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EXHIBIT 10.44
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CREDIT AGREEMENT
among
BANKBOSTON, N.A., as Agent,
THE LENDERS WHO ARE PARTIES HERETO,
JERRY'S FAMOUS DELI, INC.,
and
ITS SUBSIDIARIES WHO ARE PARTIES HERETO
Dated September 11, 1998
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS......................................................................1
SECTION 2. THE CREDIT FACILITIES...........................................................14
2.1 The Loans and Notes.....................................................................14
2.2 Scheduled Repayments of the Loans.......................................................15
2.3 Commitment Fees; Interest; Default Rate.................................................15
2.4 Requests for Loans......................................................................17
2.5 Conversion and Continuance of Loans.....................................................18
2.6 Termination of the Revolver Commitment..................................................18
2.7 Mandatory Payments and Prepayments......................................................18
2.8 Letters of Credit.......................................................................20
2.9 Changed Circumstances...................................................................23
2.10 Capital Adequacy.......................................................................24
2.11 Payments Before End of Eurodollar Period...............................................25
2.12 Additional Compensation................................................................25
2.13 Security...............................................................................25
2.14 Use of Proceeds........................................................................26
2.15 Time and Method of Payments............................................................26
2.16 Non-Receipt of Funds by Agent..........................................................28
2.17 Sharing of Payments and Setoff among Lenders..........................................29
SECTION 3. CONDITIONS OF LOANS.............................................................29
3.1 Conditions to Initial Credit Extension..................................................29
3.2 Conditions to All Credit Extensions.....................................................30
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................................31
4.1 Organization and Qualification..........................................................31
4.2 Corporate or Partnership Authority......................................................31
4.3 Valid Obligations.......................................................................31
4.4 Approvals...............................................................................31
4.5 Title to Properties; Absence of Liens...................................................31
4.6 Licenses, Patents, Trademarks and Intellectual Property.................................32
4.7 Compliance with Laws and Agreements.....................................................32
4.8 Material Agreements.....................................................................32
4.9 Environmental Matters...................................................................33
4.10 Compliance with ERISA..................................................................34
4.11 Financial Statements...................................................................34
4.12 Solvency...............................................................................34
4.13 Taxes..................................................................................34
4.14 Litigation.............................................................................35
4.15 Margin Rules...........................................................................35
4.16 Restrictions on the Borrowers..........................................................35
4.17 Capitalization.........................................................................35
4.18 Full Disclosure........................................................................35
4.19 Investment Company Act.................................................................35
4.20 Labor Disputes; Collective Bargaining Agreements; Employee Grievances..................36
SECTION 5. FINANCIAL COVENANTS.............................................................36
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5.1 Maximum Leverage Ratio..................................................................36
5.2 Minimum Fixed Charges Coverage Ratio....................................................36
5.3 Minimum Interest Coverage Ratio.........................................................36
5.4 Maximum Capital Expenditures............................................................36
SECTION 6. AFFIRMATIVE COVENANTS...........................................................37
6.1 Financial Reporting.....................................................................37
6.2 Conduct of Business.....................................................................38
6.3 Maintenance and Insurance...............................................................39
6.4 Taxes...................................................................................39
6.5 Inspection by the Lender................................................................39
6.6 Accounting System.......................................................................39
6.7 Further Assurance.......................................................................40
6.8 Environmental Laws......................................................................40
6.9 Depository..............................................................................40
SECTION 7. NEGATIVE COVENANTS..............................................................40
7.1 Indebtedness; Contingent Liabilities....................................................40
7.2 Sale and Leaseback......................................................................41
7.3 Encumbrances............................................................................41
7.4 Disposition of Assets, Etc..............................................................42
7.5 Amendment to Charter or Partnership Documents...........................................42
7.6 Mergers; Consolidations; Issuance of Securities; Etc....................................42
7.7 Equity Distributions; Subordinated Payments.............................................42
7.8 Investments, Loans and Acquisitions.....................................................43
7.9 ERISA...................................................................................43
7.10 Transactions with Affiliates...........................................................43
7.11 Amendment of Certain Agreements........................................................44
7.12 Margin Stock...........................................................................44
7.13 Negative Pledges, Etc..................................................................44
SECTION 8. DEFAULTS.........................................................................44
8.1 Events of Default.......................................................................44
8.2 Remedies................................................................................46
8.3 Letters of Credit.......................................................................47
SECTION 9. MISCELLANEOUS....................................................................47
9.1 Notices.................................................................................47
9.2 Expenses................................................................................48
9.3 Indemnification.........................................................................48
9.4 Term of Agreement.......................................................................49
9.5 No Waivers..............................................................................49
9.6 Governing Law...........................................................................49
9.7 Entire Agreement; Amendments............................................................49
9.8 Assignments; Participations............................................................50
9.9 Counterparts; Partial Invalidity........................................................52
9.10 WAIVER OF JURY TRIAL...................................................................52
9.11 CONSENT TO JURISDICTION................................................................52
9.12 Joint and Several Liability............................................................53
SECTION 10. THE AGENT......................................................................53
10.1 Appointment, Powers and Immunities....................................................53
10.2 Reliance by Agent.....................................................................53
10.3 Events of Default.....................................................................54
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10.4 Rights as a Lender....................................................................54
10.5 Indemnification.......................................................................54
10.6 Non-Reliance on Agent and other Lenders...............................................54
10.7 Failure to Act........................................................................55
10.8 Resignation of Agent..................................................................55
10.9 Cooperation of Lenders................................................................55
EXHIBITS
EXHIBIT 2.1(A) FORM OF REVOLVING NOTE
EXHIBIT 2.1(B) FORM OF TERM NOTE
EXHIBIT 2.4 FORM OF LOAN REQUEST
EXHIBIT 2.5 FORM OF INTEREST RATE OPTION NOTICE
EXHIBIT 6.1(C) FORM OF COVENANT COMPLIANCE REPORT
EXHIBIT 9.8(A) FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT 9.8(B) FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
SCHEDULES
SCHEDULE 1 COMMITMENTS/PERCENTAGES
SCHEDULE 2.14 EXISTING TERM DEBT TO BE REFINANCED
SCHEDULE 4.1 QUALIFICATIONS
SCHEDULE 4.4 APPROVALS
SCHEDULE 4.6 INTELLECTUAL PROPERTY; TRADEMARKS, ETC.
SCHEDULE 4.8 MATERIAL AGREEMENTS
SCHEDULE 4.9 ENVIRONMENTAL MATTERS
SCHEDULE 4.14 LITIGATION
SCHEDULE 4.17 CAPITALIZATION
SCHEDULE 7.1 INDEBTEDNESS
SCHEDULE 7.3 ENCUMBRANCES
SCHEDULE 7.8 EXISTING INVESTMENTS
SCHEDULE 7.10 TRANSACTIONS WITH AFFILIATES
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of September 11, 1998 among JERRY'S
FAMOUS DELI, INC. (the "Parent"); JFD, INC., a California corporation, NATIONAL
DELI CORPORATION, a Florida corporation, and JERRY'S FAMOUS DELI L.A., INC., a
California corporation, the only Subsidiaries of the Parent in existence on the
date hereof (the "Existing Subsidiaries"), the Parent's future Subsidiaries who
become parties hereto (the Parent, the Existing Subsidiaries and all of such
future Subsidiaries who become parties hereto being collectively referred to as
the "Borrowers" and individually, as a "Borrower"); the various financial
institutions which are now, or in accordance with Section 9.8 hereafter become,
parties hereto as Lenders (individually, a "Lender" and collectively, the
"Lenders"); and BANKBOSTON, N.A., a national banking association, as agent for
the Lenders (the "Agent").
RECITALS
A. The Borrowers are engaged in the business of owning and
operating Restaurants;
B. The Borrowers, have requested that the Lenders provide term
financing of up to $9,000,000 to refinance existing term debt, to pay closing
costs in connection with this financing, and the balance to the Borrowers as
working capital and to provide a revolving line of credit of up to $6,000,000 to
be used for working capital, for standby letters of credit, to develop or fund
new Restaurants via development and acquisition and for general corporate
purposes;
C. The Lenders are willing, subject to the terms and conditions set
forth herein, to provide such financing;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. As used herein, the capitalized terms set forth
below shall have the following meanings:
Accountants: PricewaterhouseCoopers LLP or other independent certified
public accountants acceptable to the Agent.
Acquisition: See definition of Permitted Acquisition.
Adjusted Eurodollar Rate: As applied to any Interest Period, the rate
per annum determined pursuant to the following formula:
AER = [ IOR ]*
[1.00 - RP]
AER = Adjusted Eurodollar Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
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*The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100th of 1%.
Where:
The "Interbank Offered Rates" applicable to any Eurodollar Loan
for any Interest Period means the rate of interest determined by the
Lender to be the prevailing rate per annum at which deposits in U.S.
dollars are offered to the Lender by first-class banks in the interbank
Eurodollar market in which it regularly participates on or about 10:00
a.m. (Boston time) two Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount
of the Eurodollar Loan to which such Interest Period is to apply for a
period of time approximately equal to such Interest Period; and
The "Reserve Percentage" applicable to any Interest Period means
the rate (expressed as a decimal) applicable to the Lender during such
Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for determining the maximum
reserve requirement (including, without limitation, any basic,
supplemental, emergency or marginal reserve requirement) of the Lender
with respect to "Eurocurrency liabilities" as that term is defined under
such regulations.
The Adjusted Eurodollar Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Percentage.
Affiliate: As applied to any Person, (a) if an individual, a spouse or
relative of such person; (b) if a business entity, any partner, shareholder,
member, director, officer or manager of such Person (except an equityholder of
not more than 5% of the outstanding stock of any company listed on a national
securities exchange or actively traded in the over-the-counter securities
market); (c) any corporation, association, partnership, joint venture, firm or
other entity of which such Person is a partner, stockholder (except an
equityholder of not more than 5% of the outstanding stock of any company listed
on a national securities exchange or actively traded in the over-the-counter
securities market), venturer, member, director, officer or manager; and (d) any
other Person directly or indirectly controlling, controlled by, or under common
control with, such Person.
Agent: See the Preamble.
Applicable Margin: See Section 2.3.
Assignment and Acceptance Agreement: See Section 9.8.
Available Revolver Commitment: At any time, the aggregate Revolver
Commitments minus the Revolving Credit Outstandings.
Base Rate: The higher of (a) the annual rate of interest announced from
time to time by BankBoston, N.A. at its head office as its Base Rate, and (b)
the Federal Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if
necessary, to the next 1/16th of 1%). The Base Rate is not necessarily intended
to be the lowest rate of interest determined by the Agent in connection with
extensions of credit.
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Base Rate Loan: Any Revolving Loan or portion of any Term Loan bearing
interest calculated by reference to the Base Rate.
Borrowers: See the Preamble.
Business Day: (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts and are open for the transaction of a substantial part of
their commercial banking business; and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day that is a Business Day described in clause (i) and
that is also a day for trading by and between banks in the U.S. Dollar deposits
in the interbank Eurodollar market.
Capital Expenditures: Expenditures for fixed assets, leasehold
improvements, store fixtures, installment purchases of machinery and equipment
and similar expenditures, in each case capitalized in accordance with GAAP.
Capitalized Leases: Leases under which any Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
Code: The Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
Collateral: Any and all real and personal property of the Borrowers and
their Subsidiaries, whether tangible or intangible, in which the Agent on behalf
of the Lenders now has, is granted by this Agreement or otherwise, or hereafter
acquires a security interest or any other lien to secure any of the Obligations.
Commitments: As to any Lender, collectively, such Lender's Revolver
Commitment and Term Loan Commitment.
Companies: The Borrowers and their existing and future Subsidiaries.
Consolidated Cash Flow: For any period, without duplication, the sum of
(a) the Consolidated EBITDAR of the Borrowers and their Subsidiaries for such
period, minus (b) cash taxes of the Borrowers and their Subsidiaries for such
period, plus (c) Net Sale Proceeds for such period, minus (d) the aggregate
amount of Maintenance Capital Expenditures for such period; in each case
determined on a consolidated basis in accordance with GAAP.
Consolidated EBITDA: For any period, without duplication, an amount
equal to Consolidated Net Income of the Borrowers and their Subsidiaries for
such period, plus (a) taxes in respect of income and profits of the Borrowers
and their Subsidiaries for such period (excluding any
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such taxes taken into account in the computation of EBITDA in any prior period),
plus (b) Consolidated Interest Expense for such period, to the extent deducted
in the calculation of Consolidated Net Income for such period, plus (c)
depreciation, amortization and other non-cash charges for such period; all to
the extent deducted in computing Consolidated Net Income for such period, in
each case determined on a consolidated basis in accordance with GAAP.
Consolidated EBITDAR: For any period, without duplication, the sum of
(a) Consolidated EBITDA, plus (b) rental expense under Operating Leases; in each
case determined on a consolidated basis in accordance with GAAP.
Consolidated Financial Obligations; For any period, the sum of all
scheduled payments including without limitation, principal, Consolidated
Interest Expense and rental expense under Operating Leases which came due during
such period; in each case determined on a consolidated basis in accordance with
GAAP.
Consolidated Funded Indebtedness: Without duplication, all Indebtedness
of the Borrowers and their Subsidiaries with respect to any of the following:
(i) money borrowed (whether recourse or non-recourse), including principal,
interest and premiums, (ii) obligations evidenced by a bond, debenture, note or
other like written obligation to pay money, (iii) obligations under Capitalized
Leases, (iv) obligations under conditional sales or other title retention
agreements or secured by any Encumbrance, (v) the aggregate drawing amount of
any letters of credit or similar instruments (including reimbursement
obligations with respect thereto), (vi) the deferred unpaid purchase price of
property or services, except trade payables and accrued expenses incurred in the
ordinary course of business, or (vii) any Guaranty of any or all of the
foregoing; in each case determined on a consolidated basis in accordance with
GAAP. The aggregate amount of Consolidated Funded Indebtedness at any time shall
include all accrued interest which has become due and payable but has not been
paid (whether or not capitalized) and the accreted amount of any Debt Issuance
issued with original issue discount.
Consolidated Interest Expense: For any period, without duplication, the
sum of all interest (including without limitation interest on Capitalized
Leases) and commitment, letter of credit and similar fees on all Indebtedness of
the Borrowers and their Subsidiaries which came due during such period; in each
case determined on a consolidated basis in accordance with GAAP.
Consolidated Net Income: For any period, the net income (or loss) of the
Borrowers and their Subsidiaries, excluding any extraordinary income (or loss)
for such period (taken as a cumulative whole), after deducting all operating
expenses, provisions for all taxes and reserves (including reserves for deferred
income taxes) and all other proper deductions; in each case determined on a
consolidated basis in accordance with GAAP.
Controlled Group: All trades or businesses (whether or not incorporated)
under common control that, together with the Borrowers and their Subsidiaries,
are treated as a single employer under Section 414(b) or 414(c) of that Code or
Section 4001 of ERISA.
Credit Extensions: The Loans and the Letters of Credit.
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Debt/Equity Proceeds Payments: See Section 2.7.
Debt Issuance: The issuance of Indebtedness subordinated to the
obligations of the Borrowers to pay principal of and interest on and other
amounts due with respect to the Loans, the Notes and other Obligations hereunder
on terms of subordination satisfactory to the Required Lenders, and pursuant to
documentation containing other terms and including, without limitation,
interest, amortization, mandatory prepayments, covenants and events of default
in form and substance satisfactory to the Required Lenders.
Default: An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
Encumbrances: See Section 7.3.
Environmental Laws: Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted or promulgated), of all governmental agencies, bureaus or departments
which may now or hereafter have jurisdiction over any of the borrowers and all
applicable judicial and administrative and regulatory decrees, judgments and
orders, including common law rulings and determinations, relating to injury to,
or the protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous Materials,
chemical substances, pollutants or contaminants whether solid, liquid or gaseous
in nature, into the environment or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of such
Hazardous Materials, chemical substances, pollutants or contaminant. Without
limiting the generality of the foregoing, the term shall encompass each of the
following statutes and regulations promulgated thereunder, and amendments and
successors to such statutes and regulations, as enacted and promulgated from
time to time: (a) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.;
42 U.S.C. and 42 U.S.C. Section 9601 et seq.); (b) the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. Section 6901 et seq. ); (c) the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.); (d) the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.); (e) the Clean Water Act
(33 U.S.C. Section 1251 et seq.); (f) the Clean Air Act (42 U.S.C. Section 7401
et seq.); (g) the Safe Drinking Water Act (21 U.S.C. Section 349; 42 U.S.C.
Section 201 and Section 300 et seq.); (h) the National Environmental Policy Act
of 1969 (42 U.S.C. Section 4321); (i) the Superfund Amendment and
Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C.; 29
U.S.C.; 33 U.S.C. and 42 U.S.C.); and (j) Title III of the Superfund Amendment
and Reauthorization Act (40 U.S.C. Section 1101 et seq.).
Equity Affiliate: Any Affiliate of the Parent who owns or controls any
Borrower's shares of capital stock or any warrants, options or rights for the
purchase thereof.
Equity Issuance: (a) any issuance or sale by any Borrower or any of its
Subsidiaries of (i) any of its capital stock or other equity interests, (ii) any
warrants or options exercisable in respect of capital stock or other equity
interests, or (iii) any other security or instrument if representing an equity
interest (or the right to obtain any equity interest) in any Borrower or any of
its Subsidiaries.
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ERISA: The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
Eurodollar Loan: Any Revolving Loan or portion of any Term Loan bearing
interest at a rate calculated by reference to the Adjusted Eurodollar Rate.
Event of Default: See Section 8.1.
Expiration Date: August 31, 2003, or such earlier date on which all the
Commitments of the Lenders shall terminate in accordance with the terms hereof.
Federal Funds Effective Rate: For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by the
Agent.
Fee Letter: A letter agreement dated on or about the date hereof by and
between the Agent and the Borrowers regarding the payment of certain fees.
GAAP: For all purposes other than the financial statements contemplated
by Sections 6.1(a) and (b) of this Agreement, GAAP shall mean U.S. generally
accepted accounting principles in effect as of December 31, 1997, applied on a
consistent basis. With respect to the financial statements contemplated by
Sections 6.1(a) and (b) of this Agreement, GAAP shall mean generally accepted
accounting principles in effect at the time of the effective dates thereof,
applied on a consistent basis with past financial statements.
Guaranty or Guarantees: All guarantee(s), endorsement(s) or other
contingent or surety obligation(s) of any Borrower or any of its Subsidiaries
with respect to obligations of others, whether or not reflected on the
Borrowers' balance sheet, including any obligation to furnish funds, directly or
indirectly (whether by virtue of partnership arrangements, by agreement to
keep-well or otherwise), through the purchase of goods, supplies or services, or
by way of stock purchase, capital contribution, advance or loan, or to enter
into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity.
Hazardous Material: Any substance (a) the presence of which requires or
may hereafter require notification, investigation or remediation under any
Environmental Law; (b) which is or becomes defined as a "hazardous waste",
"hazardous material", "hazardous material or oil" or "hazardous substance" or
"controlled industrial waste" or "pollutant" or "contaminant" or "chemical
substance or mixture" under any present or future Environmental Law or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (43 U.S.C. Section 9601
et seq.) and any applicable local statutes and the regulations
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promulgated thereunder; (c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of any foreign country, and the
United States, any state of the United States, or any political subdivision
thereof to the extent any of the foregoing has or had jurisdiction over any
Borrower or any of its Subsidiaries; or (d) without limitation, which contains
gasoline, diesel fuel or other petroleum products, asbestos or polychlorinated
biphenyls.
Indebtedness: As applied to any Borrower or any of its Subsidiaries: (a)
all obligations for borrowed money whether or not secured or unsecured, absolute
or contingent, including, without limitation, unmatured reimbursement
obligations with respect to letters of credit or guarantees issued for the
account of or on behalf of any Borrower or any of its Subsidiaries and all
obligations representing the deferred purchase price of property or services,
other than accounts payable or accrued expenses arising in the ordinary course
of business, (b) all obligations evidenced by bonds, notes, debentures or other
similar instruments, (c) all obligations secured by any mortgage, pledge,
security interest or other lien on property owned or acquired by any Borrower or
any of its Subsidiaries whether or not the obligations secured thereby shall
have been assumed, (d) that portion of all obligations arising under Capitalized
Leases that is required to be capitalized on the Borrowers' consolidated balance
sheet, (e) all Guarantees and Sale Leaseback obligations, and (f) all
obligations that are immediately due and payable out of the proceeds of or
production from property now or hereafter owned or acquired by any Borrower or
any of its Subsidiaries.
Initial Financial Statement: See Section 4.11.
Insolvent or Insolvency: As applied to any Person, a Person as to which
there has occurred one or more of the following events, as applicable: (a)
dissolution; (b) termination of existence; (c) insolvency within the meaning of
the United States Bankruptcy Code or other applicable statute; (d) such Person's
inability to pay his or its debts as they come due; or (e) appointment of a
receiver of any part of the property of, execution of a trust mortgage or an
assignment for the benefit of creditors by, of the filing of a petition in
bankruptcy or the commencement of any proceedings under any bankruptcy or
insolvency laws, or any laws relating to the relief of debtors, readjustment or
indebtedness or reorganization of debtors, or the offering of a plan to
creditors for composition or extension, except for an involuntary proceeding
commenced against such Person which is dismissed within 60 days after the
commencement thereof without the entry of an order for relief or the appointment
of a trustee.
