Exhibit 10.46
$25,000,000
CREDIT AGREEMENT
DATED AS OF
SEPTEMBER 30, 1996
BETWEEN
APPLE SOUTH, INC.,
AS BORROWER
AND
FIRST UNION NATIONAL BANK OF GEORGIA
AS LENDER
Table of Contents
ARTICLE 1. DEFINITIONS .....................................................1
SECTION 1.1.Definitions.......................................................1
"Adjusted Capitalization"...................................1
"Adjusted Funded Debt"......................................1
"Adjusted Funded Debt/Adjusted Capitalization Ratio"........1
"Adjusted LIBOR Rate,"......................................1
"Affiliate".................................................1
"Agreement".................................................2
"Assignee"..................................................2
"Authority".................................................2
"Bank" ...................................................2
"Bank's Address"............................................2
"Base Rate".................................................2
"Base Rate Loan"............................................2
"BB&T" ...................................................2
"BB&T Agreement"............................................2
"Borrower"..................................................2
"Borrowing".................................................2
"Capital Stock".............................................3
"Capitalized Lease Obligations".............................3
"CERCLA" ...................................................3
"CERCLIS"...................................................3
"Change of Law".............................................3
"Closing Certificate".......................................3
"Closing Date"..............................................3
"Code" ...................................................3
"Commitment"................................................3
"Compliance Certificate"....................................3
"Consolidated Net Income,"..................................3
"Consolidated Subsidiary"...................................3
"Controlled Group"..........................................3
"Default"...................................................4
"Default Rate"..............................................4
"Dollars" or "$"............................................4
"Domestic Business Day".....................................4
"DR Holdings Lease".........................................4
"Environmental Authorizations"..............................4
"Environmental Authority"...................................4
"Environmental Judgments and Orders"........................4
"Environmental Liabilities".................................4
"Environmental Notices".....................................4
i
"Environmental Proceedings".................................5
"Environmental Releases"....................................5
"Environmental Requirements"................................5
"ERISA" ...................................................5
"Euro-Dollar Business Day"..................................5
"Euro-Dollar Rate,".........................................5
"Euro-Dollar Rate Loan".....................................5
"Euro-Dollar Reserve Percentage"............................5
"Event of Default"..........................................5
"Federal Funds Rate"........................................5
"Fiscal Quarter"............................................6
"Fiscal Year"...............................................6
"Fixed Charge Coverage Ratio"...............................6
"Franchise Rights"..........................................6
"GAAP" ...................................................6
"Guarantee" or "Guaranty"...................................6
"Hazardous Materials".......................................6
"Interest Period"...........................................7
"Lending Office"............................................7
"LIBOR Rate"................................................7
"Lien" ...................................................7
"Loan Documents"............................................8
"Margin Stock"..............................................8
"Material Adverse Effect"...................................8
"Monthly Interest Period"...................................8
"Multiemployer Plan"........................................8
"Note" ...................................................8
"Notice of Borrowing".......................................8
"Participant"...............................................8
"PBGC" ...................................................8
"Person" ...................................................8
"Plan" ...................................................8
"Prime Rate"................................................9
"Properties"................................................9
"Purchase Money Liens"......................................9
"Redeemable Preferred Stock"................................9
"Regulation D"..............................................9
"Regulation G"..............................................9
"Regulation T"..............................................9
"Regulation U"..............................................9
"Regulation X"..............................................9
"Revolving Loan"............................................10
"Sale-Leaseback Transaction"................................10
"Senior Note Indenture".....................................10
"Senior Notes"..............................................10
ii
"Solvent"...................................................10
"Stockholders' Equity"......................................10
"Subsidiary"................................................10
"Synthetic Lease"...........................................10
"Termination Date"..........................................10
"Third Parties".............................................11
"Total Funded Debt".........................................11
"Transferee"................................................11
"Unfunded Vested Liabilities"...............................11
"Unused Commitment".........................................11
"Voluntary Store Closing"...................................11
"Wachovia"..................................................11
"Wachovia Credit Agreement".................................11
SECTION 1.2.Accounting Terms and Determinations......................12
SECTION 1.3.References...............................................12
SECTION 1.4.Use of Defined Terms.....................................12
SECTION 1.5.Terminology..............................................12
ARTICLE 2.THE CREDIT ........................................................12
SECTION 2.1. Commitment to Lend......................................12
SECTION 2.2. Method of Borrowing ....................................13
2.2.1. Notice to Bank........................................13
2.2.2. When Revolving Loans Made.............................13
2.2.3. Application of Certain Proceeds.......................13
2.2.4. No Borrowing Upon Default.............................13
SECTION 2.3. Note....................................................13
2.3.1. Single Note...........................................13
2.3.2. Endorsement to Note...................................13
SECTION 2.4. Maturity of Revolving Loans.............................14
SECTION 2.5. Interest Rates..........................................14
2.5.1. Base Rate Loans......................................14
2.5.2. Euro-Dollar Rate Loans...............................14
2.5.3. Bank to Determine....................................14
2.5.4. Savings Clause.......................................15
SECTION 2.6. Closing Fee.............................................15
SECTION 2.7. Termination or Reduction of Commitment..................15
2.7.1. Termination of Commitments...........................15
2.7.2. Mandatory Reduction and Reinstatement of Commitment..15
SECTION 2.8. Optional Prepayments...................................15
SECTION 2.9. Mandatory Prepayments..................................16
SECTION 2.10. General Provisions as to Payments......................16
2.10.1. Timing...............................................16
2.10.2. Next Banking Day.....................................16
SECTION 2.11. Computation of Interest................................16
iii
ARTICLE 3. CONDITIONS TO BORROWINGS ........................................16
SECTION 3.1. Conditions to First Borrowing..........................16
3.1.1. This Agreement.......................................16
3.1.2. Note.................................................17
3.1.3. Opinion..............................................17
3.1.4. Closing Certificate..................................17
3.1.5. Other Documents......................................17
3.1.6. Borrowing Notice.....................................17
SECTION 3.2. Conditions to All Borrowings...........................17
3.2.1. Notice...............................................17
3.2.2. No Default...........................................17
3.2.3. Truth of Representations.............................17
3.2.4. Not Overadvance......................................17
ARTICLE 4. REPRESENTATIONS AND WARRANTIES....................................18
SECTION 4.1. Corporate Existence and Power..........................18
SECTION 4.2. Corporate and Governmental Authorization:
No Contravention....................................18
SECTION 4.3. Binding Effect.........................................18
SECTION 4.4. Financial Information: No Material Adverse Effect......19
SECTION 4.5. No Litigation..........................................19
SECTION 4.6. Compliance with Laws Generally; Compliance with ERISA..19
SECTION 4.7. Taxes..................................................20
SECTION 4.8. Subsidiaries...........................................20
SECTION 4.9. Not a Holding Company, Public Utility, Investment Company
Investment Adviser..................................20
SECTION 4.10. Ownership of Property; Liens...........................20
SECTION 4.11. No Default.............................................20
SECTION 4.12. Full Disclosure........................................20
SECTION 4.13. Environmental Matters..................................21
SECTION 4.14. Capital Stock..........................................21
SECTION 4.15. Margin Stock...........................................21
SECTION 4.16. Solvency...............................................22
SECTION 4.17. Possession of Franchises, Licenses, Etc................22
SECTION 4.18. Insurance..............................................22
ARTICLE 5. COVENANTS .......................................................22
SECTION 5.1. Information............................................22
5.1.1. Annual Audit.........................................22
5.1.2. Interim Statements...................................23
5.1.3. Compliance Certificates..............................23
5.1.4. Default Notice.......................................23
5.1.5. Proxy................................................23
5.1.6. Registration Statements..............................23
5.1.7. ERISA Notices........................................23
iv
5.1.8. Wachovia Agreement; BB& T Agreement; Senior Notes.....24
5.1.9. Other Reports.........................................24
SECTION 5.2. Inspection of Property, Books and Records..............24
SECTION 5.3. Adjusted Funded Debt/Adjusted Capitalization Ratio.....24
SECTION 5.4. Minimum Shareholders' Equity...........................24
SECTION 5.5. Fixed Charge Coverage Ratio............................24
SECTION 5.6. Negative Pledge........................................24
SECTION 5.7. Maintenance of Existence...............................25
SECTION 5.8. Dissolution............................................26
SECTION 5.9. Consolidation, Mergers, and Sales of Assets; Sale-
Leaseback Transactions...............................26
5.9.1. Consolidation, Mergers, and Sales of Assets..........26
5.9.2. Sale-Leaseback Transactions..........................26
SECTION 5.10. Use of Proceeds........................................26
SECTION 5.11. Compliance with Laws; Payment of Taxes.................27
SECTION 5.12. Insurance..............................................27
SECTION 5.13. Change is Fiscal Year..................................27
SECTION 5.14. Maintenance of Property................................27
SECTION 5.15. Environmental Notices..................................27
SECTION 5.16. Environmental Matters..................................27
SECTION 5.17. Environmental Releases.................................28
SECTION 5.18. Investments............................................28
(i) Current Assets.......................................28
(ii) Capital Expenditures.................................28
(iii) Franchise Fees.......................................28
(iv) Escrow Deposits......................................28
(v) Bank Accounts........................................28
(vi) Surplus Cash.........................................29
(vii) Subsidiaries.........................................29
(viii) Travel Advances......................................29
(ix) Special Life Insurance Program.......................29
(x) Applebee's Franchisees...............................29
(xi) Other Restaurant Concepts............................30
(xii) Other Investments Generally..........................30
SECTION 5.19. Subsidiary Debt........................................30
ARTICLE 6. DEFAULTS ........................................................30
SECTION 6.1. Events of Default.......................................30
6.1.1. Non-Payment..........................................30
6.1.2. Failure to Observe Certain Covenants.................31
6.1.3. Failure to Observe Covenants Generally...............31
6.1.4. Misrepresentation....................................31
6.1.5. Cross-Default........................................31
6.1.6. Voluntary Bankruptcy.................................31
6.1.7. Involuntary Bankruptcy...............................32
v
6.1.8. ERISA................................................32
6.1.9. Judgments............................................32
6.1.10. Tax Liens...........................................32
6.1.11. Change of Control...................................32
6.1.12. Loss of Franchise Rights............................33
6.1.13. BB&T Agreement......................................33
6.1.14. Material Adverse Effect.............................33
ARTICLE 7. CHANGE IN CIRCUMSTANCES; COMPENSATION ...........................33
SECTION 7.1. Basis for Determining Interest Rate Inadequate .........33
SECTION 7.2. Illegality..............................................34
SECTION 7.3. Increased Cost and Reduced Return.......................34
7.3.1. Change of Law........................................34
7.3.2. Capital Adequacy.....................................35
7.3.3. Notice of Determination..............................35
7.3.4. Assignees Covered....................................35
SECTION 7.4. Base Rate Loans Substituted for Affected Euro-Dollar Rate
Loans................................................35
SECTION 7.5. Compensation............................................36
ARTICLE 8. MISCELLANEOUS ...................................................36
SECTION 8.1. Notices.................................................36
SECTION 8.2. No Waivers..............................................36
SECTION 8.3. Expenses; Documentary Taxes.............................37
SECTION 8.4. Indemnification.........................................37
SECTION 8.5. Amendments and Waivers..................................37
SECTION 8.6. Successors and Assigns..................................37
8.6.1. No Assignment by Borrower.............................37
8.6.2. Participation.........................................38
8.6.3. Assignments...........................................38
8.6.4. Disclosures...........................................38
8.6.5. Status of Transferee..................................38
SECTION 8.7. Confidentiality.........................................38
SECTION 8.8. GEORGIA LAW.............................................39
SECTION 8.9. Interpretation..........................................39
SECTION 8.10.CONSENT TO JURISDICTION.................................39
SECTION 8.11.Counterparts............................................40
SECTION 8.12.Survival................................................40
SECTION 8.13.Entire Agreement: Amendment; Severability...............40
SECTION 8.14.TIME OF THE ESSENCE.....................................40
SECTION 0.00.Xxxx Not a Joint Venturer...............................40
EXHIBITS
EXHIBIT A Form of Notice of Borrowing
vi
EXHIBIT B Form of Compliance Certificate
SCHEDULES
SCHEDULE 4.8 Existing Subsidiaries
SCHEDULE 5.6 Existing Permitted Liens
vii
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 30, 1996, is made between
APPLE SOUTH, INC., as Borrower; and FIRST UNION NATIONAL BANK OF GEORGIA, as
Lender.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
SECTION 1.1. Definitions.
