UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-12454
RUBY TUESDAY, INC.
(Exact name of registrant as specified in charter)
GEORGIA 63-0475239
(State of incorporation or (I.R.S. Employer identifi-
organization) cation no.)
4721 Morrison Drive
P.O. Box 160266
Mobile, AL 36625
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (334)344-3000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
17,159,958
(Number of shares of $0.01 par value common stock outstanding
as of October 3, 1997)
Exhibit Index appears on page 13
INDEX
PAGE
NUMBER
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF
AUGUST 30, 1997 AND MAY 31, 1997............... 3
CONSOLIDATED STATEMENTS OF INCOME FOR
THE THIRTEEN WEEKS ENDED AUGUST 30,
1997 AND AUGUST 31, 1996....................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED
AUGUST 30, 1997 AND AUGUST 31, 1996. .......... 5
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS..................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.......................... 6-10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................... 10-11
ITEM 2. CHANGES IN SECURITIES.................. NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES........ NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS....................... NONE
ITEM 5. OTHER INFORMATION...................... NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....... 11-12
SIGNATURES..................................... 12
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1
RUBY TUESDAY, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<CAPTION>
August 30, May 31,
1997 1997
(UNAUDITED) (AUDITED)
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments.................. $ 8,053 $ 7,608
Accounts and notes receivable.................... 5,768 4,621
Inventories...................................... 10,056 9,650
Prepaid expenses................................. 8,375 9,225
Deferred income tax benefits..................... 4,982 4,388
Total current assets........................... 37,234 35,492
Property and equipment - at cost....................... 526,890 512,404
Less accumulated depreciation and amortization... (175,115) (165,640)
351,775 346,764
Costs in excess of net assets acquired................. 20,229 20,396
Other assets........................................... 17,299 16,219
Total assets................................. $426,537 $418,871
Liabilities & shareholders' equity
Current liabilities:
Accounts payable................................. $ 27,315 $ 28,828
Short-term borrowings............................ 0 534
Accrued liabilities:
Taxes, other than income taxes................. 11,916 11,425
Payroll and related costs...................... 9,676 8,982
Insurance...................................... 8,970 8,800
Rent and other................................. 11,317 10,393
Income taxes payable............................. 1,279 0
Current portion of long-term debt................ 104 102
Total current liabilities.................... 70,577 69,064
Long-term debt......................................... 90,479 78,006
Deferred income taxes.................................. 13,634 13,552
Other deferred liabilities............................. 35,095 34,609
Shareholders' equity:
Common stock, $0.01 par value;(authorized 100,000
shares; issued 17,124 @ 8/30/97; 17,720 @ 5/31/97) 171 177
Capital in excess of par value................... 1,548 2,729
Retained earnings................................ 217,700 223,399
219,419 226,305
Less cost of Company stock held by deferred
compensation plan............................... (2,667) (2,665)
216,752 223,640
Total liabilities & shareholders' equity..... $426,537 $418,871
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
RUBY TUESDAY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER-SHARE DATA)
(UNAUDITED)
Thirteen Weeks Ended
August 30, August 31,
1997 1996
Revenues................................ $174,099 $157,282
Operating costs and expenses:
Cost of merchandise................ 47,471 42,325
Payroll and related costs.......... 56,296 51,834
Other.............................. 36,872 34,862
Selling, general and administrative 12,380 9,483
Depreciation and amortization...... 10,232 9,127
Interest expense, net.............. 994 1,142
164,245 148,773
Income before income taxes.............. 9,854 8,509
Provision for income taxes.............. 3,474 3,020
Net income.............................. $ 6,380 $ 5,489
Earnings per common and common equivalent
share(primary and fully diluted)... $ 0.36 $ 0.31
Weighted average common and common
equivalent shares:
Primary............................ 17,578 17,942
Fully Diluted...................... 17,716 17,942
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
RUBY TUESDAY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Thirteen Weeks Ended
August 30, August 31,
1997 1996
<S> <C> <C>
Operating activities:
Net Income........................................ $ 6,380 $ 5,489
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 10,232 9,127
Amortization of intangibles..................... 182 183
Deferred income taxes........................... (395) 415
(Gain)/loss on disposition of assets............ (85) 127
Changes in operating assets and liabilities:
Increase in receivables...................... (1,144) (3,415)
Increase in inventories...................... (406) (346)
(Increase)/decrease in prepaid and other
assets...................................... (1,690) 743
Increase in accounts payable,
accrued and other liabilities............... 1,252 5,366
Increase in income taxes payable............. 3,340 708
Net cash provided by operating activities....... 17,666 18,397
Investing activities:
Purchases of property and equipment............... (15,504) (21,232)
Proceeds from disposal of assets.................. 299 33
Other, net........................................ (690) (321)
Net cash used by investing activities........... (15,895) (21,520)
Financing activities:
Proceeds from long-term debt...................... 12,500 5,000
Net change in short-term borrowings............... (534) (2,531)
Principal payments on long-term debt and capital
leases.......................................... (25) (23)
Proceeds from issuance of stock, including
treasury stock.................................. 1,830 2,100
Stock repurchases................................. (15,097) (301)
Net cash provided (used) by financing activities (1,326) 4,245
Increase in cash and short-term investments....... 445 1,122
Cash and short-term investments:
Beginning of year............................... 7,608 7,139
End of quarter.................................. $ 8,053 $ 8,261
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
</PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
statements should be read in conjunction with the notes to the
consolidated financial statements included in Ruby Tuesday, Inc.'s annual
report for the fiscal year ended May 31, 1997. The accompanying unaudited
consolidated financial statements reflect all adjustments for normal
recurring accruals. These adjustments are necessary, in the opinion of
management, for a fair presentation of the financial position, the
results of operations and the cash flows for the interim periods
presented. The results of operations for the interim periods reported
herein are not necessarily indicative of results to be expected for the
full year.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General:
The Company reported net income of $6.4 million for the thirteen weeks
ended August 30, 1997 compared to $5.5 million for the corresponding
period of the prior year. Earnings per share for the first quarter was
$0.36, a 16.1% increase compared to earnings per share for the first
quarter of fiscal 1997. Contributing to the increase was a 1.6% increase
in same-store sales. As of August 30, 1997, the Company owned and
operated 404 restaurants, including 335 Ruby Tuesdays, 49 Mozzarella's,
and 20 Tia's Tex-Mex restaurants. Franchised operations included one
domestic unit and four international units.
Results of Operations:
The following table sets forth selected restaurant operating data as a
percentage of revenues for the periods indicated. All information is
derived from the unaudited consolidated financial statements of the
Company included herein.
Thirteen Weeks Ended
August 30, August 31,
1997 1996
Revenues................................ 100.0% 100.0%
Operating costs and expenses:
Cost of merchandise................ 27.3 26.9
Payroll and related costs.......... 32.3 33.0
Other.............................. 21.2 22.2
Selling, general and administrative 7.1 6.0
Depreciation and amortization...... 5.9 5.8
Interest expense, net.............. 0.5 0.7
94.3 94.6
Income before income taxes.............. 5.7 5.4
Provision for income taxes.............. 2.0 1.9
Net income.............................. 3.7% 3.5%
The following table shows year-to-date restaurant openings, closings, and
total restaurants as of the end of the first quarter.
Year-to-date Year-to-date Total Open at End
Openings Closings of First Quarter
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
1998 1997 1998 1997 1998 1997
Ruby Tuesday 10 7 0 1 335 307
Mozzarella's 1 1 0 0 49 47
Tia's 0 0 0 0 20 18
The Company estimates that approximately 25 additional Ruby Tuesdays, one
Mozzarella's, and two Tia's units will be opened during the remainder of
fiscal 1998. As disclosed in Note 11 to the 1997 Audited Financial
Statements, the Company has entered into a series of agreements with
three partnerships to sell 29 of its Florida units in fiscal 1998. The
Company expects this transaction to be completed during second quarter.
Company Restaurant Sales:
Company revenues increased $16.8 million or 10.7% to $174.1 million for
the quarter ended August 30, 1997 compared to the same quarter of the
prior year. These increases are the result of a net addition of 32
units (consisting of 28 Ruby Tuesdays, two Mozzarella's, and two Tia's as
of August 30, 1997) and positive same-store sales.
Cost of Merchandise, Payroll and Related Costs and Other Operating Costs:
Cost of merchandise increased $5.2 million or 12.3% to $47.5 million for
the quarter ended August 30, 1997 compared to the same quarter of the
prior year. The increase is primarily attributable to higher food
prices, primarily shrimp and ribs, and an increase in the number of
units.
Payroll and related costs increased $4.5 million or 8.7% for the quarter
ended August 30, 1997 as compared to the same quarter of the prior year.
However, these expenses decreased as a percentage of revenues (down 0.7%
to 32.3% ) for the thirteen weeks ended August 30, 1997 compared to the
thirteen weeks ended August 31, 1996. The decrease is primarily
attributable to reductions in hourly labor costs resulting from lower
turnover, continued focus on accurately matching the number of managers
needed for each unit to unit volume levels, as well as decreased workers'
compensation rates compared to the prior year.
While other operating costs increased $2.0 million or 5.7% for the first
quarter of fiscal 1998 compared to the first quarter of fiscal 1997,
these costs decreased as a percentage of revenues. This decrease is
attributable to a continued focus on controlling supplies expense and a
decrease in repairs expense resulting from continued savings due to the
Company's efforts to reevaluate and renegotiate unit level maintenance
contracts.
Selling, general and administrative expenses increased $2.9 million for
the first quarter of fiscal 1998 compared to the first quarter of fiscal
1997 and as a percentage of revenues (7.1% compared to 6.0% for the first
quarters of fiscal 1998 and 1997, respectively). General and
administrative costs increased due to additional management training
payroll, travel and recruiting costs related to more unit openings in the
first quarter of fiscal 1998 compared to the prior year. In addition,
start-up costs related to the Company's franchising program also
contributed to the increase in general and administrative costs.
Advertising expense in the first quarter of fiscal 1998 was higher due
the "Neighborhood Introduction Program", a couponing promotion which
began in the third quarter of fiscal 1997.
Depreciation and amortization expense increased $1.1 million or 12.1% for
the first quarter of fiscal 1998 due to the net addition of 32
restaurants and current year depreciation expense on information
technology projects completed in the prior year. As a percentage of
revenues, depreciation expense for the first quarter of fiscal 1998
remained relatively consistent compared to the first quarter of fiscal
1997.
Interest Expense (net of Interest Income):
Net interest expense decreased slightly ($0.1 million) for the quarter
ended August 30, 1997 compared to the same quarter in the prior year.
Income Taxes:
The effective income tax rate for the thirteen weeks ended August 30,
1997 was 35.3% compared to 35.5% for the same period of the prior year.
Earnings per Share:
Earnings per share are based on the weighted average number of shares
outstanding during each quarter and are adjusted for the assumed
conversion of shares issuable upon exercise of options, after the assumed
repurchase of common shares with the related proceeds. The difference
between primary and fully diluted weighted average shares reflects the
maximum extent of potential dilution that conversions of shares could
create.
