted
by law, any objection it may now or hereafter have to the laying of venue in
any such action or proceeding in any such court as well as any right it 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.
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16. THE UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A)
UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (B)
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
GUARANTY, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
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SIGNED AND DELIVERED this ___ day of _______, 199_.
[GUARANTOR]
By:
-------------------------------------
Title:
----------------------------------
Address:
--------------------------------
--------------------------------
118
EXHIBIT F-1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is dated as of
___________, 199__ and is made by _________________, a _______________
corporation ("Grantor"), in favor of and for the benefit of Bank of America
National Trust and Savings Association, as Agent (the "Agent").
RECITALS
WHEREAS, [Grantor] [Einstein Bros. Bagels, Inc., a Delaware
corporation (the "Borrower")] has entered into that certain Secured Credit
Agreement dated as of May 17, 1996 as amended and restated by that certain
Amended and Restated Secured Credit Agreement dated as of November __, 1997
(said Credit Agreement, as it may hereafter be further amended, supplemented,
restated or otherwise modified from time to time, being the "Credit Agreement";
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined) with the Agent and the Co-Agent, the Issuing Lender
and the Lenders party thereto, pursuant to which the Lenders have agreed to
make Loans and other financial accommodations to the [Grantor] [Borrower],
subject to the terms and conditions of the Credit Agreement;
[WHEREAS, the Grantor will derive substantial direct and
indirect benefits from the making of the Loans under the Credit Agreement;]*/
WHEREAS, the Grantor desires to secure all obligations of the
[Borrower] [Grantor] now or hereafter existing under the Credit Agreement, and
the other Loan Documents;
WHEREAS, the Grantor desires to grant pledges and security
interests in its personal property in favor of the Lenders; and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement, that the Grantor shall have granted the security interest
contemplated by this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make Loans, the
parties hereto agree as follows:
__________________________________
*/ Insert for Subsidiary Security Agreements.
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SECTION 1. Grant of Security. The Grantor hereby assigns and
pledges to the Agent for the benefit of the Lenders, and hereby grants to the
Agent for the benefit of the Lenders, a security interest in, all of the
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which the Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "Collateral") to
secure the Secured Obligations (as defined in Section 2):
(a) All equipment in all of its forms (including, but not
limited to, all machinery, all processing, distribution, selling, data
processing and office equipment, all furniture, fixtures, trade
fixtures and all other goods other than Inventory, and all parts
thereof and all accessions thereto) and all documents of title
representing any of the above (any and all such equipment, parts and
accessions being the "Equipment");
(b) All inventory in all of its forms, including, but not
limited to, (i) all goods held for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, supplies and materials
used or consumed in the processing, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in the Grantor's business, (iii) goods in
which the Grantor has an interest in mass or a joint or other interest
or right of any kind, whether in the possession of the Grantor or of a
bailee or other Person for sale, storage, transit, processing, use or
otherwise, and (iv) goods which are returned to or repossessed or
shipped in transit by the Grantor and all additions and accessions
thereto and replacements thereof, (all such inventory, accessions and
products being the "Inventory");
(c) All rights and claims to the payment or receipt of money
or other forms of consideration of any kind, including, but not
limited to, any and all such rights and claims in, to and under, all
accounts, contracts (including without limitation all Hedging
Agreements), contract rights, chattel paper, instruments, general
intangibles, guaranties, credit agreements in which the Grantor acts
as lender, letters of credit, documents, drafts, acceptances, tax
refunds, rights to performance, judgments taken on any rights or
claims otherwise included in this clause (c) and all rights in, to and
under all security agreements, leases and other contracts securing or
otherwise relating to any such rights and claims to the payment or
receipt of
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money or other forms of consideration (any and all such rights and
claims to the payment or receipt of money or other forms of
consideration being the "Payment Rights," any and all such leases,
security agreements and other contracts being the "Related
Contracts");
(d) To the extent assignable, to the extent not included in
(c) above, all accounts, contracts, contract rights, chattel paper,
instruments, general intangibles, documents, rights to performance,
and judgements taken on any rights or claims otherwise included in
this clause (d);
(e) To the extent assignable, all books, records, ledger
cards, files, correspondence, computer programs, tapes, disks and
related data processing software (owned by the Grantor or in which it
has an interest) that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon;
(f) All plant fixtures, business fixtures and other fixtures
and storage and office facilities, and all additions and accessions
thereto and replacements thereof and products thereof;
(g) all leases of real and personal property in which the
Grantor is lessee unless the lease related thereto restricts the
Grantor's right to grant a security interest therein;
(h) All now existing or hereafter acquired trademarks and
trademark applications and registrations (including, without
limitation, all of Grantor's rights, titles and interests in the
United States and throughout the world, in and to all of its currently
owned or hereafter acquired trademarks, registrations of trademarks
and applications for registration, together with the goodwill of the
business symbolized by such trademarks, and to all income, royalties,
damages and payments now and hereafter due and/or payable under or
based on such trademarks, and in and to all rights to xxx, collect and
retain damages and payments for past and further infringements and
violations of the rights thereof), trade names, patent applications,
patents, copyrights, rights and interests in copyrights and works
protectable by copyright, trade secrets, inventions, designs,
franchises, customer lists, and other confidential information
relating to the business of the Grantor owned by the Grantor or held
by the Grantor pursuant to licenses, to the extent permitted by such
licenses, including, by way of illustration and not limitation, each
and every kind of
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know-how practice by the Grantor and its employees; the names and
addresses of, and credit and other business information concerning,
the Grantor's past, present or future customers as they may exist from
time to time; the prices at which the Grantor sells merchandise;
estimating and cost procedures; profit margins; policies and
procedures pertaining to the sale and design of equipment, components,
devices and services furnished by the Grantor; information concerning
suppliers and agents and franchises of the Grantor; and manner of
operation, business plans, pledges, projections, and all other
information of any kind or character, whether or not reduced in
writing, with respect to the conduct by the Grantor of its business
not generally known by the public;
(i) All deposit accounts of the Grantor, including, without
limitation, deposit accounts maintained with the Lenders;
(j) All proceeds of any and all of the foregoing Collateral
and, to the extent not otherwise included, all payments under
insurance (whether or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage
to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds are sold,
collected, exchanged or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes, without
limitation, all rights to payment, including returned premiums, with
respect to any insurance relating thereto.
Notwithstanding the foregoing, Collateral shall not include contractual rights
arising from the Agreement to Contribute Shares, dated February 17, 1995, among
the shareholders of Xxxxxxxx Brothers, Inc. and Einstein Bros. Bagels Inc.
(f/k/a Progressive Bagel Concepts, Inc.).
SECTION 2. Security for Obligations. This Agreement secures
and the Collateral is collateral security for the prompt payment or performance
in full when due, whether at stated maturity, by acceleration or otherwise
(including the payment of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a)) of all obligations of every nature of the Borrower [and the
Grantor] now or hereafter existing under the Credit Agreement, the other Loan
Documents and any promissory note or other document or instrument delivered
pursuant thereto and all amendments, extensions or renewals thereof or hereof,
whether for principal, interest (including, without limitation,
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interest that, but for the filing of a petition in bankruptcy with respect to
the Grantor, would accrue on such obligations), fees, expenses or otherwise,
whether now existing or hereafter arising, voluntary or involuntary, whether or
not jointly owed with others, direct or indirect, absolute or contingent,
liquidated or unliquidated, and whether or not from time to time decreased or
extinguished and later increased, created or incurred and all or any portion of
such obligations that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from the Agent or the Lenders as
a preference, fraudulent transfer or otherwise (all such obligations being the
"Underlying Debt"), and all obligations of every nature of the Grantor now or
hereafter existing under this Agreement (all such obligations of the Grantor,
together with the Underlying Debt, being the "Secured Obligations").
SECTION 3. The Grantor Remains Liable. Anything herein to
the contrary notwithstanding, (a) the Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Agent of any of the rights hereunder shall not release the Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral and (c) the Agent shall not have any obligation or liability under
any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Agent be obligated to perform any of the obligations
or duties of the Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder by reason of this Agreement.
SECTION 4. Representations and Warranties. The Grantor
represents and warrants as follows:
(a) Binding Obligation. This Agreement is the legally valid
and binding obligation of the Grantor, enforceable against it in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally and to general
principles of equity.
(b) Location of Equipment and Inventory. All of the
Equipment and Inventory is located at the places specified in Schedule
I hereto.
(c) Delivery of Certain Collateral. All chattel paper and
notes and other instruments (excluding checks) comprising any and all
items of Collateral have been delivered to the Agent duly endorsed and
accompanied by duly executed instruments of transfer or assignment in
blank.
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(d) Payment Rights Valid. To the best of its knowledge, each
Payment Right constitutes the legally valid and binding obligation of
the party obligated to pay the same (the "Account Debtor"). Each such
Payment Right complies in all material respects with the provisions of
all applicable laws and regulations, whether federal, state or local,
applicable thereto (including, without limitation, any usury law, the
Federal Truth in Lending Act and Regulation C of the Federal Reserve
System). None of the Payment Rights is evidenced by a promissory
note, or other debt instrument other than a check, that has not been
delivered to the Agent (except to the extent any such promissory notes
are expressly excluded from the delivery requirements hereunder
pursuant to Section 5.10(a) of the Credit Agreement).
(e) Ownership of Collateral. Except for (i) the security
interest created by this Agreement, (ii) Liens otherwise permitted
under Section 6.1 of the Credit Agreement, and (iii) junior Liens on
property held as collateral by the Grantor pursuant to the Financed
Franchisee Loan Documents; provided that such junior Liens secure
purchase money Debt of the lienor, the Grantor owns the Collateral
free and clear of any Lien. Except such as may have been filed in
favor of the Agent relating to this Agreement or as otherwise
permitted under Section 6.1 of the Credit Agreement, no effective
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any filing or recording
office.
(f) Perfection. This Agreement creates a valid security
interest in the Collateral (subject to such Liens as are permitted by
the Credit Agreement), securing the payment of the Secured
Obligations.
(g) Governmental Authorizations. Other than those
authorizations and approvals which have been obtained or which may be
required upon the exercise by the Agent of its rights and remedies
hereunder (e.g., permits which must be renewed upon a change in
control), no authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required either (i) for the grant by the Grantor of the security
interest granted hereby or for the execution, delivery or performance
of this Agreement by the Grantor or (ii) for the perfection of the
Agent's rights and remedies hereunder (except as may have been taken
by or at the direction of the Grantor or except as stayed under
applicable law).
