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CREDIT AGREEMENT
DATED AS OF SEPTEMBER 23, 1999
BY AND AMONG
SBARRO, INC.
AND
EUROPEAN AMERICAN BANK
AS AGENT
AND
THE LENDERS PARTY HERETO
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS.....................................1
SECTION 1.01. Definitions.......................................1
SECTION 1.02. Terms Generally..................................25
ARTICLE II
LOANS...............................................................26
SECTION 2.01. Revolving Credit Loans...........................26
SECTION 2.02. Revolving Credit Note............................27
SECTION 2.03. Letters of Credit................................27
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS...................................................30
SECTION 3.01. Interest Rates; Continuation and Conversion
of Loans.......................................30
SECTION 3.02. Use of Proceeds..................................32
SECTION 3.03. Mandatory and Optional Prepayments...............32
SECTION 3.04. Fees.............................................33
SECTION 3.05. Inability to Determine Interest Rate. ..........34
SECTION 3.06. Illegality. ....................................34
SECTION 3.07. Increased Costs..................................34
SECTION 3.08. Indemnity. ......................................35
SECTION 3.09. Taxes............................................36
SECTION 3.10. Pro Rata Treatment and Payments..................37
SECTION 3.11. Funding and Disbursement of Loans................38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES......................................38
SECTION 4.01. Organization, Powers. ..........................38
SECTION 4.02. Authorization of Borrowing, Enforceable
Obligations....................................39
SECTION 4.03. Financial Condition..............................39
SECTION 4.04. Taxes............................................40
SECTION 4.05. Title to Properties..............................40
SECTION 4.06. Litigation.......................................40
SECTION 4.07. Restrictions.....................................40
SECTION 4.08. Compliance with ERISA............................41
SECTION 4.09. Federal Reserve Regulations; Use of Proceeds.....41
SECTION 4.10. Approvals........................................41
SECTION 4.11. Subsidiaries.....................................42
SECTION 4.12. Hazardous Materials..............................42
SECTION 4.13. Investment Company Act...........................42
SECTION 4.14. No Default.......................................42
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SECTION 4.15. Material Contracts...............................42
SECTION 4.16. Permits and Licenses.............................42
SECTION 4.17. Compliance with Law..............................43
SECTION 4.18. Y2K..............................................43
SECTION 4.19. Fiscal Year End..................................43
SECTION 4.20. Certain Agreements...............................43
SECTION 4.21. Representations and Warranties Contained in
Certain Agreements...............................43
SECTION 4.22. Disclosure.......................................44
ARTICLE V
CONDITIONS OF LENDING...............................................44
SECTION 5.01. Conditions to Initial Extension of Credit........44
SECTION 5.02. Conditions to All Extensions of Credit...........47
ARTICLE VI
AFFIRMATIVE COVENANTS...............................................48
SECTION 6.01. Existence, Properties, Insurance.................48
SECTION 6.02. Payment of Taxes.................................48
SECTION 6.03. Financial Statements, Reports, etc...............48
SECTION 6.04. Books and Records; Access to Premises............51
SECTION 6.05. Notice of Adverse Change.........................51
SECTION 6.06. Notice of Default................................51
SECTION 6.07. Notice of Litigation.............................51
SECTION 6.08. Notice of Default in Other Agreements............51
SECTION 6.09. Notice of ERISA Event............................51
SECTION 6.10. Notice of Environmental Law Violations...........52
SECTION 6.11. Notice Regarding Material Contracts..............52
SECTION 6.12. Compliance with Applicable Laws..................52
SECTION 6.13. Subsidiaries.....................................52
SECTION 6.14. Environmental Laws...............................53
SECTION 6.15. Imposition of Restrictive Covenants..............53
ARTICLE VII
NEGATIVE COVENANTS..................................................54
SECTION 7.01. Liens............................................54
SECTION 7.02. Indebtedness.....................................54
SECTION 7.03. Guaranties.......................................54
SECTION 7.04. Asset Sales......................................54
SECTION 7.05. Sales of Receivables. ..........................55
SECTION 7.06. Investments......................................55
SECTION 7.07. Nature of Business...............................55
SECTION 7.08. Sale and Leaseback...............................55
SECTION 7.09. Federal Reserve Regulations......................55
SECTION 7.10. Accounting Policies and Procedures...............55
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SECTION 7.11. Hazardous Materials..............................56
SECTION 7.12. Limitations on Fundamental Changes...............56
SECTION 7.13. Financial Covenants..............................56
SECTION 7.14. Senior Notes.....................................57
SECTION 7.15. Restricted Payments..............................57
SECTION 7.16. Transactions with Affiliates.....................60
SECTION 7.17. Amendments to Certain Agreements.................61
SECTION 7.18. Issuance of Preferred Stock......................61
SECTION 7.19. S Corporation Matters............................61
SECTION 7.20. Limitation on Issuances and Sales of Capital
Stock..........................................62
ARTICLE VIII
EVENTS OF DEFAULT...................................................63
SECTION 8.01. Events of Default................................63
ARTICLE IX
THE AGENT...........................................................66
SECTION 9.01. Appointment, Powers and Immunities...............66
SECTION 9.02. Reliance by Agent................................66
SECTION 9.03. Events of Default................................66
SECTION 9.04. Rights as a Lender...............................67
SECTION 9.05. Indemnification..................................67
SECTION 9.06. Non-Reliance on Agent and Other Lenders..........67
SECTION 9.07. Failure to Act...................................68
SECTION 9.08. Resignation of the Agent.........................68
SECTION 9.09. Sharing of Collateral and Payments...............68
ARTICLE X
MISCELLANEOUS.......................................................69
SECTION 10.01. Notices..........................................69
SECTION 10.02. Effectiveness; Survival..........................70
SECTION 10.03. Expenses.........................................70
SECTION 10.04. Amendments and Waivers...........................71
SECTION 10.05. Successors and Assigns; Participations...........72
SECTION 10.06. No Waiver; Cumulative Remedies...................75
SECTION 10.07. APPLICABLE LAW...................................75
SECTION 10.08. SUBMISSION TO JURISDICTION.......................75
SECTION 10.09. Confidentiality..................................76
SECTION 10.10. Severability.....................................76
SECTION 10.11. Right of Setoff..................................77
SECTION 10.12. Headings.........................................77
SECTION 10.13. Construction.....................................77
SECTION 10.14. Counterparts.....................................77
iii
SCHEDULES
Schedule I - Subsidiaries
Schedule II - Existing Liens
Schedule III - Existing Indebtedness
Schedule IV - [Reserved]
Schedule V - Material Contracts
Schedule VI - Existing Letters of Credit
Schedule VII - Committed Restricted Investments
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Corporate Guaranty
Exhibit C - Form of Assignment and Acceptance Agreement
Exhibit D - Form of Opinion of Counsel
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CREDIT AGREEMENT dated as of September 23, 1999, by and among SBARRO, INC.,
a New York corporation (the "Company"), the LENDERS which from time to time are
parties to this Agreement (individually, a "Lender" and, collectively, the
"Lenders"), and EUROPEAN AMERICAN BANK, a New York banking corporation, as
Agent.
RECITALS
The Company has requested the Lenders to extend credit from time to
time and the Lenders are willing to extend such credit to the Company, subject
to the terms and conditions hereinafter set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINITIONS. As used herein, the following words and
terms shall have the following meanings:
"Adjusted Consolidated Net Income" shall mean, with respect to any
Person for any period, the sum of (i) the Consolidated Net Income of such Person
for such period plus (ii) the aggregate amount of intangible amortization
charges resulting from the Merger to the extent that such intangible
amortization charges were deducted in computing such Consolidated Net Income.
"Adjusted Libor Loans" shall mean Loans at such time as they are made
and/or being maintained at a rate of interest based upon Reserve Adjusted Libor.
"Affiliate" shall mean with respect to a specified Person, another
Person which, directly or indirectly, controls or is controlled by or is under
common control with such specified Person. For the purpose of this definition,
"control" of a Person shall mean the power, direct or indirect, to direct or
cause the direction of the management or policies of such Person whether through
the ownership of voting securities, by contract or otherwise; provided that, in
any event, any Person who owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership (other than as
a limited partner of such other Person) or other ownership interest of any
Person, other than a corporation, will be deemed to control such corporation or
other Person.
"Agent" shall mean European American Bank in its capacity as
administrative agent for the Lenders under this Agreement or its successor Agent
permitted pursuant to Section 9.08.
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"Aggregate Letters of Credit Outstandings" shall mean, at a particular
time, the sum of (a) the aggregate maximum stated amount at such time which is
available or available in the future to be drawn under all outstanding Letters
of Credit, (b) the aggregate amount of all payments made by the Issuing Lender
on behalf of the Lenders under any Letter of Credit that have not been
reimbursed by the Company at such time and (c) the aggregate maximum exposure of
the Company under any guarantees of the Company of reimbursement obligations
under letters of credit then outstanding that were issued by any Lender for the
account of any Affiliate of the Company.
"Aggregate Outstandings" shall mean, at a particular time, the sum of
(a) the Aggregate Letters of Credit Outstandings at such time and (b) the
aggregate outstanding principal amount of all Revolving Credit Loans at such
time.
"Agreement" shall mean this Credit Agreement dated as of September 23,
1999, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Applicable Margin" shall mean (a) with respect to an Adjusted Libor
Loan, the percentage set forth below under the heading "Libor Margin" opposite
the applicable ratio and (b) with respect to a Prime Rate Loan, the percentage
set forth below under the heading "Prime Margin" opposite the applicable ratio:
Consolidated Senior Debt Libor Margin Prime Margin
to Consolidated EBITDA (360 day basis) (360 day basis)
----------------------- --------------- ---------------
Equal to or less than 1.50% 0%
3.00:1.00
Greater than 3.00:1.00 but 1.75% 0%
equal to or less than
3.25:1.00
Greater than 3.25:1.00 but 2.00% .25%
equal to or less than
3.50:1.00
Greater than 3.50:1.00 but 2.25% .50%
equal to or less than
3.75:1.00
Greater than 3.75:1.00 2.50% .75%
Notwithstanding the foregoing, during the period commencing on and including the
Closing Date and ending on the day immediately preceding the date the Applicable
Margin is reset in
2
accordance with the next sentence, the Libor Margin shall be 2.25% and the Prime
Margin shall be .50%. The Applicable Margin will be reset with respect to each
Loan on each date which is five Business Days following the date of receipt by
the Agent of the financial statements referred to in Section 6.03(a) and Section
6.03(b) together with a certificate of the Chief Financial Officer of the
Company certifying the ratio of Consolidated Senior Debt to Consolidated EBITDA
and setting forth the calculation thereof in detail for the then most recently
completed fiscal quarter of the Company. If any such financial statement and
certificate are not received by the Agent within the time period required
pursuant to Section 6.03(a) or Section 6.03(b), as the case may be, the
Applicable Margin will be reset, based on a ratio of Consolidated Senior Debt to
Consolidated EBITDA of greater than 3.75:1.00 from the date such financial
statement and certificate were due until the date which is five Business Days
following the receipt by the Agent of such financial statements and certificate,
provided, however, that the Lenders shall not in any way be deemed to have
waived any Default or Event of Default, including without limitation, an Event
of Default resulting from the failure of the Company to comply with Section 7.13
of this Agreement, or any rights or remedies hereunder or under any other Loan
Document in connection with the failure of the Agent to receive such financial
statements and certificate. During the occurrence and continuance of a Default
or an Event of Default, no downward adjustment, and only upward adjustments,
shall be made to the Libor Margin and Prime Margin; provided, however, any
downward adjustment shall become effective on the date, if any, on which such
Default or Event of Default shall cease to be continuing.
"Asset Sale" shall mean (i) the sale, lease (as lessor), conveyance or
other disposition (collectively, "dispositions") of any assets or rights
(including, without limitation, by way of a sale and leaseback), other than
dispositions of inventory in the ordinary course of business consistent with
past practices and the disposition in the ordinary course of obsolete or worn
out equipment or other equipment no longer necessary or no longer usable for its
business, and (ii) the issuance of Equity Interests by any Corporate Guarantor
or the disposition by the Company or a Corporate Guarantor of Equity Interests
in any of the Corporate Guarantors (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Corporate Guarantor); provided, however, that the term Asset Sale shall not
include any disposition of any assets or rights or any issuance or disposition
of Equity Interests if such transaction would have been an Asset Sale in the
absence of this proviso to the extent that the gross proceeds thereof do not
exceed, in aggregate amount together with all other such dispositions or
issuances, $3.0 million in any fiscal year of the Company and $5.0 million
during the term of this Agreement (the "Excluded Proceeds"); provided, however,
that the Excluded Proceeds are applied within 360 days of such sale by the
Company or the Corporate Guarantor, as applicable, to the acquisition of a
controlling interest in another business, the making of a Capital Expenditure or
the other acquisition of assets (other than assets that would be classified as
current assets in accordance with Generally Accepted Accounting Principles), in
each case, subject to Section 7.07 ("Excluded Proceeds Permitted Use").
Notwithstanding the foregoing, the following will be deemed not to be Asset
Sales: (i) a transfer of assets or rights or Equity Interests by the Company to
a Corporate Guarantor which is a wholly-owned Subsidiary or by a Corporate
Guarantor which is a wholly-owned Subsidiary to the Company or to another
Corporate
3
Guarantor which is a wholly-owned Subsidiary; (ii) an issuance of Equity
Interests by a Corporate Guarantor which is a wholly-owned Subsidiary of the
Company to the Company or to another Corporate Guarantor which is a wholly-owned
Subsidiary of the Company; (iii) a Permitted Investment or Restricted Payment
that is permitted pursuant to Section 7.15, and (iv) a disposition of Eligible
Investments solely for cash or other Eligible Investments.
"Assignment and Acceptance Agreement" shall mean an Assignment and
Acceptance entered into by a Lender and an assignee and accepted by the Agent,
in the form attached hereto as Exhibit C or any other form approved by the
Agent.
"Board of Directors" shall mean, with respect to any Person, the board
of directors of such Person, or any duly authorized committee of such board of
directors.
"Borrowing Date" shall mean, with respect to any Loan, the date on
which such Loan is disbursed to the Company.
"Business Day" shall mean (a) any day not a Saturday, Sunday or legal
holiday, on which banks in New York City are open for business and (b) as it
relates to any payment, determination, funding or notice to be made or given in
connection with any Adjusted Libor Loan, any day specified in clause (a) on
which trading is carried on by and between banks in Dollar deposits in the
London interbank eurodollar market.
"Capital Expenditures" shall mean additions to property and equipment
of the Company which, in conformity with Generally Accepted Accounting
Principles, are included as "additions to property, plant or equipment" or
similar items which would be reflected in the statement of cash flow of the
Company, including, without limitation, property and equipment which are the
subject of Capital Leases.
"Capital Lease" shall mean any lease the obligations of which are
required to be capitalized on the balance sheet of a Person in accordance with
Generally Accepted Accounting Principles.
"Capital Stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, limited
liability company or limited liability partnership, partnership or membership
interests (whether general or limited) and (iv) any other ownership interest not
described in the preceding clauses (i) through (iii) if such interest confers on
the owner thereof the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral" shall mean a deposit by the Company made in
immediately available funds to a cash collateral account at the Agent and the
taking of all action required to provide the Agent, for the ratable benefit of
the Lenders, a first priority perfected security interest in such deposit.
4
"Change of Control" shall mean the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition, in one or a
series of related transactions, directly or indirectly, of all or substantially
all of the assets of the Company or the Company and the Corporate Guarantors
taken as a whole to any Person or "group" (as such term is used in Section
13(d)(3) of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), other than to one or more Permitted Holders, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person or group, other than one
or more Permitted Holders, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of the
Company (measured by voting power rather than number of shares) or (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"Chief Financial Officer" shall mean the Chief Financial Officer of
the Company.
"Closing Date" shall mean the date of the initial extension of credit
under this Agreement but in no event later than September 30, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment Proportion" shall mean with respect to each Lender at the
time of determination, the proportion its Revolving Credit Commitment bears to
the Total Revolving Credit Commitment.
"Committed Restricted Investments" shall mean up to $13.9 million of
Investments that were, as of August 30, 1999, committed to be made by the
Company and the Corporate Guarantors as set forth on Schedule VII hereto.
"Company" shall have the meaning set forth in the preamble hereto.
"Consolidated EBITDA" shall mean for any period, Consolidated Net
Income (or consolidated net loss), plus the sum, without duplication, of (a)
Consolidated Interest Expense, (b) depreciation and amortization expenses or
charges, (c) all income and franchise taxes to any government or governmental
instrumentality expensed on the Company's books (whether paid or accrued), (d)
non-cash charges and non-recurring charges, if any, relating to the final
settlement of the litigation described in the first paragraph under "Business -
Legal Proceedings" of the Preliminary Offering Memorandum of the Company dated
September 2, 1999 with respect to the Senior Notes if and to the extent deducted
as an expense in calculating Consolidated Net Income provided the aggregate
amount of such charges added back shall not exceed $1,600,000, and (e) the Tax
Distributions, if any, made by the Company if and to the extent deducted as an
expense
5
in calculating Consolidated Net Income, in each case, determined in accordance
with Generally Accepted Accounting Principles applied on a consistent basis. All
of the foregoing categories shall be calculated with respect to the Company and
the Corporate Guarantors on a consolidated basis and shall be calculated
(without duplication) as of the end of each applicable fiscal quarter for the
four fiscal quarter periods then ended.
"Consolidated Interest Expense" shall mean for any period the sum,
without duplication, of (i) the consolidated interest expense of the Company and
the Corporate Guarantors for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Leases, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), (ii) the consolidated interest
expense of the Company and the Corporate Guarantors that was capitalized during
such period, and (iii) the product of (x) any preferred stock dividends declared
or paid or payable in cash, and (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of the Person issuing or paying such
dividend, expressed as a decimal, determined, in each case, on a consolidated
basis and in accordance with Generally Accepted Accounting Principles.
Consolidated Interest Expense shall be calculated with respect to the Company
and the Corporate Guarantors on a consolidated basis and shall be calculated
without duplication as of the end of each applicable fiscal quarter for the four
fiscal quarters then ended; provided, however, that for the first three fiscal
quarters following the Closing Date, Consolidated Interest Expense shall be
determined on a pro forma basis as if interest bearing indebtedness had been
incurred at the beginning of such four-quarter period.
"Consolidated Net Income" shall mean, with respect to the Company for
any period, the aggregate of the Net Income of the Company and the Corporate
Guarantors for such period, on a consolidated basis, determined in accordance
with Generally Accepted Accounting Principles less the amount of all Tax
Distributions, if any, made by the Company from the beginning of such period
through the date that is 30 days after the end of such period; provided that (i)
the Net Income of any Person that is neither the Company nor a Corporate
Guarantor or that is accounted for by the equity method of accounting shall be
excluded, except that the Net Income of such Person shall be included to the
extent of the amount of dividends or distributions paid in cash by such Person
during such period to the Company or a Corporate Guarantor which is a
wholly-owned Subsidiary of the Company (other than any such dividends or
distributions (x) which the Company elects not to include in the computation of
Consolidated Net Income at the time of the computation thereof or (y) which
consist of payments to the Company referred to in subclause 3 of clause (c) of
the first paragraph under Section 7.15), (ii) the net income (but not loss) of
any Corporate Guarantor shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Corporate Guarantor of
that net income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
6
judgment, decree, order, statute, rule or governmental regulation applicable to
that Corporate Guarantor or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded to the extent it would cause
Consolidated Net Income to exceed Consolidated Net Income calculated without
giving effect to such change, and (v) any non-cash write-off or charge
(excluding any such non-cash write-off or charge to the extent it represents an
accrual of or reserve of cash expenses in any future period) in respect of the
disposition or write-down of fixed assets other than in the ordinary course of
business shall be excluded.
"Consolidated Senior Debt" shall mean Indebtedness of the Company or
any Corporate Guarantor that is not subordinated in right of payment to any
other Indebtedness of the Company or such Corporate Guarantor, including,
without limitation, Indebtedness under the Senior Notes and the Revolving Credit
Loans. For purposes of calculating Consolidated Senior Debt pursuant to the
definition of "Applicable Margin" and "Unused Fee Rate", Consolidated Senior
Debt shall include the aggregate principal amount of Senior Note Payments, if
any, made pursuant to Section 7.14 during the period commencing on the Closing
Date and ending on (and including) the date of determination thereof.
"Continuing Director" shall mean, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated or elected to the
Board of Directors of the Company with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Guarantors" shall mean, collectively, each Person
identified on Schedule I which is not designated as an Unrestricted Subsidiary
and each Person who, from time to time, executes a Corporate Guaranty in
accordance with Section 6.13.
"Corporate Guaranty" shall mean the Corporate Guaranty in the form
attached hereto as Exhibit B to be executed and delivered by each Corporate
Guarantor as the same may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Default" shall mean any condition or event which upon notice, lapse
of time or both would constitute an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the Revolving Credit Commitment Termination Date.
"Dollar" and the symbol "$" shall mean lawful money of the United
States of America.
7
"Eligible Investments" shall mean (a) direct obligations of the United
States of America or any governmental agency thereof which are fully guaranteed
by the United States of America, provided that such obligations mature within
six months from the date of acquisition thereof; or (b) dollar denominated
certificates of time deposit maturing within one year issued by any bank
organized and existing under the laws of the United States or any state thereof
and having aggregate capital and surplus in excess of $500,000,000; or (c) money
market mutual funds having assets in excess of $2,500,000,000; or (d) commercial
paper rated not less than P-1 or A-1 or their equivalent by Xxxxx'x Investors
Service, Inc. or Standard & Poor's Ratings Group, respectively; or (e) tax
exempt securities of a U.S. issuer rated A or better by Standard and Poor's
Ratings Group or Xxxxx'x Investors Service, Inc.; or (f) repurchase obligations
with a term of not more than seven days for underlying securities of the type
described in clauses (a) and (b) above entered into with any financial
institution meeting the qualifications specified in clause (b) above; or (g)
investments in money market funds that invest exclusively in securities of the
types described in clauses (a) through (f) above; or (h) Eurodollar time
deposits with maturities not exceeding six months or less from the date of
acquisition with any domestic commercial bank having capital and surplus in
excess of $500 million and a Xxxxx Bank Watch Rating of AB or better.
"Environmental Law" shall mean any law, ordinance, rule, regulation,
or policy having the force of law of any Governmental Authority relating to
pollution or protection of the environment or to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.) the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901, et seq.) and the rules and regulations
promulgated pursuant thereto.
"Equity Interests" shall mean Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Company or any Affiliate of the Company would
be deemed to be a member of the same "controlled group" within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Eurocurrency Reserve Requirement" shall mean a fraction (expressed as
a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves, under any regulations of the Board of Governors of the Federal Reserve
System or any
8
other governmental authority having jurisdiction with respect thereto) as from
time to time in effect, dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "eurocurrency liabilities" in
Regulation D) maintained by any Lender. For purposes hereof each Adjusted Libor
Loan shall be deemed to constitute a "eurocurrency liability" as defined in
Regulation D, and subject to the reserve requirements of "Regulation D," without
benefit of credit or proration, exemptions or offsets which might otherwise be
available to the Lenders from time to time under Regulation D.
"Event of Default" shall have the meaning set forth in Article VIII.
"Excluded Proceeds" shall have the meaning set forth in the definition
of "Asset Sale".
"Excluded Proceeds Permitted Use" shall have the meaning set forth in
the definition of "Asset Sale".
"Executive Officer" shall mean any of the Chairman, Vice Chairman,
President, the Chief Executive Officer, the Chief Financial Officer or the
Secretary of the Company or any Corporate Guarantor, as applicable, and their
respective successors, if any, designated by the board of directors thereof.
"Existing Indebtedness" means the Indebtedness of the Company and the
Corporate Guarantors (other than the Indebtedness evidenced by the Notes and the
Senior Notes) in existence on the Closing Date and set forth in a Schedule III,
until such Indebtedness is repaid. Existing Indebtedness shall include, without
duplication, (a) certain guarantees of obligations for borrowed money (the
"Borrowed Money Obligations") including the Company's guarantee of 40% of up to
$11.0 million of Indebtedness from time to time outstanding of Boulder Creek
Holding LLC and Boulder Creek Venture LLC under loan agreements with HSBC Bank
U.S.A., as they may be amended and in effect from time to time, (b) certain
guarantees of reimbursement obligations in respect of letters of credit, (c) any
guarantee by the Company or any Corporate Guarantor of Indebtedness issued in
exchange for, or the net proceeds of which are used to refund, refinance or
replace, Borrowed Money Obligations at the time guaranteed pursuant to a
guarantee referred to in clause (a) above ("Guaranteed Refinancing
Indebtedness"), to the extent that (x) the principal amount of such Guaranteed
Refinancing Indebtedness does not exceed the principal amount of the guaranteed
Borrowed Money Obligations so refunded, refinanced or replaced and (y) the
obligor(s) of such Guaranteed Refinancing Indebtedness are the same as the
obligors on the guaranteed Borrowed Money Obligations being refunded, refinanced
or replaced, and (d) any guarantee of reimbursement obligations in respect of a
letter of credit issued in replacement for a letter of credit in respect of
which the reimbursement obligations are guaranteed pursuant to a guarantee
referred to in clause (b) above (a "Replacement Letter of Credit") to the extent
that (x) the amount of Indebtedness represented by the guarantee of
reimbursement obligations in respect of the Replacement Letter of Credit does
not exceed the amount of Indebtedness represented by the guarantee of
reimbursement obligations in respect of the letter of credit so replaced and (y)
the obligor(s) of the reimbursement obligations in respect of the Replacement
Letter of Credit are
9
the same as the obligor(s) of the reimbursement obligations in respect of the
letter of credit so replaced. For purposes of this Agreement, (a) any guarantee
by the Company or any Corporate Guarantor of Guaranteed Refinancing Indebtedness
shall not be deemed to be an additional Investment to the extent that (x) the
provisions of subclauses (x) and (y) of clause (c) of the preceding sentence are
satisfied in respect of such Guaranteed Refinancing Indebtedness and (y) the
guarantee of the Borrowed Money Obligations refunded, refinanced or replaced by
such Guaranteed Refinancing Indebtedness was entered into prior to August 30,
1999 or constitutes a Committed Restricted Investment and (b) any guarantee by
the Company or any Corporate Guarantor of reimbursement obligations in respect
of a Replacement Letter of Credit shall not be deemed to be an additional
Investment to the extent that (x) the provisions of subclauses (x) and (y) of
clause (d) of the preceding sentence are satisfied in respect of such guarantee
and such Replacement Letter of Credit and (y) the guarantee of the reimbursement
obligations in respect of the letter of credit replaced by such Replacement
Letter of Credit was entered into prior to August 30, 1999, or constitutes a
Committed Restricted Investment.