Intercompany Notes: Notes issued by the Subsidiaries to the Borrowers
evidencing any and all loans and advances made from time to time by any Borrower
to any Subsidiary, all of which must be endorsed over and delivered to the Agent
pursuant to the Security Documents.
Interest Adjustment Date: See Section 2.3(c).
Interest Expense: For any period, the aggregate amount (determined in
accordance with GAAP) of interest, premium and fees paid or required to be paid
during such period in respect of all Indebtedness of the Companies.
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Interest Period: (a) With respect to each Eurodollar Loan, the period
commencing on the date of the making or continuation of or conversion to such
Eurodollar Loan and ending one, two, three or six months thereafter, as the
Borrowers may elect in the applicable Loan Request or Interest Rate Option
Notice; and (b) with respect to each Base Rate Loan, the period commencing on
the date of the making or continuation of or conversion to such Base Rate Loan
and ending on the next Quarterly Date thereafter provided that, in each case:
(i) any Interest Period (other than an Interest Period determined
pursuant to clause (iv) below) that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless, in the case of Eurodollar Loans, such Business Day falls in the
next calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day;
(ii) if the Borrowers shall fail to give notice as provided in
Section 2.5, the Borrowers shall be deemed to have requested a
conversion of the affected Eurodollar Loan to a Base Rate Loan on the
last day of the then current Interest Period with respect thereto;
(iii) any Interest Period relating to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is not numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (iv) below,
end on the last Business Day of a calendar month;
(iv) any Interest Period related to a Eurodollar Loan under the
Revolving Note that would otherwise end after the Expiration Date shall
end on the Expiration Date, and any Interest Period related to a
Eurodollar Loan under any Term Note that would otherwise end after the
final maturity date of the Term Loan shall end on such final maturity
date;
(v) no Interest Period applicable to any Term Loan shall include
a principal repayment date for any Term Loan unless an aggregate
principal amount of Loans at least equal to the principal amount due on
such principal repayment date shall be Base Rate Loans or Eurodollar
Loans having Interest Period ending on or before such date; and
(vi) notwithstanding clauses (iv) and (v) above, no Interest
Period relating to a Eurodollar Loan shall have a duration of less than
one month.
Interest Rate Protection Agreement: Any interest rate swap agreement,
interest rate swap agreement or other financial agreement or arrangement
designed to protect any Borrower or any of its Subsidiaries against fluctuations
in interest rate.
Interest Rate Option Notice: See Section 2.5.
Issuing Bank: BankBoston, N.A. or any successor issuing bank of Letters
of Credit.
LC Draw Obligation: The Borrowers' obligation to reimburse the Issuing
Bank on account of any drawing under any Letter of Credit as provided in Section
2.8(c).
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LC Exposure Amount: At any time, the sum of (i) the aggregate undrawn
face amount of all Letters of Credit outstanding at such time, and (ii) the
aggregate amount of all drawings under Letters of Credit for which the Agent for
the account of the Issuing Bank shall not have been reimbursed by the Borrowers
as provided in Section 2.8(c). The amount of any Lender's LC Exposure Amount at
any time shall be the product of (i) the LC Exposure Amount, multiplied by (ii)
such Lender's Percentage at such time.
Lenders: See the Preamble.
Letter of Credit: See Section 2.8(a).
Letter of Credit Documents: See Section 2.8(a).
Letter of Credit Fee: See Section 2.8(i).
Leverage Ratio: See Section 2.3.
Loan Documents: Collectively, this Agreement, the Notes, the Letters of
Credit, the Letter of Credit Documents, the Security Documents, each Assignment
and Acceptance Agreement and any and all other agreements, instruments,
certificates or reports executed by any of the Borrowers or any of their
Subsidiaries or Affiliates in connection with this Agreement, as amended from
time to time.
Loan Request: See Section 2.4.
Loans: Collectively, the Revolving Loans and the Term Loans.
Maintenance Capital Expenditures: Capital Expenditures relating solely
to the maintenance of Restaurants in existence on the date hereof and related
purposes as provided in Section 6.3 below.
Margin Stock: See Section 4.15.
Net Debt/Equity Proceeds: In the case of any Debt Issuance or any Equity
Issuance, the aggregate amount of all cash received by any Borrower or any of
its Subsidiaries in respect thereof, net of reasonable expenses incurred by the
Borrowers and their Subsidiaries for such Debt Issuance or Equity Issuance.
Net Sale Proceeds: With respect to any sale of assets (other than sales
or other dispositions permitted pursuant to Section 7.4(a) of this Agreement),
the aggregate amount of all cash received by any Borrower or any of its
Subsidiaries in respect thereof, net of reasonable expenses incurred by the
Borrowers and their Subsidiaries for such sale.
Notes: The Revolving Notes and the Term Notes, and any and all
amendments, substitutions, replacements or renewals thereof.
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Obligations: Any and all obligations of any of the Borrowers and any of
their Subsidiaries to the Agent or any Lender of every kind and description,
direct or indirect, absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising, regardless of how they arise or
by what agreement or instrument they may be evidenced or whether evidenced by
any agreement or instrument, and including obligations to perform acts and to
refrain from acting as well as obligations to pay money; including without
limitation all of the Borrower's obligations under this Agreement, the Notes,
the Security Documents, the Letters of Credit, the Letter of Credit Documents
and any Interest Rate Protection Agreements with any Lender.
Operating Leases: Leases or other periodic payment arrangements for the
use of real or personal property, other than Capitalized Leases.
Organizational Documents: See Section 4.2.
Parent: See the Preamble.
PBGC: The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA
Percentage: As to any Lender, at any time, the percentage set forth
opposite such Lender's name on Schedule 1 hereto (or, if such Lender has
executed an Assignment and Acceptance Agreement, opposite such Lender's
signature on the most recent Assignment and Acceptance Agreement then executed
by it).
Permitted Acquisitions: The acquisition by the Parent or, if outside
California, a Subsidiary which is a Borrower hereunder, whether by way of the
purchase of assets or equity interests, by merger or consolidation or otherwise,
of substantially all of the assets of or equity interests in a Restaurant or
Restaurants (each, an "Acquisition"), subject to the fulfillment of the
following conditions:
(a) Such Acquisition (1) shall have been approved in writing by
the Required Lenders prior to the execution of the acquisition agreement
relating thereto, or (2) shall have been the only Acquisition
consummated by the Borrowers in the remainder of fiscal year 1998 or in
any fiscal year thereafter, as applicable, with a total purchase price
for such Acquisition not exceeding $5,000,000;
(b) If such Acquisition involves the purchase of equity
interests, the same shall be effected in such a manner as to assure that
the acquired entity becomes a wholly-owned Subsidiary of the Parent;
(c) No later than: (1) 15 days prior to the consummation of any
such Acquisition or, if earlier, 10 business days after the execution
and delivery of the related acquisition agreement, the Borrowers shall
have delivered to the Agent a copy of executed counterparts of such
acquisition agreement, together with all schedules thereto, and all
applicable financial information, including new Projections, updated to
reflect such Acquisition and any related transactions, (2) promptly
following a request therefor, copies of such other
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information or documents relating to such Acquisition as the Agent shall
have reasonably requested, and (3) promptly following the consummation
of such Acquisition, copies of the material agreements, instruments and
documents executed and delivered at the closing under such acquisition
agreement;
(d) No Borrower nor any Subsidiary shall, in connection with any
such Acquisition, assume or remain liable with respect to any
Indebtedness (including any material tax or ERISA liability) of the
related seller, except (i) to the extent permitted under this Agreement
and (ii) trade obligations of the seller incurred in the ordinary course
of business and necessary or desirable to the continued operation of the
underlying Restaurant business;
(e) All assets and properties acquired in connection with such
Acquisition shall be free and clear of any Encumbrances, other than
Permitted Encumbrances;
(f) Immediately prior to any such Acquisition and after giving
effect thereto, no Default shall have occurred or be continuing;
(g) Without limiting the generality of the foregoing, after
giving effect to such Acquisition (including any Loan therefor) the
Borrowers shall be in compliance with the provisions of Section 5, (i)
calculated on a pro forma basis as of the end of and for the Reference
Period most recently ended prior to the effective date of such
Acquisition, and (ii) under the updated Projections referred to above.
The Borrowers shall provide to the Agent a certificate signed on behalf
of the Borrowers by their treasurer demonstrating such compliance in
reasonable detail;
(h) On or before the consummation of each such Acquisition
involving the purchase or formation of a Subsidiary, such Subsidiary
shall be wholly-owned by the Parent and the Loan Documents shall be
revised pursuant to amendments satisfactory in form and substance to
Lender providing for such Subsidiary to become another "Borrower"
hereunder and for compliance with all requirements of Section 2.13; and
(i) On or before the consummation of each such Acquisition, the
Borrowers and their Subsidiaries shall have complied with all of the
requirements of Section 2.13 hereto,
including the execution and delivery of any required Security Documents,
and the Agent shall have received on behalf of the Lenders a first
priority security interest in all of the assets so acquired, whether by
way of an asset or equity interest acquisition, and the Agent shall have
also received, on behalf of the Lenders, a first priority perfected
security interest in and pledge of the equity interests of any such
acquired Subsidiary.
Permitted Encumbrances: See Section 7.3.
Permitted Sale: See Section 7.4.
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Person: Any individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated organization or any government
or any agency or political subdivision thereof.
Plan: At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (a) maintained by any Borrower or any of
its Subsidiaries or any member of the Controlled Group for employees of any
Borrower or any of its Subsidiaries or any member of the Controlled Group or (b)
if such Plan is established maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which any Borrower or any of its Subsidiaries or any member
of the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five Plan years made contributions.
Projections: See Section 4.11.
Qualified Investments: As applied to any Company, investments in (a)
notes, bonds or other obligations of the United States of America or any agency
thereof that as to principal and interest constitute direct obligations or are
guaranteed by the United States of America, (b) certificates of deposit or other
deposit instruments or accounts of banks or trust companies organized under the
laws of the United States or any state thereof that have capital and surplus of
at least $500,000,000 and are members of the Federal Deposit Insurance
Corporation, (c) commercial paper of the Lender or commercial paper of other
issuers that is rated not less than prime-one or A-1 or their equivalents by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation, respectively,
or their successors or municipal bonds with at least the equivalent rating, (d)
existing Subsidiaries, (e) any repurchase agreement secured by any one or more
of the foregoing and (f) shares of money market mutual funds publicly traded on
a national securities exchange.
Quarterly Dates: March 31, June 30, September 30 and December 31 of each
year.
Reference Period: Each period of four consecutive fiscal quarters of the
Borrowers and their Subsidiaries ending on or after September 30, 1998.
Remedial Work: All activities, including, without limitation, cleanup
design and implementation, removal activities, investigation, field and
laboratory testing and analysis, monitoring and other remedial and response
actions, taken or to be taken, arising out of or in connection with Hazardous
Materials, including without limitation (a) all activities included within the
meaning of the terms "removal," "remedial action" or "response," as defined in
42 U.S.C. Section 9601(23), (24) and (25), and (b) all activities included
within the meaning of the terms "remedial response actions" and "Remedial
Response Implementation Plan (RRIP)," as defined in 310 CMR 40.
Required Lenders: At any time, Lenders (a) holding in the aggregate at
least 51% of the sum of (i) the Revolving Credit Commitments at such time (or if
such Commitments have been terminated, Revolving Credit Outstandings) and (ii)
the aggregate principal amount of Term Loans outstanding at such time, and (b)
constituting no less than two Lenders if there are only two Lenders hereunder.
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Restaurant: Any deli-style restaurant or gourmet take-out restaurant
owned or controlled by any Borrower or any Affiliate thereof doing business
under the Jerry's Famous Deli or Rascal House service marks for such restaurants
or doing business under the Epicure Market servicemark for such gourmet take-out
establishments.
Revolving Credit Outstandings: At any time, the sum of (i) the aggregate
principal amount of Revolving Loans outstanding at such time, plus (ii) the LC
Exposure Amount at such time.
Revolver Commitment: With respect to each Lender, the amount set forth
on Schedule 1 hereto as the amount of such Lender's commitment to make Revolving
Loans to the Borrowers hereunder, as the same may be reduced from time to time
or terminated in accordance with the terms hereof.
Revolving Credit Period: The period beginning on the date of this
Agreement and extending through and including the Expiration Date or such
earlier date on which all Commitments are terminated or reduced to zero in
accordance with the terms hereof.
Revolving Loans: See Section 2.1.
Revolving Note: See Section 2.1.
Sale Leaseback: See Section 7.2.
Sale Proceeds Payments: See Section 2.7.
Security Documents: Collectively, the agreements and instruments
referred to in Section 3.1 and any and all other agreements, documents and
instruments executed by any of the Borrowers, and/or any of their Subsidiaries
or other Affiliates, to secure, or otherwise in connection with, the
Obligations, all as amended from time to time.
Subsidiary: (a) Any corporation, association, joint stock company,
business trust or other similar organization of which 50% or more of the
ordinary voting power for the election of a majority of the members of the board
of directors or other governing body of such entity is held or controlled by any
Borrower or a Subsidiary of any Borrower; (b) any other such organization the
management of which is directly or indirectly controlled by any Borrower or a
Subsidiary of any Borrower through the exercise of voting power or otherwise
(other than JFD-Encino, solely by being a general partner thereof); or (c) any
joint venture, association, partnership or other entity in which any Borrower
has at least a 50% equity interest.
Term Loans: See Section 2.1.
Term Loan Commitment: With respect to each Lender, the amount set forth
on Schedule 1 hereto as the amount of such Lender's commitment to make Term
Loans to the Borrowers in accordance with Section 2.1 hereof.
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Term Loan Maturity Date: August 31, 2003, or such earlier date on which
all the Commitments of the Lenders shall terminate in accordance with the terms
hereof.
Term Notes: See Section 2.1.
Westwood Lease: Assignment and Assumption of Lessor's Interest in Lease
between JFD - Westwood, Inc., as assignor and The Xxxxxxxx Family Trust dated
December 29, 1993; Standard Industrial/Commercial Single-Tenant Lease-Net dated
April 1, 1993, between JFD-Westwood, Inc., as lessor, and Jerry's Famous Deli,
Inc.; Addendum to Lease dated April 1, 1993, adding Sections 50 and 51; and
First Amendment to Lease Agreement dated August 1, 1995; all as originally
executed or as amended only in accordance herewith.
SECTION 2. THE CREDIT FACILITIES.
2.1 The Loans and Notes.
(a) Revolving Loans. Each Lender severally agrees, subject to the
terms of this Agreement, to make revolving credit loans (the "Revolving Loans")
to the Borrowers from time to time from and after the effectiveness of this
Agreement until the Expiration Date in an aggregate principal amount at any time
outstanding up to, but not exceeding, the Revolver Commitment of such Lender at
such time, minus such Lender's LC Exposure Amount at such time. The aggregate of
all Revolver Commitments on the date hereof is equal to $6,000,000. Subject to
the terms and conditions of this Agreement, from time to time from and after the
effectiveness of this Agreement until the Expiration Date, the Borrowers may
borrow, repay and reborrow Revolving Loans. The Revolving Loans of each Lender
shall be evidenced by a promissory note in the form of Exhibit 2.1(a) hereto
delivered to such Lender in the amount of its Revolver Commitment on the date
hereof (the "Revolving Note").
(b) Term Loans. Each Lender severally agrees, subject to the terms
of this Agreement, to make a term loan (the "Term Loans") to the Borrowers on or
about the date hereof in a principal amount up to, but not exceeding, such
Lender's Percentage of $9,000,000. The Borrowers shall not be entitled to
reborrow all or any part of the principal of the Term Loans which shall be paid
or prepaid at any time. The Term Loan of each Lender shall be evidenced by a
promissory note in the form of Exhibit 2.1(b) hereto delivered to such Lender in
the amount of its Term Loan on the date hereof (the "Term Note").
(c) Notations on Notes. The Borrowers irrevocably authorize each
Lender to make an appropriate notation on the applicable Note reflecting the
making of each Loan and each payment on the Loans. The outstanding amount of the
Loans entered in the computer records of each Lender shall be prima facie
evidence of the principal amount thereof owing and unpaid to the such Lender,
but the failure to enter, or any error in so entering, any such amount shall not
limit or otherwise effect the obligations of the Borrowers hereunder or under
any Note to make payments of principal, interest and other amounts due
thereunder.
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2.2 Scheduled Repayments of the Loans.
(a) Scheduled Repayments of Revolving Loans. The Borrowers shall pay
jointly and severally to the Agent for the account of the Lenders on the
Expiration Date all then outstanding principal, interest and other amounts with
respect to the Revolving Loans.
(b) Scheduled Repayments of Term Loans. The Borrowers shall pay
jointly and severally to the Agent for the account of the Lenders principal of
the Term Loans in 18 consecutive quarterly installments in the amounts set forth
below, payable on each Quarterly Date falling during the periods set forth
below, commencing on June 30, 1999:
Period Amount
------ ------
June 30, 1999 - December 31, 1999 $585,000
March 31, 2000 - December 31, 2000 $495,000
March 31, 2001 - December 31, 2001 $562,500
March 31, 2002 - December 31, 2002 $562,500
March 31, 2003 - June 30, 2003 $255,000
All remaining principal, interest and other amounts payable in respect of the
Term Loans will, if not sooner paid, become due and payable on the Term Loan
Maturity Date.
2.3 Commitment Fees; Interest; Default Rate.
(a) Commitment Fees. The Borrowers shall pay jointly to the Agent
for the account of the Lenders a commitment fee (the "Commitment Fee") on the
daily unused portion of the aggregate Revolver Commitments (taking into account
the LC Exposure Amount as usage) at a per annum rate equal to the Applicable
Margin (as defined below).
(b) Interest Rate. The Borrowers may elect an interest rate for each
Loan (or one or more portions thereof) based on either the Base Rate or the
applicable Adjusted Eurodollar Rate and determined as follows: (i) the rate for
any Base Rate Loan shall be the Base Rate plus the Applicable Margin; and (ii)
the rate for any Eurodollar Loan shall be the applicable Adjusted Eurodollar
Rate plus the Applicable Margin.
(c) Applicable Margin. For purposes of this Agreement, the term
"Applicable Margin" shall mean:
(i) from and after the date hereof until the first Interest
Adjustment Date identified below, the Applicable Margins for Revolving
Loans, Term Loans and the Commitment Fees shall be the Level II
Applicable Margins for such Loans and Commitment Fees specified in the
table in paragraph (ii) below; and
(ii) from and after the tenth day after each date the Agent
receives the quarterly financial statements required by Section 6.1(b)
and the covenant compliance certificate required by Section 6.1(c)
(beginning with the financial statements for the fiscal quarter
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ending September 30, 1998) (each, an "Interest Adjustment Date"),
subject to the provisions of paragraph (iv) below, the Applicable Margin
shall be determined from the following table based upon the Leverage
Ratio (as defined below) as of the Quarterly Date immediately preceding
such Interest Adjustment Date:
Applicable Margin Applicable Margin Applicable Margin
Level Leverage Ratio for Revolving Loans for Term Loans for Commitment
----- -------------- ------------------- ----------------- ------------------
Fee
---
Base Rate Eurodollar Base Rate Eurodollar
--------- ---------- --------- ----------
I Greater than or 1.25% 3.00% 1.00% 2.75% .50%
equal to 4.0:1.0
II Less than 1.00% 2.75% .75% 2.50% .50%
4.0:1.0, but
greater than or
equal to 3.5:1.0
III Less than .75% 2.50% .50% 2.25% .50%
3.5:1.0, but
greater than or
equal to 3.0:1.0
IV Less than .50% 2.25% .25% 2.00% .375%
3.0:1.0, but
greater than or
equal to 2.5:1.00
V Less than .50% 2.00% .25% 1.75% .375%
2.5:1.00
(iii) As used herein, the term "Leverage Ratio" shall mean the
ratio of (A) Consolidated Funded Indebtedness as of any Quarterly Date
to (B) Consolidated EBITDA for the Reference Period ending on such
Quarterly Date.
(iv) Notwithstanding the foregoing, no downward adjustment of
the Applicable Margin hereunder shall be permitted unless (A) all of the
required financial statements for the relevant Reference Period have
been delivered to the Agent and the Lenders as required in Section 6.1;
and (B) there shall exist no Default at the time of such proposed
downward adjustment.
(v) The determination of the Applicable Margin hereunder as
of any Quarterly Date shall be based on unaudited quarterly financial
statements for the relevant Reference Period; provided, however, that in
the event of any discrepancy between computations based upon any
unaudited quarterly financial statements and the related audited
financial
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statements furnished pursuant to Section 6.1(a) (the "Audited Financial
Statements") in favor of the Lenders, the computation based upon the
Audited Financial Statements shall govern (retroactive to the relevant
Interest Adjustment Date), and the amount of interest and Commitment
Fees thereby overdue and payable by the Borrowers shall be paid to the
Agent, for the account of the Lenders, within three Business Days after
the Agent's demand therefor.
(d) Interest and Commitment Fees Payment Dates. Interest on Base
Rate Loans shall be due and payable, without setoff, deduction or counterclaim,
quarterly in arrears on each Quarterly Date, commencing September 30, 1998, and
when such Base Rate Loan is due (whether at maturity, by reason of acceleration
or otherwise). The rate of interest on Base Rate Loans shall change on the date
of any change in the applicable Base Rate. Interest on each Eurodollar Loan
shall be payable, without setoff, deduction or counterclaim, for the related
Interest Period on the last day thereof and when such Eurodollar Loan is due
(whether at maturity, by reason of acceleration or otherwise) and, if such
Interest Period is longer than three months, at intervals of three months after
the first day of such Interest Period. Commitment Fees shall be due and payable
in arrears on each Quarterly Date and on the Expiration Date.