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(h) Other Information. All information heretofore, herein or
hereafter supplied to the Agent or any Lender by or on behalf of the
Grantor with respect to the Collateral is accurate and complete in all
material respects.
(i) Office Locations; Fictitious Names. The chief place of
business, the chief executive office and the office where the Grantor
keeps its books and records are as follows:
________________________________. The Grantor does not do business
under any trade-name or fictitious business name other than
"______________________".
(j) Incorporation of Credit Agreement Representations and
Warranties. Each representation and warranty of the Grantor set forth
in Article IV of the Credit Agreement is true and correct in all
material respects and such representations and warranties are hereby
incorporated herein by this reference with the same effect as though
set forth in their entirety herein.
(k) Consignments etc. None of the Inventory or Equipment is
stored with a bailee, warehouseman, consignee or similar third party.
SECTION 5. Further Assurances. (a) The Grantor agrees that
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be reasonably necessary or desirable, or that the Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Grantor will: (i) at the
reasonable request of the Agent, xxxx conspicuously each of its records
pertaining to the Collateral, each chattel paper included in the Payment Rights
and each Related Contract with a legend, in form and substance satisfactory to
the Agent, indicating that such Collateral is subject to the security interest
granted hereby; (ii) if any Payment Right shall be evidenced by a promissory
note (except to the extent any such promissory note is expressly excluded from
the delivery requirements hereunder pursuant to Section 5.10(a) of the Credit
Agreement) or other instrument or chattel paper, deliver and pledge to the
Agent hereunder such note or instrument or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Agent; (iii) at the reasonable request of the
Agent, deliver and pledge to the Agent for the benefit of the Lenders all
promissory notes and other instruments and all original counterparts of chattel
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paper constituting Collateral duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory
to the Agent; (iv) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby; (v)
at any reasonable time, upon demand by the Agent or any Lender exhibit
Collateral to and allow inspection of the Collateral by the Agent or any
Lender, or persons designated by the Agent or such Lender; and (vi) at the
Agent's request, appear in and defend any action or proceeding that may affect
the Grantor's title to or the Agent's security interest in the Collateral.
(b) The Grantor hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of the Grantor, to the
extent permitted under applicable law. A carbon, photographic or other
reproduction of this Agreement or a financing statement signed by the Grantor
shall be sufficient as a financing statement.
(c) The Grantor will furnish to the Agent and the Lenders
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as the
Agent may reasonably request, all in reasonable detail.
SECTION 6. Covenants of Grantor. The Grantor shall:
(a) Not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement, any policy of
insurance covering the Collateral or any applicable statute,
regulation or ordinance in such manner as could reasonably be expected
to result in a material adverse change in the condition (financial or
otherwise), business operations or prospects of the Grantor and its
Subsidiaries, taken as a whole;
(b) Notify the Agent of any change in the Grantor's name,
identity or corporate structure prior to such change;
(c) Give the Agent 30 days' prior written notice of any
change in the Grantor's chief place of business; and
(d) Pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Collateral,
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except to the extent the validity thereof is being contested in good
faith; provided that the Grantor shall in any event pay such taxes,
assessments, governmental charges or levies not later than five days
prior to the date of any proposed sale of which it receives due notice
under any judgment, writ or warrant of attachment entered or filed
against the Grantor as a result of the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and
Inventory. The Grantor shall:
(a) Keep the Equipment and Inventory (other than as may be
sold in the ordinary course of business) at the places therefor
specified on Schedule I hereto or, upon 30 days' prior written notice
to the Agent, at such other places in jurisdictions where the Agent
shall have had full and fair opportunity to take all action that may
be reasonably necessary or desirable or that the Agent may reasonably
request in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable the Agent to exercise
and enforce its rights and remedies hereunder with respect to such
Equipment and Inventory;
(b) Cause the Equipment to be maintained and preserved in a
commercially reasonable condition, repair and working order, ordinary
wear and tear excepted, in accordance with the Grantor's past
practices, and shall forthwith, or in the case of any loss or damage
to any of the Equipment as quickly as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements, and other
improvements in connection therewith that are necessary or desirable
to such end, in the ordinary course of business and in accordance with
the Grantor's past practices. The Grantor shall furnish to the Agent
simultaneously with the delivery of the financial statements in
accordance with Section 5.8(1) of the Credit Agreement a statement
respecting any material loss or damage to the Equipment, as a whole,
to the extent such material loss or damage is not otherwise reflected
in such financial statements;
(c) Maintain in accordance with the Grantor's past practices
commercially reasonable records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory;
(d) If any Inventory is in possession or control of any of
the agents, bailees or processors of the Grantor and if the aggregate
book value of all such Inventory for all of the Grantor exceeds
$100,000 and
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in any event upon the occurrence and during the continuance of an
Event of Default, instruct such agent, bailee or processor to hold all
such Inventory for the account of the Agent and subject to the
instructions of the Agent; and
(e) Not store any Inventory or Equipment with a bailee,
warehouseman, consignee or similar third party without the Agent's
written consent, which will not be unreasonably withheld or delayed.
SECTION 8. Insurance. (a) The Grantor will maintain or cause
to be maintained, with commercially reasonable and reputable insurers,
insurance with respect to its properties and business and the properties and
business of its Subsidiaries against loss or damage of the kinds customarily
insured by corporations of established reputation engaged in the same or
similar businesses and similarly situated, of such types and in such amounts as
are customarily carried under similar circumstances by such other corporations.
Such insurance shall include, without limitation, property damage insurance and
liability insurance. Each policy for property damage insurance shall provide
for all losses (except for losses of less than $100,000 per occurrence) to be
paid jointly to the Agent and the Grantor. Each policy shall in addition (i)
name the Grantor and the Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Agent) as their interests
may appear, (ii) contain an agreement by the insurer that any loss in excess of
$100,000 thereunder shall be payable jointly to the Agent and the Grantor
notwithstanding any action, inaction or breach of representation or warranty by
the Grantor, (iii) have attached thereto a lender's loss payable endorsement or
its equivalent, in form and substance acceptable to the Agent, (iv) provide
that there shall be no recourse against the Agent or the Lenders for payment of
premiums or other amounts with respect thereto, and (v) provide that at least
30 days' prior written notice of cancellation, material amendment, reduction in
scope or limits of coverage or of lapse shall be given to the Agent by the
insurer. The Grantor shall, if so requested by the Agent, deliver to the Agent
original or duplicate policies of such insurance and, as often as the Agent may
reasonably request, but not more than once per fiscal quarter of the Grantor, a
report of one or more reputable insurance brokers with respect to such
insurance. Further, the Grantor shall, at the request of the Agent, duly
execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 5(a) and cause the respective insurers
to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by
the Grantor pursuant to this Section 8 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any
loss involving damage to
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Equipment and Inventory when subsection (c) of this Section 8 is not
applicable, the Grantor may make or cause to be made the necessary repairs to
or replacements of such Equipment and Inventory, and if the Grantor so chooses
to repair or replace such Equipment any proceeds of insurance maintained by the
Grantor with respect thereto pursuant to this Section 8 shall be paid by the
Agent to the Grantor as reimbursement for the costs of such repairs or
replacements.
(c) Upon (i) the occurrence and during the continuance of any
Event of Default, or (ii) the actual or constructive total loss (in excess of
$50,000 per occurrence) of any Equipment, or Inventory to the extent such
Equipment or Inventory cannot be repaired or replaced, all insurance payments
in respect of such Equipment and Inventory shall be paid to and applied by the
Agent as specified in Section 17.
SECTION 9. Special Covenants With Respect to Payment Rights
and Related Contracts.
(a) The Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Payment Rights and Related Contracts at the location therefor specified in
Section 4 or, upon 30 days' prior written notice to the Agent, at such other
locations in a jurisdiction where the Agent has had full and fair opportunity
to take all action that may be reasonably necessary or desirable or that the
Agent may reasonably request in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to such
Payment Rights and Related Contracts. The Grantor will hold and preserve such
records and will permit representatives of the Agent or any Lender at any time
during normal business hours to inspect and make abstracts from such records
and the Grantor agrees to render to the Agent or any Lender, at the Grantor's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. Promptly upon the written request of the Agent,
the Grantor shall deliver to the Agent complete and correct copies of each
Related Contract.
(b) The Grantor shall, for not less than 5 years from the
date on which such Payment Right arose, maintain (i) complete records of each
Payment Right, including records of all payments received, credits granted and
merchandise returned and (ii) all material documentation relating thereto.
(c) The Grantor shall duly fulfill all obligations on its
part to be fulfilled under or in connection with the Payment Rights and the
Related Contracts and shall do nothing to impair the rights of the Agent
therein, provided the Grantor may declare a breach or default of any agreement
constituting or underlying
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the Payment Rights and Related Contracts to the extent a breach or default has
occurred.
(d) Except as otherwise provided in this subsection (d) of
this Section 9, the Grantor shall continue to collect, at its own expense, all
amounts due or to become due the Grantor under the Payment Rights and Related
Contracts. In connection with such collections, the Grantor may take (and, at
the Agent's direction, shall take) such action as may be necessary or advisable
to enforce collection of the Payment Rights; provided, however, that the Agent
shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default and upon written notice to the Grantor of
its intention to do so, to notify the account debtors or obligors under any
Payment Rights of the assignment of such Payment Rights to the Agent and to
direct such account debtors or obligors to make payment of all amounts due or
to become due to the Grantor thereunder directly to the Agent and, upon such
notification and at the expense of the Grantor, to enforce collection of any
such Payment Rights and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Grantor might have
done. After receipt by the Grantor of the notice from the Agent referred to in
the proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by the Grantor in respect of the Related
Contracts and the Payment Rights shall be received in trust for the benefit of
the Agent hereunder, shall be segregated from other funds of any of the Grantor
and shall be forthwith paid over or delivered to the Agent in the same form as
so received (with any necessary endorsement) to be held as cash collateral and
applied as provided in Section 17, and (ii) the Grantor shall not adjust,
settle or compromise the amount or payment of any Payment Right, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
SECTION 10. Deposit Accounts. Upon the occurrence and during
the continuance of an Event of Default, the Agent may exercise dominion and
control over, and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from deposit accounts maintained
with the Agent constituting part of the Collateral.
SECTION 11. License of Patents, Trademarks and Trade Names.