"Existing Letters of Credit" shall mean, collectively, each standby
letter of credit issued by European American Bank prior to the Closing Date
which remains in effect on the Closing Date as set forth on Schedule VI hereto.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal fund brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Agent from
three Federal fund brokers of recognized standing selected by the Agent.
"Generally Accepted Accounting Principles" shall mean those generally
accepted accounting principles in the United States of America, as in effect
from time to time.
"Governmental Authority" shall mean any nation or government, any
state, province, city or municipal entity or other political subdivision
thereof, and any governmental, executive, legislative, judicial, administrative
or regulatory agency, department, authority, instrumentality, commission, board
or similar body, whether xxxxxxx, xxxxx, xxxxxxxxxx, xxxxxxxxxxx, local or
foreign.
"Hazardous Materials" shall mean any explosives, radioactive
materials, or other materials, wastes, substances, or chemicals regulated as
toxic hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.
"Hedging Obligations" shall mean with respect to any Person, the
obligations of such Person under any interest rate swap, collar, cap, floor or
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure executed in connection with hedging the interest rate exposure of
such Person, and any confirming letter executed pursuant to such agreement, all
as amended, supplemented, restated or otherwise modified from time to time.
10
"Indebtedness" shall mean, without duplication, as to any Person or
Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred
purchase price of property or services (other than trade payables and accrued
expenses incurred in the ordinary course of business); (c) indebtedness
evidenced by bonds, debentures, term notes or other similar instruments; (d)
obligations and liabilities of a third party (other than the Company or any
Corporate Guarantor) secured by a Lien upon property owned by such Person,
whether or not owing by such Person and even though such Person has not assumed
or become liable for the payment thereof; (e) guarantees by such Person of
Indebtedness of another Person; (f) obligations or liabilities of such Person
created or arising under any conditional sales contract or other title retention
agreement with respect to property used and/or acquired by such Person; (g)
obligations of such Person as lessee under Capital Leases; (h) net liabilities
of such Person under Hedging Obligations and foreign currency exchange
agreements, as calculated on a basis satisfactory to the Agent and in accordance
with accepted practice; (i) all obligations of such Person in respect of
banker's acceptances; and (j) all obligations, contingent or otherwise of such
Person as an account party or applicant in respect of letters of credit.
"Interest Payment Date" shall mean as to any Loan, (a) the first day
of each month during the term hereof and (b) the date such Loan is paid in full
or in part.
"Interest Period" shall mean with respect to any Adjusted Libor Loan:
(a) initially, the period commencing on the date such Adjusted Libor
Loan is made and ending one, two, three or six months thereafter, as selected by
the Company in its notice of borrowing or in its notice of conversion from a
Prime Rate Loan given, in each case, in accordance with the terms of Articles II
and III hereof; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Adjusted Libor Loan and ending one,
two, three or six months thereafter, as selected by the Company by irrevocable
written notice (or telephonic notice promptly confirmed in writing) to the Agent
not later than 11:00 a.m. New York, New York time three Business Days prior to
the last day of the then current Interest Period with respect to such Adjusted
Libor Loan and the Agent shall promptly notify each of the Lenders of such
notice; provided, however, that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) if the Company shall fail to give notice as provided in
clause (b) above, the Company shall be deemed to have requested
conversion of the affected
11
Adjusted Libor Loan to a Prime Rate Loan on the last day of the then
current Interest Period with respect thereto;
(iii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) no more than four (4) Interest Periods may exist at any one
time with respect to all outstanding Revolving Credit Loans.
"Investments" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of (a)
direct or indirect loans (including guarantees of (or the furnishing of letters
of credit as security for) Indebtedness or other obligations but excluding
Remote Guarantees), (b) advances or capital contributions (excluding (i) salary
and bonus advances, and commission, travel and similar advances, to officers and
employees made in the ordinary course of business consistent with past practice
and (ii) amounts payable by shareholders of the Company pursuant to the
provisions of the Tax Payment Agreement), (c) purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or other securities, and (d)
payments pursuant to guarantees of Indebtedness or other obligations (including
payments made or required to be made pursuant to Remote Guarantees), together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with Generally Accepted Accounting Principles, excluding,
however, trade accounts receivable and bank deposits made in the ordinary course
of business consistent with past practice. The amount of any Investment by any
Person that constitutes a guarantee of (or the furnishing of a letter of credit
as security for) Indebtedness or other obligations shall be deemed to be (a) if
such Investment is a guarantee of Indebtedness, the maximum principal amount of
Indebtedness that may be guaranteed under such guarantee, (b) if such Investment
is the furnishing of a letter of credit, the maximum reimbursement obligation in
respect of such letter of credit, (c) if such Investment is a guarantee of a
lease, the lesser of (A) the sum of (i) the total amount of fixed rent
(excluding escalations resulting from a rise in the consumer price index or
similar index and excluding amounts required to be paid for insurance, taxes,
gas, electricity, common area charges and other similar charges) provided for in
such lease during the term thereof, and (ii) the product of (x) the Company's
estimate (as determined in good faith by the Board of Directors whose resolution
with respect thereto shall be delivered to the Agent and, reasonably, acceptable
to the Required Lenders) of the amounts (exclusive of fixed rent) that will be
payable under such lease in respect of the first year of the term thereof and
(y) the number of years of the term of such lease and (B) the maximum liability
of such Person under such guarantee and (d) if such Investment is a guarantee of
obligations other than Indebtedness or a lease, the maximum liability of such
Person under such guarantee. If an Investment by a Person consists of the
guarantee of a lease and the amount of such Investment is determined under
subclause (A) of clause (c) of the preceding sentence, such Investment shall be
deemed to be amortized on a straight line basis over the term of the lease (or
the remaining term of the lease if the Investment is made or deemed to
12
have been made after the commencement of the term of the lease). If an
Investment by a Person consists of the guarantee of a lease and the amount of
such Investment is determined under subclause (B) of clause (c) of the second
preceding sentence, such Investment shall be deemed to be amortized as and to
the extent that the maximum liability of such Person under such guarantee (as
determined in good faith by the Board of Directors of the Company and,
reasonably acceptable to the Required Lenders, whose resolution with respect
thereto shall be delivered to the Agent) is reduced. Any unamortized portion of
an Investment by a Person that consists of a guarantee of a lease shall be
deemed to be amortized on such date, if any, as such Person has no further
liability under such guarantee. If an Investment by a Person consists of the
guarantee of a lease and the fixed rent under such lease is increased or the
term of such lease is extended, (a) such Person shall be deemed to have made a
new Investment on the date (and computed as if the term of the lease commenced
as of the date) on which the action which increased the fixed rent or extended
the term occurred and (b) the unamortized portion immediately prior to such date
of such Person's original Investment by reason of such guarantee shall be deemed
to be amortized on such date. If the Company or any Corporate Guarantor sells or
otherwise disposes of any Equity Interests of any Corporate Guarantor which is a
direct or indirect wholly-owned Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
wholly-owned Subsidiary of the Company, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal to sum of (a)
the fair market value of the Equity Interests of such Corporate Guarantor not
sold or disposed of in an amount determined in accordance with the last
paragraph of Section 7.15 and (b) the amount of the Investments by the Company
and the Corporate Guarantors constituting a guarantee of (or the furnishing of a
letter of credit as security for) Indebtedness or other obligations of such
Corporate Guarantor.
"Issuing Lender" shall mean the entity which is the Agent, in its
capacity as the issuer of Letters of Credit hereunder.
"Lenders" shall have the meaning set forth in the preamble hereto.
"Lending Office" shall mean, for each Lender, the office specified
under such Lender's name on the signature pages hereof with respect to each Type
of Loan, or such other office as such Lender may designate in writing from time
to time to the Company and the Agent with respect to such Type of Loan.
"Letter of Credit" shall mean any Standby Letter of Credit issued by
the Issuing Lender for the account of the Company pursuant to the terms of this
Agreement including the Existing Letters of Credit.
"Lien" shall mean any lien (statutory or otherwise), security
interest, mortgage, deed of trust, pledge, charge, conditional sale, title
retention agreement, Capital Lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
13
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Corporate Guaranties, and each other agreement executed in connection with
the transactions contemplated hereby or thereby, as each of the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time.
"Loans" shall mean, collectively, the Revolving Credit Loans.
"Mandatory Senior Payment" shall mean a purchase of Senior Notes
pursuant to Section 4.16 of the Senior Note Indenture with those proceeds from
an Asset Sale (other than a Non- Equity Asset Sale) remaining after giving
effect to prepayment of the Revolving Credit Loans pursuant to Section 3.03.
"Material Adverse Effect" shall mean a material adverse effect upon
(a) the business, operations, property, prospects or condition (financial or
otherwise) of the Company or of the Company and the Corporate Guarantors, taken
as a whole, or (b) the ability of the Company or any Corporate Guarantor to
perform in any material respect any obligations under any Loan Document to which
it is a party.
"Material Contract" shall mean each contract, instrument or agreement
the breach or termination of which could reasonably be expected to have a
Material Adverse Effect.
"Merger" shall mean the merger of SMLLC with and into the Company
pursuant to the Merger Agreement.
"Merger Agreement" shall mean that certain Amended and Restated
Agreement and Plan of Merger, dated as of January 19, 1999, among the Company,
SMLLC and Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx (1994) Family Limited
Partnership, Xxxxxxx Xxxxxx, and Xxxxx Xxxxxx and Xxxxxxxx Xxxxxxxxxx, not
individually but as trustees under that certain Trust Agreement dated April 28,
1984 for the benefit of Xxxxxxx Xxxxxx and her descendants, as the same may be
further amended, restated, supplemented or otherwise modified from time to time
as permitted pursuant to the terms thereof.
"Merger Payment" shall mean the cash payment due to shareholders and
stock option holders of the Company entitled to receive such payment for their
shares of the Company's capital stock and options to purchase capital stock,
respectively, at the effective time of the Merger in accordance with the Merger
Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with Generally Accepted Accounting
Principles and before any reduction in respect of preferred stock dividends,
excluding, however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with (a)
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by such Person
or any of its Subsidiaries or
14
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, and (ii) any extraordinary gain or extraordinary non-cash loss and
any nonrecurring gain (but not loss), together with any related provision for
taxes on such extraordinary gain or extraordinary non-cash loss or nonrecurring
gain (but not loss).
"Net Proceeds" shall mean the aggregate cash proceeds received by the
Company or any Corporate Guarantor in respect of any Asset Sale permitted
pursuant to Section 7.04 (including, without limitation, any cash received upon
the sale or other disposition of any non-cash consideration received in any such
sale, but only as and when received), net of (i) the direct costs relating to
such sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as a
result thereof, (ii) taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such sale and (iv) any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with Generally Accepted
Accounting Principles.
"Non-Equity Asset Sale" shall mean an Asset Sale described in clause
(i) of the definition thereof.
"Note Purchase Agreement" shall mean the Note Purchase Agreement,
dated the date hereof, by and among the Company, the guarantors and purchasers
identified therein pursuant to which the Company issued the Senior Notes, as
amended, supplemented or modified from time to time.
"Notes" shall mean, collectively, the Revolving Credit Notes.
"Obligations" shall mean all obligations, liabilities and indebtedness
of the Company to the Lenders, the Issuing Lender and the Agent, whether now
existing or hereafter created, absolute or contingent, direct or indirect, due
or not, whether created directly or acquired by assignment or otherwise, arising
under or relating to this Agreement, the Notes or any other Loan Document
including, without limitation, all obligations, liabilities and indebtedness of
the Company with respect to the principal of and interest on the Loans,
reimbursement of Letters of Credit, including, without limitation, the Existing
Letters of Credit, and all fees, costs, expenses and indemnity obligations of
the Company hereunder or under any other Loan Document.
"Participant" shall have the meaning set forth in Section 10.05(b).
"Payment Office" shall mean the Agent's office located at 000 Xxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 or such other office as the Agent
may designate from time to time.
15
"PBGC" shall mean the Pension Benefit Corporate Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Debt" shall mean each of the following items of
Indebtedness:
(i) the incurrence by the Company and the Corporate Guarantors of
Indebtedness under (A) this Agreement and the other Loan Documents,
(B) obligations under Capital Leases or (C) purchase money
indebtedness and mortgage loans secured solely by liens on the real
property, improvements, fixtures and related personal property which
customarily secures such a loan which are the subject of such loan
(other than a loan secured solely by the real property and
improvements of 401 Broad Hollow Realty Corp. (or any successor
thereto) located at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx unless
such loan is in the principal amount of $12,000,000 or more and the
proceeds from such loan are used to pay (i) if the aggregate
outstanding principal balance of the Revolving Credit Loans is less
than $12,000,000, then the outstanding principal amount of the
Revolving Credit Loans and (ii) if the aggregate outstanding principal
balance of the Revolving Credit Loans is equal to or greater than
$12,000,000 then the lesser of (x) the outstanding principal amount of
the Revolving Credit Loans or (y) the full amount of such proceeds;
provided that the aggregate amount of all Indebtedness (with letters
of credit being deemed for all purposes of this Agreement to have a
principal amount equal to the maximum potential liability of the
Company and the Corporate Guarantors in respect thereof) outstanding
under this clause (i) after giving effect to such incurrence,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(i), does not exceed an aggregate principal amount equal to $75.0
million less the aggregate principal amount of all Indebtedness
permanently repaid with the Net Proceeds of any Asset Sale;
(ii) the incurrence by the Company and the Corporate Guarantors
of Indebtedness represented by the Senior Notes, the guarantees
thereof and the Senior Note Indenture in the principal amount of the
Senior Notes originally issued on the Closing Date; provided the
aggregate original principal amount of the Senior Notes shall not
exceed $255,000,000;
(iii) the incurrence by the Company and the Corporate Guarantors
of the Existing Indebtedness;
(iv) [Reserved];
(v) [Reserved];
(vi) the incurrence by the Company and any Corporate Guarantor of
Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace
Indebtedness (other than Hedging Obligations and other than
16
Indebtedness permitted to be incurred pursuant to clause (vii) or
clause (ix) of this paragraph) that was permitted by this Agreement to
be incurred;
(vii) the incurrence by the Company or any Corporate Guarantor
which is a wholly owned Subsidiary of intercompany Indebtedness
between or among the Company and any such wholly owned Subsidiary,
provided, however, that any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or a Corporate Guarantor which is a wholly
owned Subsidiary of the Company, and any sale or other transfer of any
such Indebtedness to a person that is not either the Company or a
Corporate Guarantor which is a wholly owned Subsidiary of the Company,
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Corporate Guarantor, as the case
may be;
(viii) the incurrence by the Company or any Corporate Guarantor
of Hedging Obligations that are incurred for the purpose of hedging
against fluctuations in currency values or for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness of the Company or any Corporate Guarantor that is
permitted by the terms of this Agreement to be outstanding, provided
that the notional principal amount of any Hedging Obligations does not
exceed the principal amount of Indebtedness to which such agreement
relates;
(ix) the guarantee by the Company or any Corporate Guarantor of
Indebtedness of the Company or a Corporate Guarantor which is a wholly
owned Subsidiary of the Company that was permitted to be incurred by
another provision of this definition;
(x) Subordinated Debt; and
(xi) the guaranties permitted pursuant to Section 7.03.
For purposes of determining the amount of any Indebtedness of any
Person under this definition, (a) the principal amount of any Indebtedness of
such Person arising by reason of such Person having granted or assumed a Lien on
its property to secure Indebtedness of another Person shall be the lower of the
fair market value of such property and the principal amount of such Indebtedness
outstanding (or committed to be advanced) at the time of determination; (b) the
amount of any Indebtedness of such Person arising by reason of such Person
having guaranteed Indebtedness of another Person where the amount of such
guarantee is limited to an amount less than the principal amount of the
Indebtedness so guaranteed shall be such amount as so limited; and (c)
Indebtedness shall not include a non-recourse pledge by the Company or any
Corporate Guarantor of Investments in any Person that is not a Corporate
Guarantor to secure the Indebtedness of such Person. For purposes of determining
compliance with Section 7.02, in the event that an item of Indebtedness meets
the criteria of more than one of the categories of Permitted Debt described in
clauses (i) through (xi) above, the Company shall, in its sole
17
discretion, classify such item of Indebtedness in only one of such clauses and
such item of Indebtedness will be treated as having been incurred pursuant to
only one of such clauses.
"Permitted Holder" shall mean Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxx, their respective spouses and lineal descendants, any spouse of any such
lineal descendant who is a full time employee of the Company or any of its
Subsidiaries, any trust for the benefit of one or more of the foregoing, any
Person in which one or more of the foregoing holds 80% or more of the Voting
Stock (measured by voting power rather than number of shares) and the trust
created under that certain Trust Agreement dated April 28, 1984 for the benefit
of Xxxxxxx Xxxxxx and her descendants.
"Permitted Investments" shall mean (i) any Investment in the Company
or in a Corporate Guarantor which is a wholly-owned Subsidiary of the Company;
(ii) any Investment in Eligible Investments; (iii) any Investment by the Company
or any Corporate Guarantor in a Person, if as a result of such Investment (a)
such Person becomes a wholly-owned Subsidiary of the Company and a Corporate
Guarantor or (b) such Person is merged, consolidated or amalgamated with or into
(provided the Company or the Corporate Guarantor is the surviving entity), or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Corporate Guarantor which is a wholly-owned Subsidiary of the
Company; (iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 7.04; (v) any acquisition of assets received solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(vi) Investments received in connection with the settlement of any ordinary
course obligations owed to the Company or any Corporate Guarantor; and (vii)
other Investments (including Investments in the form of guarantees of, or
providing letters of credit as security for, Indebtedness or other obligations
but excluding Committed Restricted Investments) in entities engaged in lines of
business consistent with the requirements in Section 7.07 if, after giving
effect to such Investment, the aggregate amount of Unrestricted Investments
Outstanding does not exceed $20,000,000.
"Permitted Liens" shall mean (i) Liens in favor of the Company or any
Corporate Guarantor; (ii) Liens securing the Obligations to the Lenders; (iii)
Liens on real property and improvements which are the subject of mortgage loans
permitted pursuant to clause (i) of the definition of Permitted Debt; provided,
that the outstanding principal amount of Indebtedness secured by such Liens
(other than Liens on the real property, improvements, fixtures and related
personal property which customarily secures such a loan owned by 401 Broad
Hollow Realty Corp. (or any successor thereto) located at 000 Xxxxxxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx) permitted by this clause (iii) shall not at any time exceed
$50,000,000, (iv) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (v) Liens identified on Schedule
II; (vi) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
Generally Accepted Accounting Principles shall have been made
18
therefore; (vii) Liens securing Permitted Refinancing Indebtedness to the extent
that the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded was permitted to be secured by a Lien provided that such Liens do not
extend to any assets other than those that secured the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (viii) Liens
incurred in the ordinary course of business of the Company or any Corporate
Guarantor with respect to obligations that do not exceed $2,000,000 in the
aggregate at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(including, without limitation, trade credit in the ordinary course of business)
and (b) do not in the aggregate materially detract from the value of the
property or materially impair the use thereof in the operation of business by
the Company or such Corporate Guarantor, and (ix) purchase money Liens securing
the purchase price for fixed or capital assets (other than real property), and
Liens on the equipment which is the subject of a Capital Lease granted to the
lessor thereunder; provided in each case (i) no Default or Event of Default
shall have occurred or be continuing or shall occur after giving effect to such
Lien, (ii) such purchase money Lien does not exceed 100% of the purchase price
of, and encumbers only, the property acquired, and (iii) such purchase money
Lien does not secure any Indebtedness other than in respect of the purchase
price of the asset acquired.
"Permitted Refinancing Indebtedness" shall mean any Indebtedness of
the Company or any Corporate Guarantor issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Hedging Obligations and other than
Indebtedness permitted to be incurred pursuant to clauses (vii) and (ix) of the
definition of Permitted Debt), of the Company or any Corporate Guarantor;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus premium and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Obligations or any Corporate
Guaranty, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Obligations or any Corporate Guaranty or such Hedging Obligations
on terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Corporate Guarantor that is an obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" shall mean any natural person, corporation, limited liability
company, limited liability partnership, business trust, joint venture,
association, company, partnership, Governmental Authority or other entity.
19
"Plan" shall mean any multi-employer or single-employer plan defined
in Section 4001 of ERISA, which covers, or at any time during the five calendar
years preceding the date of this Agreement covered, employees of the Company,
any Corporate Guarantor or an ERISA Affiliate on account of such employees'
employment by the Company, any Corporate Guarantor or an ERISA Affiliate.
"Prime Rate" shall mean the rate per annum announced by the entity
which is the Agent from time to time as its prime rate in effect at its
principal office, each change in the Prime Rate shall be effective on the date
such change is announced to become effective.
"Prime Rate Loans" shall mean Loans at such times as they are being
made and/or maintained at a rate of interest based on the Prime Rate.
"Purchasing Lender" shall have the meaning set forth in Section
10.05(c).
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from time
to time.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement to be executed on or prior to the Closing Date by and among the
Company, the Corporate Guarantors named therein, and Bear, Xxxxxxx & Co. Inc.,
as initial purchaser, as the same may be amended, supplemented or modified from
time to time.
"Remote Guarantee" shall mean a guarantee of a tenant's obligations
under a lease of real property which does not apply to obligations accruing in
respect of periods subsequent to the date on which the tenant surrenders
possession of the leased premises to the landlord (whether or not such surrender
is authorized by the terms of the lease), does not apply to any breach arising
from any such surrender and does not apply to any obligations that may have been
accelerated under the provisions of the lease.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30 day notice requirement has not
been waived by the PBGC.
"Required Lenders" shall mean Lenders owed at least 61% of the sum of
the aggregate unpaid principal amount of the Loans or, if no Loans are
outstanding, Lenders having at least 61% of the Total Revolving Credit
Commitments.
"Reserve Adjusted Libor" shall mean, with respect to the Interest
Period pertaining to an Adjusted Libor Loan, a rate per annum equal to the
product (rounded upwards to the next higher 1/16 of one percent) of (a) the
annual rate of the interest at which Dollar deposits of an amount comparable to
the amount of such Adjusted Libor Loan and for a period equal to the Interest
Period applicable thereto which appears on Telerate Page 3750 at approximately
11:00 A.M. (London time) on the second Business Day prior to the commencement of
such Interest Period or
20
if such rate does not appear on Telerate Page 3750 as of such date and time, the
rate per annum appearing on Reuters Screen Libor Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London time)
on the second Business Day prior to the commencement of such Interest Period for
a term equal to such Interest Period, provided, however; if more than one rate
is specified on Reuters Screen Libor Page, the applicable rate shall be the
arithmetic mean of all such rates multiplied by (b) the Eurocurrency Reserve
Requirement.
"Restricted Investment" shall mean an Investment other than a
Permitted Investment.
"Restricted Payment" shall have the meaning set forth in Section 7.15.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the obligation of such Lender to make Revolving Credit Loans to the Company and
to acquire participations in Letters of Credit in an aggregate amount not to
exceed the amount set forth opposite such Lender's name on the signature pages
hereof under the caption "Revolving Credit Commitment", as such amounts may be
adjusted in accordance with the terms of this Agreement.
"Revolving Credit Commitment Period" shall mean the period from and
including the Closing Date to, but not including, the Revolving Credit
Commitment Termination Date or such earlier date as the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Commitment Termination Date" shall mean the fifth
anniversary of the Closing Date.
"Revolving Credit Loan" shall have the meaning specified in Section
2.01.
"Revolving Credit Note" shall have the meaning specified in Section
2.02.
"S Corporation" means a corporation that is treated as an "S
corporation" for federal income tax purposes.
"Senior Note Payment" shall mean a direct or indirect prepayment,
repayment, defeasance, purchase, redemption, or optional prepayment or optional
repayment of principal of, any Senior Note, including without limitation any
Mandatory Senior Note Payment.
"Senior Notes" shall mean the Senior Notes due 2009 in the aggregate
original principal amount of not less than $245,000,000 or greater than
$255,000,000 to be issued by the Company pursuant to the Note Purchase Agreement
and the Senior Note Indenture on or prior to the Closing Date.
"Senior Note Indenture" shall mean the Indenture to be executed on or
prior to the Closing Date by the Company, the Corporate Guarantors identified
therein, and FIRSTAR Bank, as trustee, pursuant to which the Company shall issue
the Senior Notes, as amended, supplemented or modified from time to time.
21
"SMLLC" shall mean Sbarro Merger LLC, a New York limited liability
company.
"Solvent" shall mean with respect to any Person as of the date of
determination thereof that (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required on its debts as such debts become absolute
and matured, (c) such Person will not have as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such Person
will be able to pay its debts as they mature.
"Standby Letter of Credit" shall mean any letter of credit issued to
support an obligation of a Person and which may be drawn on only upon the
failure of such Person to perform such obligation or other contingency.
"Subordinated Debt" shall mean all debt which is subordinated in right
of payment to the prior final payment in full of the Obligations on terms
satisfactory to and approved in writing by the Required Lenders, having a final
maturity on a date after the Revolving Credit Commitment Termination Date and
which requires no payments (whether principal, interest or otherwise) prior to
the Revolving Credit Commitment Termination Date.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of at least a majority of
the directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"Tax Distributions" shall mean amounts paid or distributed to or for
the benefit of shareholders of the Company (net of amounts repaid by such
shareholders) pursuant to and in accordance with the Tax Payment Agreement as in
effect on the Closing Date.
"Taxes" shall have the meaning set forth in Section 3.09.
"Tax Payment Agreement" shall mean the Tax Payment Agreement, dated as
of the Closing Date, among the Company, Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx
Xxxxxx (1994) Family Limited Partnership, Xxxxxxx Xxxxxx, and Xxxxx Xxxxxx and
Xxxxxxxx Xxxxxxxxxx, not individually but as trustees under that certain Trust
Agreement dated April 28, 1984 for the benefit of Xxxxxxx Xxxxxx and her
descendants, and any future shareholders of the Company that may become parties
thereto.