(e) Default Rate; Late Fee. During the existence of any Event of
Default, the outstanding principal under the Notes and, to the extent permitted
by applicable law, any interest (under this Section 2.3) and fees or any other
amounts due and payable hereunder (including without limitation overadvances)
shall bear interest, from and including the date such Event of Default occurred
until such Event of Default is waived or cured to the satisfaction of the Agent
and Required Lenders (or Lenders, as applicable pursuant to Section 9.7), at a
rate per annum equal to 2% above the rate which then applies to Base Rate Loans
with respect to each type of Loan, which interest shall be compounded daily and
payable on demand. If any payment of principal, interest or other amount due
hereunder is not paid in full within 10 days after the same is due, the
Borrowers shall also jointly and severally pay to the Agent on behalf of the
Lenders a late fee in the amount of 5.0% of the amount not paid when due.
Nothing in this Section 2.3(d) shall affect the Agent's right to exercise any of
its rights or remedies, including those provided in Section 8.2 and in the
Security Documents, arising upon the occurrence of an Event of Default.
(f) Computations. Interest on the Loans and on fees and expenses
shall be computed on the basis of the actual number of days elapsed over a
360-day year. Except as otherwise provided in the definition of the term
"Interest Period" with respect to the Eurodollar Loans, if any payment hereunder
or under the Notes shall be due and payable on a day which is not a Business
Day, such payment shall be deemed due on the next following Business Day and
interest shall be payable at the applicable rate specified herein through such
extension period.
2.4 Requests for Loans. The Parent shall give the Agent telephonic
notice confirmed in writing in the form of Exhibit 2.4(a) of each Revolving Loan
requested hereunder (a "Loan Request") no later than (a) 1:00 PM (Boston time)
on the same Business Day as the proposed date of any Base Rate Loan and (b) 1:00
PM (Boston time) on the third Business Day prior to the proposed date of any
Eurodollar Loan. Each such notice shall specify (i) the type of Loan and, if a
Revolving Loan, the principal amount thereof requested and the use or uses
thereof, (ii) the proposed date of such Loan, (iii) the Interest Period for such
Loan, if a Eurodollar Loan, and (iv) whether such Loan shall be a Base Rate Loan
or a Eurodollar Loan. Each Loan Request shall be irrevocable and
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binding on the Borrowers and shall obligate the Borrowers to accept the Loan
requested from the Lenders on the proposed date. Each Loan Request for a Base
Rate Loan shall be in a minimum amount of $50,000 (and integrals thereof) and
each Loan Request for a Eurodollar Loan shall be in a minimum amount of $100,000
(and integrals thereof); provided, that at no time shall there be more than five
Eurodollar Loans outstanding from any Lender. The Agent shall promptly notify
the Lenders of each Loan Request. Not later than 2:00 PM, Boston time, on the
date specified for each borrowing hereunder, each Lender shall transfer to the
Agent, by wire transfer or otherwise, but in any event in immediately available
funds, the amount of the Loan to be made by it on such date, and the Agent, upon
its receipt thereof, shall disburse such sum to the Borrowers by depositing it
in a joint account of the Borrowers with the Agent.
2.5 Conversion and Continuance of Loans.
(a) Conversion to a Different Type of Loan. The Borrowers may elect
from time to time to convert any outstanding Revolving Loan or any portion of
the Term Loans to a Base Rate Loan or Eurodollar Loan, as the case may be
provided that (i) with respect to any such conversion of a Eurodollar Loan to a
Base Rate Loan, the Borrowers shall provide the appropriate Interest Rate Option
Notice in the form of Exhibit 2.5 hereto to Agent by 1:00 PM (Boston time) on
the date of such proposed conversion; (ii) with respect to any such conversion
of a Base Rate Loan to a Eurodollar Rate Loan, the Borrowers shall provide the
appropriate Interest Rate Option Notice to Agent by 1:00 PM (Boston time) at
least three Business Days' prior to the date of such proposed conversion; (iii)
with respect to any such conversion of a Eurodollar Loan into a Base Rate Loan,
such conversion shall only be made on the last day of the related Interest
Period; (iv) no Loans may be converted into a Eurodollar Loan when any Default
has occurred and is continuing; (v) at no time shall there be more than six
Eurodollar Loans outstanding from any Lender; and (vi) any conversion of less
than all of the outstanding Loans of either type into Loans of the other type
shall be in a minimum principal amount of $100,000, provided that a conversion
of a Eurodollar Loan to a Base Rate Loan shall be in a minimum principal amount
of $50,000.
(b) Continuance of an Interest Rate Option. The Borrowers may
continue any Loan of either type as a Loan of the same type upon the expiration
of the related Interest Period by providing an Interest Rate Option Notice to
the Agent in compliance with the notice provisions set forth in Section 2.5(a);
provided that no Eurodollar Loan may be continued as such when any Default has
occurred and is continuing, but shall be automatically converted to a Base Rate
Loan on the last day of the first applicable Interest Period which ends during
the continuance of such Default.
2.6 Termination of the Revolver Commitment. The Revolver Commitments
shall be automatically and permanently reduced to -0- on the Expiration Date,
when all outstanding principal, accrued interest and other amounts due on the
Revolving Notes shall be due and payable in full.
2.7 Mandatory Payments and Prepayments.
(a) Overdraws. If at any time the Revolving Credit Outstandings
exceed the sum of the Revolver Commitments, the Borrowers shall immediately pay
to the Agent, for the account of the Lenders, the amount of such excess, which
excess shall be first applied to any unpaid LC Draw
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Obligations or, if a Default then exists and is continuing, applied at the
Required Lenders' sole and absolute discretion.
(b) Mandatory Payments in Connection with Prepayment Events. The
Borrowers shall, not later than 30 days following each day any Net Sale Proceeds
are received by any Borrower or any of its Subsidiaries, pay to the Agent on
account of the Lenders the amount of such Net Sale Proceeds (each such payment
to the Agent being referred to herein as a "Sale Proceeds Payment").
(c) Mandatory Payments in Connection with Debt or Equity Issuances.
The Borrowers shall, not later than 30 days next following each day any Net
Debt/Equity Proceeds are received by any Borrower or any of its Subsidiaries,
pay to the Agent on account of the Lenders the amount of such Net Debt/Equity
Proceeds (each such payment to the Agent being referred to herein as a
"Debt/Equity Proceeds Payment"); provided, however, such Debt/Equity Proceeds
Payment shall not be due and payable if the Leverage Ratio for the most recently
ended Reference Period for which the Borrowers have delivered quarterly
financial statements pursuant hereto is less than or equal to 2.5:1.0.
(d) Voluntary Prepayments. Subject to the provisions hereof,
including without limitation the provisions of Section 2.11, the Borrowers may
at any time voluntarily prepay the Revolving Loans or the Term Loans, in whole
or in part (in multiples of $100,000 as to Eurodollar Loans and $50,000 as to
Base Rate Loans) from time to time upon not less than the same Business Day
prior notice by 1:00 PM to Agent with respect to Base Rate Loans and three
Business Days' prior notice by 1:00 PM to Agent with respect to Eurodollar
Loans; provided, however, that (i) Eurodollar Loans may be repaid only on the
last day of an Interest Period for such Loans, (ii) all repayments of Eurodollar
Loans or any portion thereof shall be made together with payment of all interest
accrued on the amount repaid and other amounts due with respect thereto through
the date of such repayment, and (iii) if any portion of the Term Loans are paid
prior to the third anniversary of the date of this Agreement, a prepayment
penalty shall be due at the time of prepayment with respect to any prepayment
resulting from the refinancing of the Term Loans, in whole or in part, by
another financial institution or institutions, equal to 1.0% of the amount so
prepaid.
(e) Application of Payments.
(i) If no Default then exists hereunder, all Sale Proceeds
Payments and all Debt/Equity Proceeds Payments shall be first applied to
remaining scheduled installments of Term Loans (each in inverse order of
maturity) and then (after all principal of the Term Loans has been paid
in full) to principal of the Revolving Loans. Any such payments applied
to Revolving Loans shall immediately, automatically and permanently
reduce the aggregate Revolving Commitments by the amount thereof.
(ii) Except as set forth in subparagraph (i) above (or if a
Default exists in which case all payments and prepayments may be applied
as Required Lenders elect), all payments and repayments made pursuant to
the terms hereof shall be applied (A) first to all (if any) amounts
(except principal, interest and fees) due and payable under this
Agreement at such time, (B) then to payment of all fees due and payable
at such time, (C) then to interest due
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and payable at such time, (D) then to accrued interest and then to
principal of Base Rate Loans, (E) then to principal of Eurodollar Loans,
and (F) finally, to all other Obligations.
2.8 Letters of Credit.
(a) Letter of Credit Commitment. Subject to the execution and
delivery by the Borrowers of a letter of credit application and any other
related documents in a form satisfactory to the Issuing Bank (collectively, the
"Letter of Credit Documents") and in reliance upon the representations and
warranties of the Borrowers contained herein, the Issuing Bank agrees from time
to time during the Revolving Credit Period to issue, extend and renew for the
account of any Borrower or any of their Subsidiaries one or more standby letters
of credit (each individually, a "Letter of Credit"), in such form as may be
requested from time to time by the Borrowers and agreed to by the Issuing Bank.
In the event and to the extent that any provision of any Letter of Credit
Document shall be inconsistent with any provision of this Agreement, then the
provisions of this Agreement shall govern.
(b) Conditions to Issuance of Letters of Credit; Etc.
(i) The obligation of the Issuing Bank to issue, extend or
renew any Letter of Credit hereunder shall be subject to the conditions
for Loans set forth in Section 3 and to the following conditions:
(A) Such Letter of Credit shall provide for payment
in U.S. Dollars and shall expire by its terms no later than the
earlier to occur of (A) the Expiration Date and (b) one year
form the date of its issuance;
(B) After giving effect to such issuance, extension
or renewal, (1) the aggregate outstanding principal amount of
the Revolving Loans shall not exceed the Available Revolver
Commitment and (2) the sums of the aggregate LC Exposure Amount
shall not exceed $750,000;
(C) The form and terms of each Letter of Credit and
the related Letter of Credit Documents shall be acceptable to
the Issuing Bank; and
(D) Each Letter of Credit shall be issued to support
obligations of one or more Companies incurred in the ordinary
course of its or their business.
(ii) Whenever the Borrowers desire to have a Letter of Credit
issued, extended or renewed, the Borrowers will furnish to the Agent and
the Issuing Bank a written application therefor which shall (A) be
received by the Agent and the Issuing Bank not less than three Business
Days prior to the proposed date of issuance, extension or renewal and
(B) specify (1) such proposed date (which must be a Business Day), (2)
the expiration date of such Letter of Credit, (3) the name and address
of the beneficiary of the Letter of Credit, (4) the amount of such
Letter of Credit, and (5) the purpose and proposed form of such Letter
of Credit. Each Letter of Credit shall be subject to the Uniform Customs
Act and, to the extent not inconsistent therewith, the laws of The
Commonwealth of Massachusetts.
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(c) LC Draw Obligations of the Borrowers. In order to induce the
Issuing Bank to issue, extend and renew each Letter of Credit, the Borrowers
hereby jointly and severally agree to reimburse or pay to the Agent for the
account of the Issuing Bank:
(i) except as otherwise expressly provided in paragraphs
(ii) and (iii) below, on each date that any draft presented under such
Letter of Credit is honored by the Issuing Bank or the Issuing Bank
otherwise makes a payment with respect thereto, as indicated in the
notice thereof from the Issuing Bank to the Borrowers (A) the amount
paid by the Issuing Bank under or with respect to such Letter of Credit,
and (B) the amount of any taxes, fees, charges or other reasonable costs
and expenses whatsoever incurred by the Issuing Bank in connection with
any payment made by the Issuing Bank under or with respect to such
Letter of Credit;
(ii) upon the reduction (but not termination) of the
aggregate Revolver Commitments to an amount less than the LC Exposure
Amount, an amount equal to such difference, which amount shall be held
by the Agent as cash collateral for all LC Draw Obligations; and
(iii) upon the termination (or reduction) of the Revolver
Commitments, or the acceleration of the LC Draw Obligations in
accordance with Section 8.1, an amount equal to the LC Exposure Amount
(or with respect to a reduction, the excess thereof over the reduced
aggregate Revolver Commitments), which amount shall be held by the Agent
as cash collateral for all LC Draw Obligations.
Interest shall accrue on any and all amounts remaining unpaid by the Borrowers
under this Section 2.8 at any time from the date such amounts become due and
payable (whether as stated in this Section 2.8, by acceleration of otherwise)
until payment in full (whether before or after judgment) at the rate specified
in Section 2.3(d) for overdue principal on the Loans and shall be payable to the
Agent on demand.
(d) Participations in Letters of Credit. By the issuance of a Letter
of Credit and without any further action on the part of the Issuing Bank or the
other Lenders in respect thereof, the Issuing Bank hereby grants to each Lender,
and each Lender hereby acquires from the Issuing Bank, a participation in such
Letter of Credit equal to such Lender's Percentage of the face amount of such
Letter of Credit, effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Agent, for the account of the Issuing
Bank, such Lender's Percentage of each LC Draw Obligation. Each Lender
acknowledges and agrees that its obligation to acquire participations in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstances whatsoever, including the occurrence and continuance of a
Default hereunder, and that each such payment shall be made without any setoff,
withholding or reduction whatsoever.
(e) Revolving Loans to Satisfy LC Draw Obligations. The Borrowers
may elect to satisfy any LC Draw Obligation arising under paragraph (c)(i) of
this Section by borrowing a Base Rate Loan in the amount thereof and applying
the proceeds thereto, provided that (i) all conditions to
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such Revolving Loan set forth in Section 3 shall have been satisfied in full and
(ii) after giving effect to such Revolving Loan and the application of proceeds
thereof, the Revolving Credit Outstandings will not exceed the aggregate
Revolver Commitments. If the Agent has not received from the Borrowers the
payment required pursuant to Section 2.8(c)(i) above by 1:00 PM (Boston time) on
the date on which the Issuing Bank has notified the Borrowers that the payment
of a draft has been presented under any Letter of Credit will be made, the Agent
shall promptly notify the Issuing Bank and each other Lender of the LC Draw
Obligation and, in the case of each Lender, its percentage of such Letter of
Credit Disbursement. Each Lender shall pay to the Agent, not later than 3:00 PM
(Boston time) on such date, such Lender's Percentage of such LC Draw Obligation,
which the Agent shall promptly pay to the Issuing Bank. The Agent will promptly
remit to each Lender its share of any amount subsequently received by the Agent
from the Borrowers in respect of such LC Draw Obligation.
(f) Borrowers' Obligations Absolute. The Borrowers assume all risks
in connection with the Letters of Credit. The Borrowers' obligations under this
Section 2.8 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which any Borrower
may have or have had against the Agent, the Issuing Bank or any Lender or any
beneficiary of a Letter of Credit. The Borrowers also agree that the Agent, the
Issuing Bank and any other Lender shall not be responsible for, and the
Borrowers' LC Draw Obligations shall not be affected by, among other things, (i)
the validity, genuineness or enforceability of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient (provided all such documents conform on their
face), fraudulent or forged, or (ii) any dispute between or among any Borrower,
any of its Subsidiaries, the beneficiary of any Letter of Credit or any
financing institution or other party to which any Letter of Credit may be
transferred or any claims or defenses whatsoever of any Borrower or any of its
Subsidiaries against the beneficiary of any Letter of Credit or any such
transferee. The Agent, the Issuing Bank and any other Lender shall not be liable
for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit. The Borrowers agree that any action taken or omitted by the
Agent, the Issuing Bank or any other Lender under or in connection with each
Letter of Credit and the related drafts and documents, if done in good faith,
shall be binding upon the Borrowers and shall not subject the Agent, the Issuing
Bank or any other Lender to any liability to the Borrowers.
(g) Reliance by Issuer. The Lender shall be entitled to rely, and
shall be fully protected in relying upon, any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, telegram, telecopy,
telex or teletype message, statement, order or other document believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person and upon advice and statements of legal counsel, independent accountants
and other experts selected by the Issuing Bank.
(h) Letter of Credit Fee. In order to induce the Issuing Bank to
issue, extend and renew each Letter of Credit, the Borrowers hereby agree
jointly and severally to pay to the Agent quarterly in arrears with respect to
each such issuance, extension and renewal a fee (in each case, a "Letter of
Credit Fee") for the account of the Issuing Bank and the Lenders on the stated
amount of such Letter of Credit at a rate per annum equal to 2.0%.
Notwithstanding anything herein to the contrary, the
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Issuing Bank shall receive a portion of the Letter of Credit Fee equal to 1/8th
of 1% per annum on the stated amount of such Letter of Credit, and the balance
of each Letter of Credit Fee shall be shared ratably among the Lenders
(including the Issuing Bank) based upon their Revolver Commitments. In addition,
the Borrowers shall pay to the Issuing Bank any and all standard charges
customarily made by the Issuing Bank in connection with such issuance, extension
or renewal.
2.9 Changed Circumstances.
(a) Eurodollar Loans. In the event that:
(i) on any date on which the Adjusted Eurodollar Rate would
otherwise be set, the Agent shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair
means do not exist for ascertaining the Interbank Offered Rate, or
(ii) at any time any Lender or the Agent shall have
determined in good faith (which determination shall be final and
conclusive) that:
(A) the making or continuation of, or conversion of
any Base Rate Loan to, a Eurodollar Loan has been made
impracticable or unlawful by (1) the occurrence of a contingency
that materially and adversely affects the Interbank Eurodollar
market or (2) compliance by the Agent or any Lender in good
faith with any applicable law or governmental regulation,
guideline or order or interpretation or change thereof by any
governmental authority charged with the interpretation or
administration thereof or with any request or directive of any
such governmental authority (whether or not having the force of
law); or
(B) the Adjusted Eurodollar Rate shall no longer
represent the effective cost to the Lenders for U.S. dollar
deposits in the Interbank market for deposits in which they
regularly participate;
then, and in any such event, the affected Lender shall so notify the Agent and
the Agent shall so notify the Borrowers. Until the Agent notifies the Borrowers
that the circumstances giving rise to such notice no longer apply, the
obligation of the Lenders to allow selection by the Borrowers of Eurodollar
Loans shall be suspended. If at the time the Agent so notifies the Borrowers,
the Borrowers have previously given the Agent a Loan Request or Interest Rate
Option Notice with respect to one or more Eurodollar Loans but such Loans have
not yet gone into effect, such notification shall be deemed to be void and the
Loans shall bear interest at the rate than applicable to Base Rate Loans. Upon
such date as the Lender shall specify in such notice (which shall be the last
day of applicable Interest Period, if an earlier date is not required), the
Borrowers shall prepay all outstanding Eurodollar Loans, together with interest
thereon, and may borrow Base Rate Loans in accordance with this Agreement by
delivering an Interest Rate Option Notice pursuant to Section 2.5. In the event
that the affected Lender determines at any time following the giving of notice
pursuant to this clause that such Lender may lawfully make Eurodollar Loans, the
affected Lender(s) shall give notice thereof to the Agent and the Agent shall
give notice to the Borrowers of such
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determination, whereupon the Borrowers' right to request, and the Lenders'
obligation to make, Eurodollar Loans shall be restored.
(b) All Credit Extensions. After the date hereof, in case any change
in any existing or any new law, regulation, treaty or official directive or the
interpretation or application thereof by any court or by any governmental
authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other governmental authority
(whether or not having the force of law):
(i) subjects the Agent or any Lender to any tax with respect
to payments of principal or interest or any other amounts payable
hereunder by any Borrower or otherwise with respect to the transactions
contemplated hereby (except for taxes on the overall net income of such
Persons imposed by the United States of America or any political
subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or Loans or
Letters of Credit issued by Agent or any Lender (other than such
requirements as are already included in the determination of the
Adjusted Eurodollar Rate), or
(iii) imposes upon the Agent or any Lender any other condition
with respect to the Loans or the Letters of Credit or otherwise with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the Agent or
any Lender, reduce the income receivable by the Agent or any Lender or impose
any expense with respect to any Loan or Letter of Credit (in each case without
duplication of amounts described in Section 2.10), the affected Lender shall so
notify Agent and agent shall so notify the Borrowers. The Borrowers agree to pay
to the Agent the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or
determined, upon demand after presentation by the Agent of a statement in the
amount and setting forth the Agent's or such Lender's calculation thereof, which
statement shall be prima facie evidence of the correctness of such calculation,
absent manifest error.
2.10 Capital Adequacy. The affected Lender shall notify the Agent and
the Agent shall notify the Borrowers if, after the date hereof, the Agent or any
Lender determines that (a) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies , or any change in the interpretation or application thereof by any
governmental authority charged with the administration thereof, or (b)
compliance by any such Person or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital adequacy
(whether or not having the force of law), has the effect of reducing the return
on such Person's or such holding company's capital as a consequence of such
Person's commitment to make Loans or issue Letters of Credit hereunder to a
level below that which such Person or such holding company could have achieved
but for such adoption, change or compliance (taking into consideration such
Person's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital and
excluding
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any such reduction resulting from a decline in such Person's capital or capital
ratios) by any amount reasonably deemed by such Person to be material. The
Borrowers agree to pay to the Agent the amount of such reduction of return of
capital as and when such reduction is determined, within a reasonable period of
time (as determined by such Person in its reasonable discretion), after
presentation by the Agent of a statement in the amount and setting forth the
Agent's or such Lender's calculation thereof, which statement shall be deemed
true and correct absent manifest error. In determining such amount, the affected
Lender, Issuing Bank or Agent may use any reasonable averaging and attribution
methods used by such Person in similar circumstances.