The Grantor hereby assigns (to the extent assignable), transfers, conveys to
the Agent effective upon the occurrence and during the continuance of any Event
of Default, the nonexclusive right and license to use all trademarks, trade
names, copyrights, patents or technical processes owned or used by the Grantor
that relate to the Collateral, together with any goodwill associated therewith,
all to the extent necessary to enable the Agent to use, possess and realize on
the Collateral and any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all
successors, assigns and
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transferees of the Agent and its successors, assigns and transferees, whether
by voluntary conveyance, operation of law, assignment, transfer, foreclosure,
deed in lieu of foreclosure or otherwise. Such right and license is granted
free of charge, without requirement that any monetary payment whatsoever be
made to the Grantor.
SECTION 12. Transfers and Other Liens. The Grantor shall
not:
(a) Sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral in any manner prohibited by
the Credit Agreement.
(b) Except for (i) the security interest created by this
Agreement, (ii) the Liens permitted under Section 6.1 of the Credit
Agreement, and (iii) junior Liens on property held as collateral by
the Grantor pursuant to the Financed Franchisee Loan Documents
(provided that such junior Liens secure purchase money Debt of the
lienor), create or suffer to exist any Lien upon or with respect to
any of the Collateral to secure the indebtedness or other obligations
of any person or entity.
SECTION 13. Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Agent the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor,
the Agent or otherwise, from time to time upon the occurrence and continuation
of an Event of Default in the Agent's discretion to take any action and to
execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained
by the Grantor or paid to the Agent pursuant to Section 8,
(b) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses
(a) and (b) above,
(d) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the
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Collateral or otherwise to enforce the rights of the Agent with
respect to any of the Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon
or threatened against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by
the Agent in its sole discretion, and such payments made by the Agent
to become obligations of the Grantor to the Agent, due and payable
immediately without demand,
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with
accounts and other documents relating to the Collateral,
(g) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Agent were the absolute owner thereof for
all purposes, and to do, at the Agent's option and the Grantor's
expense, at any time, or from time to time, all acts and things that
the Agent deems necessary to protect, preserve or realize upon the
Collateral and the Agent's security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively as
the Grantor might do.
SECTION 14. Agent May Perform. If the Grantor fails to
perform any agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Grantor under Section
18.
SECTION 15. Agent's Duties and Liabilities.
(a) The powers conferred on the Agent hereunder are solely to
protect its interest and the interests of the Lenders in the
Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it
hereunder, the Agent shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral. The Agent
shall be deemed to exercise reasonable care in the custody and
preservation of such Collateral if such Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property.
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(b) The Agent shall not be liable to the Grantor (i) for any
loss or damage sustained by it, or (ii) for any loss, damage,
depreciation or other diminution in the value of any of the
Collateral, that may occur as a result of, in connection with or that
is in any way related to (x) any exercise by the Agent of any right or
remedy under this Agreement or (y) any other act of or failure to act
by the Agent, except to the extent that the same shall be determined
by a judgment of a court of competent jurisdiction to be the result of
acts or omissions on the part of the Agent constituting gross
negligence or willful misconduct.
(c) NO CLAIM MAY BE MADE BY THE GRANTOR AGAINST THE AGENT, OR
ANY LENDER OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE
CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN
CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE
TRANSACTIONS CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH; AND THE GRANTOR HEREBY EXPRESSLY WAIVES, RELEASES AND
AGREES NOT TO XXX UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR
NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS
FAVOR.
SECTION 16. Remedies. If any Event of Default shall have
occurred and be continuing, the Agent may exercise in respect of the
Collateral, (a) all the rights and remedies it has as a secured party on
default under the Uniform Commercial Code of the State of Illinois (the "Code")
(whether or not the Code applies to the affected Collateral), (b) all of the
rights and remedies provided for in this Agreement, the Credit Agreement and
any other agreement between the Grantor, the Lenders and the Agent, as
applicable, and (c) such other rights and the remedies as may be provided by
law or otherwise (such rights and remedies of the Agent to be cumulative and
non-exclusive). If an Event of Default shall have occurred and be continuing,
the Agent also may (i) require the Grantor to, and the Grantor hereby agrees
that it will at its expense and upon request of the Agent forthwith, assemble
all or part of Collateral as directed by the Agent and make it available to the
Agent at a place to be designated by the Agent that is reasonably convenient to
such parties, (ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent the Agent deems appropriate, (iv) take possession of the Grantor's
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any equipment of the Grantor for
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the purpose of completing any work in process, taking any actions described in
the preceding clause (iii) and collecting any Secured Obligation and (v)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale of which the Grantor
has received reasonable notice, at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Agent may deem commercially reasonable. The Grantor
agrees that, at least ten days' notice to the Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
The Agent may retain any directors, officers and employees of
the Grantor, in each case upon such terms as the Agent and any such person may
agree, notwithstanding the provisions of any employment, confidentiality or
non-disclosure agreement between any such person and the Grantor, and the
Grantor hereby waives its rights under any such agreement and consent to each
such retention.
SECTION 17. Application of Proceeds. Except as expressly
provided elsewhere in this Agreement, all proceeds received by the Agent in
respect of any sale of, collection from or other realization upon all or any
part of the Collateral may, in the discretion of the Agent, be held by the
Agent as Collateral for, and/or then, or at any other time thereafter applied,
in full or in part by the Agent against the Secured Obligations in the
following order of priority:
FIRST: To the payment of all reasonable costs and expenses of
such sale, collection or other realization and all other expenses,
liabilities and advances made or incurred by the Agent in connection
therewith and all amounts for which the Agent is entitled to
indemnification hereunder and all advances made by the Agent hereunder
for the account of the Grantor and for the payment of all costs and
expenses paid or incurred by the Agent in connection with the exercise
of any right or remedy hereunder, all in accordance with Section 18;
SECOND: To the ratable payment in full of the Secured
Obligations owing to the Lenders; and
THIRD: After payment in full of the amounts specified in the
preceding paragraphs, to the payment
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to or upon the order of the Grantor, or whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
All applications of proceeds to the Secured Obligations shall
be applied to the payment of interest before application of payment to
principal.
SECTION 18. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Agent and Lenders
from and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the
Agent's and/or any such Lender's, as the case may be, gross negligence or
willful misconduct.
(b) The Grantor will upon demand pay to the Agent and/or any
Lender, as the case may be, the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of such Person's counsel and of
any experts and agents, that the Agent and/or any Lender, as the case may be,
may incur in connection with (i) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any of the
Collateral after the occurrence of an Event of Default, (ii) the exercise or
enforcement of any of the rights of the Agent or any Lender, as the case may
be, hereunder after the occurrence of an Event of Default or (iii) the failure
by the Grantor to perform or observe any of the provisions hereof.
SECTION 19. Other Waivers by the Grantor, Etc.
The Grantor waives any right to require the Agent to (a)
proceed against any Person, including, without limitation, any Account Debtor;
(b) proceed against or exhaust any collateral held from any other Person; (c)
pursue any other remedy in the Agent's power; or (d) make or give any
presentments, demands for performance, notices of nonperformance, protests,
notices of protests or notices of dishonor in connection with any obligation or
evidences of indebtedness held by the Agent as collateral, or in connection
with any obligations or evidences of indebtedness that constitute in whole or
in part the Underlying Debt, or in connection with the creation of new or
additional indebtedness.
The Grantor waives any defense arising by reason of, and
agrees that the rights of the Agent and the obligations of the Grantor
hereunder shall be absolute and unconditional irrespective of, (a) any
disability or other defense of any other Person; (b) the unenforceability or
cessation from any cause whatsoever, other than the indefeasible payment in
full, of the
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Underlying Debt; (c) the application by the Grantor of the proceeds of any
Underlying Debt for purposes other than the purposes represented by the Grantor
to the Agent or intended or understood by the Agent; (d) any right to deferral
or modification of the Grantor's obligations hereunder by reason of any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding; (e) to the fullest extent permitted by law, any defense or benefit
that may be derived from or afforded by law that limits the liability of or
exonerates guarantors or sureties; (f) any election of remedies by the Agent
that destroys the Grantor's subrogation rights or the Grantor's right to
proceed against any other Person for reimbursement, including without
limitation the loss of rights the Grantor may suffer by reason of any rights,
power or remedies of the Grantor in connection with any anti-deficiency laws or
any other laws limiting, qualifying or discharging the Underlying Debt; and (g)
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, any other Person in respect of the Underlying Debt.
Until the indefeasible payment in full of all of the
liabilities and obligations under the Credit Agreement (including without
limitation the liabilities and payment obligations relating to the Loans) and
termination of each Lender's Commitment, the Grantor waives any right to
enforce any remedy that the Agent now has or may hereafter have against any
other Person, and waives any benefit of, or any right to participate in, any
security whatsoever now or hereafter held by the Agent.
SECTION 20. Waiver of Hearing. The Grantor expressly waives
any constitutional or other right to a judicial hearing prior to the time the
Agent takes possession or disposes of the Collateral as provided in Section 16
hereof.
SECTION 21. Waiver of Jury Trial. THE GRANTOR AND THE AGENT
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including, without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. The Grantor and the
Agent each acknowledge that this waiver is a material inducement for the
Grantor and the Agent to enter into a business relationship, that the Grantor
and the Agent have already relied on the waiver in entering into this Agreement
and that each will continue to rely on the waiver in their related future
dealings. The Grantor and the Agent further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
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SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 22. Continuing Security Interest. This Agreement
shall create a continuing security interest in the Collateral and shall (a)
remain in full force and effect until the indefeasible payment in full of the
Secured Obligations and termination of each Lender's Commitment, (b) be binding
upon the Grantor, its successors and assigns and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Agent, the
Lenders and their respective successors, transferees and assigns. Upon the
indefeasible payment in full of the Secured Obligations and termination of each
Lender's Commitment, the security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the Grantor. Upon any such
termination, the Agent will, at the Grantor's expense, execute and deliver to
the Grantor such documents as the Grantor shall reasonably request to evidence
such termination and shall terminate its financing statements with regard to
the Collateral wherever filed.
SECTION 23. Amendments; Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Grantor, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
SECTION 24. 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 at the address of such party set forth in the Credit 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 24. 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.
SECTION 25. Consent to Jurisdiction and Service of Process.
Each of the Grantor and the Agent hereby submits to the nonexclusive
jurisdiction of the state courts of the State of Illinois and the federal
courts located in the Northern District of Illinois for all matters arising
under this Agreement and related documents. Service of process sufficient for
personal jurisdiction in any action against the Grantor in Illinois may be
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made by registered or certified mail, return receipt requested, to the address
specified pursuant to Section 24.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES. Unless otherwise defined herein or in the Credit Agreement, terms
used in Article 9 of the Code as in effect in the State of Illinois are used
herein as therein defined.