LIQUIDITY AND CAPITAL RESOURCES
Total assets at August 30, 1997 were $426.5 million, a $7.6 million
increase from $418.9 million as of the prior fiscal year end. Net
property and equipment increased $5.0 million from May 31, 1997. The
increase was primarily the net result of capital expenditures of $15.5
million, offset by depreciation and amortization expense totaling $10.2
million and $0.2 million in retirements. The Company anticipates that
during the remainder of fiscal 1998, capital expansion will be financed
primarily from operating cash flows, minimal incremental borrowings on
bank lines of credit and the five-year revolving credit facility and
through operating leases.
Total liabilities at August 30, 1997 were $209.8 million, a $14.6 million
increase from $195.2 million as of the end of the prior fiscal year. At
August 30, 1997 the Company had $89.5 million in borrowings outstanding
under its five-year credit facility. Long-term borrowings increased $12.5
million from the end of the prior fiscal year primarily as a result of
additional borrowings to finance the Company's "dutch auction" tender
offer which was completed during the quarter. (See discussion of stock
repurchases below.) The weighted average interest rate on these
borrowings and lines of credit was 6.21% during the quarter.
In addition, at August 30, 1997, the Company had committed lines of
credit amounting to $25.0 million (all of which remained available at
August 30, 1997) and non-committed lines of credit amounting to $15.0
million with several banks at varying interest rates. These lines are
subject to periodic review by each bank and may be canceled by the
Company at any time.
KNOWN EVENTS, UNCERTAINTIES AND TRENDS
Financial and Stock Repurchase Plans
The Company employs a financial strategy which utilizes a prudent amount
of debt to minimize the weighted average cost of capital while allowing
the Company to maintain financial flexibility and the equivalent of an
investment-grade (BBB) bond rating. This financial strategy sets a target
debt-to-capital ratio of 60%, including operating leases. The strategy
also provides for repurchasing Company stock whenever cash flow exceeds
funding requirements while maintaining the target capital structure.
Pursuant to this strategy, on May 2, 1997, the Company commenced a tender
offer for up to one million shares of the Company's common stock in a
dutch auction at a price between $20 and $22 per share. The tender offer
was completed during the quarter with the Company purchasing 670,512
shares at $22 per share, for an aggregate purchase price of $14.8 million
plus fees and expenses associated with the offer. After the dutch auction
was completed, 1.3 million shares remained available for repurchase under
the Company's stock repurchase program. During the quarter, the Company
purchased 8,200 shares in addition to those shares purchased in
conjunction with the dutch auction.
New Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("FAS 128"), which the Company is required to adopt during its third
quarter ending on February 28, 1998. At that time, the Company will be
required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock
options will be excluded. The impact is expected to result in an increase
in primary earnings per share for the quarter ended August 30, 1997 of
$0.02 per share. The impact of FAS 128 on the calculation of fully
diluted earnings per share is not expected to be material.
Cash Dividend
During fiscal 1997, the Board of Directors approved a dividend policy as
a means of returning excess capital to its shareholders. This policy
calls for payment of semi-annual dividends of approximately $3.0 million
annually. Accordingly, the Company intends to pay its first dividend
beginning in the third quarter of fiscal 1998.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
The foregoing section contains various "forward-looking statements" which
represent the Company's expectations or beliefs concerning future events,
including the following: statements regarding unit growth, future
capital expenditures and future borrowings. The Company cautions that a
number of important factors could, individually or in the aggregate,
cause actual results to differ materially from those included in the
forward-looking statements including, without limitation, the following:
consumer spending trends and habits; mall-traffic trends; increased
competition in the casual dining restaurant market; weather conditions in
the regions in which the Company operates restaurants; consumers'
acceptance of the Company's development concepts; laws and regulations
affecting labor and employee benefit costs; the Company's ability to
attract qualified managers and franchisees; and changes in the
availability of capital.
PART II - OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
The Company is currently, and from time to time, subject to pending
claims and lawsuits arising in the ordinary course of its business. In
addition, the Company, as successor to Morrison Restaurants Inc.,
("Morrison") is a party to a case (Morrison Restaurants Inc. v. United
States of America, et al.), originally filed by Morrison in 1994 to claim
a refund of taxes paid in the amount of approximately $3,000 and
abatement of taxes assessed by the Internal Revenue Service ("IRS")
against Morrison on account of the employer's share of FICA taxes on
unreported tips allegedly received by employees. The IRS filed a
counterclaim for approximately $7,000 in additional taxes. The case was
decided by the U.S. District Court in favor of the Company in February
1996 on summary judgment. The IRS appealed the District Court's decision
and, on August 12, 1997, the U.S. Court of Appeals for the Eleventh
Circuit reversed the award of summary judgment and remanded the case to
the District Court for proceedings consistent with the Court's opinion.
In its reversal, the Eleventh Circuit upheld the IRS' enforcement policy
with respect to the employer's share of FICA taxes on allegedly
unreported tips. The Company intends to petition the U.S. Court of
Appeals for a review of the matter by the full Court. If this is
unsuccessful, the Company will strongly consider seeking review of the
decision by the U.S. Supreme Court. There can be no assurance, however,
that the Company's position will prevail. Although the amount in dispute
is not material, it is possible that if the Company's position does not
prevail, the IRS will attempt to assess taxes in additional units of the
Company (as well as other restaurant companies). In the event the IRS'
enforcement policy with respect to such assessments is ultimately upheld,
the Company believes that a business tax credit would be available to the
Company to offset, over a period of years, some portion of additional
taxes determined to be due. Moreover, the Company is a participant in an
IRS enforcement program which would reduce the risk of additional
assessments by the IRS in return for a restaurant employer's proactive
role in encouraging employee tip reporting. The protection against
additional assessment afforded by the agreement should be available to
the Company. In the opinion of management, the ultimate resolution of
all pending legal proceedings will not have a material adverse effect on
the Company's operations or financial position.
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
The following exhibits are filed as part of this report:
Exhibit
No.
11 Computation of Primary and Fully Diluted Earnings Per Share
27 Financial Data Schedule
99.1 Loan facility agreement and guaranty dated May 30, 1997 by
and among Ruby Tuesday, Inc., SunTrust Bank, Atlanta, and the
other lender signatories thereto.
REPORTS ON FORM 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RUBY TUESDAY , INC.
(Registrant)
10/14/97 /s/ J. RUSSELL MOTHERSHED
DATE J. RUSSELL MOTHERSHED
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
11 Computation of Primary and Fully Diluted Earnings Per Share
27 Financial Data Schedule
99.1 Loan facility agreement and guaranty dated May 30, 1997
by and among Ruby Tuesday, Inc., SunTrust Bank, Atlanta, and
the other lender signatories thereto.
ITEM 6.(a)
EXHIBIT 11: COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER-SHARE DATA)
Thirteen Weeks Ended
Aug. 30, 1997 Aug. 31, 1996
PRIMARY EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Average common shares outstanding..... 16,960 17,672
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treasury stock method", at the
average market price)............... 618 270
TOTALS............. 17,578 17,942
Net income............................ $6,380 $5,489
Primary earnings per common and
common equivalent share............. $0.36 $0.31
FULLY DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Average common shares outstanding..... 16,960 17,672
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treasury stock method", at the
higher of period-end or average
market price)....................... 756 270
TOTALS............. 17,716 17,942
Net income............................ $6,380 $5,489
Fully diluted earnings per common and
common equivalent share............. $0.36 $0.31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RUBY
TUESDAY, INC. FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDED AUGUST 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-06-1998
<PERIOD-END> AUG-30-1997
<CASH> 8,053
<SECURITIES> 0
<RECEIVABLES> 5,758
<ALLOWANCES> 0
<INVENTORY> 10,056
<CURRENT-ASSETS> 37,234
<PP&E> 526,890
<DEPRECIATION> 175,115
<TOTAL-ASSETS> 426,537
<CURRENT-LIABILITIES> 70,577
<BONDS> 90,479
0
0
<COMMON> 171
<OTHER-SE> 216,752
<TOTAL-LIABILITY-AND-EQUITY> 426,537
<SALES> 174,022
<TOTAL-REVENUES> 174,099
<CGS> 47,471
<TOTAL-COSTS> 103,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 994
<INCOME-PRETAX> 9,854
<INCOME-TAX> 3,474
<INCOME-CONTINUING> 6,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,380
<EPS-PRIMARY> $0.36
<EPS-DILUTED> $0.36
</TABLE>
EXECUTION COUNTERPART
LOAN FACILITY AGREEMENT
AND GUARANTY
by and among
RUBY TUESDAY, INC.,
SUNTRUST BANK, ATLANTA, as Servicer
and
EACH OF THE PARTICIPANTS PARTY HERETO
Dated as of May 30, 1997
LOAN FACILITY AGREEMENT AND GUARANTY
Table of Contents
Page
I. DEFINITIONS 2
1.1 Definitions 2
Adjusted LIBO Rate 2
Advance 2
Affiliate 2
Agreement 2
Assignment and Acceptance 2
Bankruptcy Code 2
Borrower 2
Borrower Rate 3
Business Day 3
Capital Lease 3
Capital Lease Obligation 3
Change in Control Provision 3
Closing Date 3
Collateral 3
Collateral Agreement 3
Commitment 3
Commitment Fee 3
Consolidated Companies 3
Consolidated Funded Debt 4
Consolidated Interest Expense 4
Consolidated Net Income (Loss) 4
Consolidated Net Worth 4
Contractual Obligation 4
Credit Event 4
Credit Parties 4
Defaulted Borrower 4
Defaulted Loan 4
Dollar" and "U.S. Dollar" and the sign "$ 4
EBITR 4
Eligible Assignee 5
Environmental Laws 5
ERISA 5
ERISA Affiliate 5
Executive Officer 5
Federal Funds Rate 6
Fee Letter 6
Final Termination Date 6
Fiscal Year 6
Fiscal Year End 6
Fixed Charge Coverage Ratio 6
Fixed Charges 6
Franchisee Loan Program 6
Fronting Advance 7
Fully Guaranteed Pool 7
Funded Debt 7
Funded Participant's Interest 7
Funding Approval Notice 7
Funding Request 7
GAAP 8
Guaranteed Obligations 8
Guarantors 8
Guaranty 8
Guaranty Agreement 8
Hazardous Substances 9
Hostile Acquisition 9
Indebtedness 9
Initial Funding Request 9
Interest Rate Contract 9
Investment 9
LIBOR 10
LIBOR Lease Transaction 10
Lien 10
Limited Guaranty Pool 10
Loan 10
Loan Commitment 10
Loan Agreement 10
Loan Default 11
Loan Documents 11
Loan Indebtedness 11