2.11 Payments Before End of Eurodollar Period. If any Borrower for
any reason makes any payment or prepayment of principal with respect to any
Eurodollar Loan on any day other than the last day of the applicable Interest
Period, or fails to borrow, continue or convert to a Eurodollar Loan after
giving a Loan Request or Interest Rate Option Notice pursuant to Section 2.4 or
2.5, or if any Eurodollar Loan is accelerated pursuant to Section 8.1, the
Borrowers shall pay to the Agent for the account of the Lenders a makewhole
payment pursuant to the following formula:
L = (R - T) x P x D
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360
L = amount payable to the Agent
R = interest rate on such Loan
T = effective interest rate per annum at which any
readily marketable bond or other obligation of
the United States, selected at the Agent's sole
discretion, maturing on or near the last day of
the then applicable Interest Period and in
approximately the same amount as such Loan can
be purchased by the Lenders on the day of such
payment of principal or failure to borrow,
continue or convert
P = the amount of principal prepaid or the amount of the
requested Loan
D = the number of days remaining in the Interest Period
as of the date of such payment or the number of
days of the requested Interest Period
The Borrowers shall pay such amount upon demand upon presentation by the Agent
of a statement setting forth the amount and the Agent's calculation thereof
pursuant hereto, which statement shall be deemed true and correct absent
manifest error.
2.12 Additional Compensation. The Borrowers shall pay jointly and
severally to the Agent certain compensation as provided in the Fee Letter dated
on or about the date hereof.
2.13 Security.
The Obligations, whether under this Agreement, the Notes, the Letter of
Credit Documents, the other Loan Documents or otherwise, shall be secured at all
times by:
(a) a first priority perfected security interest in all presently
owned and hereafter acquired tangible and intangible personal property and
fixtures of the Borrowers and their Subsidiaries (including without limitation
all Intercompany Notes and all trademarks and service
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marks and licenses), subject only to Permitted Encumbrances, together with any
landlord waivers (which Borrowers are able to obtain by use of best efforts)
with respect to the locations of such personal property and fixtures and, after
an Event of Default has been declared, lock box account agreements with respect
to cash receipts;
(b) second priority mortgages or deeds of trust and assignments of
leases and rents on all presently owned real estate of each Borrower or any of
its Subsidiaries and first priority mortgages or deeds of trust and assignments
of leases and rents on all hereafter acquired real estate of each Borrower or
any of its Subsidiaries, subject only to Permitted Encumbrances, together with
mortgagee title insurance policies acceptable to the Agent in the amount of no
greater than the fair market value of each such property, less the amount of
senior Permitted Encumbrances which constitute first mortgages relating thereto,
if any;
(c) a first priority perfected pledge of all of the issued and
outstanding shares of capital stock and other equity interests of all of the
Borrowers (except the Parent) and their Subsidiaries, together with all options,
warrants and other similar rights to the purchase thereof, now or hereafter
owned legally or beneficially by any of the Borrowers; and
(d) the subordination to the Agent and the Lenders of all now
existing or thereafter arising obligations of the Borrowers to any of the other
Borrowers, the Subsidiaries, or other Affiliates of any of the foregoing
pursuant to a subordination agreement satisfactory to the Agent in form and
substance.
The Borrowers agree to take such actions (and to cause their Subsidiaries to
take such actions) as the Agent may reasonably request from time to time in
order to cause the Agent and the Lenders to be secured at all times as described
in this Section.
2.14 Use of Proceeds. Each of the Borrowers hereby covenants,
warrants and represents as follows:
(a) The proceeds of the Term Loans shall be used by the Borrowers
solely to refinance outstanding term financing described in Schedule 2.14 (which
lists the payoff amounts thereof), for certain closing costs relating hereto
disclosed to Agent prior to closing and the balance thereof to working capital.
(c) Proceeds of Revolving Loans shall be used for working capital
and general corporate purposes of the Borrowers and their Subsidiaries (pursuant
to Intercompany Notes). In addition, proceeds of Revolving Loans may be used to
fund Permitted Acquisitions provided the Leverage Ratio for the Borrowers and
their Subsidiaries for the most recently ended Reference Period for which
financial statements have been provided to the Agent and the Lenders hereunder
is not greater than 3.25:1.00 (calculated on a pro forma basis with respect to
any Permitted Acquisition).
2.15 Time and Method of Payments. (a) All payments of principal,
interest, fees and other amounts (including indemnities) payable by the
Borrowers hereunder shall be made in U.S. Dollars, in immediately available
funds, without deduction, setoff or counterclaim, to the Agent at its principal
office on the date on which such payment shall become due; provided, however,
that any payment not received by the Agent by 3:00 PM, (Boston time) on the date
made shall be deemed received on the next Business Day (but no Default shall be
deemed to have occurred as a result
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thereof under Section 8.1 if payment is received after 3:00 PM, (Boston time),
but prior to 5:00 PM, (Boston time) on the date on which such payment shall
become due). The Agent or any Lender for whose account any such payment is to be
made may, but shall not be obligated to, debit the amount of any such payment
which is not made by such time to any deposit account of any of the Borrowers
with the Agent or such Lender, as the case may be. Each payment received by the
Agent hereunder for the account of a Lender shall be paid promptly to such
Lender, in like funds. If any payment of principal or interest becomes due on a
day other than a Business Day, such payment may be made on the next succeeding
Business Day, and such extension shall be included in computing interest in
connection with such payment. So long as the applicable Lender shall have
complied with Section 2.15(b) hereof, all payments hereunder and under the Notes
shall be made without setoff or counterclaim and in such amounts as may be
necessary in order that all such payments shall not be less than the amounts
otherwise specified to be paid under this Agreement and the Notes after
withholding for or on account of (i) any present or future taxes, levies,
imposts, duties or other similar charges of whatever nature imposed by any
government or any political subdivision or taxing authority thereof, other than
any tax (except those referred to in clause (ii) below) on or measured by the
net income of the Agent, any Lender or the Issuing Bank to which any such
payment is due pursuant to applicable federal, state and local income tax laws,
and (ii) deduction of amounts equal to the taxes on or measured by, or are
otherwise required by law to be withheld with respect to, the net income of such
Person with respect to the amount by which the payments required to be made
under this sentence exceed the amounts otherwise specified to be paid in this
Agreement and the Notes.
(b) If the Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code, and such Lender is entitled to an exemption (or
is exempt) from United States withholding tax under Section 1441 or 1442 of the
Code, such Lender will deliver to the Agent and the Borrowers:
(i) if such Lender is entitled to claim an exemption from,
or a reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year, and before the payment of any
interest in each third succeeding calendar year, during which interest
may be paid to such Lender under this Agreement;
(ii) if such Lender is entitled to claim that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the first
taxable year of such Lender, and in each succeeding taxable year of such
Lender, during which interest may be paid to such Lender under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Each Lender as of the effective date of this Agreement, and each
assignee under any Assignment and Acceptance (as of the date hereof), that is a
"foreign corporation, partnership or trust" as described herein must be eligible
to claim a complete exemption and must provide
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applicable forms to the Borrowers as required by this Section 2.15. Each such
Lender will promptly notify the Agent and the Borrowers of any changes in
circumstances that would modify or render invalid any claims exemption or
reduction.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required under subsection
(c) above are not executed, completed and/or delivered to the Agent, then the
Agent may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax. For purposes of this Section, a distribution hereunder by the Agent to or
for the account of any Lender shall be deemed a payment by the Borrowers.
(d) If the Internal Revenue Service or any other governmental
authority, domestic or foreign, asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (whether
because the appropriate form was not delivered or was not properly executed,
completed and/or delivered, because such Lender failed to notify the Agent of a
change in circumstances that rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), such Lender shall
indemnify the Agent and the Borrowers fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this subsection (d), together with all costs, expenses and
reasonable attorneys' fees incurred or paid in connection therewith.
(e) If at any time the Borrowers request any Lender to deliver any
forms other than documentation pursuant to subsection (c) above, then the
Borrowers shall, upon demand of such Lender, reimburse such Lender for any
reasonable costs or expenses incurred by such Lender in the preparation or
delivery of such forms or other documentation.
(f) Each Lender agrees that, if the Borrowers are required to pay
additional amounts to or for the account of any Lender pursuant to subsection
(a) above, then such Lender will, to the extent permitted by law, endeavor in
good faith to designate another lending office for its Eurodollar Loans, but
only if such designation would make it lawful for such Lender to continue to
make or maintain Eurodollar Loans hereunder; provided that such designation is
made on such terms that such Lender, in its good faith determination, suffers no
increased cost or economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of this
Section.
2.16 Non-Receipt of Funds by Agent. Unless the Agent shall have been
notified by a Lender or the Borrowers prior to the date on which such Lender is
to make payment to the Agent of the proceeds of a Loan to be made by it
hereunder or Borrowers is to make a payment to the Agent for the account of one
or more of the Lenders, as the case may be, that such Person does not intend to
make such payment to the Agent, the Agent may assume that such payment has been
made and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient on such date and, if
such Person has not in fact made such payment to the Agent, the recipient of
such payment shall, on demand, repay to the Agent the
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amount made available to it together with interest thereon at a rate per annum
equal to the Federal Funds Rate (when the recipient is a Lender) or equal to the
rate of interest applicable to such Loan (when the recipient is any Borrower).
2.17 Sharing of Payments and Setoff among Lenders. Each of the
Borrowers hereby agrees that, in addition to (and without limitation of) any
right of setoff, banker's lien or counterclaim a Lender may otherwise have, each
Lender shall be entitled, at its option, to offset balances held by it at any of
its offices for any Borrower or any of its Subsidiaries against any principal of
or interest on any of its Loans or the LC Draw Obligations hereunder, or any fee
payable to it, which is not paid when due (regardless of whether such balances
held by it are then due to any Borrower or any of its Subsidiaries), in which
case it shall promptly notify the Borrowers (and the Agent) thereof, provided
that its failure to give such notice shall not affect the validity thereof. If a
Lender shall effect payment of any principal of or interest on any of its Loans
or the LC Draw Obligations hereunder or any fee payable to it, through the
exercise of any right of setoff, banker's lien, counterclaim or similar right,
it shall promptly purchase at par from the other Lenders participations in the
corresponding Obligations held by the other Lenders in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end that
all the Lenders shall share the benefit of such payment pro rata in accordance
with the unpaid principal and interest on the Obligations held by each of them.
To such end all the Lenders shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise) if such payment is rescinded
or must otherwise be restored. Each of the Borrowers agrees that any Lender so
purchasing a participation in the Loans or the LC Draw Obligations held by the
other Lenders may exercise all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Obligations in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise and retain the benefits of exercising
any such right with respect to any other indebtedness or obligation of any
Borrower or any of its Subsidiaries.
SECTION 3. CONDITIONS OF LOANS.
3.1 Conditions to Initial Credit Extension. The obligations of the
Agent and the Lenders to enter into this Agreement and make the initial Credit
Extensions hereunder are subject to the fulfillment of the following conditions
precedent:
(a) Receipt by the Agent of the following documents, certificates
and opinions in form and substance satisfactory to the and duly executed and
delivered by the parties thereto:
(i) This Agreement;
(ii) The Notes;
(iii) The Security Documents and such assignments, consents,
landlord waivers, mortgagee waivers (if any can be obtained by Borrowers
using a best efforts basis), UCC financing statements and other
instruments and documents as the Agent shall deem necessary to satisfy
the requirements of Section 2.13;
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(v) An officer's certificate executed by the chief financial
officer of the Borrowers in the form provided by the Agent, including
all attachments thereto;
(vi) Certificates of insurance or insurance binders
evidencing compliance with Section 6.3 (including the required lender's
loss payable endorsements); and
(vii) A favorable legal opinion satisfactory to the Agent,
addressed to the Agent and the Lenders, from Jeffer, Mangels, Xxxxxx &
Marmaro LLP, counsel to the Borrowers and their Subsidiaries, which
opinion may rely upon an opinion of local counsel as to the
enforceability of mortgages and related real estate documents (other
than with respect to California-based real estate).
(b) The Borrowers shall have paid the fees required under Section
2.12 to be paid as of the date hereof and all reasonable fees and expenses of
the Agent's counsel through the closing date (which attorneys' fees of Agent
shall not exceed $19,000, plus out of pocket expenses).
(c) The Borrowers shall have provided the Agent with such additional
instruments, certificates, opinions and other documents as the Agent or its
counsel shall reasonably request.
(d) All corporate, partnership and other proceedings, and all
documents, instruments and other legal, diligence and financial matters in
connection with the transactions contemplated by the Loan Documents shall be
reasonably satisfactory in form and substance to the Agent and its counsel.
3.2 Conditions to All Credit Extensions. The obligation of the Agent
and the Lenders to make any Credit Extension (including the initial Credit
Extension) is subject to the following conditions:
(a) All representations and warranties contained in this Agreement
or otherwise made in writing by or on behalf of any of the Borrowers or any of
their Subsidiaries in connection with the transactions contemplated hereby shall
be true and correct in all material respects at the time of each such Credit
Extension (except to the extent affected by transactions occurring after the
date hereof and permitted hereunder), with and without giving effect to the
Credit Extension at such time and the application of the proceeds thereof.
(b) At the time of each such Credit Extension (i) the Borrowers and
their Subsidiaries shall have performed and complied with all covenants and
conditions required in this Agreement to be performed or complied with by it
prior to the making of such Credit Extension, (ii) no Default shall have
occurred and be continuing or would result from such Credit Extension, and (iii)
there shall have been no material adverse change in the business, assets,
condition (financial or otherwise), or prospects of any of the Companies, since
the date of the audited Initial Financial Statements.
(c) As to any such Credit Extension, the Agent shall have received a
properly completed Loan Request or Letter of Credit Documents, as appropriate.
(d) The Agent shall have received such other supporting documents
and certificates as it may reasonably request.
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Each request for a Credit Extension shall be deemed to constitute the Borrowers'
representations and warranty that all of the foregoing conditions in Sections
3.1 and 3.2 have been satisfied in full.
SECTION 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Agent
and Lenders to enter into this Agreement and make the Credit Extensions
hereunder, each of the Borrowers hereby confirms the representations and
warranties set forth in the Security Documents (which are incorporated by
reference herein) and, further, represents and warrants (all of which
representations and warranties assume the making of the initial Credit
Extensions hereunder) as follows:
4.1 Organization and Qualification. Each of the Companies (a) is a
limited partnership or corporation duly organized, validly existing and in good
standing under the laws of its state of formation (as designated on Schedule
4.1); (b) has all requisite corporate or partnership power and authority, as the
case may be, to own its property and conduct its business as now conducted and
as presently contemplated; and (c) is duly qualified and in good standing in
each jurisdiction where the nature of its properties or its business (present or
proposed) requires such qualification, as specified in Schedule 4.1, except
where the failure to so qualify will not materially adversely affect its
business.
4.2 Corporate or Partnership Authority. The execution, delivery and
performance of each of the Loan Documents and the transactions contemplated
thereby (including the granting of security interests thereunder in favor of
Agent on behalf of Lenders) are within the corporate and partnership authority
of each of the Companies, have been authorized by all necessary corporate and
partnership proceedings on the part of each of the Companies, and do not and
will not contravene any provision of law (including without limitation the rules
and provision of law or the charter documents, by-laws, certificates of limited
partnership or partnership agreements (collectively, "Organizational Documents")
of any of the Companies, or contravene any provisions of, or constitute a
Default hereunder or a default under any other material agreement (including any
lease, any shareholder agreement, any license agreement or any supplier
contracts), instrument, judgment, order, decree, permit, license or undertaking
binding upon or applicable to any of the Companies or any of its properties, or
result in the creation, other than in favor of the Agent on behalf of the
Lenders, of any Encumbrance upon any of the properties of any of the Companies.
4.3 Valid Obligations. Each of the Loan Documents and all of its
respective terms and provisions (including the security interests granted
thereunder) are legal, valid and binding obligations of each of the Companies
who are named as parties thereto, enforceable in accordance with their terms.
4.4 Approvals. The execution, delivery and performance of the Loan
Documents and the transactions contemplated thereby do not require any approval
or consent of, or filing or registration with, any governmental or other agency
or authority or any other Person, except as disclosed on Schedule 4.4.
4.5 Title to Properties; Absence of Liens. As of the date of this
Agreement and after giving effect to the application of the proceeds of the
Loans as provided in Section 2.14, each of the
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Companies has good and marketable title to all of its properties of every name
and nature now purported to be owned by it, including without limitation all
assets of the Restaurants listed on Schedule 4.8 (as updated from time to time
as required hereunder), the Collateral and the properties reflected in the
Initial Financial Statement, in each case free from all Encumbrances whatsoever
except for Permitted Encumbrances. All of the Restaurants are and will be owned
and operated by the Parent or one of its wholly-owned Subsidiaries which are
Borrowers hereto, except for the existing Restaurant located in Encino,
California which is owned and operated by JFD-Encino, a California limited
partnership in which Jerry's Famous Deli of L.A., Inc. holds 80% of the general
partner interests and 7.55% of the limited partner interests.
4.6 Licenses, Patents, Trademarks and Intellectual Property. Except
as otherwise described in Schedule 4.6, each of the Companies has all necessary
permits, approvals, authorizations, consents, license (including liquor
licenses), franchises, registrations, patents, trademarks, trade names and
copyrights, recipes and other rights and privileges to allow it to own and
operate their businesses and to operate the Restaurants listed on Schedule 4.8
(as updated from time to time as required hereunder) without any violation of
law or the rights of others. All trademarks, service marks (including, without
limitation, Jerry's Famous Deli, Rascal House and The Epicure Market), trade
names, patents and patent applications in which any Company has an ownership
interest, and all United States, state and foreign registrations thereof and
applications therefor, are listed on Schedule 4.6 and the Parent is and will at
all times hereafter be the owner thereof, free of all Encumbrances except in
favor of the Agent. No interest in any of such intellectual property has been
licensed to any other Person.
4.7 Compliance with Laws and Agreements. No Company is in violation
of any provision of its Organizational Documents and no Company is in violation
of any provision of any material indenture, agreement or instrument to which it
is a party or by which it is bound (including without limitation any material
lease) or, to the best of the Borrowers' knowledge and belief, of any provision
of law, the violation of which could have a material adverse effect upon any
Company or any Restaurant or any order, judgment or decree of any court or other
agency of government. Without limiting the scope of the foregoing, each Company
is in compliance in all material respects with all federal and state laws and
regulations (including all Environmental Laws and all other federal and state
securities laws) the violation of which could have a material adverse effect
upon it or upon any Restaurant.
4.8 Material Agreements. Schedule 4.8 accurately and completely
lists all Restaurants owned and/or operated by any Company (with the owner
and/or operator and address of each Restaurant listed thereon) and all
Organizational Documents and all material agreements to which any Company is a
party. Each of the material agreements listed on Schedule 4.8 is in full force
and effect and constitutes the legally valid and binding obligation of the
Company identified with it thereon and, to Borrowers' knowledge, the other
parties thereto, enforceable against each of them in accordance with its
respective terms. No Company is in violation under any material agreements,
where such violations in the aggregate would be likely to have a material
adverse effect on any Company or any Restaurant. To Borrowers' knowledge, except
as disclosed in Schedule 4.8, third parties to any material agreements are not
in material violation thereof to the extent that such violations in the
aggregate would be likely to have a material adverse effect on any Company or
Restaurant.
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4.9 Environmental Matters. Except as specified in Schedule 4.9:
(a) Each Company has 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 have
a material adverse effect on the business, financial condition or operations of
any Company or any Restaurant. Each Company and each Restaurant is in compliance
with the terms and conditions of all such permits, licenses and authorizations,
and is also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a material adverse effect on the business, financial condition,
prospects or operations of any Company or any Restaurant.
(b) To the best of Borrowers' knowledge, without independent
investigation, no notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by any Company or any Restaurant to have any permit, license or
authorization required in connection with the conduct of its business or with
respect to any Environmental Laws, including, without limitation, Environmental
Laws relating to the generation, treatment, storage, recycling, transportation,
disposal or release of any Hazardous Materials, except to the extent that such
notice, complaint, penalty or investigation did not or could not result in the
remediation of any property costing in excess of $250,000 in the aggregate in
each fiscal year.
(c) To the best of Borrowers' knowledge, without independent
investigation, no material oral or written notification of a release of a
Hazardous Material has been filed by or on behalf of any Company or any
Restaurant and no property now or previously owned, leased or used by any
Company or any Restaurant is listed or proposed for listing on the National
Priorities List under the comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any similar state list of sites
requiring investigation or clean-up.
(d) There are no Encumbrances arising under or pursuant to any
Environmental Laws on any of the real properties owned, leased or used by any
Company or any Restaurant, and no governmental actions have been taken or are in
process which could subject any of such properties to any Encumbrances or, as a
result of which any Company or any Restaurant would be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it or in any deed to such property.