22
"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Associated Press-Dow Xxxxx Telerate Service (or such other page as may
replace Page 3750 on the Associated Press-Dow Xxxxx Telerate Service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
interest settlement rates for Dollar deposits). Each Reserve Adjusted Libor rate
determined on the rate displayed on Telerate Page 3750 shall be subject to
corrections, if any, made in such rate and displayed by the Associated Press-Dow
Xxxxx Telerate Service within one hour of the time when such rate is first
displayed by such service.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate of the Revolving Credit Commitments in effect at such time which,
initially, shall be $30,000,000.
"Type" shall mean as to any Loan its status as a Prime Rate Loan or an
Adjusted Libor Loan.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the present value of the accrued benefits under the Plan as of the
close of its most recent plan year exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"Unrestricted Investments Outstanding" shall mean, at any time of
determination, in respect of any Permitted Investments made in any Person
pursuant to clause (vii) of the definition of the term Permitted Investments
(and any Investments (other than Committed Restricted Investments) made in such
Person by the Company or any Corporate Guarantor during the period from August
30, 1999 to the Closing Date), the difference between (i) the sum of all
Permitted Investments theretofore made by the Company or any Corporate Guarantor
in such Person on or after the date of this Agreement pursuant to clause (vii)
of the definition of Permitted Investments plus the sum of all Investments
(other than Committed Restricted Investments) made by the Company or any
Corporate Guarantor in such Person during the period from August 30, 1999 to the
Closing Date minus (ii) the sum of, without duplication, (a) the amount of all
dividends and distributions paid in cash by such Person after August 30, 1999 to
the Company or a Corporate Guarantor (to the extent that the Company does not
elect to include the amount of such dividends and distributions in the
computation of Consolidated Net Income pursuant to the parenthetical of clause
(i) of the definition thereof at the time of determination), (b) all repayments
after August 30, 1999 by such Person of the principal amount of loans or
advances that constitute Permitted Investments theretofore made by the Company
or any Corporate Guarantor in such Person pursuant to clause (vii) of the
definition of Permitted Investments or that constitute loans or advances (other
than Committed Restricted Investments) made by the Company or any Corporate
Guarantor in such Person during the period from August 30, 1999 to the Closing
Date, (c) any other reduction made in cash of such Investments by the Company or
any Corporate Guarantor in such Person, (d) if any Permitted Investment made in
such Person by the Company or any Corporate Guarantor pursuant to clause (vii)
of the definition of the term Permitted Investments (or if any Investment (other
than Committed Restricted Investments) made in such Person by the Company or any
Corporate Guarantor during the period from August 30, 1999 to the Closing Date)
was in the form of a guarantee of Indebtedness, the amount of any reduction in
the
23
maximum principal amount of Indebtedness that may be guaranteed under such
guarantee, (e) if any Permitted Investment made in such Person by the Company,
any Corporate Guarantor pursuant to clause (vii) of the definition of the term
Permitted Investments (or if any Investment (other than Committed Restricted
Investments) made in such Person by the Company or any Corporate Guarantor
during the period from August 30, 1999 to the Closing Date) was in the form of
the furnishing of a letter of credit as security for Indebtedness or other
obligations, the amount of any reduction in the maximum reimbursement
obligations in respect of such letter or credit, (f) if any Permitted Investment
made in such Person by the Company or any Corporate Guarantor pursuant to clause
(vii) of the definition of the term Permitted Investments (or if any Investment
(other than Committed Restricted Investments) made in such Person by the Company
or any Corporate Guarantor during the period from August 30, 1999 to the Closing
Date) was in the form of the guarantee of a lease, the amount of amortization
(as provided in the definition of "Investments") of such Investment and (g) if
any Permitted Investment made in such Person by the Company or any Corporate
Guarantor pursuant to clause (vii) of the definition of the term Permitted
Investments (or if any Investment (other than Committed Restricted Investments)
made in such Person by the Company or any Corporate Guarantor during the period
from August 30, 1999 to the Closing Date) was in the form of a guarantee of
obligations other than Indebtedness or a lease, the amount of any reduction in
the maximum liability under such guarantee; provided that (x) the amount of
Unrestricted Investments Outstanding in respect of any Person in respect of such
Investments shall at no time be a negative amount and (y) the amount of
Unrestricted Investments Outstanding in respect of any Permitted Investments
theretofore made in any Person pursuant to clause (vii) of the definition of the
term Permitted Investments (and any Investments (other than Committed Restricted
Investments) made in such Person by the Company or any Corporate Guarantor
during the period from August 30, 1999 to the Closing Date) shall be zero if, at
the time of determination, such Person is a Corporate Guarantor which is a
wholly-owned Subsidiary of the Company.
"Unrestricted Subsidiary" shall mean each of the Subsidiaries of the
Company listed on Schedule I and not designated thereon as a Corporate Guarantor
and any Subsidiary of the Company formed or acquired after the Closing Date
which is designated as an Unrestricted Subsidiary in accordance with the last
sentence of Section 6.13, in each case, only to the extent that such Subsidiary
(a) is not party to any agreement, contract, arrangement or understanding with
the Company or any Corporate Guarantor unless the terms of any such agreement,
contract, arrangement or understanding comply with Section 7.16, (b) is a Person
with respect to which neither the Company nor any Corporate Guarantor has any
direct or indirect obligation (i) to subscribe for additional Equity Interests
or (ii) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results and (c) is not
a guarantor of, and is not otherwise directly or indirectly providing credit
support for, any Indebtedness of the Company or any Corporate Guarantor.
"Unused Fee Rate" shall mean the percentage set forth below opposite
the applicable ratio:
Consolidated Senior Debt Unused Fee Rate
to Consolidated EBITDA (360 day basis)
------------------------ ---------------
24
Equal to or less than 3.00.1.00 .25%
Greater than 3.00.1.00 but equal .30%
to or less than 3.25.1.00
Greater than 3.25:1.00 but equal .35%
to or less than 3.50.1.00
Greater than 3.50:1.00 but equal .40%
to or les than 3.75:1.00
Greater than 3:75:1.00 .45%
Notwithstanding the foregoing, during the period commencing on and including the
Closing Date and ending on the day immediately preceding the date the Unused Fee
Rate is reset in accordance with the next sentence, the Unused Fee Rate shall be
.40%. The Unused Fee Rate will (a) be reset on each date which is five Business
Days following the date of receipt by the Agent of the financial statements
referred to in Section 6.03(a) and Section 6.03(b) together with a certificate
of the Chief Financial Officer of the Company certifying the ratio of
Consolidated Senior Debt to Consolidated EBITDA and setting forth the
calculation thereof in detail; for the then most recently completed fiscal
quarter of the Company. If any such financial statement and certificate are not
received by the Agent within the time period required pursuant to Section
6.03(a) or Section 6.03(b), as the case may be, the Unused Fee Rate will be
reset, based on a ratio of Consolidated Funded Debt to Consolidated EBITDA of
greater than 3.75:1.00 from the date such financial statement and certificate
were due until the date which is five Business Days following the receipt by the
Agent of such financial statements and certificate, provided, however, that the
Lenders shall not in any way be deemed to have waived any Default or Event of
Default, including without limitation, an Event of Default resulting from the
failure of the Company to comply with Section 7.13 of this Agreement, or any
rights or remedies hereunder or under any other Loan Document in connection with
the failure of the Agent to receive such financial statements and certificate.
During the occurrence and continuance of a Default or an Event of Default, no
downward adjustment, and only upward adjustments, shall be made to the Unused
Fee Rate; provided, however, any downward adjustment shall become effective on
the date, if any, on which such Default or Event of Default shall cease to be
continuing.
"Voting Stock" of any Person as of any date shall mean Capital Stock
of such Person that is at the time entitled to vote in the election of at least
a majority of the directors, managers, trustees or other governing body of such
Person.
"Weighted Average Life to Maturity" shall mean when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
25
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and the neuter. Except as otherwise
herein specifically provided, each accounting term used herein shall have the
meaning given to it under Generally Accepted Accounting Principles. The term
"including" shall not be limited or exclusive, unless specifically indicated to
the contrary. The word "will" shall be construed to have the same meaning in
effect as the word "shall". The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
schedules hereto, all of which are by this reference incorporated into this
Agreement.
ARTICLE II
LOANS
SECTION 2.01. REVOLVING CREDIT LOANS. (a) Subject to the terms and
conditions, and relying upon the representations and warranties, set forth
herein, each Lender severally agrees to make loans (individually a "Revolving
Credit Loan" and, collectively, the "Revolving Credit Loans") to the Company
from time to time during the Revolving Credit Commitment Period up to but not
exceeding at any one time outstanding the amount of its Revolving Credit
Commitment; provided, however, that no Revolving Credit Loan shall be made if,
after giving effect to such Revolving Credit Loan, the Aggregate Outstandings
would exceed the Total Revolving Credit Commitment in effect at such time.
During the Revolving Credit Commitment Period, the Company may from time to time
borrow, repay and reborrow hereunder on or after the Closing Date hereof and
prior to the Revolving Credit Commitment Termination Date, subject to the terms,
provisions and limitations set forth herein. The Revolving Credit Loans may be
(i) Adjusted Libor Loans, (ii) Prime Rate Loans or (iii) a combination thereof.
(b) The Company shall give the Agent irrevocable written notice (or
telephonic notice promptly confirmed in writing) not later than 11:00 a.m., New
York, New York time, three Business Days prior to the date of each proposed
Adjusted Libor Loan under this Section 2.01 or prior to 11:00 a.m. New York, New
York time on the date of each proposed Prime Rate Loan under this Section 2.01.
Such notice shall be irrevocable and shall specify (i) the amount and Type of
the proposed borrowing, (ii) the proposed use of the loan proceeds, (iii) the
initial Interest Period if an Adjusted Libor Loan, and (iv) the proposed
Borrowing Date. Upon receipt of such notice from the Company, the Agent shall
promptly notify each Lender thereof. Each borrowing pursuant to the Total
Revolving Credit Commitment shall be, subject to availability therefor, in an
aggregate principal amount of (i) $400,000 or whole multiples of $100,000 in
excess thereof, with respect to Prime Rate Loans and (ii) $1,000,000 (or
$500,000 if there is only a single Lender) or whole multiples of $500,000 in
excess thereof with respect to Adjusted Libor Loans.
(c) The Company shall have the right, upon not less than three
Business Days' prior written notice to the Agent, to terminate the Total
Revolving Credit Commitment or from time to time to permanently reduce the
amount of the Total Revolving Credit Commitment; provided, however, that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the
26
Aggregate Outstandings would exceed the Total Revolving Credit Commitment as
then reduced; provided, further, that any such termination or reduction
requiring prepayment of any Adjusted Libor Loan shall be made only on the last
day of the Interest Period with respect thereto or on the date of payment in
full of all amounts owing pursuant to Section 3.08 as a result of such
termination or reduction. The Agent shall promptly notify each Lender of each
notice from the Company to terminate or permanently reduce the amount of the
Total Revolving Credit Commitment pursuant to this Section 2.01(c). Any such
reduction shall be in the amount of $1,000,000 (or $500,000 if there is only a
single Lender) or whole multiples of $100,000 in excess thereof, and shall
reduce permanently the amount of the Total Revolving Credit Commitment then in
effect.
(d) The several agreement of the Lenders to make Revolving Credit
Loans pursuant to this Section 2.01 shall automatically terminate on the
Revolving Credit Commitment Termination Date. Upon such termination, the Company
shall immediately repay in full the principal amount of the Revolving Credit
Loans then outstanding, together with all accrued interest thereon and all other
amounts due and payable hereunder.
SECTION 2.02. REVOLVING CREDIT NOTE. The Revolving Credit Loans made
by each Lender shall be evidenced by a promissory note of the Company
(individually a "Revolving Credit Note" and, collectively, the "Revolving Credit
Notes"), in the form attached hereto as Exhibit A, each appropriately completed,
duly executed and delivered on behalf of the Company and payable to the order of
such Lender in a principal amount equal to the Revolving Credit Commitment of
such Lender. Each Revolving Credit Note shall (a) be dated the Closing Date, (b)
be stated to mature on the Revolving Credit Commitment Termination Date, and (c)
bear interest from the date thereof until paid in full on the unpaid principal
amount thereof from time to time outstanding as provided in Section 3.01. Each
Lender is authorized to record the date, Type and amount of each Revolving
Credit Loan and the date and amount of each payment or prepayment of principal
of each Revolving Credit Loan in such Lender's records or on the grid schedule
annexed to the Revolving Credit Note; provided, however, that the failure of a
Lender to set forth each such Revolving Credit Loan, payment and other
information shall not in any manner affect the obligation of the Company to
repay each Revolving Credit Loan made by such Lender in accordance with the
terms of its Revolving Credit Note and this Agreement. The Revolving Credit
Note, the grid schedule and the books and records of each Lender shall
constitute conclusive evidence of the information so recorded absent manifest
error.
SECTION 2.03. LETTERS OF CREDIT. (A) LETTERS OF CREDIT - GENERALLY.
Subject to the terms and conditions set forth in this Agreement, upon written
request of the Company in accordance herewith, the Issuing Lender shall issue
Letters of Credit, at any time during the Revolving Credit Commitment Period,
with pro rata participation by all of the Lenders in accordance with their
respective Commitment Proportions. Notwithstanding the foregoing, at no time
shall the Aggregate Letters of Credit Outstanding exceed $10,000,000, and no
Letter of Credit shall be issued or created if, after giving effect to the same,
the Aggregate Outstandings would exceed the Total Revolving Credit Commitment.
Furthermore, notwithstanding anything contained herein to the contrary, the
Issuing Lender shall be under no obligation to issue a Letter of Credit if any
order, judgment or decree of any court, arbitrator or governmental authority
shall
27
purport by its terms to enjoin, restrict or restrain the Issuing Lender in any
respect relating to the issuance of such Letter of Credit or a similar letter of
credit, or any law, rule, regulation, policy, guideline or directive (whether or
not having the force of law) from any governmental authority with jurisdiction
over the Issuing Lender shall prohibit or direct the Issuing Lender in any
respect relating to the issuance of such Letter of Credit or a similar letter of
credit, or shall impose upon the Issuing Lender with respect to any Letter of
Credit, any restrictions, any reserve or capital requirement or any loss, cost
or expense not reimbursed by the Company to the Issuing Lender. Each request for
issuance of a Letter of Credit shall be in writing and shall be received by the
Issuing Lender by no later than 12:00 p.m. on the day which is at least two
Business Days prior to the proposed date of issuance or creation, as applicable.
Such issuance or creation, as applicable, shall occur by no later than 5:00 p.m.
on the proposed date of issuance or creation (assuming proper prior notice as
aforesaid). Subject to the terms and conditions contained herein the expiry
dates, amounts and beneficiaries of the Letters of Credit will be as designated
by the Company. The Issuing Lender shall promptly notify the Lenders of the
amounts of all Letters of Credit issued hereunder and of any extension,
reduction, termination or amendment of any Letter of Credit. Each Letter of
Credit issued by the Issuing Lender hereunder shall identify: (i) the dates of
issuance and expiry of such Letter of Credit, (ii) the amount of such Letter of
Credit (which shall be a sum certain), (iii) the beneficiary of such Letter of
Credit, and (iv) the drafts and other documents necessary to be presented to the
Issuing Lender upon drawing thereunder. No Letter of Credit shall expire more
than one year from the date of issuance thereof provided a Letter of Credit may
contain a renewal or so called "evergreen provision" providing for successive
annual renewals of such Letter of Credit. The Company agrees to execute and
deliver to the Issuing Lender such further documents and instruments in
connection with any Letter of Credit issued (including without limitation,
applications therefor) created hereunder as the Issuing Lender in accordance
with its customary practices may request.
(B) DRAWINGS UNDER LETTERS OF CREDIT. The Company hereby absolutely
and unconditionally promises to pay to the Issuing Lender on the date of each
drawing under a Letter of Credit, in immediately available funds from its
accounts, the amount of such drawing under such Letter of Credit. If the Company
requests a Revolving Credit Loan pursuant to Section 2.01 not later than 11:00
a.m. on the date of the drawing under a Letter of Credit in accordance with the
terms hereof and if each of the conditions precedent to the making of such Loan
set forth in Article V of this Agreement has been satisfied, on the date of a
drawing under a Letter of Credit, the amount of such drawing, plus interest
thereon, for which the Issuing Lender has not been reimbursed by the Company
shall become a Prime Rate Loan made by the Lenders to the Company on such day.
The Issuing Lender agrees to notify each Lender of the amount of each drawing
under a Letter of Credit promptly upon the occurrence thereof. Each Lender
agrees that if notified of any draw under a Letter of Credit prior to 12:00 noon
on a Business Day then prior to 4:00 p.m. on the same Business Day (or, if
notified after such time on a Business Day, not later than 12:00 noon on the
next succeeding Business Day) it will make available to the Issuing Lender at
its office located at the Payment Office of the Issuing Lender (or such other
payment office as may be designated by the Issuing Lender, in federal funds or
other immediately available funds, its Commitment Proportion of any such drawing
or payment, plus any interest which shall have accrued thereon, provided that
each Lender's obligation shall be reduced by its Commitment
28
Proportion of any reimbursement by the Company in respect of any such drawing or
payment pursuant to this Section 2.03.
(C) LETTER OF CREDIT OBLIGATIONS ABSOLUTE. (i) The obligation of the
Company to reimburse the Issuing Lender as provided hereunder in respect of
drawings or payments under Letters of Credit shall rank pari passu with the
obligation of the Company to repay the Loans hereunder, shall be absolute and
unconditional under any and all circumstances. Without limiting the generality
of the foregoing, the obligation of the Company to reimburse the Issuing Lender
in respect of drawings under Letters of Credit shall not be subject to any
defense based on the non- application or misapplication by the beneficiary of
the proceeds of any such payment or the legality, validity, regularity or
enforceability of the Letters of Credit or any related document or any dispute
between or among the Company, the beneficiary of any Letter of Credit or any
financing institution or other party to which any Letter of Credit may be
transferred. The Issuing Lender may accept or pay any draft presented to it
under any Letter of Credit regardless of when drawn or made and whether or not
negotiated, if such draft, accompanying certificate or documents and any
transmittal advice are presented or negotiated on or before the expiry date of
the Letter of Credit or any renewal or extension thereof then in effect, and
conforms to the terms and conditions of such Letter of Credit. Furthermore,
neither the Issuing Lender nor any of its correspondents shall be responsible,
as to any document presented under a Letter of Credit which appears to be
regular on its face, and appears on its face to be in substantial compliance
with the terms of the Letter of Credit, for the validity or sufficiency of any
signature or endorsement, for delay in giving any notice or failure of any
instrument to bear adequate reference to the Letter of Credit, or for failure of
any person to note the amount of any draft on the reverse of the Letter of
Credit. The Issuing Lender shall have the right, in its sole discretion, to
decline to accept any documents and to decline making payment under any Letter
of Credit if the documents presented are not in strict compliance with the terms
of such Letter of Credit.
(ii) Any action, inaction or omission on the part of the Issuing
Lender or any of its correspondents under or in connection with any Letter of
Credit or the related instruments, documents or property, if in good faith and
in conformity with such laws, regulations or customs as are applicable, shall be
binding upon the Company and shall not place the Issuing Lender or any of its
correspondents under any liability to the Company in the absence of (x) gross
negligence or willful misconduct by the Issuing Lender or its correspondents or
(y) the failure by the Issuing Lender to pay under a Letter of Credit after
presentation of a draft and documents strictly complying with such Letter of
Credit unless the Issuing Lender is prohibited from making such payment pursuant
to a court order. The Issuing Lender's rights, powers, privileges and immunities
specified in or arising under this Agreement are in addition to any heretofore
or at any time hereafter otherwise created or arising, whether by statute or
rule of law or contract. All Letters of Credit issued hereunder will, except to
the extent otherwise expressly provided hereunder, be governed by the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce, Publication No. 500, and any subsequent revisions thereof.
(d) OBLIGATIONS OF LENDERS IN RESPECT OF LETTERS OF CREDIT. Each
Lender acknowledges that each Letter of Credit issued by the Issuing Lender
pursuant to this Agreement
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is issued by the Issuing Lender on behalf of and with the ratable participation
of all of the Lenders (i.e., in accordance with their Commitment Proportions),
and each Lender agrees to make the payments required by subsection (b) hereof
and agrees to be responsible for its pro rata share of all liabilities incurred
by the Issuing Lender in respect of each Letter of Credit issued, established,
opened or extended by the Issuing Lender hereunder for the account of the
Company, including the Existing Letters of Credit. Each Lender agrees with the
Issuing Lender and the other Lenders that its obligation to make the payments
required by subsection (b) hereof shall not be affected in any way by any
circumstances (other than the gross negligence or willful misconduct of the
Issuing Lender) occurring before or after the making of any payment by the
Issuing Lender pursuant to any Letter of Credit, including, without limitation:
(i) any modification or amendment of, or any consent, waiver, release or
forbearance with respect to, any of the terms of this Agreement or any other
instrument or document referred to herein; (ii) the existence of any Default or
Event of Default; or (iii) any change of any kind whatsoever in the financial
position or credit worthiness of the Company.
(e) LETTERS OF CREDIT COLLATERAL. In the event any Letter of Credit
shall not have matured or presentment for honor shall not have occurred on or
prior to the Revolving Commitment Termination Date or such earlier date on which
the Total Revolving Credit Commitments shall terminate, the Company shall
provide the Agent with Cash Collateral in an amount equal to the aggregate
undrawn amounts of such Letters of Credit. Such Cash Collateral shall be applied
by the Agent to reimburse the Issuing Lender for drawings under such Letters of
Credit which the Issuing Lender has not been so reimbursed.
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
SECTION 3.01. INTEREST RATES; CONTINUATION AND CONVERSION OF LOANS.
(a) Each Prime Rate Loan shall bear interest for the period from the
date thereof on the unpaid principal amount thereof at a fluctuating rate per
annum equal to the Prime Rate plus the Applicable Margin.
(b) Each Adjusted Libor Loan shall bear interest for the Interest
Period applicable thereto on the unpaid principal amount thereof at a rate per
annum equal to the Reserve Adjusted Libor determined for each Interest Period
thereof in accordance with the terms hereof plus the Applicable Margin.
(c) Upon the occurrence and during the continuance of an Event of
Default the outstanding principal amount of the Loans (excluding any defaulted
payment of principal accruing interest in accordance with clause (d) below),
shall, at the option of the Required Lenders, bear interest payable on demand at
a rate of interest 3% per annum in excess of the interest rate otherwise then in
effect.
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(d) If the Company shall default in the payment of the principal of or
interest on any portion of any Loan or any other amount becoming due hereunder,
whether with respect to reimbursement of drawings under Letters of Credit,
interest, fees, expenses or otherwise, the Company shall pay interest on such
defaulted amount accruing from the date of such default up to and including the
date of actual payment (after as well as before judgment) at a rate of 3% per
annum in excess of the rate otherwise in effect or, if no rate is in effect, 3%
per annum in excess of the Prime Rate.
(e) The Company may elect from time to time to convert outstanding
Loans from Adjusted Libor Loans to Prime Rate Loans by giving the Agent at least
three Business Day's prior irrevocable written notice (or telephonic notice
promptly confirmed in writing) of such election, provided that any such
conversion of Adjusted Libor Loans shall only be made on the last day of an
Interest Period with respect thereto or upon the date of payment in full of any
amounts owing pursuant to Section 3.08 as a result of such conversion. Upon
receipt of such notice, the Agent shall promptly notify each Lender thereof. The
Company may elect from time to time to convert outstanding Loans from Prime Rate
Loans to Adjusted Libor Loans by giving the Agent irrevocable written notice of
such election not later than 11:00 a.m. New York, New York time, three Business
Days prior to the date of the proposed conversion. Upon receipt of such notice
the Agent shall promptly notify each Lender thereof. All or any part of
outstanding Prime Rate Loans may be converted as provided herein, provided that
each conversion shall be in the principal amount of $1,000,000 (or $500,000 if
there is only one Lender) or whole multiples of $500,000 in excess thereof, and
further provided that no Default or Event of Default shall have occurred and be
continuing. Any conversion to or from Adjusted Libor Loans hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of all Adjusted Libor Loans having the
same Interest Period shall not be less than $1,000,000 (or $500,000 if there is
only one Lender).
(f) Any Adjusted Libor Loan in a minimum principal amount of
$1,000,000 (or $500,000 if there is only one Lender) may be continued as such
upon the expiration of an Interest Period with respect thereto by compliance by
the Company with the notice provisions contained in the definition of "Interest
Period"; provided, that no Adjusted Libor Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but shall be
automatically converted to a Prime Rate Loan on the last day of the Interest
Period in effect when the Agent is notified, or otherwise has actual knowledge,
of such Default or Event of Default.
(g) If the Company shall fail to select the duration of any Interest
Period for any Adjusted Libor Loan in accordance with the definition of
"Interest Period" set forth in Section 1.01, the Company shall be deemed to have
selected an Interest Period of one month.
(h) No Loan may be requested or continued as, or converted to, an
Adjusted Libor Loan with an Interest Period that extends beyond the Revolving
Credit Commitment Termination Date.
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(i) Anything in this Agreement or in any Note to the contrary
notwithstanding, the obligation of the Company to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be paid to the Lender to the extent that the charging or receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting the rates of interest that may be charged or collected by the Lender.
If the provisions of this Agreement or any Note would at any time otherwise
require payment by the Company to the Lender of any amount of interest in excess
of the maximum amount then permitted by applicable law the interest payments
shall be reduced to the extent necessary so that the Lender shall not receive
interest in excess of such maximum amount. To the extent that, pursuant to the
foregoing sentence, the Lender shall receive interest payments hereunder or
under any Note in an amount less than the amount otherwise provided herein or in
any Note, such deficit (hereinafter called the "Interest Deficit") will cumulate
and will be carried forward (without interest) until the termination of this
Agreement. Interest otherwise payable to the Lender hereunder and under any Note
for any subsequent period shall be increased by such maximum amount of the
Interest Deficit that may be so added without causing the Lender to receive
interest in excess of the maximum amount then permitted by applicable law. The
amount of the Interest Deficit shall to the extent not prohibited by law be
treated as a prepayment penalty and paid in full at the time of any optional
prepayment by the Company to the Lender of all or any part of the Loans. The
amount of the Interest Deficit relating to a Note at the time of any complete
payment of such Note at that time outstanding shall be cancelled and not paid.