The terms as defined in this Section 1.1 shall for all purposes of this
Agreement and any amendment hereto (except as herein otherwise expressly
provided or unless the context otherwise requires), have the meanings set forth
herein:
"Adjusted Capitalization" shall be equal to the sum at any date of: (i)
Adjusted Funded Debt; plus (ii) Stockholders' Equity.
"Adjusted Funded Debt" shall mean and include the sum (without
duplication) of the following, at any date, for the Borrower and its
Consolidated Subsidiaries on a consolidated basis: (i) Total Funded Debt; plus
(ii) the present value (discounted at ten percent (10%) per annum) of the
minimum amount of noncancellable operating lease payments owing by Borrower and
such Subsidiaries at such date (excluding, however, for this purpose, any such
lease payments owing under the DR Holdings Lease); plus (iii) the present value
(discounted at ten percent (10%) per annum) of the total payments of "Rent"
owing by the Borrower under the DR Holdings Lease for the entire remaining
"Lease Term" (inclusive of the original term and all renewal terms, whether or
not then effective), with the terms "Rent" and "Lease Term" as used hereinabove
having the meanings given to such terms in the DR Holdings Lease; plus (iv) all
Redeemable Preferred Stock.
"Adjusted Funded Debt/Adjusted Capitalization Ratio" shall mean the
ratio which (i) the Adjusted Funded Debt of the Borrower and its Consolidated
Subsidiaries at any date bears to (ii) the Adjusted Capitalization of the
Borrower and its Consolidated Subsidiaries at such date.
"Adjusted LIBOR Rate," applicable to any Monthly Interest Period, means
that interest rate per annum determined by the Bank to be equal to the quotient
obtained (rounded upwards, if necessary, to the next higher 1/100th of 1%) by
dividing (i) the applicable LIBOR Rate for such Monthly Interest Period by (ii)
1.00 minus the then applicable Euro-Dollar Reserve Percentage (if any).
1
"Affiliate" means, as to any Person (i) any other Person that directly,
or indirectly through one or more intermediaries, controls such Person (a
"Controlling Person"), (ii) any other Person which is controlled by or is under
common control with such Person or a Controlling Person, or (iii) any other
Person of which such Person owns, directly or indirectly, twenty percent (20%)
or more of the common stock or equivalent equity interests. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Credit Agreement, together with all amendments
and modifications hereto.
"Assignee" has the meaning set forth in Section 8.6.3.
"Authority" has the meaning set forth in Section 7.2.
"Bank" means First Union National Bank of Georgia, a national banking
association organized under the laws of the United States of America, and its
successors and permitted assigns.
"Bank's Address" means the address of the Bank referred to or specified in
Section 8.1.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent (1/2%) per annum above the Federal Funds Rate. For
purposes of determining the Base Rate for any day, changes in the Prime Rate or
the Federal Funds Rate, as the case may be, shall be effective on the date of
each such change.
"Base Rate Loan" means a Revolving Loan made at the Base Rate pursuant
to Section 2.1.
"BB&T" means Branch Banking and Trust Company.
"BB&T Agreement" means the credit agreement, dated as of November 1,
1995, between the Borrower and BB&T.
"Borrower" means Apple South, Inc., a Georgia corporation, and its
successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of a Revolving Loan
made to the Borrower by the Bank pursuant to Article II. A Borrowing is a "Base
Rate Borrowing" if such Revolving Loan is a Base Rate Loan or a "Euro-Dollar
Rate Borrowing" if such Revolving Loan is a Euro-Dollar Rate Loan.
251094.7/ 383. 840
2
"Capital Stock" means any nonredeemable capital stock of the Borrower
or any Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"Capitalized Lease Obligations" shall mean those liabilities of the
Borrower and its Consolidated Subsidiaries under any leases that are required to
be capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such liabilities shall be the capitalized amount of such liabilities
as determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. ss. 9601 et seq. and its implementing regulations and
amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 7.2.
"Closing Certificate" has the meaning set forth in Section 3.1.4.
"Closing Date" means the date of this Agreement, as first inscribed
hereinabove.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" means $25,000,000, as such amount is subject to reduction
as provided in Section 2.7.
"Compliance Certificate" has the meaning set forth in Section 5.1.3.
"Consolidated Net Income," for any period, means the net income of the
Borrower and its Consolidated Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, excluding, however, (i) any
extraordinary items and (ii) any equity interest of the Borrower or any
Consolidated Subsidiary in the unremitted earnings of any Person which is
not a Subsidiary, in each case as likewise determined on a consolidated
basis in accordance with GAAP.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial
statements as of such date.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
251094.7/ 383. 840
3
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Revolving Loan, on any day,
the sum of two percent (2%) per annum in excess of the interest rate otherwise
then or thereafter payable on such Revolving Loan, but, in any event, not less
than two percent (2%) per annum in excess of the Base Rate.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks are not required to be open for business in
the State of Georgia.
"DR Holdings Lease" shall mean the Lease and Development Agreement,
dated as of March 2, 1995, between DR Holdings, L.P., as lessor, and the
Borrower, as lessee, together with Appendix "A" thereto and each "Lease
Supplement" thereto (as defined therein), all "Operative Documents" (as also
defined therein) and all amendments and modifications thereto made from time to
time hereafter.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower or any Subsidiary required by any Environmental
Requirement.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or pursuant to written
agreements with an Environmental Authority or any other entity, arising from or
in any way associated with any Environmental Requirement, whether or not
incorporated in a judgment, decree or order.
"Environmental Liabilities" means any liabilities whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other Person, of possible or alleged noncompliance with or liability
under any Environmental Requirement, including, without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other Person for correction of any violation of any Environmental
Requirement or any investigations concerning any violation of any Environmental
Requirement.
251094.7/ 383. 840
4
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means "releases" as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any Subsidiary
or any Property, including, but not limited to, any such requirement under
CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day in which
dealings in Dollar deposits are carried out in the London interbank Euro-Dollar
market.
"Euro-Dollar Rate," applicable to any Monthly Interest Period, means
that interest rate per annum equal to the sum of (i) the Adjusted LIBOR Rate for
such Monthly Interest Period, plus (ii) nine-tenths of one percent (.90%). Each
such Euro-Dollar Rate shall remain in effect for the applicable Monthly Interest
Period and shall be adjusted to a new Euro-Dollar Rate as of the first day of
the next Monthly Interest Period.
"Euro-Dollar Rate Loan" means a Revolving Loan made at the Euro-Dollar
Rate pursuant to Section 2.1.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of the Bank to United States residents). The Adjusted LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
"Event of Default" has the meaning set forth in Section 6.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which
251094.7/ 383. 840
5
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Bank on such day on
such transactions, as determined by the Bank.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Charge Coverage Ratio" shall mean, for any fiscal period, the
ratio which (A) the sum of Consolidated Net Income for such period plus interest
expense, provision for taxes and operating lease expense of the Borrower and its
Consolidated Subsidiaries for such period, bears to (B) the sum of interest
expense and operating lease expense of the Borrower and its Consolidated
Subsidiaries for the same such period, all as determined under GAAP.
"Franchise Rights" shall mean all rights, privileges and interests of
the Borrower and its Consolidated Subsidiaries to own, operate and develop
franchised restaurants as a franchisee, whether now or hereafter existing, and
whether with respect to the operation of any "Applebee's" restaurants, any
"Hardee's" restaurants or otherwise.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.2, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Guarantee" or "Guaranty" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
debt or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to secure, purchase or pay (or advance or supply
funds for the purchase or payment of) such debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to provide collateral security
to take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee of
such debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The terms "Guarantee" or "Guaranty" used as a verb
has a corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss. 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance," "pollutant," or "contaminant" as defined in CERCLA, or in
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or
251094.7/ 383. 840
6
regulation, and (e) insecticides, fungicides, or rodenticides, as defined in the
Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any
applicable state or local law or regulation, as each such Act, statute or
regulation may be amended from time to time.
"Interest Period" means with respect to each Borrowing, the period
commencing on the date of such Borrowing and ending on the date on which such
Borrowing is fully paid or converted to a Borrowing of a different type;
provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (b) below) which would otherwise end
on a day which is not a Domestic Business Day shall be extended to the
next succeeding Domestic Business Day;
(b) any Interest Period which begins before the Termination
Date and would otherwise end after the Termination Date shall end on
the Termination Date.
"Lending Office" means the Bank's office located at its address set
forth on the signature page hereof or such other office in the United States as
the Bank may hereafter designate as its Lending Office by notice to the
Borrower.
"LIBOR Rate" means, for any Euro-Dollar Rate Loan for each Monthly
Interest Period, the rate per annum determined on the basis of the offered rate
for deposits in Dollars of amounts equal or comparable to the principal amount
of such Euro-Dollar Rate Loan offered for a term comparable to such Monthly
Interest Period, which rate appears on the display designated as page "3750" of
the Telerate Service (or such other page as may replace page 3750 of that
service or such other service or services as may be nominated by the British
Banker's Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits), determined as of 10:00 A.M., New York City
time, on the first day of such Monthly Interest Period, provided that (i) if
more than one such offered rate appears on such page, the "LIBOR Rate" will be
the arithmetic average (rounded upward, if necessary, to the next higher 1/100th
of 1%) of such offered rates; (ii) if no such offered rates appear on such page,
the "LIBOR Rate" for such Monthly Interest Period will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of 1%) of rates quoted
by not less than two (2) major banks in New York City, selected by the Bank, at
approximately 10:00 A.M., New York City time, on the first day of such Monthly
Interest Period, for deposits in Dollars offered to leading European banks for a
period comparable to such Monthly Interest Period in an amount comparable to the
principal amount of such Euro-Dollar Loan.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title or
other preferential arrangement, which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law. For
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or
251094.7/ 383. 840
7
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan Documents" means this Agreement, the Note, any Subsidiary
Guaranty, any other documents evidencing or relating to the Revolving Loans, and
any other document, instrument, certificate or agreement delivered in connection
with this Agreement, the Note or the Revolving Loans, as such documents,
instruments, certificates and agreements may be amended or modified from time to
time.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U
or X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, that
such event or events, act or acts, condition or conditions, and/or occurrence or
occurrences results in a material adverse change in, or has a material adverse
effect upon, any of (a) the financial condition, operations, business, or
properties of the Borrower and its Consolidated Subsidiaries taken as a whole,
(b) the rights and remedies of the Bank under the Loan Documents, or the ability
of the Borrower to perform its obligations under the Loan Documents to which it
is a party, as applicable, or (c) the legality, validity or enforceability of
this Agreement, the Note or any Loan Document.