Loan Payment Default 11
Loan Term 11
Margin Regulations 11
Material Subsidiary 11
Materially Adverse Effect 11
Maturity Date 12
Maximum Amount 12
MFCI 12
MHCI 12
Moody's 12
Morrison 12
Multiemployer Plan 12
Net Proceeds 12
Operative Documents 12
Participant 12
Participating Commitment 12
Participant Funding 12
Participant's Interest 12
Participant's Unused Commitment 13
Participation Certificate 13
Payment Date 13
Payment Period 13
PBGC 13
Permitted Liens 13
Person 13
Personal Guaranty 13
Plan 13
Pro Rata Share 13
Promissory Note 14
Regulation D 14
Release 14
Remedial Action 14
Rental Obligations 14
Required Participants 14
Requirement of Law 14
Response Period 15
Restructuring Charges 15
Reuters Screen 15
Servicing Agreement 15
Servicing Fee 15
Servicing Report 15
Servicer 15
Sharing Agreements 15
Sponsor's Fee 15
Spousal Consent 15
Standard & Poor's 15
Subordinated Debt 15
Subsidiary 16
Tax Code 16
Taxes 16
Telerate 16
Total Capitalization 16
Transaction 16
Unmatured Credit Event 16
Voting Stock 16
1.2 Accounting Terms and Determination. 17
1.3 Other Definitional Terms 17
1.4 Exhibits and Schedules 17
II. LOAN FACILITY 17
2.1 Establishment of Commitment; Terms of Loans 17
2.2 Conveyance of Participant's Interest 18
2.3 Funding of Advances; Funding of Participant's
Interest in Loans 19
2.4 Commitment Fees. 21
2.5 Interest on Funded Participant's Interest 21
2.6 Default Interest 22
2.7 Voluntary Reduction of the Unutilized Commitment 22
2.8 Extension of Commitment 23
2.9 Reserve Requirements; Change in Circumstances 24
2.10 Pro Rata Treatment 25
2.11 Payments 25
2.12 Sharing of Setoffs 26
III.SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION
OF PAYMENTS 27
3.1 Servicer's Obligations with Respect to Loans; Collateral;
Non-Recourse 27
3.2 Application of Payments 27
3.3 Servicing Report 29
IV. LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND 29
4.1 Notice Of Loan Default 29
4.2 Waiver or Cure By The Sponsor; Fully Guaranteed Pool 29
4.3 Defaulted Loan Guaranty Demand 30
4.4 No Waiver or Cure Available. 30
V. REPRESENTATIONS AND WARRANTIES 31
5.1 Representations and Warranties 31
5.2 Representations and Warranties with Respect to Specific
Loans 38
VI. COVENANTS 39
6.1 Affirmative Covenants 39
6.2 Negative Covenants 45
VII.CREDIT EVENT 52
7.1 Credit Events 52
VIII.GUARANTY 55
8.1 Unconditional Guaranty 55
8.2 Continuing Guaranty 56
8.3 Waivers 56
8.4 Additional Actions 57
8.5 Additional Waivers 57
8.6 Postponement of Obligations 57
8.7 Effect on additional Guaranties 58
8.8 Reliance on Guaranty and Purchase Obligation; Disclaimer of
Liability 58
8.9 Reinstatement of Obligations 59
8.10 Right to Bring Separate Action 59
IX. INDEMNIFICATION 59
9.1 Indemnification. 59
9.2 Notice Of Proceedings; Right To Defend 60
9.3 Third Party Beneficiaries 61
X. SURVIVAL OF LOAN FACILITY 62
XI. CONDITIONS PRECEDENT 62
11.1 Receipt of Documents 62
XII.THE SERVICER 63
12.1 Appointment of Servicer as Agent 63
12.2 Nature of Duties of Servicer 63
12.3 Lack of Reliance on the Servicer 63
12.4 Certain Rights of the Servicer 64
12.5 Reliance by Servicer 64
12.6 Indemnification of Servicer 65
12.7 The Servicer in its Individual Capacity 65
12.8 Holders of Participation Certificates 65
XIII. MISCELLANEOUS 66
13.1 Notices 66
13.2 Amendments, Etc 66
13.3 No Waiver; Remedies Cumulative 67
13.4 Payment of Expenses, Etc. 67
13.5 Right of Setoff 68
13.6 Benefit of Agreement; Assignments; Participations 68
13.7 Governing Law; Submission to Jurisdiction 70
13.8 Counterparts 71
13.9 Severability 71
13.10 Independence of Covenants 71
13.11 Change in Accounting Principles, Fiscal Year or Tax Laws 71
13.12 Headings Descriptive; Entire Agreement 72
EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Guaranty Agreement
Exhibit C - Form of Loan Agreement
Exhibit D - Form of Participation Certificate
Exhibit E - Form of Promissory Note
Exhibit F - Form of Servicing Report
SCHEDULES
Schedule 5.1(a) - Percentage of Ownership of Subsidiaries and
Restrictions Thereon
Schedule 5.1(e) - Litigation
Schedule 5.1(h)(i) - Environmental Liabilities
Schedule 5.1(h)(ii) - Environmental Notices
Schedule 5.1(h)(iii) - Environmental Permits
Schedule 5.1(l) - Taxes
Schedule 5.1(m) - Subsidiaries
Schedule 5.1(o) - ERISA
Schedule 5.1(p) - Patents and Trademarks
Schedule 5.1(q) - Ownership of Properties
Schedule 6.2(a) - Existing Indebtedness
Schedule 6.2(b) - Existing Liens
LOAN FACILITY AGREEMENT AND GUARANTY
THIS LOAN FACILITY AGREEMENT AND GUARANTY (the "Agreement") made as
of this 30th day of May, 1997, by and among RUBY TUESDAY, INC., a Georgia
corporation having its principal place of business and chief executive
office at 4271 Morrison Drive, Mobile, Alabama 36625 ("Sponsor"),
SUNTRUST BANK, ATLANTA ("STBA") and each of the other lending
institutions listed on the signature pages hereto (STBA, such lenders,
together with any assignees thereof becoming "Participants" pursuant to
the terms of this Agreement, the "Participants") and SUNTRUST BANK,
ATLANTA, a banking corporation organized and existing under the laws of
Georgia having its principal office in Atlanta, Georgia, as Servicer and
agent for the Participants (in such capacity, the "Servicer").
W I T N E S S E T H:
WHEREAS, Sponsor has established franchise relationships with
certain restaurant owners (the "Franchisees") across the United States to
own and operate restaurants under the "Ruby Tuesday" franchise;
WHEREAS, in connection therewith, Sponsor wishes to establish a
loan program with the Servicer to provide working capital lines of credit
to the Franchisees for business purposes arising in connection with the
acquisition of such franchise rights and the operation of such
restaurants and wishes to have the Participants buy an ownership interest
in such loans and the security therefor;
WHEREAS, the Servicer and the Participants have agreed to make such
lines of credit available to the Franchisees upon the terms and
conditions set forth herein and in the Servicing Agreement, dated as of
even date herewith by and between the Servicer and the Sponsor (as
hereafter amended, modified or supplemented, the "Servicing Agreement"),
including, without limitation, (x) the obligation of the Sponsor to
purchase all outstanding loans and loan commitments upon the occurrence
of certain credit events and (y) the limited guaranty obligations of the
Sponsor with respect to the loans, all as more particularly set forth
below;
THEREFORE, upon the terms and conditions hereinafter stated, and in
consideration of the mutual premises set forth above and other adequate
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
I. DEFINITIONS
I.1 Definitions. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified
(such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Adjusted LIBO Rate" shall mean, with respect to each Payment
Period, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined pursuant to the following formula:
"Adjusted LIBO Rate" = LIBOR
1.00 - LIBOR Reserve Percentage
As used herein, LIBOR Reserve Percentage shall mean, for any Payment
Period for any Funded Participant's Interest outstanding hereunder, the
reserve percentage (expressed as a decimal) equal to the then stated
maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or against any
successor category of liabilities as defined in Regulation D).
"Advance" means a funding of an advance pursuant to the Loan
Commitment of any Borrower pursuant to a Funding Request.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract
or otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and
"under common control with") as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person.
"Agreement" means this Loan Facility Agreement and Guaranty as it
may hereafter be amended or modified.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Participant and an Eligible Assignee in accordance with
the terms of this Agreement and substantially in the form of Exhibit A.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as
amended and in effect from time to time (11 U.S.C. sec. 101 et seq.).
"Borrower" means a Franchisee or other affiliated Person who is
primarily liable for repayment of a Loan as a result of having executed
Loan Documents as maker, or its permitted assignee.
"Borrower Rate" shall mean, with respect to each Loan, the Prime
Rate per annum plus any additional margin per annum specified for such
Loan by Sponsor in the applicable Funding Approval Notice, such margin
not to exceed four percent (4.0%) per annum.
"Business Day" shall mean any day excluding Saturday, Sunday and
any other day on which banks are required or authorized to close in
Atlanta, Georgia.
"Capital Lease" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee
which would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on a balance sheet of such Person, other
than, in the case of Sponsor or any of its Subsidiaries, any such lease
under which Sponsor or a wholly-owned Subsidiary of Sponsor is the
lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder which would,
in accordance with GAAP, appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or
document evidencing or governing Indebtedness of Sponsor evidencing debt
or a commitment to extend loans in excess of $2,000,000 which requires,
or permits the holder(s) of such Indebtedness of Sponsor to require that
such Indebtedness of Sponsor be redeemed, repurchased, defeased, prepaid
or repaid, either in whole or in part, or the maturity of such
Indebtedness of Sponsor to be accelerated in any respect, as a result of
a change in ownership of the capital stock of Sponsor or voting rights
with respect thereto.
"Closing Date" means, for any Loan, the date upon which the Loan
Documents with respect to such Loan are executed and delivered and the
Loan Commitment is established thereunder.
"Collateral" means property subject to a security interest or lien
which secures a Loan.
"Collateral Agreement" means an agreement executed by a Borrower
and any other Persons primarily or secondarily liable for all or part of
the Loan, granting a security interest to the Servicer in specified
Collateral as security for such Loan.
"Commitment" shall have the meaning set forth in Section 2.1(a)
hereof.
"Commitment Fee" shall have the meaning set forth in Section 2.4.
"Consolidated Companies" shall mean, collectively, Sponsor and all
of its Subsidiaries.
"Consolidated Funded Debt" shall mean, as of any date of
determination, the Funded Debt of the Consolidated Companies.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense of the Consolidated Companies (including without
limitation, interest expense attributable to Capital Leases, all
capitalized interest, all commissions, discounts and other fees and
charges owed with respect to bankers acceptance financing, net costs
(i.e., costs minus benefits) under Interest Rate Contracts, and total
interest expense (whether shown as interest expense or as loss and
expenses on sales of receivables) under a receivables purchase facility)
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, with reference to any
period, the net income (or deficit) of the Consolidated Companies for
such period (taken as a cumulative whole), after deducting all operating
expenses, provisions for all taxes and reserves (including reserves for
deferred income taxes) and all other proper deductions, all determined in
accordance with GAAP on a consolidated basis, after eliminating all
intercompany transactions and after deducting portions of income properly
attributable to minority interests, if any, in the stock and surplus of
the Subsidiaries of the Sponsor.
