EXHIBIT A TO LICENSING
ASSETS PURCHASE AGREEMENT
SENIOR NOTE AGREEMENT
among
THE XXX. XXXXXX' BRAND, INC.,
as Borrower,
and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY,
PRUCO LIFE INSURANCE COMPANY,
and
CONTRARIAN CAPITAL ADVISORS, L.L.C.
(AS AGENT),
as Lenders
Dated as of September 18, 1996
TABLE OF CONTENTS
RECITAL 1
AGREEMENT 1
ARTICLE 1 DEFINITIONS 1
Section 1.1 Definitions 1
Section 1.2 Other Definitional Provisions 11
ARTICLE 2 AUTHORIZATION OF ISSUANCE OF SECURITIES 11
Section 2.1 Authorization of the Notes 11
ARTICLE 3 CONDITIONS PRECEDENT TO EFFECTIVENESS 12
Section 3.1 Lenders' Conditions to Effectiveness 12
Section 3.2 The Borrower's Condition to Effectiveness 13
ARTICLE 4 ISSUANCE OF NOTES: CLOSING 13
Section 4.1 Issuance of Notes 13
Section 4.2 Closing 14
ARTICLE 5 NOTES 15
Section 5.1 Interest on Notes 15
Section 5.2 Mandatory Prepayments 15
Section 5.3 Optional Prepayment 15
Section 5.4 Repayment at Maturity 16
Section 5.5 Certain Amounts Owed under the License Purchase Agreement16
ARTICLE 6 ADDITIONAL TERMS OF THE NOTES 17
Section 6.1 Security 17
Section 6.2 Receipt of Payment 17
Section 6.3 Sharing of Payments, etc. 17
Section 6.4 Accounting 18
Section 6.5 Access 18
Section 6.6 Notes Deemed Outstanding 19
ARTICLE 7 REPRESENTATIONS AND WARRANTIES 19
Section 7.1 Existence and Authority 19
Section 7.2 Regulation G, etc. 20
Section 7.3 Status Under Certain Federal Statutes 20
Section 7.4 Offering of Securities 20
Section 7.5 Pro Forma Balance Sheet of the Borrower; No Violations 21
ARTICLE 8 AFFIRMATIVE COVENANTS 21
Section 8.1 Financial Statements 21
Section 8.2 Corporate Existence, etc. 26
Section 8.3 Payment of Taxes and Claims 26
Section 8.4 Compliance with Laws, etc. 27
Section 8.5 Maintenance of Properties; Insurance 27
Section 8.6 Affiliate Transactions, Keeping of Books, Bank Accounts 28
Section 8.7 Compliance with Affiliate Transactions 28
Section 8.8 Security Interest in Newly Acquired Property 28
Section 8.9 Environmental Reporting Requirements 29
Section 8.10 Environmental Reports, Remedial Action, Indemnity 30
Section 8.11 Preparation of Financial Statements 31
Section 8.12 Intellectual Property 31
Section 8.13 Collection Accounts 32
ARTICLE 9 NEGATIVE COVENANTS 32
Section 9.1 Restricted Payments and Restrictions on Investments 32
Section 9.2 Liens 33
Section 9.3 Indebtedness 34
Section 9.4 Loans, Advances, Investments and Contingent Liabilities 35
Section 9.5 Issuance of Capital Stock 37
Section 9.6 Merger and Sale of Assets 37
Section 9.7 Sale and Leaseback Transactions 38
Section 9.8 Certain Contracts 38
Section 9.9 Agreements by Subsidiaries 39
Section 9.10 Compliance with ERISA 39
Section 9.11 Transactions with Affiliates 41
Section 9.12 Vendor Payments 41
Section 9.13 Operating Cash Flow 41
Section 9.14 Capital Expenditure 42
Section 9.15 Transfer of Intellectual Property 43
Section 9.16 Compliance with Environmental Laws 43
Section 9.17 Amendments and Modifications to Operative Documents 43
Section 9.18 Changes in Business 43
Section 9.19 Amendment of Certificate of Incorporation 43
Section 9.20 Amendment of License Agreement 44
Section 9.21 Change in Fiscal Year 44
Section 9.22 General and Administrative Expenses; Annual Budget 44
Section 9.23 Management Services 44
ARTICLE 10 EVENTS OF DEFAULT 44
Section 10.1 Events of Default 44
Section 10.2 Remedies 47
Section 10.3 Other Remedies 47
ARTICLE 11 MISCELLANEOUS 48
Section 11.1 Performance Due Other Than on a Business Day 48
Section 11.2 Successors and Assigns 48
Section 11.3 Governing Law 48
Section 11.4 Notices 49
Section 11.5 Severability 50
Section 11.6 Counterparts 51
Section 11.7 Further Assurances 51
Section 11.8 Entire Agreement 51
Section 11.9 Consent to Amendments 51
Section 11.10 Form, Registration, Transfer and Exchange of Notes; Lost Notes 52
Section 11.11 Persons Deemed Owners; Participation 53
Section 11.12 Confidentiality 53
Section 11.13 Satisfaction Requirement 54
Section 11.14 Solicitation of Noteholders 54
Section 11.15 Indemnification 55
Section 11.16 Fees and Expenses 56
INDEX TO EXHIBITS AND SCHEDULES
Exhibits
Exhibit A-1 Form of Series 1 Senior Notes
Exhibit A-2 Form of Series 2 Senior Notes
Exhibit B-1 Form of Collateral Agency Agreement
Exhibit B-2 Form of Security Agreement
Exhibit B-3 Form of Stock Pledge Agreement
Exhibit B-4 Form of Blocked Account Letter Agreement
Exhibit C Form of Escrow Agreement
Exhibit D Form of Officer's Certificate as to Total Cash, Operating
Cash Flow and Capital Expenditures
Exhibit E Form of Confidentiality Agreement
Schedules
Schedule 3.1(a) Notes payable to Prudential
Schedule 3.1(b) Notes payable to Principal
Schedule 3.1(c) Notes payable to Pruco
Schedule 3.1(d) Notes payable to Contrarian
Schedule 3.1(e) Opinion of Counsel
Schedule 6.2 Payment Instructions
Schedule 7.5 Pro Forma Balance Sheet
Schedule 8.11 Accounting Practices
Schedule 8.13 Collection Accounts
Schedule 9.4(vii) Permitted Financial Institutions
SENIOR NOTE AGREEMENT
SENIOR NOTE AGREEMENT dated as of September 18, 1996 (this
"Agreement") by and among THE XXX. XXXXXX' BRAND, INC., a Delaware corporation
(the "Borrower"), as borrower, and The Prudential Insurance Company of America,
a New Jersey mutual insurance company ("Prudential"), Principal Mutual Life
Insurance Company, an Iowa corporation ("Principal"), Pruco Life Insurance
Company, an Arizona corporation ("Pruco"), and Contrarian Capital Advisors,
L.L.C., a Delaware limited liability company, (as agent) ("Contrarian"), as
lenders.
RECITAL
Pursuant to a Licensing Assets Purchase Agreement, dated as of
August 7, 1996 (the "License Purchase Agreement"), among the Borrower, Xxx.
Xxxxxx Development Corporation, a Delaware corporation ("MFD"), and Capricorn
Investors II, L.P., a Delaware limited partnership ("Capricorn"), the Borrower
is as of the date of this Agreement purchasing certain assets specified therein
and issuing as partial consideration therefor the Notes (as hereinafter
defined).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties and agreements contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1 ARTICLE DEFINITIONS
1.1 Section Definitions . As used in this Agreement, the
following terms have the following respective meanings:
1.3 "Affiliate" means, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the voting or nonvoting
stock of such Person, and (b) each Person that controls, is controlled by or is
under common control with such Person. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
1.5 "Bankruptcy Code" means title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
thereto.
1.7 "Blocked Account Letter Agreement" means any Blocked
Account Letter Agreement among the Collateral Agent, the Borrower and any bank
which maintains a Collection Account, substantially in the form of Exhibit B-4
hereto.
"Board of Directors" means the Board of Directors of the
Borrower, as the same may be constituted from time to time.
"Business Day" means any day other than a Saturday, Sunday, or
day on which commercial banks in New York are required or authorized to be
closed.
"Capital Expenditures" means all payments for or Indebtedness
incurred in connection with fixed assets or improvements or for replacements,
substitutions or additions thereto, that are required to be capitalized under
GAAP.
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
the Borrower or any Subsidiary, any such lease under which the Borrower or such
Subsidiary is the lessor.
"Capital Lease Obligation" means, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all assets of the Borrower and the
Subsidiaries and all capital stock of the Subsidiaries, in each case upon which
a Lien is granted to the Collateral Agent on behalf of the Lenders pursuant to
the Security Documents.
"Collateral Agency Agreement" means the Collateral Agency
Agreement, dated as of the date of this Agreement, among the Collateral Agent,
the Borrower and the Lenders, substantially in the form of Exhibit B-1 hereto.
"Collateral Agent" means The Bank of New York, as trustee and
collateral agent for the Lenders under the Collateral Agency Agreement, and as
escrow agent and secured party under the Stock Pledge Agreement, or any duly
appointed successor of Bank of New York in such capacities.
"Collateral Agent's Account" means a bank account in the name
of the Collateral Agent maintained at The Bank of New York or any other bank
account specified by the Collateral Agent as the Collateral Agent's Account.
"Collection Accounts" means the various bank accounts
identified on Schedule 8.13, together with any additional bank accounts as to
which the Borrower provides written notice to the Collateral Agent and provides
a Blocked Account Letter Agreement from the bank at which such bank account is
established.
"Common Stock" means the shares of common stock, $1.00 par value,
of the Borrower.
"Contaminant" means those substances or materials which are
regulated by or form the basis of liability, now or hereafter, under any
Environmental Laws, including without limitation, petroleum or any fraction or
byproduct thereof, asbestos, polychlorinated biphenyls, radioactive substances,
or any other substances or materials which have in the past or could in the
future constitute a health, safety or environmental hazard to any Person or
property.
"Environmental Laws" means any and all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or government restrictions (including without limitation, any
judicial or administrative order, consent decree or judgment), relating to the
regulation and protection of human health, safety, the environment or natural
resources (including without limitation, ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species, and vegetation), or the Release of any materials into the environment,
including, without limitation, those related to hazardous substances or wastes,
air emissions and discharges to waste water or public treatment systems.
Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.); the Hazardous Material Transportation Act, as amended
(49 X.X.X.xx. 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as amended (7 U.S.C. ss. 136 et seq.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. ss. 6901 et seq.); the Toxic Substance
Control Act, as amended (15 U.S.C. ss. 2601 et seq.); the Clean Air Act, as
amended (42 U.S.C. ss. 7401 et seq.); the Federal Water Pollution Control Act,
as amended (33 U.S.C. ss. 1251 et seq.); the Occupational Safety and Health Act,
as amended (29 U.S.C. ss. 651 et seq.); and the Safe Drinking Water Act, as
amended (42 U.S.C. ss. 300 et seq.), and their state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes such
as the New Jersey Environmental Cleanup Responsibility Act (N.J. Stat. Xxx. ss.
13:lK-6 et seq.).
"Environmental Liabilities and Cost" means, as to any Person,
all liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any other Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, including,
without limitation, arising under any Environmental Law, Permit, order or
agreement with any Governmental Authority or other Person, and which relate to
any environmental, health or safety condition, or a Release or threatened
Release, and result from the past, present or future operations of such Person.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
or any successor ----- statute.
"ERISA Affiliate" means, with respect to any Person, any trade
or business (whether or not incorporated) under common control or treated as a
single employer with such Person within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Escrow Agreement" means the Escrow Agreement, dated as of the
date of this Agreement, among The Bank of New York, as escrow agent, the
Borrower and the Lenders substantially in the form of Exhibit C hereto.
"Event of Default" means any one of the events described in
Section 10.1 hereof.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department, court
or other entity thereof exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any
obligation of such Person guaranteeing any Indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including, without limitation, any obligation or
arrangement of such Person (a) to purchase or repurchase any such primary
obligation, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) to indemnify the owner of such
primary obligation against loss in respect thereof.
"Indebtedness" means, as to any Person, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (including, without limitation, reimbursement and all other
obligations with respect to surety or appeal bonds, letters of credit and
bankers' acceptances, whether or not matured, but not including obligations to
trade creditors incurred in the ordinary course of business), (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property, but not including obligations to trade creditors incurred in the
ordinary course of business), (d) all Capital Lease Obligations of such Person,
(e) all Guaranteed Indebtedness of such Person, (f) all Indebtedness referred to
in clause (a), (b), (c), (d) or (e) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, (g) in the case of the
Borrower, the Obligations, and (h) all liabilities of such Person under Title IV
of ERISA (other than premiums owed to the PBGC); provided, however, that
intercompany indebtedness owed solely to the Borrower or any Subsidiary and
guarantees of obligations (other than Indebtedness) of the Borrower's
Subsidiaries shall be deemed not to constitute Indebtedness.