"Monthly Interest Period" shall mean, with respect to Euro-Dollar Rate
Borrowings, the period beginning on the first day of a calendar month and ending
on the last day of such calendar month.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Note" means the promissory note, dated of even date herewith, from the
Borrower to the Bank in the original amount of the Commitment and evidencing the
Revolving Loans, together with all amendments, consolidations, modifications,
renewals, and supplements thereto.
"Notice of Borrowing" has the meaning set forth in Section 2.2.1.
"Participant" has the meaning set forth in Section 8.6.2.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
251094.7/ 383. 840
8
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a 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.
"Prime Rate" refers to that interest rate so denominated and set by the
Bank from time to time as an interest rate basis for borrowings. The Prime Rate
is but one of several interest rate bases used by the Bank. The Bank lends at
interest rates above and below the Prime Rate.
"Properties" means all property owned, leased or otherwise used,
operated or occupied by the Borrower or any Subsidiary, wherever located, and
whether real property or personal property.
"Purchase Money Liens" means Liens securing the repayment of any
purchase money debt permitted hereunder incurred to finance the purchase of any
Property hereafter acquired by the Borrower or any Consolidated Subsidiary, so
long as such Liens are limited solely to the Property so acquired, secure only
the purchase money debt so incurred and are terminated upon payment in full of
such purchase money debt.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
251094.7/ 383. 840
9
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Revolving Loan" means a Base Rate Loan or a Euro-Dollar Rate Loan made
by the Bank pursuant to Section 2.1.
"Sale-Leaseback Transaction" means any sale-leaseback transaction
involving the sale of any assets or properties of the Borrower or any Subsidiary
to any other Person and the leasing back of such asset or property by the
Borrower or any Subsidiary.
"Senior Note Indenture" means the Indenture of Trust, dated as of May
1, 1996, between SunTrust Bank and the Borrower, and including all applicable
covenants with respect to the Senior Notes contained in the Prospectus, dated as
of May 6, 1996, as supplemented May 23, 1996, for the Senior Notes.
"Senior Notes" means the Borrower's $125,000,000 9.75% Senior Notes
due June 1, 2006.
"Solvent" means as to any Person, that such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay all of such
Person's total debts, direct or indirect, contingent or otherwise, (ii) is able
to pay all of such debts as and when such debts mature and (iii) has capital
sufficient to carry on the business and transactions in which it is engaged and
all business and transactions in which it is about to engage.
"Stockholders' Equity" means, at any time, the stockholders' equity of
the Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower and its consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Shareholders' Equity generally would include, but not be limited to (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, and (D) employee stock ownership plan debt Guarantees.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Synthetic Lease" shall mean any agreement, or series of related
agreements, between the Borrower and one or more other parties which are
intended to be treated, for accounting purposes, as an operating lease with the
Borrower as lessee and, for tax purposes, as a financing arrangement with the
Borrower as debtor.
251094.7/ 383. 840
10
"Termination Date" has the meaning set forth in Section 2.7.1.
"Third Parties" means all leases, subleases, licensees and other users
of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.
"Total Funded Debt" shall mean that portion of the total liabilities of
the Borrower and its Consolidated Subsidiaries at any date equal to the sum
(without duplication) of: (i) all indebtedness for borrowed money at such date
(including, for this purpose, indebtedness in respect of any outstanding
bankers' acceptances); plus (ii) all Capitalized Lease Obligations outstanding
at such date; plus (iii) all debts, liabilities and obligations which are
Guaranteed by the Borrower or any Consolidated Subsidiary as of such date; plus
(iv) all debts, liabilities or obligations at such date to any seller incurred
to pay the deferred price of property or services having a deferred purchase
price of One Million Dollars ($1,000,000) or more, excepting, in any event,
trade accounts payable arising in the ordinary course of business and purchase
options prior to their exercise; plus (v) all debts, liabilities and obligations
outstanding at such date in respect of any Synthetic Leases, excluding
therefrom, however, any debts, liabilities or obligations under the DR Holdings
Lease up to a maximum thereof of Twenty-Eight Million Dollars ($28,000,000.00),
it being understood and agreed that, subject to such limitation, no debts,
liabilities or obligations (including any constituting Guaranteed Obligations)
under the DR Holding Lease shall be included in the definition of Total Funded
Debt.
"Transferee" has the meaning set forth in Section 8.6.4.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Unused Commitment" means at any date an amount equal to the Commitment
less the aggregate outstanding principal amount of the Revolving Loans.
"Voluntary Store Closing" shall mean any voluntary closing by the
Borrower or any Subsidiary of any franchised restaurant location in the ordinary
course of its business which does not cause, or result in, the forfeiture,
suspension, loss, rejection, disclaimer, impairment, curtailment, alteration of,
or other adverse effect on, any Franchise Rights with respect to the operation
or development of any other existing or future franchised restaurant location or
locations.
"Wachovia" means Wachovia Bank of Georgia, National Association, a
national banking association, and its successors.
11
"Wachovia Credit Agreement" means the Credit Agreement, dated February
27, 1996, among Borrower, Wachovia, as agent, and the banks that are signatories
thereto.
SECTION 1.2. Accounting Terms and Determinations.
Unlike otherwise specified herein, all terms of an accounting character
used herein shall be interpreted, all accounting determinations hereunder shall
be made, and all financial statements required to be delivered hereunder shall
be prepared in accordance with GAAP, applied on a basis consistent (except for
changes concurred with by the Borrower's independent public accountants or
otherwise required by a change in GAAP) with the then most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Bank; provided, however, that upon any change in
GAAP material to Borrower occurring hereafter, the Bank shall have the right to
require either that conforming adjustments be made to any financial covenants
hereafter set forth, or the components thereof, affected by such change or that
the Borrower report its financial condition based on GAAP as in effect
immediately prior to such change occurring.
SECTION 1.3. References.
Unless otherwise indicated, references in this Agreement to "Articles,"
"Exhibits," "Schedules," "Sections" and other Subdivisions are references to
articles, exhibits, schedules, sections and other subdivisions hereof.
SECTION 1.4. Use of Defined Terms.
All terms defined in this Agreement shall have the same defined
meanings when used in any of the other Loan Documents, unless otherwise defined
therein or unless the context shall require otherwise.
SECTION 1.5. Terminology.
All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
Titles of Articles and Sections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
ARTICLE 2. THE CREDIT
SECTION 2.1. Commitment to Lend.
The Bank agrees, on the terms and conditions set forth herein, to make
Revolving Loans to the Borrower from time to time before the Termination Date;
provided that, immediately after each such Revolving Loan is made, the aggregate
principal amount of Revolving Loans shall not exceed the amount of the
Commitment, as the same may be reduced from time to time pursuant to Section
2.7. Each Borrowing under this Section shall be in an
251094.7/ 383. 840
12
aggregate principal amount of One Million Dollars ($1,000,000.00) or any larger
multiple of Five Hundred Thousand Dollars ($500,000.00) (except that any such
Borrowing may be in the aggregate amount of the Unused Commitment). Withing the
foregoing limits, the Borrower may borrow under this Section, repay or, to the
extent permitted by Section 2.8, prepay Revolving Loans and reborrow under this
Section at any time or from time to time before the Termination Date.
SECTION 2.2. Method of Borrowing.
2.2.1. Notice to Bank. The Borrower shall give the Bank notice (a
"Notice of Borrowing"), which shall be substantially in the form of Exhibit
A, not later than 11:00 a.m. (Atlanta, Georgia time) on the day of each
Borrowing, specifying:
(a) the date of such Borrowing,
(b) the aggregate amount of such Borrowing, and
(c) whether such Borrowing is to be a Base Rate Loan or
Euro-Dollar Rate Loan.
2.2.2. When Revolving Loans Made. Not later than 1:00 p.m.
(Atlanta, Georgia time) on the date of each Borrowing, the Bank shall (except as
provided in Section 2.2.3) make available such Borrowing, in Federal or other
funds immediately available in Atlanta, Georgia, to the Borrower at the Bank's
Address unless the Bank determines that any applicable condition specified in
Article 3 has not been satisfied.
2.2.3. Application of Certain Proceeds. If the Bank makes a
Revolving Loan hereunder on a day on which the Borrower is to repay all or any
part of an outstanding Revolving Loan, the Bank shall apply the proceeds of its
new Revolving Loan to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the amount being
repaid shall be made available to the Borrower as provided in Section 2.2.2.
2.2.4. No Borrowing Upon Default. Notwithstanding anything to the
contrary contained in this Agreement, no Borrowing may be made if there
shall have occurred a Default, which Default shall not have been cured or
waived.
SECTION 2.3. Note.
2.3.1. Single Note. The Revolving Loans shall be evidenced by the
Note, payable to the order of the Bank for the account of its Lending
Office, in an amount equal to the original principal amount of the
Commitment.
2.3.2. Endorsement to Note. The Bank may record and, prior to any
transfer of the Note shall, endorse on the schedule forming a part thereof
appropriate notations to
251094.7/ 383. 840
13
evidence the date, amount and maturity of each Revolving Loan, the date and
amount of each payment of principal made by the Borrower with respect thereto
and whether such Revolving Loan is a Base Rate Loan or Euro-Dollar Rate Loan,
and such schedule shall constitute rebuttable presumptive evidence of the
principal amount owing and unpaid on the Note; provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the obligation
of the Borrower hereunder or under the Note. The Bank is hereby irrevocably
authorized by the Borrower so to endorse the Note and to attach to and make a
part of the Note a continuation of any such schedule as and when required.
SECTION 2.4. Maturity of Revolving Loans.
Each Revolving Loan included in any Borrowing shall mature, and the
principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable to such Borrowing.
SECTION 2.5. Interest Rates.
Subject to the terms of Section 7.1:
2.5.1. Base Rate Loans. Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the Base Rate, as it may change
from time to time during such Interest Period. Such interest shall be payable
monthly, in arrears, on the last day of each calendar month, in respect of
interest accrued in such month (or portion thereof), commencing on September 30,
1996 (with the first payment date to cover the period from the Closing Date
until September 30, 1996), until maturity and thereafter on demand. Any overdue
principal of and, to the extent permitted by applicable law, overdue interest on
any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
2.5.2. Euro-Dollar Rate Loans. Each Euro-Dollar Rate Loan
shall bear interest on the outstanding principal amount thereof at the
Euro-Dollar Rate for such Monthly Interest Period (or portion thereof during
which it is outstanding). If a Euro-Dollar Rate Loan shall be outstanding during
more than one calendar month, the interest rate thereon shall be adjusted to the
new Euro-Dollar Rate as of the first day of the next succeeding Monthly Interest
Period during which it is outstanding. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue principal of and, to the
extent permitted by law, overdue interest on any Euro-Dollar Rate Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate; provided that the mere application of the Default
Rate to these Revolving Loans shall not give rise to the breakage of an Interest
Period, but only an increased margin applicable to these Revolving Loans.