"Consolidated Net Worth" shall mean the shareholders' equity of the
Sponsor and its Subsidiaries calculated in accordance with GAAP, less
treasury stock.
"Contractual Obligation" of any Person shall mean any provision of
any security issued by such Person or of any agreement, instrument or
undertaking under which such Person is obligated or by which it or any of
the property owned by it is bound.
"Credit Event" shall have the meaning set forth in Section 7.1 of
this Agreement.
"Credit Parties" shall mean, collectively, each of the Sponsor and
the Guarantors.
"Defaulted Borrower" means a Borrower under a Defaulted Loan.
"Defaulted Loan" means a Loan evidenced by Loan Documents under the
terms of which exist one or more Loan Defaults which have not been cured
or waived as permitted herein.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money
of the United States of America.
"EBITR" shall mean for any period, the Consolidated Net Income
(Loss) of the Consolidated Companies, plus, to the extent deducted
therefrom in determining Consolidated Net Income (Loss), the sum of (i)
Consolidated Interest Expense, (ii) provision for income taxes (whether
paid or deferred), (iii) Rental Obligations for such period, and (iv)
Restructuring Charges, and without giving effect to any extraordinary
gains or losses, any other non-cash charges or gains or losses from sales
of assets other than inventory sold in the ordinary course of business.
"Eligible Assignee" shall mean (i) a commercial bank organized
under the laws of the United States or any state thereof having total
assets in excess of $1,000,000,000.00 or any commercial finance or asset-
based lending Affiliate of any such commercial bank and (ii) any
Participant.
"Environmental Laws" shall mean all federal, state, local and
foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect
(including, without limitation, those with respect to asbestos or
asbestos containing material or exposure to asbestos or asbestos
containing material), relating to pollution or protection of the
environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any
petroleum product or other waste, chemicals or substances regulated by
any Environmental Law into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), or (ii) the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling of
any Hazardous Substance, petroleum including crude oil or any fraction
thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks
and related piping, and emissions, discharges and releases or threatened
releases therefrom, such Environmental Laws to include, without
limitation (a) the Clean Air Act (42 U.S.C. sec. 7401 et seq.), (b) the
Clean Water Act (33 U.S.C. sec. 1251 et seq.), (c) the Resource Conservation
and Recovery Act (42 U.S.C. sec 6901 et seq.), (d) the Toxic Substances
Control Act (15 U.S.C. sec. 2601 et seq.), (e) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. sec. 9601 et seq.),
and (f) all applicable national and local laws or regulations with
respect to environmental control.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each
trade or business (whether or not incorporated) which is a member of a
group of which that Person is a member and which is under common control
within the meaning of the regulations promulgated under Section 414 of
the Tax Code.
"Executive Officer" shall mean with respect to any Person, the
President, Vice Presidents, Chief Financial Officer, Treasurer, Secretary
and any Person holding comparable offices or duties.
"Federal Funds 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 funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of Atlanta,
or, if such rate is not so published for any day that is a Business Day,
the average quotations for the day of such transactions received by the
Servicer from three federal funds brokers of recognized standing selected
by it.
"Fee Letter" shall mean that certain letter agreement dated as of
even date herewith, by and between the Sponsor and the Servicer, setting
forth certain fees applicable to the loan facility described herein,
either as originally executed or as hereafter amended or modified.
"Final Termination Date" shall mean the date which is sixty (60)
days after the expiration of the last Loan Commitment established
hereunder.
"Fiscal Year" shall mean any period of 52 (or, if applicable 53)
consecutive weeks ending on the first Saturday occurring after May 30 of
any year; references to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1996") refer to the Fiscal Year ending
on the first Saturday occurring after May 30 of that year.
"Fiscal Year End" shall mean the last day of any Fiscal Year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio
of (i) EBITR to (ii) Fixed Charges for such period.
"Fixed Charges" shall mean, with reference to any period,
determined in accordance with GAAP on a consolidated basis, the sum of
the following for the Consolidated Companies, after eliminating all
intercompany items:
(a) Consolidated Interest Expense for such period; and
(b) all Rental Obligations payable as lessee under any operating
lease properly charged or chargeable to income during such
period in accordance with GAAP;
provided that any interest charges or rentals paid or accrued by any
Person acquired by the Sponsor or any of its Subsidiaries during such
period, through purchase, merger, consolidation or otherwise, shall be
included in "Fixed Charges" only to the extent that the earnings of such
Person are taken into account in determining EBITR for such period.
"Franchisee Loan Program" shall mean that transaction evidenced by
(i) this Agreement wherein the Sponsor has guaranteed, to the extent set
forth herein, certain obligations of franchisees of the Sponsor, and (ii)
the other "Operative Documents" (as such term is defined herein) executed
by the Consolidated Companies in connection herewith and therewith.
"Fronting Advance" shall have the meaning set forth in Section 2.3.
"Fully Guaranteed Pool" shall mean Loans which are subject to the
full and unlimited guaranty of the Sponsor pursuant to the terms of
Section 4.2 and Article VIII of this Agreement.
"Funded Debt" shall mean, as applied to any Person, all
Indebtedness of such Person which by its terms or by the terms of any
instrument or agreement relating thereto matures, or which is otherwise
payable or unpaid, one year or more from, or is directly or indirectly
renewable or extendable at the option of the debtor to a date one year
or more (including an option of the debtor under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over
a period of one year or more) from, the date of the creation thereof,
provided that Funded Debt shall include, as at any date of determination,
any portion of such Indebtedness outstanding on such date which matures
on demand or within one year from such date (whether by sinking fund,
other required prepayment, or final payment at maturity) and shall also
include (i) all Indebtedness of such Person for borrowed money under a
line of credit, guidance line, revolving credit, bankers acceptance
facility or similar arrangement for borrowed money, including, without
limitation, all unpaid drawings under letters of credit and unreimbursed
amounts pursuant to letter of credit reimbursement agreements, regardless
of the maturity date thereof, and (ii) as of any date of determination
with respect to the Sponsor, the aggregate guaranty obligations of the
Sponsor calculated as of such date (without giving effect to any
liability of the Sponsor on any subsequent date) pursuant to the
Franchise Loan Program, regardless of the maturity date thereof. In
addition, there shall also be included in Funded Debt the present value
of all minimum lease commitments to make payments with respect to
operating leases of such Person, determined based upon a discount rate of
10% in accordance with discounted present value analytical methodology,
and with respect to the Sponsor, shall include the rental obligations of
the Sponsor arising pursuant to the LIBOR Lease Transaction assuming, for
the purposes of such calculation regardless of the Sponsor's actual
election pursuant to the documents executed in connection therewith, that
the Sponsor has exercised and will exercise all optional extensions
thereof and will exercise its option to remarket the leased properties at
the end of the lease term.
"Funded Participant's Interest" means the aggregate outstanding
amount of Advances made by a Participant hereunder with respect to the
Loans, and shall include, with respect to STBA, the aggregate outstanding
amount of Fronting Advances.
"Funding Approval Notice" means a written notice to the Servicer
from Sponsor setting forth the conditions of a proposed Loan Commitment,
consistent with the requirements therefor as set forth in this Agreement,
and containing such information and in substantially such form as shall
be agreed to by Servicer and Sponsor pursuant to the Servicing Agreement.
"Funding Request" means (x) a request from a Borrower to the
Servicer to fund a portion of such Borrower's Loan Commitment, and (y)
the Initial Funding Request.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board
or, if no such statements are promulgated, then such other statements by
such other entity as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of
the date of determination.
"Guaranteed Obligations" means the aggregate amount of the Loan
Indebtedness outstanding under the Loan Documents and guaranteed by the
Sponsor pursuant to this Agreement to include, without limitation (i) all
principal, interest and commitment fees due with respect to all Loans,
including post-petition interest in any proceeding under federal
bankruptcy laws, (ii) all fees, expenses, and amounts payable by any
Borrower for reimbursement or indemnification under the terms of the Loan
Agreement or any other Loan Document executed in connection with the Loan
to such Borrower, (iii) all amounts advanced by Servicer to protect or
preserve the value of any security for the Loans, and (iv) all renewals,
extensions, modifications, and refinancings (in whole or in part) of any
of the amounts referred to in clauses (i) and (ii) above).
"Guarantors" shall mean, (i) Tias, Inc., a Texas corporation and
(ii) all other Material Subsidiaries of the Sponsor, and their respective
successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise (other than letters of credit), of a Person with respect to any
Indebtedness or other obligation or liability of another Person,
including without limitation, any such Indebtedness, obligation or
liability directly or indirectly guaranteed, endorsed, co-made or
discounted or sold with recourse by that Person, or in respect of which
that Person is otherwise directly or indirectly liable, including
contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such
Indebtedness, obligation or liability or any security therefor, or any
agreement to provide funds for the payment or discharge thereof (whether
in the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or to make any payment other than for value
received. The amount of any Guaranty shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in
respect of which guaranty is made or, if not so stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming
such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreement" shall mean the Guaranty Agreement executed by
each of the Material Subsidiaries of the Sponsor in favor of the Servicer
and the Participants, substantially in the form of Exhibit B as the same
may be amended, restated or supplemented from time to time.
"Hazardous Substances" shall have the meaning assigned to that term
in the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization
Acts of 1986.
"Hostile Acquisition" shall mean any Investment resulting in
control of a Person involving a tender offer or proxy contest that has
not been recommended or approved by the board of directors of the Person
that is the subject of the Investment prior to the first public
announcement or disclosure relating to such Investment.
"Indebtedness" of any Person shall mean, without duplication (i)
all obligations of such Person which in accordance with GAAP would be
shown on the balance sheet of such Person as a liability (including,
without limitation, obligations for borrowed money and for the deferred
purchase price of property or services, and obligations evidenced by
bonds, debentures, notes or other similar instruments); (ii) all Capital
Lease Obligations; (iii) all Guaranties of such Person; (iv) Indebtedness
of others secured by any Lien upon property owned by such Person, whether
or not assumed; and (v) obligations or other liabilities under currency
contracts, Interest Rate Contracts, or similar agreements or combinations
thereof. Notwithstanding the foregoing, in determining the Indebtedness
of any Person, there shall be included all obligations of such Person of
the character referred to in clauses (i) through (v) above deemed to be
extinguished under GAAP but for which such Person remains legally liable
except to the extent that such obligations (x) have been defeased in
accordance with the terms of the applicable instruments governing such
obligations and (y) the accounts or other assets dedicated to such
defeasance are not included as assets on the balance sheet of such
Person.
"Initial Funding Request" means the Funding Request submitted by a
Borrower for the initial Advance on the Closing Date of such Loan.