"Lenders" means, collectively, Prudential, Principal, Pruco,
Contrarian and any of their successors or transferees in each case for so long
as such Person holds Notes.
"License Agreement" means the License Agreement, dated as of
the date of this Agreement, between the Borrower and the Store Company, as
amended, supplemented or otherwise modified from time to time in accordance with
its terms and the terms of this Agreement.
"License Purchase Agreement" means the Licensing Assets
Purchase Agreement, dated as of August 7, 1996, among the Borrower, MFD and
Capricorn.
"Lien" means any mortgage, deed of trust, pledge, security
interest, lien, option, trust deed, hypothecation, collateral assignment, tax
lien, mechanic's lien, materialmen's lien, lis pendens, or charge or encumbrance
of any kind (including any conditional sale or other title retention agreement
and any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code of New York or comparable law of any
jurisdiction) whether arising by contract, operation of law, or otherwise;
provided, however, that the licensing and/or franchising of intellectual
property or the issuance of options or letters of intent or reservation with
respect to such licensing or franchising shall not constitute a Lien under the
terms of this Agreement.
"Liquid Investments" means all assets of the Borrower and the
Subsidiaries of the types described in clauses (ii), (iii), (iv), (v), (vi) and
(vii) of Section 9.4 hereof.
"Majority Lenders" means the holders of at least a majority in
dollar amount of the aggregate unpaid principal amount of the Notes; provided
that for so long as the Notes are held by two or more Persons that are not
Affiliates of each other, the majority of holders of such Notes must include at
least two such holders who are not Affiliates of each other.
"Maturity Date" means, with respect to each Note, the Maturity
Date of such Note, as set forth ------------- therein.
"Multiemployer Plan" means any Plan which is a "multiemployer
plan" as such term is defined in section 4001(a)(3) of ERISA.
"Notes" means each of the Series 1 Notes and the Series 2 Notes.
"Obligations" means all obligations, indebtedness and
liabilities, now existing or hereafter arising, of the Borrower or any of its
Subsidiaries to any of the Lenders, or the Collateral Agent, in each case, under
this Agreement or any other Operative Document, whether such obligations,
indebtedness and liabilities are direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, all fees and other expenses (including attorneys'
fees and disbursements) incurred in connection with the enforcement or
collection thereof.
"Operating Cash Flow" means, with respect to any fiscal period
of the Borrower, the operating income of the Borrower and the Subsidiaries
(before deducting any interest, taxes, depreciation or amortization) determined
on a consolidated basis in accordance with GAAP.
"Operative Documents" mean this Agreement, the Notes and the
Security Documents.
"PBGC" means The Pension Benefit Guaranty Corporation or any
other Governmental Authority succeeding to any of its functions.
"Permit" means any permit, approval, authorization, license,
variance or permission required by a Governmental Authority under any applicable
Environmental Laws.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, unincorporated organization,
governmental authority, or other entity.
"Plan" means an "employee pension benefit plan" (as defined in
section 3(2) of ERISA) which is or has been established or maintained, or to
which contributions are required to be made or have been made, by the Borrower
or any of the Subsidiaries.
"Release" means, as to any Person, any release, spill,
emission, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment or into or out of any
property owned or operated by such Person, including, without limitation, the
movement of Contaminants through or in the air, soil, surface water, ground
water or property.
"Remedial Action" means all actions required or voluntarily
undertaken to (a) clean up, remove, treat or in any other way address
Contaminants in the indoor or outdoor environment, (b) prevent the Release or
threat of Release or minimize the further Release of contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Restricted Payment" means (a) any dividend or other
distribution on account of any shares of Common Stock or other capital stock of
the Borrower now or hereafter outstanding in excess of Tax Distributions, (b)
any redemption or retirement, purchase or other acquisition for value, direct or
indirect, of (i) any shares of Common Stock or other capital stock of the
Borrower now or hereafter outstanding, (ii) any warrants, rights or options to
acquire any such shares or (iii) any securities convertible into or exchangeable
for such shares and (c) any payment of principal or interest, repurchase,
redemption or defeasance of any Subordinated Indebtedness other than as
contemplated by this Agreement; provided, that "Restricted Payment" shall not be
deemed to include (x) any dividend or distribution payable in additional shares
of the capital stock on which such dividend or distribution is paid or (y) any
conversion, exercise or exchange of any security convertible into or exercisable
or exchangeable for shares of capital stock of the Borrower.
"Security Agreement" means the Security Agreement, dated as of
the date of this Agreement, in favor of the Collateral Agent, substantially in
the form of Exhibit B-2.
"Security Documents" means the Collateral Agency Agreement,
the Stock Pledge Agreement, the Security Agreement and any Blocked Account
Letter Agreement from time to time in effect.
"Series 1 Notes" means the senior promissory notes of the
Borrower issued pursuant to this Agreement in the aggregate original principal
amount of $1,000,000 substantially in the form of Exhibit A-1 hereto, and any
notes which may be issued hereunder in substitution or exchange for any such
Notes.
"Series 2 Notes" means the senior promissory notes of the
Borrower issued pursuant to this Agreement in the aggregate original principal
amount of $9,000,000 substantially in the form of Exhibit A-2 hereto, and any
notes which may be issued hereunder in substitution or exchange for any such
Notes.
"Stock Pledge Agreement" means the Stock Pledge Agreement,
dated as of the date of this Agreement, by the Borrower in favor of the
Collateral Agent, substantially in the form of Exhibit B-3 hereto.
"Store Company" means Xxx. Xxxxxx' Original Cookies, Inc., a
Delaware corporation.
"Subordinated Indebtedness" means with respect to the Notes,
any other Indebtedness which by its express terms is subordinated to the Notes
and is acceptable to the Majority Lenders in all respects, including with
respect to the use of proceeds thereof.
"Subsidiary" means any corporation, partnership or other
business entity of which an aggregate of 50% or more of the outstanding shares
of capital stock, beneficial or partnership interests, participations or other
equivalents (regardless of how designated) having ordinary voting power to elect
a majority of the board of directors, managers, trustees or other controlling
persons, is, at the time, directly or indirectly, owned by the Borrower and/or
one or more Subsidiaries of the Borrower (irrespective of whether, at the time,
stock, interests or other equivalents of any other class or classes of such
entity shall have or might have voting power by reason of the happening of any
contingency).
"Tax Distributions" means, in the case of any fiscal year (or
portion thereof) in which the Borrower joins in the filing of U.S. consolidated
Federal income tax returns as part of an affiliated group of corporations, as
determined under section 1504(a) of the Code, or the filing of any combined or
unitary tax return for state or local tax purposes, the Borrower's share of the
affiliated, combined or unitary group's Federal, state and local tax liability
(including any estimated tax payments) for such year (or portion thereof), as
determined in good faith by the common parent corporation and not disputed in
good faith by the Majority Lenders within 20 days after notice of the amount
thereof, together with sufficient information to support such determination, is
given to each Lender, to the extent not otherwise paid directly to the taxing
authorities by the Borrower.
"Total Cash" means, at any time, all amounts which the
Borrower and the Subsidiaries are required to report as the cash balances
(including any bank overdraft) on the Borrower's books and records in accordance
with GAAP, consistently applied, including, without limitation, all (i) cash,
(ii) cash equivalents, and (iii) Liquid Investments.
"Transactions" means the issuance of the Notes, the granting
of a security interest in the Collateral to the Lenders and the acquisition of
assets and assumption of liabilities by the Borrower pursuant to the License
Purchase Agreement.
1.1 Section Other Definitional Provisions . All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof", "herein" and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified, all Article, Section, Exhibit and Schedule references pertain to
Articles, Sections, Exhibits and Schedules of this Agreement. All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP, applied on a consistent basis. Terms used herein that are defined in the
Uniform Commercial Code as adopted by the State of New York, unless otherwise
defined herein, shall have the meanings specified in the Uniform Commercial Code
as adopted by the State of New York. All references herein to agreements or
promissory notes shall mean such agreements or notes as amended, restated,
supplemented or otherwise modified from time to time.
2 ARTICLE AUTHORIZATION OF ISSUANCE OF SECURITIES
1.1 Section Authorization of the Notes . The Borrower has
authorized the issuance to the Lenders of the Notes, each to be dated the date
of this Agreement, to mature on their respective Maturity Dates, and to bear
interest at the respective rates specified therein.
2 ARTICLE CONDITIONS PRECEDENT TO EFFECTIVENESS
1.1 Section Lenders' Conditions to Effectiveness . The
provisions of this Agreement set forth in Section 4.1 shall not become effective
unless and until the Borrower shall have delivered the following documents, each
in the form attached hereto (in the case of documents the forms of which are
attached) and otherwise in form and substance satisfactory to each of the
Lenders and (unless otherwise indicated) each dated the date of this Agreement:
(a) to Prudential, the Notes payable to the order of
Prudential, duly executed by the Borrower in the respective principal amounts
set forth opposite such Lender's name on Schedule 3.1(a) hereto;
(c) to Principal, the Notes payable to the order of Principal,
duly executed by the Borrower in the respective principal amounts set forth
opposite such Lender's name on Schedule 3.1(b) hereto;
(e) to Pruco, the Notes payable to the order of Pruco, duly
executed by the Borrower in the respective principal amounts set forth opposite
such Lender's name on Schedule 3.1(c) hereto;
(g) to Contrarian, the Notes payable to the order of
Contrarian, duly executed by the Borrower in the respective principal amounts
set forth opposite such Lender's name on Schedule 3.1(d) hereto;
(i) a favorable opinion of counsel to the Borrower, addressed
to each of the Lenders, substantially in the form attached hereto as Schedule
3.1(e);
(k) copies of resolutions of the Board of Directors, certified
by the Secretary or Assistant Secretary of the Borrower as of the date of this
Agreement as having been duly adopted on or prior to such date and in full force
and effect on such date, authorizing (i) the execution, delivery and performance
of the Operative Documents, and (ii) specific officers to execute and deliver
this Agreement and the other Operative Documents;
(m) a certificate of the Secretary of State of Delaware, dated
as of a recent date prior to the date of this Agreement, with telegram updates
where available, showing that the Borrower is organized and in good standing
under the laws of Delaware;
(o) a copy of the certificate of incorporation of the Borrower
certified as of the date of this Agreement by the Secretary or Assistant
Secretary of the Borrower as true and correct as of the date of this Agreement,
and copies of the Borrower's by-laws, certified by the Secretary or Assistant
Secretary of the Borrower as true and correct, as of the date of this Agreement;
and
(q) certificates of the Secretary or an Assistant Secretary of
the Borrower as to the incumbency and signatures of the officers or
representatives of the Borrower executing any of the Operative Documents and any
other certificate or other document to be delivered pursuant thereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary.
1.2 Section The Borrower's Condition to Effectiveness . The
provisions of this Agreement set forth in Section 4.1 shall not become effective
unless and until the conditions to the Borrower's obligations set forth in the
License Purchase Agreement shall have been satisfied or waived by the Borrower.
1 ARTICLE ISSUANCE OF NOTES: CLOSING
1.1 Section Issuance of Notes . In consideration for the
rights and obligations under this Agreement and the other Operative Documents,
the Borrower hereby agrees to issue to each Lender (subject to the provisions of
Section 11.10) and, subject to the terms and conditions herein set forth, each
Lender agrees to accept from the Borrower:
(a) in the case of Prudential, the Notes in the form of one or
more Notes in respect of each series of Notes registered in such
Lender's name or that of its nominee or nominees, as such Lender shall
request, and in such denominations as such Lender shall request
(subject to the restrictions set forth in Section 11.10 hereof), in the
aggregate principal amount specified opposite such Lender's name in
Schedule 3.1(a) attached hereto;
(a) in the case of Principal, the Notes in the form of one or
more Notes in respect of each series of Notes registered in such
Lender's name or that of its nominee or nominees, as such Lender shall
request, and in such denominations as such Lender shall request
(subject to the restrictions set forth in Section 11.10 hereof), in the
aggregate principal amount specified opposite such Lender's name in
Schedule 3.1(b) attached hereto;
(a) in the case of Pruco, the Notes in the form of one or more
Notes in respect of each series of Notes registered in such Lender's
name or that of its nominee or nominees, as such Lender shall request,
and in such denominations as such Lender shall request (subject to the
restrictions set forth in Section 11.10 hereof), in the aggregate
principal amount specified opposite such Lender's name in Schedule
3.1(c) attached hereto; and
(a) in the case of Contrarian, the Notes in the form of one or
more Notes in respect of each series of Notes registered in such
Lender's name or that of its nominee or nominees, as such Lender shall
request, and in such denominations as such Lender shall request
(subject to the restrictions set forth in Section 11.10 hereof), in the
aggregate principal amount specified opposite such Lender's name in
Schedule 3.1(d) attached hereto.