SECTION 27. Headings. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement or be given any substantive effect.
SECTION 28. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation and in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 29. No Other Writing. This writing is intended by
the Grantor and the Agent as the final expression of this Agreement and is also
intended, together with the Credit Agreement (and the other Exhibits thereto,
including the Notes) as a complete and exclusive statement of the terms of
their agreement with respect to the matters covered hereby. No course of
dealing, course of performance or trade usage, and no parol evidence of any
nature, shall be used to supplement or modify and terms of this Agreement.
There are no conditions to the full effectiveness of this Agreement.
SECTION 30. Counterparts. This Agreement may be executed in
one or more counterparts, each of which when so executed shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
SECTION 31. Confidentiality. Prior to an Event of Default,
to the extent any of the Collateral constitutes or consists of trade secrets or
other confidential or proprietary information of the Borrower, Agent, Lenders
and any party acquiring the Collateral upon the exercise of the remedies
provided in this Agreement, shall not use or disclose such Collateral in any
manner inconsistent with the business of the Borrower, and shall maintain and
preserve the confidentiality thereof to the extent necessary to maintain such
Collateral as trade secrets under the Uniform Trade Secrets Act and similar
statues and rules of law pertaining to trade secrets and confidential and
proprietary information.
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SECTION 32. Rights Exercisable. Notwithstanding anything else
to the contrary herein, Agent's rights hereunder are limited to whatever rights
Grantor has with respect to the Collateral.
* * * * *
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IN WITNESS WHEREOF, the Grantor and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
----------------------------------
By:
------------------------------
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:
-------------------------------
Title:
140
SCHEDULE I
TO SECURITY AGREEMENT*/
Locations of Equipment:
Each of the locations set forth on Schedule 4.18 of the Credit
Agreement (other than those locations designated by an "*" on such
Schedule 4.18) as owned or leased by the Grantor.
Locations of Inventory:
Each of the locations set forth on Schedule 4.18 of the Credit
Agreement (other than those locations designated by an "*" on such
Schedule 4.18) as owned or leased by the Grantor.
-----------------
*/ Modify as appropriate.
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EXHIBIT F-2
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (this "Agreement") is dated
as of ______, 199_ and is made by ___________________, a _____________
corporation ("Grantor"), in favor of and for the benefit of Bank of America
National Trust and Savings Association, as Agent (the "Agent").
RECITALS
WHEREAS, [Grantor] [Einstein Bros. Bagels, Inc., a Delaware
corporation (the "Borrower")] has entered into that certain Secured Credit
Agreement dated as of May 17, 1996 as amended and restated by that certain
Amended and Restated Secured Credit Agreement dated as of November __, 1997
(said Credit Agreement, as it may hereafter be further amended, supplemented,
restated or otherwise modified from time to time, being the "Credit Agreement";
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined) with the Agent and the Co-Agent, the Issuing Lender
and the Lenders party thereto, pursuant to which the Lenders have agreed to
make Loans and other financial accommodations to the [Grantor] [Borrower],
subject to the terms and conditions of the Credit Agreement;
[WHEREAS, the Grantor will derive substantial direct and
indirect benefits from the making of the Loans under the Credit Agreement;
and]*/
WHEREAS, to secure the repayment of all amounts under the
Credit Agreement and other Loan Documents, Grantor has granted to the Agent for
the benefit of the Lenders a valid security interest in and to all of its now
existing and hereafter acquired general intangibles, including, without
limitation, all of its now existing and hereafter arising trade secrets,
patents and patent applications, trademarks and trademark applications,
tradenames, and copyrights.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to
__________________________________
*/ Insert for Subsidiary Agreements.
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induce the Lenders to make Loans, the parties hereto agree as follows:
1. To secure the payment and performance of all indebtedness
and other obligations and liabilities of [Borrower and] Grantor to the Lenders
of every kind and description, whether direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising under or in connection with the Credit Agreement and other
Loan Documents, Grantor hereby grants to the Agent for the benefit of the
Lenders a valid, enforceable security interest in all of Grantor's rights,
titles and interests in the United States and throughout the world, in and to
all of its currently owned or hereafter acquired trademarks, registrations of
trademarks and applications for registration, together with the goodwill of the
business symbolized by such trademarks, including without limitation, those
United States trademark registrations and applications for trademark
registrations on Schedule A attached hereto and made a part hereof, and to all
income, royalties, damages and payments now and hereafter due and/or payable
under or based on such trademarks, and in and to all rights to xxx, collect and
retain damages and payments for past and future infringements and violation of
the rights thereof (hereinafter all of the foregoing trademarks, registrations
of trademarks and applications for trademark registrations are sometimes
individually and/or collectively referred to as the "Trademarks").
2. Grantor warrants and represents to and covenants with the
Agent that except as disclosed to the Agent and the Banks in a letter dated as
of the date of this Agreement:
(a) Grantor is the present owner of the entire right, title
and interest in and to the Trademarks that are the subject of
registrations on Schedule A, and, to the best of its knowledge, has
good and indefeasible title thereto.
(b) Except pursuant to Area Development Agreements, Franchise
Agreements, and similar agreements and as otherwise disclosed in
writing by Grantor to the Agent, the Trademarks (excluding non-United
States Trademarks) are free and clear of all security interests,
liens, claims and encumbrances, except those permitted by the Credit
Agreement.
(c) Except pursuant to Area Development Agreements, Franchise
Agreements and similar agreements and as otherwise disclosed in
writing by Grantor to the Agent, Grantor has not granted any license,
rights and privileges in or to the Trademarks to any party, except the
Agent.
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(d) To the best of Grantor's knowledge, Grantor may use the
Trademarks that are the subject of registrations on Schedule A free
and clear of the infringement of the rights of others.
(e) Except as otherwise disclosed in writing by Grantor to
the Agent, Grantor has no outstanding threats of action and has not
commenced and is not about to commence any suit or action against
others in connection with the violation or enforcement of the rights
of Grantor in the Trademarks.
(f) The Trademarks on Schedule A constitute all of the United
States registrations and applications for the Trademarks owned by
Grantor.
(g) Grantor has not and will not make any agreement or
assignment in conflict with this Agreement.
3. To the best of Grantor's knowledge, the trademark
applications have been duly and properly filed, and the trademark registrations
filed and issued, and the Trademarks which are the subject of registrations on
Schedule A are valid and enforceable.
4. Grantor shall not take any action, nor permit any action
to be taken by others subject to Grantor's control, including licensees, or
fail to take any action regarding any matter of which the Grantor has
knowledge, which would affect the validity and enforcement of the Trademarks,
or impair the value of the Trademarks or the goodwill of the business
associated therewith, except Grantor may discontinue or abandon the use of the
Trademarks and any applications and registrations therefor it determines in
accordance with its reasonable business judgment, such discontinuance or
abandonment is desirable or necessary.
5. Subject to the other provisions of this Agreement, Grantor
shall assume and continue, at its own cost and expense, through counsel of its
own choice and acceptable to the Agent, full and complete responsibility for
the prosecution, issuance, enforcement, maintenance, renewal or any other
actions in connection with the Trademarks.
6. Grantor promptly shall notify the Agent, in writing, of
any material suit, action or proceeding brought against it relating to,
concerned with or affecting the Trademarks or infringement of another
trademark, and shall, on written request, deliver to the Agent a copy of all
pleadings, papers, orders or decrees theretofore and thereafter filed in any
such suit, action or proceeding, and shall keep the Agent fully advised in
writing of the progress of any such suit.
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7. Grantor shall provide the Agent semi-annually with a
listing of all new applications for trademarks (together with a listing of the
issuance of registrations on any previous applications), which new applications
and issued trademark registrations shall be subject to the terms and conditions
of the Credit Agreement and this Agreement and come within the term
"Trademarks" as set forth herein. Grantor shall, together with the list,
provide the Agent, on written request, with duly executed documents in a form
acceptable to counsel for the Agent and suitable for recording, which documents
grant a valid enforceable security interest to the Agent for the benefit of the
Lenders as in Paragraph 1 hereof, and subject to all the terms of this
Agreement and the Credit Agreement.
8. Grantor shall provide the Agent, at least annually, with a
complete status report of all the Trademarks, and upon written request by the
Agent, shall deliver to counsel for the Agent copies of any trademark
applications and other non-privileged documents concerned with or related to
the adoption, use, prosecution, protection, maintenance, renewal, enforcement
or issuance of the Trademarks.
9. In order to protect and continue the goodwill of the
business associated with and symbolized by the Trademarks, and to avoid
deception to the public as to the nature and quality of the goods on which the
Trademarks are employed by Grantor, Grantor shall conduct its business in
accordance with the requirements of production, quality and service of the
goods in the market as in the past, and shall at all times use its reasonable
best efforts to maintain the quality of the goods sold or distributed on which
the Trademarks are employed commensurate with at least the same or better
quality and past practices of Grantor.
10. The occurrence of either of the following shall
constitute an Event of Default under this Agreement: (a) if Grantor shall fail
or neglect to perform, keep or observe any material term, provision, condition,
covenant, warranty or representation contained in this Agreement which is
required to be performed, kept or observed by Grantor, and the same is not
cured within 15 Business Days after written notice thereof from the Agent to
Grantor; or (b) occurrence of an Event of Default under the Credit Agreement.
Grantor hereby appoints and designates the Agent its sole attorney to take any
such action after an Event of Default as the Agent deems necessary under the
circumstances, and Grantor shall pay all fees and expenses in connection with
such action by its attorney so appointed and designated.
11. From and after an Event of Default hereunder and the
continuance thereof, the Agent may grant licenses, rights or other privileges
in, or otherwise take whatever action with respect to the Trademarks that the
Agent deems necessary or
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appropriate under the circumstances. In addition, from and after an Event of
Default hereunder and during the continuance thereof, the Agent shall have all
of the rights, remedies and benefits of a secured party under applicable law,
including without limitation, all of the rights, remedies and benefits of a
secured party under the Uniform Commercial Code, whether or not the Uniform
Commercial Code is applicable.
12. Should any part or provision of this Agreement be held
unenforceable or conflicting with the law of any jurisdiction the validity of
the remaining parts or provisions hereof shall not be affected thereby.