2.5.3. Bank to Determine. The Bank shall determine each interest rate
applicable to the Revolving Loans hereunder. The Bank shall give prompt
notice to the
251094.7/ 383. 840
14
Borrower by telecopier of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
2.5.4. Savings Clause. In no contingency or event whatsoever,
whether by reason of advancement of the proceeds hereof or otherwise, shall the
amount paid or agreed to be paid to the Bank for the use, forbearance or
detention of money advanced hereunder exceed the highest lawful rate permissible
under any law which a court of competent jurisdiction may deem applicable
hereto. In the event that such a court determines that the Bank has charged or
received interest hereunder in excess of the highest applicable rate, such rate
shall automatically be reduced to the maximum rate permitted by applicable law
and the Bank shall promptly refund to the Borrower any interest received by the
Bank in excess of the maximum lawful rate or, if so requested by the Borrower,
shall apply such excess to the principal balance of the Note. It is the intent
hereof that the Borrower not pay or contract to pay, and that the Bank not
receive or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by the Borrower under applicable
law.
SECTION 2.6. Closing Fee.
The Borrower shall pay to the Bank on the Closing Date a fully earned,
non-refundable closing fee of $15,000.
SECTION 2.7. Termination or Reduction of Commitment.
2.7.1. Termination of Commitments. The Commitment shall
terminate on April 30, 1997 (the "Termination Date"), and any Revolving Loans
then outstanding (together with accrued interest thereon) shall be due and
payable on such date. In addition to the foregoing, the Borrower shall have the
right to terminate the Commitment at any time if no Borrowings are then
outstanding or all Borrowings are repaid or prepaid in accordance with the terms
of Section 2.9, as the case may be, on or prior to such early termination,
provided that (i) the Borrower shall have given at least one (1) Domestic
Business Day's advance written notice to the Bank of such election and (ii) any
such notice of termination shall be irrevocable once made.
2.7.2. Mandatory Reduction and Reinstatement of Commitment. If
at any time the Borrower's "Consolidated Fixed Charge Coverage Ratio" (as
defined in the Senior Note Indenture) is equal to or less than 2.5:1.0, the
Commitment shall be automatically and without further action on the part of the
Bank, the Borrower or any other Person, reduced to $20,000,000 minus (but only
prior to the termination of the BB&T Agreement and all obligations thereunder)
the outstanding amount under the BB&T Agreement. At such time as the Borrower
provides a written certification to the Bank that the "Consolidated Cash Flow
Coverage Ratio" (as defined in the Senior Note Indenture) exceeds 2.5:1.0, the
Commitment shall thereafter be increased to $25,000,000 without any further
action on the part of the Bank, the Borrower or any other Person.
251094.7/ 383. 840
15
SECTION 2.8. Optional Prepayments.
The Borrower may, on any Business Day, upon giving notice to the Bank
by not later than 11:00 A.M. (Atlanta, Georgia time) on such Business Day, and
making payment to the Bank, on such Business Day of any compensation required by
Section 7.5, prepay any Borrowing in whole at any time, or from time to time in
part in amounts aggregating at least One Million Dollars ($1,000,000) and
integral multiples of Five Hundred Thousand Dollars ($500,000), by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay the
Revolving Loans.
SECTION 2.9. Mandatory Prepayments.
On each date, if any, on which the Commitment is terminated or reduced
pursuant to Section 2.7, the Borrower shall repay or prepay such principal
amount of the outstanding Revolving Loans, if any, as may be necessary so that
after such payment the aggregate unpaid principal amount of the Revolving Loans
is reduced to zero, in the case of any termination, or does not exceed the
aggregate amount of the Commitment as then reduced, in the case of any
reduction, plus, in each case, accrued interest thereon to the date of
prepayment and any compensation required by Section 7.5.
SECTION 2.10. General Provisions as to Payments.
2.10.1. Timing. The Borrower shall make each payment of
principal of, and interest on, the Revolving Loans and of any fees hereunder,
not later than 2:00 P.M. (Atlanta, Georgia time) on the date when due, in
Federal or other funds immediately available in Atlanta, Georgia, to the Bank's
Address.
2.10.2. Next Banking Day. Whenever any payment of principal of, or
interest on, any Loans or of any fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day.
SECTION 2.11. Computation of Interest.
Interest on the Revolving Loans shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed, calculated as
to each Interest Period from and including the first day thereof to but
excluding the last day thereof.
ARTICLE 3. CONDITIONS TO BORROWINGS
SECTION 3.1. Conditions to First Borrowing.
The obligation of the Bank to make the initial Revolving Loan on the
occasion of the first Borrowing is subject to the satisfaction of the conditions
set forth in Section 3.2 and receipt by the Bank of the following:
251094.7/ 383. 840
16
3.1.1. This Agreement. A duly executed counterpart of this Agreement
signed by the Borrower;
3.1.2. Note. The duly executed Note complying with the provisions of
Section 2.3;
3.1.3. Opinion. An opinion (together with any opinions of local
counsel relied on therein) of legal counsel for the Borrower, dated as of
the Closing Date, in form and substance satisfactory to the Bank;
3.1.4. Closing Certificate. A certificate ("Closing Certificate"),
dated as of the Closing Date, in form and substance satisfactory to the
Bank, signed by the chief financial officer of the Borrower, to the effect
that (i) no Default has occurred and is continuing on the date of the first
Borrowing and (ii) the representations and warranties of the Borrower
contained in Article 4 are true on and as of the Closing Date;
3.1.5. Other Documents. All documents which the Bank may reasonably
request relating to the existence of the Borrower, the corporate authority
for and the validity of this Agreement, the Note and the other Loan
Documents, and any other matters relevant hereto, all in form and substance
satisfactory to the Bank, including, without limitation, a certificate of
incumbency of the Borrower, signed by the Secretary or an Assistant
Secretary of the Borrower, certifying as to the names, true signatures and
incumbency of the officer or officers of the Borrower authorized to execute
and deliver the Loan Documents, and certified copies of the following
items: (i) the Borrower's Articles of Incorporation, (ii) the Borrower's
Bylaws, (iii) a certificate of the Secretary of State of the State of
Georgia as to the good standing of the Borrower in the State of Georgia,
and (iv) the action taken by the Board of Directors of the Borrower
authorizing the Borrower's execution, delivery and performance of this
Agreement, the Note and the other Loan Documents to which the Borrower is a
party;
3.1.6. Borrowing Notice. A Notice of Borrowing.
SECTION 3.2. Conditions to All Borrowings.
The obligation of the Bank to make a Revolving Loan on the occasion of
each Borrowing is subject to the satisfaction of the following conditions:
3.2.1. Notice. Receipt by the Bank of a Notice of Borrowing;
3.2.2. No Default. The fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
3.2.3. Truth of Representations. The fact that the representations and
warranties of the Borrower contained in Article 4 of this Agreement shall
be true on and as of the date of such Borrowing; and
251094.7/ 383. 840
17
3.2.4. Not Overadvance. The fact that, immediately after such
Borrowing, the aggregate outstanding principal amount of the Revolving
Loans will not exceed the amount of the Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in Sections
3.2.2, 3.2.3 and 3.2.4.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power.
Each of the Borrower and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to so qualify, or obtain such licenses,
authorizations, consents or approvals could not be reasonably expected to have
or cause a Material Adverse Effect.
SECTION 4.2. Corporate and Governmental Authorization: No
Contravention.
The execution, delivery and performance by the Borrower and each
Subsidiary which is party thereto of this Agreement, the Note and the other Loan
Documents (i) are within the Borrower's and such Subsidiary's corporate powers,
(ii) have been duly authorized by all necessary corporate action, (iii) require
no action by or in respect of or filing with, any governmental body, agency or
official, (iv) do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the articles of incorporation or by-laws
of the Borrower or such Subsidiary or, to the best of the Borrower's knowledge,
of any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any of its Subsidiaries, and (v) do not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries.
SECTION 4.3. Binding Effect.
This Agreement constitutes a valid and binding agreement of the
Borrower enforceable in accordance with its terms, and the Note and the other
Loan Documents, when executed and delivered in accordance with this Agreement,
will constitute valid and binding obligations of the Borrower and each
Subsidiary party thereto enforceable in accordance with their respective terms,
provided that the enforceability hereof and thereof is subject in each case to
general principles of equity and to bankruptcy, insolvency and similar laws
affecting the enforcement of creditors' rights generally.
251094.7/ 383. 840
18
SECTION 4.4. Financial Information: No Material Adverse Effect.
The audited balance sheet of the Borrower and its Consolidated
Subsidiaries as of December 31, 1995, and the related consolidated audited
statements of income, shareholders' equity and cash flows of the Borrower and
its Consolidated Subsidiaries for the Fiscal Year then ended, copies of which
have been delivered to the Bank, and the unaudited financial statements of the
Borrower and its Consolidated Subsidiaries as of and for the Fiscal Quarter
ended closest to June 30, 1996, copies of which have been delivered to the Bank,
fairly present, in conformity with GAAP, the financial position of the Borrower
and its Consolidated Subsidiaries as of such dates and the results of its
operations and cash flow for such periods stated; provided, that, (i) the
interim statements remain subject to normal year-end audit adjustments and (ii)
during the term of this Agreement after the Closing Date, future representations
as to the matters set forth in this sentence shall be deemed to refer to the
most recent financial statements delivered pursuant to Sections 5.1.1 and 5.1.2.
Since December 31, 1995, there has been no event, act, condition or occurrence
having or which could be expected to have a Material Adverse Effect, except for
matters disclosed in the quarterly financial statements referred to above;
provided that during the term of this Agreement following the Closing Date,
future representations as to matters set forth in this sentence shall be deemed
to refer to the last day of the most recent audited financial statements
delivered by the Borrower pursuant to Section 5.1.1.
SECTION 4.5. No Litigation.
There is no action, suit or proceeding pending, or to the knowledge of
the Borrower threatened, against or affecting the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which could have a Material Adverse Effect or which in any manner draws
into question the validity of, or could impair the ability of the Borrower to
perform its obligations under, this Agreement, the Note or any of the other Loan
Documents.
SECTION 4.6. Compliance with Laws Generally; Compliance with ERISA.
The Borrower and each Subsidiary are in compliance in all material
respects with applicable laws (including, but not limited to, ERISA),
regulations and similar requirements of governmental authorities (including, but
not limited to, PBGC), non-compliance with which could have or cause a Material
Adverse Effect, except where the necessity of such compliance is being contested
in good faith through appropriate proceedings. To the best of the Borrower's
knowledge, (i) the Borrower and each member of the Controlled Group have
fulfilled their respective 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 presently 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 (ii) neither the Borrower nor any member of the Controlled Group
is or ever has been obligated to contribute to any Multiemployer Plan.
251094.7/ 383. 840
19
SECTION 4.7. Taxes.
There have been filed on behalf of the Borrower and its Subsidiaries
all federal, state and local income, excise, property and other tax returns
which are required to be filed by them and all taxes due pursuant to such
returns or pursuant to any assessment received by or on behalf of the Borrower
or any Subsidiary have been paid, except for amounts that either are immaterial
or are being disputed in good faith and by appropriate proceedings. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate.