1.1 Section Closing . The delivery of the Notes shall take
place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 at a closing (the "Closing") on the date of this
Agreement. At the Closing, the Borrower will deliver to each Lender the Notes to
be issued to such Lender at the Closing as set forth opposite such Lender's name
in Schedules 3.1(a), 3.1(b), 3.1(c) and 3.1(d) upon satisfaction or waiver of
the conditions precedent set forth herein.
1 ARTICLE NOTES
1.1 Section Interest on Notes . The Borrower shall pay
interest on the unpaid principal amount of each outstanding Note pursuant to the
terms of such Note.
(a) Section Mandatory Prepayments . The Borrower shall make
prepayments of principal for the Series 2 Notes equal to (i) $250,000 on
September 30, 1997, December 31, 1997, March 31, 1998, June 30, 1998, September
30, 1998 and Xxxxxxxx 00, 0000, (xx) $312,500 on March 31, 1999, June 30, 1999,
September 30, 1999 and December 31, 1999 and (iii) $375,000 on March 31, 2000
and on each June 30, September 30, December 31 and March 31 thereafter until the
earlier of maturity or repayment thereof in full. Any mandatory or voluntary
prepayments of the Notes shall be applied to reduce such prepayment obligations
in the inverse order of maturity for the Notes so affected.
(a) In the event that (i) the average daily amount of Total
Cash during the first fifteen Business Days in January of any year exceeds
$250,000, the Borrower, upon five Business Days' irrevocable prior written
notice given promptly following availability of sufficient financial information
to permit determination of whether such prepayment is required to be made, shall
apply an amount equal to 75% of such excess over $250,000 in prepayment of
principal of the Notes beginning with the Series 2 Notes.
(c) Any prepayments made pursuant to this Section 5.2 shall be
(i) made without premium and together with accrued but unpaid interest through
the date of prepayment on the amount being so prepaid, (ii) applied pro rata
among Notes of the same series, and (iii) subject to the escrow arrangements
specified in Section 5.5(b) hereof.
(e)
1.2 Section Optional Prepayment . The Borrower shall have the
right, upon giving at least five Business Days' irrevocable prior written notice
to each affected Lender (which notice may be waived by each Lender on its own
behalf) specifying (i) the date of such prepayment, and (ii) the principal
amount of the outstanding Notes, and the Notes held by each such Lender being
prepaid, to voluntarily prepay the principal of the Notes then outstanding in
whole or in part, without premium or penalty Notice of prepayment having been
given as aforesaid, the principal amount of the outstanding Notes to the extent
specified in such notice, together with interest thereon to the prepayment date,
shall become due and payable on such prepayment date. Any prepayments made
pursuant to this Section 5.3 shall be (i) made without premium and together with
accrued but unpaid interest through the date of prepayment on the amount being
so prepaid, (ii) applied first to the Series 2 Notes, (iii) applied pro rata
among Notes of the same series, and (iv) subject to the escrow arrangements
specified in Section 5.5(b) hereof.
1.3
1.1 Section Repayment at Maturity . On the Maturity Date of
each Note, the Borrower shall pay all remaining principal together with accrued
but unpaid interest due with respect to such Note.
(a) Section Certain Amounts Owed under the License Purchase
Agreement . Notwithstanding anything to the contrary contained herein, (i) all
payments, if any, required to be made by MFD under Section 10 of the License
Purchase Agreement shall be made by reducing, on a dollar for dollar basis (x)
first, all accrued and unpaid interest owed on the Series 1 Notes and (y)
second, all outstanding principal of the Series 1 Notes; provided, however, that
such right of reduction, or set-off, shall terminate on the date 18 months
following the date of this Agreement.
(c) In the event that voluntary prepayments of principal are
made on the Series 1 Notes during a period of time when the Borrower's set-off
rights with respect to such Notes shall remain in effect pursuant to this
Section 5.5, the amount of principal being so prepaid shall be deposited into
escrow with the Bank of New York, as escrow agent, pursuant to the Escrow
Agreement and shall be paid as provided in the Escrow Agreement either to the
Borrower in satisfaction of claims eligible for set-off or to the holders of
such Notes, as the case may be, at such times and amounts as appropriate to
reflect the termination or limitation as to amount of such set-off rights
pursuant to this Section 5.5.
(a) The Borrower's various rights of set-off under this
Section 5.5 are independent and the Borrower may in its sole discretion elect
whether to exercise its set-off right under Section 5.5(a) hereof, on the one
hand, or under Section 5.5(b) hereof, on the other hand.
1 ARTICLE ADDITIONAL TERMS OF THE NOTES
1.1 Section Security . The outstanding Notes and all other
Obligations of the Borrower arising under this Agreement and the other Operative
Documents shall be secured by all of the Collateral until the outstanding Notes
and all such other Obligations are paid in full.
1.1 Section Receipt of Payment . The Borrower shall make each
payment under any of the outstanding Notes not later than 1:00 P.M. (New York
City time) on the day when due in lawful money of the United States of America
by wire transfer of immediately available funds for credit to the account or
accounts specified by each Lender in Schedule 6.2 hereto, or such other account
or accounts in the United States as a Lender may designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Lender agrees that, before disposing of any Note, it will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date through which interest thereon
has been paid. The Borrower agrees to afford the benefits of this Section 6.2 to
any transferee under Section 11.10 hereof of any of the outstanding Notes which
shall have made the same agreement in writing as the Lenders have made in this
Section 6.2. All payments made by the Borrower on the outstanding Notes (or any
series of outstanding Notes) shall be made ratably in proportion to the
respective outstanding principal amounts of such Notes (or such series of Notes)
held by each Lender in respect of which such payment is made or applied.
1.1 Section Sharing of Payments, etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of Notes in excess of its ratable
share of payments based on the outstanding aggregate principal amounts of such
Lenders' Notes prior to such payment (after giving effect to any applicable
set-offs pursuant to Section 5.5) on account of Notes obtained by all Lenders,
such Lender shall forthwith purchase from each other Lender such participations
in such Notes as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each other Lender; provided, however, that if all or
any portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and each Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 6.3 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
1.1 Section Accounting . Each Lender may but shall not be
required to provide a quarterly accounting of transactions in respect of the
Notes owned by it to the Borrower. Each and every such accounting provided shall
(absent manifest error) be deemed final, binding and conclusive upon the
Borrower in all respects as to all matters reflected therein, unless the
Borrower, within 60 days after the date any such accounting is rendered and
delivered to the Borrower, shall notify such Lender in writing of any objection
which the Borrower may have to any such accounting, describing the basis for
such objection with specificity.
1.3 Section Access . Each Lender and any of their officers,
employees and, if authorized in writing by any Lender, any of their professional
consultants and/or agents shall have the right, exercisable as any Lender
reasonably determines to be appropriate, during normal business hours (or at
such other times as may reasonably be requested by any Lender), at its own
expense, to inspect the properties and facilities of the Borrower and each of
the Subsidiaries, and to inspect, audit and make copies of or extracts from all
of the Borrower's and each of the Subsidiaries' records, files and books of
account and to discuss the affairs, finances and accounts of any of such Persons
with the principal officers of the Borrower or its independent public
accountants (and by this provision the Borrower authorizes such accountants to
discuss with any director, officer, employee, agent or professional consultant
so designated the affairs, finances and accounts of the Borrower and its
Subsidiaries); provided, however, that such requests shall not unduly interrupt
the Borrower's ordinary business operations, and that expenses incurred by any
Lender in connection with any of the foregoing shall be borne by the Borrower
following the occurrence of an Event of Default. No inspection or investigation
by or on behalf of any Lender shall have any effect on, and such inspection or
investigation shall not be deemed a waiver in whole or in part of, any covenant
contained herein or any Event of Default hereunder and no Lender shall be deemed
to have any knowledge based solely thereon or on the existence of this provision
(it being understood, however, that the foregoing shall not be construed to
relieve any Lender of any actual knowledge which it may have, and that neither
the foregoing, nor any such actual knowledge, shall be construed to relieve the
Borrower or any Subsidiary from any obligation which it may have under this
Agreement or any Operative Document to provide notice to the Lenders).
1.5 Section Notes Deemed Outstanding . No Notes held by the
Borrower or any Subsidiary shall be deemed to be outstanding for any purpose
under this Agreement. The Borrower shall not, and shall not permit any
Subsidiary to, issue, sell, transfer, pledge, hypothecate, encumber or otherwise
dispose of any Notes, except pursuant to the terms of this Agreement.
1 ARTICLE REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement, the
Borrower represents and warrants to the Lenders as of the date of this Agreement
as follows:
1.1 Section Existence and Authority . The Borrower is a
corporation duly organized and validly existing in good standing under the laws
of Delaware and has full power and authority to own its property, carry on its
business, and enter into and perform its obligations under the Operative
Documents. The Borrower has no Subsidiaries. The Operative Documents to which
the Borrower is a party have been duly authorized by all necessary corporate
action, executed, and delivered by the Borrower and constitute the legal, valid
and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms and not subject to any defense based upon usury or
capacity of the Borrower, but subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and to general principles of equity.
1.3 Section Regulation G, etc. The Borrower does not own or
has any present intention of acquiring any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve
System. Neither the Borrower nor any agent acting on its behalf has taken any
action which might cause this Agreement or the Notes to violate Regulation G,
Regulation J, Regulation T, Regulation U, Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or the Securities
Exchange Act of 1934, as amended, each as now in effect.
1.5 Section Status Under Certain Federal Statutes . The
Borrower is not (a) an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended, (b) a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or a "subsidiary company" of
a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, (c) a "public utility" as such term is defined
in the Federal Power Act, as amended, (d) a "rail carrier or a person controlled
by or affiliated with a rail carrier", within the meaning of Title 49, U.S.C.,
or (e) a "carrier" to which 49 U.S.C. ss. 11301(b)(1) is applicable.
1.7 Section Offering of Securities . Neither the Borrower nor
any agent acting on its behalf has taken or will take any action which would
subject the issuance or sale of the Notes to the provisions of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act"), or to the provisions
of any securities or "blue sky" law of any applicable jurisdiction. In
connection with the foregoing, each Lender hereby represents and warrants to the
Borrower that the Notes to be issued to such Lender pursuant to this Agreement
are not being acquired by such Lender with a view to or for sale in connection
with any distribution thereof within the meaning of the Securities Act (it being
understood, however, that the disposition of such Lender's property shall at all
times be within such Lender's control).
1.9 Section Pro Forma Balance Sheet of the Borrower; No
Violations . Attached as Schedule 7.5 hereto is an unaudited pro forma balance
sheet of the Borrower which has been presented as if the transactions
contemplated by the License Purchase Agreement are consummated as of August 31,
1996 based on the assumptions that (i) various actual and estimated information
received from MFD accurately reflects the assets and liabilities to be
transferred to the Borrower at the closing under the License Purchase Agreement
and (ii) transaction costs payable by the Borrower in connection with such
transactions equal $300,000. The Borrower has engaged in no business and has no
material liabilities or obligations other than in connection with its
organization and the negotiation of this Agreement, the License Purchase
Agreement and related agreements. The Borrower has taken no action causing it to
be in breach of any agreement to which it is a party or immediately after the
Closing will succeed in interest or in violation of any law, in each case other
than any such defaults or violations to which the Borrower may have succeeded
under the License Purchase Agreement, including without limitation by reason of
any required governmental or third party consents or approvals to the transfer
of assets or liabilities thereunder not having been obtained.