13. Grantor agrees, on written request by the Agent, now and
during the term of this Agreement to do all such acts as may be necessary or
appropriate in order to carry out the intent and purpose of this Agreement, and
to protect the interest of the Lenders in the Trademarks.
14. The term of this Agreement shall correspond to the term
of the Credit Agreement and this Agreement shall remain in full force and
effect until the Credit Agreement is terminated or cancelled in accordance with
the terms thereof.
15. Upon payment in full of all obligations of the Grantor
arising under or in connection with the Credit Agreement and other Loan
Documents and the termination of each of the Lender's Commitment thereunder,
the Agent agrees to release and take such further action as may be necessary of
advisable to evidence such release and termination of its security interest set
forth herein.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
-------------------------------
ATTEST:
By:
----------------------------
Title:
-------------------------
------------------------
Secretary
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:
---------------------------
Title:
------------------------
147
SCHEDULE A
Trademarks
----------
Trademark Serial # Reg. # Date Issued
--------- -------- --------- -----------
Trademark Applications
----------------------
Trademark Serial # Date Applied For
--------- -------- ----------------
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EXHIBIT F-3
[Attached existing Collateral Assignment
of Servicing Agreements]
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EXHIBIT G
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
______, 199_ made by __________________, a ________ corporation (the
"Pledgor"), in favor of Bank of America National Trust and Savings Association,
INC., as Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, the Pledgor has entered into that certain Secured
Credit Agreement, dated as of May 17, 1996 as amended and restated by that
certain Amended and Restated Secured Credit Agreement dated as of November __,
1997 (said Credit Agreement, as it may hereafter be further amended,
supplemented, restated or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with the Agent and the Co-Agent,
the Issuing Lender and the Lenders party thereto, pursuant to which the Lenders
have agreed to make Loans (as defined herein) to the Pledgor, subject to the
terms and conditions of the Credit Agreement;
WHEREAS, as a condition precedent to the making of the Loans
by the Lenders under the Credit Agreement, the Pledgor is required to execute
and deliver this Pledge Agreement; and
WHEREAS, the Pledgor has duly authorized the execution,
delivery and performance of this Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to
induce the Lenders to make Loans to the Pledgor pursuant to the Credit
Agreement, the Pledgor agrees, for the benefit of the Lenders, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms. The following terms when used in
this Pledge Agreement, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
"Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
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"Distributions" means all stock dividends, liquidating
dividends, shares of stock resulting from (or in connection with the exercise
of) stock splits, reclassifications, warrants, options, non-cash dividends, and
other distributions (whether similar or dissimilar to the foregoing) on or with
respect to any Pledged Shares or other shares of capital stock constituting
Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with
respect to any Pledged Shares made out of capital surplus.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Affiliate Shares" means all shares of capital stock
or other equity interest of any Pledged Share Issuer with respect to which the
Pledgor is record owner and which are delivered by the Pledgor to the Agent as
Pledged Property hereunder, and all of the certificates and instruments
representing such shares of capital stock or other equity interest.
"Pledged Debtor Shares" means all shares of capital stock or
other equity interest of any Pledged Share Issuer with respect to which the
Pledgor has been granted a Lien to secure certain Debt owed by some third party
Person to the Pledgor and which are delivered to the Agent as Pledged Property
hereunder, all of the certificates and instruments representing such shares of
capital stock or other equity interest.
"Pledged Note Issuer" means each Person identified in Item A
of Attachment 1 (hereto as such Attachment 1 shall be updated by any substitute
Attachment 1 delivered by Pledgor pursuant to Section 5.10 of the Credit
Agreement) as the issuer of the Pledged Note identified opposite the name of
such Person.
"Pledged Notes" means all promissory notes of any Pledged Note
Issuer which are delivered by the Pledgor to the Agent as Pledged Property
hereunder, as such promissory notes, in accordance with Section 4.5, are
amended, modified, or supplemented from time to time and together with any
promissory note of any Pledged Note Issuer taken in extension or renewal
thereof or substitution therefor.
"Pledged Property" means all Pledged Shares, all Pledged
Notes, and all other pledged shares of capital stock or promissory notes, all
other securities, all assignments of any amounts due or to become due, all
other instruments which are now being delivered by the Pledgor to the Agent or
may from time to time hereafter be delivered by the Pledgor to the Agent for
the purpose of pledge under this Pledge Agreement or any other Loan Document,
and all proceeds of any of the foregoing.
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"Pledged Share Issuer" means each Person identified in Item B
of Attachment 1 hereto (as such Attachment 1 shall be updated by any substitute
Attachment 1 delivered by Pledgor pursuant to Section 5.10 of the Credit
Agreement) as the issuer of the Pledged Shares identified opposite the name of
such Person.
"Pledged Shares" means all Pledged Affiliate Shares and all
Pledged Debtor Shares; provided, however Pledged Shares shall not include stock
issued by the Pledgor.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"U.C.C." means the Uniform Commercial Code as in effect in the
State of Illinois, as the same may be amended from time to time.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Pledge
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
SECTION 1.3 U.C.C. Definitions. Unless otherwise defined
herein or the context otherwise requires, terms for which meanings are provided
in the U.C.C. are used in this Pledge Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1 Grant of Security Interest. The Pledgor hereby
pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to
the Agent for the benefit of the Lenders, and hereby grants to the Agent for
the benefit of the Lenders, a continuing security interest in, all of the
following property (the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer
identified in Item A of Attachment 1 hereto (as such Attachment I
shall be updated by any substitute Attachment I delivered by Pledgor
pursuant to Section 5.10 of the Credit Agreement);
(b) all other Pledged Notes issued from time to time;
(c) all Pledged Shares identified in Item B of Attachment 1
hereto (as such Attachment I shall be
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updated by any substitute Attachment I delivered by Pledgor pursuant
to Section 5.10 of the Credit Agreement);
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter
delivered to the Agent in connection with this Pledge Agreement;
(f) all Dividends, Distributions, interest, and other
payments and rights with respect to any Pledged Property to which
Pledgor is entitled or entitled to receive a security interest; and
(g) all proceeds of any of the foregoing.
SECTION 2.2 Security for Obligations. This Pledge Agreement
secures the payment in full of all obligations of every nature of the Pledgor
now or hereafter existing under the Credit Agreement, the Notes and each other
Loan Document, whether for principal, interest, costs, fees, expenses, or
otherwise (all such obligations of the Pledgor being the "Secured
Obligations").
SECTION 2.3 Delivery of Pledged Property; Registration of
Pledge, Transfer, etc. All certificates or instruments representing or
evidencing any Collateral, including all Pledged Shares and all Pledged Notes
(except to the extent any such Pledged Notes are expressly excluded from the
delivery requirements hereunder pursuant to Section 5.10(a) of the Credit
Agreement), shall be delivered to and held by or on behalf of the Agent
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank. Prior to the delivery thereof to the Agent, such
certificates or instruments shall be held by the Pledgor separate and apart
from its other property and in express trust for the Agent. To the extent
Pledgor has such rights, the Agent shall have the right, at any time after a
Default shall have occurred and be continuing and without notice to the
Pledgor, to transfer to, or to register in the name of the Agent or any of its
nominees, any or all of the Pledged Affiliate Shares, subject only to the
revocable rights of the Pledgor specified in clause (c) of Section 4.4. In
addition, to the extent Pledgor has such rights, the Agent shall have the right
at any time after a Default shall have occurred and be continuing to exchange
certificates or instruments representing or evidencing any Pledged Affiliate
Shares for certificates or instruments of smaller or larger denominations.
SECTION 2.4 Dividends and Interest. (a) In the event that
any Dividend to which Pledgor is entitled or entitled to
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receive a security interest is to be paid on any Pledged Share at a time when
no Event of Default has occurred and is continuing, and the proceeds of such
Dividend have not previously been required to be applied to any of the Secured
Obligations, such proceeds may be paid directly to the Pledgor.
(b) In the event that any payment of interest or principal to which Pledgor is
entitled or entitled to receive a security interest is to be paid on any
Pledged Note at a time when no Event of Default has occurred and is continuing,
and the proceeds of such payment have not previously been required to be
applied to any of the Secured Obligations, such proceeds may be paid directly
to the Pledgor.
SECTION 2.5 Continuing Security Interest; Transfer of Note.
This Pledge Agreement shall create a continuing security interest in the
Collateral and shall
(a) remain in full force and effect until payment in full of
all Secured Obligations and the termination of all Commitments,
(b) be binding upon the Pledgor and its successors,
transferees and assigns, and
(c) inure to the benefit of the Agent, the Lenders and their
respective successors, transferees, and assigns.
Without limiting the foregoing clause (c), pursuant to the terms of the Credit
Agreement, the Lenders may assign, or otherwise transfer (in whole or in part)
their ratable portion of the Notes or any Loan held by them to any other Person
or entity, and such other Person or entity shall thereupon become vested with
all the benefits in respect thereof granted to the Lenders under any Loan
Document (including this Pledge Agreement) or otherwise. Upon the payment in
full of the Secured Obligations and the termination of each Lender's
Commitment, the security interest granted herein shall terminate and all rights
to the Collateral shall revert to the Pledgor. Upon any such termination, the
Agent will, at the Pledgor's sole expense, deliver to the Pledgor, without any
representations or warranties of any kind whatsoever, all certificates and
instruments representing or evidencing all Pledged Shares and all Pledged
Notes, together with all other Collateral held by the Agent hereunder, and
execute and deliver to the Pledgor, at the Pledgor's sole expense, such
documents as the Pledgor shall reasonably request to evidence such termination.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants unto the Agent, as at the
date of each pledge and delivery hereunder (including each pledge and delivery
of Pledged Shares and each pledge and delivery of a Pledged Note) by the
Pledgor to the Agent of any Collateral, as follows:
SECTION 3.1 Ownership, No Liens, etc. The Pledgor is the
legal and beneficial owner of, and has good and marketable title to (and has
full right and authority to pledge and assign) all the Collateral (other than
Pledged Debtor Shares and Dividends, Distributions and Proceeds therefrom),
free and clear of all liens, security interests, options, or other charges or
encumbrances, except any lien or security interest permitted under Section 6.1
of the Credit Agreement. The Pledgor has a valid, perfected, first priority
security interest in the Pledged Debtor Shares and all proceeds thereof,
subject to the exceptions set forth in Section 6.1 of the Credit Agreement.
SECTION 3.2 As to Pledged Shares. In the case of any Pledged
Affiliate Shares constituting such Collateral, all of such Pledged Affiliate
Shares are duly authorized and validly issued, fully paid, and non-assessable.