SECTION 4.8. Subsidiaries.
As of the Closing Date, the Borrower has no Subsidiaries, except for
the Subsidiaries set forth on Schedule 4.8, all of which are Consolidated
Subsidiaries.
SECTION 4.9. Not a Holding Company, Public Utility, Investment
Company, Investment Adviser.
Neither the Borrower nor any Subsidiary is a "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," or a "public
utility," within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or a "public utility" within the meaning of the Federal Power Act,
as amended; or an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended; or an "investment adviser" within the meaning of the Investment
Advisers Act of 1940, as amended.
SECTION 4.10. Ownership of Property; Liens.
The Borrower owns Properties, or interests in Properties, sufficient
for the conduct of its business; and none of such Properties is subject to any
Lien except as permitted in Section 5.7.
SECTION 4.11. No Default.
Neither the Borrower nor any of its Subsidiaries is in default under or
with respect to any agreement, instrument or undertaking to which it is a party
or by which it or any of its Property is bound which could have or cause a
Material Adverse Effect. No Default has occurred and is continuing.
SECTION 4.12. Full Disclosure.
All written information and, to the best of the Borrower's knowledge,
all other information, heretofore furnished by the Borrower to the Bank for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all such
251094.7/ 383. 840
20
information hereafter furnished by the Borrower to the Bank will be, true,
accurate and complete in every material respect or based on reasonable estimates
on the date as of which such information is stated or certified. The Borrower
has disclosed to the Bank in writing any and all facts which could reasonably be
expected to have or cause a Material Adverse Effect.
SECTION 4.13. Environmental Matters.
To the best of the Borrower's knowledge, (i) neither the Borrower nor
any Subsidiary is subject to any Environmental Liability which could have or
cause a Material Adverse Effect and neither the Borrower nor any Subsidiary has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. None of the Properties located in the United
States, owned by either the Borrower or a Subsidiary, has been identified on any
current or proposed (A) National Priorities List under 40 C.F.R. ss. 300, (B)
CERCLIS list or (C) any list arising from a state statute similar to CERCLA;
(ii) to the best of the Borrower's knowledge, no Hazardous Materials have been
or are being used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at, in or under
the Properties, owned or operated by either the Borrower or a Subsidiary, or, to
the best of the knowledge of the Borrower, at or from any adjacent site or
facility, except for Hazardous Materials, such as cleaning solvents, pesticides
and other materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed, or otherwise handled in the ordinary
course of business in compliance with all applicable Environmental Requirements;
and (iii) to the best of the Borrower's knowledge, the Borrower and its
Subsidiaries are in compliance with all Environmental Requirements in connection
with the ownership, use and operation of the Properties and the Borrower's and
such Subsidiary's respective businesses.
SECTION 4.14. Capital Stock.
All Capital Stock, debentures, bonds, notes and all other securities of
the Borrower and its Subsidiaries presently issued and outstanding are validly
and properly issued in accordance with all applicable laws, including but not
limited to, the "Blue Sky" laws of all applicable states and the federal
securities laws.
SECTION 4.15. Margin Stock.
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
purchasing or carrying any Margin Stock, and no part of the proceeds of any
Revolving Loan will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock, or
be used for any purpose which violates, or which is inconsistent with the
provisions of, Regulations G, T, U or X.
251094.7/ 383. 840
21
SECTION 4.16. Solvency.
After giving effect to the execution and delivery of the Loan Documents
and the making of the Revolving Loans under this Agreement, the Borrower will be
Solvent.
SECTION 4.17. Possession of Franchises, Licenses, Etc.
The Borrower and its Subsidiaries possess to the extent material all
franchises, certificates, licenses, permits and other authorizations from
governmental and political subdivisions or regulatory authorities, and all
patents, trademarks, service marks, trade names, copyrights, franchises,
licenses and other rights that are necessary for ownership, maintenance and
operation of any of their respective material Properties and assets, and neither
the Borrower nor any of its Subsidiaries is in violation of any thereof, which,
individually or in the aggregate, would or might have or cause a Material
Adverse Effect. Without limiting the generality of the foregoing, and, in any
event, the Borrower and its Subsidiaries possess all Franchise Rights necessary
for the ownership, operation and development of its (or their) franchised
restaurant business as conducted, or contemplated to be conducted, by the
Borrower and such Subsidiaries, including, without limitation, in the case of
"Applebee's" restaurants, franchise agreements for each franchised restaurant
location and exclusive development rights for each designated area in which
franchised restaurants are located or contemplated to be located.
SECTION 4.18. Insurance.
The Borrower and each of its Subsidiaries maintains adequate insurance
on, and in respect of the ownership and operation of, its Properties in at least
such amounts and against at least such risks as are usually insured against in
the same general areas by companies of established repute engaged in the same or
similar business.
ARTICLE 5. COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any amount payable hereunder or under the Note remains unpaid:
SECTION 5.1. Information.
The Borrower will deliver to the Bank:
5.1.1. Annual Audit. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such Fiscal Year and the related consolidated statements of income,
shareholders' equity and cash flows for such Fiscal Year, setting forth in each
case in comparative form the figures for the previous fiscal year, all certified
by independent public accountants of nationally recognized standing, with such
certification to be free of any material exceptions and qualifications; provided
that, the information required by
251094.7/ 383. 840
22
this paragraph may be satisfied by delivery of information pursuant to
Section 5.1.5 or Section 5.1.6.
5.1.2. Interim Statements. As soon as available and in any
event within fifty (50) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Quarter and the
related statement of income and statement of cash flows for such quarter and for
the portion of the Fiscal Year ended at the end of such quarter, setting forth
in each case in comparative form the figures for the corresponding quarter and
the corresponding portion of the previous Fiscal Year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer of the Borrower; provided, that the
information required by this paragraph may be satisfied by delivery of
information pursuant to Section 5.1.5 or Section 5.1.6.
5.1.3. Compliance Certificates. Simultaneously with the
delivery of each set of financial statements referred to in Sections 5.1.1 and
5.1.2, a certificate, substantially in the form of Exhibit B (a "Compliance
Certificate"), of the chief financial officer of the Borrower (i) setting forth
in reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 5.3, 5.4, 5.5, and 5.18 on
the date of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
5.1.4. Default Notice. Promptly, (and, in any event, within
five (5) Domestic Business Days) after the Borrower becomes aware of the
occurrence of any Default, a certificate of the chief financial officer of the
Borrower setting forth details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
5.1.5. Proxy. Promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial statements,
reports and proxy statements so mailed;
5.1.6. Registration Statements. Promptly upon the filing
thereof, copies of all registration statements and annual, quarterly or
monthly reports which the Borrower shall have filed with the Securities and
Exchange Commission;
5.1.7. ERISA Notices. If and when any member of the Controlled
Group (i) 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 under Title
IV of ERISA, or knows that 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; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA, a
xxx of such notice; or (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any Plan, a
copy of such notice; and
251094.7/ 383. 840
23
5.1.8. Wachovia Agreement; BB& T Agreement; Senior Notes.
Promptly upon the occurrence thereof, (x) notice of any "default" or "event of
default" under, or amendment of, (i) the Wachovia Agreement, (ii) prior to the
termination thereof, the BB&T Agreement or (iii) the Senior Notes or the Senior
Note Indenture pursuant to which such Senior Notes were issued and (y) notice
that the Borrower's "Consolidated Fixed Charge Coverage Ratio" (as defined in
the Senior Note Indenture) does not exceed 2.5:1.0.
5.1.9. Other Reports. From time to time such additional
information regarding the financial position or business of the Borrower
and its Subsidiaries as the Bank may reasonably request.
SECTION 5.2. Inspection of Property, Books and Records.
The Borrower will keep, and require each Subsidiary to keep, proper
books of record and account in which full, true and correct entries in
conformity with GAAP (or, in the case of any non-domestic Subsidiary, such other
accounting standards, rules, regulations and practices applicable to businesses
operating in the locality in which each such Person operates); and permit, and
cause each Subsidiary to permit, representatives of the Bank at the Bank's
expense prior to the occurrence of a Default and at the Borrower's expense after
the occurrence and during the continuance of a Default to visit and inspect any
of their respective Properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accounts. The Borrower agrees to cooperate and assist in such visits and
inspections in each case at such reasonable times and as often as may reasonably
be desired.
SECTION 5.3. Adjusted Funded Debt/Adjusted Capitalization Ratio.
The Adjusted Funded Debt/Adjusted Capitalization Ratio will not as of
any Fiscal Quarter-end exceed .65:1.
SECTION 5.4. Minimum Shareholders' Equity.
Shareholders' Equity will at no time be less than $180,000,000.
SECTION 5.5. Fixed Charge Coverage Ratio.
Borrower's Fixed Charge Coverage Ratio, measured on a rolling four (4)
Fiscal Quarters' basis as of the end of such Fiscal Quarter shall be not less
than 2:1.
SECTION 5.6. Negative Pledge.
The Borrower will not, nor will the Borrower permit any Subsidiary to,
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except: (i) those Liens, if any, described on Schedule 5.6,
concerning existing debt of the Borrower, to be set forth and described more
particularly therein, together with any Lien arising out of the
251094.7/ 383. 840
24
refinancing, extension, renewal or refunding of any debt secured by any such
Lien, provided that such debt is not secured by any additional assets, and the
amount of such debt secured by any such Lien is not increased; (ii) Liens
incidental to the conduct of its business or the ownership of its Properties
which (A) do not secure debt and (B) do not in the aggregate materially detract
from the value of its Properties or materially impair the use thereof or the
operation of its business, including, without limitation, easements, rights of
way, restrictive covenants, zoning and other similar restrictions on real
property; (iii) materialmen's, mechanics', warehousemen's, carriers', landlords'
and other similar statutory Liens which secure debt or other obligations that
are not past due, or, if past due are being contested in good faith by the
Borrower or the appropriate Subsidiary by appropriate proceedings; (iv) Liens
for taxes not delinquent or taxes being contested in good faith and by
appropriate proceedings; (v) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation; (vi)
deposits to secure performance of bids, trade contracts, leases, statutory
grants of security and rights of setoff in accounts, securities and other
Properties held at banks or financial institutions to secure the payment or
reimbursement under overdraft, letter of credit, acceptance and other credit
facilities; (viii) rights of setoff, banker's liens and other similar rights
arising solely by operation of law; (ix) Purchase Money Liens; (x) Liens on any
Properties acquired by Borrower or any Subsidiary subsequent to the Closing
Date, to the extent that (A) such Liens are existing at the time of acquisition,
(B) the debt secured thereby is not secured by any other Properties of Borrower
or such Subsidiary except the acquired Properties, (C) the amount of such debt
so secured thereby is not increased at or subsequent to the acquisition and (D)
the total amount of all such debt secured by all such acquired Properties does
not exceed at any time, in aggregate amount, fifteen percent (15%) of Tangible
Net Worth; together with any Lien arising out of the refinancing, extension,
renewal or refunding of any debt secured by any such Lien, provided that such
debt is not secured by any additional assets and the amount of such debt secured
by any such Lien is not increased; and (xi) capital leases made in the ordinary
course of business (but excluding, however, Sale-Leaseback Transactions to the
extent not permitted by Section 5.9) in which there is no provision for title to
the leased Property to pass to the Borrower or such Subsidiary at the expiration
of the lease term or as to which no bargain purchase option exists.