(e) No Company or Restaurant has (i) engaged in or permitted any
operations or activities upon or any use or occupancy of any property owned,
leased or used by it, or any portion thereof, for the purpose of or in any way
involving the handling, manufacture, treatment, storage, use generation,
release, discharge, refining, dumping or disposal (whether legal or illegal,
accidental or intentional) of any Hazardous Materials on, under, in or about
such property, except to the extent commonly used in day-to-day operations of
such property and in such case only in compliance with all Environmental Laws,
or (ii) transported any Hazardous Materials to, from or across such property
except to the extent commonly used in day-to-day operations of such property
and, in such case, in compliance with,
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all Environmental Laws; nor to the knowledge of the Borrowers have any Hazardous
Materials migrated from other properties upon, about or beneath such property,
nor to the knowledge of the Borrowers, are any Hazardous Materials presently
constructed, deposited, stored or otherwise located on, under, in or about such
property except to the extent commonly used in day-to-day operations, and, in
such case, in compliance with, all Environmental Laws.
4.10 Compliance with ERISA. Each of the Companies and each member of
the Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under Title IV of
ERISA; and no "prohibited transaction" or "reportable event" (as such terms are
defined in ERISA) has occurred with respect to any Plan.
4.11 Financial Statements. The Borrowers have furnished to the Agent
and the Lenders their consolidated audited balance sheets as at December 31,
1997 and company-prepared consolidated balance sheets as at March 31 and June
30, 1998 and related statements of operations and cash flow for the fiscal year
and fiscal quarter then ended, which were prepared in accordance with GAAP and
(as to fiscal year 1997) audited by the Accountants, and related consolidating
balance sheets and statements of operations and cash flows (collectively, the
"Initial Financial Statements"). Such Initial Financial Statements fairly
present the financial position of the Companies as at such dates and the results
of operations for such periods covered thereby. No Debt Issuance is outstanding
as of the date hereof. The Borrowers have reviewed the projections for the
future results of operations of the Companies dated August 25, 1998 for the
period commencing January 1, 1998 and ending December 31, 2002 (the
"Projections"), and the Borrowers hereby certify to the Agent and the Lenders
that the Projections are reasonable. Except as reflected in the Initial
Financial Statements, none of the Companies has any material contingent
obligations, liabilities for taxes or unusual forward or long-term commitments.
Since the effective date of the latest audited Initial Financial Statements,
there have been no changes in the assets, liabilities, financial condition or
business of any Company, the effect of which has, individually or in the
aggregate, been materially adverse to any Company or any Restaurant.
4.12 Solvency. Each of the Companies has assets (both tangible and
intangible) having a fair salable value in excess of the amount required to pay
the probably liability on its respective existing debts (whether matured or
unmatured, liquidated or unliquidated, fixed or contingent); each of the
Companies has access to adequate capital for the conduct of its respective
business for the foreseeable future and the discharge of its debts incurred in
connection therewith as such debts mature; each of the Companies is not
Insolvent and, immediately prior to the consummation of the initial Loans
hereunder, each of the Companies was not Insolvent; and each of the Companies
does not intend to or believe that it will incur debts beyond its ability to pay
them at their maturity.
4.13 Taxes. Each of the Companies has filed all federal, state and
other tax returns required to be filed and has paid or made adequate provision
for the payment of all taxes, assessments and other such governmental charges
due have been fully paid. No Company has
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executed any waiver that would have the effect of extending the applicable
statute of limitations in respect of tax liabilities.
4.14 Litigation. Except as otherwise described in Schedule 4.14,
there is no litigation, proceeding or governmental investigation, administrative
or judicial, pending or, to Borrowers' knowledge, threatened against or
affecting any Company or any Restaurant or its properties which could result in
a materially adverse effect on the business, properties or condition (whether
financial or otherwise) of any Company or any Restaurant, or its ability to
perform its obligations under any Loan Document.
4.15 Margin Rules. No portion of any Loan is intended to be used for
the purpose of purchasing or carrying any "margin security" or "margin stock",
as such terms are used in Regulations U or X or the Board of Governors of the
Federal Reserve System ("Margin Stock").
4.16 Restrictions on the Borrowers. No Company is a party to or bound
by any contract, agreement or instrument, nor subject to any charter or other
corporate restriction, materially and adversely affecting its business,
property, assets, operations or conditions, financial or otherwise.
4.17 Capitalization. Schedule 4.17 describes the ownership structure
of each of the Borrowers, their Subsidiaries and JFD-Encino, a California
limited partnership, showing accurate ownership percentages and accompanied by a
statement of authorized and issued equity securities as of the date hereof and
the names and addresses of the holders thereof. The Borrowers have supplied the
Agent with true and complete copies of their Organizational Documents. Except as
otherwise set forth in Schedule 4.17: (a) no securities of any Company carry
preemptive rights; (b) there are no outstanding subscriptions, warrants or
options to purchase any securities of any Company; (c) no Company is obligated
to redeem or repurchase any of its securities; and (d) there is no other
agreement, arrangement or plan which could directly or indirectly affect the
equity structure of any Company. All equity securities of each Company are
validly issued and fully paid and non-assessable, free of any Encumbrance,
except for liens on the securities of the Companies other than the Parent
granted to the Agent on behalf of the Lenders and restrictions on transfer
indicated on the certificates evidencing such shares pursuant to applicable
Federal or state securities regulations. No Company has any Subsidiaries except
as set forth on Schedule 4.17.
4.18 Full Disclosure. No statement of fact made by or on behalf of
any Company or the Principal in this Agreement or any of the other Loan
Documents or in any certificate or schedule furnished to the Agent or Lenders
pursuant hereto or thereto in light of all information provided to the Agent and
the Lenders, contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements continued therein or herein not
misleading. There is no fact currently known to any Borrower which has not been
disclosed to the Agent and the Lenders in writing which materially affects
adversely, or, as far as any Borrower can reasonably foresee, will materially
affect adversely, the business, operations, properties, assets or condition,
financial or otherwise, of any Company or the Principal, or the ability of the
Companies and the Principal to perform their respective obligations under the
Loan Documents.
4.19 Investment Company Act. No Company is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
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"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
4.20 Labor Disputes; Collective Bargaining Agreements; Employee
Grievances. (a) There are no collective bargaining agreements or other labor
contracts covering any Company or any Restaurant; (b) no union or other labor
organization is seeking to organize, or to be recognized as bargaining
representative for, a bargaining unit of employees of any Company or any
Restaurant; (c) there is no material labor dispute pending or threatened against
or affecting any Company or any Restaurant; (d) there has not been, during the
five year period prior to the date hereof, any material labor dispute against or
affecting any Company or any Restaurant, other than employee grievances arising
in the ordinary course of business which are not, in the aggregate, material;
and (e) each of the Companies and each Restaurant has complied with (or
corrected in full any prior noncompliance) and is in compliance with the
provisions of the Fair Labor Standards Act and regulations thereunder.
SECTION 5. FINANCIAL COVENANTS. Each of the Borrowers covenants and
agrees that, until all Commitments have been terminated, all Letters of Credit
have terminated or expired, and all Obligations have been indefeasibly paid in
full in cash, the Borrowers will not cause or permit:
5.1 Maximum Leverage Ratio. The ratio of Consolidated Funded
Indebtedness at any time to Consolidated EBITDA for any Reference Period to be
greater than 3.25:1.00.
5.2 Minimum Fixed Charges Coverage Ratio. The ratio of Consolidated
Cash Flow for any Reference Period ending on any Quarterly Date falling during
any period identified in the table below to Consolidated Financial Obligations
for such Reference Period to be less than the ratio specified below opposite
such period:
Minimum Fixed
Period Charges Coverage Ratio
------ ----------------------
Date hereof - December 31, 2000 1.50:1.00
January 1, 2001 and thereafter 1.55:1.00
5.3 Minimum Interest Coverage Ratio. The ratio of Consolidated
EBITDA for any Reference Period to Consolidated Interest Expense for such
Reference Period to be less than 4.50:1.00.
5.4 Maximum Capital Expenditures. Make or agree to make, or incur
any obligations with respect to, any Capital Expenditures in excess of the
maximum amounts set forth below for the fiscal years listed, plus the lesser of
the unused portion, if any, or 35% of the maximum Capital Expenditures amount
for the immediately preceding fiscal year (in either case, the "Carryforward
Amount"). For purposes of determining the Carryforward Amount on any fiscal
year, Capital Expenditures shall first be applied to reduce any Carryforward
Amount from the immediately preceding fiscal year and then to reduce the maximum
amount specified herein.
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Maximum Amount of
Fiscal Year Capital Expenditures
----------- --------------------
Date hereof through end of $2,000,000
fiscal year 1998
1999 $6,000,000
2000 and each fiscal $5,000,000
year thereafter
SECTION 6. AFFIRMATIVE COVENANTS. Each of the Borrowers covenants and
agrees that, until all Commitments have been terminated, all Letters of Credit
have terminated or expired, and all Obligations have been indefeasibly paid in
full in cash:
6.1 Financial Reporting. The Borrowers will furnish to the Agent and
the Lenders:
(a) as soon as available, but in any event within 120 days after
each fiscal year-end, the Borrowers' balance sheet as at the end of, and related
statements of operations and cash flow for, such year, prepared in accordance
with GAAP consistently applied and audited by the Accountants; and concurrently
with such financial statements, consolidating financial statements and a written
statement by the Accountants that, in conducting such audit, they have obtained
no knowledge of any Default or Event of Default (or, if such an event exists, a
statement as to its nature and status);
(b) as soon as available, but in any event within 45 days after the
end of each fiscal quarter, the Borrowers' balance sheet as at, the end of, and
related statements of operations and cash flow for, the portion of the year then
ended and the fiscal quarter then ended, prepared in accordance with GAAP,
together with a comparison of such results to budgeted results and to the
results for the comparable period in the prior fiscal year, prepared on a
consolidated basis and a per Restaurant basis, in each case certified by the
Borrowers' chief financial officer or controller;
(c) as soon as available, but in any event within 45 days after the
end of each fiscal quarter, a covenant compliance report in substantially the
form of Exhibit 6.1(c), signed by the Borrowers' chief financial officer or
controller;
(d) promptly as they become available, a copy of each report
(including any so-called management letters) submitted to any Company by the
Accountants in connection with each annual, interim or special audit of its
books;
(e) promptly as they become available, copies of all such financial
statements, proxy material and reports as any Company shall send or make
available to its stockholders and/or material creditors;
(f) promptly as they become available, copies of the Parent's
quarterly report filed on Form 10-Q and annual report filed on Form 10-K with
the Securities and Exchange Commission and copies of all registration statements
and regular periodic reports, if any, that the Parent shall have
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filed with the Securities and Exchange Commission (or any governmental agency
substituted therefor) or any national securities exchange;
(g) within 30 days after the beginning of each fiscal year, pro
forma projections for the Companies for such fiscal year, prepared on a
quarterly basis, consisting of projected statements of operations and
projections of Capital Expenditures, all prepared on a basis consistent with the
financial statements required by Section 6.1(a);
(h) no more than five Business Days after any Company gives or is
required to give notice to the PBGC of any "Reportable Event" (as defined in
Section 4043 of ERISA) with respect to any Plan that might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that any member
of the Controlled Group or the plan administrator of any Plan has given or is
required to give notice of any such Reportable Event, a copy of the notice of
such Reportable Event given or required to be given to the PBGC;
(i) immediately upon becoming aware of the existence of any
condition or event that constitutes an Event of Default, written notice thereof
specifying the nature and duration thereof and the action being or proposed to
be taken with respect thereto;
(j) no more than five Business Days after becoming aware of any
litigation or of any investigative proceedings by a governmental agency or
authority commenced or threatened against any Company, the outcome of which
could have a materially adverse effect on the assets, business or prospects of
any Company or any Restaurant, written notice thereof and of the action being or
proposed to be taken with respect thereto;
(k) no more than five Business Days after becoming aware of any
investigative proceedings by a governmental agency or authority commenced or
threatened against any Company regarding any potential violation of
Environmental Laws, any spill, release, discharge or disposal of any Hazardous
Material or any event required to be reported to any such governmental agency or
authority, written notice thereof and of the action being proposed to be taken
with respect thereto;
(l) Prior to the consummation of any Permitted Sale, if the
aggregate proceeds received by the Companies in the fiscal year in which such
Permitted Sale occurs are equal to or in excess of $100,000, written notice
thereof, specifying the purchase price, payment terms and closing date thereof;
(m) At the same time as written notice, if any, is required to be
given to the Agent concerning a Permitted Sale or concerning a Permitted
Acquisition, an updated Schedule 4.8 to this Agreement, giving effect to such
Permitted Sale or Permitted Acquisition, as the case may be; and
(n) as soon as reasonably possible and in any event within 10 days
after request therefor, such other information regarding the operations, assets,
business, affairs and financial condition of any Company or any Restaurant as
the Agent may reasonably request.
6.2 Conduct of Business. Each of the Companies will (a) duly observe
and comply in all material respects with all applicable laws and all
requirements of any governmental authorities relative to its corporate
existence, rights and franchises, to the conduct of its business and to its
property and assets (including without limitation all Environmental Laws and
ERISA); (b) maintain
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and keep in full force and effect all licenses and permits necessary to the
proper conduct of its business; (c) comply in all material respects with all
material agreements (including without limitation material leases and supplier
contracts) to which it is a party; (d) maintain its corporate or partnership
existence, as the case may be; and (e) remain or engage in the business of
owning and operating Restaurants and incidental purposes, and in no other
business.
6.3 Maintenance and Insurance. Each of the Companies will maintain
and keep its properties in good repair, working order and condition, and from
time to time make all needful and proper repairs, renewals, replacements,
additions and improvements thereto so that its business may be properly and
advantageously conducted at all times. Each of the Companies and each Restaurant
at all times will maintain, or cause to be maintained, insurance covering it and
its tangible property in such amounts (including, without limitation, so-called
"all perils" coverage at replacement value, "broad form" liability coverage, and
fidelity and business interruption insurance), against such hazards and
liabilities and for such purposes as is customary in the industry for companies
of established reputation engaged in the same or similar businesses and owning
or operating similar properties. The Agent shall be named as loss payee
(pursuant to a standard "lender's loss payable" endorsement) and additional
insured and shall be given 30 days' advance notice of any cancellation, change
in form or renewal of insurance. Such insurance shall insure the Agent's
interest regardless of any breach or violation of the underlying policies by any
Company or any other Person. Each of the Companies shall insure, or cause to be
insured, its assets in amounts sufficient to prevent the application of any
co-insurance provisions. The Borrowers shall evidence their compliance with this
Section by delivering a certificate with respect to each policy concurrently
with the execution hereof, annually thereafter and at any time upon the Agent's
request. If any Company fails to provide or cause to be provided such insurance,
the Agent, in its sole discretion, may provide such insurance and charge the
cost to any of the Borrowers' deposit accounts with Agent or any Lender.
6.4 Taxes. Each of the Companies will pay or cause to be paid all
taxes, assessments or governmental charges on or against it or its properties
prior to such taxes becoming delinquent; except for any tax, assessment or
charge (other than any charge for required environmental cleanup costs) which is
being contested in good faith by appropriate legal or other proceedings or
actions and with respect to which adequate reserves have been established and
are being maintained in accordance with GAAP, if no Encumbrance shall have been
filed to secure such tax, assessment or charge.
6.5 Inspection by the Lender. Each of the Companies will at all
reasonable times, during normal business hours permit the Agent and the Lenders
or their designees, to (a) visit and inspect the Restaurants and other
properties of the Companies and (b) examine and make copies of and take
abstracts from the Companies' and the Restaurants' books and records. Without
limiting the foregoing, the Agent and the Lenders may conduct as many commercial
credit examinations of the Companies and the Restaurants as it reasonably deems
necessary, whether or not an Event of Default exists, and the Borrowers will
reimburse the Agent and the Lenders the costs of all such credit examinations.
6.6 Accounting System. The Companies will maintain an accurate
system of accounting in accordance with GAAP, will at all times be part of a
consolidated group for accounting purposes,
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and, without the Agent's prior written consent, will not change their fiscal
year from the fiscal year accounting used in the preparation of the Initial
Financial Statements.
6.7 Further Assurance. From time to time hereafter, the Companies
will execute and deliver, or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the Agent
shall reasonably request for the purpose of implementing or effectuating the
provisions of this Agreement, the Notes, the Letter of Credit Documents or the
other Loan Documents, and upon the exercise by the Agent of any power, right,
privilege or remedy pursuant to this Agreement, the Notes, the Letter of Credit
Documents or the other Loan Documents which requires any consent, approval,
registration, qualification or authorization of any governmental authority or
instrumentality, exercise and deliver all applications, certifications,
instruments and other documents and papers that the Agent may be so required to
obtain.
6.8 Environmental Laws. Each of the Companies will comply in all
material respects with, and perform or cause to be performed any and all
Remedial Work necessary under, all Environmental Laws applicable (now or in the
future) to it or to its business.
6.9 Depository. The Borrowers shall maintain a depository account or
accounts with the Agent to facilitate borrowings and payments hereunder. Each of
the Companies hereby irrevocably authorizes the Agent to debit such depository
account or accounts in order to effect the making of any such payments not paid
when due.
SECTION 7. NEGATIVE COVENANTS. Each of the Borrowers covenants and
agrees that, until all Commitments have been terminated, all Letters of Credit
have terminated or expired, and all Obligations have been indefeasibly paid in
full in cash:
7.1 Indebtedness; Contingent Liabilities. No Company will create,
incur, assume, guarantee or be or remain liable with respect to any Indebtedness
except:
(a) Indebtedness of the Companies to the Agent and the Lenders under
the Loan Documents;
(b) Indebtedness in the amounts existing on the date hereof and
described in Exhibit 7.1 (but no refinancings, renewals or extensions thereof
without the Agent's prior written consent, except the Indebtedness secured by
the existing Permitted Encumbrance upon the property located in Pasadena,
California may be refinanced upon similar or better terms);
(c) Guarantees in respect of endorsements of negotiable instruments
for collections in the ordinary course of business (and refinancings, renewals
or extensions thereof);
(d) Capitalized Leases and purchase money Indebtedness not exceeding
$250,000 in the aggregate secured by Permitted Encumbrances under Section
7.3(f);
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(e) unsecured Indebtedness of the Subsidiaries who are Borrowers
hereunder to the Parent, evidenced by Intercompany Notes pledged and delivered
to the Agent pursuant to the Security Documents; and
(f) Debt Issuance with third parties who are not Affiliates
hereafter arising provided it is unsecured and subordinate to the Obligations
pursuant to a written subordination agreement in form and substance satisfactory
to the Agent and provided the prepayment required by Section 2.7 is paid in full
with respect thereto.
7.2 Sale and Leaseback. No Company will enter into any arrangement
(a "Sale Leaseback"), directly or indirectly whereby any of them shall sell or
transfer any of its property acquired prior to the date of this Agreement in
order to lease such property or lease other property that any Company intends to
use for substantially the same purpose as such property being sold or
transferred.
7.3 Encumbrances. No Company nor the Principal on behalf of any
Restaurant will create, incur, assume or suffer to exist any mortgage, pledge,
security interest, lien or other charge or encumbrance, including the lien or
retained security title of a conditional vendor upon or with respect to any of
its property or assets ("Encumbrances"), or assign or otherwise convey any right
to receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("Permitted Encumbrances"):
(a) Encumbrances in favor of the Agent under the Loan Documents;
(b) Encumbrances existing as of the date of this Agreement and
disclosed in Schedule 7.3 (and any refinancing of the Indebtedness described
therein which is secured by the Encumbrance of the Pasadena property);
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 6.4;
(d) landlord's and lessors' liens in respect of rent not in default
or liens in respect of pledges or deposits under worker's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent or are released by appropriate
statutory release bonds; liens securing the performance of bids, tenders,
contracts (other than for the payment of money); and statutory obligations
incidental to the conduct of its business and that do not in the aggregate
materially detract from the value of its property or materially impair the use
thereof in the operation of its business;
(e) judgment liens that shall not have been in existence for a
period of longer than 30 days after the creation thereof or, if a stay of
execution shall have been obtained, for a period longer than 30 days after the
expiration of such stay;
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(f) Encumbrances in respect of Capital Leases and purchase money
obligations incurred within 90 days of purchase which in the aggregate do not
secure Indebtedness in excess of $250,000 for tangible personal property other
than inventory used in its business, provided that any such Encumbrances shall
not extend to property and assets not financed by such Capitalized Lease or
purchase money obligation and shall not secure Indebtedness greater than the
lesser of the cost or fair market value of such tangible personal property so
acquired; and
(g) easements, rights of way, restrictions and other similar
Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of its business, if the same were permitted exceptions
to the title insurance policies deemed by Agent to be satisfactory.
7.4 Disposition of Assets, Etc. No Company will sell, lease,
transfer or otherwise dispose of any of its properties, assets, rights, licenses
or franchises to any Person, except for (a) dispositions of inventory in the
ordinary course of business (which dispositions may be made free from the
Encumbrances of the Loan Documents), the disposition in the ordinary course of
business, without replacement, of equipment which is obsolete or no longer
needed in the conduct of its business and the disposition and replacement in the
ordinary course of business of equipment or other tangible personal property
with other equipment of at least equal utility and value (provided that, except
for purchase money security interests and rights of lessors of equipment if
permitted hereunder, the Agent's lien upon such newly acquired equipment shall
have the same priority as the Agent's lien upon the replaced equipment); and (b)
so long as no Default exists or would result therefrom, any other sale of assets
other than the sale of all or substantially all of the assets of any Company, or
any Restaurant for not less than the fair market value thereof, (each such sale
being referred to as a "Permitted Sale"), provided that prior notice thereof is
given to the Agent, if required, pursuant to Section 6.1(l) and the Sale
Proceeds Payment with respect thereto is made, if and to the extent required,
pursuant to Section 2.7(d) of this Agreement.