(j) Interest on each Loan shall be payable in arrears on each Interest
Payment Date and shall be calculated on the basis year of 360 days and shall be
payable for the actual days elapsed. Any rate of interest on the Loans or other
Obligations which is computed on the basis of the Prime Rate shall change when
and as the Prime Rate changes in accordance with the definition thereof. Each
determination by the Agent of an interest rate under this Section 3.01 or fee
under Section 3.04 shall, absent manifest error, be conclusive and binding for
all purposes.
SECTION 3.02. USE OF PROCEEDS. The proceeds of the Revolving Credit
Loans shall be used solely (i) to finance (x) a portion of the Merger Payment
and (y) a portion of the expenses incurred by the Company in connection with the
Merger, provided that the sum of (x) and (y) shall not exceed $15,000,000, and
(ii) to finance the Company's general corporate purposes, (other than any
acquisition of all or substantially all of the Equity Interests of another
Person which is not approved by the board of directors or other governing body
of the Person to be acquired). Letters of Credit shall be issued for purposes in
connection with and in the ordinary course of the business of the Company and
consistent with the historical purposes of letters of credit issued for the
account of the Company prior to the date hereof.
SECTION 3.03. MANDATORY AND OPTIONAL PREPAYMENTS.
(a) In the event of any Asset Sale permitted pursuant to Section 7.04,
the Company shall apply within one Business Day of the closing of such Asset
Sale the Net Proceeds therefrom to pay the Revolving Credit Loans then
outstanding; provided, however, in the event that the Net Proceeds or any
portion thereof constitute Excluded Proceeds, then the Company shall apply such
Excluded Proceeds to pay the Revolving Credit Loans within 361 days of the
closing of such Asset
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Sale to the extent such Excluded Proceeds have not been applied to an Excluded
Proceeds Permitted Use. If such Net Proceeds arise from a Non-Equity Asset Sale
such payment shall permanently reduce the Total Revolving Credit Commitment by
an amount equal to the aggregate principal amount of Revolving Credit Loans
repaid. In the event the amount of such Net Proceeds from a Non-Equity Asset
Sale exceeds the outstanding principal amount of the Revolving Credit Loans
outstanding on the date of any mandatory repayment required hereunder, then the
Total Revolving Credit Commitment shall be reduced by an amount equal to such
excess Net Proceeds. If after making a mandatory prepayment pursuant to this
Section 3.03(a) as a result of a Non- Equity Asset Sale, the Aggregate Letters
of Credit Outstanding exceeds the Total Revolving Credit Commitment, the Company
shall, on the closing date of such sale, provide to the Agent Cash Collateral
for the ratable benefit of the Issuing Lender in an amount equal to such excess.
(b) The Company may at any time and from time to time prepay the then
outstanding Loans, in whole or in part, without premium or penalty, except as
provided in Section 3.08, upon written notice to the Agent (or telephonic notice
promptly confirmed in writing) not later than 11:00 a.m. New York, New York
time, three Business Days before the date of prepayment with respect to
prepayments of Adjusted Libor Loans, or 11:00 a.m. New York, New York time one
Business Day before the date of prepayment with respect to Prime Rate Loans.
Each notice shall be irrevocable and shall specify the date and amount of
prepayment and whether such prepayment is of Adjusted Libor Loans or Prime Rate
Loans or a combination thereof, and if a combination thereof, the amount of
prepayment allocable to each. Upon receipt of such notice, the Agent shall
promptly notify each Lender thereof. If such notice is given, the Company shall
make such prepayment, and the amount specified in such notice shall be due and
payable, on the date specified therein together with accrued interest to (but
excluding) such date on the amount repaid. Each partial prepayment pursuant to
this Section 3.03 shall be in a principal amount of (x) $400,000 or whole
multiples of $100,000 in excess thereof with respect to Prime Rate Loans and (y)
$1,000,000 (or $500,000 if there is only a single Lender) or whole multiples of
$500,000 in excess thereof with respect to Adjusted Libor Loans.
SECTION 3.04. FEES. (a) The Company agrees to pay the Agent for its
own account, such agency and other fees as agreed between the Company and the
Agent.
(b) The Company shall pay to each Lender a commitment fee equal to
such Lender's Commitment Proportion of an amount equal to (x) the average daily
unused portion of the Total Revolving Credit Commitment multiplied by (y) the
Unused Fee Rate, from the date of this Agreement until the Revolving Credit
Commitment Termination Date. The commitment fee shall be calculated on the basis
of a year of 360 days for the actual number of days elapsed and shall be payable
on the last Business Day of each calendar quarter, commencing December 31, 1999,
and on the Revolving Credit Commitment Termination Date and on any day the Total
Revolving Credit Commitment is permanently reduced in whole or in part.
(c) The Company shall pay to the Issuing Lender, on demand, for the
Issuing Lender's own account all customary fees charged by the Issuing Lender
with respect to the processing, issuance, administration, renewal, extension,
amendment, payment and negotiation of letters of credit.
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(d) The Company shall pay to the Agent for the account of each Lender
a participation fee with respect to each Lender's participation in Letters of
Credit which shall accrue at a rate per annum equal to .875% multiplied by the
stated amount of each Letter of Credit at the time of issuance thereof, and
payable on the date of such issuance and each anniversary of such date
thereafter to the extent the applicable Letter of Credit remains outstanding on
such date. Such fee shall be calculated on the basis of 360 days for the actual
number of days from the date of issuance of the Letter of Credit or anniversary,
as applicable, to the earlier of the next succeeding anniversary or the date on
which the Letter of Credit expires if there is no drawing thereunder.
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE. In the event that
the Agent shall have determined (which determination shall be conclusive and
binding upon the Company) that, by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the Reserve Adjusted Libor applicable pursuant to Section 3.01(b) for any
requested Interest Period with respect to (a) the making of an Adjusted Libor
Loan, (b) an Adjusted Libor Loan that will result from the requested conversion
of a Prime Rate Loan into an Adjusted Libor Loan, or (c) the continuation of an
Adjusted Libor Loan beyond the expiration of the then current Interest Period
with respect thereto, the Agent shall forthwith give notice by telephone of such
determination, promptly confirmed in writing, to the Company and each Lender.
From the date of such notice until the Agent notifies the Company that the
circumstances giving rise to the suspension described herein no longer exist,
the Company shall not have the right to request or continue an Adjusted Libor
Loan or to convert a Prime Rate Loan to an Adjusted Libor Loan.
SECTION 3.06. ILLEGALITY. Notwithstanding any other provisions herein,
if any introduction of or change in any law, regulation, treaty or directive or
in the interpretation or application thereof shall make it unlawful for any
Lender to make or maintain Adjusted Libor Loans as contemplated by this
Agreement, such Lender shall forthwith give notice by telephone of such
circumstances, promptly confirmed in writing, to the Agent, which notice the
Agent shall promptly transmit to the Company and the other Lenders and (a) the
commitment of such Lender to make and to allow conversion to or continuations of
Adjusted Libor Loans shall forthwith be cancelled for the duration of such
illegality and (b) the Loans then outstanding as Adjusted Libor Loans, if any,
shall be converted automatically to Prime Rate Loans on the next succeeding last
day of each Interest Period applicable to such Adjusted Libor Loans or within
such earlier period as may be required by law. The Company shall pay to such
Lender, upon demand, any additional amounts required to be paid pursuant to
Section 3.08 hereof.
SECTION 3.07. INCREASED COSTS. (a) In the event that any introduction
of or change in, on or after the date hereof, any applicable law, regulation,
treaty, order, directive or in the interpretation or application thereof
(including, without limitation, any request, guideline or policy, whether or not
having the force of law, of or from any central bank or other Governmental
Authority and including, without limitation, Regulation D), by any authority
charged with the administration or interpretation thereof shall occur, which:
34
(i) shall subject any Lender or the Issuing Lender to any tax of any
kind whatsoever with respect to this Agreement, any Note, any Loan, or any
Letter of Credit or change the basis of taxation of payments to such Lender or
the Issuing Lender of principal, interest, fees or any other amount payable
hereunder (other than any franchise tax or tax that is measured with respect to
the overall net income of such Lender or the Issuing Lender or Lending Office of
such Lender or the Issuing Lender and that is imposed by the United States of
America, or any political subdivision or taxing authority thereof or therein, or
by any jurisdiction in which such Lender's Lending Office or the Issuing
Lender's Lending Office is located, or by any jurisdiction in which such Lender
is organized, has its principal office or is managed and controlled); or
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement (whether or not having the force
of law) against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of any Lender or the Issuing Lender; or
(iii) shall impose on any Lender or the Issuing Lender any other
condition, or change therein;
and the result of any of the foregoing is to increase the cost to such Lender or
the Issuing Lender of making, renewing or maintaining or participating in
advances or extensions of credit hereunder or to reduce any amount receivable
hereunder, in each case by an amount which such Lender or the Issuing Lender
deems material, then, in any such case, the Company shall pay such Lender or the
Issuing Lender, on demand therefor, such additional amount or amounts as such
Lender or the Issuing Lender shall have determined will compensate such Lender
or the Issuing Lender for such increased costs or reduction.
(b) If any Lender or the Issuing Lender shall have determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
or the Issuing Lender (or any lending office of any Lender or the Issuing
Lender) or any Lender's or the Issuing Lender's holding company, with any
request or directive regarding capital adequacy (whether or not having the force
of the law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's or the
Issuing Lender's capital or on the capital of such Lender's or the Issuing
Lender's holding company as a consequence of its obligations hereunder to a
level below that which such Lender or the Issuing Lender could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or the Issuing Lender's policies and the policies of such Lender's or the
Issuing Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender or the Issuing Lender to be material, then from time to
time, the Company shall pay to such Lender or the Issuing Lender on demand
therefor the additional amount or amounts as such Lender or the Issuing Lender
shall have determined will compensate such Lender or Issuing Lender or such
Lender's or the Issuing Lender's holding company for such reduction. Such
Lender's or the Issuing Lender's determination of such amounts shall be
conclusive and binding on the Company absent manifest error.
35
(c) In the event any Lender or the Issuing Lender shall be entitled to
compensation pursuant to Section 3.07(a) or Section 3.07(b), it shall promptly
notify the Agent and the Company of the event by reason of which it has become
so entitled; provided, however, no failure on the part of any Lender or the
Issuing Lender to demand compensation under clause (a) or clause (b) above on
one occasion shall constitute a waiver of its right to demand compensation on
any other occasion.
SECTION 3.08. INDEMNITY. The Company agrees to indemnify each Lender
and to hold each Lender harmless from any loss, cost or expense which such
Lender may sustain or incur, including, without limitation, interest or fees
payable by such Lender to lenders of funds obtained by it in order to maintain
Adjusted Libor Loans hereunder, as a consequence of (a) default by the Company
in payment of the principal amount of or interest on any Adjusted Libor Loan,
(b) default by the Company to accept or make a borrowing of an Adjusted Libor
Loan or a conversion into or continuation of an Adjusted Libor Loan after the
Company has requested such borrowing, conversion or continuation, (c) default by
the Company in making any prepayment of any Adjusted Libor Loan after the
Company gives a notice in accordance with Section 3.03 of this Agreement and/or
(d) the making of any payment or prepayment (whether mandatory or optional) of
an Adjusted Libor Loan or the making of any conversion of an Adjusted Libor Loan
to a Prime Rate Loan on a day which is not the last day of the applicable
Interest Period with respect thereto. A certificate of a Lender setting forth
such amounts shall be conclusive absent manifest error. The Company shall pay
such Lender the amount shown as due on any certificate within five days after
receipt thereof.
SECTION 3.09. TAXES. (a) Except as required by law, all payments made
by the Company under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
income and franchise taxes imposed on the Agent, the Issuing Lender or a Lender
by (i) the United States of America or any political subdivision or taxing
authority thereof or therein, (ii) the jurisdiction under the laws of which the
Agent, the Issuing Lender or such Lender is organized or in which it has its
principal office or is managed and controlled or any political subdivision or
taxing authority thereof or therein, or (iii) any jurisdiction in which such
Lender's Lending Office or the Issuing Lender's lending office is located or any
political subdivision or taxing authority thereof or therein (such non-excluded
taxes being called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Agent, the Issuing Lender or any Lender hereunder, or
under the Notes, the amount so payable to the Agent, the Issuing Lender or such
Lender shall be increased to the extent necessary to yield to the Agent, the
Issuing Lender or such Lender (after payment of all Taxes and free and clear of
all liability in respect of such Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes. Whenever any Taxes are payable by the Company, as promptly as
possible thereafter, the Company shall send to the Agent for its own account or
for the account of the Issuing Lender or such Lender, as the case may be, a
certified copy of an original official receipt showing payment thereof. If the
Company fails to pay Taxes when due to the appropriate taxing authority or fails
to remit to the Agent the required
36
receipts or other required documentary evidence, the Company shall indemnify the
Agent, the Issuing Lender and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent, the Issuing Lender or such
Lender as a result of any such failure together with any expenses payable by the
Agent, the Issuing Lender or such Lender in connection therewith.
(b) Prior to the first Interest Payment Date, each Lender that is not
organized under the laws of the United States or a state thereof agrees that it
will deliver to the Agent (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, certifying in each case that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, and (ii) an Internal Revenue Service Form W-8 or
W-9 or successor applicable form, as the case may be, to establish an exemption
from United States back-up withholding tax. Each Lender which delivers to the
Company and the Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the
preceding sentence further undertakes to deliver to the Agent two further copies
of the said statement and Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, or other manner of certification, as the case may be, on or
before the date that any such letter or form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent letter
and form previously delivered by it to the Agent, and such extensions or
renewals thereof as may reasonably be requested by the Agent, certifying in the
case of a Form 1001 or 4224 that such Lender is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes. If a Lender fails to provide a copy or form required
pursuant to this Section 3.09(b), upon notice by the Company to the Agent and
such Lender, (i) the Company shall be entitled to deduct or withhold on payments
to the Agent or such Lender as a result of such failure, as required by law, and
(ii) the Company shall not be required to make payments of additional amounts
with respect to withheld Taxes pursuant to Section 3.09(a) to the extent such
withholding is required solely of the failure of Agent or Lender to provide the
necessary copy or form.
SECTION 3.10. PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by
the Company from the Lenders, each conversion of a Loan pursuant to Section
3.01(e) or continuation of a Loan pursuant to Section 3.01(f), each payment by
the Company on account of any fee (other than with respect to fees for the
account of the Agent and the Issuing Lender described in Section 3.04 and
reimbursements by the Company to the Issuing Lender with respect to drawings
under Letters of Credit pursuant to Section 2.03) and any reduction of the
Revolving Credit Commitments of the Lenders hereunder shall be made pro rata
according to the respective relevant Commitment Proportions of the Lenders. Each
payment (including each prepayment) by the Company on account of principal of
and interest on each Loan shall be made pro rata according to the respective
outstanding principal amounts of such Loans held by each Lender. All payments
(including prepayments) to be made by the Company on account of principal,
interest, fees and reimbursement obligations shall be made without set-off or
counterclaim and shall be made to the Agent, for the account of the Lenders
(except as specified in Sections 2.03(b) and Section 3.04) at the Payment Office
of the Agent in Dollars in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds by
wire transfer of each Lender's portion of such payment to such Lender for the
account of its Lending Office. The
37
Agent may, in its sole discretion, directly charge principal and interest
payments and fees due in respect of the Loans to the Company's accounts at the
Payment Office or other office of the Agent. The Issuing Lender may, in its sole
discretion, directly charge reimbursement obligations with respect to Letters of
Credit to the Company's accounts at any office of the Issuing Lender. Except as
otherwise provided in the definition of "Interest Period", if any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon or fees shall be payable at the then
applicable rate during such extension.
SECTION 3.11. FUNDING AND DISBURSEMENT OF LOANS. (a) Each Lender shall
make each Loan to be made by it hereunder available to the Agent at the Payment
Office for the account of such office and the Agent by 1:00 p.m. New York, New
York time on the Borrowing Date in Dollars in immediately available funds.
Unless any applicable condition specified in Article V has not been satisfied,
the amount so received by the Agent will be made available to the Company at the
Payment Office by crediting the account of the Company with such amount and in
like funds as received by the Agent; provided, however, that if the proceeds of
any Loan or any portion thereof are to be used to prepay outstanding Loans, then
the Agent shall apply such proceeds for such purpose to extent necessary and
credit the balance, if any, to the Company's account.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a proposed Borrowing Date that such Lender will not make the amount
which would constitute its Commitment Proportion of the borrowing on such
Borrowing Date available to the Agent, the Agent may assume that such Lender has
made such amount available to the Agent on such Borrowing Date, and the Agent
may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is not made available to the Agent until a
date after such Borrowing Date, such Lender shall pay to the Agent on demand
interest on such Lender's Commitment Proportion of such borrowing at a rate
equal to the greater of (i) the daily average Federal Funds Rate and (ii) a rate
determined by the Agent in accordance with banking industry rules on interbank
compensation during such period, from and including such Borrowing Date to the
date on which such Lender's Commitment Proportion of such borrowing shall have
become immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts due pursuant to this Section 3.11(b)
shall be conclusive absent manifest error. Nothing herein shall be deemed to
relieve any Lender from its obligations to fulfill its commitment hereunder or
to prejudice any right which the Company may have against any Lender as a result
of any default by such Lender hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans herein provided for, the Company represents and warrants to the
Agent and each Lender that:
SECTION 4.01. ORGANIZATION, POWERS. The Company and each Corporate
Guarantor (a) is a corporation, general partnership or limited liability company
as indicated on
38
Schedule I attached hereto duly organized, validly existing and in good standing
under the laws of the state of its incorporation or formation, (b) has the
corporate, limited liability or partnership power, as applicable, and authority
to own its properties and to carry on its business as now being conducted, (c)
is duly qualified to do business in every jurisdiction wherein the conduct of
its business or the ownership of its properties are such as to require such
qualification except those jurisdictions in which the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect, and (d) has
the corporate power to execute, deliver and perform each of the Loan Documents
to which it is a party, including, without limitation, with respect to the
Company, the power to obtain extensions of credit hereunder and to execute and
deliver the Notes.
SECTION 4.02. AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by the Company of this Agreement, and the
other Loan Documents to which it is a party, the borrowings and the other
extensions of credit to the Company hereunder, and the execution, delivery and
performance by each of the Corporate Guarantors of the Loan Documents to which
such Corporate Guarantor is a party, (a) have, with respect to the Company and
each Corporate Guarantor, been duly authorized by all requisite corporate,
limited liability or partnership action as applicable, (b) will not violate or
require any consent (other than consents as have been made or obtained and which
are in full force and effect) under (i) any provision of law applicable to the
Company or any Corporate Guarantor, any rule or regulation of any Governmental
Authority, or the certificate of incorporation or by-laws, articles of
organization, operating agreement or partnership agreement as applicable of the
Company or of any Corporate Guarantor or (ii) any order of any court or other
Governmental Authority binding on the Company or any Corporate Guarantor or any
indenture, agreement or other instrument to which the Company or any Corporate
Guarantor is a party, or by which the Company or any Corporate Guarantor or any
of its property is bound, and (c) will not be in conflict with, result in a
breach of or constitute (with due notice and/or lapse of time) a default under,
any such indenture, agreement or other instrument, or result in the creation or
imposition of any Lien, of any nature whatsoever upon any of the property or
assets of the Company or any Corporate Guarantor other than as contemplated by
this Agreement or the other Loan Documents. This Agreement and each other Loan
Document to which the Company or any Corporate Guarantor is a party constitutes
a legal, valid and binding obligation of the Company and each such Corporate
Guarantor, as the case may be, enforceable against the Company and each such
Corporate Guarantor, as the case may be, in accordance with its terms except to
the extent that enforcement may be limited by applicable bankruptcy, fraudulent
conveyance, reorganization, moratorium, insolvency and similar laws affecting
creditors' rights generally or by equitable principles of general application,
regardless of whether considered in a proceeding in equity or at law or by
equitable principles of general application.
SECTION 4.03. FINANCIAL CONDITION. (a) The Company has heretofore
furnished to each Lender (i) the audited consolidated balance sheet of the
Company and the related statements of income, retained earnings and cash flow of
the Company and its Subsidiaries, audited by Xxxxxx Xxxxxxxx LLP, independent
certified public accountants, as of January 3, 1999 and for the fiscal year then
ended and (ii) the management prepared unaudited consolidated balance sheet and
the related statements of income, retained earnings and cash flow of the
39
Company and its Subsidiaries as of July 18, 1999 and for the twenty-eight week
period then ended. Such financial statements were prepared in conformity with
Generally Accepted Accounting Principles, applied on a consistent basis, and
fairly present the financial condition and results of operations of the Company
and its Subsidiaries as of the date of such financial statements and for the
periods to which they relate and, since July 18, 1999, no Material Adverse
Effect has occurred, except to the extent reflected on the pro forma financial
statements referred to in Section 5.01(n)(i) hereof (subject to adjustments
resulting from the interest rate and discount applicable to the Senior Notes).
The Company shall deliver to the Agent, with a copy for each Lender, a
certificate of the Chief Financial Officer of the Company to that effect on the
Closing Date. Other than obligations and liabilities arising in the ordinary
course of business since July 18, 1999 and the indebtedness evidenced by the
Senior Notes, the Existing Indebtedness and the Committed Restricted
Investments, neither the Company nor any Subsidiaries have incurred any
obligations or liabilities contingent or otherwise that would be required to be
included on the face of, or in footnotes to, consolidated financial statements
of the Company, which are not reflected or disclosed on such statements other
than obligations of the Company and its Subsidiaries incurred in the ordinary
course of business (which shall be deemed to exclude obligations or liabilities
arising from acquisitions by the Company or any of its Subsidiaries of the
business or assets (including, without limitation stock) of any Person).
(b) The Company, individually and together with the Corporate
Guarantors, is Solvent and immediately after giving effect to the Merger and to
each Loan and each other extension of credit contemplated by this Agreement and
the execution of each Loan Document, will be Solvent.
SECTION 4.04. TAXES. All assessed deficiencies resulting from Internal
Revenue Service examinations of the federal income tax returns of the Company or
any Corporate Guarantor have been discharged or reserved against in accordance
with Generally Accepted Accounting Principles. The Company and each Corporate
Guarantor has filed or caused to be filed all federal, state and local tax
returns which are required to be filed, and has paid or has caused to be paid
all taxes as shown on said returns or on any assessment received by them, to the
extent that such taxes have become due, except taxes which are being contested
in good faith and which are reserved against in accordance with Generally
Accepted Accounting Principles.
SECTION 4.05. TITLE TO PROPERTIES. The Company and each Corporate
Guarantor has good title to their respective properties and assets reflected on
the financial statements referred to in Section 4.03 hereof, except for such
properties and assets as have been disposed of since the date of such financial
statements as no longer used or useful in the conduct of their respective
businesses or as have been disposed of in the ordinary course of business or as
permitted pursuant to this Agreement, and all such properties and assets are
free and clear of all Liens other than Permitted Liens.
SECTION 4.06. LITIGATION. (a) There are no actions, suits or
proceedings (whether or not purportedly on behalf of the Company or of any
Corporate Guarantor) pending or, to the knowledge of the Company or any
Corporate Guarantor, threatened against the Company or any Corporate Guarantor
at law or in equity or before or by any Governmental Authority, which
40
involve any of the transactions contemplated herein or which, if adversely
determined against the Company or such Corporate Guarantor, could reasonably be
expected to result in a Material Adverse Effect; and (b) neither the Company nor
any Corporate Guarantor is in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any Governmental Authority which could
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.07. RESTRICTIONS. Neither the Company nor any Corporate
Guarantor is subject to any charter or other corporate restriction, or any
judgment, order, writ, injunction, decree or regulation which could reasonably
be expected to have a Material Adverse Effect.
SECTION 4.08. COMPLIANCE WITH ERISA. Each Plan is in compliance with
in all material respects with ERISA; no Plan is insolvent or in reorganization,
no Plan or Plans have an Unfunded Current Liability in excess of $1,000,000
individually or in the aggregate, and no Plan has an accumulated or waived
funding deficiency in excess of $1,000,000, individually or in the aggregate;
neither the Company, any Corporate Guarantor nor any ERISA Affiliate has
incurred any liability to or on account of a Plan pursuant to Section 515, 4062,
4063, 4064, 4201 or 4204 of ERISA or reasonably expects to incur any liability
under any of the foregoing sections on account of the prior termination of
participation in or contributions to any such Plan in excess of $1,000,000,
individually or in the aggregate, no proceedings have been instituted to
terminate any Plan which would cause the Company to incur a liability in excess
of $1,000,000, individually or in the aggregate, in each case; no condition
exists which could reasonably be expected to present a risk to the Company, any
Corporate Guarantor or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code in
excess of $1,000,000 individually or in the aggregate; no lien imposed under the
Code or ERISA on the assets of the Company, any Corporate Guarantor or any of
its ERISA Affiliates exists or could reasonably be expected to arise on account
of any Plan which secures liabilities in excess of $1,000,000, individually or
in the aggregate; and the Company and each Corporate Guarantor may terminate
contributions to any other employee benefit plans maintained by it without
incurring any liability to any Person interested therein in excess of $1,000,000
individually or in the aggregate.
SECTION 4.09. FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS. (a)
Neither the Company nor any Corporate Guarantor is engaged principally in, nor
has as one of its important activities, the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States, as amended from time to time).
(b) No part of the proceeds of any Loan and no other extension of
credit hereunder will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or to carry margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock, or to refund indebtedness originally incurred for such purposes,
or (ii) for any purpose which violates or is inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
41
(c) The proceeds of each Loan, and each other extension of credit
hereunder shall be used solely for the purposes permitted under Section 3.02.
SECTION 4.10. APPROVALS. No registration with or consent or approval
of, or other action by, any Governmental Authority or any other Person is
required in connection with the execution, delivery and performance of this
Agreement by the Company or any Corporate Guarantor, or with the execution and
delivery of other Loan Documents to which the Company or any Corporate Guarantor
is a party or, with respect to the Company, the borrowings and each other
extension of credit hereunder.