"Interest Rate Contract" shall mean all interest rate swap
agreements, interest rate cap agreements, interest rate collar
agreements, interest rate insurance and other agreements and arrangements
designed to provide protection against fluctuations in interest rates, in
each case as the same may be from time to time amended, restated,
renewed, supplemented or otherwise modified.
"Investment" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than
the creation of receivables in the ordinary course of business) or
capital contribution by such Person (by means of transfers of property to
others or payments for property or services for the account or use of
others, or otherwise) to any Person, or any direct or indirect purchase
or other acquisition by such Person of, or of a beneficial interest in,
capital stock, partnership interests, bonds, notes, debentures or other
securities issued by any other Person.
"LIBOR" shall mean, for each Payment Period, the offered rate for
deposits in U.S. Dollars, for a period of one month and in an amount
comparable to the aggregate outstanding Funding Participant's Interest as
of the first day of such Payment Period, appearing on Telerate Page 3750
as of 11:00 A.M. (Atlanta, Georgia time) on such date. If two or more of
such rates appear on Telerate Page 3750, the rate for that Payment Period
shall be the arithmetic mean of such rates. If the foregoing rate is
unavailable from Telerate Page 3750 for any reason, then such rate shall
be determined by the Servicer from the Reuters Screen LIBO Page or, if
such rate is also unavailable on such service, then on any other interest
rate reporting service of recognized standing designated in writing by
the Servicer to Sponsor; in any such case rounded, if necessary, to the
next higher 1/16 of 1.0%, if the rate is not such a multiple.
"LIBOR Lease Transaction" shall mean, collectively, (a) that
transaction evidenced by (i) that certain Lease Agreement, dated as of
May 30, 1997, by and between Sponsor, as lessee and Atlantic Financial
Group, LLP, as lessor, (ii) that certain Master Agreement, dated as of
May 30, 1997 by and among Sponsor, Atlantic Financial Group, LLP,
SunTrust Bank, Atlanta, as agent and the other financial institutions
named therein and (iii) the other Operative Documents (as such term is
defined in such Master Agreement) executed by the Consolidated Companies
in connection therewith and (b) certain similar lease transaction entered
into hereafter by the Consolidated Companies with a syndicate of lenders
agented by SunTrust Bank, Atlanta providing an aggregate amount of
financing to the Consolidated Companies in the approximate amount of
$75,000,000.
"Lien" shall mean any mortgage, pledge, security interest, lien,
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential property right, trust or other arrangement having the
practical effect of the foregoing and shall include the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease
or other title retention agreement.
"Limited Guaranty Pool" shall mean each of the Loans outstanding
hereunder other than the Loans comprising the Fully Guaranteed Pool.
"Loan" means the aggregate Advances made pursuant to a Loan
Commitment, as evidenced by the relevant Promissory Note.
"Loan Commitment" means the commitment of the Servicer to each
Borrower to make Advances to such Borrower in the aggregate amount
specified in the relevant Promissory Note, subject to the terms and
conditions set forth therein.
"Loan Agreement" means the Line of Credit Agreement setting forth
the terms and conditions, as between a Borrower and the Servicer, under
which the Servicer has established a Loan Commitment to make Advances to
the Borrower, substantially in the form of Exhibit C.
"Loan Default" means an occurrence with respect to a Loan which is
defined by the applicable Loan Documents to be an event of default
(including but not limited to a Loan Payment Default).
"Loan Documents" means the Loan Agreement, the Promissory Note, any
Personal Guaranty, any Spousal Consent, the Collateral Agreements, any
other documents relating to the Loan delivered by any Borrower or any
guarantor or surety thereof to the Servicer and any amendments thereto
(provided that such amendments are made with the consent of Sponsor,
where such consent is required under this Agreement).
"Loan Indebtedness" means all amounts due and payable by a Borrower
under the terms of the Loan Documents for a given Loan, including,
without limitation, outstanding principal, accrued interest, any
commitment fees, and all reasonable costs and expenses of any legal
proceeding brought by the Servicer to collect any of the foregoing
(including without limitation, reasonable attorneys' fees actually
incurred).
"Loan Payment Default" means the failure of a Borrower to make a
payment of principal, accrued interest thereon or any other amounts,
within the cure period following the due date therefor, as provided under
the applicable Loan Documents.
"Loan Term" means the period from the Closing Date of a Loan
Commitment until the Maturity Date of such Loan Commitment and the Loan
outstanding thereunder, which period shall not exceed thirty-seven
months.
"Margin Regulations" shall mean Regulation G, Regulation T,
Regulation U and Regulation X of the Board of Governors of the Federal
Reserve System, as the same may be in effect from time to time.
"Material Subsidiary" shall mean (i) each Credit Party other than
the Sponsor, and (ii) each other Subsidiary of the Sponsor, now existing
or hereafter established or acquired, that at any time prior to the
Maturity Date, has or acquires total assets in excess of $5,000,000, or
that accounted for or produced more than 5% of the Consolidated Net
Income (Loss) of the Sponsor on a consolidated basis during any of the
three most recently completed Fiscal Years of the Sponsor, or that is
otherwise material to the operations or business of the Sponsor or
another Material Subsidiary.
"Materially Adverse Effect" shall mean any materially adverse
change in (i) the business, results of operations, financial condition,
assets or prospects of the Consolidated Companies, taken as a whole, (ii)
the ability of Sponsor to perform its obligations under this Agreement,
or (iii) the ability of the other Credit Parties (taken as a whole) to
perform their respective obligations under the Operative Documents.
"Maturity Date" means, with respect to any Loan Commitment, the
date set forth under the applicable Loan Documents when such Loan
Commitment terminates and all principal and interest with respect to the
Loan outstanding thereunder shall become due and payable in full;
provided that, each Maturity Date shall be a Payment Date.
"Maximum Amount" shall have the meaning set forth in Section 8.1
hereof.
"MFCI" shall mean Morrison's Fresh Cooking, Inc.
"MHCI" shall mean Morrison's Healthcare, Inc.
"Moody's" shall mean Moody's Investors Service, Inc.
"Morrison" shall mean Morrison Restaurants Inc. the predecessor
corporation to the Sponsor, MFCI and MHCI.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any equity offering or
issuance of Subordinated Debt, (i) all cash received with respect
thereto, whether by way of deferred payment pursuant to a promissory
note, a receivable or otherwise (and interest paid thereon), plus (ii)
the higher of the book value or the fair market value of any assets
(including any stock) received with respect thereto, in each case, net of
reasonable and customary sale expenses, fees and commissions incurred and
taxes paid or expected to be payable within the next twelve months in
connection therewith.
"Operative Documents" shall mean this Agreement, the Guaranty
Agreement, the Servicing Agreement, the Fee Letter and any other
documents delivered by Sponsor or any Guarantor to the Servicer or the
Participants in connection herewith or therewith.
"Participant" shall mean STBA, the other lending institutions
listed on the signature pages hereof and each assignee thereof, if any,
pursuant to the terms hereof.
"Participating Commitment" shall mean the amount set forth opposite
each Participant's name on the signature pages hereof, as such amount may
be modified by assignment pursuant to the terms hereof; provided that,
following the termination of the Commitment, each Participant's
Participating Commitment shall be deemed to be its Pro Rata Share of the
aggregate Loan Commitments.
"Participant Funding" shall mean a funding by the Participants of
their Pro Rata Share of Loans outstanding.
"Participant's Interest" shall have the meaning set forth in
Section 2.2.
"Participant's Unused Commitment" shall mean, with respect to any
Participant, the difference between such Participant's Participating
Commitment and such Participant's Funded Participant's Interest.
"Participation Certificate" shall mean, a certificate issued by the
Servicer to a Participant, substantially in the form of Exhibit D
attached hereto, evidencing such Participant's ownership interest
conveyed hereunder.
"Payment Date" means the last day of each calendar month, provided,
however, if such day is not a Business Day, the next succeeding Business
Day.
"Payment Period" shall mean a period of one (1) month; provided
that (i) the first day of a Payment Period must be a Business Day, (ii)
any Payment Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day, (iii)
the first Payment Period hereunder shall commence on the date hereof and
shall end on the last day of the next succeeding calendar month and (iv)
the first day of any succeeding Payment Period shall be the last day of
the preceding Payment Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" shall mean those Liens expressly permitted by
Section 6.2(b).
"Person" shall mean an individual, corporation, partnership,
limited liability company, trust, incorporated or unincorporated
organization, joint venture, joint stock company, or a government or any
agency or political subdivision thereof or other entity of any kind.
"Personal Guaranty" shall mean any guaranty from a principal of a
Borrower substantially in the form attached to the Servicing Agreement.
"Plan" shall mean any "employee benefit plan" (as defined in
Section 3(3) of ERISA), including, but not limited to, any defined
benefit pension plan, profit sharing plan, money purchase pension plan,
savings or thrift plan, stock bonus plan, employee stock ownership plan,
Multiemployer Plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement medical),
hospitalization, accident, sickness, disability, or life insurance
benefits.
"Pro Rata Share" shall mean, with respect to each of the
Participants, the percentage designated as such Participant's Pro Rata
Share on the signature pages hereof, as such percentage may change from
time to time as a result of assignments or amendments pursuant to this
Agreement.
"Promissory Note" means a Master Note of a Borrower, substantially
in the form attached hereto as Exhibit E setting forth the obligation of
such Borrower to repay the Loan evidenced thereby.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be in effect from time to
time.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal (including the abandonment or discarding of
barrels, containers, or other closed receptacles), discharge, dispersal,
leaching or migration into the indoor or outdoor Environment or into or
out of any property, including the movement of Hazardous Substances
through or in the air, soil, surface water, ground water or property.
"Remedial Action" means all actions reasonably necessary, whether
voluntary or involuntary, to (a) clean up, remove, treat or in any other
way adjust Hazardous Substances in the indoor or outdoor Environment; (b)
prevent the Release or further movement of Hazardous Substances so that
they do not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor Environment; or (c) perform remedial
studies, investigations, restoration and post-remedial studies,
investigations and monitoring on, about or in the Property, assets,
equipment or facilities
"Rental Obligations" shall mean, with reference to any period, the
aggregate amount of all rental obligations for which the Consolidated
Companies are directly or indirectly liable (as lessee or as guarantor or
other surety but without duplication) under all leases in effect at any
time during such period (other than operating leases for motor vehicles,
computers, office equipment and other similar items used in the ordinary
course of business of the Consolidated Companies), including all such
amounts for which any Person was liable during the period immediately
prior to the date such Person became a Subsidiary of the Sponsor or was
merged into or consolidated with the Sponsor or a Subsidiary of the
Sponsor, as determined in accordance with GAAP and expressly including
all rental obligations arising pursuant to the LIBOR Lease Transaction
(excluding supplemental or contingent lease obligations thereunder).
"Required Participants" shall mean at any time, the Participants
holding at least 66 2/3% of the sum of (x) aggregate Funded Participant's
Interest, plus (y) the Participant's Unused Commitments, or, following
the termination of the Commitment and the Loan Commitments, the
Participants holding at least 66 2/3% of the aggregate outstanding Funded
Participant's Interests at such time.