SECTION 3.3 As to Pledged Notes. To the best of Pledgor's
knowledge, in the case of each Pledged Note, all of such Pledged Notes have
been duly authorized, executed, endorsed, issued and delivered (except to the
extent any such Pledged Notes are expressly excluded from the delivery
requirements hereunder pursuant to Section 5.10(a) of the Credit Agreement),
and are the legal, valid and binding obligation of the issuers thereof
enforceable against such issuers in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights and to
general principles of equity. None of the Pledged Notes are in default with
respect to the obligor's payment obligation.
SECTION 3.4 Authorization, Approval, etc. Except as may have
been obtained, no authorization, approval, or other action by, and no notice to
or filing with, any governmental authority, regulatory body or any other Person
is required either
(a) for the pledge by the Pledgor of any Collateral pursuant
to this Pledge Agreement or for the execution, delivery, and
performance of this Pledge Agreement by the Pledgor, or
(b) for the exercise by the Agent of the voting or other
rights provided for in this Pledge Agreement,
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or, except with respect to any Pledged Shares, as may be required in
connection with a disposition of such Pledged Shares by laws affecting
the offering and sale of securities generally, the remedies in respect
of the Collateral pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Protect Collateral; Further Assurances, etc. The
Pledgor will not sell, assign, transfer, pledge, or encumber in any other
manner the Collateral (except (i) in favor of the Agent hereunder, and (ii)
prior to an Event of Default, in connection with the exercise of any remedy the
Pledgor has against any third party borrower which has pledged such Collateral
to the Pledgor as security). The Pledgor will warrant and take reasonable
action to defend the right and title herein granted unto the Agent in and to
the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever. The
Pledgor agrees that at any time, and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all further instruments,
and take all further action, that may be necessary or desirable, or that the
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 4.2 Stock Powers, etc. The Pledgor agrees that all
Pledged Shares (and all other shares of capital stock constituting Collateral)
delivered by the Pledgor pursuant to this Pledge Agreement will be accompanied
by duly executed undated blank stock powers, or other equivalent instruments of
transfer acceptable to the Agent. The Pledgor will, from time to time upon the
request of the Agent, promptly deliver to the Agent such stock powers,
instruments, and similar documents, satisfactory in form and substance to the
Agent, with respect to the Collateral as the Agent may reasonably request and
will, from time to time upon the request of the Agent after the occurrence of
any Event of Default and during the continuance thereof to the extent of any
right to do such, promptly transfer any Pledged Affiliate Shares into the name
of any nominee designated by the Agent.
SECTION 4.3 Continuous Pledge. Subject to Section 2.4, the
Pledgor will, at all times, keep pledged to the Agent pursuant hereto all
Pledged Shares and all other shares of capital stock constituting Collateral,
all Dividends and Distributions with respect thereto to which the Pledgor is
entitled, or entitled to receive a security interest in, all
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Pledged Notes, all proceeds received by the Agent or the Pledgor with respect
to the Pledged Notes, and all other Collateral and other securities,
instruments, proceeds, and rights from time to time received by or
distributable to the Pledgor in respect of any Collateral.
SECTION 4.4 Voting Rights; Dividends, etc. The Pledgor
agrees to deliver (properly endorsed where required hereby or requested by the
Agent) to the Agent:
(a) after an Event of Default shall have occurred and be
continuing, promptly upon receipt thereof by the Pledgor and without
any request therefor by the Agent, all Dividends and Distributions (to
which the Pledgor is entitled or entitled to receive a security
interest therein) and all interest, all other cash payments, and all
proceeds of the Collateral, all of which shall be held by the Agent as
additional Collateral for use in accordance with Section 6; and
(b) after an Event of Default shall have occurred and be
continuing, promptly upon request of the Agent, such proxies and other
documents as may be necessary to allow the Agent to exercise any
voting power to which the Pledgor is entitled with respect to any
share of capital stock (including Pledged Shares) constituting
Collateral;
provided, however, that unless an Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled:
(c) to exercise, in its reasonable judgment, but in a manner
which would not have a material adverse effect on the value of the
Pledged Shares, and in a manner not inconsistent with the terms of the
Credit Agreement or any other Loan Document (including this Pledge
Agreement) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral (subject to the Pledgor's
obligation to deliver to the Agent such Pledged Shares and other
shares in pledge hereunder); and
(d) to the prompt receipt of all Dividends in accordance with
Section 2.4.
All Dividends, Distributions, interest, cash payments, and proceeds which may
at any time and from time to time be held by the Pledgor but which the Pledgor
is then obligated to deliver to the Agent, shall, until delivery to the Agent,
be held by the Pledgor separate and apart from its other property in trust for
the Agent. The Agent agrees that unless an Event of Default shall have
occurred and be continuing, the Agent shall, upon the
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written request of the Pledgor, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by the Pledgor which are
necessary to allow the Pledgor to exercise any voting power to which the
Pledgor is entitled with respect to any share of capital stock (including
Pledged Shares) constituting Collateral; provided, however, that no vote shall
be cast, or consent, waiver, or ratification given, or action taken by the
Pledgor that would impair any Collateral or be inconsistent with or violate any
provision of the Credit Agreement or any other Loan Document (including this
Pledge Agreement).
SECTION 4.5 Additional Undertakings. The Pledgor will not,
without the prior written consent of the Agent, which will not be unreasonably
withheld or delayed:
(a) enter into any agreement materially amending,
supplementing, or waiving any provision of any Pledged Note (including
any underlying instrument pursuant to which such Pledged Note is
issued) or compromising or releasing or extending the time for payment
of any obligation of the maker thereof, provided that the Pledgor may
exercise its rights to convert debt or exercise options for equity in
any Financed Franchisee at any time permitted by the Credit Agreement;
or
(b) take or omit to take any action the taking or the
omission of which would result in any material impairment or
alteration of any obligation of the maker of any Pledged Note or other
instrument constituting Collateral.
ARTICLE V
THE AGENT
SECTION 5.1 Agent Appointed Attorney-in-Fact. The Pledgor
hereby irrevocably appoints the Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time upon the occurrence and during the continuance
of a Default in the Agent's discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
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(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(a) above; and
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent with respect to any of the Collateral.
SECTION 5.2 Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by the Pledgor pursuant to Section 6.3.
SECTION 5.3 Reasonable Care. The Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any of the
Collateral, if it takes such action for that purpose as the Pledgor reasonably
requests in writing at times other than upon the occurrence and during the
continuance of any Event of Default, but failure of the Agent to comply with
any such request at any time shall not in itself be deemed a failure to
exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall
have occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on
default under the U.C.C. (whether or not the U.C.C. applies to the
affected Collateral) and also may sell the Collateral or any part
thereof after reasonable notice to the Pledgor in one or more parcels
at public or private sale or broker's board, at any of the Agent's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that the Agent or any Lender shall be entitled to
bid for or purchase any or all of the Collateral at any such sale.
The Pledgor agrees that at least ten days' notice to the Pledgor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Agent
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shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) The Agent may (to the extent Pledgor could do so or has
done so)
(i) transfer all or any part of the Collateral into
the name of the Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and
security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Agent of any amount due or
to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings
in the Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral,
and
(vi) execute (in the name, place and stead of the
Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION 6.2 Application of Proceeds. Except as expressly
provided elsewhere in this Agreement, all proceeds received by the Agent in
respect of any sale of, collection from or other realization upon all or any
part of the Collateral may, in the discretion of the Agent, be held by the
Agent as Collateral for, and/or then, or at any other time thereafter applied,
in full or in part by the Agent against the Secured Obligations in the
following order of priority:
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FIRST: To the payment of all reasonable costs and expenses of
such sale, collection or other realization and all other expenses,
liabilities and advances made or incurred by the Agent in connection
therewith and all amounts for which the Agent is entitled to
indemnification hereunder and all advances made by the Agent hereunder
for the account of the Pledgor and for the payment of all costs and
expenses paid or incurred by the Agent in connection with the exercise
of any right or remedy hereunder, all in accordance with Section 6.3;
SECOND: To the ratable payment in full of the Secured
Obligations owing to the Lenders; and
THIRD: After payment in full of the amounts specified in the
preceding paragraphs, to the payment to or upon the order of the
Pledgor, or whomsoever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
All applications of proceeds to the Secured Obligations shall
be applied to the payment of interest before application of payment to
principal.
SECTION 6.3 Indemnity and Expenses. The Pledgor hereby
indemnifies and holds harmless the Agent and the Lenders from and against any
and all claims, losses, and liabilities growing out of or resulting from this
Pledge Agreement (including enforcement of this Pledge Agreement), except
claims, losses, or liabilities resulting from the Agent's and/or any such
Lender's, as the case may be, gross negligence or willful misconduct. Upon
demand, the Pledgor will pay to the Agent and/or any Lender, as the case may
be, the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Agent and/or any Lender, as the case may be, may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of the rights of the
Agent or any Lender, as the case may be, hereunder; or
(d) the failure by the Pledgor to perform or observe any of
the provisions hereof.
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SECTION 6.4 Rights Exercisable. Notwithstanding anything
else to the contrary herein, Agent's rights hereunder are limited to whatever
rights Pledgor has with respect to the Collateral.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 Loan Document. This Pledge Agreement is a Loan
Document executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof, including Article IX thereof.
SECTION 7.2 Amendments, etc. No amendment to or waiver of
any provision of this Pledge Agreement nor consent to any departure by the
Pledgor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it is given.
SECTION 7.3 Obligations Not Affected. The obligations of the
Pledgor under this Pledge Agreement shall remain in full force and effect
without regard to, and shall not be impaired or affected by:
(a) any amendment or modification or addition or supplement
to the Credit Agreement, any Note, any other Loan Document, any
instrument delivered in connection therewith, or any assignment or
transfer thereof;
(b) any exercise, non-exercise, or waiver by the Agent of any
right, remedy, power, or privilege under or in respect of, or any
release of any guaranty or collateral provided pursuant to, this
Pledge Agreement, the Credit Agreement, or any other Loan Document;
(c) any waiver, consent, extension, indulgence, or other
action or inaction in respect of this Pledge Agreement, the Credit
Agreement, or any other Loan Document or any assignment or transfer of
any thereof; or
(d) any bankruptcy, insolvency, reorganization,arrangement,
readjustment, composition, liquidation, or the like, of the Pledgor or
any other Person, whether or not the Pledgor shall have notice or
knowledge of any of the foregoing.