1 ARTICLE AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with the Lenders that the
Borrower will perform and observe the following affirmative covenants as long as
any of the Obligations are outstanding:
1.1 Section Financial Statements . The Borrower will deliver to each Lender:
(a) as soon as available and in any event not more than 60 and
not less than 30 days prior to the beginning of each calendar year, commencing
with calendar year 1997, projected consolidated balance sheet, and statements of
income and cash flows of the Borrower and the Subsidiaries for each month in
such calendar year, accompanied by a written statement of the assumptions used
in connection therewith, all in reasonable detail and in a form reasonably
satisfactory to the Majority Lenders;
(b) as soon as practicable and in any event not more than 30
days after the end of each month in each calendar year, a consolidated and
consolidating balance sheet of the Borrower and the Subsidiaries as at the end
of such month and the related consolidated and consolidating statement of income
and consolidated statement of cash flows of the Borrower and the Subsidiaries
for such month and the period from the beginning of the year through the end of
such month setting forth, in each case in comparative form, figures for the
corresponding periods in the preceding calendar year and figures for the
corresponding periods in the projected consolidated statements of income
previously furnished to the Lenders, as described in Section 8.1(a) above or
otherwise, all in reasonable detail and in a form reasonably acceptable to the
Majority Lenders and certified by the chief financial officer of the Borrower as
fairly presenting the consolidated and consolidating financial condition of the
Borrower and the Subsidiaries as at the date indicated and the consolidated and
consolidating results of their operations and consolidated cash flows for the
period indicated, in conformity with GAAP applied on a basis consistent with
prior periods (except as disclosed in the certificate of such chief financial
officer), subject to changes resulting from year-end adjustments;
(d) as soon as practicable and in any event not more than 90
days after the end of each calendar year, a consolidated and consolidating
balance sheet of the Borrower and the Subsidiaries as at the end of such year
and the related consolidated and consolidating statements of income and cash
flows of the Borrower and the Subsidiaries for such year, and setting forth, in
each case in comparative form, corresponding figures for the preceding calendar
year, all in reasonable detail and reasonably satisfactory in scope to the
Majority Lenders and (i) in the case of such consolidated financial statements,
accompanied by a report thereon of Deloitte & Touche or other independent public
accountants of recognized national standing selected by the Borrower and
acceptable to the Majority Lenders, which report shall state that such
consolidated financial statements present fairly the financial position of the
Borrower and the Subsidiaries as at the dates indicated and the consolidated
results of their operations and cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years (except as
otherwise specified in such report) and that the audit by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards, and (ii) in the case of
such consolidating financial statements, certified by the chief financial
officer of the Borrower as presenting fairly the information contained therein
in conformity with GAAP applied on a basis consistent with prior periods (except
as otherwise specified in such report);
(f) together with each delivery of financial statements of the
Borrower and the Subsidiaries pursuant to Sections 8.1(b) and (c) hereof, an
officer's certificate stating that the signer has reviewed the terms of this
Agreement and the Notes and the other Operative Documents and has made, or
caused to be made under his supervision, a review in reasonable detail of the
transactions and condition of the Borrower and the Subsidiaries during the
fiscal period covered by such financial statements and that such review has not
disclosed the existence during or at the end of such fiscal period, and that the
signer does not have knowledge of the existence as at the date of the officer's
certificate, of any condition or event which constitutes, or with the giving of
notice or lapse of time or both would constitute, an Event of Default or, if any
such event existed or exists, specifying the nature and period of existence
thereof and what action the Borrower has taken or is taking or proposes to take
with respect thereto;
(h) together with each delivery of financial statements of the
Borrower and the Subsidiaries pursuant to Section 8.1(c) hereof, a certificate
by the Borrower's independent public accountants stating (i) that their audit
examination has included a review of the terms of this Agreement and the Notes
and the other Operative Documents as they relate to accounting matters and that
such review is sufficient to enable them to make the statement referred to in
clause (iii) of this Section 8.1(e), (ii) whether, in the course of their audit
examination, there has been disclosed the existence during the calendar year
covered by such financial statements (and whether they have knowledge of the
existence as of the date of such accountants' certificate) of any condition or
event which constitutes, or with the giving of notice or lapse of time or both
would constitute, an Event of Default and if during their audit examination
there has been disclosed (or if they have knowledge of) such a condition or
event, specifying the nature and period of existence thereof (it being
understood, however, that such accountants shall not be liable to any Person by
reason of their failure to obtain knowledge of any such condition or event which
would not be disclosed in the course of an audit conducted in accordance with
generally accepted auditing standards), and (iii) that based on their annual
audit examination nothing came to their attention which causes them to believe
that the information contained in the officer's certificate delivered therewith
pursuant to Section 8.1(d) hereof is not correct or that the matters set forth
in such officer's certificate are not stated in accordance with the terms of
this Agreement;
(j) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower and the Subsidiaries to its security holders
(other than the Borrower in the case of the Subsidiaries), of all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by the Borrower or any of the Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or with NASDAQ, and of all press releases
and other written statements made available generally by the Borrower or any of
the Subsidiaries to the public concerning material developments in the business
of the Borrower or any of the Subsidiaries;
(l) promptly upon receipt thereof by the Borrower or any
Subsidiary, copies of all reports submitted to the Borrower by independent
public accountants and consultants in connection with each annual, interim or
special audit of the Borrower or any of the Subsidiaries made by such
accountants and minutes of the proceedings of the audit committee of the Board
of Directors or of such committee of the board of directors of any Subsidiary;
(n) promptly upon any officer of the Borrower obtaining
knowledge (i) that a condition or event exists that constitutes, or with the
giving of notice or lapse of time would constitute, an Event of Default, (ii)
that the holder of any Note has given any notice or taken any other action with
respect to a claimed Event of Default under this Agreement or any of the other
Operative Documents, (iii) of any condition or event which, individually or in
the aggregate, has or could reasonably be expected to have a material adverse
effect on the business, condition (financial or other), assets, properties or
operations of the Borrower and the Subsidiaries taken as a whole (other than
matters of a general economic or political nature which do not affect the
Borrower or the Subsidiaries uniquely), (iv) that any Person has given any
notice to the Borrower or any Subsidiary or taken any other action with respect
to a claimed event of default under any agreement or instrument to which the
Borrower or any Borrower is a party, (v) that any Person has given any notice of
cancellation to the Borrower or any Subsidiary relating to any contract
representing 5% or more of the Borrower's revenues during the most recently
completed fiscal year, or (vi) of the institution of any litigation involving
either claims against or potential liability of the Borrower or any Subsidiary
equal to or greater than $50,000 with respect to any single cause of action or
$100,000 in the aggregate, an officer's certificate specifying the nature and
period of existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed
event or condition that constitutes an Event of Default, and what action the
Borrower has taken, is taking or proposes to take with respect thereto;
(p) as soon as practicable and in any event within 15 days
after any officer of the Borrower obtains knowledge of the occurrence of any of
the following events which would result in a material liability to the Borrower:
(i) any event or condition which constitutes a "reportable event", as such term
is defined in section 4043 of ERISA, other than any such event for which the
PBGC has waived the requirement to notify it within 30 days, (ii) any
transaction which constitutes a "prohibited transaction", as such term is
defined in section 4975 of the Code and section 406 of ERISA, in connection with
any Plan or any trust created thereunder except to the extent that an
administrative or statutory exemption is available, (iii) any termination of any
Plan, or proceedings to terminate any Plan which are pending or threatened, or
(iv) any liability to or on account of a Plan under section 4062, 4063 or 4064
or ERISA which will or may be incurred by the Borrower, any Subsidiary or any
other Affiliate of the Borrower, a written notice specifying the nature thereof,
what action the Borrower has taken, is taking or proposes to take with respect
thereto, and, when known, any action taken or threatened by the PBGC or the
Internal Revenue Service with respect thereto;
(r) as soon as practicable and in any event not later than
fifteen days after the last day of any calendar quarter beginning with December
31, 1996, a certificate of an authorized officer of the Borrower using the form
of officer's certificate attached as Exhibit D hereto certifying the amount of
Total Cash as of the last day of such quarter, and the amounts of Operating Cash
Flow generated and Capital Expenditures made during such quarter; and
(t) with reasonable promptness, such other information and
data with respect to the Borrower or any of the Subsidiaries as from time to
time may be reasonably requested by any Lender.
1.3 Section Corporate Existence, etc. Except as otherwise
permitted pursuant to Section 9.6 hereof, the Borrower will at all times
preserve and keep in full force and effect its corporate existence and all
licenses, rights, franchises, permits, qualifications, consents and approvals
material to its business, and those of each of the Subsidiaries (provided that
the Subsidiaries shall be permitted to merge, consolidate, dissolve and
liquidate for so long as their assets are thereupon distributed to or otherwise
acquired by the Borrower or another Subsidiary) and will qualify, and cause each
of the Subsidiaries to qualify, to do business in any jurisdiction where the
failure to do so would, individually or in the aggregate, have or be reasonably
likely to have a material adverse effect on the business, condition (financial
or other), assets, properties or operations of the Borrower and the Subsidiaries
taken as a whole. Without limiting the foregoing, the Borrower will comply with
its obligations, and enforce the quality control standards under the License
Agreement and its other license agreements.
1.5 Section Payment of Taxes and Claims . The Borrower will,
and will cause each of the Subsidiaries to, pay all income taxes before the same
shall become delinquent, except where such income taxes are contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
if adequate reserves therefor have been established on the books of the Borrower
or the Subsidiaries in accordance with GAAP or except where the failure to pay
such income taxes involves amounts which, in the aggregate, are not significant
and such failure could not, individually or in the aggregate, have a material
adverse effect on the Borrower and the Subsidiaries taken as a whole. The
Borrower will, and will cause each of the Subsidiaries to, pay all other taxes,
assessments and other governmental charges imposed upon such Person or with
respect to its employees or any of its respective properties or assets or in
respect of any of its respective franchises, business, income or profits before
any penalty or interest accrues thereon, including, without limitation,
withholding taxes, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums which have become due and
payable and which by law have or may give rise to a Lien upon any of its
respective properties or assets; provided, however, that no such tax,
assessment, charge or claim need be paid (i) if it is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
and if such accrual or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor or (ii) if such tax, assessment, claim or
charge involves amounts which, in the aggregate, are not significant and could
not, individually or in the aggregate, have a material adverse effect on the
Borrower and the Subsidiaries taken as a whole.
1.7 Section Compliance with Laws, etc. The Borrower will, and
will cause each of the Subsidiaries to, comply with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority or
arbitrator, the noncompliance with which, individually or in the aggregate,
would or would be reasonably likely to materially adversely affect the business,
condition (financial or other), assets, properties or operations of the Borrower
and the Subsidiaries taken as a whole.
1.9 Section Maintenance of Properties; Insurance . The
Borrower will, to the extent reasonably prudent, maintain or cause to be
maintained in good repair, working order and condition all properties used or
useful in the business of the Borrower or any of the Subsidiaries and from time
to time, to the extent reasonably prudent, will make or cause to be made all
appropriate repairs, renewals, replacements or disposals thereof. Without
limiting the foregoing, the Borrower shall maintain such trademark and trade
name registrations which from time to time are material to its business. The
Borrower will, and will cause each Subsidiary to, maintain with financially
sound and reputable insurers, insurance with respect to such Person's respective
properties and business against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or similar
business and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations and,
in any event, in compliance with any insurance requirements under any of the
Operative Documents and naming the Collateral Agent and the Lenders as an
additional insured, which shall provide that any amounts payable under the
Borrower's insurance policies shall be paid directly to the Borrower to be used
by the Borrower to repair and restore the property which was the subject of the
claim; provided that, for so long as an Event of Default has occurred and is
continuing any amounts payable under the Borrower's insurance policies shall be
paid directly to the Collateral Agent to be used by the Borrower to repair and
restore the property which was the subject of the claim. The Borrower will, and
will cause the Subsidiaries to, promptly defend any action, claim or demand
which may in any manner affect the Borrower's or any of the Subsidiaries' title
or interest in and to Collateral having a fair market value in excess of
$50,000.
1.11 Section Affiliate Transactions, Keeping of Books, Bank
Accounts . The Borrower will, and will cause each of the Subsidiaries to, (a)
keep separate books of record and account, in which full and correct entries
shall be made of all transactions including any transactions between the
Borrower and any of the Subsidiaries or other Affiliates of the Borrower, all in
accordance with GAAP and (b) maintain bank accounts which are separate and
segregated from the bank accounts of any Affiliate of the Borrower.
1.13 Section Compliance with Affiliate Transactions . The
Borrower will, and will cause each of the Subsidiaries to, strictly enforce the
requirements of all provisions of, and diligently enforce, terminate or take
other appropriate action in the event of a default under, any contract relating
to a transaction with an Affiliate of the Borrower.
1.15 Section Security Interest in Newly Acquired Property . If
the Borrower or any of its Subsidiaries incorporated within the United States
shall at any time acquire any interest in property (personal or real, tangible
or intangible) not subject to Liens created under the Security Documents and
which does not constitute Collateral, promptly upon such acquisition the
Borrower or such Subsidiary shall execute, deliver and record a supplement to
the Security Documents, satisfactory in form and substance to the Majority
Lenders, subjecting such interests to the Lien created by the Security
Documents, and take such other actions as may be reasonably required by the
Majority Lenders to ensure that the security interest in such interest will be a
valid and effective security interest on terms comparable to the security
interest of the Lenders in the Collateral.