SECTION 5.7. Maintenance of Existence.
Except as permitted in Section 5.9, the Borrower shall, and shall cause
each Subsidiary to, maintain its corporate existence and carry on its business
in substantially the same manner and in substantially the same fields as such
business is now carried on and maintained. Without limiting the generality of
the foregoing, the Borrower shall, and shall cause each Subsidiary to, maintain
at all times in full force and effect all Franchise Rights necessary to the
ownership, operation and development of all franchised restaurant business
conducted, or contemplated to be conducted, by the Borrower and such
Subsidiaries, except with respect to Voluntary Store Closings.
251094.7/ 383. 840
25
SECTION 5.8. Dissolution.
Neither the Borrower nor any of its Subsidiaries shall suffer or permit
dissolution or liquidation either in whole or in part, except through corporate
reorganization to the extent permitted by Section 5.9.
SECTION 5.9. Consolidation, Mergers, and Sales of Assets;
Sale-Leaseback Transactions.
5.9.1. Consolidation, Mergers, and Sales of Assets. The
Borrower will not, nor will it permit any Subsidiary to, consolidate or merge
with or into, or sell, lease (except pursuant to Sale-Leaseback Transactions
permitted pursuant to Section 5.9.2) or otherwise transfer all or any
substantial part of its assets to, any other Person, or discontinue or eliminate
any business line or segment, provided that, subject at all times to Section
5.18, the Borrower or any Subsidiary may merge with another Person (which is not
the Borrower or such Subsidiary) if (i) such Person was organized under the laws
of the United States of America or one of its states, (ii) the Borrower or such
Subsidiary (as the case may be) is the corporation surviving such merger and
(iii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing; and, provided, further, that any Subsidiaries of the
Borrower may (i) merge or consolidate with each other or with the Borrower (so
long as the Borrower is the corporation surviving such merger), or (ii) sell
assets to each other or to the Borrower.
5.9.2. Sale-Leaseback Transactions. The Borrower will not, nor
will it permit any Subsidiary to, enter into any Sale-Leaseback Transaction
where the Borrower's (or its Subsidiaries') obligations with respect to the
principal component of all leases entered into in connection with all such
Sale-Leaseback Transactions exceeds $20,000,000 in the aggregate at any time.
SECTION 5.10. Use of Proceeds.
The proceeds of [the initial Revolving Loan will be used to repay the
Borrower's obligations under the BB&T Agreement and proceeds of subsequent]
Revolving Loans will be used by the Borrower to finance investments permitted
hereunder, for working capital and for general corporate purposes. No portion of
the proceeds of the Revolving Loans will be used by the Borrower (i) in
connection with, whether directly or indirectly, any tender offer for, or other
acquisition of, stock of any corporation with a view towards obtaining control
of such other corporation if a majority or controlling interest of the officers,
directors or shareholders of such corporation shall be opposed to such
acquisition by the Borrower, (ii) directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any Margin
Stock, or (iii) for any purpose in violation of any term of this Agreement or of
any applicable law or regulation.
251094.7/ 383. 840
26
SECTION 5.11. Compliance with Laws; Payment of Taxes.
The Borrower will, and will cause each of its Subsidiaries and each
member of the Controlled Group to, comply in all material respects with
applicable laws (including but not limited to ERISA), regulations and similar
requirements of governmental authorities (including but not limited to PBGC),
except where the necessity of such compliance is being contested in good faith
through appropriate proceedings. The Borrower will, and will cause each of its
Subsidiaries to, pay promptly when due all taxes, assessments governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a Lien against the Property of the Borrower or any
Subsidiary, except liabilities being contested in good faith and against which,
if requested by the Bank, the Borrower will set up reserves in accordance with
GAAP.
SECTION 5.12. Insurance.
The Borrower will maintain, and will cause each of its Subsidiaries to
maintain (either in the name of the Borrower or in such Subsidiary's own name),
with financially sound and reputable insurance companies, insurance on, and in
respect of the ownership and operation of, its Properties in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies of established repute engaged in the same or
similar business.
SECTION 5.13. Change is Fiscal Year.
The Borrower will not change its Fiscal Year without the consent of the
Bank.
SECTION 5.14. Maintenance of Property.
The Borrower shall, and shall cause each Subsidiary to, maintain all of
its Properties in good condition, repair and working order, ordinary wear and
tear excepted.
SECTION 5.15. Environmental Notices.
The Borrower shall furnish to the Bank, promptly after the Borrower
becomes aware thereof, written notice of all Environmental Liabilities, pending,
threatened Environmental Proceedings, Environmental Notices, Environmental
Judgements and Orders and Environmental Releases, at, on, in, under or in any
way affecting the Properties or any adjacent property and all facts, events, or
conditions that could reasonably be expected to lead
to any of the foregoing.
SECTION 5.16. Environmental Matters.
The Borrower will not, and will not permit any Third Party to, use,
produce, manufacture, process, treat, recycle, generate, store, dispose of,
manage at, or otherwise handled or ship or transport to or from the Properties
any Hazardous Materials except for
251094.7/ 383. 840
27
Hazardous Materials such as cleaning solvents, pesticides and other similar
materials used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed, managed, or otherwise handled in the ordinary course of
business in compliance with all applicable Environmental Requirements.
SECTION 5.17. Environmental Releases.
The Borrower agrees that upon the occurrence of an Environmental
Release (except for any Environmental Release which (x) occurred in compliance
with all Environmental Requirements and (y) could not reasonably be expected to
have or cause a Material Adverse Effect), it will act immediately to investigate
the extent of, and to take appropriate remedial action to eliminate, such
Environmental Release, whether or not ordered or otherwise directed to do so by
any Environmental Authority.
SECTION 5.18. Investments.
The Borrower will not make (nor will the Borrower permit any Subsidiary
to make) any investment in any Person or Property (which term "investment," for
purposes hereof, shall mean and include, without limitation, the acquisition of
any property, the issuance, acquisition or exchange of any capital stock, debt
or other obligations or security to, from or with any Person, and the making of
any loan, advance, extension of credit, credit accommodation, Guarantee or
capital contribution to or on behalf of any Person), provided, however, that,
notwithstanding the foregoing, the Borrower (or any Subsidiary) may, from time
to time, undertake the following, without the necessity of obtaining the Bank's
prior written consent thereto:
(i) Current Assets. Acquire current assets for use in, or
arising from, the sale of goods or services in the ordinary
course of its business (including, for this purpose, but without
limitation, credit card receivables);
(ii) Capital Expenditures. Make capital expenditures in the
ordinary course of its business;
(iii) Franchise Fees. Pay franchisee fees and royalties to
its franchisors in the ordinary course of its business;
(iv) Escrow Deposits. Make or maintain escrow deposits for
the payment of taxes, rents, utilities, insurance or like matters
in the ordinary course of its business;
(v) Bank Accounts. Make and maintain deposits of cash in
demand deposit accounts of banks in the ordinary course of its
business, and make endorsements of checks, drafts or other
instruments in connection therewith;
251094.7/ 383. 840
28
(vi) Surplus Cash. Consistent at all times with the
Borrower's internal Statement of Investment Policy, invest
surplus cash in (A) obligations of, or guaranteed by, the United
States of America or any agency thereof, (B) short-term
certificates of deposit issued by, and time deposits with, the
Bank or any other financial institution domiciled in the United
States of America with assets of at least $500,000,000, (C)
short-term commercial paper rated at lest "A1" by Standard &
Poors or "P1" by Xxxxx'x, and (D) fixed or adjustable rate
corporate debt securities with a credit rating of at least double
A (Aa/AA) by either Xxxxx'x or Standard & Poors, provided that
any fixed rate debt securities have a maturity of one year or
less;
(vii) Subsidiaries. Make investments in those Consolidated
Subsidiaries of the Borrower which are wholly-owned, directly or
indirectly, by the Borrower, in the ordinary course of, and
pursuant to the reasonable requirements of, the Borrower's and
such Subsidiaries' respective businesses, provided that the
aggregate amount of such investments which may be outstanding at
any one time hereafter, as to all such Subsidiaries, shall not
exceed, in any event, Twenty-Five Million Dollars ($25,000,000),
it being understood and agreed that (a) there shall be excluded
from such calculation any investment deemed made by the Borrower
in DF&R Restaurants, Inc., a Texas corporation which is a
wholly-owned, Consolidated Subsidiary of the Borrower, pursuant
to the accounting for the prior acquisition of such corporation
by the Borrower as a pooling of interests; (b) there shall be
deducted in any event from the amount of investments in
Subsidiaries which may be made pursuant to this clause (vii) the
aggregate amount of Capitalized Lease Obligations of all
Subsidiaries which are at any time outstanding; and (c) the
provisions of this clause (vii) henceforth shall be the exclusive
means by which the Borrower (or any Subsidiary) may make
investments in any Subsidiaries (whether or not wholly-owned
Subsidiaries) and shall override any other provisions of this
Section 5.18 (including, particularly, clauses (x), (xi) and
(xii) below) which may be construed otherwise to permit such
investments.
(viii) Travel Advances. Make travel and similar advances to
employees from time to time in the ordinary course of business.
(ix) Special Life Insurance Program. The Borrower may invest
up to Eight Hundred Fifty Thousand Dollars ($850,000) per Fiscal
Year in the making of annual premiums payable on the split dollar
joint survivor life insurance program implemented, or to be
implemented, covering the lives of Xxx X. XxXxxx, Xx. and his
spouse Xxxx XxXxxx, with an initial death benefit of Fifty
Million Dollars ($50,000,000), provided, however, that (i) such
investments are made over a period not to exceed ten (10) Fiscal
Years and (ii) Borrower maintains at all times during the
effective period of the program a security interest in policy
proceeds and cash values of policies issued as part of the
program equal in amount to not less than its then cumulative
premium investments;
(x) Applebee's Franchisees. Make investments in franchisees
of "Applebee's" restaurants, but no investment in Xxxxxxxx'x
International, Inc. (or any Person which subsequent hereto shall
become the franchisor of "Applebee's" restaurants) shall be
251094.7/ 383. 840
29
permitted to be made subsequent to the Closing Date,
notwithstanding this clause (x) or any other provision of this
Section, except with the prior written consent of the Bank;
(xi) Other Restaurant Concepts. Make investments in other
restaurant concepts, besides "Applebee's," so long as the total
amount of each such investment (either considered individually or
as part of a series of related, concurrent investments), does not
exceed ten percent (10%) of Borrower's consolidated total assets
immediately before such investment (or the last in a series of
related, concurrent investments) is made;
(xii) Other Investments Generally. Make other investments,
not described in clauses (i) through (xi) above, provided that
all such investments, in the aggregate, do not exceed at any one
time ten percent (10%) of Stockholders' Equity.
The Borrower shall notify the Bank from time to time, but
not less frequently than quarterly, or at any time at the Bank's
request, of the nature and amount of any investments made
pursuant to clauses (x), (xi) and (xii) hereof which,
individually or in the aggregate, exceed One Hundred Thousand
Dollars ($100,000).
SECTION 5.19. Subsidiary Debt.