SECTION 4.11. SUBSIDIARIES. Attached hereto as Schedule I is a correct
and complete list of each of the Company's Subsidiaries as of the Closing Date
showing as to each Subsidiary, its name, type of entity (i.e., corporation,
limited liability company, etc.), the jurisdiction of its incorporation or
formation, the holders of the Voting Stock in each Subsidiary, the outstanding
Voting Stock held by such holders and whether the Subsidiary is an Unrestricted
Subsidiary. Schedule I shall be deemed updated after the date hereof with
respect to any Subsidiary with respect to which the Company has complied with
its obligations under Section 6.13. All of the outstanding capital stock of the
Company will, immediately following completion of the Merger, be owned
beneficially and of record by the Persons indicated as such owners on Schedule
I.
SECTION 4.12. HAZARDOUS MATERIALS. The Company and each Corporate
Guarantor is in compliance with all applicable Environmental Laws and neither
the Company nor any Corporate Guarantor has used Hazardous Materials on, from,
or affecting any property now owned or occupied, previously owned or occupied,
or hereafter owned or occupied by the Company or any Corporate Guarantor in any
manner which violates any applicable Environmental Law, except where any such
violations could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. To the Company's knowledge, no prior owner of
any such property or any tenant, subtenant, prior tenant or prior subtenant have
used Hazardous Materials on, from, or affecting such property in any manner
which violates any applicable Environmental Law, except where any such
violations could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect
SECTION 4.13. INVESTMENT COMPANY ACT. Neither the Company nor any
Corporate Guarantor is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.14. NO DEFAULT. No Default or Event of Default has occurred
and is continuing.
SECTION 4.15. MATERIAL CONTRACTS. All Material Contracts are disclosed
on Schedule V hereto as the same may be updated from time to time by the Company
by written notice to the Agent. Each such Material Contract is in full force and
effect and is binding upon and enforceable against the Company and any Corporate
Guarantor, in each case, to the extent they are a party thereto, and, to the
Company's knowledge, all other parties thereto in accordance
42
with its terms, and there exists no default, under any Material Contract by the
Company or any Corporate Guarantor or, to the Company's knowledge, by any other
party thereto which has not been fully cured or waived, except those that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.16. PERMITS AND LICENSES. The Company and each Corporate
Guarantor has all permits, licenses, certifications, authorizations and
approvals required for it lawfully to own and operate their respective
businesses except those the failure of which to have could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.17. COMPLIANCE WITH LAW. The Company and each Corporate
Guarantor are each in compliance, with all laws, rules, regulations, orders and
decrees which are applicable to the Company or any Corporate Guarantor, or to
any of their respective properties, except where the failure to comply could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.18. Y2K. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the Company's or any
Corporate Guarantor's computer systems and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Company's or any Corporate Guarantor's systems interface), and the testing of
all such systems and equipment, as so reprogrammed has been completed, except to
the extent the failure to conduct such reprogramming or testing could not
reasonably be expected to have a Material Adverse Effect. The cost to the
Company and each Corporate Guarantor's of such reprogramming and testing and of
the reasonably foreseeable consequences of the year 2000 to the Company and each
Corporate Guarantor (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or Event
of Default or have a Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and each Corporate
Guarantor are and, with ordinary course upgrading and maintenance, will continue
to be sufficient to permit the Company and each Corporate Guarantor to conduct
their respective businesses without having a Material Adverse Effect.
SECTION 4.19. FISCAL YEAR END. The next succeeding six fiscal year
ends of the Company are January 2, 2000, December 31, 2000, December 30, 2001,
December 29, 2002, December 28, 2003 and January 2, 2005.
SECTION 4.20. CERTAIN AGREEMENTS. The Merger Agreement and the Note
Purchase Agreement, a true, correct and complete copy of each of which has
heretofore been furnished to each Lender (including all schedules, exhibits,
annexes, amendments and disclosure letters referred to therein are delivered
pursuant thereto) have each been duly executed and delivered by the parties
thereto, and on the date hereof is, and on the Closing Date will be, in full
force and effect in accordance with its terms.
43
SECTION 4.21. REPRESENTATIONS AND WARRANTIES CONTAINED IN CERTAIN
AGREEMENTS. Without limiting or modifying the representations and warranties of
the Company contained herein, the representations and warranties of the Company
and of SMLLC contained in the Merger Agreement and the Company and the Corporate
Guarantors contained in the Note Purchase Agreement will be true and correct in
all material respects on the Closing Date as if made on and as of the Closing
Date; and the Lenders are entitled to rely on the representations and warranties
of the Company to the same extent as those such representations and warranties
were set forth in full herein. The Company is in compliance with its covenants
and agreements set forth in the Note Purchase Agreement and the Company and
SMLLC are each in compliance with their respective covenants and agreements set
forth in the Merger Agreement.
SECTION 4.22. DISCLOSURE. Neither this Agreement, any other Loan
Document, nor any other document, certificate or written statement furnished to
the Agent, the Issuing Lender, or any Lender by or on behalf of the Company or
any Corporate Guarantor for use in connection with the transactions contemplated
by this Agreement contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which they were made.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make its initial Loan hereunder and the obligation
of the Issuing Lender to issue the initial Letter of Credit hereunder, are
subject to the following conditions precedent:
(a) NOTES. On or prior to the Closing Date, the Agent shall have
received for the account of each Lender a Revolving Credit Note duly executed by
the Company.
(b) CORPORATE GUARANTIES. On or prior to the Closing Date, the Agent
shall have received, with a counterpart for each Lender, the Corporate
Guaranties duly executed by each Corporate Guarantor.
(c) OPINION OF COUNSEL. On or prior to the Closing Date, the Agent
shall have received, with a copy for each Lender, a written opinion of counsel
for the Company and the Corporate Guarantors dated the Closing Date and
addressed to the Agent and the Lenders, substantially in the form of Exhibit D
attached hereto.
(d) SUPPORTING DOCUMENTS. On or prior to the Closing Date, the Agent
shall have received, with a copy for each Lender, (i) a copy of a certificate of
good standing for the Company and each Corporate Guarantor from the secretary of
state of the states of their organizational jurisdiction dated as of a recent
date; (ii) certified copies of the certificate of incorporation, the by-laws,
articles of organization, operating agreement or partnership agreement, as
applicable, of the Company and each Corporate Guarantor; (iii) a certificate of
the Secretary or an Assistant Secretary of the Company and of the Secretary,
Assistant Secretary or member as
44
applicable, of each Corporate Guarantor dated the Closing Date and certifying:
(x) that neither the certificate of Incorporation, the by-laws, articles of
organization, operating agreement or partnership agreement, as applicable, of
the Company nor of any Corporate Guarantor has been amended since the date of
their certification (or if there has been any such amendment, attaching a
certified copy thereof); (y) that attached thereto is a true and complete copy
of resolutions adopted by the board of directors of the Company and by the board
of directors or other governing body or Persons of each Corporate Guarantor
authorizing the execution, delivery and performance of each Loan Document to
which it is a party and, with respect to the Company, the borrowings and other
extensions of credit hereunder; and (z) the incumbency and specimen signature of
each officer of the Company and of each officer or other authorized Person of
each Corporate Guarantor executing each Loan Document to which the Company or
any Corporate Guarantor is a party and any certificates or instruments furnished
pursuant hereto or thereto, and a certification by another officer of the
Company and each Corporate Guarantor as to the incumbency and signature of the
Secretary or Assistant Secretary of the Company and each Corporate Guarantor;
and (iv) such other documents as the Agent may reasonably request.
(e) OFFICER'S CERTIFICATE. The Agent shall have received, with a copy
for each Lender, a certificate from a duly authorized Executive Officer of the
Company stating that (i) the representations and warranties of the Company
contained in this Agreement and the other Loan Documents to which it is a party
are true and correct on and as of the Closing Date with the same effect as
though such representations and warranties were made on and as of such date,
unless such representation or warranty is as of a specific date, in which case,
as of such date, and (ii) no Default or Event of Default has occurred or is
continuing on the Closing Date.
(f) INSURANCE. On or prior to the Closing Date, the Agent shall have
received a certificate or certificates evidencing insurance coverage from an
independent insurance broker or brokers confirming the insurance required to be
maintained pursuant to Section 6.01 hereof.
(g) ASSETS FREE FROM LIENS. Prior to the Closing Date, the Agent shall
have received UCC-1 financing statement, tax and judgment lien searches
evidencing that the Company's and each Corporate Guarantor's accounts
receivable, inventory, equipment and all other assets are free and clear of all
Liens except Permitted Liens.
(h) FEES AND EXPENSES. On or prior to the Closing Date, the Agent
shall have received for itself and for the account of the Lenders (i) all fees
payable to the Lenders pursuant to the Loan Documents on or prior to the Closing
Date, (ii) reimbursement of expenses in accordance with Section 10.03 and (iii)
fees payable to the Agent which are required to be paid to the Agent on the
Closing Date pursuant to any agreement between the Company and the Agent.
(i) NO LITIGATION. There shall exist no action, suit, investigation,
litigation or proceeding affecting the Company or any Corporate Guarantor
pending or threatened before any court, governmental agency or arbiter that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
45
(j) CONSENTS AND APPROVALS. All governmental and third party consents
and approvals necessary in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained (without the
imposition of any conditions that are not acceptable to the Required Lenders)
and shall remain in effect, and no law or regulation shall be applicable in the
reasonable judgment of the Required Lenders that imposes materially adverse
conditions upon the transactions contemplated hereby.
(k) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
material adverse change in the business, operations, properties, prospects or
condition (financial or otherwise) of the Company or the Company and the
Corporate Guarantors taken as a whole since July 18, 1999 other than, with
respect to financial condition only, the payment on the Closing Date of the
Merger Payment and the incurrence on the Closing Date of indebtedness under the
Senior Notes.
(l) MERGER AGREEMENT. The conditions to the effectiveness of the
Merger as set forth in the Merger Agreement shall be fulfilled in a manner
satisfactory to the Required Lenders and the Merger Agreement shall not have
been amended, modified, supplemented or otherwise changed and no material term
or condition thereof shall have been waived, without the prior consent of the
Required Lenders.
(m) SENIOR NOTES. The Initial Purchaser (as defined in the Note
Purchase Agreement) shall have purchased, or shall concurrently purchase on the
effective date of the Merger, the Senior Notes pursuant to and in accordance
with the Note Purchase Agreement and the Company shall have received gross
proceeds from the issuance of the Senior Notes in an amount not less than
$245,000,000 which shall be available to finance a portion of the Merger
Payment. The Agent shall have received, with a copy for each Lender, a
certificate of a duly authorized Executive Officer of the Company certifying
that the transactions referred to in paragraph (l) and this paragraph (m) have
been effected or that such transactions shall be effected contemporaneously with
the initial Revolving Credit Loan hereunder.
(n) PRO FORMA FINANCIAL STATEMENTS. (a) No event or circumstance shall
have occurred which would cause any of the assumptions made in (i) the pro forma
financial statements of the Company and its Subsidiaries (which were based upon
the financial statements of the Company for the twenty-eight week period ending
July 18, 1999, contained in the Company's Preliminary Confidential Offering
Memorandum dated September 2, 1999 and which reflect the consummation of the
Merger) or (ii) the projections for the Company and its Subsidiaries for the
five-year period commencing on the proposed Closing Date delivered to the Agent
on August 31, 1999 to be unreasonable in any material respect (other than
revisions resulting from the final determination of the interest rate on the
Senior Notes) and (b) if the interest rate with respect to the Senior Notes is
established at 12.5% or more, receipt and satisfactory review by the Lenders of
(i) revised pro forma financial statements of the Company and its Subsidiaries
prepared on the same basis as those referred to in clause (a) and (ii) revised
projections for the Company and the Corporate Guarantors for a five-year period
commencing on the proposed Closing Date;
46
(o) CERTAIN AGREEMENTS. The Agent and the Lenders shall have received
a true, correct and complete copy of the Senior Note Indenture and of the
Registration Rights Agreement (including all schedules, exhibits, annexes,
amendments and disclosure letters referred to therein) each of which shall be in
form and substance satisfactory to the Required Lenders; provided, however, the
forms thereof delivered to the Agent prior to the date hereof (as modified by
the "Description of Notes" delivered to the Agent via facsimile from Bowne of
New York on September 24, 1999) shall be deemed satisfactory so long as they are
not revised or modified in any manner unsatisfactory to the Required Lenders.
(p) OTHER INFORMATION, DOCUMENTATION. The Agent and the Lenders shall
have received such other and further information and documentation as any of
them may reasonably request, including, but not limited to, any information or
documentation relating to compliance by the Company and each Corporate Guarantor
with the requirements of all Environmental Laws.
(q) COMPLETION OF PROCEEDINGS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by the Loan Documents, shall be reasonably
satisfactory in form and substance to the Agent, the Lenders and their counsel.
SECTION 5.02. CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligation
of each Lender to make each Loan hereunder and the obligation of the Issuing
Lender to issue, amend, renew or extend any Letter of Credit, including, without
limitation, the initial Loan and the initial Letter of Credit are subject to the
following additional conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
by the Company and each Corporate Guarantor pursuant to this Agreement and the
other Loan Documents to which each is a party shall be true and correct on and
as of the Borrowing Date or as of the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, with the same effect as
though such representations and warranties had been made on and as of such date
unless such representation is as of a specific date, in which case, as of such
date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on the Borrowing Date or on the date of issuance, amendment,
renewal or extension of a Letter of Credit or will result after giving effect to
the Loan requested or the requested issuance, amendment, renewal or extension of
a Letter of Credit.
(c) ADDITIONAL DOCUMENTATION. With respect to the issuance, amendment,
renewal or extension of any Letter of Credit, the Issuing Lender shall have
received the documents and instruments requested by the Issuing Lender in
accordance with the last sentence of Section 2.03(a).
Each borrowing hereunder and each issuance, amendment, renewal or extension of a
Letter of Credit shall constitute a representation and warranty of the Company
that the statements contained
47
in clauses (a) and (b) of Section 5.02 are true and correct on and as of the
Borrowing Date or as of the date of issuance, amendment, renewal or extension of
a Letter of Credit, as applicable.
48
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees with the Lenders that so long as the
Revolving Credit Commitments remain in effect or any of the principal of or
interest on the Notes or any other Obligations hereunder shall be unpaid, it
will, and will cause each Corporate Guarantor to:
SECTION 6.01. EXISTENCE, PROPERTIES, INSURANCE. (a) Do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate, partnership or limited liability company, as applicable, existence,
rights and franchises and comply in all material respects with all laws
applicable to it (except for mergers, sales of assets and consolidations
permitted pursuant to Section 7.12); (b) at all times maintain, preserve and
protect all franchises and trade names and preserve all of its property used or
useful in the conduct of its business and keep the same in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, replacements, betterments and improvements thereto
so that the business carried on in connection therewith may be properly and
advantageously conducted in the ordinary course at all times, except to the
extent that the failure to do so could reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect; and (c) at all times
maintain insurance covering its assets and its businesses with financially sound
and reputable insurance companies or associations in such amounts and against
such risks (including, without limitation, hazard, business interruption, public
liability and product liability) as are usually carried by companies engaged in
the same or similar business.
SECTION 6.02. PAYMENT OF TAXES. Pay and discharge or cause to be paid
and discharged promptly all taxes, assessments and government charges or levies
imposed upon it or upon its income and profits, or upon any of its property,
real, personal or mixed, or upon any part thereof, before the same shall become
in default; provided, however, that neither the Company nor any Corporate
Guarantor shall be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings,
and the Company or such Corporate Guarantor, as the case may be, shall have set
aside on its books adequate reserves determined in accordance with Generally
Accepted Accounting Principles with respect to any such tax, assessment, charge,
levy or claim so contested; provided, further, that the Company and each
Corporate Guarantor will pay or cause to be paid all such taxes, assessments,
charges, levies or claims prior to foreclosure of any Lien which has attached as
security therefor.
SECTION 6.03. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the Agent
and each Lender:
(a) as soon as available, but in any event within 90 days (or
such longer period which companies which are subject to the reporting
requirements of the Securities and Exchange Act of 1934, as amended,
are permitted to file with the Securities and Exchange Commission its
annual report on Form 10-K, giving effect to any permitted extensions
obtained by the Company but, in any event, not to exceed 105 days)
after the end of each fiscal year of the Company, (i) a copy of the
audited consolidated balance sheet of the
49
Company and its Subsidiaries as of the end of such year and the
related audited consolidated statements of income, shareholders'
equity and cash flow for such year, in each case, setting forth in
comparative form the respective figures as of the end of and for the
previous fiscal year, and accompanied by a report thereon of
independent certified public accountants of recognized national
standing selected by the Company and not reasonably unsatisfactory to
the Required Lenders (the "Auditor"), which report shall not have a
"going concern" or like qualification or exception or qualification or
exception as to the scope of the audit and shall be to the effect that
such financial statements present fairly in all material respects the
financial condition and results of operation of the Company and its
Subsidiaries in accordance with Generally Accepted Accounting
Principles, consistently applied; (ii) a copy of the corresponding
supplemental consolidating balance sheets and income statements of the
Company, the Corporate Guarantors (as a group) and the Unrestricted
Subsidiaries (as a group) and, to the extent required by Generally
Accepted Accounting Principles or by applicable rules or regulations
of the Securities and Exchange Commission, each Corporate Guarantor
setting forth, commencing with the financial statements for the first
date or period after December 31, 2000, in comparative form the
respective figures as of the end of and for the previous fiscal year
or fiscal quarter, as applicable, and which support the financial
statements delivered pursuant to clause (i), and (iii) a copy of the
corresponding unaudited supplementary balance sheet and income
statement of the Company and the Corporate Guarantors on a
consolidated basis as of the end of such year and for such year, in
each case of (i) and (ii) and (iii) prepared in accordance with
Generally Accepted Accounting Principles, applied on a consistent
basis, and with respect to the statements referred to in clause (ii)
and (iii) accompanied by a certificate of the Chief Financial Officer
to that effect that such financial statements present fairly in all
material respects the financial condition and results of operation of
the Company and the Corporate Guarantors in accordance with Generally
Accepted Accounting Principles and a customary supplemental financial
information report thereon by the Auditor;
(b) as soon as available, but in any event not later than 45 days
(or such longer period which companies which are subject to the
reporting requirements of the Securities and Exchange Act of 1934, as
amended, are permitted to file with the Securities and Exchange
Commission its quarterly report on Form 10-Q, giving effect to any
permitted extensions obtained by the Company but, in any event, not to
exceed 60 days) after the end of the first, second and third quarterly
period of each fiscal year of the Company, (i) a copy of the interim
unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of each such quarter and the related
interim statements of income, shareholders equity and cash flow for
such quarter and the portion of the fiscal year through such date
prepared in accordance with Generally Accepted Accounting Principles,
consistently applied, and setting forth in comparative form the
respective figures for the corresponding date and period in the
previous fiscal year, in each case prepared by the Chief Financial
Officer and accompanied by a certificate executed by the Chief
Financial Officer to the effect that such financial statements present
fairly in all material respects the financial condition and results of
operation of the Company and its Subsidiaries in accordance with
Generally Accepted Accounting Principles consistently
50
applied subject to normal year end adjustments; (ii) a copy of the
corresponding consolidated interim balance sheet of the Company and
the Corporate Guarantors as of the end of such quarter and the related
corresponding unaudited consolidated interim statements of income, for
such quarter and the portion of the fiscal year through such date, and
(iii) a copy of the corresponding supplemental consolidating balance
sheets and income statements of the Company, the Corporate Guarantors
(as a group), the Unrestricted Subsidiaries (as a group), and, to the
extent required by Generally Accepted Accounting Principles or by
applicable rules or regulations of the Securities and Exchange
Commission, each Corporate Guarantor, in each case of (ii) and (iii),
prepared by management of the Company, and setting forth, commencing
with the financial statements for the first date or period after
December 31, 2000, in comparative form the respective figures for the
corresponding date and period in the previous fiscal year or fiscal
quarter, as applicable, and prepared in accordance with Generally
Accepted Accounting Principles, consistently applied.
(c) a certificate prepared and signed by the Chief Financial
Officer in form and substance reasonably acceptable to the Lenders
with each delivery required by clauses (a) and (b) above, as to
whether or not, as of the close of such preceding period and at all
times during such preceding period, the Company or each Corporate
Guarantor, as the case may be, was in compliance with all the
provisions in this Agreement, showing a detailed computation of
financial covenants and quantitative negative covenants and, if the
Chief Financial Officer shall have obtained knowledge of any default
in such compliance or notice of such default, he shall disclose in
such certificate such default or defaults or notice thereof and the
nature thereof, whether or not the same shall constitute a Default or
an Event of Default hereunder;
(d) promptly after the preparation thereof, a copy of the annual
budget or projection prepared with respect to the Company and/or any
Corporate Guarantor;
(e) promptly after receipt thereof, a copy of the management
letter and internal control letter, if any, prepared by the Auditor;
(f) if applicable, promptly after filing thereof, copies of all
regular and periodic financial information, proxy materials and other
information and reports (including, without limitation, reports on
Form 8-K) which the Company or any Corporate Guarantor shall file with
the Securities and Exchange Commission;
(g) promptly after submission to any government or regulatory
agency, all documents and information furnished to such government or
regulatory agency other than such documents and information prepared
in the normal course of business and which could not reasonably be
expected to result in any materially adverse action to be taken by
such agency;
(h) promptly following delivery thereof, copies of all reports,
notices and other materials delivered to the holders of the Senior
Notes generally; and
51
(i) promptly, from time to time, such other information regarding
the operations, business affairs and condition (financial or
otherwise) of the Company or any Corporate Guarantor as any Lender may
reasonably request.
SECTION 6.04. BOOKS AND RECORDS; ACCESS TO PREMISES. Keep adequate
records and proper books of record and account in which complete entries will be
made in a manner to enable the preparation of financial statements in accordance
with Generally Accepted Accounting Principles, and which shall reflect all
financial transactions of the Company and its Subsidiaries. At any time during
normal business hours and from time to time, permit any Lender or any agent or
representative thereof, to examine and make copies of any abstracts from the
books and records of such information which the Lenders deem necessary or
desirable (including, without limitation, the financial records of the Company
and the Corporate Guarantors) and to visit the properties of the Company or any
Corporate Guarantor and to discuss their respective affairs, finances and
accounts with any of their respective executive officers or the Company's
independent accountants.
SECTION 6.05. NOTICE OF ADVERSE CHANGE. Promptly notify each Lender in
writing of (a) any change in the business or the operations of the Company or
any Corporate Guarantor which could reasonably be expected to have a Material
Adverse Effect, and (b) any information which indicates that any financial
statements which are the subject of any representation contained in this
Agreement, or which are furnished to the Agent or the Lenders pursuant to this
Agreement, fail, in any material respect, to present fairly, as of the date
thereof and for the period covered thereby, the financial condition and results
of operations purported to be presented therein, disclosing the nature thereof.
SECTION 6.06. NOTICE OF DEFAULT. Promptly notify each Lender of any
Default or Event of Default which shall have occurred, which notice shall
include a written statement as to such occurrence, specifying the nature thereof
and the action (if any) which is proposed to be taken with respect thereto.
SECTION 6.07. NOTICE OF LITIGATION. Promptly notify each Lender of any
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency which, if adversely determined against the
Company or any Corporate Guarantor on the basis of the allegations and
information set forth in the complaint or other notice of such action, suit or
proceeding, or in the amendments thereof, if any, could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.08. NOTICE OF DEFAULT IN OTHER AGREEMENTS. Promptly notify
each Lender of any default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument to which the Company or any Corporate Guarantor is a party which
default could reasonably be expected to have a Material Adverse Effect.
SECTION 6.09. NOTICE OF ERISA EVENT. Promptly deliver to each Lender a
certificate of the Chief Financial Officer of the Company setting forth details
as to such
52
occurrence and such action, if any, which the Company, such Corporate Guarantor
or such ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by the Company,
such Corporate Guarantor ERISA Affiliate, the PBGC, a Plan participant or the
Plan administrator, with respect thereto: that a Reportable Event has occurred
with respect to a Plan, that an accumulated funding deficiency has been incurred
or an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan, that a Plan has been terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA, that one
or more Plans have an Unfunded Current Liability giving rise to a Lien under
ERISA, that proceedings may be or have been instituted to terminate a Plan, that
a proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan, or that the Company, any Corporate Guarantor
or any ERISA Affiliate will incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA if any of the
foregoing could, individually or in the aggregate, reasonably be expected to
cause the Company or the Corporate Guarantors to incur liabilities in excess of
$1,000,000, individually or in the aggregate. The Company will deliver to each
Lender a complete copy of the annual report (Form 5500) of each Plan that is a
single employer Plan (within the meaning of Section 4001(a)(15) of ERISA), filed
with the Internal Revenue Service. In addition to any certificates or notices
delivered to each Lender pursuant to the first sentence hereof, copies of annual
reports and any other notices received by the Company or any Corporate Guarantor
and required to be delivered to each Lender hereunder shall be delivered to each
Lender no later than ten days after the later of the date such report or notice
has been filed with the Internal Revenue Service or the PBGC, given to Plan
participants or received by the Company or a Corporate Guarantor.
SECTION 6.10. NOTICE OF ENVIRONMENTAL LAW VIOLATIONS. Promptly notify
each Lender of the receipt of any notice of an action, suit, and proceeding
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, pending against the Company or any
Corporate Guarantor relating to any alleged violation of any Environmental Law
which could reasonably be expected to have a Material Adverse Effect.
SECTION 6.11. NOTICE REGARDING MATERIAL CONTRACTS. Promptly notify
each Lender of (a) any termination (prior to the end of its stated term),
material amendment, material supplement or other material modification of any
Material Contract and (b) the occurrence of a material default by the Company or
any Corporate Guarantor or by any other party to any Material Contract of which
the Company or any Corporate Guarantor is aware.
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAWS. Comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, the breach of which could reasonably be expected to have
a Material Adverse Effect.