1.17 Section Environmental Reporting Requirements . The
Borrower shall, promptly (and in any event within 30 days) following an officer
or director of the Borrower learning of any of the following, advise the Lenders
in writing and reasonable detail of:
(a) any Remedial Action taken by the Borrower, its
Subsidiaries or any other Person in response to any Contaminant on or under any
real property owned, operated or leased by the Borrower or its Subsidiaries or
Affiliates, the existence of which could result in Environmental Liabilities and
Costs to the Borrower and its Subsidiaries in excess of $100,000;
(c) a Release or threatened Release which could reasonably be
expected to subject the Borrower and its Subsidiaries to Environmental
Liabilities and Costs of $100,000 or more;
(e) the receipt by the Borrower of notification that any real or personal
property of the Borrower or its Subsidiaries is subject to any Environmental
Lien;
(g) the receipt by the Borrower of any notice of violation of,
or knowledge by the Borrower that there exists a condition which may result in a
violation by the Borrower or its Subsidiaries of, any Environmental Law, except
for violations or conditions the consequences of which in the aggregate would
have no reasonable likelihood of subjecting the Borrower or its Subsidiaries to
Environmental Liabilities and Costs of $250,000 or more;
(i) any proposed acquisition of stock, assets or real estate,
or any proposed leasing of property, or any other action by the Borrower or its
Subsidiaries other than those the consequences of which in the aggregate have no
reasonable likelihood of subjecting the Borrower or its Subsidiaries to
Environmental Liabilities or Costs of $250,000 or more;
(k) any proposed Capital Expenditures of the Borrower or its
Subsidiaries intended or designed to implement any existing or additional
Remedial Action other than those which in the aggregate will not exceed
$250,000; and
(m) any proposed action to be taken by the Borrower or its
Subsidiaries to commence operations that could reasonably be expected to subject
the Borrower or its Subsidiaries to additional laws, rules or regulations,
including laws, rules and regulations requiring additional or amended Permits,
except where compliance with these additional requirements would have no
reasonable likelihood of subjecting the Borrower or its Subsidiaries to
Environmental Liabilities and Costs in excess of $100,000.
(o) Section Environmental Reports, Remedial Action, Indemnity
. If Lenders at any time have a reasonable basis to believe that (i) there may
be a material violation of any Environmental Law by the Borrower or its
Subsidiaries or related to any real property owned, leased or operated by the
Borrower or its Subsidiaries or (ii) activities on real property adjacent to
such real property will have an adverse effect on real property owned, leased or
operated by the Borrower or its Subsidiaries which could subject the Borrower to
Environmental Liabilities and Costs in excess of $100,000, then the Borrower
agrees, upon request from the Lenders, to provide the Lenders, at the Borrower's
expense, with such reports, certificates, engineering studies or other written
material or data as the Lenders may reasonably require so as to reasonably
satisfy the Lenders that the Borrower and its Subsidiaries are in material
compliance with all applicable Environmental Laws.
(q) The Borrower and each of its Subsidiaries shall promptly
take any and all appropriate Remedial Action in response to the presence,
storage, use, disposal, transportation or discharge of any Contaminant on, under
or about any real property owned by the Borrower or any of its Subsidiaries and,
with respect to leased property or property operated but not owned, to the
extent failure to take Remedial Action could reasonably be expected to result in
Environmental Liabilities and Costs to the Borrower or its Subsidiaries of
$100,000 or more. In the event the Borrower or any of its Subsidiaries
undertakes any Remedial Action with respect to any Contaminant on, under or
about any real property owned, leased or operated by the Borrower or any of its
Subsidiaries, the Borrower or such Subsidiary shall conduct and complete such
Remedial Action in compliance with all applicable Environmental Laws, and in
accordance with the applicable and binding policies, orders and directives of
all federal, state and local Governmental Authorities except where the
Borrower's or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Contaminant is being contested in
good faith by the Borrower or such Subsidiary and appropriate reserves therefor
have been established in accordance with GAAP.
(s) The Borrower shall indemnify, pay and hold each of the
Lenders harmless from and against any and all losses, costs (including
attorneys' fees), claims, liabilities, injuries, expenses and damages whatsoever
incurred by such Lender by reason of any violation of any applicable
Environmental Law for which the Borrower or any of its Subsidiaries is liable or
as a result of any real property being owned, leased or operated by the Borrower
or any of its Subsidiaries, or by reason of the imposition of any governmental
lien for the recovery of environmental cleanup or response costs expended by
reason of any such violation, or by reason of any breach of any representation,
warranty or affirmative or negative covenant in Sections 8.10, 8.11 or 9.15 of
this Agreement; provided, however, that the Borrower shall have no liability to
any of the Lenders for losses, costs (including attorneys' fees), claims,
liabilities, injuries, expenses and damages incurred by reason of any violation
by the party to be indemnified of any applicable Environmental Law as determined
by a court of competent jurisdiction.
1.19 Section Preparation of Financial Statements . The
Borrower will prepare the financial statements required to be delivered to the
Lenders pursuant to Section 8.1 hereof in a manner reasonably consistent with
past accounting practices as described in reasonable detail on Schedule 8.11
hereto, except as required by GAAP.
1.21 Section Intellectual Property . The Borrower shall, and
shall cause each of the Subsidiaries to, do or cause to be done, all things
necessary to preserve and keep in full force and effect, its intellectual
property, except where the failure to so preserve any such intellectual property
(other than the Xxx. Xxxxxx trademark or trade name) would not and would not be
reasonably likely to materially adversely affect the business, condition
(financial or other), assets, properties or operations of the Borrower and the
Subsidiaries taken as a whole.
1.23 Section Collection Accounts. The Borrower shall deposit
and shall cause each of the Subsidiaries to deposit on the date of receipt
thereof or cause to be deposited directly all cash, checks, notes, drafts or
other similar items of payment, including, without limitation, those relating to
or constituting (w) net proceeds derived from the sale of any Collateral, (x)
payments made by the Borrower's account debtors in respect of accounts, (y)
payments received by the Borrower or any of the Subsidiaries from any licensees,
sublicensees or franchisees and (z) any other similar payments in one of the
Collection Accounts, in each case subject to the Blocked Account Letter
Agreements with the banks in which the Collection Accounts are maintained. Upon
the occurrence and during the continuation of an Event of Default, all amounts
deposited in the Collection Accounts may immediately be transferred to the
Collateral Agent's Account and may be applied by the Collateral Agent to the
outstanding balance of the Obligations in accordance with the Collateral Agency
Agreement.
1 ARTICLE NEGATIVE COVENANTS
The Borrower covenants and agrees with the Lenders that the
Borrower will perform and observe the following negative covenants as long as
any of the Obligations are outstanding:
1.1 Section Restricted Payments and Restrictions on
Investments . The Borrower will not, directly or indirectly, declare, order,
pay, make or set apart any sum or property for any Restricted Payment, or make
or become obligated to make any investment in any Person, through the direct or
indirect holding of securities or otherwise, except if no default or Event of
Default has occurred and is continuing for amounts paid by the Borrower in
respect of Common Stock, or options to acquire Common Stock, held by management
employees of the Borrower in an aggregate amount not in excess of $25,000 per
year and except as permitted pursuant to Section 9.4 hereof.
1.1 Section Liens . The Borrower will not, and will not permit
any Subsidiary to, create, assume or suffer to exist any Lien upon any of such
Person's respective property or assets having an aggregate fair market value in
excess of $25,000, whether now owned or hereafter acquired, except:
(a) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP;
(c) other Liens incidental to the conduct of the Borrower's or
any Subsidiary's business or the ownership of its property and assets which were
not incurred in connection with the borrowing of money or the obtaining of
advances or credit, and which do not secure any appeal bond or judgment, and
which do not in the aggregate materially detract from the value of the
Borrower's or any Subsidiary's property or assets taken as a whole or materially
impair the use of such property or assets in the operation of the Borrower's or
any Subsidiary's business taken as a whole;
(e) Liens existing on the property or assets of the Borrower
or any Subsidiary on the date of this Agreement and Liens in favor of the
Lenders pursuant to the Operative Documents;
(g) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law and created
or otherwise occurring in the ordinary course of the Borrower's business, but
only to the extent that the amounts secured by such Liens either (i) are not yet
past due, (ii) do not exceed an aggregate amount equal to $25,000, or (iii) are
being actively contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP;
(i) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of the Borrower's business (including,
without limitation, surety bonds) in connection with workers compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts (other than for the
repayment of borrowed money or other Indebtedness), statutory obligations and
other similar obligations; and
(k) Liens created pursuant to the filing of any financing
statement under the Uniform Commercial Code as in effect in any jurisdiction
with respect to a lease which is permitted under the terms of this Agreement;
(m) provided, however, that the Borrower will not, and will not permit any
Subsidiary to, create, assume or suffer to exist any Lien upon any of such
Person's intellectual property, except pursuant the License Agreement and except
that the Borrower or any of the Subsidiaries may license or franchise any of
such intellectual property.
1.3 Section Indebtedness . The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any
Indebtedness of the Borrower or any Subsidiary, except:
(a) Indebtedness of the Borrower represented by the Notes;
(c) Indebtedness of the Borrower or any Subsidiary in respect of
appeal bonds, but not to exceed $50,000 in the aggregate;
(e) Indebtedness incurred in the ordinary course of the
Borrower's or any Subsidiary's business in connection with insurance, workers'
compensation and other types of social security benefits, or to guarantee
performance of tenders, bids, contracts (other than for the repayment of
borrowed money or other Indebtedness), statutory obligations or other similar
obligations;
(g) Subordinated Indebtedness; and
(i) Indebtedness of the Borrower to the Store Company as
contemplated by the License Agreement and Indebtedness of the Borrower to the
Store Company in respect of transaction costs relating to the transactions
contemplated by the License Purchase Agreement which are paid by the Store
Company on behalf of the Borrower and subject to reimbursement by the Borrower.
1.5 Section Loans, Advances, Investments and Contingent
Liabilities . Except as permitted pursuant to Sections 8.2 and 9.6 hereof, the
Borrower will not, and will not permit any Subsidiary to, make or permit to
remain outstanding any loan or advance to, or extend credit to, or guarantee,
endorse or otherwise be or become contingently liable, directly or indirectly,
in connection with the obligations, stock or dividends of, or own, purchase or
otherwise acquire any assets, stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person, or become a
general or limited partner in any partnership, or a participant in any joint
venture, except that the Borrower or any Subsidiary may:
(i) purchase or otherwise acquire and own personal
property or lease real or personal property to be used in the
ordinary course of its business;
(i) purchase or otherwise acquire and own marketable
direct obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof and maturing
within one year from the date of acquisition thereof;
(i) purchase or otherwise acquire and own marketable
direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year after
the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable
from either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc. and not listed (except with positive
implications) in Credit Watch or any successor publication
published by Standard & Poor's Corporation;
(i) make demand deposits in banks in the ordinary
course of business (not for investment purposes), and make
deposits or own certificates of deposit maturing within one
year from the date of acquisition thereof issued by commercial
banks having as at any date of determination combined capital
and surplus of not less than $100,000,000 (determined in
accordance with GAAP) and a long-term bank deposit rating of
P-1 or better by Xxxxx'x Investors Service, Inc. (or a
comparable rating if the rating system is changed);
(i) purchase or otherwise acquire and own commercial
paper maturing no more than 270 days from the date of
acquisition thereof and having as at any date of determination
one of the two highest ratings obtainable from either Standard
& Poor's Corporation or Xxxxx'x Investors Service, Inc.;
(i) enter into written investment or repurchase
agreements having a term of one month or less and an aggregate
principal value not greater than $500,000 with any financial
institution owned by a holding company whose senior debt
obligations have a rating of at least "AA" by Standard &
Poor's Corporation or "Aa2" by Xxxxx'x Investors Service,
Inc., which investment agreements or repurchase agreements
require the Borrower or a Subsidiary (as the case may be) to
deliver, against the transfer of funds, securities that are
direct obligations of, or that are fully guaranteed as to
principal and interest by, the United States or any agency
thereof; provided that (A) in the case of certificated
securities, the Borrower or such Subsidiary (as the case may
be) or a third party acting as collateral agent therefor, has
possession of such securities, issued or registered in the
name of the Borrower or such Subsidiary, (B) in the case of
uncertificated securities, (x) such securities are pledged by
such bank to a member bank ("Member Bank") of the Federal
Reserve System, as agent for or trustee on behalf of the
Borrower or such Subsidiary (as the case may be), which Member
Bank has been duly authorized by the Borrower or such
Subsidiary (as the case may be) to act in such capacity and
(y) both such Member Bank and the appropriate Federal Reserve
Bank make an entry in their respective records that such
securities are so pledged, (C) the Borrower or such Subsidiary
(as the case may be) has a perfected first priority security
interest in such securities (whether in certificated or
uncertificated form) free and clear of liens and claims of
third parties and (D) such written investment agreements or
repurchase agreements provide the contractual right to
liquidate, without notice, the underlying securities upon the
commencement of voluntary or involuntary insolvency,
reorganization or receivership proceedings concerning, or a
moratorium affecting the obligations of, such bank;
(i) purchase or otherwise acquire ownership interests
in a fund sponsored by a financial institution listed on
Schedule 9.4(vii) hereto or approved in writing by the
Majority Lenders, provided that all or substantially all of
the assets of such fund are invested in Liquid Investments;
(i) endorse negotiable instruments for collection in the
ordinary course of business;
(i) make intercompany operating loans, advances and
guaranties among the Borrower and its Subsidiaries; provided,
that the aggregate outstanding amount of all such loans to
Subsidiaries as to which the Borrower and/or another
Subsidiary do not own 100% of the outstanding capital stock
may not at any time exceed $100,000; and
(i) acquire capital stock of a new Subsidiary in
connection with the formation thereof, provided that such
stock is pledged to the Lenders pursuant to the Stock Pledge
Agreement.