Except solely to the extent expressly permitted in clause (vii) of
Section 5.18 of this Agreement, the Borrower will not permit any Consolidated
Subsidiary of the Borrower which is a wholly-owned Subsidiary, directly or
indirectly, of the Borrower, to create, incur or suffer to exist any of the
following: (i) indebtedness for borrowed funds; (ii) Capitalized Lease
Obligations, provided, however, that DF&R Restaurants, Inc. and its Subsidiaries
may incur Capitalized Lease Obligations in an aggregate amount not to exceed Ten
Million Dollars ($10,000,000) at any one time outstanding; (iii) Guarantees;
(iv) debts, liabilities or obligations to any seller incurred to pay the
deferred purchase price of property or services having a deferred purchase price
of One Million Dollars ($1,000,000) or more, excepting, in any event, trade
accounts payable arising in the ordinary course of business and purchase options
prior to their exercise; and (v) debts, liabilities or obligations in respect of
Synthetic Leases.
ARTICLE 6. DEFAULTS
SECTION 6.1. Events of Default.
If one or more of the following events ("Events of Default") shall have
occurred and be continuing:
6.1.1. Non-Payment. The Borrower (i) shall fail to pay when
due any principal of any Revolving Loan or (ii) shall fail to pay any interest
on any Revolving Loan within five (5) Domestic Business Days after such interest
shall become due, or (iii) shall fail to pay any fee or other amount payable
hereunder or under any Loan Document within five (5) Domestic Business Days
after such fee or other amount becomes due; or
251094.7/ 383. 840
30
6.1.2. Failure to Observe Certain Covenants. The Borrower shall fail to
observe or perform any covenant contained in Sections 5.3 through 5.8, 5.9,
5.10, 5.11, 5.14, or 5.18, inclusive; or
6.1.3. Failure to Observe Covenants Generally. The Borrower shall fail to
observe or perform any covenant or agreement contained or incorporated by
reference in this Agreement (other than those covered by Sections 6.1.1 and
6.1.2) and such failure shall not have been cured within ten (10) days after the
earlier to occur of (i) written notice thereof has been given to the Borrower by
the Bank or (ii) an executive, senior financial or accounting officer of the
Borrower otherwise becomes aware of any such failure; or
6.1.4. Misrepresentation. Any representation, warranty, certification or
statement made by the Borrower in Article IV of this Agreement or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
6.1.5. Cross-Default. The Borrower or any Subsidiary shall fail to make any
payment in respect of the Wachovia Agreement, the BB&T Agreement, the Senior
Notes or any other debt, liability or obligation outstanding individually or in
the aggregate with all other such debts, liabilities or obligations, equal to or
in excess of Five Hundred Thousand Dollars ($500,000), other than the Note, when
due or within any applicable grace period; or any event or condition shall occur
which results in the acceleration of the maturity of the debt evidenced by the
Wachovia Agreement, the BB&T Agreement, the Senior Notes or any other such debt,
liability or obligation outstanding of the Borrower or any Subsidiary
individually or in the aggregate with all other such debts, liabilities or
obligations equal to or in excess of Five Hundred Thousand Dollars ($500,000) or
the mandatory prepayment or purchase of the debt evidenced by the Wachovia
Agreement, the BB&T Agreement, the Senior Notes or any such other debt,
liability or obligation by the Borrower (or its designee) or such Subsidiary (or
its designee) individually or in the aggregate with all other such debts,
liabilities or obligations equal to or in excess of Five Hundred Thousand
Dollars ($500,000) prior to the scheduled maturity thereof, or enables (or, with
the giving of notice or lapse of time or both, would enable) Wachovia, BB&T, the
holders of the Senior Notes or the holders of any such other debt, liability or
obligation individually or in the aggregate with all other such debts,
liabilities or obligations equal to or in excess of Five Hundred Thousand
Dollars ($500,000) or any Person acting on such holders' behalf to accelerate
the maturity thereof or require the mandatory prepayment or purchase thereof
prior to the scheduled maturity thereof, without regard to whether such holders
or other Person shall have exercised or waived their right to do so; or
6.1.6. Voluntary Bankruptcy. The Borrower or any Subsidiary shall commence
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its Property, or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an
251094.7/ 383. 840
31
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize
any of the foregoing; or
6.1.7. Involuntary Bankruptcy. An involuntary case or other
proceeding shall be commenced against the Borrower or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its Property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of sixty (60) days; or an order for relief shall be entered against the
Borrower or any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect; or
6.1.8. ERISA. The Borrower or any member of the Controlled
Group shall fail to pay when due any material amount which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans shall be filed under Title IV of ERISA by
the Borrower, any 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 to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within thirty (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
6.1.9. Judgments. One or more judgments or orders for the payment of money
in an aggregate amount equal to or greater than Five Hundred Thousand Dollars
($500,000) shall be rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for a period of thirty
(30) days; or
6.1.10. Tax Liens. A federal tax Lien shall be filed against
the Borrower under Section 6323 of the Code or a Lien of the PBGC shall be filed
against the Borrower or any Subsidiary under Section 4068 of ERISA and in either
case such Lien shall remain undischarged for a period of thirty (30) days after
the date of filing; or
6.1.11. Change of Control. Xxx X. XxXxxx, Xx. shall cease to
own and control, beneficially and with power to vote, at least fifteen percent
(15%) of the outstanding shares of the voting common stock of the Borrower; or
any Person (other than Xxx X. XxXxxx, Xx.) or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of twenty percent (20%) or more of the outstanding shares of the
voting common stock of the Borrower; or as of any date, a majority of the Board
of Directors of the Borrower consists of individuals who were not either (A)
directors of the Borrower as of the corresponding date of the previous year, (B)
selected or nominated to become directors by a Board of Directors of the
Borrower of which a majority
251094.7/ 383. 840
32
consisted of individuals described in clause (A), or (C) selected or nominated
to become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and individuals
described in clause (B); or
6.1.12. Loss of Franchise Rights. If any of the Franchise
Rights of the Borrower or its Subsidiaries shall be forfeited, suspended, lost,
rejected, disclaimed, impaired, curtailed or otherwise adversely altered or
affected in any manner, in whole or in any material part, for any reason
whatsoever, whether or not related to the Borrower's or such Subsidiary's
performance of its duties and obligations as franchisee at any time hereafter
except with respect to any Voluntary Store Closing; or there shall occur any
default by the Borrower or any such Subsidiary in the payment, performance or
observance of any terms, covenants or conditions of any franchise or development
agreements giving rise to the existence and/or continuation of any such
Franchise Rights, and any grace or cure period relative thereto granted therein
shall have expired without such default being waived or cured; or
6.1.13. BB&T Agreement. The Borrower shall fail to terminate the BB&T
Agreement and repay all of its obligations thereunder within ninety (90) days of
the date hereof; or
6.1.14. Material Adverse Effect. The occurrence of any event, act,
occurrence, or condition which the Bank determines either does or has a
reasonable probability of causing, or resulting in, a Material Adverse Effect;
then, and in every such event, the Bank may by notice to the Borrower terminate
the Commitment and it shall thereupon terminate, and (ii) by notice to the
Borrower declare the Note (together with accrued interest thereon) to be, and
the Note shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, together with interest at the Default Rate
accruing on the principal amount thereof from and after the date of such Event
of Default; provided that if any Event of Default specified in Sections 6.1.6 or
6.1.7 above occurs with respect to the Borrower or any Subsidiary, without any
notice to the Borrower or any other acts by the Bank, the Commitment shall
thereupon terminate and the Note (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower, together
with interest thereon at the Default Rate accruing on the principal amount
thereof from and after the date of such Event of Default. Notwithstanding the
foregoing, the Bank shall have available to it all other remedies at law or
equity, and may exercise any one or all of them at its discretion.
ARTICLE 7. CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 7.1. Basis for Determining Interest Rate Inadequate
or Unfair.
If on or prior to the first day of any Interest Period, the Bank
determines that deposits in Dollars (in the applicable amounts) are not being
offered in the relevant market for such
251094.7/ 383. 840
33
Interest Period, or the Bank determines that the Adjusted LIBOR Rate, as
determined by the Bank, will not adequately and fairly reflect the cost to the
Bank of funding the relevant Euro- Dollar Rate Loans for such Interest Period,
then, the Bank shall forthwith give notice thereof to the Borrower, whereupon
until the Bank notifies the Borrower that the circumstances giving rise to such
suspensions no longer exist, the obligations of the Bank to make the Euro-Dollar
Rate Loans specified in such notice shall be suspended. Unless the Borrower
notifies the Bank at least two (2) Domestic Business days before the date of any
Borrowing of such Euro-Dollar Rate Loans for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing.
SECTION 7.2. Illegality.
If, after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any such
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by the Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for the Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Rate Loans, the Bank shall
forthwith give notice thereof to the Borrower, whereupon until the Bank notifies
the Borrower that the circumstances giving rise to such suspension no longer
exist, the obligation of the Bank to make Euro-Dollar Rate Loans shall be
suspended. If the Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Rate Loans to maturity and
shall so specify in such notice, the Borrower shall immediately prepay in full
the then outstanding principal amount of each Euro-Dollar Rate Loan, together
with accrued interest thereon. Concurrently with prepaying each such Euro-Dollar
Rate Loan, the Borrower shall borrow, pursuant to Section 2.2.2, a Base Rate
Loan in an equal principal amount (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Rate Loans), and the Bank
shall make such a Base Rate Loan.
SECTION 7.3. Increased Cost and Reduced Return.
7.3.1. Change of Law. If after the date hereof, a Change of
Law or compliance by the Bank (or its Lending Office) with any request or
directive (whether or not having the force of law) of any Authority either: (i)
shall subject any Bank (or its Lending Office) to any tax, duty or other charge
with respect to the Revolving Loans, the Note or its obligation to make
Revolving Loans, or shall change the basis of taxation of payments to the Bank
(or its Lending Office) of the principal of or interest on the Revolving Loans
or any other amounts due under this Agreement in respect of the Revolving Loans
or its obligation to make Revolving Loans (except for changes in the rate of tax
on the overall net income of the Bank or its Lending Office imposed by the
jurisdiction in which the Bank's principal executive office or Lending Office is
located); or (ii) shall impose, modify or deem applicable any reserve, special
deposit insurance or similar requirement (including, without limitation, any
such requirements imposed by the Board of Governors of the Federal Reserve
System, but
251094.7/ 383. 840
34
excluding any such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of, or credit
extended by, the Bank (or its Lending Office); or (iii) shall impose on the Bank
(or its Lending Office) or the London Interbank Market any other similar
condition affecting the Revolving Loans, the Note or its obligation to make
Revolving Loans; and the result of any of the foregoing is to increase the cost
to the Bank (or its Lending Office) of making or maintaining any Revolving Loan,
or to reduce the amount of any such received or receivable by the Bank (or its
Lending Office) under this Agreement or under the Note with respect thereto, by
an amount deemed by the Bank to be material, then, within fifteen (15) days
after demand by the Bank the Borrower shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction.
7.3.2. Capital Adequacy. If the Bank shall have determined
that after the date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof, or compliance by the Bank (or its
Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any Authority, has or would have the
effect of reducing the rate of return on the Bank's capital as a consequence of
its obligations hereunder to a adoption, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy), by an
amount deemed by the Bank to be material, then from time to time, within fifteen
(15) days after demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank for such reduction.