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SECTION 7.4 Protection of Collateral. The Agent may from
time to time, at its option, perform any act which the Pledgor agrees hereunder
to perform and which the Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default) and the
Agent may from time to time take any other action which the Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 7.5 Notices, Etc. All notices and other
communications provided for under this Pledge Agreement shall be in writing
(including telegraphic, telex or facsimile communication) and mailed or
telecommunicated or delivered at the address of such party set forth in the
Credit 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 7.5. All such notices and
communications shall, when mailed or telecommunicated, be effective upon actual
receipt, 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.
SECTION 7.6 Section Captions. Section captions used in this
Pledge Agreement are for convenience of reference only, and shall not affect
the construction of this Pledge Agreement.
SECTION 7.7 Severability. Wherever possible each provision
of this Pledge Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Pledge Agreement.
Section 7.8 LAW. THIS PLEDGE AGREEMENT HAS BEEN DELIVERED AT
CHICAGO, ILLINOIS, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OF CHOICE OF LAW.
SECTION 7.9 Submission to Jurisdiction. Pledgor hereby
irrevocably agree that any legal action or proceeding pertaining to this Pledge
Agreement may be brought in the courts of the State of Illinois, County of
Xxxx, or of the United States of America for the Northern District of Illinois.
The Pledgor hereby irrevocably agrees that service of process in such action or
proceeding may be made either by mailing, by registered or certified mail,
postage prepaid, a copy of the summons or complaint, or other legal process in
such action or proceeding to
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the Pledgor at the address specified pursuant to Section 7.5. Service of
process in any such action or proceeding, effected as aforesaid, shall be
effective upon receipt by the Pledgor or such agent and shall be deemed
personal service upon the Pledgor and shall be legal and binding upon the
Pledgor for all purposes, notwithstanding any failure by the Pledgor's agent to
forward copies of such process to the Pledgor. The Pledgor hereby waives, to
the fullest extent permitted by law, any objection it may now or hereafter have
to the laying of venue in any such action or proceeding in any such court as
well as any right it 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
-------------------------------
By
---------------------------
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By
---------------------------
Title:
165
ATTACHMENT 1
to
Pledge Agreement
Pledged Notes
See items described on part (1) "Debt" of Schedule 4.17 of the Credit
Agreement, which is incorporated herein by this reference.
Item B. Pledged Shares
See items described on part (3) "Capital Stock, Partnership Interests or Other
Equity Interests" of Schedule 4.17 of the Credit Agreement, which is
incorporated herein by this reference.
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EXHIBIT H
COLLATERAL ASSIGNMENT OF TENANT'S RIGHTS IN LEASE
THIS COLLATERAL ASSIGNMENT OF TENANT'S RIGHTS IN LEASE (this
"Assignment") is made as of the ___ day of ___________, 199_ by
__________________, a Delaware corporation ("Borrower"), to BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent for the Lenders (herein,
together with its successors and assigns in such capacity, called "Agent").
W I T N E S S E T H:
WHEREAS, Lenders now and from time to time hereafter shall make loans,
advances and/or financial accommodations to or for the benefit of Borrower
pursuant to a certain Secured Credit Agreement dated as of May 17, 1996 as
amended and restated by that certain Amended and Restated Secured Credit
Agreement dated as of November __, 1997 among Borrower, Lenders, Co-Agent, and
Agent (said Credit Agreement, as it may hereafter be further amended,
supplemented, restated or otherwise modified from time to time, is referred to
as the "Credit Agreement"; terms used herein and not otherwise defined herein
shall have the meaning assigned thereto in the Credit Agreement); and
WHEREAS, Borrower has entered into a commercial lease with [-]
("Landlord") dated [-] for occupancy of the property commonly known as [-] and
legally described on Exhibit A attached hereto and made a part hereof (the
"Premises") (which lease, together with all renewals, amendments, or
replacements, all of the Borrower's rights and remedies thereunder, and all
proceeds payable under any policy of insurance covering loss resulting from
untenantability caused by destruction or damage to the Premises, is hereinafter
referred to as the "Lease"). The Lease is additional security for all of
Borrower's obligations to Agent or Lenders arising under or in connection with
the Credit Agreement and the other Loan Documents (the "Liabilities").
NOW, THEREFORE, for and in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. The Assignment. In order to induce Lenders to make advances under the
Credit Agreement and as additional security for the payment of the Liabilities
and for the performance and observance of all the agreements contained herein,
in the Credit Agreement and in the other Loan Documents, Borrower does hereby
set over, and transfer to Agent, upon the terms and conditions hereinafter
contained, a continuing collateral security interest in the Lease, together
with all the right, title and interest of Borrower therein and thereto, to have
and to hold the same unto Agent, its successors and assigns, forever, or for
such shorter period as hereinafter may be indicated, as additional security for
the payment of the Liabilities and for the performance and observance of all
the agreements contained in the Credit Agreement.
2. Warranties, Representations and Covenants. Borrower hereby covenants,
represents, warrants and agrees as follows:
A. At all times, but not more than two times per year unless
there has been an Event of Default, Agent shall have the right to verify the
validity, amount of or any other matter relating to the Lease, by mail,
telephone, telegraph or otherwise, in the name of Borrower, Agent, any or all
of the Lenders, a nominee of Agent, or any or all of said names, all in
accordance with the terms and conditions of the Lease.
B. Unless Agent notifies Borrower in writing that it dispenses
with any one or more of the following requirements, Borrower shall: (i) inform
Agent, in writing, of any assertion of any material defaults, claims, offsets
or counterclaims under the Lease; and (ii) not permit or agree to any
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termination or surrender, or to any material extension, settlement or amendment
or modification of, the Lease.
C. The Lease is in full force and effect; a complete and correct
copy of the Lease has been furnished to Agent; Borrower is the lessee under the
Lease and has good right to collaterally assign its interest in the same
(subject, however, to the rights, if any, of the Landlord to consent to such
collateral assignment); no other person, firm or corporation has any right,
title or interest therein except as expressly set forth herein; and Borrower
has not previously sold, assigned, transferred, mortgaged or pledged its
interest in the Lease to any other person or entity, except for any subleases
described in Schedule 2C hereto.
D. Borrower has and shall: (i) observe, perform and discharge,
duly and punctually, all the obligations, terms, covenants, conditions and
warranties of the Lease, on the part of Borrower to be kept, observed and
performed, if any such failure to keep, observe or perform could result in the
termination of the Lease; and (ii) give prompt notice to Agent of any failure
on the part of Borrower to observe, perform and discharge same. Borrower has
and shall: (i) appear in and defend any action or proceeding arising under,
occurring out of, or in any manner connected with the Lease or the obligations,
duties or liabilities of Borrower and/or Landlord thereunder; (ii) upon request
by Agent, will do so in the name and behalf of Agent but at the expense of
Borrower; and (iii) pay all costs and expenses of Agent, including reasonable
attorneys' fees in any action or proceeding in which Agent may appear.
E. Borrower has entered or will enter into occupancy of the
Premises in accordance with the terms and conditions of the Lease; to the best
of Borrower's knowledge, Landlord is not in default in performing or complying
with any of its obligations under the Lease to the best of Borrower's
knowledge; Landlord has completed, or will complete within the time period
provided in the Lease, all improvements required by the terms of the Lease; and
to the best of Borrower's knowledge, the Premises are, or will be within the
due course of construction completion, open for the use of Borrower, its
customers, employees and invitees.
F. Neither Lenders nor Agent shall not be liable in any way for
any injury or damage to person or property sustained by any person or persons,
firm or corporation in or about the Premises nor shall Lenders or Agent assume
any obligation, duty or liability under the Lease.
G. Borrower hereby agrees to indemnify and hold Agent and Lenders
harmless of, from and against any and all liability, loss, damage or expense
which Agent or Lenders may or might incur by reason of this Agreement. Should
Agent or Lenders incur any such liability, loss, damage or expense, the amount
thereof (including reasonable attorneys' fees) shall be payable by Borrower
immediately upon demand, shall bear interest (at the rate due on monies after a
default) from the date of payment by Agent or Lenders thereof until repaid by
Borrower, and shall be secured hereby.
H. The failure of Agent to avail itself of any of the terms,
covenants and conditions of this Assignment for any period of time or at any
time or times, shall not be construed or deemed to be a waiver by Agent of any
of its rights and remedies hereunder. The rights and remedies of Agent under
this Assignment are and shall be cumulative and in addition to any and all
rights and remedies available to Agent or Lenders under the Credit Agreement.
I. Upon payment in full of all of the Liabilities, this
Assignment shall become and be void and of no further effect, and Agent shall,
upon demand by Borrower, execute a release to be filed of record.
J. This Assignment was executed and delivered in, and, except as
otherwise specifically stated in any given paragraph hereof, shall be governed
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as to validity, interpretation, construction, effect and in all other respects
by the laws and decisions of the State of Illinois.
3. Power of Attorney. Upon the occurrence of an Event of Default under
the terms of the Credit Agreement, Borrower further irrevocably appoints Agent
as Borrower's attorney-in-fact to exercise any or all of Borrower's rights in,
to, and under the Lease and to do any or all other acts, in Borrower's name or
in the Agent's own name, that Borrower could do under the Lease, with the same
force and effect as if this Assignment had not been made.
4. Exercise of Rights. Upon the occurrence of an Event of Default under
the terms of the Credit Agreement, Agent, in its sole discretion, may do any
one or more of the following, subject to the terms and conditions contained in
the Lease:
A. Enter upon, take possession of, manage and operate the
Premises or any part thereof pursuant to the terms and conditions of the Lease,
and Borrower agrees to surrender possession of the same.
B. If such Event of Default under the Credit Agreement occurs due
to Borrower's default under the Lease, Agent may cure any such default under
the Lease within the curative times provided in the Lease, or any longer period
granted to Agent by Landlord.
C. Exercise any and all rights and remedies afforded to Agent or
Lenders under the Credit Agreement, the other Loan Documents and the Uniform
Commercial Code and any and/all other applicable provisions of law, including
the right to sell Borrower's interest in the Lease at a public or private sale.
5. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding on Borrower and Agent and the successors and assigns of each.
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IN WITNESS WHEREOF, this Agreement has been duly exercised the day and
year first above written.