1.1 Section Issuance of Capital Stock . The Borrower will not
permit any Subsidiary to, without the consent of the Majority Lenders (such
consent not to be unreasonably withheld), issue any shares of capital stock
except for capital stock issued to the Borrower or other Subsidiaries, in each
case for so long as each of the following conditions are satisfied: (x) the
issued stock is subject to the Lien of, and matters related to such stock are in
compliance with the provisions of, the Stock Pledge Agreement, with the priority
of Lien specified therein and (y) such capital stock shall be fully paid and
non-assessable.
1.3 Section Merger and Sale of Assets . The Borrower will not
merge or consolidate with any other Person (except a wholly-owned Subsidiary of
the Borrower may merge into the Borrower) and will not permit any Subsidiary to
merge or consolidate with any other Person (other than the Borrower or another
Subsidiary). The Borrower will not, and will not permit any Subsidiary to, sell,
lease or transfer or otherwise dispose of, or part with control of, any assets,
including, without limitation, any shares of stock of any Subsidiary or
Indebtedness owed by any Subsidiary, to any Person or Persons, other than (i)
any franchising and/or licensing arrangement with respect to any such assets,
(ii) dispositions of worn-out and obsolete equipment in the ordinary course of
business, and (iii) any dissolution or liquidation of a Subsidiary in compliance
with Section 8.2 hereof.
1.5 Section Sale and Leaseback Transactions . The Borrower
will not, and will not permit any Subsidiary to, enter into or become or be
liable as lessee or as guarantor with respect to any lease of any property, real
or personal, whether now owned or hereafter acquired by the Borrower or any
Subsidiary, which has been or is to be sold or transferred by the Borrower or
any Subsidiary to any Person other than the Borrower or any Subsidiary and
having a term (including all renewal terms, whether or not exercised) of more
than 36 months from the date of inception of such lease.
1.7 Section Certain Contracts . The Borrower will not, and
will not permit any Subsidiary to, enter into or be a party to:
(a) any contract for the purchase of materials, supplies or
other property or services if such contract (or any related document) requires
that payment for such materials, supplies or other property or services shall be
made regardless of whether or not delivery of such materials, supplies or other
property or services is ever made or tendered, other than contracts which in the
aggregate would not obligate the Borrower and the Subsidiaries to make payments
in excess of $100,000 in any calendar year;
(c) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or
requires that the lessee purchase or otherwise acquire securities or obligations
of the lessor; or
(e) any contract for the sale or use of materials, supplies or
other property, or the rendering of services, if such contract (or any related
document) requires that payment to the Borrower or any Subsidiary for such
materials, supplies or other property, or the use thereof, or payment for such
services, shall be subordinated to any Indebtedness (of the purchaser or user of
such materials, supplies or other property or the Person entitled to the benefit
of such services) owed or to be owed to any Person.
1.9 Section Agreements by Subsidiaries . The Borrower shall
not permit any of the Subsidiaries to enter into any agreement which restricts
the ability of any of the Subsidiaries to pay or declare any dividend
distribution or other distribution on account of or with respect to any shares
of capital stock or other equity interests in any of the Subsidiaries.
1.11 Section Compliance with ERISA . The Borrower will not,
and will not permit any Subsidiary or ERISA Affiliate of the Borrower to:
(a) engage in any transaction in connection with which the
Borrower, any Subsidiary or any other ERISA Affiliate of the Borrower could be
subject to either a civil penalty assessed pursuant to section 502(i) of ERISA
or a tax imposed by section 4975 of the Code, terminate or withdraw from any
Plan (other than a Multiemployer Plan) in a manner, or take any other action
with respect to any such Plan (including, without limitation, a substantial
cessation of operations within the meaning of section 4062(e) of ERISA or an
amendment of a Plan within the meaning of section 4041(e) of ERISA), which could
result in any liability of the Borrower, any Subsidiary or any such ERISA
Affiliate to the PBGC, to a Plan or to a trustee appointed under section 4042(b)
or (c) of ERISA, incur any liability to the PBGC or a Plan on account of a
withdrawal from or a termination of a Plan under section 4063 or 4064 of ERISA,
incur any liability in respect of employees or former employees of the Borrower,
any Subsidiary or any such ERISA Affiliate for post-employment welfare benefits
(other than as required by law), fail to make full payment when due of all
amounts which, under the provisions of any Plan or applicable law, the Borrower,
any Subsidiary or any such ERISA Affiliate is required to pay as contributions
thereto, or permit to exist any accumulated funding deficiency, whether or not
waived, with respect to any Plan (other than a Multiemployer Plan), if, in any
such case, such penalty or tax or such liability, or the failure to make such
payment, or the existence of such deficiency, as the case may be, could
reasonably be expected to result in a liability of the Borrower, any Subsidiary
or any such ERISA Affiliate in excess of $500,000 in the aggregate;
(c) at any time permit the present value of all benefit
liabilities under all Plans subject to Title IV of ERISA maintained at such time
by the Borrower or any of the Subsidiaries or any such ERISA Affiliate (other
than Multiemployer Plans) to exceed the current value of the assets of all such
Plans allocable to such benefit liabilities by more than $500,000;
(e) permit the aggregate complete or partial withdrawal
liability under Title IV of ERISA with respect to Multiemployer Plans incurred
by the Borrower or the Subsidiaries or any such ERISA Affiliate to exceed
$500,000; or
(g) permit the sum of (i) the amount by which the present
value of all benefit liabilities referred to in Section 9.10(b) hereof exceeds
the current value of the assets referred to in such Section 9.10(b) and (ii) the
amount of the aggregate incurred withdrawal liability referred to in Section
9.10(c) hereof to exceed $500,000.
(i) For the purposes of Sections 9.10(c) and 9.10(d) hereof,
the amount of the withdrawal liability of the Borrower and the Subsidiaries and
such ERISA Affiliates at any date shall be the aggregate present value of the
amount claimed to have been incurred less any portion thereof as to which the
Borrower reasonably believes, after appropriate consideration of possible
adjustments arising under sections 4219 and 4221 of ERISA, it and the
Subsidiaries and such ERISA Affiliates will have no liability, provided that the
Borrower shall obtain prompt written advice from independent actuarial
consultants supporting such determination. The Borrower agrees that at the
request of any Lender it will (i) once in each calendar year request and obtain
a current statement of withdrawal liability from each Multiemployer Plan and
(ii) transmit a copy of such statement to each Lender, within 21 days after the
Borrower receives the same. As used in this Section 9.10, the term "accumulated
funding deficiency" has the meaning specified in section 302 of ERISA and
section 412 of the Code, the terms "present value" and "current value" have the
meanings specified in section 3 of ERISA and the term "benefit liabilities" has
the meaning specified in section 4001(a)(16) of ERISA.
1.13 Section Transactions with Affiliates . The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, engage in
any transaction (including, without limitation, the purchase, sale, or exchange
of assets or the rendering of any service) with any (x) Affiliate of the
Borrower or (y) holder of the Notes or any Affiliate of any such holder (other
than a wholly-owned Subsidiary of the Borrower), except for transactions in the
ordinary course of business of the Borrower or any of the Subsidiaries, as the
case may be, and at arms' length and for fair value, and except for transactions
under the License Agreement and transaction costs relating to the transactions
contemplated by the License Purchase Agreement which are paid by the Store
Company on behalf of the Borrower and subject to reimbursement by the Borrower.
The Borrower agrees to provide each holder of the Notes with reasonably detailed
notice of each such Affiliate transaction involving consideration in excess of
$25,000 between the Borrower or any of its Subsidiaries, on the one hand, and
(x) any Affiliate of the Borrower (other than any wholly-owned Subsidiary of the
Borrower) or (y) any holder of the Notes, or any Affiliate of such holder, on
the other hand.
1.15 Section Vendor Payments . The Borrower will not, and will
not permit the Subsidiaries to, make payments to its or their vendors, as the
case may be, other than in accordance with the normal and customary payment
terms for such vendors.
1.17 Section Operating Cash Flow . The Borrower will not
permit Operating Cash Flow (a) for the fiscal quarter ending on the first date
set forth below, for the two consecutive fiscal quarters ending on the second
date set forth below, for the three consecutive fiscal quarters ending on the
third date set forth below, or for the four consecutive fiscal quarters ending
on the fourth, fifth, sixth, seventh or eighth dates set forth below, to be less
than the respective amounts set forth opposite such dates below or (b) for the
four consecutive fiscal quarters ending on March 31, 1999 or on any June 30,
September 30, December 31 or March 31 thereafter to be less than 102% of the
amount of Operating Cash Flow required pursuant to this Section 9.13 with
respect to the period ending on the last day of the immediately preceding fiscal
quarter:
Periods Ending on Amount of
the Following Dates: Operating Cash Flow
March 31, 1997 $ 206,000
June 30, 1997 $ 975,000
September 30, 1997 $ 1,181,000
December 31, 1997 $ 1,950,000
March 31, 1998 $ 2,100,000
June 30, 1998 $ 2,320,000
September 30, 1998 $ 2,340,000
December 31, 1998 $ 2,560,000
. The Borrower will not, and will not permit the Subsidiaries to, make Capital
Expenditures that, in the aggregate, exceed $15,000 for the period from the date
of this Agreement through December 31, 1996 and $50,000 for each fiscal year
ending December 31 thereafter, in each case increased by an amount not to exceed
$200,000 equal to 50% of the amount if any by which Operating Cash Flow for the
most recently ended period specified in Section 9.13 hereof exceeded an amount
equal to the minimum Operating Cash Flow indicated for such period times 125%;
provided, however, that (i) in the event that the Borrower and the Subsidiaries
expend less in connection with Capital Expenditures than the amount set forth
above with respect to any calendar year, the amount of Capital Expenditures
permitted to be made during the next succeeding calendar year shall be increased
by such unexpended amount and (ii) upon the occurrence and during the
continuation of an Event of Default, no Capital Expenditures shall be permitted
except such Capital Expenditures which the Borrower is contractually committed
to make at the time of the occurrence of such Event of Default.
1.1 Section Transfer of Intellectual Property . The Borrower
will not, and will not permit any Subsidiary to, sell, transfer, pledge,
hypothecate, grant a security interest, right, license or franchise in, xxxxx x
Xxxx over, xxxxx an option in respect of, or exchange, intellectual property or
any portion thereof, except pursuant to the Security Agreement and franchising
or licensing arrangements.
1.3 Section Compliance with Environmental Laws . The Borrower
will not, and will not permit any of its Subsidiaries or tenants to: (i) violate
any applicable Environmental Law other than those Environmental Laws the
noncompliance with which could not, individually or in the aggregate, have a
reasonable likelihood of subjecting the Borrower to Environmental Liabilities
and Costs of $250,000 or more; (ii) dispose of any Contaminant into, onto or
from (except in accordance with applicable laws) any real property owned, leased
or operated by the Borrower or any of its Subsidiaries; or (iii) except to the
extent being actively opposed in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP, permit
any Environmental Lien to be imposed or to remain on any real property owned by
the Borrower or any of its Subsidiaries.