7.3.3. Notice of Determination. The Bank will promptly notify
the Borrower of any event of which it has knowledge, occurring after the date
hereof, which will entitle the Bank to compensation pursuant to this Section and
will designate a different Lending Office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank, in any respect
deemed material by the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
7.3.4. Assignees Covered. The provisions of this Section 7.3
shall be applicable with respect to any Assignee or other Transferee (excluding
any Participants), and any calculations required by such provisions shall be
made based upon the circumstances of such Assignee or other Transferee.
SECTION 7.4. Rate Loans Substituted for Affected Euro-Dollar
Rate Loans.
If (i) the obligation of the Bank to make or maintain Euro-Dollar Rate
Loans has been suspended pursuant to Section 7.2 or (ii) any Bank has demanded
compensation under Section 7.3.1, and the Borrower shall, by at least five (5)
Euro-Dollar Business Days' prior notice to the Bank have elected that the
provisions of this Section shall apply to the Bank,
251094.7/ 383. 840
35
then, unless and until the Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no longer apply: (i)
all Revolving Loans which would otherwise be made by the Bank as Euro-Dollar
Rate Loans, shall be made instead as Base Rate Loans and (ii) after each of the
Euro-Dollar Rate Loans has been repaid, all payments of principal which would
otherwise be applied to repay such Euro-Dollar Rate Loans shall be applied to
repay its Base Rate Loans instead.
SECTION 7.5. Compensation.
Upon the request of the Bank, delivered to the Borrower, the Borrower
shall pay to the Bank such amount or amounts as shall compensate the Bank for
any actual out of pocket loss, cost or expense incurred by the Bank (in
connection with the relevant Interest Period) as a result of: (i) any payment or
prepayment (whether pursuant to Section 7.2 or otherwise) of a Euro-Dollar Rate
Loan on a date other than the last day of an Interest Period for such Euro-
Dollar Rate Loan; or (ii) any failure by the Borrower to prepay a Euro-Dollar
Rate Loan on the date for such prepayment specified in the relevant notice of
prepayment hereunder; or (iii) any failure by the Borrower to borrow a
Euro-Dollar Rate Loan on the date for the Euro- Dollar Borrowing of which such
Euro-Dollar Rate Loan is a part specified in the applicable Notice of Borrowing
delivered pursuant to Section 2.2.
ARTICLE 8. MISCELLANEOUS
SECTION 8.1. Notices.
All notices, requests and other communications to any party hereunder
or under any Loan Document shall be in writing (including bank wire, telecopier
or similar writing) and shall be given to such party at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopier number as such party may hereafter specify for the purpose by
notice to the other party. Each such notice, request or other communication
shall be effective (i) if given by telecopier, when such telecopy is transmitted
to the telecopier number specified in this Section and the appropriate
confirmation is received, (ii) if given by mail, seventy-two (72) hours after
such communication is deposited in the United States mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Bank under Article 2 shall not be effective until received.
SECTION 8.2. No Waivers.
No failure or delay by the Bank in exercising any right, power or
privilege hereunder or under any Note 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 provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
251094.7/ 383. 840
36
SECTION 8.3. Expenses; Documentary Taxes.
The Borrower shall pay (i) all out-of-pocket expenses of the Bank,
including fees and disbursements of special counsel for the Bank, in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default occurs,
all out-of-pocket expenses incurred by the Bank, including fees and
disbursements of counsel (including a reasonable allocation of the cost of
internal counsel), in connection with such Default and collection and other
enforcement proceedings resulting therefrom, including out-of-pocket expenses
incurred in enforcing this Agreement, the Note and other Loan Documents. The
Borrower shall indemnify the Bank against any transfer taxes, documentary taxes,
assessments or charges made by any Authority by reason of the execution and
delivery of this Agreement, the Note or the other Loan Documents.
SECTION 8.4. Indemnification.
The Borrower shall indemnify the Bank and each affiliate thereof and
their respective directors, officers, employees and agents from, and hold each
of them harmless against, any and all losses, liabilities, claims or damages to
which any of them may become subject, insofar as such losses, liabilities,
claims or damages arise out of or result from any actual or proposed use by the
Borrower of the proceeds of any extension of credit by the Bank hereunder or
breach by the Borrower of this Agreement, the Note or any other Loan Document or
from any investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing, and the Borrower shall
reimburse the Bank, and each affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified. The indemnification provisions (including, without
limitation, provisions for default interest, to the extent that this Section 8.4
might be construed as duplicating the Borrower's obligation to pay interest at
the Default Rate as required elsewhere in this Agreement) set forth in this
Section 8.4 are meant to be without duplication of any other indemnification
provisions set forth in this Agreement.
SECTION 8.5. Amendments and Waivers.
Any provision of this Agreement, the Note or any other Loan Documents
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Bank.
SECTION 8.6. Successors and Assigns.
8.6.1. No Assignment by Borrower. The provisions of this Agreement shall be
binding upon and insure to the benefit of the parties hereto and their
respective successors
251094.7/ 383. 840
37
and assigns; provided that the Borrower may not assign or otherwise transfer any
of its rights under this Agreement.
8.6.2. Participation. The Bank may, without the consent of the
Borrower, at any time sell to one or more Persons (each a "Participant")
participating interests in any Revolving Loan, the Note, the Commitment
hereunder or any other interest of the Bank hereunder. In the event of any such
sale by the Bank of a participating interest to a Participant, the Bank's
obligations under this Agreement shall remain unchanged, the Bank shall remain
solely responsible for the performance thereof, the Bank shall remain the holder
of the Note for all purposes under this Agreement, and the Borrower shall
continue to deal solely and directly with the Bank in connection with the Bank's
rights and obligations under this Agreement. The Bank, if it sells a
participating interest in the Revolving Loan, Note, Commitment or other interest
under this Agreement, shall, within ten (10) Domestic Business Days of such
sale, provide the Borrower with written notification stating that such sale has
occurred and identifying the Participant and the interest purchased by such
Participant. The Bank and the Borrower agree that each Participant shall be
entitled to the benefits of Article 7 with respect to its participation in
Revolving Loans outstanding from time to time, but only to the extent that the
Bank would have been entitled thereto pursuant to the terms of this Agreement.
8.6.3. Assignments. The Bank may at any time assign to one or
more banks or financial institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under this Agreement
and the Note, and such Assignee shall assume all such rights and obligations.
8.6.4. Disclosures. Subject to the provisions of Section 8.7,
the Borrower authorizes the Bank to disclose to any Participant, Assignee or
other transferee (each a "Transferee") and any prospective Transferee any and
all information in the Bank's possession concerning the Borrower which has been
delivered to the Bank by the Borrower pursuant to this Agreement or which has
been delivered to the Bank by the Borrower in connection with the Bank's credit
evaluation prior to entering into this Agreement.
8.6.5. Status of Transferee. No Transferee shall be entitled
to receive any greater payment under Section 7.3 than the Bank would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent or by reason of the provisions
of Section 7.2 or 7.3 requiring the Bank to designate a different Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
SECTION 8.7. Confidentiality.
The Bank agrees to exercise its best efforts (and, in any event, with
at least the same degree of care as it ordinarily exercises with respect to
confidential information of its other customers) to keep any information
delivered or made available by the Borrower to it, including, without
limitation, information obtained by the Bank by reason of a visit or
251094.7/ 383. 840
38
investigation by any Person contemplated in Section 5.2, confidential from any
one other than persons employed or retained by the Bank who are or are expected
to become engaged in evaluating, approving, structuring or administering the
Revolving Loans; provided, however that nothing herein shall prevent the Bank
from disclosing such information (i) upon the order of any court or
administrative agency, (ii) upon the request or demand of any regulatory agency
or authority having jurisdiction over the Bank, (iii) which has been publicly
disclosed other than by an act or omission of the Bank except as permitted
herein, (iv) to the extent reasonably required in connection with any litigation
(with respect to this Agreement, any of the other Loan Documents, in connection
with any of the foregoing, or any other obligations of the Borrower or any
Subsidiary owing to the Bank) to which the Bank or its Affiliates may be a
party, (v) to the extent reasonably required in connection with the exercise of
any remedy hereunder, (vi) to the Bank's legal counsel and independent auditors
and (vii) to any actual or proposed Participant, Assignee or other Transferee of
all or part of its rights hereunder which has agreed in writing to be bound by
the provisions of this Section 8.7.
SECTION 8.8. GEORGIA LAW.
THIS AGREEMENT, EACH NOTE AND EACH OTHER LOAN DOCUMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF GEORGIA.
SECTION 8.9. Interpretation.
No provision of this Agreement or any of the other Loan Documents shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such provision.
SECTION 8.10. CONSENT TO JURISDICTION.
THE BORROWER AND THE BANK IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE
PERSONAL JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOF AND THE UNITED
STATES DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS, (B) WAIVE ANY AND ALL PERSONAL RIGHTS
UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT
LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE OF
GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT, THE NOTE OR THE
OTHER LOAN DOCUMENTS, AND (C) AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT
IN THE MANNER PRESCRIBED IN SECTION 8.1 FOR THE GIVING OF NOTICE TO THE
BORROWER. NOTHING HEREIN CONTAINED, HOWEVER, SHALL PREVENT THE BANK FROM
BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST
THE BORROWER PERSONALLY,
251094.7/ 383. 840
39
AND AGAINST ANY ASSETS OF THE BORROWER, WITHIN ANY OTHER STATE OR
JURISDICTION.
SECTION 8.11. Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 8.12. Survival.
All representations, warranties and covenants made herein shall survive
the execution and delivery of all of the Loan Documents. The terms and
provisions of this Agreement shall continue in full force and effect until the
payment of the Note and termination of the Commitment.
SECTION 8.13. Entire Agreement: Amendment; Severability.
This Agreement shall constitute the entire agreement among the parties
hereto with respect to the subject matter hereof. Neither this Agreement nor any
provision hereof may be changed, waived, discharged, modified or terminated
orally, but only by an instrument in writing in accordance with Section 8.5. If
any provision of any of the Loan Documents or the application thereof to any
party thereto or circumstances shall be invalid or unenforceable to any extent,
the remainder of such Loan Documents and the application of such provisions to
any other party thereto or circumstances shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.
SECTION 8.14. TIME OF THE ESSENCE.
TIME IS OF THE ESSENCE IN THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS.
SECTION 8.15. Bank Not a Joint Venturer.
Neither this Agreement nor any agreements, instruments, documents or
transactions contemplated hereby (including the Loan Documents), shall in any
respect be interpreted, deemed or construed as making the Bank a partner or
joint venturer with the Borrower or as creating any similar relationship or
entity.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
251094.7/ 383. 840
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, under seal, by their respective authorized officers, as of the
day and year first above written.
"BORROWER"
APPLE SOUTH, INC. (SEAL)
By:/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Chief Financial Officer and
Treasurer
Attest:/s/ Xxx Xxxxxx
Xxx Xxxxxx, Assistant Secretary
Apple South, Inc.
Corporate Headquarters
Xxxxxxx at Washington
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxx,
Chief Financial Officer
Telecopier Number: (000) 000-0000
41
"BANK"
FIRST UNION NATIONAL BANK OF
GEORGIA
By:/s/ Xxxxxxx X. Xxxxxx
Title: Underwriter
Lending Office:
First Union National Bank of Georgia
000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Georgia Corporate Banking
Telecopier Number: ____________________
42