7.5 Amendment to Charter or Partnership Documents. Each of the
Companies will not permit or suffer any amendment of its Organizational
Documents which could materially adversely affect its financial condition or
adversely affect (in light of the entire transaction in which it is a part) the
rights of the Agent or any Lender hereunder or under the Loan Documents (it
being expressly agreed that the inclusion in any such charter documents of any
provision similar to those set forth in Section 102(b)(2) of Title 8 of the
Delaware General Corporation Law is prohibited under this Section).
7.6 Mergers; Consolidations; Issuance of Securities; Etc. No Company
will dissolve, liquidate, merge or consolidate into or with any other Person;
provided that any Borrower may merge any of its Subsidiaries into a Borrower or
another Subsidiary so long as such Borrower or such Subsidiary is the surviving
entity of such merger and all Borrowers remain as surviving entities. No Company
will issue any additional shares of capital stock or other equity securities,
any options therefor or any securities convertible thereto, unless no Default
exists or would result therefrom and the Debt/Equity Proceeds Payment with
respect thereto is made, if and to the extent required, pursuant to Section
2.7(e) of this Agreement.
7.7 Equity Distributions; Subordinated Payments. No Company will pay
any cash or cash equivalent dividends or other distributions on any class of its
equity interests or make any other
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distribution or payment on account of or in redemption, retirement or repurchase
of such securities; provided, (a) the Subsidiaries of the Parent shall declare
and pay cash distributions to the Parent to the extent required to ensure that
the Borrowers can meet their Obligations under the Loan Documents, and (b) if no
Default then exists or could result therefrom, the Parent may redeem its capital
stock from shareholders other than Equity Affiliates for purchase prices which
do not exceed $300,000 in the aggregate while this Agreement is in effect. No
Company will make any payment on any Debt Issuance except interest payments if
expressly permitted under the applicable subordination agreement relating
thereto.
7.8 Investments, Loans and Acquisitions. No Company will (a)
purchase or acquire any share of capital stock, partnership interest, evidence
of Indebtedness or other equity security of any other Person, (b) acquire all or
substantially all of the assets of any Person or any division of any Person, (c)
make any loan, advance or extension of credit to, or contribution to the capital
of, any other Person, (d) purchase any real estate for sale or investment, (e)
purchase any commodities futures contracts other than in connection with bona
fide hedging transactions in the ordinary course of business, (f) make any other
investment in any Person, (g) form any Subsidiary (except to the extent the
Parent determines that the formation of a Subsidiary is necessary or appropriate
in connection with a Permitted Acquisition), or (h) make any commitment or
acquisition of any option or enter into any other arrangement for the purpose of
making any of the foregoing investments, loans or acquisitions, except the
following:
(i) Qualified Investments;
(ii) Permitted Acquisitions;
(iii) Loans from the Parent to Subsidiaries who are Borrowers
hereunder pursuant to Section 7.1 (e); and
(iv) the existing investments referred to in Schedule 7.8
hereto.
7.9 ERISA. No Company nor any member of the Controlled Group shall
permit any Plan maintained by it to (a) engage in any "prohibited transaction"
(as defined in Section 4975 of the Code), (b) incur any "accumulated funding
deficiency" (as defined in Section 302 of ERISA) whether or not waived, or (c)
terminate any Plan in a manner that could result in the imposition of a lien or
encumbrance on the assets of any Company pursuant to Section 4068 of ERISA.
7.10 Transactions with Affiliates. No Company will enter, directly or
indirectly, into any purchase, sale, lease or other transaction with any
Affiliate, except in the ordinary course of business and on terms that are no
less favorable to such Company than those which could be obtained at the time in
a comparable arm's length transaction with any Person who is not an Affiliate.
No Company will incur Indebtedness to any Affiliate except as permitted under
Section 7.1(e) of this Agreement. All transactions of any Company with
Affiliates existing on the date of this Agreement are described on Schedule 7.10
hereto. Notwithstanding anything herein to the contrary, no Company will make a
payment of cash or property, or both, directly or indirectly for any reason to
any Affiliate, if a Default exists hereunder or would result therefrom (other
than scheduled rental payments under the Westwood Lease and reasonable
compensation and employee benefit expenses paid to employees of
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such Company pursuant to employment agreements in the ordinary course of
business and reasonable bona fide out-of-pocket reimbursement expenses incurred
on behalf of such Company).
7.11 Amendment of Certain Agreements. No Company will amend or modify
any Organizational Document, the Westwood Lease or any other material agreement,
if the same would be likely to have a material adverse effect upon its business,
its ability to fulfill any of its obligations under the Loan Documents or any of
the Agent's or any Lender's rights under the Loan Documents.
7.12 Margin Stock. No Company will use or permit the use of any of
the proceeds of the Credit Extensions, directly or indirectly, for the purpose
of purchasing or carrying, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry, any Margin
Stock or for any other purpose which might constitute a "purpose credit" within
the meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the
Federal Reserve System, or cause this Agreement to violate any other regulation
of the Board of Governors of the Federal Reserve System or the Securities
Exchange Act of 1934, as amended, or any rules or regulations promulgated under
such statutes.
7.13 Negative Pledges, Etc. No Company will enter into any agreement,
amendment or arrangement (excluding this Agreement or any other Loan Document)
prohibiting or restricting (a) it from amending or otherwise modifying this
Agreement or any other Loan Document, (b) the creation or assumption of any
Encumbrances upon its properties, revenues or assets, whether now owned or
hereafter acquired, or (c) the ability of any Subsidiary to make any payment or
distribution, directly or indirectly, to the Parent.
SECTION 8. DEFAULTS.
8.1 Events of Default. There shall be an Event of Default hereunder
if any of the following events occurs:
(a) any Borrower shall fail to pay when due (whether on the date
fixed for such payment, by acceleration or otherwise) any amount of principal of
any Loan, any LC Draw Obligation or any principal on any other Obligation or to
pay within three days after due (whether on the date fixed for such payment, by
acceleration or otherwise) any interest thereon, or fees or expenses
constituting any Obligation; or
(b) any Company shall fail to perform any term, covenant or
agreement contained in Section 5, Section 6.1 (other than Section 6.1(n)), or
Section 7 hereof;
(c) any Company shall fail to perform any term, covenant or
agreement contained in this Agreement or any default shall occur on the part of
any Company under any other Loan Document, other than those referred to in
Sections 8.1(a) and (b) above, and such default shall continue for 15 days after
the earlier of (i) written notice thereof to the Borrowers by the Agent or (ii)
actual knowledge thereof by any Company; or
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(d) any representation or warranty of any Company made in this
Agreement or any other Loan Document or in any report, certificate or financial
statement delivered hereunder shall prove to have been false in any material
respect upon the date when made or deemed to have been made; or
(e) any Company shall fail to pay at maturity, or within any
applicable period of grace, any obligations which, together with all other such
obligations of the Companies and the Restaurants, exceed $250,000 in the
aggregate, or fail to observe or perform any term, covenant or agreement
evidencing or securing such obligations, the result of which failure is to
permit the holder or holders of such obligations to cause the indebtedness
relating thereto to become due prior to its stated maturity upon delivery of
required notice, if any; or
(f) any Company shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar official of itself or of all or a substantial part of its property,
(ii) be generally not paying its debts as such debts become due, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Federal Bankruptcy Code (as now or hereafter in effect), (v) take
any action or commence any case or proceeding under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts, or any other law providing for the relief of debtors, (vi) fail to
contest in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Federal Bankruptcy
Code or other law, (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (viii) take
any action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced with respect to any
Company, without the application or consent of such in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding
up, or composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its assets, or (iii) similar relief in respect of it, under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or unstayed and
in effect, for a period of 60 days; or an order for relief shall be entered in
an involuntary case under the Federal Bankruptcy Code, against any Company; or
action under the laws of the jurisdiction of incorporation or organization of
any Company similar to any of the foregoing shall be taken with respect to any
Company and shall continue unstayed and in effect for any period of 60 days; or
(h) a judgment or order for the payment of money shall be entered
against any Company by any court, or a warrant of attachment or execution or
similar process shall be issued or levied against property of any Company, that,
together with all other such judgments and attachments against the Companies
exceeds $250,000 in the aggregate in value and such judgment, order, warrant or
process shall continue undischarged or unstayed for 30 days; or
(i) any Company or any member of the Controlled Group shall fail to
pay when due an amount or amount that it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA and which, together with all such
amounts, exceeds $250,000 in the aggregate; or notice of intent to terminate a
Plan or Plans shall be filed under Title IV of ERISA by any Company, any
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member of the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans against any Company and such proceedings shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any such Plan or
Plans must be terminated; or
(j) for any reason, the Parent shall cease to own 100% of all of the
legal and beneficial equity interests of all of its other Subsidiaries existing
as of the date hereof, or 100% of all of the legal and beneficial equity
interests of any Subsidiary formed after the date hereof; provided however if
otherwise permitted hereunder Jerry's Famous Deli L.A., Inc. may purchase
additional partnership interests in JFD-Encino, a California limited
partnership, which may not result in such Borrower owning 100% thereof;
(k) for any reason, any Security Documents shall not be in full
force or effect in all material respects, or any party thereto shall contest the
validity thereof or disaffirm its obligations thereunder or default with respect
to any of its material obligations thereunder; or
(l) for any reason, any combination of Xxxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxx or Xxx Xxxxxxxx (or family trusts controlled by them) shall cease to
own and control of record and beneficially shares of issued and outstanding
voting capital stock of the Parent in an amount no less than 90% of the
aggregate amount held by them (as shown on Schedule 4.18) as of the date hereof.
8.2 Remedies. Upon the occurrence of an Event of Default described
in Section 8.1(f) or (g), immediately and automatically, and upon the occurrence
and continuance of any other Event of Default, or if on any date that a draft is
presented under a Letter of Credit or any date that a Letter of Credit is sought
to be issued, extended or renewed, the conditions precedent to the issuance,
extension or renewal of Letters of Credit are not satisfied, at the Required
Lenders' option and upon the Agent's declaration: (a) the Revolver Commitments
and any obligation to issue, extend or renew Letters of Credit shall terminate;
and (b) the unpaid principal amount of the Loans, together with accrued
interest, all LC Draw Obligations and all other Obligations shall become
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived. Upon termination
of the Revolver Commitments and acceleration of the Loans and the LC Draw
Obligations, the Agent may exercise any and all rights it has under this
Agreement, the Security Documents or any other Loan Documents, or at law or in
equity, and proceed to protect and enforce the Agent's and the Lenders' rights
by any action at law, in equity or other appropriate proceeding. In the event
that the Agent shall apply for the appointment of, or the taking of possession
by, a trustee, receiver or liquidator of any Company or any Restaurant or of any
other similar official to hold or liquidate all or any substantial part of the
properties or assets of any Company or any Restaurant following the occurrence
of a default in payment of any amount owed hereunder and following any
applicable notice or cure period, each of the Companies and the Principal (with
all due and proper corporate, partnership or other authorization, as the case
may be), hereby consents to such appointment and taking of possession and agrees
to execute and deliver any and all documents requested by the Agent relating
thereto (whether by joining in a petition for the voluntary appointment of, or
entering no contest to a petition for the appointment of, such an official or
otherwise, as appropriate under applicable law).
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8.3 Letters of Credit. If any one or more Events of Default shall at any
time occur, the Agent may also, by written notice to the Borrowers, take any or
all of the following actions, at the same or different times:
(a) The Agent may send notices to all or any of the beneficiaries of the
Letters of Credit advising such beneficiaries of the intention and desire of the
Lender to effect the termination, cancellation and surrender of such Letters of
Credit in 30 days; provided, however, that the Agent shall not send any such
notice to any beneficiary unless the Lender has requested that the Borrowers
deliver cash collateral to the Agent pursuant to paragraph (b) below and the
Borrowers have failed to deliver such cash collateral to the Agent within 10
days after such request; and
(b) The Lender may require that the Borrowers deliver to the Lender
first priority perfected cash collateral in an amount equal to the face amount
of all Letters of Credit which remain outstanding.
SECTION 9. MISCELLANEOUS.
9.1 Notices. Unless otherwise specified herein, all notices hereunder to
any party hereto shall be in writing and shall be deemed to have been given (a)
when delivered by hand, (b) three days after mailing by certified mail, return
receipt requested, or (c) one day after delivery or electronic facsimile
transmission, or to the overnight courier; in each case addressed to such party
at its address indicated below:
(a) If to the Borrowers:
Jerry's Famous Deli, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx and Xxxxxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxx, Esq.
Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
(b) If to any Lender:
To its address set forth below its name on the signature
pages hereof, with a copy to the Agent; and
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(c) If to the Agent:
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Mail Stop: 01-09-05
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Director
Telecopier No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
or to any other address specified by such party in writing.
9.2 Expenses. The Borrowers will pay jointly and severally on demand all
expenses of the Agent and the Lenders in connection with the preparation, waiver
or amendment of this Agreement or any other Loan Documents (subject to the limit
on legal expenses hereinabove provided), or the default or collection of the
Loans, the LC Draw Obligations or any other Obligation or in connection with the
Agent's exercise, preservation or enforcement or after a Default, any Lender's
enforcement of any of its rights, remedies or options thereunder, including
without limitation fees of outside legal counsel or the allocated costs of
in-house legal counsel, accounting, consulting, brokerage or other similar
professional fees or expenses, and any fees or expense associated with any
travel or other costs relating to any appraisals or credit or other examinations
conducted in connection with the Obligations or any collateral therefor, and the
amount of all such expenses shall, until paid, bear interest at the highest rate
applicable to principal hereunder (including any default rate). All such
expenses may be charged against any deposit account maintained by any Borrower
with the Agent or any Lender.
9.3 Indemnification. Each of the Borrowers shall absolutely and
unconditionally indemnify and hold the Agent and Lenders harmless against any
and all claims, demands, suits, actions, causes of action, expenses and all
other liabilities whatsoever which shall at any time or times be incurred or
sustained by any of them or by any of their respective shareholders, directors,
officers, employees, subsidiaries, affiliates or agents (except any of the
foregoing incurred or sustained as a result of the gross negligence or willful
misconduct of such Person) on account of, or in relation to, or in any way in
connection with, any of the arrangements or transactions contemplated by,
associated with or ancillary to any of the Loan Documents, whether or not all or
any of the transactions contemplated by, associated with or ancillary to this
Agreement or any of such documents are ultimately consummated.
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9.4 Term of Agreement. This Agreement shall continue in force and effect
until all Commitments have been terminated, all Letters of Credit have been
terminated or expired, and all Obligations have been indefeasibly paid in full
in cash.
9.5 No Waivers. No failure or delay by the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other documents
or agreements executed in connection herewith shall operate as a waiver thereof;
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein, in the Notes and in the Loan Documents are
cumulative and not exclusive of any rights or remedies otherwise provided by
agreement or law.
9.6 Governing Law. This Agreement shall be deemed to be a contract made
under seal and shall be construed in accordance with and governed by the laws of
Massachusetts (without giving effect to any conflicts of laws provisions
contained therein).
9.7 Entire Agreement; Amendments. This Agreement, the Notes and the
other Loan Documents constitute the final agreement of the parties hereto and
supersede any prior agreement or understanding, written or oral, with respect to
the matters contained herein and therein. No modification or waiver of any
provision hereof or of the Notes or any other Loan Document, nor consent to the
departure by any Borrower or any of its Subsidiaries therefrom, shall be
effective unless the same is in writing, and then such waiver or consent shall
be effective only in the specific instance, and for the purpose, for which
given. Except as hereafter provided, the consent of the Required Lenders shall
be required and sufficient (a) to amend with the consent of the Borrowers, any
term of this Agreement, the Notes or any other Loan Document or to waive the
observance of any such term (either generally or in a particular instance or
either retroactively or prospectively); (b) to take or refrain from taking any
action under this Agreement, the Notes, any other Loan Document or applicable
law, including, without limitation, (i) the acceleration of the payment of the
Notes, (ii) the termination of the Commitments, (iii) the exercise of the
Agent's and the Lenders' remedies hereunder and under the Security Documents and
(iv) the giving of any approvals, consents, directions or instructions required
under this Agreement or the Security Documents; provided that no such amendment,
waiver or consent shall, without the prior written consent of all of the Lenders
or the holders of all of the Notes at the time outstanding, (A) extend the fixed
maturity or reduce the principal amount of, or reduce the amount or extend the
time of payment of any principal of, or interest on, any Note (other than Sale
Proceeds Payments or Debt/Equity Proceeds Payments), (B) increase or extend any
Commitment of any Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default shall not
constitute any such increase or extension), (C) release Guaranties of the
Obligations, if any, or any Collateral, unless such release of Collateral is
permitted under Section 7.4 in connection with a Permitted Sale or otherwise,
(D) change the percentage referred to in the definition of "Required Lenders"
contained in Section 1, or (E) amend the provisions of this Section 9.7; and
provided, further, that neither notice to, nor the consent of, any of the
Borrowers shall be required for any modification, amendment or waiver of the
provisions of this Section 9.7 governing the number of Lenders required to
consent to any act or omission under the Loan Documents or the definition of
"Required Lenders".
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(b) Any amendment or waiver effected in accordance with this Section 9.7
shall be binding upon each holder of any Note at the time outstanding, each
future holder of any Note and each of the Borrowers. The Lenders' failure to
insist (directly or through the Agent) upon the strict performance of any term,
condition or other provision of this Agreement, any Note, or any of the Loan
Documents, or to exercise any right or remedy hereunder or thereunder, shall not
constitute a waiver by the Lenders of any such term, condition or other
provision or Default or Event of Default in connection therewith, nor shall a
single or partial exercise of any such right or remedy preclude any other or
future exercise, or the exercise of any other right or remedy; and any waiver of
any such term condition or other provision or of any such Default or Event of
Default shall not affect or alter this Agreement, any Note or any of the Loan
Documents, and each and every term, condition and other provision of this
Agreement, the Notes and the Loan Documents shall, in such event, continue in
full force and effect and shall be operative with respect to any other then
existing or subsequent Default or Event of Default in connection therewith. An
Event of Default hereunder and a Default under any Note or under any of the Loan
Documents shall be deemed to be continuing unless and until cured or waived in
writing by the Required Lenders or all of the Lenders, as provided in paragraph
(a) above.
9.8 Assignments; Participations.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrowers and their successors and to the benefit of the Lenders and the Agent
and their respective successors and assigns. The rights and obligations of the
Borrowers under this Agreement shall not be assigned or delegated without the
prior written consent of the Agent and the Lenders, and any purported assignment
or delegation without such consent shall be void.
(b) Each Lender may assign its rights and interests under this Agreement,
the Credit Extensions, the Notes and the other Loan Documents and/or delegate
its obligations hereunder and thereunder, in whole or in part, and sell
participations in the Notes, the LC Draw Obligations and the Security Documents
as security therefor, provided as follows:
(i) Any such assignment made other than to a separately organized
branch, or an Affiliate of, a Lender shall reflect an assignment, ratably,
of such assigning Lender's Notes, Credit Extensions and Commitments which
is in an aggregate principal amount of at least $1,000,000, and if
greater, shall be an integral multiple of $1,000,000.
(ii) Notwithstanding any provision of this Agreement to the
contrary, each Lender may at any time assign all or any portion of its
rights under this Agreement and each of the other Loan Documents,
including, without limitation, the Notes held by such Lender, to a Federal
Reserve Bank (or equivalent thereof in the case of Lenders chartered
outside of the United States); provided that no such assignment shall
release a Lender from any of its obligations and liabilities under the
Loan Documents. Any Federal Reserve Bank (or equivalent thereof) which
receives such an assignment from any Lender may make further assignments
of such rights in accordance with the provisions of this Section.
(iii) Any assignments and/or delegations made hereunder shall be
pursuant to an instrument of assignment and acceptance (the "Assignment
and Acceptance") substantially in
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55
the form of Exhibit 9.8(a) and the parties to each such assignment shall
execute and deliver to the Agent for its acceptance the Assignment and
Acceptance together with any Note or Notes subject thereto. Upon such
execution and delivery, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least
five Business Days after the execution thereof, (A) the assignee
thereunder shall become a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder with Commitments as set forth therein and (B) the
assigning Lender thereunder shall, to the extent provided in such
assignment, be released from its obligations under this Agreement as to
that portion of its rights and obligations being so assigned and
delegated. The Assignment and Acceptance shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect
the addition of the assignee as a Lender and the resulting adjustment of
Commitments arising from the purchase by and delegation to such assignee
of all or a portion of the rights and obligations of such assigning
Lender under this Agreement.
(iv) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and the assignee together with the Note or Notes
subject to such assignment and payment by the assignee to the Agent of a
registration and processing fee of $3,500, the Agent shall accept such
Assignment and Acceptance. Promptly upon delivering such Assignment and
Acceptance to the Agent, the assigning Lender shall give notice thereof
to the Borrowers and the other Lenders pursuant to a Notice of
Assignment and Acceptance substantially in the form of Exhibit 9.8(b).
Within five Business Days after receipt of such notice, the Borrowers
shall execute and deliver to the Agent in exchange for each such
surrendered Note a new Note payable to the order of such assignee in an
amount equal to the portion of the applicable Commitments assumed by
such assignee pursuant to such Assignment and Acceptance and a new Note
payable to the order of the assigning Lender in an amount equal to the
portion of the applicable Commitments retained by it hereunder. Such new
Notes shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form provided in
this Agreement. Canceled Notes shall be immediately returned to the
Borrowers upon the execution and delivery of such new Notes.