SECTION 6.13. SUBSIDIARIES. Promptly notify the Lenders (a) prior to
the occurrence thereof, of the creation, establishment or acquisition, in any
manner, of any Subsidiary of the Company or any Corporate Guarantor not existing
on the date hereof, (b) of the designation
53
of an Unrestricted Subsidiary as a "Restricted Subsidiary" (as that term is
defined in the Senior Note Indenture), and (c) of the failure of any Subsidiary
which was an Unrestricted Subsidiary to conform with all the requirements
applicable to an Unrestricted Subsidiary as set forth in the definition thereof,
and, in each case of clause (a), (b) and (c), promptly cause, subject to the
next succeeding sentence, each such Subsidiary to execute a Corporate Guaranty,
concurrently with the creation, establishment or acquisition of such Subsidiary,
and concurrently with the delivery of each Corporate Guaranty pursuant to this
Section 6.13 provide to the Agent the supporting documents identified in clauses
(i), (ii), and (iii) of Section 5.01(d) in each case with respect to the
Subsidiary executing the same, together with a favorable written opinion of
counsel to such Subsidiary in form and substance reasonably satisfactory to the
Lenders, as to the due execution, delivery and enforceability of such documents
and such other matters as the Lenders may reasonably request. Notwithstanding
the foregoing, any Subsidiary of an Unrestricted Subsidiary and any future
Subsidiary which is properly designated as an Unrestricted Subsidiary in
accordance with the terms of the Indenture shall not be required to be or become
a Corporate Guarantor provided, however, that if any Unrestricted Subsidiary is
subsequently designated a "Restricted Subsidiary" (as that term is defined in
the Senior Note Indenture), the Company shall promptly cause such Subsidiary to
execute and deliver a Corporate Guaranty and the related supporting documents
and opinion of counsel referred to above; provided, further, no Corporate
Guarantor may be designated at any time as an Unrestricted Subsidiary.
SECTION 6.14. ENVIRONMENTAL LAWS. Comply in all respects with the
requirements of all Environmental Laws, provide to the Lenders all documentation
in connection with such compliance that the Lenders may reasonably request, and
defend, indemnify, and hold harmless the Agent and each Lender and their
respective employees, agents, officers, and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of, or in any way related to: (a) the presence, disposal, or release
of any Hazardous Materials on any property at any time owned or occupied by the
Company or any Corporate Guarantor; (b) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Hazardous Materials; (c) any lawsuit brought or threatened, settlement reached,
or government order relating to such Hazardous Materials, and/or (d) any
violation of applicable Environmental Laws, including, without limitation,
reasonable attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses if such failure to so comply in the
preceding clauses (a) through (d) could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 6.15. IMPOSITION OF RESTRICTIVE COVENANTS. In the event the
Company shall enter into an amendment or modification of the Senior Note
Indenture which amendment or modification would cause the covenants or
restrictions contained therein to be more restrictive than the covenants
contained in Article VII of this Agreement, then such covenants or restrictions
shall be deemed included in this Agreement as if fully set forth herein and the
Company shall immediately notify the Agent of the same and shall execute such
amendments or other agreements with the Agent and the Banks as the Agent or the
Required Banks shall reasonably deem necessary to evidence such inclusion. In
the event the Required Lenders approve an amendment, supplement or modification
to the Senior Note Indenture pursuant to Section 7.17 which contains any
54
modification to any restriction or covenant therein or adds any additional
restriction or covenant, and the Required Lenders do not require an amendment to
this Agreement as a condition thereto, then such modified or additional
restrictions or covenants shall not be deemed for purposes of this Section 6.15
to be more restrictive than the covenants and restrictions in Article VII of
this Agreement.
ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees with the Lenders that so long as the
Revolving Credit Commitments remain in effect or any of the principal of or
interest on any Note or any other Obligations hereunder shall be unpaid, it will
not, and will not cause or permit any Corporate Guarantor, directly or
indirectly, to:
SECTION 7.01. LIENS. Incur, create, assume or suffer to exist any Lien
on any of their respective assets now or hereafter owned other than Permitted
Liens.
SECTION 7.02. INDEBTEDNESS. Incur, create, assume or suffer to exist
or otherwise become liable in respect of any Indebtedness other than Permitted
Debt or Indebtedness constituting Permitted Investments or Committed Restricted
Investments.
SECTION 7.03. GUARANTIES. Except guaranties constituting Permitted
Debt, Permitted Investments or Restricted Payments, guarantee, endorse, become
surety for, or otherwise in any way become or be responsible for the
Indebtedness or obligations of any Person (other than by endorsement of
negotiable instruments for collection in the ordinary course), whether by
agreement to maintain working capital or equity capital or otherwise maintain
the net worth or solvency of any Person or by agreement to purchase the
Indebtedness of any other Person, or agreement for the furnishing of funds,
directly or indirectly, through the purchase of goods, supplies or services for
the purpose of discharging the Indebtedness of any other Person or otherwise, or
enter into or be a party to any contract for the purchase of merchandise,
materials, supplies or other property if such contract provides that payment for
such merchandise, materials, supplies or other property shall be made regardless
of whether delivery of such merchandise, supplies or other property is ever made
or tendered.
SECTION 7.04. ASSET SALES. Enter into or consummate an Asset Sale
unless (i) the Company (or the Corporate Guarantor, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors of the Company set
forth in a certificate executed by an Executive Officer and delivered to the
Agent and reasonably acceptable to the Required Lenders) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Eligible Investments; provided that the amount of (a) any
liabilities (as shown on the Company's or such Corporate Guarantor's most recent
balance sheet) of the Company or such Corporate Guarantor (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any
55
guarantee thereof) that are assumed by the transferee of any such assets or
Equity Interests pursuant to a customary novation agreement that expressly
releases the Company or such Corporate Guarantor from further liability and (b)
any securities, notes or other obligations received by the Company or such
Corporate Guarantor from such transferee that are converted by the Company or
such Corporate Guarantor into cash or Eligible Investments within 30 days after
such Asset Sale (to the extent of the cash received) shall be deemed to be cash
for purposes of this provision. Upon receipt of the Net Proceeds from an Asset
Sale, the Company shall apply such Net Proceeds in accordance with Section 3.03
hereof.
SECTION 7.05. SALES OF RECEIVABLES. Sell, transfer, discount or
otherwise dispose of accounts receivable arising in the ordinary course of
business owing to the Company or any Corporate Guarantor, with or without
recourse, except for collection in the ordinary course of business.
SECTION 7.06. INVESTMENTS. Make or commit to make any Investment other
than Permitted Investments or Restricted Payments constituting Investments.
SECTION 7.07. NATURE OF BUSINESS. Change or alter, in any material
respect, the nature of its business from the nature of the business engaged in
by it on the date hereof, which nature shall include, without limitation, the
sale or distribution of food products and related products.
SECTION 7.08. SALE AND LEASEBACK. Enter into any arrangement, directly
or indirectly, with any Person whereby it shall sell or transfer any property,
whether real or personal, used or useful in its business, whether now owned or
hereafter acquired, of it or any Corporate Guarantor, if at the time of such
sale or disposition it intends to lease or otherwise acquire the right to use or
possess (except by purchase) such property or like property for a substantially
similar purpose; except that the Company may enter into sale-leaseback
arrangements provided that the aggregate consideration received by Company and
the Corporate Guarantors for any property subject to such an arrangement shall
not exceed $500,000 in the aggregate during the term of this Agreement.
SECTION 7.09. FEDERAL RESERVE REGULATIONS. Permit any Loan or the
proceeds of any Loan to be used for any purpose which violates or is
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
SECTION 7.10. ACCOUNTING POLICIES AND PROCEDURES. Permit any change in
the accounting policies and procedures of the Company or any Corporate
Guarantor, including a change in fiscal year (other than to a calendar year end,
in which event appropriate adjustments shall be made to the dates specified in
Section 7.13(a)), provided, however, that any policy or procedure required to be
changed by the Financial Accounting Standards Board (or other board or committee
thereof) in order to comply with Generally Accepted Accounting Principles may be
so changed.
56
SECTION 7.11. HAZARDOUS MATERIALS. Cause or permit any of its
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce or process Hazardous
Materials, except in compliance with all applicable federal, state and local
laws or regulations, or cause or permit, as a result of any intentional or
negligent act or omission on the part of the Company or any Corporate Guarantor,
a release of Hazardous Materials onto such property or asset or onto any other
property if such action could reasonably be expected to have a Material Adverse
Effect.
SECTION 7.12. LIMITATIONS ON FUNDAMENTAL CHANGES. Merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now or hereafter acquired) to, any Person, or acquire all of the stock or all or
substantially all of the assets or the business of any Person or liquidate, wind
up or dissolve or suffer any liquidation or dissolution; provided, however, that
(i) the Company and the Corporate Guarantors may acquire assets primarily for
the purpose of acquiring store locations from third parties (including
franchisees) provided that the aggregate purchase price of all such acquisitions
shall not exceed $6,500,000 in any year and (ii) any Corporate Guarantor may
merge or consolidate with or sell, assign, lease (as lessor) or otherwise
dispose of all or substantially all of its assets (whether now or hereafter
acquired) to the Company or any other Corporate Guarantor.
SECTION 7.13. FINANCIAL COVENANTS.
(a) CONSOLIDATED SENIOR DEBT TO CONSOLIDATED EBITDA. Permit the ratio
of Consolidated Senior Debt to Consolidated EBITDA as of the end of any fiscal
quarter of the Company to be greater than the ratio set forth below opposite the
applicable period:
Period Ratio
------ -----
Closing Date through January 1, 2000 4.50: 4.50:1.0 0
January 2, 2000 through December 30, 2000 4.50:1.00
December 31, 2000 through December 29, 2001 4.30:1.00
December 30, 2001 through December 28, 2002 4.10:1.00
December 29, 2002 and thereafter 3.90:1.00
(b) CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE. Permit the
ratio of Consolidated EBITDA to Consolidated Interest Expense as of the end of
any fiscal quarter of the Company to be less than 2.00:1.00.
SECTION 7.14. SENIOR NOTES. Make a Senior Note Payment; provided,
however, if (a) no Default or Event of Default has occurred and is continuing or
would occur after giving effect to the Senior Note Payment, (b) the Consolidated
EBITDA determined from the most recent financial statements delivered to the
Lenders pursuant to Section 6.03 is not less than $75,000,000, (c) after giving
effect to the Senior Note Payment the Eligible Investments plus an amount equal
to the Total Revolving Credit Commitment less the Aggregate Outstandings is not
less than $30,000,000, and (d) the Senior Notes to be purchased are repurchased
at a discount
57
from the face amount thereof (or not in excess of the face amount thereof in the
event of a Mandatory Senior Payment), then the Company may make Senior Note
Payments.
SECTION 7.15. RESTRICTED PAYMENTS. (i) Declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger (other than the Merger) or consolidation involving the Company) or to any
direct or indirect holders of the Company's Equity Interests in their capacity
as such (other than dividends or distributions (a) payable in Equity Interests
(other than Disqualified Stock) of the Company or (b) payable to the Company or
any Corporate Guarantor that is a wholly-owned Subsidiary of the Company); (ii)
except for Permitted Investments in Persons that are, or after giving effect to
such Investments become, Subsidiaries of the Company, purchase, redeem or
otherwise acquire or retire for value (including, without limitation, in
connection with any merger (other than the Merger) or consolidation involving
the Company) any Equity Interests of the Company or any Affiliate of the Company
(other than any such Equity Interests owned by the Company or any wholly-owned
Subsidiary of the Company which is a Corporate Guarantor, any Equity Interests
then being issued by the Company or a wholly-owned Subsidiary of the Company
which is a Corporate Guarantor or any Investment in a Person that, after giving
effect to such Investment, is a wholly-owned Subsidiary of the Company which is
a Corporate Guarantor); (iii) [Reserved]; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i), (ii) and (iv)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated EBITDA to Consolidated Interest Expense
covenant set forth in Section 7.13(b); and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments declared or made by the Company and
the Corporate Guarantors after the Closing Date (excluding Restricted
Payments permitted by clauses (ii), (iii), (v) and (vi) and clause
(viii) (if and to the extent that the reimbursement obligations paid
pursuant to clause (viii) are direct obligations of the Company or any
of the Corporate Guarantors and are in respect of letters of credit
issued prior to the Closing Date) of the next succeeding paragraph),
is less than the sum, without duplication, of
(1) 50% of the Adjusted Consolidated Net Income of the
Company for the period (taken as one accounting period) from the
Closing Date to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
58
Adjusted Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus
(2) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the Closing Date of Equity
Interests of the Company (other than Disqualified Stock), or of
Disqualified Stock or debt securities of the Company that have
been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified
Stock or convertible debt securities that have been converted
into Disqualified Stock), plus
(3) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of
disposition, if any) (but only to the extent not included in
subclause (1) of this clause (c) or applied to reduce
Unrestricted Investments Outstanding) and (B) the initial amount
of such Restricted Investment, plus
(4) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of a guarantee of Indebtedness is
reduced as a result of a reduction in the maximum principal
amount of Indebtedness that may be guaranteed under such
guarantee, the amount of such reduction, plus
(5) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of the furnishing of a letter of credit
as security for Indebtedness or other obligations is reduced as a
result of a reduction in the maximum reimbursement obligations in
respect of such letter of credit, the amount of such reduction,
plus
(6) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of the guarantee of a lease has been
amortized (as provided in the definition of "Investments"), the
amount of such amortization, plus
(7) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of a guarantee of obligations other than
Indebtedness or a lease is reduced as a result of a reduction in
the maximum liability under such guarantee, the amount of such
reduction, plus
(8) in the event that (A) any Unrestricted Subsidiary shall
become a Corporate Guarantor and (B) immediately after giving
effect to such event no Default or Event of Default shall have
existed and such Subsidiary shall have
59
become a wholly-owned Subsidiary of the Company, the lowest of
(x) an amount equal to the fair market value (as determined in
good faith by the Board of Directors of the Company and
reasonably acceptable to the Required Lenders) at the time of
such designation of the outstanding Investments of the Company
and the Corporate Guarantors in the Subsidiary so designated, (y)
an amount equal to the net book value of such outstanding
Investments at the time of such designation and (z) an amount
equal to the amount of Restricted Investments (other than
Committed Restricted Investments) made by the Company and the
Corporate Guarantors in such Subsidiary after the Closing Date
less the amount, if any, of any amounts included in subclause
(3), (4), (5), (6) or (7) of this clause (c) in respect of such
Subsidiary, plus
(9) $20.0 million; provided, however, that the Restricted Payment
identified in this clause (9) (i) shall not be made prior to January
1, 2000, (ii) on or after January 1, 2000, no more than $10,000,000 of
such payment shall be distributed in any one fiscal quarter, and (iii)
for the Company's fiscal year ending December 31, 2000, the sum of all
distributions or loans to shareholders of the Company shall not exceed
an amount equal to (x) if the Company is an S Corporation, the
Company's taxable income for such fiscal year determined in accordance
with Section 1363 of the Code less the aggregate Tax Distributions
with respect to such fiscal year or (y) if the Company is not an S
Corporation, then the Adjusted Consolidated Net Income of the Company
for such fiscal year; provided further, that the Company shall no
longer be subject to the foregoing proviso if the Company obtains a
mortgage loan on its real property improvements, fixtures and related
personal property customarily securing such loans located at 000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx in a principal amount of at least
$12,000,000, the proceeds of which are used to pay (i) if the
aggregate outstanding principal balance of the Revolving Credit Loans
is less than $12,000,000, then the outstanding principal amount of the
Revolving Credit Loans and (ii) if the aggregate outstanding principal
balance of the Revolving Credit Loans is $12,000,000 or greater, then
the lesser of (x) the outstanding principal amount of the Revolving
Credit Loans or (y) the full amount of such proceeds.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Agreement; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(2) of the preceding paragraph; (iii) the redemption, repurchase, retirement,
defeasance or other acquisition of Subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Corporate Guarantor held by any member of
the Company's (or any Corporate Guarantor's) management or board of directors or
any employee stock ownership; provided that the aggregate price paid for
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all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $1.0 million in any twelve-month period; (v) Tax Distributions in respect
of periods when the Company is an S Corporation, (vi) Committed Restricted
Investments; (vii) Restricted Investments consisting of payments pursuant to
guaranties (not prohibited by the provisions of the Senior Note Indenture) of
Indebtedness; (viii) Restricted Investments consisting of payments pursuant to
reimbursement obligations in respect of letters of credit (not prohibited by the
provisions of the Agreement) securing Indebtedness or other obligations; and
(ix) Restricted Investments consisting of payments pursuant to guaranties (not
prohibited by the provisions of the Agreement) of obligations (other than
Indebtedness), provided, however, that at the time of, and after giving effect
to, any Restricted Payment permitted under clauses (i) through (iv) no Default
or Event of Default shall have occurred and be continuing.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or any Corporate
Guarantor, as the case may be, pursuant to the Restricted Payment.
Notwithstanding the preceding sentence, the amount of any Restricted Investment
that is a guarantee of (or the furnishing of a letter or credit as security for)
Indebtedness or other obligations shall be as determined under the definition of
"Investments." Not later than the date of making any Restricted Payment, the
Company shall deliver to the Agent an officers' certificate executed by an
Executive Officer of the Company stating that such Restricted Payments were
permitted and setting forth the basis upon which the calculations required by
this Section 7.15 were computed.
SECTION 7.16. TRANSACTIONS WITH AFFILIATES. Make or permit any
Subsidiary of the Company to make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Company (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person and (ii) the Company delivers to the Agent (a) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate payments or consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in a certificate executed by an
Executive Officer certifying that such Affiliate Transaction complies with
clause (i) above and that such Affiliate Transaction has been approved by a
majority of the independent members of the Board of Directors of the Company and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in excess of $5.0
million, an opinion as to the fairness to the Company or such Subsidiary of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The foregoing provisions will not prohibit (i) any reasonable
employment agreement or other compensation plan or arrangement paid or made
available to officers or employees of the Company or its Subsidiaries for
services actually rendered or to be rendered and entered into by
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the Company or any Subsidiary in the ordinary course of business and consistent
with past practice; (ii) transactions between or among the Company and/or
Corporate Guarantors which are wholly owned Subsidiaries of the Company; (iii)
any Remote Guarantee or Permitted Investment or any Restricted Payment that is
permitted by the provisions of this Agreement; (iv) transactions between or
among Unrestricted Subsidiaries of the Company; (v) the provision, in the
ordinary course of business consistent with past practice and for cash
consideration not less than the cost thereof, of support services (such as
accounting, architectural, legal and administrative services) by the Company and
the Corporate Guarantors to Unrestricted Subsidiaries of the Company and
entities in which the Company has, directly or indirectly, an equity interest of
20% or more; (vi) the Tax Payment Agreement; (vii) leases or subleases by the
Company and the Corporate Guarantors of real property to Unrestricted
Subsidiaries or Persons in which Unrestricted Subsidiaries have an equity
interest to the extent that such leases or subleases are in effect on the
Closing Date; (viii) guarantees of Indebtedness or real property lease
obligations of Unrestricted Subsidiaries or entities in which Unrestricted
Subsidiaries have an equity interest to the extent that such guarantees are in
effect on the Closing Date; or (ix) payments by the Company to Sbarro
Enterprises, L.P. under the sublease for the Company's administrative office
building as in effect on the Closing Date.
SECTION 7.17. AMENDMENTS TO CERTAIN AGREEMENTS. Without the prior
consent of the Required Banks, amend, supplement or modify the Senior Note
Indenture, the Senior Notes, the Note Purchase Agreement, the Tax Payment
Agreement or the Registration Rights Agreement in any material respect or in any
manner adverse to the Lenders; provided, however, any amendment or supplement
which solely designates one or more Restricted Subsidiaries (as defined in the
Senior Note Indenture) as guarantors under the Senior Note Indenture shall not
be deemed an amendment, supplement or modification which is adverse to the
Lenders or which is material.
SECTION 7.18. ISSUANCE OF PREFERRED STOCK. Issue any Capital Stock of
a Corporate Guarantor of any class or classes (however designated) that ranks
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of the
issuer thereof to shares of Capital Stock of any other class of such Issuer;
provided, however, the Corporate Guarantors may issue preferred stock to the
Company or any other Corporate Guarantor.
SECTION 7.19. S CORPORATION MATTERS. If the Company elects to be
treated as an S Corporation:
(a) the Company shall elect to be treated as an "S corporation" or its
equivalent for state and local income tax purposes in each state and locality in
which the Company does business that permits such an election, for the earliest
possible applicable tax year;
(b) with respect to each of the Company's Subsidiaries as to which the
Company makes a valid "qualified subchapter S subsidiary" election under Section
1361(b)(3) of the Code, the Company shall make an equivalent election for state
and local income tax purposes, in each state
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and locality in which the Company does business that permits such an election,
for the earliest possible applicable tax year;
(c) except as permitted in paragraph 10 of the Tax Payment Agreement
or except in connection with the termination of the Company's status as an S
Corporation, the Company shall not take any action which it knows would
terminate any election made to be treated as an "S corporation" or its
equivalent for state and local income tax purposes, or for one or more of its
subsidiaries to be treated as a "qualified subchapter S subsidiary" or its
equivalent for state and local income tax purposes;
(d) the Company shall furnish the Agent with (i) a copy of its
election to be treated as an S Corporation within 15 days after the filing
thereof, (ii) a copy of each determination of amounts permitted to be paid or
distributed to or for the benefit of, or required to be repaid by, the
shareholders of the Company under the Tax Payment Agreement, certified by the
Chief Financial Officer of the Company, on or prior to making such payment or
distribution or requesting such repayment, (iii) a copy of its federal income
tax return for each taxable year (and any amendment thereto) in which it claims
to be an S Corporation within 20 days after filing thereof, and (iv) a
certificate of the Company's certified independent accountants confirming the
computation of the amount determined under clause (a) of paragraph 4 of the Tax
Payment Agreement based on the Company's original federal income tax return for
such taxable year as filed, within 20 days after the Tax Return Date (as defined
in the Tax Payment Agreement) for each taxable year in which the Company claims
to be an S Corporation;
(e) the Company shall promptly notify the Agent and each Lender upon
learning the termination of its status as an S Corporation for any reason;
(f) the Company shall file its original federal income tax return for
each taxable year in which it claims to be an S Corporation on or before the due
date thereof (including valid extensions of time to file such returns); and
(g) the Company shall cause to be repaid to the Company all amounts
(including interest, where applicable) required to be repaid by the shareholders
of the Company pursuant to the Tax Payment Agreement. Any such repayments shall
be treated as capital contributions which shall not increase the amount
available for Restricted Payments, except for any such increase resulting from
such repayments causing an increase in Adjusted Consolidated Net Income.
SECTION 7.20. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK. The
Company (i) shall not, and shall not permit any Corporate Guarantor which is a
wholly owned Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Equity Interests or other ownership interests
(including convertible debt securities) of any Corporate Guarantor which is a
wholly owned Subsidiary of the Company to any Person (other than the Company or
a Corporate Guarantor which is a wholly owned Subsidiary of the Company), unless
(a) such transfer, conveyance, sale, lease or other disposition is of all the
Equity Interests and other ownership interests of a Corporate Guarantor which is
a wholly-owned Subsidiary of the
63
Company and (b) the Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with Section 3.03 and 7.04 hereof,
and (ii) shall not permit any Corporate Guarantor which is a wholly owned
Subsidiary of the Company to issue any of its Equity Interests or other
ownership interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Corporate Guarantor which is a wholly owned Subsidiary of the
Company.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. In the case of the happening of any
of the following events (each an "Event of Default"):
(a) failure of the Company to pay the principal of or interest on
any Loan, any reimbursement obligations with respect to a drawing
under any Letter of Credit (including, without limitation, any
Existing Letter of Credit), or any fees under this Agreement as and
when due and payable, and with respect to interest payments and fee
payments only, such failure shall continue unremedied for a period of
three (3) Business Days;
(b) default shall be made in the due observance or performance of
(i) any covenant, condition or agreement set forth in Article VII or
Section 6.03, or (ii) any other covenant, condition or agreement of
the Company or any Corporate Guarantor to be performed pursuant to
this Agreement or any other Loan Document (other than those specified
in clauses (a) or (b)(i) of this Section 8.01) if such default, if
capable of cure, shall continue unremedied for a period of fifteen
(15) days;
(c) any representation or warranty made or deemed made by the
Company or any Corporate Guarantor in this Agreement or any other Loan
Document shall prove to be false or misleading in any material respect
when made or given or when deemed made or given;
(d) any report, certificate, financial statement or other
instrument furnished by the Company or any Corporate Guarantor in
connection with this Agreement or any other Loan Document or the
borrowings hereunder, shall prove to be false or misleading in any
material respect when made or given or when deemed made or given;
(e) default in the performance or compliance in respect of any
agreement or condition relating to any Indebtedness of the Company or
any Corporate Guarantor in excess of $1,000,000 individually or in the
aggregate (other than the Notes), if the effect of such default is to
accelerate the maturity of such Indebtedness or to permit the holder
or obligee thereof (or a trustee on behalf of such holder or obligee)
to cause such Indebtedness to become due prior to the stated maturity
thereof, or, any such Indebtedness shall not be paid when due;
64
(f) the Company or any Corporate Guarantor shall (i) voluntarily
commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other federal or state
bankruptcy, insolvency or similar law, (ii) consent to the institution
of, or fail to controvert in a timely and appropriate manner, any such
proceeding or the filing of any such petition, (iii) apply for or
consent to the employment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or any Corporate
Guarantor or for a substantial part of its property; (iv) file an
answer admitting the material allegations of a petition filed against
it in such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) take corporate action for the purpose of effecting
any of the foregoing, or (vii) become unable or admit in writing its
inability or fail generally to pay its debts as they become due;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any
Corporate Guarantor or of a substantial part of their respective
property, under Title 11 of the United States Code or any other
federal or state bankruptcy insolvency or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any Corporate Guarantor or for a
substantial part of their property, or (iii) the winding-up or
liquidation of the Company or any Corporate Guarantor and, in the case
of clauses (i), (ii) or (iii), such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect
for 60 days;
(h) One or more orders, judgments or decrees for the payment of
money in excess of $1,000,000 in the aggregate shall be rendered
against the Company or any Corporate Guarantor and the same shall not
have been paid in accordance with such judgment, order or decree or
settlement and either (i) an enforcement proceeding shall have been
commenced by any creditor upon such judgment, order or decree, or (ii)
there shall have been a period of thirty (30) days during which a stay
of enforcement of such judgment, order or decree, by reason of pending
appeal or otherwise, was not in effect;
(i) any Plan shall fail to maintain the minimum funding standard
required for any Plan year or part thereof or a waiver of such
standard or extension of any amortization period is applied for or
granted under Section 412 of the Code, any Plan is terminated by the
Company or any ERISA Affiliate or the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a Reportable Event shall have occurred with respect to a
Plan or the Company, any Corporate Guarantor, or any ERISA Affiliate
shall have incurred a liability to or on account of a Plan under
Section 515, 4062, 4063, 4201 or 4204 of ERISA, and there shall result
from any such event or events the imposition of a lien upon the assets
of the Company or any Corporate Guarantor, the granting of a security
interest on such assets, or a liability to the PBGC or a Plan or a
trustee appointed under ERISA or a penalty under Section 4971 of the
Code, in case such lien, security interest or penalty involves an
amount in excess of $1,000,000;
65
(j) any material provision of any Loan Document shall for any
reason cease to be in full force and effect in accordance with its
terms or the Company or any Corporate Guarantor shall so assert in
writing;
(k) a Change of Control shall have occurred without the prior
written consent of the Required Lenders;
(l) an Event of Default (as that term is defined in the Senior
Note Indenture) shall have occurred; or
(m) the Company shall fail to "Consummate" the "Exchange Offer"
(as those terms are defined in the Registration Rights Agreement)
within one year of the date it is first required to pay "Liquidated
Damages" (as that term is defined in the Registration Rights
Agreement);
then, at any time thereafter during the continuance of any such event, the Agent
may, and, upon the request of the Required Lenders, shall, by written or
telephonic notice to the Company, take any or all of the following actions, at
the same or different times, (a) terminate their Revolving Credit Commitments
and (b) declare (i) the Notes, both as to principal and interest, (ii) an amount
equal to the maximum amount that may be drawn under all Letters of Credit
(including, without limitation, the Existing Letters of Credit) then outstanding
(whether or not any beneficiary under any Letter of Credit shall have presented
or be entitled to present the drafts and other documents required to draw under
such Letter of Credit), and (iii) all other Obligations, to be forthwith due and
payable without presentment, diligence, demand, protest or other notice of any
kind, all of which are hereby expressly waived, anything contained herein or in
the Notes to the contrary notwithstanding; provided, however, that if an event
specified in Section 8.01(f) or (g) shall have occurred, the Revolving Credit
Commitments shall automatically terminate and interest, principal and amounts
referred to in the preceding clauses (b), (i), (ii), and (iii) shall be
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived, anything contained herein
or in the Notes to the contrary notwithstanding. With respect to all Letters of
Credit (including, without limitation, the Existing Letters of Credit) that
shall not have matured or presentment for honor shall not have occurred, the
Company shall provide the Agent with Cash Collateral in an amount equal to the
aggregate undrawn amount of such letters of credit. Such Cash Collateral shall
be applied by the Agent to reimburse the Issuing Lender for drawings under
Letters of Credit (including, without limitation, the Existing Letters of
Credit) for which the Issuing Lender has not been reimbursed and, to the extent
not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Company at such time or, if the maturity of the Loans has
been accelerated, be applied to satisfy other Obligations.