1.5 Section Amendments and Modifications to Operative
Documents . The Borrower shall not enter into any amendment, modification or
supplement of, or any waiver or consent under, any Operative Document (other
than this Agreement and the Notes).
1.1 Section Changes in Business . The Borrower shall not, and
shall not permit the Subsidiaries to, (i) enter into any business which is
substantially different from that conducted by the Borrower and the Subsidiaries
or (ii) cease to conduct the business carried on by the Borrower and the
Subsidiaries, in each case as of the date of this Agreement and after giving
effect to the Transactions; provided that this Section shall not prohibit any
transaction otherwise permitted under Section 8.2 or 9.6 hereof.
1.3 Section Amendment of Certificate of Incorporation . The
Borrower will not amend or modify its certificate of incorporation or by-laws
other than to authorize the issuance of any additional classes or shares of
capital stock.
1.5 Section Amendment of License Agreement . The Borrower will
not enter into any amendment, modification or supplement of or to, or any waiver
or consent under, the License Agreement, and will at all times maintain the
License Agreement in full force and effect in accordance with its terms.
1.7 Section Change in Fiscal Year . The Borrower will not
change its fiscal year.
1.9 Section General and Administrative Expenses; Annual Budget
. The Borrower will not spend and will prevent the Subsidiaries from spending in
any calendar year an aggregate amount in excess of 30% of the revenues earned by
the Borrower and the Subsidiaries for such calendar year for all expenses
(including any and all amounts paid under the management services agreements
under the License Agreement), other than taxes, interest expense, depreciation
and amortization of good will, and $300,000 in expenses incurred by the Borrower
in connection with the transactions contemplated by the License Purchase
Agreement. The Borrower will not make and will prevent any Subsidiary from
making any expenditures in excess of the amounts provided for in the annual
budget contemplated by the License Agreement or as set forth in any successor
management services agreement.
1.11 Section Management Services . In the event that notice
shall be given by either party thereto to terminate the management services
agreements under the License Agreement, the Borrower shall, not later than 45
days prior to the effective date of such termination, enter into a new
management services agreement in form and substance reasonably satisfactory to
the Majority Lenders.
1 ARTICLE EVENTS OF DEFAULT
1.1 Section Events of Default . Following the occurrence and
during the continuance thereof, each of the following shall be deemed an "Event
of Default":
(a) the Borrower shall fail to make any payment of principal
of, or interest on or any other amount owing in respect of the Notes or
any of the other Obligations when due and payable or declared due and
payable and, in the case of such interest or other amounts only, such
failure to pay continues for a period of five days;
(a) the Borrower shall fail or neglect to perform, observe or
comply with any of the provisions of Sections 8.5 (to the extent
relating to insurance), 8.6(b) or 8.7, or Article 9 of this Agreement,
Sections 5(g), 5(j) or 5(n) of the Security Agreement, or Section 7(a)
of the Stock Pledge Agreement;
(a) the Borrower shall fail or neglect to perform, observe, or
comply with any of the provisions of this Agreement or of any of the
other Operative Documents (other than those referred to in Sections
10.1(a) and 10.1(b) hereof, and the same shall remain unremedied for a
period ending on the first to occur of thirty days after (x) the
Collateral Agent or any Lender gives written notice to the Borrower of
such failure or (y) any executive officer of the Borrower or any
Subsidiary shall actually become aware thereof;
(a) a default shall occur under any other agreement, document
or instrument to which the Borrower or any Subsidiary is a party or by
which the Borrower, any such Subsidiary or the Borrower's or any such
Subsidiary's property is bound, and such default (i) involves the
failure to make any payment (whether of principal, interest or
otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise and after giving effect to any
applicable grace or cure period) in respect of any Indebtedness for
borrowed money or Guaranteed Indebtedness with respect to borrowed
money of the Borrower or any such Subsidiary greater than $25,000, or
(ii) causes (or permits any holder of such Indebtedness or a trustee to
cause) such Indebtedness (other than Indebtedness under real property
leases) or a portion thereof in an aggregate amount exceeding $25,000,
or Indebtedness under real property leases or a portion thereof in an
aggregate amount exceeding $50,000 to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment;
(a) any representation or warranty in this Agreement or in any
other Operative Document or any statement made pursuant thereto or this
Agreement or delivered to any Lender by the Borrower or any Subsidiary
pursuant thereto or hereto shall be untrue or incorrect in any material
respect, as of the date when made or deemed made;
(a) any of the assets of the Borrower or any Subsidiary, other
than assets which are not material to the business, operations, assets,
financial or other condition of the Borrower and the Subsidiaries taken
as a whole, shall be attached, seized, levied upon or subjected to a
writ or distress warrant, or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors
of any such Person and shall remain unstayed or undismissed for sixty
consecutive days; or the Borrower or any Subsidiary shall have
concealed, removed or permitted to be concealed or removed, any part of
its property, with intent to hinder, delay or defraud its creditors or
any of them or made or suffered a transfer of any of its property or
the incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law;
(a) a case or proceeding shall have been commenced against the
Borrower or any Subsidiary in a court having competent jurisdiction
seeking a decree or order in respect of such Person (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of
such Person or of any substantial part of its or their properties, or
(iii) ordering the winding-up or liquidation or dissolution of the
affairs of such Person and such case or proceeding shall remain
undismissed or unstayed for sixty (60) consecutive days or such court
shall enter a decree or order granting the relief sought in such case
or proceeding;
(a) the Borrower or any Subsidiary shall (i) file a petition
seeking relief under the Bankruptcy Code, or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii) consent
to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of such Person or of any substantial part of its
properties, (iii) fail generally to pay its debts as such debts become
due or admit in writing its inability to pay such debts generally as
they become due, (iv) have made an assignment for the benefit of
creditors or (v) take any corporate or other similar action to
authorize or approve any of the foregoing;
(a) any provision of any Operative Document, shall for any
reason cease to be valid or enforceable in accordance with its terms,
or any security interest created under any Operative Document shall
cease to be a valid and perfected first priority security interest or
Lien (except as otherwise stated therein) in any of the Collateral
purported to be covered thereby and such cessation shall not be
remedied within thirty days after the occurrence thereof, except for
such cessation which would not materially and adversely affect the
Lenders' rights and remedies under the Operative Documents or the
Lenders' security interest or Lien in the Collateral taken as a whole;
or
(a) a judgment in an amount in excess of $50,000 is rendered
against the Borrower or any Subsidiary and, within sixty days after the
entry thereof, such judgment is not discharged or execution thereof
stayed pending appeal, or within sixty days after the expiration of any
such stay, such judgment is not discharged.
1.1 Section Remedies . If any Event of Default specified in
Section 10.1 hereof shall have occurred and be continuing, the Majority Lenders
may declare all Notes to be forthwith due and payable, whereupon all such Notes
shall become and be due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by the Borrower;
provided, however, that, upon the occurrence of an Event of Default specified in
Section 10.1(f), (g) or (h) hereof, such Notes shall automatically become due
and payable, without declaration, notice or demand by any Lender.
1.3 Section Other Remedies . If any Event of Default shall
occur and be continuing, any Lender may proceed to protect and enforce its
rights under this Agreement and any Note by exercising such remedies as are
available to such Lender in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon any Lender is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.
1 ARTICLE MISCELLANEOUS
1.1 Section Performance Due Other Than on a Business Day . If
any performance (including, without limitation, any payment) shall be due
hereunder on a day that is not a Business Day, then such shall, for all purposes
hereunder, be deemed due on the Business Day next following the day otherwise
due.
1.1 Section Successors and Assigns . This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective heirs, legal representatives, successors, and assigns, including,
without limitation, any transferee of any of the Notes under Section 11.10
hereof, provided that the Borrower may not assign any rights or obligations
under this Agreement without the prior written consent of all of the Lenders.
This Agreement shall also inure to the benefit of the Collateral Agent and its
successors in such capacity.
1.3 Section Governing Law . THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK. COURTS WITHIN THE STATE OF NEW YORK SHALL, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, HAVE NON-EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES
ARISING UNDER OR PERTAINING TO THIS AGREEMENT AND THE NOTES; IN ANY AND ALL SUCH
DISPUTES, THE BORROWER, FOR ITSELF AND ON BEHALF OF EACH SUBSIDIARY, HEREBY
IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ALL UNITED STATES
FEDERAL AND NEW YORK STATE COURTS WITHIN THE STATE OF NEW YORK AND TO THE
SERVICE OF PROCESS OF ANY OF THE AFORESAID COURTS BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS
ADDRESS PROVIDED HEREIN; AND VENUE IN ANY SUCH DISPUTE SHALL, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, BE PROPER IN NEW YORK COUNTY OR THE SOUTHERN
DISTRICT OF NEW YORK.
1.5 Section Notices . All notices and other communications
provided for in this Agreement shall be given or made by telecopy, first class
mail, overnight delivery, or personal delivery to the intended recipient at the
address specified herein or, as to any party, at such other address as shall be
designated by such party in a notice to each other party given in accordance
with this Section 11.4. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt and the provision
immediately thereafter of a copy by first class mail, overnight delivery, or
personal delivery or, in the case of a mailed notice, when duly deposited in the
U.S. mails, first class postage prepaid, in each case given or addressed as
follows:
If to the Borrower,
The Xxx. Xxxxxx' Brand, Inc.
c/o Capricorn Investors II, L.P.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000
Fax: (000) 000-0000,
With a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Prudential,
The Prudential Insurance Company of America
c/o Prudential Financial Restructuring Group
Four Gateway Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attn: Managing Director
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Principal,
Investment Securities Department
The Principal Financial Group
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Pruco,
Pruco Life Insurance Company
c/o Prudential Financial Restructuring Group
Four Gateway Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attn: Managing Director
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Contrarian,
Contrarian Capital Advisors, L.L.C. (as agent)
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
1.1 Section Severability . In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
1.1 Section Counterparts . This Agreement may be executed and
delivered in any number of counterparts, and by different parties hereto on
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute one and the same original instrument.
1.3 Section Further Assurances . Each party to this Agreement
agrees to execute, acknowledge, deliver, file, and record such further
certificates, instruments and documents, and to do all other acts and things as
may reasonably be necessary or advisable to carry out the intents and purposes
of this Agreement.
1.5 Section Entire Agreement . THIS AGREEMENT, THE OTHER
OPERATIVE DOCUMENTS, THE LICENSE PURCHASE AGREEMENT AND RELATED AGREEMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL OTHER PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
1.7 Section Consent to Amendments . This Agreement or any of
the Notes may be amended or modified, and waivers or consents with respect to
any action prohibited herein or in any Note, or omissions to perform any act
required herein or in any Note may be granted only pursuant to a written
agreement or instrument among the Borrower and the Majority Lenders, except that
no amendment to, modification of or waiver with respect to this Agreement or any
of the Notes shall change the maturity of any Note of a particular class or
series, or change the principal of, or the rate or time of payment of interest
payable with respect to any Note of a particular class or series, or affect the
time, amount or allocation of any required prepayments of the Notes of a
particular class or series, or reduce the proportion of the principal amount of
the Notes of a particular class or series required with respect to any consent,
without the written consent of the holder or holders of all Notes of such class
or series at the time outstanding and the written consent of the Lenders holding
a majority in outstanding principal amount of all other classes or series of
Notes. Each holder of any Note at the time or thereafter outstanding shall be
bound by any amendment, modification, waiver or consent authorized by this
Section 11.9, whether or not such Note shall have been marked to indicate such
amendment, modification, waiver or consent, but any Notes issued thereafter may
bear a notation referring to any such amendment, modification, waiver or
consent. No course of dealing between the Borrower and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any holder of such Note. As used herein, in the
Notes and in the other Operative Documents, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to time be
amended, restated, supplemented or otherwise modified.
1.9 Section Form, Registration, Transfer and Exchange of
Notes; Lost Notes . The Notes are issuable and transferable as registered notes
without coupons in denominations of at least $100,000, except as may be
necessary to reflect any principal amount not evenly divisible by $100,000, and
may be transferred only to accredited investors (within the meaning of
Regulation D under the Securities Act) or pursuant to any other exemption from
the registration requirements of the Securities Act on such terms and conditions
as may be determined by any holder in its sole and absolute discretion; provided
that such transfer shall not be effective unless and until the transferee has
entered into and delivered to the Borrower a confidentiality agreement
substantially in the form of Exhibit E hereto whereby the transferee agrees to
be bound as a Lender under this Section 11.10 and Section 11.12 hereof. The
Borrower shall keep at its principal office a register in which the Borrower
shall provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Borrower in accordance with the provisions hereof, the Borrower shall, at
its expense, execute and deliver one or more new Notes of like tenor and of a
like aggregate principal amount, registered in the name of such transferee or
transferees. At the option of the holder of any Note, such Note may be exchanged
for other Notes of like tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be exchanged at the
principal office of the Borrower. Whenever any Notes are so surrendered for
exchange, the Borrower shall, at its expense, execute and deliver the Notes
which the holder making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed, by the holder
of such Note or such holder's attorney duly authorized in writing. Any Note or
Notes issued in exchange for any Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of written notice from
the holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Borrower will make
and deliver a new Note, or like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.