(v) Each Lender may sell participations in all or a portion of its
rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Notes held by
it); provided, however, that, (A) the selling Lender shall remain
obligated under this Agreement to the extent as it would if it had not
sold such participation, (B) the selling Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (C) at no time shall the selling Lender agree with such
participant to take or refrain from taking any action hereunder or under
any other Loan Document, except that the selling Lender may agree not to
consent, without such participant's consent, to any of the actions
referred to in Section 9.7, to the extent that the same require the
consent of each Lender hereunder, (D) all amounts payable by the
Borrowers hereunder shall be determined as if such Lender had not sold
such participation and no participant shall be entitled to receive any
greater amount pursuant to this Agreement than the selling Lender would
have been entitled to receive in respect of the amount of the
participation transferred by such Lender to such participant had no such
transfer occurred, and (E) the Borrowers, the Agent and the other
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56
Lenders shall continue to deal solely and directly with the selling
Lender in connection with such Lender's rights and obligations under this
Agreement.
(vi) Except for an assignment made to a separately organized branch
or an Affiliate of a Lender, no assignment referred to above shall be
permitted without (A) the prior written consent of the Agent, which
consent shall not be unreasonably withheld or delayed, or (B) the prior
written consent of the Borrowers, which consent shall not be so required
with respect to any assignment made during the existence of a Default and,
if required, shall not be unreasonably withheld or delayed.
(b) Each of the Borrowers authorizes each Lender to disclose to any
participant or assignee any prospective participant or assignee any and all
information in such Lender's possession concerning the Companies which has been
delivered to such Lender by or on behalf of the Companies pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Companies in connection with such Lender's credit evaluation prior to becoming a
party to this Agreement.
9.9 Counterparts; Partial Invalidity. This Agreement may be signed in
any number of counterparts with the same effect as if the signatures hereto and
thereto were upon the same instrument. The invalidity or unenforceability of any
one or more phrases, clauses or sections of this Agreement shall not affect the
validity or enforceability of the remaining portions of it.
9.10 WAIVER OF JURY TRIAL. EACH OF BORROWERS, THE AGENT AND THE LENDERS
AGREES THAT NEITHER IT NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR
ARISING OUT OF, THIS AGREEMENT, ANY NOTE, ANY SECURITY DOCUMENT OR ANY OTHER
LOAN DOCUMENT, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP AMONG ANY
BORROWER, THE AGENT OR ANY LENDER, OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE PARTIES
HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO LENDER NOR
THE AGENT NOR ANY BORROWER HAS AGREED WITH OR REPRESENTED TO ANY OTHER THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
9.11 CONSENT TO JURISDICTION. EACH OF THE BORROWERS HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO
THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW
SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF ANY BORROWERS' OBLIGATIONS UNDER OR WITH RESPECT TO
THE NOTES, ANY SECURITY DOCUMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY,
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57
AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF
SUCH COURTS.
9.12 Joint and Several Liability. Each of the Borrowers acknowledges and
agrees that it is jointly and severally liable for all Obligations under the
Loan Documents.
SECTION 10. THE AGENT.
10.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
designates and appoints BankBoston, N.A., which designation and appointment is
coupled with an interest, as the Agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes
BankBoston, N.A., as the Agent of such Lender, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. The Agent and its
affiliates and their officers, directors, employees and agents) shall not: (a)
have any duties or responsibilities to be a trustee for any Lender; (b) be
responsible to the Lenders for any recitals, statements, representations or
warranties contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by either of them under, this
Agreement, or for the value, validity, effectiveness, genuineness,
enforceability, perfection or sufficiency of this Agreement, any Note, any
Security Document, any other Loan Document or any other document referred to or
provided for herein or for any failure by any Borrower or any other Person to
perform any of its obligations hereunder or thereunder; (c) be required to
initiate or conduct any litigation or collection proceedings hereunder except to
the extent requested by the Required Lenders; and (d) be responsible for any
action taken or omitted to be taken by it hereunder or under any other document
or instrument referred to or provided for herein or in connection herewith,
except for its own gross negligence or willful misconduct. The Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact it selects with reasonable
care. Subject to the foregoing, and to Section 9.7, the Agent shall, on behalf
of the Lenders, (a) hold and apply any and all Collateral, and the proceeds
thereof, at any time received by it, in accordance with the provisions of the
Security Documents and this Agreement; (b) exercise any and all rights, powers
and remedies of the Lenders under this Agreement or any of the Security
Documents, including the giving of any consent or waiver or the entering into of
any amendment, subject to the provisions of Section 9.7; (c) execute, deliver
and file UCC financing statements, mortgages, deeds of trust, lease assignments
and other such agreements, and possess instruments on behalf of any or all of
the Lenders; and (d) in the event of acceleration of the Borrowers' Indebtedness
hereunder, sell or otherwise liquidate or dispose of any portion of the
Collateral held by it and otherwise exercise the rights of the Lenders hereunder
and under the Security Documents.
10.2 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any communication by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. As to any matters not expressly provided
for by this Agreement, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in
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58
accordance with instructions signed by the Required Lenders or the Lenders, as
the case may be, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on the Lenders.
10.3 Events of Default. The Agent shall not be deemed to have knowledge of
the occurrence of an Event of Default (other than the non-payment of principal
of or interest on the Notes) unless the Agent has received written notice from
any Lender or the Borrowers specifying such Event of Default and stating that
such notice is a "Notice of Default". In the event that the Agent receives such
a notice of the occurrence of an Event of Default, the Agent shall give prompt
notice thereof to the Lenders (and shall give each Lender prompt notice of each
such non-payment). The Agent shall (subject to Section 10.7) take such action
with respect to such Event of Default as shall be directed by the Required
Lenders, as provided under Section 9.7, provided that, unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action on behalf of the Lenders, or refrain from taking
such action, with respect to such Event of Default as it shall deem advisable in
the best interest of the Lenders.
10.4 Rights as a Lender. With respect to its Commitments and the Credit
Extensions made by BankBoston, N.A. hereunder, BankBoston, N.A. shall have the
same rights and powers hereunder as any other Lenders and may exercise the same
as though it were not acting as the Agent. The Agent and its affiliates may,
without having to account therefor to the Lenders and without giving rise to any
fiduciary or other similar duty to any Lender, accept deposits from, lend money
to and generally engage in any kind of banking, trust or other business with any
Company and any of their affiliates as if it were not acting as an Agent, and
the Agent may accept fees and other consideration from any Company for services
in connection with this Agreement or otherwise without having to account for the
same to the Lenders.
10.5 Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 9.3, but without limiting the obligations of
the Borrowers, ratably in accordance with the Revolving Credit Outstandings held
by the Lenders (or, if no such principal or interest is at the time outstanding,
ratably in accordance with their respective Commitments), for any and all
liabilities, obligations, losses, damages, penalties, action, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement, any Security Document, any other Loan Document or
any other document contemplated by or referred to herein or the transactions
contemplated by or referred to herein or therein (including, without limitation,
the costs and expenses which the Borrowers are obligated to pay under Section
9.2) or the enforcement of any of the terms of this Agreement, any Security
Document, any other Loan Document or of any such other documents, provided that
no Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the party to be indemnified.
10.6 Non-Reliance on Agent and other Lenders. Each Lender agrees that it
has, independently and without reliance on the Agent or any other Lenders, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrowers and their Subsidiaries and its own decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Lenders, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions
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59
in taking or not taking action under this Agreement. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrowers and their Subsidiaries of this Agreement or any other document
referred to or provided for herein or to inspect the properties or books of the
Borrowers or their Subsidiaries. Except for notices, reports and other documents
and information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall have no duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition
or businesses of the Borrowers (or any of their affiliates) which may come into
the possession of the Agent or any of its Affiliates. Notwithstanding the
foregoing, the Agent will provide to the Lenders any and all information
reasonably requested by them and reasonably available to the Agent promptly upon
such request.
10.7 Failure to Act. Except for action expressly required of the Agent
hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
10.8 Resignation of Agent. BankBoston, N.A. (or any other Agent
hereunder), may resign as the Agent at any time by giving 30 days' prior written
notice thereof to the Lenders and the Borrowers. Any such resignation shall take
effect at the end of such 30-day period or upon the earlier appointment of a
successor Agent by the Required Lenders as provided below. Upon any resignation
of BankBoston, N.A. (or any other Agent hereunder), and subject to the
Borrowers' approval (which approval shall not be unreasonably withheld or
delayed and shall not be required with respect to any such appointment made
during the existence of any Default), the Required Lenders shall appoint a
successor agent from among the Lenders or, if such appointment is deemed
inadvisable or impractical by the Required Lenders, another financial
institution with a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Agent hereunder by such successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent. After the effective
date of the resignation of an Agent hereunder, the retiring Agent shall be
discharged from its duties and obligations hereunder, provided that the
provisions of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent. In the event that there shall not be a duly appointed and acting
Agent, each of the Borrowers agrees to make each payment due to the Agent
hereunder, if any, directly to each Lender entitled thereto, pursuant to written
instructions provided by the retiring Agent, and to provide copies of each
certificate or other document required to be furnished to the Agent hereunder,
if any, directly to each Lender.
10.9 Cooperation of Lenders. Each Lender shall (a) promptly notify the
other Lenders and the Agent of any Event of Default known to such Lender under
this Agreement and not reasonably believed to have been previously disclosed to
the other Lenders; (b) provide the other Lenders and the Agent with such
information and documentation as such other Lenders or the Agent shall
reasonably request in the performance of their respective duties hereunder,
including, without limitation, all information relative to the outstanding
balance of principal, interest and other sums owed to such Lender by the
Borrowers; and (c) cooperate with the Agent with respect to any and all
collections and/or foreclosure procedures at any time commenced against any
Borrower, any of its
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60
Subsidiaries, the Principal or otherwise in respect of the Collateral by the
Agent in the name and on behalf of the Lenders.
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61
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal by their duly authorized officers as of the day and year
first above written.
LENDER:
BANKBOSTON, N.A.
By:
-----------------------------------------
Xxxxx X. Xxxxx, Director
Address for Notices:
BankBoston, N.A.
000 Xxxxxxx Xxxxxx, Mail Stop: 01-09-05
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Director
Telecopier: (000) 000-0000
AGENT:
BANKBOSTON, N.A., as Agent
By:
-----------------------------------------
Xxxxx X. Xxxxx, Director
Address for Notices:
BankBoston, N.A.
000 Xxxxxxx Xxxxxx, Mail Stop: 01-09-05
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Director
Telecopier: (000) 000-0000
62
BORROWERS:
JERRY'S FAMOUS DELI, INC.
By:
-----------------------------------------
Title:
JFD, INC.
By:
-----------------------------------------
Title:
NATIONAL DELI CORPORATION
By:
-----------------------------------------
Title:
JERRY'S FAMOUS DELI L.A., INC.
By:
-----------------------------------------
Title:
63
EXHIBIT 2.1(a)
REVOLVING NOTE
$______________ Dated as of [ ], 1998
FOR VALUE RECEIVED, JERRY'S FAMOUS DELI, INC., JFD, INC., NATIONAL DELI
CORPORATION and JERRY'S FAMOUS DELI L.A., INC. (collectively, the "Borrowers"),
hereby jointly and severally promise to pay to the order of [ ] (hereinafter,
together with its successors in title and assigns, called the "Lender"), at the
office of BankBoston, N.A. (the "Agent") pursuant to the Credit Agreement (as
amended or extended from time to time, the "Credit Agreement"), dated as of
September 11, 1998, among the Borrowers, the various financial institutions that
are now or hereafter become Lenders under the Credit Agreement and the Agent,
the principal sum of $________ or, if less, the aggregate unpaid principal
amount of Revolving Loans advanced by the Lender to any of the Borrowers
pursuant to the Credit Agreement, together with interest on the principal
balance thereof from time to time outstanding from the date hereof until payment
in full, without set-off, deduction or counterclaim, on the dates and in such
amounts as specified in the Credit Agreement, and at the final maturity of this
Note, whether by payment or prepayment, acceleration or otherwise. Interest
accruing on the unpaid balance hereof from time to time shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.
Overdue principal (whether at maturity, by reason of acceleration or
otherwise) and, to the extent permitted by applicable law, overdue interest and
fees or any other amounts payable under the Credit Agreement due to the
Borrowers' failure to pay the same in full shall bear interest from and
including the due date thereof until paid, at a rate or rates per annum
determined in accordance with the Credit Agreement, which interest shall be
compounded daily and payable on demand.
All payments under this Note shall be made to the Agent, at the head
office of the Agent, at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (or at
such other place as the Agent may designate from time to time in writing) in
lawful money of the United States of America in immediately available funds.
The outstanding principal amount of this Note and accrued and unpaid
interest thereon shall be due and payable as provided in the Credit Agreement.
The Borrowers have the right in certain circumstances and the obligation in
certain other circumstances to prepay this Note in whole or in part on the terms
and conditions provided in the Credit Agreement.
This Note is a "Revolving Note" referred to in the Credit Agreement and
evidences Revolving Loans thereunder. This Note is entitled to the benefits of
the Credit Agreement (including the Schedules thereto) and all other instruments
evidencing and/or securing the indebtedness hereunder; but neither this
reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrowers to pay the
principal of and interest on this Note as herein provided. The occurrence or
existence of an "Event of Default" as defined in the Credit Agreement shall
constitute a default under this Note and the entire indebtedness hereunder may
become or be declared due and payable as may be provided for in the Credit
Agreement.
The Lender shall, and is hereby irrevocably authorized by the Borrowers
to, endorse on the schedule attached to this Note or a continuation of such
schedule attached hereto and made a part hereof, an appropriate notation
evidencing advances and repayments of principal of this Note, provided that
failure by the Lender to make any such notations shall not affect any of the
Borrowers' obligations or the validity of any repayments made by any of the
Borrowers in respect of this Note.
64
All agreements involving the Borrowers and the Lender are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid to the Lender for the use or forbearance of the indebtedness
evidenced hereby exceed the maximum amount which the Lender is permitted to
receive under applicable law. If, from any circumstances whatsoever, fulfillment
of any provision hereof or of the Credit Agreement, at the time performance of
such provision shall be due, shall involve exceeding such amount, then the
obligation to be fulfilled shall automatically be reduced to the limit of such
validity, and if from any circumstance the Lender should ever receive as
interest an amount which would exceed such maximum amount, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof;
provided, however, that in the event there is a change in the law which results
in a higher permissible rate of interest, then this Note shall be governed by
such new law as of its effective date. This provision shall control every
provision of all agreements involving the Borrower and the Lender.
Each of the Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Note, assent
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
This instrument shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
65
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in
its corporate name under seal by its duly authorized officer as of the day and
year first above written.
JERRY'S FAMOUS DELI, INC.
By:
-----------------------------------------
Title:
JFD, INC.
By:
-----------------------------------------
Title:
NATIONAL DELI CORPORATION
By:
-----------------------------------------
Title:
JERRY'S FAMOUS DELI L.A., INC.
By:
-----------------------------------------
Title:
66
Amount of
Amount of Principal Balance of
Revolving Paid or Principal Notation
Date Loan Prepaid Unpaid Made By
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67
EXHIBIT 2.1(b)
TERM NOTE
$______________ Dated as of [ ], 1998
FOR VALUE RECEIVED, JERRY'S FAMOUS DELI, INC., JFD, INC., NATIONAL DELI
CORPORATION and JERRY'S FAMOUS DELI L.A., INC. (collectively, the "Borrowers"),
hereby jointly and severally promise to pay to the order of [ ] (hereinafter,
together with its successors in title and assigns, called the "Lender"), at the
office of BankBoston, N.A. (the "Agent") pursuant to the Credit Agreement (as
amended or extended from time to time, the "Credit Agreement"), dated as of
September 11, 1998, among the Borrowers, the various financial institutions that
are now or hereafter become Lenders under the Credit Agreement and the Agent,
the principal sum of $________, together with interest on the principal balance
thereof from time to time outstanding from the date hereof until payment in
full, without set-off, deduction or counterclaim, on the dates and in such
amounts as specified in the Credit Agreement, and at the final maturity of this
Note, whether by payment or prepayment, acceleration or otherwise. Interest
accruing on the unpaid balance hereof from time to time shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.
Overdue principal (whether at maturity, by reason of acceleration or
otherwise) and, to the extent permitted by applicable law, overdue interest and
fees or any other amounts payable under the Credit Agreement due to the
Borrowers' failure to pay the same in full shall bear interest from and
including the due date thereof until paid, at a rate or rates per annum
determined in accordance with the Credit Agreement, which interest shall be
compounded daily and payable on demand.
All payments under this Note shall be made to the Agent, at the head
office of the Agent, at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (or at
such other place as the Agent may designate from time to time in writing) in
lawful money of the United States of America in immediately available funds.
The outstanding principal amount of this Note and accrued and unpaid
interest thereon shall be due and payable as provided in the Credit Agreement.
The Borrowers have the right in certain circumstances and the obligation in
certain other circumstances to prepay this Note in whole or in part on the terms
and conditions provided in the Credit Agreement.
This Note is a "Term Note" referred to in the Credit Agreement and
evidences a Term Loan thereunder. This Note is entitled to the benefits of the
Credit Agreement (including the Schedules thereto) and all other instruments
evidencing and/or securing the indebtedness hereunder; but neither this
reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrowers to pay the
principal of and interest on this Note as herein provided. The occurrence or
existence of an "Event of Default" as defined in the Credit Agreement shall
constitute a default under this Note and the entire indebtedness hereunder may
become or be declared due and payable as may be provided for in the Credit
Agreement.
All agreements involving the Borrowers and the Lender are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid to the Lender for the use or forbearance of the indebtedness
evidenced hereby exceed the maximum amount which the Lender is permitted to
receive under applicable law. If, from any circumstances whatsoever, fulfillment
of any provision hereof or of the Credit Agreement, at the time performance of
such provision shall be due, shall involve exceeding such amount, then the
obligation to be fulfilled shall
68
automatically be reduced to the limit of such validity, and if from any
circumstance the Lender should ever receive as interest an amount which would
exceed such maximum amount, such amount which would be excessive interest shall
be applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. As used herein, the term "applicable law" shall mean
the law in effect as of the date hereof; provided, however, that in the event
there is a change in the law which results in a higher permissible rate of
interest, then this Note shall be governed by such new law as of its effective
date. This provision shall control every provision of all agreements involving
the Borrowers and the Lender.
Each of the Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Note, assent
to any extension or postponement of the time of payment or any other indulgence,
to any substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
This instrument shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in
its corporate name under seal by its duly authorized officer as of the day and
year first above written.
JERRY'S FAMOUS DELI, INC.
By:
-----------------------------------------
Title:
JFD, INC.
By:
-----------------------------------------
Title:
NATIONAL DELI CORPORATION
By:
-----------------------------------------
Title:
JERRY'S FAMOUS DELI L.A., INC.
By:
-----------------------------------------
Title:
69
EXHIBIT 2.4
LOAN REQUEST
--------------, -------
BankBoston, N.A., as Agent
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Director
Re: Credit Agreement dated as of September 11, 1998 (as amended or extended
from time to time, the "Credit Agreement") among Jerry's Famous Deli,
Inc., JFD, Inc., National Deli Corporation and Jerry's Famous Deli L.A.,
Inc. (collectively, the "Borrowers"), the various financial institutions
which are now or hereafter become parties to the Agreement as Lenders,
and BankBoston, N.A., as agent (the "Agent"). (Capitalized terms used
herein have the meanings assigned to them in the Credit Agreement.)
Ladies and Gentleman:
Pursuant to Section 2.4 of the Credit Agreement, the Borrowers hereby confirm
their request made on [] for a Loan in the amount of $[] to be made on []. The
Borrowers hereby confirm their request that such [Revolving/Term] Loan be a
[Base Rate/Eurodollar] Loan. The proceeds shall be used by the Borrowers as set
forth in Schedule A hereto.
The representations and warranties contained in the Credit Agreement and other
Loan Documents are as of the date hereof and, on the date such Loan is made will
be, true and accurate in all material respects (except to the extent affected by
transactions occurring after the date of the Credit Agreement and permitted
therein), with and without giving effect to the requested Loan and the
application of the proceeds thereof.
The Borrowers hereby further confirm that at the date hereof (i) the Borrowers
have performed and complied with all covenants and conditions in the Credit
Agreement to be performed or complied with by the Borrowers prior to the making
of the requested Loan, (ii) no Default shall have occurred and be continuing or
result from such Loan, and (iii) there has been no material adverse change in
the business, assets, condition (financial or otherwise), or prospects of any
Company since the date of the Credit Agreement.
Executed as an instrument under seal as of the date first above written.
JERRY'S FAMOUS DELI, INC.
JFD, INC.
NATIONAL DELI CORPORATION
JERRY'S FAMOUS DELI L.A., INC.
By:
------------------------------------
Duly authorized signatory as to all
70
Schedule A
to
EXHIBIT 2.4
Use of Proceeds
71
EXHIBIT 2.5
INTEREST RATE OPTION NOTICE
BankBoston, N.A., as Agent
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Director
Re: Credit Agreement dated as of September 11, 1998 (as amended or extended
from time to time, the "Credit Agreement") among Jerry's Famous Deli,
Inc., JFD, Inc., National Deli Corporation and Jerry's Famous Deli L.A.,
Inc. (collectively, the "Borrowers"), the various financial institutions
which are now or hereafter become parties to the Agreement as Lenders,
and BankBoston, N.A., as agent (the "Agent"). (Capitalized terms used
herein have the meanings assigned to them in the Credit Agreement.)