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ARTICLE IX
THE AGENT
SECTION 9.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder,
under the Loan Documents with such powers as are specifically delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. The Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the other Loan Documents and shall not be a trustee for any Lender, nor is
the Agent acting in a fiduciary capacity of any kind under this Agreement or the
other Loan Documents or in respect thereof or in respect of any Lender. The
Agent shall be not responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or the other Loan
Documents, in any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or the other Loan Documents, or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the other Loan Documents or any other document
referred to or provided for herein or therein or for the collectibility of the
Loans or for the validity, effectiveness or value of any interest or security
covered by the Loan Documents or for the value of any collateral or for the
validity or effectiveness of any assignment, mortgage, pledge, security
agreement, financing statement, document or instrument, or for the filing,
recording, re-filing, continuing or rerecording of any thereof or for any
failure by the Company or any Corporate Guarantor to perform any of its
obligations hereunder or under the other Loan Documents. The Agent may take all
actions by itself and/or it may employ agents and attorneys-in-fact, and shall
not be responsible, except as to money or the securities received by it or its
authorized agents, for the negligence or misconduct of itself or its employees
or of any such agents or attorneys-in-fact, if such agents or attorneys-in-fact
are selected by it with reasonable care. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for any
action taken or omitted to be taken by it hereunder under the other Loan
Documents or in connection herewith or therewith, except for its own gross
negligence or willful misconduct.
SECTION 9.02. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any certification,
notice or other communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Agent. As to any matters not expressly provided for by this
Agreement or the other Loan Documents, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under the other
Loan Documents in accordance with instructions signed by the Required Lenders,
or such other number of Lenders as is specified in Section 10.04 hereof, and
such instructions of the Required Lenders or other number of Lenders as
aforesaid and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.
SECTION 9.03. EVENTS OF DEFAULT. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of
67
principal of or interest on the Loans to the extent the same is required to be
paid to the Agent for the account of the Lenders) unless the Agent has received
notice from a Lender or the Company specifying such Default or Event of Default
and stating that such notice is a "Notice of Default". In the event that the
Agent receives such a notice of the occurrence of a Default or Event of Default,
the Agent shall give prompt notice thereof to the Lenders. The Agent shall
(subject to Section 9.07 hereof) take such action with respect to such Default
or Event of Default as shall be directed by the Required Lenders, except as
otherwise provided in Section 10.04 hereof; provided that unless and until the
Agent shall have received such directions, the Agent may (but is not obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders.
SECTION 9.04. RIGHTS AS A LENDER. With respect to its Revolving Credit
Commitment and the Loans made by it, the Agent in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the entity which is the Agent in its individual capacity. The entity
which is the Agent and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Company or its Affiliates, as if it
were not acting as the Agent, and, except to the extent otherwise herein
specifically set forth, the entity which is the Agent may accept fees and other
consideration from the Company or its Affiliates, for services in connection
with this Agreement or any of the other Loan Documents or otherwise without
having to account for the same to the Lenders.
SECTION 9.05. INDEMNIFICATION. The Lenders shall indemnify the Agent
(to the extent not reimbursed by the Company under Section 10.03 hereof),
ratably in accordance with the aggregate outstanding principal amount of the
Loans made by the Lenders (or, if no Loans are at the time outstanding, ratably
in accordance with their respective Revolving Credit Commitments), for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in its capacity as
the Agent in any way relating to or arising out of this Agreement or any of the
other Loan Documents or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby and thereby
(including, without limitation, the costs and expenses which the Company is
obligated to pay under Section 10.03 hereof or under the applicable provisions
of any other Loan Document) or the enforcement of any of the terms hereof or of
the other Loan Documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
SECTION 9.06. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and the Corporate
Guarantors and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such
68
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement and the other Loan Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by the Company and the
Corporate Guarantors of this Agreement, the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Company and the Corporate Guarantors. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder or under the other Loan
Documents, the Agent shall not have any duty or ability to provide any Lender
with any credit or other information concerning the affairs, financial condition
or business of the Company and the Corporate Guarantors, which may come into the
possession of the Agent or any of its Affiliates.
SECTION 9.07. FAILURE TO ACT. Except for action expressly required of
the Agent hereunder or under the other Loan Documents, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder or thereunder
unless it shall be indemnified to its satisfaction by the Lenders against any
and all liability (except gross negligence and willful misconduct) and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
SECTION 9.08. RESIGNATION OF THE AGENT. Subject to the appointment and
acceptance of a successor Agent as provided in this Section 9.08, the Agent may
resign at any time by notifying the Lenders and the Company. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Company to appoint a successor to the Agent. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the resigning Agent gives notice of its resignation, then
the resigning Agent may, on behalf of the Lenders, appoint a successor Agent.
Upon the acceptance of its appointment as Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Company to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Company and such successor.
After the Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such resigning Agent
in respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
SECTION 9.09. SHARING OF COLLATERAL AND PAYMENTS. In the event that at
any time any Lender shall obtain payment in respect of a Note or interest
thereon, or a participation in any Letter of Credit, or receive any collateral
in respect thereof, whether voluntarily or involuntarily, through the exercise
of a right of banker's lien, set-off or counterclaim against the Company or the
Corporate Guarantors or otherwise, in a greater proportion than the proportion
received by any other Lender in respect of the corresponding Note held by it or
interest thereon, or its participation in any Letter of Credit, then the Lender
so receiving such greater proportionate payment shall purchase for cash from the
other Lender or Lenders such portion of each such other Lender's or Lenders'
Loan or participation in any Letter of Credit, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause the
69
Lender receiving the proportionate over-payment to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders each of
which shall have a lien on its ratable portion of the amount described hereafter
obtained from the Company or any Guarantor; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from the
Lender which received the proportionate over-payment, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Company agrees, to the extent it may do so
under applicable law, that each Lender so purchasing a portion of another
Lender's Loan or participation in any Letter of Credit may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including
telecopy), and unless otherwise expressly provided herein, shall be conclusively
deemed to have been received by a party hereto and to be effective on the day on
which delivered by hand to such party or one Business Day after being sent by
overnight mail to the address set forth below, or, in the case of telecopy
notice, when acknowledged as received, or if sent by registered or certified
mail, three (3) Business Days after the day on which mailed in the United
States, addressed to such party at such address:
(a) if to the Agent, at
European American Bank
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Account Officer
Sbarro, Inc.
Telecopy: (000) 000-0000
(b) if to the Company, at
Sbarro, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Sbarro, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
70
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
(c) if to any Lender, to its address set forth in the
signature page of this Agreement and to the person so
designated
- and -
(d) as to each such party at such other address as such
party shall have designated to the other in a written
notice complying as to delivery with the provisions of
this Section 10.01.
(e) The failure to provide copies of any notice as provided
in Section 10.01(b) shall not effect the validity of a
notice that is otherwise properly given.
SECTION 10.02. EFFECTIVENESS; SURVIVAL. This Agreement shall become
effective on the date on which all parties hereto shall have signed a
counterpart copy hereof and shall have delivered the same to the Agent. All
representations and warranties made herein and in the other Loan Documents and
in the certificates delivered pursuant hereto or thereto shall survive the
making by the Lenders of the Loans, the issuance by the Issuing Lender of
Letters of Credit, in each case, as herein contemplated and the execution and
delivery to the Lenders of the Notes evidencing the Loans and shall continue in
full force and effect so long as the Obligations hereunder are outstanding and
unpaid and the Revolving Credit Commitments are in effect. The obligations of
the Company pursuant to Section 3.07, Section 3.08, Section 3.09 and Section
10.03 shall survive termination of this Agreement and payment of the
Obligations.
SECTION 10.03. EXPENSES. The Company agrees (a) to indemnify, defend
and hold harmless the Agent, the Issuing Lender and each Lender and their
respective officers, directors, employees, and affiliates (each, an "indemnified
person") from and against any and all losses, claims, damages, liabilities or
judgments to which any such indemnified person may be subject and arising out of
or in connection with the Loan Documents, the financings contemplated hereby,
the use of any proceeds of such financings or any related transaction or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any of such indemnified persons is a party thereto, and to
reimburse each of such indemnified persons upon demand for any reasonable legal
or other expenses incurred in connection with the investigation or defending any
of the foregoing; provided that the foregoing indemnity will not, as to any
71
indemnified person, apply to losses, claims, damages, liabilities, judgments or
related expenses to the extent arising from the wilful misconduct or gross
negligence of such indemnified person, (b) to pay or reimburse the Agent for all
its reasonable out-of-pocket costs and expenses incurred in connection with the
preparation and execution of and any amendment, supplement or modification to
this Agreement, the Notes any other Loan Documents, and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including without limitation, the
reasonable fees and disbursements of Xxxxxxx Xxxxx, P.C., counsel to the Agent,
and (c) to pay or reimburse each Lender and the Agent for all their costs and
expenses incurred in connection with the enforcement and preservation of any
rights under this Agreement, the Notes, the other Loan Documents, and any other
documents prepared in connection herewith or therewith, including, without
limitation, the reasonable fees and disbursements of counsel (including, without
limitation, in-house counsel) to the Agent and to the several Lenders, including
all such out-of-pocket expenses incurred during any work-out, restructuring or
negotiations in respect of the Obligations.
SECTION 10.04. AMENDMENTS AND WAIVERS. With the written consent of the
Required Lenders, the Agent and the Company may, from time to time, enter into
written amendments, supplements or modifications hereto for the purpose of
adding any provisions to this Agreement or the Notes or any of the other Loan
Documents or changing in any manner the rights of the Lenders or of the Company
hereunder or thereunder, and with the written consent of the Required Lenders
the Agent on behalf of the Lenders may execute and deliver to the Company a
written instrument waiving, on such terms and conditions as the Agent or the
Required Lenders may specify in such instrument, any of the requirements of this
Agreement or the Notes or any of the other Loan Documents or any Default or
Event of Default; provided, however, that no such waiver and no such amendment,
or supplement or modification shall (a) extend the maturity of any Note, or any
installment thereof, (b) reduce the rate or extend the time of payment of
interest on any Note or any fees payable to the Lenders hereunder, (c) reduce
the principal amount of any Note or the amount of any reimbursement due in
respect of any Letter of Credit, (d) increase the Total Revolving Credit
Commitments, (e) amend, modify or waive any provision of this Section 10.04, (f)
reduce the percentage specified in the definition of Required Lenders or amend
or modify any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination granting consent hereunder, (g) consent to the assignment or
transfer by the Company or any Corporate Guarantor of any of its rights or
obligations under this Agreement, or (h) release any Corporate Guarantor from
its Corporate Guaranty, or limit any Corporate Guarantor's liability with
respect to its Corporate Guaranty, in each case specified in clauses (a) through
(h) above without the written consent of all the Lenders; and provided, further,
that no such waiver and no such amendment, supplement or modification shall (a)
amend, modify, supplement or waive any provision of Article IX with respect to
the Agent without the written consent of the Agent or (b) increase the amount of
any Lender's Revolving Credit Commitment without the written consent of such
Lender. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Company, the
Lenders, the Agent and all future holders of the Notes.
72
SECTION 10.05. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Lenders, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender and no Lender may assign or transfer its rights
or obligations under this Agreement except in accordance with this Section
10.05.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other financial institutions ("Participants")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Revolving Credit Commitment of such Lender or any other interest of
such Lender hereunder. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under this
Agreement to the other parties under this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this Agreement,
and the Company and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. The Company agrees that each Participant shall be entitled to the
benefits of Sections 3.07, 3.08 and 3.10 with respect to its participation in
the Revolving Credit Commitments and in the Loans, Letters of Credit outstanding
from time to time; provided, however, that no Participant shall be entitled to
receive any greater amount pursuant to such sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. No Participant shall have the right to consent to any
amendment to, or waiver of, any provision of this Agreement, except the
transferor Lender may provide in its agreement with the Participant that such
Lender will not, without the consent of the Participant, agree to any amendment
or waiver described in clause (a) through clause (h) of Section 10.04.
Notwithstanding anything in this Section 10.05(b) to the contrary, European
American Bank shall not sell to any Participant pursuant to this Paragraph (b)
unless after giving effect to such sale the Revolving Credit Commitment of
European American Bank held for its own account and in which it has not sold any
participation or made any assignment would not be less than an amount equal to
$25,000,000 less, in the event the Total Revolving Credit Commitment is less
than $30,000,000, an amount equal to $25,000,000 multiplied by a fraction the
numerator of which is the then Total Revolving Credit Commitment and the
denominator of which is $30,000,000; provided, however, European American Bank
shall not be subject to the foregoing restriction in the event of a sale to a
Participant (i) after the occurrence of an Event of Default or (ii) if it is
required by any law, rule, regulation, order or decree of any Governmental
Authority to reduce its obligations with respect to its Revolving Credit
Commitment.
(c) Subject to the last sentence of this paragraph (c) any Lender may,
in accordance with applicable law, at any time sell to any Lender or any
domestic banking affiliate thereof, or, with the consent of the Agent and (so
long as no Default or Event of Default shall have occurred and be continuing)
the Company (which consent shall not be unreasonably withheld), to one or more
additional banks or financial institutions ("Purchasing Lenders") all or any
part of its rights
73
and obligations under this Agreement and the Notes pursuant to an Assignment and
Acceptance Agreement, executed by such Purchasing Lender, such transferor Lender
and the Agent (and, in the case of an Assignment and Acceptance Agreement
relating to a Purchasing Lender that is not then a Lender or a domestic banking
affiliate thereof, also executed by the Company to the extent the Company's
consent is required pursuant to ), and delivered to the Agent for its
acceptance. Upon such execution, delivery and acceptance from and after the
effective date specified in such Assignment and Acceptance Agreement, (i) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance Agreement, have the rights and obligations of
a Lender hereunder with Revolving Credit Commitments and the issuance of Letters
of Credit as set forth therein and (ii) the transferor Lender thereunder shall,
to the extent provided in such Assignment and Acceptance Agreement, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance Agreement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor Lender
shall cease to be a party hereto except as to Sections 3.07, 3.08, 3.09 and
10.03 for the period prior to the effective date). Such Assignment and
Acceptance Agreement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of Commitment Proportions arising from the purchase
by such Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under or in respect of this Agreement and the Notes. On
or prior to the effective date specified in such Assignment and Acceptance
Agreement, the Company, at its own expense, shall execute and deliver to the
Agent, in exchange for the surrendered Notes, a new Note to the order of such
Purchasing Lender in an amount equal to the Revolving Credit Commitment assumed
by it pursuant to such Assignment and Acceptance Agreement and, if the
transferor Lender has retained any Revolving Credit Commitment hereunder, a new
Note to the order of the transferor Lender in an amount equal to such Revolving
Credit Commitment retained by it hereunder. Such new Notes shall be in a
principal amount equal to the principal amount of such surrendered Notes, shall
be dated the date of the Notes they replace and shall otherwise be in the form
of the Notes replaced thereby. The Notes surrendered by the transferor Lender
shall be returned by the Agent to the Company marked "cancelled". Anything in
this Section 10.05 to the contrary notwithstanding, (i) no transfer to a
Purchasing Lender shall be made pursuant to this paragraph (c) if such transfer
by any one transferor Lender to any one Purchasing Lender (other than a
Purchasing Lender which is a Lender hereunder prior to such transfer) is in
respect of less than $5,000,000 of the Revolving Credit Commitments of such
transferor Lender or (y) if less than the entire Revolving Credit Commitment of
such transferor Lender is transferred, after giving effect to such transfer the
Revolving Credit Commitment held by any Transferor Lender would be less than
$5,000,000 with respect to the Revolving Credit Commitments and (ii) European
American Bank shall not make or transfer to a Purchasing Lender pursuant to this
Paragraph (c) if after giving effect to such transfer the Revolving Credit
Commitment held by European American Bank for its own account and in which it
has not sold any participation shall not be less than an amount equal to
$25,000,000 less, in the event the Total Revolving Credit Commitment is less
than $30,000,000, an amount equal to $25,000,000 multiplied by a fraction the
numerator of which is the then Total Revolving Credit Commitment and the
denominator of which is $30,000,000; provided, however, European American Bank
shall not be subject to the forgoing restriction in the event of a transfer to a
74
Purchasing Lender (i) after the occurrence of an Event of Default or (ii) the
extent it is required by any law, rule, regulation, order or decree of any
Governmental Authority to reduce its Revolving Credit Commitment.
(d) The Agent shall maintain at its address referred to in Section
10.01 a copy of each Assignment and Acceptance Agreement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the commitments of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error and the Company, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as the owner of the
Loans recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance Agreement
executed by a transferor Lender and a Purchasing Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an Affiliate thereof, by the
Company) together with payment by the Purchasing Lender to the Agent of a
registration and processing fee of $3,000 if the Purchasing Lender is not a
Lender prior to the execution of an Assignment and Acceptance Agreement and
$2,500 if the Purchasing Lender is a Lender prior to the execution of an
Assignment and Acceptance Agreement, the Agent shall (i) accept such Assignment
and Acceptance Agreement, (ii) record the information contained therein in the
Register, and (iii) give prompt notice of such acceptance and recordation to the
Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the Company
and its Affiliates which has been delivered to such Lender by or on behalf of
the Company pursuant to this Agreement or which has been delivered to such
Lender by the Company in connection with such Lender's credit evaluation of the
Company and the Corporate Guarantors prior to entering into this Agreement.
(g) If, pursuant to this Section 10.05, any interest in this
Agreement, a participation agreement, or any Note is transferred to any
transferee which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Company) that under applicable law and treaties no taxes will
be required to be withheld by the Agent, the Company, or the transferor Lender
with respect to any payments to be made to such Transferee in respect of the
Loans, (ii) to furnish to the Agent, the transferor Lender and the Company
either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such Transferee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder) and (iii) to
agree (for the benefit of the Agent, the transferor Lender and the Company) to
provide the Agent, the transferor Lender and the Company a new Form 4224 or Form
1001 upon the expiration or obsolescence of any previously delivered form and
75
comparable statements in accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such Transferee, and to comply
from time to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption. If a Lender fails to provide a form required
pursuant to this Section 10.05(g), upon notice by the Company to the Agent and
such Lender, (i) the Company shall be entitled to deduct or withhold on payments
to the Agent or such Lender as a result of such failure, as required by law, and
(ii) the Company shall not be required to make payments of additional amounts
with respect to withheld Taxes pursuant to Section 3.09(a) to the extent such
withholding is required solely of the failure of Agent or Lender to provide the
necessary form.
(h) Any Lender may at any time pledge or assign or grant a security
interest in all or any part of its rights under this Agreement and its Notes to
a Federal Reserve Bank, provided that no such assignment shall release the
transferor Lender from its Revolving Credit Commitments or its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
to this Agreement.
SECTION 10.06. NO WAIVER; CUMULATIVE REMEDIES. Neither any failure nor
any delay on the part of any Lender, the Issuing Lender or the Agent in
exercising any right, power or privilege hereunder or under any Note or any
other Loan Document shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege. The rights, remedies, powers and privileges herein
provided or provided in the other Loan Documents are cumulative and not
exclusive of any rights, remedies powers and privileges provided by law.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.
SECTION 10.08. SUBMISSION TO JURISDICTION; JURY WAIVER. THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN
THE XXXXX XX XXX XXXX, XXXXXX XX XXX XXXX, XXXXXX OF NASSAU OR COUNTY OF SUFFOLK
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR
STATE COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO
76
HEREIN OR THEREIN OR THE SUBJECT MATTER HEREOF OR THEREOF MAY NOT BE LITIGATED
IN OR BY SUCH FEDERAL OR STATE COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AGREES NOT TO (I) SEEK AND HEREBY WAIVES THE RIGHT TO ANY
REVIEW OF THE JUDGMENT OF ANY SUCH FEDERAL OR STATE COURT BY ANY FEDERAL OR
STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO
GRANT AN ENFORCEMENT OF SUCH JUDGMENT OR (II) ASSERT ANY COUNTERCLAIM IN ANY
SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH CLAIM CONSTITUTES A COMPULSORY
COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL PROCEDURE. THE COMPANY AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE
LAWS OF NEW YORK. EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT.
SECTION 10.09. CONFIDENTIALITY. The Agent and each of the Lenders
agree that it will not disclose without the prior consent of the Company (other
than to affiliates of such Lenders and their respective directors, employees,
auditors, counsel or other professional advisors and their respective counsel
who are advised of the need to maintain the confidentiality thereof) any
Confidential Information (as defined below) with respect to the Company or any
Subsidiary of the Company which is furnished by the Company or any Subsidiary of
the Company; provided that any Lender may disclose any such information (a) that
is or has become generally available to the public; (b) as may be required or
appropriate (i) in any report, statement or testimony submitted to any
municipal, state or federal or other governmental regulatory body having or
claiming to have jurisdiction over such Lender or to the Federal Reserve Board
or the Federal Deposit Insurance Corporation or similar organizations (whether
in the United States or elsewhere) or their successors or (ii) in connection
with any request or requirement of any such regulatory body; (c) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation; (d) to comply with any law, order, regulation or ruling
applicable to such Lender; and (e) to any prospective Transferee in connection
with any contemplated transfer of any of the Revolving Credit Notes or any
interest therein by such Lender; provided that such prospective Transferee
agrees to be bound by this Section 10.09 to the same extent as such Lender. As
used herein "Confidential Information" shall mean information with respect to
the Company which is not generally available to the public other than such
information which after the date hereof becomes generally available to the
public through no fault or action by any Lender or becomes available to a Lender
on a nonconfidential basis from a source other than the Company which to such
Lender's knowledge is not prohibited from disclosing such information by any
contractual, legal or fiduciary obligation owed to the Company.
SECTION 10.10. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement, any Note or any other Loan Document should be
invalid, illegal or
77
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
SECTION 10.11. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, the Agent, the Issuing Lender, each Lender and each
Affiliate of each Lender are each hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Agent, the Issuing Lender,
any Lender or any Affiliate of any Lender to or for the credit or the account of
the Company against any and all of the Obligations of the Company now and
hereafter existing under this Agreement and the Notes held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any Note and although such Obligations may be unmatured. The rights
of the Agent, the Issuing Lender, each Lender and each Affiliate of each Lender
under this Section 10.11 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which they may have.
SECTION 10.12. HEADINGS. Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
SECTION 10.13. CONSTRUCTION. This Agreement is the result of
negotiations between, and has been reviewed by, each of the Company, the Agent,
the Lenders and their respective counsel. Accordingly, this Agreement shall be
deemed to be the product of each party hereto, and no ambiguity shall be
construed in favor of or against either the Company, the Agent, or any Lender.
SECTION 10.14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
taken together, shall constitute one and the same agreement.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
78
IN WITNESS WHEREOF, the Company, the Agent and the Lenders have caused
this Agreement to be duly executed by their duly authorized officers, as of the
day and year first above written.
SBARRO, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
EUROPEAN AMERICAN BANK
REVOLVING CREDIT AS AGENT AND AS A LENDER
COMMITMENT:$30,000,000
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Lending Office for Prime
Rate Loans and Adjusted Libor Loans:
European American Bank
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Address for Notices:
European American Bank
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Sbarro, Inc.