"Requirement of Law" for any person shall mean the articles or
certificate of incorporation and bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other
governmental authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Response Period" means a period of forty-five (45) days commencing
on the day next succeeding the day on which the Sponsor receives a notice
from the Servicer of a notice of Loan Payment Default; provided that, no
Response Period shall extend beyond the Final Termination Date.
"Restructuring Charges" shall mean the charges incurred by Borrower
(whether directly or by allocation), in an amount not to exceed
$31,000,000.00, in connection with the restructuring of the business of
Morrison pursuant to the Transaction.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuters
Monitor Money Rates Service (or such other page as may replace that page
on that service for the purpose of displaying rates comparable to LIBOR).
"Servicing Agreement" shall have the meaning set forth in the
recitals hereof.
"Servicing Fee" shall mean the fee payable to the Servicer pursuant
to the terms of the Servicing Agreement.
"Servicing Report" shall have the meaning set forth in Section 3.3.
"Servicer" shall mean SunTrust Bank, Atlanta and its successors and
assigns.
"Sharing Agreements" shall mean, collectively, (i) that certain
Distribution Agreement, dated as of March 2, 1996 by and among Morrison,
MFCI and MHCI, (ii) that certain License Agreement, dated as of March 2,
1996, by and between MFCI and MHCI, (iii) that certain License Agreement,
dated as of March 2, 1996, by and between Sponsor and MHCI, (iv) that
certain Amended and Restated Tax Allocation and Indemnification
Agreement, dated as of March 2, 1996, by and among Morrison, MHCI, MFCI
and certain other subsidiaries of Morrison, and (v) that certain
Agreement Respecting Employee Benefit Matters, dated as of March 2, 1996,
by and among Morrison, MFCI and MHCI.
"Sponsor's Fee" shall have the meaning set forth in the Servicing
Agreement.
"Spousal Consent" shall mean a consent of the spouse of a Person
executing a Personal Guaranty, substantially in the form attached to the
Servicing Agreement.
"Standard & Poor's" shall mean Standard & Poor's Rating Service, a
division of The McGraw-Hill Companies.
"Subordinated Debt" shall mean all Indebtedness of Sponsor
subordinated to all obligations of Sponsor or any other Credit Party
arising under the Operative Documents, created, incurred or assumed on
terms and conditions satisfactory in all respects to the Servicer and the
Required Participants, including without limitation, with respect to
interest rates, payment terms, maturities, amortization schedules,
covenants, defaults, remedies, and subordination provisions, as evidenced
by the written approval of the Servicer and Required Participants.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without limitation, partnerships,
joint ventures, and associations) regardless of its jurisdiction of
organization or formation, at least a majority of the total combined
voting power of all classes of voting stock or other ownership interests
of which shall, at the time as of which any determination is being made,
be owned by such Person, either directly or indirectly through one or
more other Subsidiaries.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended
and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security
and franchise taxes now or hereafter imposed or levied by the United
States, or any state, local or foreign government or by any department,
agency or other political subdivision or taxing authority thereof or
therein and all interest, penalties, additions to tax and similar
liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any designated
page and LIBOR, the display page so designated on the Dow Jones Telerate
Service (or such other page as may replace that page on that service for
the purpose of displaying rates comparable to LIBOR).
"Total Capitalization" shall mean, as of any date of determination,
the sum of (i) Consolidated Funded Debt, plus (ii) Consolidated Net
Worth.
"Transaction" shall have the meaning set forth in that certain
Credit Agreement, dated as of March 6, 1996, by and among Sponsor,
SunTrust Bank, Atlanta, individually and as Agent and the lenders named
therein, as amended or modified.
"Unmatured Credit Event" shall mean any condition or event which,
with notice or the passage of time or both, would constitute a Credit
Event.
"Voting Stock" shall mean securities of any class or classes, the
holders of which are entitled to elect all of the corporate directors (or
Persons performing similar functions).
I.2 Accounting Terms and Determination.
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein, all accounting determinations hereunder
shall be made, all financial statements required to be delivered
hereunder shall be prepared, and all financial records shall be
maintained in accordance with, GAAP.
I.3 Other Definitional Terms.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and
Article, Section, Schedule, Exhibit and like references are to this
Agreement unless otherwise specified.
I.4 Exhibits and Schedules.
All Exhibits and Schedules attached hereto are by reference made a
part hereof.
II. LOAN FACILITY
II.1 Establishment of Commitment; Terms of Loans.
(a) Commitment. Subject to and upon the terms and
conditions set forth in this Agreement and the other Operative
Documents, and in reliance upon the guaranty of the Sponsor set
forth herein, the Servicer hereby establishes a Commitment to the
Sponsor to establish Loan Commitments and make Advances to such
Franchisees as may be designated by the Sponsor in its Funding
Approval Notices during a period commencing on the date hereof and
ending on May 29, 1998 (as such period may be extended for one or
more subsequent 364-day periods pursuant to Section 2.8 hereof, the
"Commitment Termination Date") in an aggregate committed amount at
any one time outstanding not to exceed THIRTY-FIVE MILLION AND
NO/100 DOLLARS ($35,000,000) (the "Commitment").
(b) Authorization of Loan Commitments; Loan Terms. Within
the limits of the Commitment and in accordance with the procedures
set forth in the Servicing Agreement, the Sponsor may authorize the
Servicer to establish a Loan Commitment in favor of a Franchisee
who meets the credit criteria established by the Sponsor. The
amount of each Loan Commitment shall be determined by the Sponsor
but shall not be less than $250,000 nor exceed $3,500,000 for any
Franchisee. Pursuant to the Loan Commitment, the Servicer shall
agree to make Advances to the Borrower thereunder in a minimum
amount of $25,000 and in integral multiples of $1,000, such
Advances not to exceed six (6) per month unless the Servicer shall
otherwise agree. Each Loan shall bear interest at the Borrower
Rate designated by Sponsor in the applicable Funding Approval
Notice, and interest shall be payable on each Payment Date and on
the Maturity Date of such Loan when all principal and interest
shall be due and payable in full. Each Loan may be prepaid in full
or in part on any Business Day, without premium or penalty. The
Loan Term of each Loan shall not exceed thirty-seven months.
(c) Servicer's obligation to establish each Loan Commitment
under the Operative Documents is subject to the fulfillment of the
following conditions as of the Closing Date of such Loan:
(i) this Agreement and each of the other Operative
Documents shall be in full force and effect;
(ii) the representations and warranties of the Sponsor
contained in Sections 5.1 and 5.2 hereof shall be true and correct
with the same effect as though such representations and warranties
had been made on the Closing Date of such Loan;
(iii) the Servicer shall have received a Funding
Approval Notice from the Sponsor authorizing such Loan Commitment;
(iv) all precedents and conditions to the Loan
Commitment specified in the Servicing Agreement, together with such
additional precedents and conditions as may, at Sponsor's election,
be included in the applicable Funding Approval Notice, shall have
been completed to the Servicer's reasonable satisfaction; and
(v) no Credit Event or Unmatured Credit Event shall
have occurred and be continuing.
II.2 Conveyance of Participant's Interest.
(a) The Servicer hereby sells, assigns, transfers and
conveys to the Participants, without recourse or warranty, and each
Participant hereby purchases from the Servicer, an undivided
percentage ownership interest (which percentage shall be equal to
each Participant's Pro Rata Share) in (i) the Commitment, (ii) the
Loan Commitments, (iii) the Loans, (iv) the Collateral, (v) all
rights against any guarantor of any Loan, including the Sponsor,
and (vi) all right, title and interest to any payment or right to
receive payment with respect to the foregoing (collectively, the
"Participant's Interest"). Notwithstanding the foregoing, each
Participant's right to receive payments of interest, commitments
fees or other fees with respect to the Commitment, the Loan
Commitments and the Loans shall not exceed the amounts which such
Participant is entitled to receive pursuant to the terms of this
Agreement.
(b) In consideration of the entry by each Participant into
this Agreement and the obligation of each Participant hereunder,
the Servicer shall issue to each Participant on the Closing Date, a
Participation Certificate. Each Participation Certificate shall be
in the amount of the relevant Participant's Participating
Commitment, and the Funded Participant's Interest outstanding
thereunder shall bear interest as hereinafter set forth and shall
be payable as hereinafter set forth.
(c) In accordance with the terms and conditions hereof, and
in consideration of the sale of the Participant's Interest to such
Participant, each Participant severally agrees from time to time,
during the period commencing on the Closing Date and ending on the
Final Termination Date, to fund its Pro Rata Share of outstanding
Loans made by the Servicer in an aggregate amount at any one
outstanding not to exceed such Participant's Participating
Commitment (subject to each Participant's obligations pursuant to
Section 2.3(d) hereof).
II.3 Funding of Advances; Funding of Participant's Interest in Loans.
(a) Funding of Advances. The Servicer shall fund Advances
requested by the Borrowers pursuant to the terms of the Loan
Documents in accordance with the terms of the applicable Loan
Documents and the Servicing Agreement. On the date of any such
funding, the Servicer shall elect whether or not to require the
Participants to fund their respective Pro Rata Share of such
Advance or Advances to be made on such date. In the event that the
Servicer elects not to require the Participants to fund their Pro
Rata Share of the Advances on such date, the Servicer shall make
such Advance (each, a "Fronting Advance") to the Borrower for the
account of the Servicer; provided that, the aggregate amount of
Fronting Advances outstanding on any date shall not exceed the
amount of STBA's Participating Commitment and further provided that
the sum of (x) the aggregate Fronting Advances plus (y) the
aggregated Funded Participant's Interest shall not exceed the
amount of the Commitment. If (i) any Credit Event shall have
occurred, (ii) after giving effect to any Advance, the aggregate
Fronting Advances outstanding hereunder would exceed STBA's
Participating Commitment, or (iii) the Servicer otherwise
determines in its sole discretion to request a Participant Funding
hereunder, then the Servicer shall notify the Participants pursuant
to subsection (b) requesting a Participant Funding.
(b) Notification of Participant Funding. In the event
that the Servicer desires that the Participants fund their
respective Pro Rata Shares of Advances or Loans made or outstanding
pursuant to the Loan Documents, the Servicer shall deliver written
or telecopy notice to the Participants (or telephonic notice
promptly confirmed in writing or by telecopy) (a "Participant
Funding Request") by no later than 10:00 a.m. (Atlanta, Georgia
time) on the date which is the requested date of the Participant
Funding which shall specify (x) the date of the Participant
Funding, which shall be a Business Day, and (y) each Participant's
Pro Rata Share of the Loans outstanding to be funded in connection
with such Participant Funding.