----------------, -----
Ladies and Gentleman:
Pursuant to Section 2.5 of the Credit Agreement, the Borrowers hereby confirm
their request made on [ ] to have the interest rate on an outstanding
[Eurodollar] [Base Rate] Loan [which is a Revolving Loan/a [portion of the] Term
Loan] in the amount of $[ ] made on [ ] [converted to] [continued as] a [Base
Rate] [Eurodollar] as of [ ].
[The Borrowers hereby further confirm their request that the Interest Period
beginning on such date and applicable to such Eurodollar Loan end [ ] months
after such date, unless an earlier date is otherwise required by the Credit
Agreement.]
The representations and warranties contained in the Credit Agreement and the
other Loan Documents are as of the date hereof and, on the date such Loan is
made will be, true and accurate in all material respects (except to the extent
affected by transactions occurring after the date of the Credit Agreement and
permitted therein), with and without giving effect to the requested loan and the
application of proceeds thereof.
The Borrowers hereby further confirm that at the date hereof (i) the Borrowers
have performed and complied with all covenants and conditions in the Credit
Agreement to be performed or complied with by the Borrowers prior to the making
of the requested Loan, (ii) no Default shall have occurred and be continuing or
result from such Loan, and (iii) there has been no material adverse change in
the business, assets, condition (financial or otherwise), or prospects of any
Company since the date of the Credit Agreement.
72
Executed as an instrument under seal as of the date first above written.
JERRY'S FAMOUS DELI, INC.
JFD, INC.
NATIONAL DELI CORPORATION
JERRY'S FAMOUS DELI L.A., INC.
By:
-----------------------------------
Duly authorized signatory as to all
73
EXHIBIT 6.1(c)
COVENANT COMPLIANCE REPORT
The undersigned ______________________, [Chief Financial
Officer/Controller] of Jerry's Famous Deli, Inc. and its Subsidiaries
(collectively, the "Borrowers"), HEREBY CERTIFIES that:
This Report is furnished pursuant to Section 6.1(c) of the Credit
Agreement dated as of September 11, 1998 by and among the Borrowers, the Lenders
party thereto, and BankBoston, N.A., as agent for the Lenders, as amended from
time to time (the "Credit Agreement"). Unless otherwise defined herein, the
terms used in this Report have the meanings assigned to them in the Credit
Agreement.
As required by Section 6.1[(a)][(b)] of the Credit Agreement, the
financial statements of the Borrowers for the [year/quarter] ended _____,__ (the
"Financial Statements"), prepared in accordance with GAAP [(except to the extent
otherwise permitted by Section 6.1(b)], accompany this Report. The Financial
Statements present fairly the financial position of the Borrowers and their
Subsidiaries as at the date thereof and their results of operations for the
period covered thereby [(subject only to normal year-end adjustments)].
Based on the Financial Statements provided with this Report [and with
the Reports previously furnished for the quarters ended _______ and ______, __],
the figures set forth in Schedule A hereto for determining compliance with the
financial covenants contained in Article V of the Credit Agreement for the
applicable reporting periods are accurate.
The activities of the Borrowers and their Subsidiaries during the period
through the date of this certificate have been reviewed by the undersigned, as
[Chief Financial Officer/Controller] of the Borrowers, or by employees or agents
under the undersigned's supervision. Based on such review, to the best knowledge
and belief of the undersigned, as of the date of this Report, no Default has
occurred and is continuing, except as follows
----------------------------------------------------
------------------------------------------------------------------------------
[give a description in reasonable detail of each such Default and the actions
being taken or proposed to be taken with respect thereto, OR insert "None" if
appropriate].
WITNESS my hand this ____ day of ______________, ____.
JERRY'S FAMOUS DELI, INC.
and its Subsidiaries
By:__________________________________________
_______________ , Chief Financial Officer/
Controller as to all
74
Schedule A to Covenant Compliance Report
A MAXIMUM LEVERAGE (Section 5.1(a)) ON OR PRIOR TO 12/31/98
1. MAXIMUM PERMITTED RATIO OF CONSOLIDATED FUNDED
INDEBTEDNESS TO CONSOLIDATED EBITDA FOR THE FISCAL
QUARTER ENDED ________
___:1.00
2. ACTUAL EBITDA FOR THE FISCAL QUARTER ENDED ____________
(a) CONSOLIDATED EBITDA
(i) Consolidated Net Income $_____
(ii) Plus: Taxes paid or accrued in respect of income and profits $_____
(iii) Plus: Consolidated Interest Expense $_____
(iv) Plus: depreciation/amortization/non-cash charges $_____
(b) Total CONSOLIDATED EBITDA $_____
3. ACTUAL RATIO
(a) Consolidated Funded Indebtedness as of _________ $_____
(b) Consolidated EBITDA (see above) $_____
(c) Actual Ratio of (a) to (b): ____:1.00
B. MINIMUM FIXED CHARGES COVERAGE (Section 5.2)
1. MINIMUM REQUIRED RATIO OF CONSOLIDATED EBITDA TO
CONSOLIDATED FINANCIAL OBLIGATIONS FOR THE FOUR
FISCAL QUARTERS ENDED _________________ ____:1.00
2. ACTUAL RATIO
(a) Consolidated EBITDA (see above) $_____
(b) Consolidated Financial Obligations $_____
(c) Actual Ratio of (a) to (b): ____:1:00
75
C. MINIMUM INTEREST COVERAGE (Section 5.3)
1. MINIMUM REQUIRED RATIO OF CONSOLIDATED EBITDA TO
CONSOLIDATED INTEREST EXPENSE FOR THE FOUR FISCAL
QUARTERS ENDED _____________ ____:1:00
2. ACTUAL RATIO
(a) Consolidated EBITDA (see above) $_____
(b) Consolidated Interest Expense $_____
(c) Actual Ratio of (a) to (b): ____:1.00
D. CAPITAL EXPENDITURES (Section 5.4)
1. MAXIMUM PERMITTED CAPITAL EXPENDITURES FOR
FISCAL YEAR ________________ $_____
2. CARRYFORWARD AMOUNT $_____
3. ACTUAL CAPITAL EXPENDITURES $_____
76
EXHIBIT 9.8(a)
ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE (the "Agreement") is made as of __________,
____, by and between [ ] ("Assignor") and [ ] ("Assignee").
1. Recitals. (a) Assignor is a party to the Credit Agreement dated as of
September 11, 1998 (as amended or extended from time to time the "Credit
Agreement") among Jerry's Famous Deli, Inc., JFD, Inc., National Deli
Corporation and Jerry's Famous Deli L.A., Inc. (collectively, the "Borrowers"),
the various financial institutions named therein as "Lenders", and BankBoston,
N.A., as agent (the "Agent").
(b) Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
(c) Immediately prior to the assignment and assumption provided herein,
Assignor's Commitment and its outstanding Loans and LC Draw Obligations are as
specified in Schedule A attached hereto. Assignor desires to assign and delegate
to Assignee, and Assignee desires to acquire and assume from Assignor, a portion
(the "Purchased Percentage") of Assignor's Commitment/outstanding Loans and LC
Draw Obligations and all related claims for interest and fees after the
Effective Date (as defined below).
2. Assignment. For and in consideration of the assumption of obligations
by Assignee set forth in Section 3 hereof and the other consideration set forth
herein, and effective as of [ ] [must be at least 5 Business Days after
execution of this Agreement] (the "Effective Date"), Assignor does hereby sell,
assign, transfer and convey all of its right, title and interest in and to, and
does hereby delegate its obligations in respect of, the Purchased Percentage of
the Commitment of Assignor (as in effect on the Effective Date) and all Loans
and LC Draw Obligations made by Assignor and outstanding on the Effective Date
under the Credit Agreement and the other Loan Documents. Pursuant to Section 9.8
of the Credit Agreement, on and after the Effective Date, Assignee shall have
the rights, benefits and obligations of a Lender under the Loan Documents with
respect to the Purchased Percentage of the Loan Documents. After giving effect
to the assignment and delegation provided herein, the respective Commitments and
outstanding Loans and LC Draw Obligations of the parties hereto shall be as set
forth on Schedule A hereto, which Schedule also contains certain additional
information with respect to Assignee.
3. Assumption. For and in consideration of the assignment of rights by
Assignor set forth in Section 2 hereof and the other consideration set forth
herein, and effective as of the Effective Date, Assignee does hereby accept the
foregoing assignment of rights and delegation of obligations, and does hereby
assume and covenant and agree fully, completely and timely to perform, comply
with and discharge, each and all of the obligations, duties and liabilities of
Assignor under the Credit Agreement, which are assigned to Assignee hereunder,
which assumption includes, without limitation, the obligation to fund the
unfunded portion of the Purchased Percentage of the Assignor's Commitment in
accordance with the provisions set forth in the Credit Agreement. Assignee
agrees to be bound by all provisions relating to the Lenders under, and as
defined in, the Credit Agreement, including, without limitation, provisions
relating to the dissemination of information and the payment of indemnification.
From and after the Effective Date, Assignor is released from Assignor's
obligations with the respect to the Purchased Percentage.
4. Fees; Etc. Assignor and Assignee have made arrangements with respect to
(a) the portion, if any, to be paid, and the date or dates for payment, by
Assignor to Assignee of any
77
commitment fees heretofore received by Assignor pursuant to the Credit Agreement
prior to the Effective Date and (b) the portion, if any, to be paid, and the
date or dates for payment, by Assignee to Assignor of commitment fees or
interest received by Assignee pursuant to the Credit Agreement from and after
the Effective Date.
5. Payment Obligations. On and after the Effective Date, Assignee shall be
entitled to receive from Agent all payments of principal, interest and fees with
respect to the Purchased Percentage of Assignor's Commitments, Loans and LC Draw
Obligations. Assignee shall advance funds directly to the Agent with respect to
all Loans made and LC Draw Obligations on or after the Effective Date. In
consideration for the sale and assignment of Loans and LC Draw Obligations
hereunder, on the Effective Date, Assignee shall pay Assignor an amount equal to
the Purchased Percentage of all Loans and LC Draw Obligations made by Assignor
outstanding on the Effective Date or such other purchase price for the Purchased
Percentage agreed to by Assignor and Assignee. On and after the Effective Date,
Assignee will also remit to Assignor any amounts of interest on Loans and fees
received from Agent which relate to the Purchased Percentage of Loans and LC
Draw Obligations made by Assignor accrued for periods prior to the Effective
Date. In the event that either party hereto receives any payment to which the
other party hereto is entitled under this Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
6. Representations and Certain Agreements.
(a) Assignee's Representations, Warranties and Agreements. Assignee
represents, warrants and agrees to and with Assignor as follows:
(i) Assignee has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(ii) the making and performance by Assignee of this Agreement and
all documents required to be executed and delivered by it hereunder do not
and will not violate any law or regulation of the jurisdiction of its
organization or any other law or regulation applicable to it;
(iii) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of the Assignee,
enforceable against it in accordance with its terms;
(iv) all approvals and authorizations of, all filings with and all
actions by any governmental or other administrative or judicial authority
necessary for the validity or enforceability of Assignee's obligations
under this Agreement have been obtained;
(v) Assignee has received a copy of the Credit Agreement and the
other Loan Documents, together with copies of the most recent financial
statements and compliance certificates delivered pursuant to Sections
6.1(a), (b), (c) and (d) thereof and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision
to enter into this Agreement;
(vi) Assignee appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement
and the other Loan Documents as are delegated to Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
and
(vii) Assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of the Credit Agreement are
required to be performed by it as a
78
Lender, including, without limitation, obligations to make Loans and fund
LC Draw Obligations to the full amount of the portion of the Commitments
acquired by Assignee.
(b) Assignor's Representations and Warranties. Assignor represents
and warrants to Assignee as follows:
(i) Assignor has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(ii) the making and performance by Assignor of this Agreement and all
documents required to be executed and delivered by it hereunder do not and
will not violate any law or regulation of the jurisdiction of its
organization or any other law or regulation applicable to it;
(iii) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of Assignor,
enforceable against it in accordance with its terms;
(iv) all approvals and authorizations of, all filings with and all
actions by any governmental or other administrative or judicial authority
necessary for the validity or enforceability of Assignor's obligations
under this Agreement have been obtained;
(v) the amounts of Assignor's respective Commitments and the
aggregate outstanding principal amount of the Loans and LC Draw
Obligations held by the Assignor are, on and as of the date of this
Agreement (immediately prior to giving effect to the sale, assignment and
transfer contemplated by Section 2), correctly set forth in Schedule A
hereto; and
(vi) immediately prior to giving effect to the sale, assignment and
transfer contemplated by Section 2, the Assignor has good title to, and is
the sole legal and beneficial owner of, the Purchased Percentage, free and
clear of all liens, security interests, participations and other
encumbrances.
7. Credit Determination; Limitations on Assignor's Liability. It is
understood and agreed that Assignee has independently made its own credit
determinations and analysis based upon such information as Assignee deems
sufficient to enter into the transaction contemplated hereby and not based on
any statements or representations by Assignor and that it will, independently
and without reliance upon Assignor, any other Lender or Agent 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 the Credit
Agreement. It is understood and agreed that the assignment and assumption
hereunder are made WITHOUT RECOURSE to Assignor and that Assignor makes no
representation or warranty of any kind to Assignee (except as set forth in
Section 5(b) above) and shall not be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency, value or
collectibility of the Credit Agreement or any other Loan Document, including
without limitation, documents granting the Assignor and other Lenders a security
interest in assets of the Borrowers and their Subsidiaries, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrowers and their Subsidiaries, (iv) the performance or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrowers and their Subsidiaries or (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans and LC Draw
Obligations. Neither Assignor nor any of its officers, directors, employees,
agents or attorneys shall be liable for any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans and LC Draw
Obligations or the Loan Documents, except for its or their own gross negligence
or willful misconduct.
79
8. Indemnity. Assignee agrees to indemnify and to hold harmless Assignor
from and against any and all losses, costs, damages, expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by
Assignor in connection with or arising in any manner from Assignee's performance
or nonperformance of obligations assumed under this Agreement.
9. Subsequent Assignments. After the Effective Date, Assignee shall have
the right to assign the rights which are assigned to Assignee hereunder to any
entity or person, provided that (a) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained and (b)
Assignee is not thereby released from any of its obligations to Assignor
hereunder.
10. Governing Law. This Agreement shall be governed by the internal law,
and not the law of conflicts, of The Commonwealth of Massachusetts.
11. Notices. Notices shall be given under this Agreement in the manner set
forth in the Credit Agreement. For the purpose hereof, the addresses of the
parties hereto (until notice of a change is delivered) shall be the addresses
set forth under the parties' respective name(s) on the signature pages hereto.
12. Further Assurances. Assignor and Assignee hereby agree to execute and
deliver such other instruments, and take such other actions, as either party may
reasonably request in connection with the transaction contemplated by this
Agreement.
13. Expenses. Each party hereto shall bear its own expenses in
connection with the execution, delivery and performance of this Agreement.
14. Amendment, Modification or Waiver. No provision of this Agreement may
be amended, modified or waived except by an instrument in writing signed by
Assignor and Assignee.
15. Jurisdiction; Venue. Each of the parties hereto hereby submits to the
nonexclusive jurisdiction of the United States District Court for the District
of Massachusetts and of any Massachusetts state court for the purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, any objective which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
17. Counterparts. This Agreement may be executed in counterparts, each of
which shall be identical and all of which, taken together, shall constitute one
instrument.
80
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first above written.
[ ]
By:
------------------------------------
Title:
Address: [ ]
Telephone: [ ]
Telecopy: [ ]
[ ]
By:
------------------------------------
Title:
Address: [ ]
Telephone: [ ]
Telecopy: [ ]
ACCEPTED:
BANKBOSTON, N.A., as Agent
By:
------------------------
Title:
81
SCHEDULE A
TO ASSIGNMENT AND
ACCEPTANCE AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AND LOAN AMOUNTS
ASSIGNOR:
[Insert Name of Assignor]
Loans LC Draw Obligations Commitment
Original Amount $__________ $__________ $__________
Original Percentage _______% ________% ______%
Following assignment of the Purchased Percentage, Assignor's portions of
the Commitments and outstanding Loans will be as follows:
Loans LC Draw Obligations Commitment
Revised Amount $__________ $__________ $__________
Revised Percentage _______% ________% ______%
ASSIGNEE:
[Insert Name of Assignee]
Loans LC Draw Obligations Commitment
Original $__________ $__________ $__________
Amount, if any
Original Percentage, if _______% ________% ______%
any
82
Following assignment of the Purchased Percentage, Assignee's portions of
the Commitments, LC Draw Obligations and outstanding Loans will be as
follows:
Loans LC Draw Obligations Commitment
New Amount $__________ $___________ $__________
New Percentage _______% ________% ______%
Address for Notices:
[Address]
Attention: __________________________
Telephone: __________________________
Telecopy: __________________________
Telephone: _________________________
Confirmation:________________________
Eurodollar Lending Office:
___________________________
___________________________
___________________________
Domestic Lending Office:
___________________________
___________________________
___________________________
83
EXHIBIT 9.8(b)
NOTICE OF ASSIGNMENT
AND ACCEPTANCE
To: Jerry's Famous Deli, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xx. Xxxxxxxxx Xxxxxxxx
[List Lenders and addresses]
From: [Name of Assignor] ("Assignor")
[Name of Assignee] ("Assignee")
---------------------, ---------
1. We refer to the Credit Agreement, dated as of September 11, 1998, as it
may be amended, modified, renewed or extended from time to time, is herein
called the "Credit Agreement") among Jerry's Famous Deli, Inc., JFD, Inc.,
National Deli Corporation and Jerry's Famous Deli L.A., Inc. (collectively, the
"Borrowers"), various financial institutions named therein as a "Lender" (each a
"Lender" and collectively the "Lenders"), the above-referenced Assignor and
BankBoston, N.A., in its separate capacity as Agent for the Lenders. Capitalized
terms used herein without definition have the meanings assigned to them in the
Credit Agreement.
2. This Notice of Assignment and Acceptance (this "Notice") is given and
delivered to the Borrowers, the Lenders and the Agent pursuant to Section
9.8(b)(iv) of the Credit Agreement.
3. Assignor and the above-referenced Assignee have entered into an
Assignment and Acceptance, dated as of ____________, ____ (the "Assignment
Agreement"), pursuant to which, among other things, Assignor has sold, assigned,
delegated and transferred to Assignee, and Assignee has purchased, accepted and
assumed from Assignor, a portion of Assignor's rights and obligations under the
Credit Agreement and the other Loan Documents such that Assignee's percentage of
the aggregate Commitments and the outstanding Loans and LC Draw Obligations
shall be as set forth in Schedule A to the Assignment Agreement enclosed
herewith (which Schedule also sets forth Assignor's percentage of the
Commitments and outstanding Loans and LC Draw Obligations prior to such
transfer), effective as of the Effective Date. The Effective Date shall be
____________, ____, provided that the Effective Date shall not occur if any
condition precedent explicitly agreed to in writing by Assignor and Assignee has
not been satisfied.
4. Assignor and Assignee hereby give to the Borrowers, the other Lenders
and the Agent notice of the assignment and delegation referred to herein and
enclose a fully executed counterpart of the Assignment Agreement. Assignor will
confer with the Agent before ____________, ____ to determine if the assignment
will become effective on such date pursuant to Section 3 hereof, and will confer
with the Agent to determine the Effective Date pursuant to Section 3 hereof if
it occurs thereafter. Assignor shall notify the Agent if the assignment does not
become effective on any proposed Effective Date as a result of the failure to
satisfy the conditions precedent explicitly agreed to in writing by Assignor and
Assignee. At the request of the Agent, Assignor will give the Agent written
confirmation of the occurrence of the Effective Date.
84
5. Assignee hereby confirms its acceptance and assumption of the
assignment and delegation referred to herein and agrees as of the Effective Date
(a) to perform fully all of the obligations under the Credit Agreement which it
has assumed pursuant to the Assignment Agreement and (b) to be bound by the
terms and conditions of the Credit Agreement as a "Lender".
6. Assignor and Assignee request and agree that any payments to be made by
the Agent to Assignor on and after the Effective Date shall, to the extent of
the assignment referred to herein, be made entirely to Assignee, it being
understood that Assignor and Assignee shall make between themselves any desired
allocations.
7. Assignor hereby agrees to deliver to the Agent on or before the
Effective Date its original Note[s] subject to the assignment contemplated by
the Assignment Agreement. Assignor and Assignee hereby request that the
Borrowers deliver to the Agent on or before the Effective Date the following new
Notes payable in accordance with Section 9.8(b)(iv) of the Credit Agreement.
[Describe each new Note for Assignor and Assignee with principal amount
and payee.]
8. Assignee advises the Agent and the other Lenders that its address for
notice purposes, as well as certain other relevant information, is set forth in
Schedule A to the Assignment Agreement.
[Assignor]
By: ________________________________
Title:
[Assignee]
By: ________________________________
Title:
- 2 -
85
SCHEDULE 1
Commitments
----------------------------------------------------------------
Lender Term Loan Revolver
----------------------------------------------------------------
BankBoston, $9,000,000 $6,000,000
N.A.
----------------------------------------------------------------
----------------------------------------------------------------
Percentages
----------------------------------------------------------------
Lender Term Loan Revolver
----------------------------------------------------------------
BankBoston, 100% 100%
N.A.
----------------------------------------------------------------
----------------------------------------------------------------