Account Officer
Telecopy: (000) 000-0000
S-1
EXHIBIT A
REVOLVING CREDIT NOTE
$ Uniondale, New York
September __, 1999
FOR VALUE RECEIVED, SBARRO, INC., a New York corporation (the
"Company"), promises to pay to the order of (the "Lender"), on or before
September __, 2004, DOLLARS ($______________) or, if less, the unpaid principal
amount of all Revolving Credit Loans made by the Lender to the Company under the
Credit Agreement referred to below.
The Company promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at the rates and at the times
which shall be determined, and to make principal repayments on this Note at the
times which shall be determined, in accordance with the provisions of the Credit
Agreement referred to below.
This Note is one of the "Revolving Credit Notes" referred to in the
Credit Agreement dated as of September __, 1999, by and among the Company,
European American Bank, as Agent, and the various Lenders (including the Lender)
as are, or may from time to time become, parties thereto (as the same may be
amended, modified or supplemented from time to time, the "Credit Agreement") and
is issued pursuant to and entitled to the benefits of the Credit Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby were made and
are to be repaid. Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
Each of the Lender and any subsequent holder of this Note agrees, by
its acceptance hereof, that before transferring this Note it shall record the
date, Type and amount of each Revolving Credit Loan and the date and amount of
each payment or prepayment of principal of each Revolving Credit Loan previously
made hereunder on the grid schedule annexed to this Note; provided, however,
that the failure of the Lender or holder to set forth such Revolving Credit
Loans, payments and other information on the attached grid schedule shall not in
any manner affect the obligation of the Company to repay the Revolving Credit
Loans made by the Lender in accordance with the terms of this Note.
This Note is subject to optional and mandatory prepayments pursuant to
Section 3.03 of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
1
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in immediately available
funds at the office of European American Bank, the Agent for the Lenders under
the Credit Agreement, located at 000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 or at such other place as shall be designated in writing for such
purpose in accordance with the terms of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company and endorsers of this Note waive presentment, diligence,
demand, protest, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
SBARRO, INC.
By:_______________________________________
Title:
2
SCHEDULE
Date Principal Type Applicable Amount of Notation
of Amount of of Interest Interest Principal Made
Loan Loan Loan Rate Period Paid By
---- --------- ---- -------- ---------- --------- --------
3
EXHIBIT B
CORPORATE GUARANTY
THIS CORPORATE GUARANTY is entered into as of the ___ day of
September, 1999, by EACH OF THE UNDERSIGNED (each a "Corporate Guarantor" and,
collectively, the "Corporate Guarantors") in favor of and for the benefit of the
Agent and the Lenders, as defined in the Credit Agreement referred to below.
RECITALS
A. Pursuant to a Credit Agreement dated the date hereof, by and among
Sbarro, Inc. (the "Company"), European American Bank, as Agent, and the various
Lenders as are or may from time to time become parties thereto (as the same may
be amended, modified or supplemented from time to time, the "Credit Agreement"),
the Company will receive loans and other financial accommodations from the Agent
and Lenders and will incur Obligations.
B. The Corporate Guarantors, being members of a group of entities
affiliated with the Company and being engaged in related businesses, will
receive direct and indirect benefits from such loans and financial
accommodations.
C. Each Corporate Guarantor wishes to grant the Agent and Lenders
assurance in connection with the payment and performance by the Company of all
of its present and future Obligations, and, to that effect, to guaranty the
Obligations as set forth herein.
Accordingly, each Corporate Guarantor hereby agrees as follows:
1. CORPORATE GUARANTY.
(a) Each Corporate Guarantor, jointly and severally, unconditionally
and irrevocably guarantees to the Agent and the Lenders the full and punctual
payment by the Company, when due, whether at the stated due date, by
acceleration or otherwise, of all Obligations of the Company, howsoever created,
arising or evidenced, voluntary or involuntary, whether direct or indirect,
absolute or contingent now or hereafter existing or owing to the Agent or the
Lenders (collectively, the "Guaranteed Obligations"). This Corporate Guaranty is
an absolute, unconditional, continuing guaranty of payment and not of collection
of the Guaranteed Obligations and includes Guaranteed Obligations arising from
successive transactions which shall either continue such Guaranteed Obligations
or from time to time renew such Guaranteed Obligations after the same have been
satisfied. This Corporate Guaranty is in no way conditioned upon any attempt to
collect from the Company or upon any other event or contingency, and shall be
binding upon and enforceable against each Corporate Guarantor without regard to
the validity or enforceability of the Credit Agreement, the Notes or any other
Loan Document or of any term of any thereof. If for any reason the Company shall
fail or be unable duly and punctually to pay any of the Guaranteed Obligations
(including, without limitation amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
1
U.S.C. ss. 362(a)), each Corporate Guarantor will forthwith pay the same, in
cash, immediately upon demand.
(b) In the event the Credit Agreement, any Note or any other Loan
Document shall be terminated as a result of the rejection thereof by any
trustee, receiver or liquidating agent of the Company or any of its properties
in any bankruptcy, insolvency, reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar proceeding, each Corporate
Guarantor's obligations hereunder shall continue to the same extent as if the
Credit Agreement, such Note or such other Loan Document had not been so
rejected.
(c) Each Corporate Guarantor shall pay all costs, expenses (including,
without limitation, reasonable attorneys' fees and disbursements) incurred in
connection with the enforcement of the Guaranteed Obligations of the Company
under the Credit Agreement or the Note or any other Loan Document to the extent
that such costs, expenses and damages are not paid by the Company pursuant to
the respective documents.
(d) Each Corporate Guarantor further agrees that if any payment made
by the Company or any Corporate Guarantor to the Agent or the Lenders on any
Obligation is rescinded, recovered from or repaid by the Agent or the Lenders,
in whole or in part, in any bankruptcy, insolvency or similar proceeding
instituted by or against the Company or any Corporate Guarantor, this Corporate
Guaranty shall continue to be fully applicable to such Guaranteed Obligation to
the same extent as though the payment so recovered or repaid had never
originally been made on such Guaranteed Obligation.
(e) If any Event of Default shall have occurred and be continuing, the
Agent, the Lenders, and any affiliate of the Agent or Lender each are hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or the Lenders, or any affiliate of the Agent or a
Lender, to or for the credit or the account of any Corporate Guarantor against
any of and all the obligations of any Corporate Guarantor now or hereafter
existing under this Corporate Guaranty, irrespective of whether or not the Agent
or any Lender shall have made any demand hereunder and although such obligations
may be unmatured. The rights under this paragraph 1(e) are in addition to other
rights and remedies (including other rights of set off) which the Agent and the
Lenders may have.
2. CORPORATE GUARANTY CONTINUING, ABSOLUTE, UNLIMITED.
The obligations of each Corporate Guarantor hereunder shall be
continuing, absolute, irrevocable, unlimited and unconditional, shall not be
subject to any counterclaim, set-off, deduction or defense based upon any claim
any Corporate Guarantor may have against the Agent, any Lender or the Company or
any other person, and shall remain in full force and effect without regard to,
and, to the fullest extent permitted by applicable law, shall not be released,
discharged or in any way affected by, any circumstance or condition (whether or
not any Corporate Guarantor
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shall have any knowledge or notice thereof) whatsoever which might constitute a
legal or equitable discharge or defense including, but not limited to, (a) any
express or implied amendment, modification or supplement to the Credit
Agreement, any Note, or any other Loan Document or any other agreement referred
to in any thereof, or any other instrument applicable to the Company or to the
Loans, or the Letters of Credit or any part thereof; (b) any failure on the part
of the Company to perform or comply with the Credit Agreement, any Note or any
other Loan Document or any failure of any other person to perform or comply with
any term of the Credit Agreement, any Note, or any other Loan Document or any
other agreement as aforesaid; (c) any waiver, consent, change, extension,
indulgence or other action or any action or inaction under or in respect of the
Credit Agreement, any Note, or any other Loan Document or any other agreement as
aforesaid, whether or not the Agent, any Lender, the Company or any Corporate
Guarantor has notice or knowledge of any of the foregoing; (d) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding with respect to the Company, or its properties or its
creditors, or any action taken by any trustee or receiver or by any court in any
such proceeding; (e) any furnishing or acceptance of security or any release of
any security; (f) any limitation on the liability or obligations of the Company
under the Credit Agreement, any Note or any other Loan Document or any
termination, cancellation, frustration, invalidity or unenforceability, in whole
or in part, of the Credit Agreement, any Note, this Corporate Guaranty or any
other Loan Document or any term of any thereof; (g) any lien, charge or
encumbrance on or affecting any Corporate Guarantor's or any of the Company's
respective assets and properties; (h) any act, omission or breach on the part of
the Agent or any Lender under the Credit Agreement, any Note or any other Loan
Document or any other agreement at any time existing between the Agent, any
Lender and the Company or any law, governmental regulation or other agreement
applicable to the Agent, any Lender or any Loan; (i) any claim as a result of
any other dealings among the Agent, any Lender, any Corporate Guarantor or the
Company; (j) the assignment of this Corporate Guaranty, the Credit Agreement,
any Note or any other Loan Document by the Agent or any Lender to any other
Person in accordance with the terms of the Agreement; or (k) any change in the
name of the Agent, any Lender, the Company or any other Person referred to
herein.
3. WAIVER.
Each Corporate Guarantor unconditionally waives, to the fullest extent
permitted by applicable law: (a) notice of any of the matters referred to in
Section 2 hereof; (b) all notices which may be required by statute, rule of law
or otherwise to preserve any rights against any Corporate Guarantor hereunder,
including, without limitation, notice of the acceptance of this Corporate
Guaranty, or the creation, renewal, extension, modification or accrual of the
Guaranteed Obligations or notice of any other matters relating thereto, any
presentment, demand, notice of dishonor, protest, nonpayment of any damages or
other amounts payable under the Credit Agreement, any Note or any other Loan
Documents; (c) any requirement for the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of the Credit Agreement,
any Note or any other Loan Documents, including, without limitation, diligence
in collection or protection of or realization upon the Guaranteed Obligations or
any part
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thereof or any collateral thereof; (d) any requirement of diligence; (e) any
requirement to mitigate the damages resulting from a default by the Company
under the Credit Agreement, any Note or any other Loan Documents; (f) the
occurrence of every other condition precedent to which any Corporate Guarantor
or the Company may otherwise be entitled; (g) the right to require the Agent or
the Lenders to proceed against the Company or any other person liable on the
Guaranteed Obligations, to proceed against or exhaust any security held by the
Company or any other person, or to pursue any other remedy in the Agent's or any
Lender's power whatsoever, and (h) the right to have the property of the Company
first applied to the discharge of the Guaranteed Obligations.
The Agent and the Lenders may, at their election, exercise any right
or remedy they may have against the Company without affecting or impairing in
any way the liability of any Corporate Guarantor hereunder and each Corporate
Guarantor waives, to the fullest extent permitted by applicable law, any defense
arising out of the absence, impairment or loss of any right of reimbursement,
contribution or subrogation or any other right or remedy of any Corporate
Guarantor against the Company, whether resulting from such election by the Agent
or the Lenders or otherwise. Each Corporate Guarantor waives any defense arising
by reason of any disability or other defense of the Company or by reason of the
cessation for any cause whatsoever of the liability, either in whole or in part,
of the Company to the Agent and the Lenders for the Guaranteed Obligations.
Each Corporate Guarantor assumes the responsibility for being and
keeping informed of the financial condition of the Company and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations
and agrees that neither the Agent nor the Lenders shall have any duty to advise
any Corporate Guarantor of information regarding any condition or circumstance
or any change in such condition or circumstance. Each Corporate Guarantor
acknowledges that neither the Agent nor the Lenders have made any
representations to any Corporate Guarantor concerning the financial condition of
the Company.
4. REPRESENTATIONS AND COVENANTS OF EACH CORPORATE GUARANTOR.
(a) Each Corporate Guarantor hereby represents and warrants that the
representations and warranties contained in Article IV of the Credit Agreement,
to the extent they relate to such Corporate Guarantor, are true and correct as
of the date hereof and such Corporate Guarantor further agrees that the Agent
and the Lenders are entitled to rely on such representations and warranties to
the same extent as though the same were set forth in full herein.
(b) Each Corporate Guarantor hereby agrees to perform the covenants
contained in Article VI and Article VII of the Credit Agreement, to the extent
they relate to such Corporate Guarantor, and the Agent and the Lenders are
entitled to rely on such agreement to perform such covenants to the same extent
as though the same were set forth in full herein.
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5. PAYMENTS.
Each payment by each Corporate Guarantor to the Agent and the Lenders
under this Corporate Guaranty shall be made in the time, place and manner
provided for payments in the Credit Agreement without set-off or counterclaim to
the account at which such payment is required to be paid by the Company under
the Credit Agreement.
6. PARTIES.
This Corporate Guaranty shall inure to the benefit of the Agent, the
Lenders and their respective successors, assigns or transferees, and shall be
binding upon the Corporate Guarantors and their respective successors and
assigns. No Corporate Guarantor may delegate any of its duties under this
Corporate Guaranty without the prior written consent of the Lenders.
7. NOTICES.
Any notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing and, unless otherwise expressly
provided herein, shall be conclusively deemed to have been received by a party
hereto and to be effective on the day on which delivered to such party at the
address set forth below, or, in the case of telecopy notice, when acknowledged
as received, or if sent by registered or certified mail, on the third Business
Day after the day on which mailed in the United States, addressed to such party
at said address:
(a) if to the Agent and/or the Lenders,
European American Bank,
as Agent
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Account Officer
Sbarro, Inc.
Telecopy: (000) 000-0000
(b) if to a Corporate Guarantor, at
c/o Sbarro, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
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Sbarro, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
(c) as to each such party at such other address as such party shall
have designated to the other in a written notice complying as to
delivery with the provisions of this Section 7.
(d) The failure to provide copies of any notice as provided in
Section 7 shall not effect the validity of a notice that is
otherwise properly given.
8. REMEDIES.
Each Corporate Guarantor stipulates that the remedies at law in
respect of any default or threatened default by a Corporate Guarantor in the
performance of or compliance with any of the terms of this Corporate Guaranty
are not and will not be adequate, and that any of such terms may be specifically
enforced by a decree for specific performance or by an injunction against
violation of any such terms or otherwise.
9. RIGHTS TO DEAL WITH THE COMPANY.
At any time and from time to time, without terminating, affecting or
impairing the validity of this Corporate Guaranty or the obligations of any
Corporate Guarantor hereunder, the Lenders may deal with the Company in the same
manner and as fully as if this Corporate Guaranty did not exist and shall be
entitled, among other things, to grant the Company, without notice or demand and
without affecting any Corporate Guarantor's liability hereunder, such extension
or extensions of time to perform, renew, compromise, accelerate or otherwise
change the time for payment of or otherwise change the terms of indebtedness or
any part thereof contained in or arising under the Credit Agreement, any Note or
any other Loan Documents, or to waive any obligation of the Company to perform,
any act or acts as the Lenders may deem advisable.
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10. SUBROGATION.
(a) Upon any payment made or action taken by a Corporate Guarantor
pursuant to this Corporate Guaranty, such Corporate Guarantor shall, subject to
the provisions of Sections 10(b) and (c) hereof, be fully subrogated to all of
the rights of the Lenders against the Company arising out of the action or
inaction of the Company for which such payment was made or action taken by such
Corporate Guarantor.
(b) Any claims of such Corporate Guarantor against the Company arising
from payments made or actions taken by such Corporate Guarantor pursuant to the
provisions of this Corporate Guaranty shall be in all respects subordinate to
the full and complete or final and indefeasible payment or performance and
discharge, as the case may be, of all amounts, obligations and liabilities, the
payment or performance and discharge of which are guaranteed by this Corporate
Guaranty, and no payment hereunder by a Corporate Guarantor shall give rise to
any claim of such Corporate Guarantor against the Lenders.
(c) Notwithstanding anything to the contrary contained in this Section
10, no Corporate Guarantor shall be subrogated to the rights of the Lenders
against the Company until all of the Obligations of the Company have been paid
finally and indefeasibly in full, and that subrogation shall be suspended upon
the occurrence of the events described in Section 1(d) until the Lenders are
indefeasibly paid in full.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
All representations, warranties, covenants and agreements made herein,
including representations and warranties deemed made herein, shall survive any
investigation or inspection made by or on behalf of the Lenders and shall
continue in full force and effect until all of the obligations of the Corporate
Guarantors under this Corporate Guaranty shall be fully performed in accordance
with the terms hereof, and until the payment in full of the Guaranteed
Obligations.
12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THIS
CORPORATE GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OR
CHOICE OF LAW. EACH CORPORATE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE XXXXX XX XXX XXXX, XXXXXX XX
XXX XXXX, XXXXXX OF NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
CORPORATE GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH CORPORATE GUARANTOR HEREBY WAIVES AND AGREES
NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
7
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE COURTS, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS CORPORATE GUARANTY
OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH CORPORATE GUARANTOR AGREES (I) NOT TO SEEK AND HEREBY
WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH FEDERAL OR STATE
COURT BY ANY FEDERAL OR STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH
MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (II) NOT TO
ASSERT ANY COUNTERCLAIM, IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH
CLAIM CONSTITUTES A COMPULSORY COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL
PROCEDURES. EACH CORPORATE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN
THIS CORPORATE GUARANTY OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. THE
LENDERS AND EACH CORPORATE GUARANTOR IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS CORPORATE GUARANTY, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
13. MISCELLANEOUS.
(a) All capitalized terms used herein and not defined herein shall
have the meanings specified in the Credit Agreement.
(b) This Corporate Guaranty is the joint and several obligation of
each Corporate Guarantor, and may be enforced against each Corporate Guarantor
separately, whether or not enforcement of any right or remedy hereunder has been
sought against any other Corporate Guarantor. Each Corporate Guarantor
acknowledges that its obligations hereunder will not be released or affected by
the failure of the other Corporate Guarantors to execute the Corporate Guaranty
or by a determination that all or a part of this Corporate Guaranty with respect
to any other Corporate Guarantor is invalid or unenforceable.
(c) If any term of this Corporate Guaranty or any application thereof
shall be invalid or unenforceable, the remainder of this Corporate Guaranty and
any other application of such term shall not be affected thereby.
(d) Any term of this Corporate Guaranty may be amended, waived,
discharged or terminated only by an instrument in writing signed by each
Corporate Guarantor and the Lenders.
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(e) The headings in this Corporate Guaranty are for purposes of
reference only and shall not limit or define the meaning hereof.
(f) No delay or omission by a Lender in the exercise of any right
under this Corporate Guaranty shall impair any such right, nor shall it be
construed to be waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise of any other right.
IN WITNESS WHEREOF, the undersigned have caused this Corporate
Guaranty to be executed and delivered as of the day and year first above
written.
By:_______________________________________
Title:
By:_______________________________________
Title:
By:_______________________________________
Title:
By:_______________________________________
Title:
9
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Dated __________________
Reference is hereby made to the Credit Agreement dated September __,
1999 (as amended, modified or supplemented from time to time the "Credit
Agreement") by and among SBARRO, INC., a New York corporation (the "Company"),
the lenders signatory thereto (collectively, the "Lenders"), EUROPEAN AMERICAN
BANK, as Agent for the Lenders (in such capacity, the "Agent"). Capitalized
terms used herein that are defined in the Credit Agreement and not otherwise
defined herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
________________________________, a _________________ (the
"Assignor"), and _________________________________, a _________________ (the
"Assignee"), agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse, and without representation or warranty except as expressly set forth
herein, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, a ___% interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the Effective Date (as defined below)
(including, without limitation, such percentage interest in each of the
Assignor's Revolving Credit Commitment as in effect on the Effective Date, the
Loans owing to the Assignor on the Effective Date, the Revolving Credit Note
held by the Assignor and the participations in Letters of Credit held by the
Assignor on the Effective Date).
2. The Assignor: (i) represents and warrants that as of the date
hereof its Revolving Credit Commitment (without giving effect to assignments
thereof that have not yet become effective) is $___________, and the aggregate
outstanding principal amount of the Revolving Credit Loans owing to it (without
giving effect to assignments thereof that have not yet become effective) is
$___________ and $__________ respectively; (ii) represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder, and that such interest is free and clear of any adverse claim; (iii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company or any Subsidiary of the
Company or the performance or observance by the Company or any Subsidiary of the
Company of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto or the enforceability of any
such agreement, instrument or document; and (v) attaches the Revolving Credit
Note referred to in paragraph 1 above and requests that the Agent exchange such
note for a Revolving Credit Note dated the Effective Date in the principal
amount of $_____________
1
payable to the order of the Assignee and a Revolving Credit Note dated the
Effective Date in the principal amount of $________________ payable to the order
of the Assignor.
3. The Assignee: (i) confirms that it has received a copy of the
Credit Agreement, together with copies of such financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Agent to take such action as its agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (iv) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (v) specifies as its addresses for Prime Rate
Loans and Adjusted Libor Loans (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_________________ (the "Effective Date") which shall not be earlier than five
Business Days after the acceptance and recording by the Agent of the executed
Assignment and Acceptance. Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for acceptance by the Agent and
accompanied by the fee payable to the Agent as referred to in Section 10.05(c)
of the Credit Agreement.
5. Upon such acceptances, as of the Effective Date: (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents, and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights
(except Sections 3.07, 3.08, 3.10 and 10.03 for the period prior to the
Effective Date) and be released from its obligations under the Credit Agreement.
6. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments under the Credit Agreement and the Notes in respect of
the interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to its
rules pertaining to conflicts of laws.
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IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date first set forth above.
[NAME OF ASSIGNOR]
By: ____________________________________________
Title
[NAME OF ASSIGNEE]
By: ____________________________________________
Title
Lending Office for Prime Rate Loans:
Lending Office for Adjusted Libor
Loans:
Attention:
Address for Notices:
Attention:
Telecopy No.:
Accepted this _____ day
of _______________, ____
EUROPEAN AMERICAN BANK, as
Agent
By: _________________________________
Name:
Title:
3
SBARRO, INC.*
By: _________________________________
Name:
Title:
---------------
* If required pursuant to Section 10.05(c).
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EXHIBIT D
[LETTERHEAD OF COUNSEL TO THE
COMPANY AND ITS SUBSIDIARIES]
September __, 1999
European American Bank, as Agent
for the benefit of the Lenders
Ladies and Gentlemen:
We have acted as counsel to Sbarro, Inc. (the "Company"), a New York
corporation, and [insert Corporate Guarantors] (each a "Corporate Guarantor" and
collectively, the "Corporate Guarantors"), in connection with the Credit
Agreement (the "Agreement") dated the date hereof among the Company, European
American Bank, as Agent, and the lender parties thereto, pursuant to which the
Lenders have agreed to extend credit to the Company in an aggregate principal
amount not to exceed $30,000,000. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Agreement.
In acting as such counsel, we have examined:
(a) a counterpart of the Agreement executed by the Company;
(b) the Revolving Credit Note executed by the Company in favor of each
Lender; and
(c) a counterpart of the Corporate Guaranty executed by each Corporate
Guarantor.
The documents referred to in items (a) through (c) above are hereinafter
referred to collectively as the "Loan Documents".
We have assumed the authenticity of all documents submitted to us as
originals, the conformity to the originals of all documents submitted to us as
certified, conformed or photostatic copies and the authenticity of the originals
of such copies. We have also examined originals, or copies certified to our
satisfaction, of such corporate records, certificates of public officials,
certificates of corporate officers of the Company and each Corporate Guarantor
and such other instruments and documents as we have deemed necessary as a basis
for the opinions hereinafter set forth. As to questions of fact, we have, to the
extent that such facts were not independently established by us, relied upon
such certificates.
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Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that,
1. The Company and the Corporate Guarantors are each a corporation or
limited liability company, as indicated on Schedule I to the Credit Agreement,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation or formation and in good standing in each
jurisdiction wherein the conduct of its business or any ownership of its
properties requires it to be qualified to do business except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect, and each has the corporate or limited liability company power and
authority, as applicable, to own its assets and to transact the business in
which it is now engaged and to execute and perform each of the Loan Documents to
which it is a party.
2. The Company and the Corporate Guarantors each have the requisite
corporate or limited liability company power and authority, as applicable, to
execute, deliver and perform the Loan Documents to which it is a party, each of
which has been duly authorized by all necessary and proper corporate or limited
liability company action.
3. The Loan Documents to which the Company or the Corporate Guarantors
are a party constitute the legal, valid and binding obligation of the Company
and the Corporate Guarantors (to the extent they are a party thereto)
enforceable against the Company and each Corporate Guarantor, as the case may
be, in accordance with their respective terms subject as to enforcement by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally, and by equitable principles of
general application.
4. Neither the execution and delivery by the Company and the Corporate
Guarantors of the Loan Documents to which they are a party nor the performance
by the Company or the Corporate Guarantors of their respective obligations under
the Loan Documents, will (a) violate any law, rule or regulation or, to our
knowledge, any order or decree of any court or governmental instrumentality
binding upon the Company or any Corporate Guarantor, or (b) contravene the
Certificate of Incorporation or By-Laws, or the Articles of Organization and
Operating Agreement, as applicable, of the Company or any Corporate Guarantor
or, result in a breach of or constitute a default (with due notice or lapse of
time or both) under any agreements to which the Company or any Corporate
Guarantor is bound of which we are aware, or, to our knowledge, result in the
creation or imposition of any lien, charge, or encumbrance upon any of the
property or assets of the Company or any Corporate Guarantor.
5. Neither the Company nor any Corporate Guarantor is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940.
6. No consent or authorization of, filing with or other act by or in
respect of any governmental authority is required to be obtained by the Company
or any Corporate Guarantor
2
for the valid execution, delivery and performance of the Loan Documents to which
they are a party.
7. Assuming the proceeds of each extension of credit pursuant to the
Credit Agreement are used for the purposes set forth in Section 3.02 of the
Agreement, the making of the loans contemplated therein and the application of
the proceeds thereof will not violate the provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
8. To the best of our knowledge there are no actions, suits or
proceedings against any of the Company or any Corporate Guarantor, pending or
threatened against the Company or any Corporate Guarantor, before any court,
governmental agency or arbitrator which challenges the validity or
enforceability of any Loan Document or which, if adversely determined against
the Company or any Corporate Guarantor could reasonably be expected to have a
Material Adverse Effect.
Very truly yours,