, a corporation
------------ -----------
By:
-----------------------------------
Its President
-----------
Attest:
-------------------------------
Its Secretary
-----------
[CORPORATE SEAL]
STATE OF ILLINOIS )
) SS:
COUNTY OF ____________________)
I, the undersigned, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that ______________________________,
personally known to me to be the __________ President of _________________, a
__________ corporation, and ______________________________, personally known to
me to be the __________ Secretary of said corporation, and personally known to
me to be the same persons whose names are subscribed to the foregoing
instrument, appeared before me this day in person and severally acknowledged
that as such __________ President and __________ Secretary, they signed, sealed
and delivered said instrument as __________ President and __________ Secretary
of said corporation, and caused the corporate seal of said corporation to be
affixed thereto, pursuant to authority, given by the Board of Directors of said
corporation as their free and voluntary act, and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein set forth.
Given under my hand and official seal, this _____ day of [-], 19[-].
-------------------------------
Notary Public
My Commission Expires:
---------------------
This Instrument Prepared In Chicago, Illinois By
and After Recording Return To:
[-]
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
170
EXHIBIT A
[ATTACHED TO AND MADE A PART OF A COLLATERAL ASSIGNMENT OF TENANT'S RIGHTS IN
LEASE DATED [-] BETWEEN __________________ AND BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS AGENT
FOR LENDERS]
STORE NO:
ADDRESS:
PERMANENT TAX INDEX NUMBER:
LEGAL DESCRIPTION:
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171
EXHIBIT I
LANDLORD'S CONSENT
THIS LANDLORD'S CONSENT (this "Agreement") is executed and delivered
by [-] ("Landlord") to BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent for Lenders (herein, together with its successors and assigns in such
capacity, called "Agent"), with reference to the following facts:
A. _________________, a ______________ corporation ("Borrower"),
is the lessee under a Lease Agreement dated [-] (which lease, together with all
renewals, amendments or replacements, is referred to as the "Lease") concerning
the property commonly known as [-] and legally described on Exhibit A attached
hereto and made a part hereof (the "Premises").
B. Borrower, certain financial institutions (the "Lenders"), and
Agent have entered into a Secured Credit Agreement dated as of May 17, 1996 as
amended and restated by that certain Amended and Restated Secured Credit
Agreement dated as of November __, 1997 (which agreement, together with all
renewals, amendments or replacements, is referred to as the "Credit Agreement";
terms used herein and not otherwise defined herein shall have the meaning
assigned thereto in the Credit Agreement) providing for Lenders to lend money
to or for the benefit of Borrower. To secure Borrower's obligations to Lenders
under the Loan Documents ("Borrower's Liabilities"), Borrower has granted to
Agent a first priority security interest in and to all inventory, equipment,
furnishings, fixtures, books and records now owned or hereafter acquired by
Borrower (the "Collateral"), all or some of which is now or hereafter may be
located at the Premises.
For valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Landlord covenants and agrees with Agent as follows:
1. Landlord waives all rights which Landlord now has, or
hereafter may have, under the laws of the State of [-] or by virtue of the
Lease or Borrower's occupation of the Premises, to levy or distrain for rent or
for any monetary obligation arising by reason of default under the Lease, or to
assert any lien, right, claim or title to the Collateral. Landlord
acknowledges that Agent's security interest in the Collateral pursuant to the
Loan Documents is superior to any lien, right, claim or title which Landlord
now has or hereafter may have or assert in or to the Collateral.
2. For purposes of this Agreement, Landlord agrees that the
Collateral shall consist of all of the Borrower's removable personal property
on or about the Premises, which shall not be deemed fixtures. Collateral shall
not include any leasehold improvements which are permanently attached to the
Premises or which are owned by Landlord.
3. If Borrower defaults under the Loan Documents, Agent may
remove the Collateral or any part thereof from the Premises in accordance with
the terms and conditions of the Loan Documents or statutory law without
objection or interference by Landlord and in such case Landlord will make no
claim or demand against the Collateral, provided that the Agent shall (i)
restore any part of the Premises which may be damaged by such removal to
substantially the same condition as existed immediately prior to such damage,
and (ii) comply with all reasonable rules and regulations generally applicable
to Landlord's tenants at the Premises with respect to the times and methods for
the removal of the Collateral. In the event of any such default by Borrower,
Landlord agrees that, at Agent's option, the Collateral may remain at the
Premises for a period not exceeding one (1) month following the default,
provided Agent pays rent to Landlord for the Premises at the same rate imposed
upon Borrower.
4. If Borrower defaults in the payment or performance of any
obligations under the Lease and Landlord serves notice thereof, Landlord shall
give Agent written notice thereof and twenty (20) days after the date of such
notice to cure the same on behalf of Borrower. Written notice shall be
delivered to Agent by
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172
registered or certified mail, postage prepaid, at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attn: Xxxxx Xxxxxxxx, Vice President.
5. Landlord acknowledges that, concurrently herewith, Borrower is
assigning to Agent Borrower's interest in the Lease pursuant to a Collateral
Assignment of Tenant's Rights in Lease. Landlord represents that the Lease is
in full force and effect and that, as of the date hereof, Borrower is not in
default thereunder nor, to Landlord's knowledge, has any event occurred which,
with the passage of time or the giving of notice or both, would constitute an
event of default thereunder. Landlord consents to such assignment and agrees
that upon written notice from Agent that a default has occurred under any of
the Loan Documents, all rights under the Lease otherwise exercisable by
Borrower may be exercised by Agent. Until a default under the Loan Documents
has occurred and Agent has agreed to assume the obligations of Borrower under
the Lease, Landlord shall look solely to Borrower for payment of all sums due
under the Lease and for compliance with the terms and provisions of the Lease.
6. Agent may, without affecting the validity of this Agreement,
extend, amend or in any way modify the terms of payment or performance of any
of Borrower's Liabilities, without the consent of Landlord and without giving
notice thereof to Landlord.
7. This Agreement shall inure to the benefit of the successors
and assigns of Agent and shall be binding upon the heirs, personal
representatives, successors and assigns of Landlord.
8. This Agreement shall be governed by the internal laws of the
State where the Premises are located without reference to principles of choice
of law.
9. Neither this Agreement nor Agent's security interest in the
Collateral shall be deemed a mortgage of or lien upon Landlord's fee title to
the Premises.
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173
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above written.
-------------------------------------
(Landlord)
If corporation: By:
--------------------------------
Its President
-----------
[CORPORATE SEAL] Attest:
-----------------------------
Its Secretary
-----------
If partnership: By:
--------------------------------
Its General Partner
If individual:
--------------------------------------
Print Name:
--------------------------
--------------------------------------
Print Name:
--------------------------
This Instrument Prepared In Chicago, Illinois By
and After Recording Return To:
[-]
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
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174
PARTNERSHIP ACKNOWLEDGEMENT
State of ____________________)
) ss.
County of ___________________)
I, __________________________, a Notary Public in and for said County,
in the State aforesaid, do hereby certify that ____________________________,
personally known to me to be a general partner of _________________________, a
____________________ partnership, and personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person and severally acknowledged that he signed and delivered the
said instrument as a partner of said partnership, pursuant to due power and
authority, as his free and voluntary act ad as the free and voluntary act and
deed of said partnership, for the uses and purposes therein set forth.
Given under my hand and seal this _____ day of _____________________, 19_____.
---------------------------------
Notary Public
My Commission Expires:
--------------------------
175
CORPORATE ACKNOWLEDGEMENT
State of ____________________)
) ss.
County of ___________________)
I, __________________________, a Notary Public in and for said County,
in the State aforesaid, do hereby certify that ____________________________,
personally known to me to be the __________ President of __________________, a
____________________ corporation, and personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person and severally acknowledged that as such officer he signed
and delivered the said instrument, and caused the corporate seal to be affixed
thereto, pursuant to authority given by the Board of Directors of said
corporation, as his free and voluntary act and as the free and voluntary act
and deed of said corporation, for the purposes therein set forth.
Given under my hand and seal this _____ day of ______________________, 19_____.
-------------------------------------
Notary Public
My Commission Expires:
------------------------
176
INDIVIDUAL ACKNOWLEDGEMENT
State of ____________________)
) ss.
County of ___________________)
I, __________________________, a Notary Public in and for said County,
in the State aforesaid, do hereby certify that ____________________________,
personally known to me to be the same person(s) whose name(s) is/are subscribed
to the foregoing instrument, appeared before me this day in person and
acknowledged that he/she signed and delivered said instrument as his/her free
and voluntary act and deed for the purposes therein set forth.
Given under my hand and seal this _____ day of_______________________, 19_____.
---------------------------------
Notary Public
My Commission Expires:
-------------------------
177
Exhibit A
LEGAL DESCRIPTION OF PREMISES
STORE NO:
ADDRESS:
PERMANENT TAX INDEX NUMBER:
LEGAL DESCRIPTION:
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178
EXHIBIT J
[Attach existing Collateral Assignment of Loan]
- 1 -
179
EXHIBIT K
[Attach existing Subordination Agreement, as amended]
- 1 -
180
EXHIBIT L
- 2 -
181
Exhibit M
FORM OF
CERTIFICATE OF COMPLIANCE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent for the Lenders (the "Agent")
This certificate (the "Certificate") is delivered to you
pursuant to Section 5.8(4) of the Secured Credit Agreement dated as of May 17,
1996 as amended and restated by the Amended and Restated Secured Credit
Agreement, dated as of November __, 1997 (as amended or modified, the "Credit
Agreement"), among EINSTEIN/NOAH BAGEL CORP., a Delaware corporation (the
"Borrower"), the lenders that are or from time to time become party thereto
(the "Lenders"), the Co-Agent, and the Agent. Unless otherwise defined herein,
capitalized terms used herein have the meanings provided in the Credit
Agreement.
The undersigned hereby certifies and warrants to the Agent
that he is an officer of the Borrower authorized to execute this Certificate on
behalf of the Borrower and further certifies and warrants to the Agent on
behalf of the Borrower that:
(a) The representations and warranties contained in Article IV of the
Credit Agreement and in each other Loan Document are correct in all
material respects on and as of the date of this Certificate as though
made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and
correct in all material respects on and as of such earlier date);
(b) No Default or Event of Default has occurred and is continuing; and
(c) Attached hereto are true and correct computations of the ratios
and financial restrictions required under Article VII of the Credit
Agreement.
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182
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be
executed and delivered and the certifications and warranties contained herein
to be made, by its ____________________ this ___ day of ________, 19__.
EINSTEIN/NOAH BAGEL CORP.
By:
-----------------------------
Its:
-----------------------------
- 4 -