1.11 Section Persons Deemed Owners; Participation . Prior to
due presentment for registration of transfer, the Borrower may treat the Person
in whose name any Note is registered as the owner and holder of such Note for
the purpose of receiving payment of principal of and interest on such Note and
for all other purposes whatsoever, whether or not such Note shall be overdue,
and the Borrower shall not be affected by notice to the contrary. Subject to the
preceding sentence, the holder of any Note may from time to time grant a
participation in all or any part of such Note to any Person on such terms and
conditions as may be determined by such holder in its sole and absolute
discretion.
1.13 Section Confidentiality . Each Lender agrees to use its
best efforts to hold in confidence and not disclose any information (other than
information (i) which was publicly known or otherwise known to such Lender at
the time of disclosure (except pursuant to disclosure in connection with this
Agreement or the Operative Documents), (ii) which subsequently becomes publicly
known through no act or omission by such Lender or (iii) which otherwise becomes
known to such Lender, other than through disclosure by the Borrower or any
Subsidiary) delivered or made available by or on behalf of the Borrower or any
Subsidiary to such Lender in connection with or pursuant to this Agreement which
is proprietary in nature and clearly marked, labeled or otherwise designated as
being confidential information; provided, that nothing herein shall prevent the
holder of any Note from delivering copies of any financial statements and other
documents delivered to such holder, and disclosing any other information
disclosed to such holder, by or on behalf of the Borrower or any Subsidiary in
connection with or pursuant to this Agreement to (i) such holder's directors,
officers, employees, agents and professional consultants, (ii) any other holder
of any Note, (iii) any Person to which such holder offers to sell such Note or
any part thereof, (iv) any Person to which such holder sells or offers to sell a
participation in all or any part of such Note, (v) any federal or state
regulatory authority having jurisdiction over such holder, (vi) the National
Association of Insurance Commissioners or any similar organization or (vii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (A) in compliance with any law, rule, regulation or order applicable
to such holder, (B) in response to any subpoena or other legal process, (C) in
connection with any litigation to which such holder is a party, provided that
such Lender uses its best efforts to notify the Borrower that such information
has been requested from it, or (D) in order to implement or facilitate the
exercise of remedies by such holder in its capacity as such or to protect such
holder's rights or interests as a holder of such Note; provided, however, in the
case of clauses (iii) and (iv) above, that such Person shall have executed and
delivered to the Borrower a confidentiality agreement containing terms
substantially similar to those set forth in this Section 11.12.
1.15 Section Satisfaction Requirement . If any agreement,
certificate or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory or acceptable to any Lender
or the Majority Lenders, the determination of such satisfaction or acceptability
shall be made in the sole and exclusive judgment (exercised in good faith) of
the Person or Persons making such determination.
1.17 Section Solicitation of Noteholders . The Borrower will
not solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of the Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Borrower and shall be afforded the opportunity of
considering the same and shall be supplied by the Borrower with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver sent or effected pursuant to
the provisions of this Section 11.14 shall be delivered by the Borrower to each
holder of outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes. The Borrower will not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes for any
consent by such holder in its capacity as a holder of Notes to any waiver or
amendment of any of the terms and provisions of this Agreement unless such
remuneration is currently paid, on the same terms, ratably to the holders of all
of the Notes of such class then outstanding.
1.19 Section Indemnification . The Borrower shall indemnify
and hold harmless each Lender from and against any and all suits, actions,
proceedings, claims, (including, without limitation, reasonable attorneys' fees
and disbursements, including those incurred upon any appeal) (collectively,
"Claims") which may be instituted or asserted against any Lender in its capacity
as Lender by, or incurred by any Lender in its capacity as Lender as a result of
any Claim by, any third party that is not a Lender or a party to any of the
Operative Documents (other than the Borrower in connection with this Agreement
or any Operative Document; provided, however, that the Borrower shall not be
liable to indemnify any Lender in respect of any Claim arising out of or in
connection with the issuance of the Notes hereunder or in connection with the
transactions contemplated by the License Purchase Agreement, including without
limitation any indemnification and setoff claims and related disputes which may
arise thereunder; provided further, however, that the Borrower shall not be
liable for such indemnification to such Lender to the extent that any such
Claim, damage, loss, liability or expense results from such Lender's gross
negligence or willful misconduct. The obligations of the Borrower under this
Section 11.15 shall survive the repayment of the Notes or the transfer of any
Note or portion thereof or interest therein with respect to such obligations in
connection with the period prior to such transfer.
1.21 Section Fees and Expenses . The Buyer shall, promptly
after receipt of an invoice with respect thereto, pay all out-of-pocket expenses
of the Lenders in connection with the perfection of security interests
contemplated by the Security Documents and the administration of this Agreement
and the Notes. If, at any time or times, any Lender shall employ counsel or
other advisors for advice or other representation or shall incur reasonable
legal or other costs and expenses in connection with:
1.22 (i) any amendment, modification or waiver, or consent with
respect to, any of the
Operative Documents;
(ii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Lender, the Borrower or any other
Person) in any way relating to the Collateral, any of the Operative
Documents or any other agreements to be executed or delivered in
connection herewith (excluding the License Purchase Agreement) unless
the Borrower prevails in any of the foregoing, to the extent incurred
following the occurrence and during the continuance of an Event of
Default;
(iii) any attempt to enforce any rights of any Lender against
the Borrower, unless the Borrower prevails in connection therewith, to
the extent incurred following the occurrence and during the continuance
of an Event of Default; or
(iv) any attempt to verify, protect, collect, sell, liquidate
or otherwise dispose of the Collateral, to the extent incurred
following the occurrence and during the continuance of an Event of
Default;
then, and in any such event, the attorneys', and other parties' fees arising
from such services, including those of any appellate proceedings, and all
expenses, costs, charges and other fees incurred by such counsel and others in
any way or respect arising in connection with or relating to any of the events
or actions described in this Section 11.16 shall be payable, on demand, by the
Borrower to such Lender and, in the case of any amounts payable hereunder to any
Lender, shall be additional obligations secured under this Agreement and the
other Operative Documents. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: paralegal fees, costs and
expenses; accountants and investment bankers fees, costs and expenses; court
costs and expenses; photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal
services. The obligations of the Borrower under this Section 11.16 shall survive
the repayment of the Notes or the transfer of any Note or portion thereof or
interest therein. Notwithstanding the foregoing, the Borrower shall have no
obligation to pay the fees and expenses of any Lender in connection with the
preparation of, or matters or disputes arising under, the License Purchase
Agreement, including without limitation the preparation of this Agreement and
the issuance of Notes hereunder and any indemnification and setoff claims and
related disputes which may arise thereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
THE XXX. XXXXXX' BRAND, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
Name:Xxxxxxx X. Xxxxxxx
Title:President
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:/s/Xxxxxxx X. Xxxxxx
Name:Xxxxxxx X. Xxxxxx
Its:Vice President
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By:/s/ Xxxxxxx X. Xxxxxxxxx
Name:Xxxxxxx X. Xxxxxxxxx
Its:Counsel
PRUCO LIFE INSURANCE COMPANY
By:/s/ Xxxxxx X. Xxxxx
Name:Xxxxxx X. Xxxxx
Its:Asst. Vice President
CONTRARIAN CAPITAL ADVISORS,
L.L.C., AS AGENT FOR THE
ENTITIES LISTED BELOW:
XXXXXXXXXXX & CO., INC.
XXXXXXXXXXX HORIZON PARTNERS,
X.X.
XXXXXXXXXXX INSTITUTIONAL
HORIZON PARTNERS, X.X.
XXXXXXXXXXX INSTITUTIONAL
HORIZON FUND II, L.P.
THE & TRUST
By:/s/ Xxxxxx X. Xxxxxxx
Name:Xxxxxx X. Xxxxxxx
Its:Partner
SCHEDULE 8.11
ACCOUNTING PRACTICES
(1) Vendor rebates and advances:
(3) Will be deferred and amortized to income over the life of the
contract or the period of benefit.
(5) Current Status: Both MFI and OCC follow this policy.
(8) Vendor equipment placed at the company:
(10) If the equipment continues to be the property of the vendor, no
entries in the accounting records will be made. If the equipment is to be owned
by the company, an asset and corresponding liability will be established for the
property at the inception of the arrangement.
(11) Current Status: MFI currently follows the above policy; OCC does not
have any vendor-supplied equipment.
(1) Escalating lease payments:
(3) Escalations in rents will be charged to expense as they occur for
existing leases; for new leases and lease renewals, rent escalations will be
recorded to expense ratably over the life of the lease.
(4) Current Status: OCC follows the above policy; MFI records all rent
escalations as expense as they --------------- occur.
(1) Construction department costs:
(3) These costs will be expensed as incurred.
(4) Current Status: MFI follows the above policy; OCC capitalizes
construction department costs as project costs.
(1) Pre-opening costs:
(3) These costs will be expensed as incurred.
(4) Current Status: Both MFI and OCC follow this policy.
(1) Equipment and leaseholds upon expiration of lease:
(2) If the lease is not renewed, any remaining asset balance will be
charged to expense. If the lease is renewed, any equipment balance will be
depreciated over its remaining useful life.
Current Status: Both MFI and OCC follow this policy.
(1) Depreciable lives:
(3) Property and equipment will be depreciated using the straight-line
method as follows:
(5) ! Equipment and fixtures 3-7 years
(6) ! Leasehold improvements 7 years
(8) Note: It is assumed that the average lease life for store leases is
at least seven years considering historical lease experience.
(9) Current Status: MFI follows the above
policy; OCC depreciates equipment over 3-10
years and leasehold improvements over 5-10
years or the life of the lease whichever is
less.
(1) Franchise fees and royalties:
(3) Franchise fees and royalties will be recorded on an accrual basis
with appropriate allowance established to cover estimated uncollected amounts.
(4) Current Status: MFI follows the above policy; OCC does not have
franchise fees or royalties.
(1) Cost below the EBITDA line:
(3) In connection with the merger of the companies, reserves have been
established for integration of the two companies as well as for closure of
stores. Costs of integration (relocation, professional fees, retention
arrangements, travel, etc.) and costs of closing any stores (lease buyouts,
equipment dispositions, fixed asset writeoffs, etc.) will be charged against the
reserve account as the costs are incurred. Closed and franchised store
operations will continue to be reflected in continuing operations above the
EBITDA line but segregated from core store operations.
(4) Current Status: N/A
(1) Franchisee bad debts:
(3) Franchisee bad debts will be charged against the franchising
reserve as accounts are deemed uncollectible.
(4) Current Status: MFI follows the above policy; OCC does not have any
franchisees.
(1) Payment of guarantees:
(3) In the event a franchisee store with a corporate guarantee is taken
back by the Company, the store will either be resold to another franchisee,
operated by the Company or closed. If the store is closed, the guarantee
obligation will be charged off to the appropriate reserve account; if the store
is resold, any gain or loss on resale (taking into account the guarantee) will
be reflected in the appropriate gain or loss account at the time the store is
sold. If the Company elects to operate the store, the store asset and the
related guarantee will be recorded at the guarantee amount. The asset will be
depreciated pursuant to the policy in (7) above. The guarantee liability will be
reduced as payments are made to the party holding the guarantee.
(4) Current Status: MFI follows the above policy; OCC does not have any
franchisee guarantees.
(1) Capital expenditures:
(3) Capital expenditures will be recorded on a gross basis; not net of
asset sales or salvage value.
(4) Current Status: Both companies follow this policy.
0078853.10-01S7a
SCHEDULE 9.4(vii)
PERMITTED FINANCIAL INSTITUTIONS
XXXXX XXXXXX
XXXXXX XXXXXXX
BANK-ONE UTAH
FIRST SECURITY BANK
COMMONWEALTH BANK OF AUSTRALIA
HONG KONG AND SHANGHAI BANKING CORP.
LASALLE NATIONAL BANK
XXXXXXX XXXXX
BANK OF NOVA SCOTIA (SCOTIA BANK)
US BANK
BANK OF AMERICA