(c) Each Participant shall make its Participant Funding in
the amount of its Pro Rata Share on the proposed date thereof by
wire transfer of immediately available funds to the Servicer in
Atlanta, Georgia by not later than 2:00 P.M. (Atlanta, Georgia
time). Unless the Servicer shall have received notice from a
Participant prior to the date of any Participant Funding that such
Participant will not make available to the Servicer such
Participant's Pro Rata Share of such Participant Funding, the
Servicer may assume that the Participant has made such portion
available to the Servicer on the date of such Participant Funding
in accordance with this subsection (c) and the Servicer may, in
reliance on such assumption, make available to the Borrowers a
corresponding amount or credit the same to Fronting Advances. If
and to the extent that such Participant shall not have made such
portion available to the Servicer, such Participant and the Sponsor
shall severally agree to repay the Servicer forthwith (on demand in
the case of the Participant and within three (3) days of such
demand in the case of the Sponsor), without duplication, such
amount with interest at the Federal Funds Rate plus 2% per annum
and, until such time as such Participant has repaid to the Servicer
such amount, such Participant shall (i) have no right to vote
regarding any issue on which voting is required or advisable under
this Agreement or the other Operative Documents, and (ii) shall not
be entitled to receive any payments of interest, fees or repayment
of the principal amount of such Advance which the Participant has
failed to pay to the Servicer. If such Participant shall repay to
the Servicer such amount, then such amount shall constitute part of
such Participant's Funded Participant's Interest.
(d) Each Participant's obligations to fund its Pro Rata
Share of any requested Participant Funding shall be absolute and
unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim,
recoupment, defense, or other right which such Participant may have
against the Servicer, the Sponsor, any Borrower or any other Person
for any reason whatsoever, (ii) the occurrence of any Credit Event
or Unmatured Credit Event, (iii) the occurrence of any Loan
Default, (iv) any adverse change in the condition (financial or
otherwise) of the Sponsor or any other Credit Party or any
Borrower, (v) the acceleration or maturity of any Loan or the
Sponsor's obligations hereunder or the termination of the
Commitment, Loan Commitment or the Participating Commitments after
the making of any Fronting Advance, (vi) any breach of this
Agreement by the Sponsor or any other Participant, or (vii) any
other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(e) Notwithstanding the foregoing provisions of this
Section 2.3, no Participant shall be required to fund its Pro Rata
Share of any requested Participant Funding for purposes of
refunding a Fronting Advance pursuant to subsection (d) above if a
Credit Event, Unmatured Credit Event or Loan Default with respect
to the relevant Loan has occurred and is continuing and, prior to
the making by the Servicer of such Fronting Advance, the Servicer
had received written notice from Sponsor, the relevant Borrower or
any Participant specifying that such Credit Event, Unmatured Credit
Event or Loan Default had occurred and was continuing (and
identifying the same as a Credit Event, Unmatured Credit Event or
Loan Default, as the case may be); provided that , in the case of
an Unmatured Credit Event or Credit Event where the Participants
are not pursuing remedies, the Participants will be obligated to
fund their respective Pro Rata Shares of Fronting Advances as long
as the aggregate amount of such Fronting Advances does not exceed
$2,000,000.
II.4 Commitment Fees.
(a) Each Participant will receive from amounts paid by the
Borrowers under the Loan Documents and the Sponsor under the
Operative Documents, a commitment fee (the "Commitment Fee") with
respect to the average daily amount of each Participant's Unused
Commitment, for the period commencing on the Closing Date and
ending on the Final Termination Date, or such earlier date as the
Participating Commitment shall expire or terminate, equal to
0.1875% per annum, such Commitment Fee to be payable in arrears on
each Payment Date which is the last day of a calendar quarter (a
"Quarterly Date") commencing on June 30, 1997, calculated on the
basis of a 360-day year and the actual number of days elapsed.
(b) All Commitment Fees shall be paid on the dates due, in
immediately available funds, to the Participants by the Servicer
from amounts received from the Borrowers and Sponsor.
(c) In the event that the commitment fees received by the
Servicer from the Borrowers and the Sponsor are not sufficient on
any Quarterly Date to pay the Commitment Fees to the Participants
required pursuant hereto, the Sponsor shall, upon demand of the
Servicer, immediately fund such difference to the Servicer (with
such payment allocated to specific Loan Payment Defaults as agreed
by Sponsor and Servicer) and either, at the election of the
Sponsor, (x) the Sponsor shall be reimbursed by the Servicer upon
receipt of such amount from the Borrower, (y) the Loan Indebtedness
shall be deemed to be reduced by such amount upon a repayment or
purchase of such Defaulted Loan by Sponsor in accordance with the
terms of this Agreement, or (z) such amount shall be deemed to have
satisfied Sponsor's obligation to cure such Loan Payment Default
hereunder.
II.5 Interest on Funded Participant's Interest.
(a) Subject to the provisions of Section 2.6, each
Participant's Funded Participant's Interest shall bear interest
(computed on the basis of the actual number of days elapsed over a
year of 360 days) at rate per annum equal to the Adjusted LIBO Rate
for the Payment Period in which such Funded Participant's Interest
is outstanding (with the Payment Period being automatically reset
on each Payment Date for the next Payment Period regardless of the
date of any Participant Funding hereunder) plus an additional
ninety basis points (0.90%) per annum.
(b) Interest on each Participant's Funded Participant's
Interest shall be payable by the Servicer to the Participants on
each Payment Date from interest payments received on the Loans on
such Payment Date.
(c) In the event that the interest received by the Servicer
on any Payment Date is not sufficient to pay the interest to the
Participants required pursuant hereto, the Sponsor shall, upon
demand of the Servicer, immediately fund such difference to the
Servicer (with such payment allocated to specific Loan Payment
Defaults as agreed by Sponsor and Servicer) and if such shortfall
results from Loan Payment Defaults rather than interest rate
variances, either, at the election of the Sponsor, (x) the Sponsor
shall be reimbursed by the Servicer upon receipt of such amount
from the Borrower, (y) the Loan Indebtedness shall be deemed to be
reduced by such amount upon a repayment or purchase of such
Defaulted Loan by Sponsor in accordance with the terms of this
Agreement, or (z) such amount shall be deemed to have satisfied
Sponsor's obligation to cure such Loan Payment Default hereunder.
II.6 Default Interest.
If any amount payable to the Servicer or the Participants by the
Sponsor under the Operative Documents is not paid on the date due
hereunder, such amount shall bear interest (to the extent permitted
by law) for each day from such date up to (but not including) the
date of actual payment (after as well as before judgment) at a rate
per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Prime Rate plus 2%
per annum.
II.7 Voluntary Reduction of the Unutilized Commitment .
Upon at least three (3) Business Days' prior telephonic notice
(promptly confirmed in writing) to the Servicer, Sponsor shall have
the right, without premium or penalty, to terminate the Commitment,
in part or in whole, provided that (i) any such termination shall
apply to proportionately and permanently reduce the Participating
Commitments of each of the Participants, (ii) any partial
termination pursuant to this Section 2.7 shall be in an amount of
at least $5,000,000 and integral multiples of $1,000,000, and (iii)
the Commitment may not be reduced to an amount which is less than
the aggregate sum of all outstanding Loan Commitments.
II.8 Extension of Commitment.
(a) The Sponsor may, by written notice to the Servicer (which
shall promptly deliver a copy to each of the Participants), given
not more than sixty (60) days prior to any anniversary of the date
of this Agreement while the Commitment is effect, request that the
Participants extend the then scheduled Commitment Termination Date
(the "Existing Date") for an additional 364-day period. Each
Participant shall, by notice to the Sponsor and the Servicer given
within fifteen (15) Business Days after receipt of such request,
advise the Sponsor and the Servicer whether or not such Participant
consents to the extension request (and any Participant which does
not respond during such 15-day period shall be deemed to have
advised the Sponsor and the Servicer that it will not agree to such
extension).
(b) In the event that, on the 15th Business Day after
receipt of the notice delivered pursuant to subsection (a) above,
all of the Participants shall have agreed to extend their
respective Participating Commitments, the Commitment Termination
Date shall be deemed to have been extended, effective as of the
Existing Date, to the date which is 364 days thereafter.
(c) In the event that, on the 15th Business Day after
receipt of the notice delivered pursuant to subsection (a)
above, all of the Participants shall not have agreed to extend
their respective Participating Commitments, the Sponsor shall
notify the consenting Participants ("Consenting Participants") of
the amount of the Participating Commitments of the non-extending
Participants ("Non-Consenting Participants") and such Consenting
Participants shall, by notice to the Sponsor and the Servicer given
within ten (10) Business Days after receipt of such notice, advise
the Servicer and Sponsor whether or not such Participant wishes to
purchase all or a portion of the Participating Commitments of the
Non-Consenting Participants (and any Participant which does not
respond during such 10-Business Day period shall be deemed to have
rejected such offer). In the event that more than one Consenting
Participant agrees to purchase all or a portion of such
Participating Commitments, the Sponsor and the Servicer shall
allocate such Participating Commitments among such Consenting
Participants so as to preserve, to the extent possible, the
relative pro rata shares of the Consenting Participants of the
Participating Commitments prior to such extension request. If
Consenting Participants do not elect to assume all of the
Participating Commitments of the Non-Consenting Participants, the
Sponsor shall have the right to arrange for one or more banks (any
such bank being called a "New Participant"), to purchase the
Participating Commitment of any Non-Consenting Participant. Each
Non-Consenting Participant shall assign its Commitment and the
Loans outstanding hereunder to the Consenting Participant or New
Participant purchasing such Participating Commitment in accordance
with Section 13.6, in return for payment in full of all principal,
interest and other amounts owing to such Non-Consenting Participant
hereunder, on or before the Existing Date and, as of the effective
date of such assignment, shall no longer be a party hereto,
provided that each New Participant shall be subject to the approval
of the Servicer (which approval shall not be unreasonably
withheld). If (and only if) Participants (including New
Participants) holding Participating Commitments representing at
least an amount equal to the greater of (x) the sum of all
outstanding Loan Commitments and (y) 66 2/3% of the aggregate
Participating Commitments on the date of such extension request
shall have agreed to such extension by the Existing Date (the
"Continuing Participants"), then (i) the Commitment Termination
Date shall be extended for an additional 364-day period and (ii)
the Participating Commitment of any Non-Consenting Participant
which has not been assigned to a Consenting Participant or a New
Participant shall terminate (with the result that the amount of the
Commitment shall be decreased by the amount of such Participating
Commitment), and all amounts owing to such Non-Consenting
Participant shall become due and payable, together with all
interest accrued thereon and all other amounts owed to such Non-
Consenting Participant hereunder, on the Existing Date applicable
to such Participant without giving effect to any extension of the
Commitment Termination Date.
II.9 Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if, by
reason of (i) after the date hereof, the introduction of or any
change (including any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any law or
regulation, or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority or
quasi-Governmental Authority exercising control over banks or
financial institutions generally (whether or not having the force
of law) any reserve (including any imposed by the Federal Reserve
Board), special deposit or similar requirement (including a
reserve, special deposit or similar requirement that takes the form
of a tax) against assets of, deposits with or for the account of,
or credit extended by, any Participant's office through which it
funds its obligations hereunder shall be imposed or deemed
applicable or any other condition affecting its obligation to make
or maintain its Funded Participant's Interest at a rate based upon
the Adjusted LIBO Rate shall be imposed on any Participant or its
office through which it funds its obligations hereunder or the
interbank Eurodollar market; and as a result thereof there shall be
any increase in the cost to such Participant of agreeing to make or
making, funding or maintaining funds its obligations hereunder
(except to the extent already included in the determination of the
applicable Adjusted LIBO Rate), or there shall be a reduction in
the amount received or receivable by that Participant or its office
through which it funds its obligations hereunder, then the Sponsor
shall from time to time, upon written notice from and demand by the
Participant (with a copy of such notice and demand to the
Servicer), pay to the Servicer for the account of that Participant
within five Business Days after the date specified in such notice
and demand, additional amounts sufficient to indemnify that
Participant against such increased cost. A certificate as to the
amount of such increased cost submitted to the Sponsor and the
Servicer by that Participant, shall, except for manifest error, be
final, conclusive and binding for all purposes.
(b) If while the Commitment or any Loan Commitments are
outstanding, any Participant (including any the Servicer)
determines that the adoption of any law, rule or regulation
regarding capital adequacy or capital maintenance, or any change in
any of the foregoing or 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 Participant (or any lending office of such
Participant) or any Participant's holding company with any request
or directive regarding capital adequacy or capital maintenance
(whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Participant's capital or on the
capital of such Participant's holding company, if any, as a
consequence of this Agreement, the Loan Documents or the purchases
made by such Participant pursuant hereto to a level below that
which such Participant or such Participant's holding company could
have achieved but for such adoption, change or compliance (taking
into consideration such Participant's policies and the policies of
such Participant's holding company with respect to capital
adequacy) by an amount reasonably deemed by such Participant to be
material, then from time to time, within 15 days after written
demand by such Participant, the Sponsor pay to such Participant
such additional amount or amounts as will compensate such
Participant or such Participant's holding company for such
reduction. A certificate as to the amount of any such additional
amount or amounts, submitted to the Sponsor and the Servicer by
such Participant, shall, except for manifest error, be final,
conclusive and binding for all purposes.
II.10 Pro Rata Treatment.
Subject to the application of payments pursuant to Article III and
except as specifically provided therein, each payment of principal
of any Funded Participant's Interest, each payment of interest with
respect to the Funded Participant's Interest, each payment of the
Commitment Fees and each reduction of the Commitment shall be
allocated pro rata among the Participants in accordance with their
respective applicable Pro Rata Share. Each Participant agrees that
in computing such Participant's portion of any Funded Participant's
Interest to be made hereunder, the Servicer may, in its discretion,
round each Participant's percentage of such Participant Funding
Request to the next higher or lower whole dollar amount.
II.11 Payments.
(a) The Sponsor shall make each payment required to be made
by Sponsor hereunder and under any other Operative Document to any
Participant or the Servicer not later than 1:00 p.m. (Atlanta,
Georgia time), on the date when due in dollars to the Servicer at
its offices in Atlanta, Georgia in immediately available funds.
(b) Whenever any payment hereunder or under any other
Operative Document shall become due, or otherwise would occur,
on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of interest or
Commitment Fees, if applicable.
II.12 Sharing of Setoffs.
Each Participant agrees that if it shall, in accordance with
applicable law, through the exercise of a right of banker's lien,
setoff or counterclaim against the Sponsor or any Borrower, or
pursuant to a secured claim under Section 506 or Title 11 of the
United States Code or other security or interest arising from, or
in lieu of, such secured claim, received by the Participant under
any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Funded Participant's Interest under
this Agreement as a result of which the unpaid principal portion of
its Funded Participant's Interest shall be proportionately less
than the unpaid principal portion of the Funded Participant's
Interest of any other Participant, it shall be deemed
simultaneously to have purchases from such other Participant at
face value, and shall promptly pay to such other Participant the
purchase price for, a participation in the Funded Participant's
Interest of such other Participant, so that the aggregate unpaid
principal amount of the Funded Participant's Interest and
participations in Funded Participant's Interests held by each
Participant shall be in the same proportion to the aggregate unpaid
principal amount of all Funded Participant's Interests then
outstanding as the principal amount of its Purchases prior to such
exercise of banker's lien, setoff or counterclaim or other event
was to the principal amount of all Funded Participant's Interests
outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this
Section and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or
prices or adjustment restored without interest. The Sponsor
expressly consents to the foregoing arrangements and agrees, to the
extent permitted by applicable law, that any Participant holding a
Funded Participant's Interest or a participation in a Funded
Participant's Interest deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the
Sponsor to such Participant by reason thereof.
III. SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS
III.1 Servicer's Obligations with Respect to Loans; Collateral; Non-
Recourse.
(a) The Servicer shall, for itself and the benefit of all
of the Participants and the Sponsor, (i) document, close, manage,
administer and collect the Loans in accordance with the terms of
this Agreement and the Servicing Agreement and exercise all
discretionary powers involved in such management, administration
and collection and (ii) shall distribute the funds received with
respect to the Loans and from the Sponsor in accordance with the
terms of this Agreement. The Servicer agrees that it will exercise
the same care in administering the Loans as it exercises with
respect to loans of similar size and type in which no
participations are allocated, and each of the Participants agrees
that the Servicer shall have no further responsibility to the
Participants.
(b) The forms of Loan Agreement and Promissory Note used by
the Servicer as documentation for each Loan shall be
substantially in the forms attached hereto. The Sponsor shall have
the right to direct the Servicer to make modifications to such
forms and amendments thereto from time time but the Sponsor may not
direct the Servicer to revise or amend such forms so as to be
inconsistent with the terms of Section 2.1 hereof.
(c) Notwithstanding anything in this Agreement to the
contrary, each of the Participants acknowledges and agrees that the
Servicer shall have no obligation to the Participants with respect
to (i) the creation, perfection, priority or continuation of any
Lien on any Collateral obtained by the Servicer with respect to the
Loans at the request of the Sponsor, or (ii) the obtaining or
retention of any guaranties required by the Sponsor (other than to
distribute any proceeds therefrom in accordance with the terms of
this Article III). The Participants acknowledge and agree that the
Sponsor has the right to release or modify the terms of, any
Collateral or any Personal Guaranty.
(d) Each of the Participants acknowledges and agrees that
all payments made to the Participants pursuant to this Agreement by
the Servicer shall be made solely from amounts received from the
Sponsor, the Borrowers and other obligors or Collateral under the
applicable Loan Documents and the Servicer shall have no personal
liability for any amounts payable to the Participants hereunder.
III.2 Application of Payments.
(a) The Servicer and the Sponsor shall instruct each
Borrower to make payments with respect to Loans and the Loan
Commitments directly to the Servicer, either by mail, wire transfer
or debit pursuant to an ACH Authorization (as such term is defined
in the Servicing Agreement).
(b) On each Payment Date which is the last day of a
calendar quarter, all payments of commitments fees received by the
Servicer from the Borrowers and the Sponsor and not previously
distributed, shall be applied to pay the Commitment Fees, with any
excess amount applied in accordance with the terms of the Servicing
Agreement.
(c) On each Payment Date, all payments of interest received
by the Servicer from the Borrowers and the Sponsor pursuant to its
Guaranty contained herein with respect to the Loans and not
previously distributed by the Servicer, shall be applied to pay all
accrued but unpaid interest on the Funded Participant's Interest
pursuant to this Agreement, then to pay all accrued but unpaid
Servicing Fees and then to pay the Sponsor's Fee, in accordance
with the terms of the Servicing Agreement.
(d) On any Business Day on which the Servicer shall receive
any payment in respect of the principal amount of any Loan, whether
from a Borrower, the Sponsor pursuant to its Guaranty contained
herein, or any other obligor with respect thereto, the Servicer may
elect, in its sole discretion to (i) apply such principal payment
to fund any requested Advances, (ii) apply such amount to repay any
outstanding Fronting Advances, or (iii) to either (x) distribute
such amount to the Participants to reduce each Participant's Funded
Participant's Interest or (y) apply such amount to STBA's Funded
Participant's Interest only (with the understanding that the
Funded Participant's Interest of each Participant shall not be
deemed to have been repaid until such amount is actually received
by such Participant); provided that, in the event that the Servicer
elects to apply any repayment to reduce STBA's Funded Participant's
Interest without a corresponding reduction of the other
Participant's Funded Participant's Interest, STBA shall be
obligated to make a payment to each Participant equal to such
Participant's Pro Rata Share of such payment upon the earlier of
(i) the next Payment Date and (ii) the occurrence of a Credit Event
hereunder.
(e) If during any period when no Credit Event has occurred
and is continuing, amounts received by Servicer are not capable of
being allocated to any specific Loan or, in the case of amounts
allocable to a specific Loan, are not sufficient to repay all
obligations then due and owing with respect thereto, such amounts
shall be applied by the Servicer as follows: (i) first, to the
payment of Commitment Fees owing to the Participants hereunder,
(ii) second, to the payment of accrued interest on the Funded
Participant's Interest hereunder, (iii) third, to the payment of
the Servicing Fees owing under the Servicing Agreement, (iv)
fourth, to the repayment of the Funded Participant's Interests
outstanding hereunder, (v) fifth, to the payment of all other
amounts owing to the Servicer or any Participant hereunder, and
(vi) sixth, if all obligations of the Sponsor pursuant to the
Operative Documents have been satisfied in full, to the Sponsor.
(f) During any period when a Credit Event has occurred and
is continuing, any amounts received by Servicer with respect to the
Loans shall be applied, after deduction of any expenses incurred in
the collection of any such amounts, as follows (i) first, to the
payment of any accrued and unpaid Servicing Fee, (ii) second, to
each Participant in accordance with Pro Rata Share, and (iii)
thereafter, to such Persons as may be legally entitled thereto.
(g) If not sooner repaid, all amounts due and payable to
the Servicer and the Participants shall be due and payable in full
on the Final Termination Date.
III.3 Servicing Report.
On each Payment Date, the Servicer shall telecopy to the Sponsor
and each Participant a servicing report in the form of Exhibit F
attached hereto (the "Servicing Report") setting forth the
following information with respect the Loans:
a. the aggregate principal balance of the Loans as of the
close of business on the last Business Day of the preceding Payment
Period;
b. the aggregate amount of Loans repurchased by the
Sponsor or amounts collected with respect to the Collateral for the
Loans;
c. the aggregate Loan Commitments as of the close of
business on the last Business Day of the preceding Payment Period;
and
d. each Loan which is past due (including the past due
amount and the number of days past due).
IV. LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND
IV.1 Notice Of Loan Default.
The Servicer shall notify the Sponsor and the relevant Borrower of
a Loan Payment Default within fifteen (15) days following the
occurrence thereof and of any other Loan Default in accordance with
the terms of the Servicing Agreement.
IV.2 Waiver or Cure By The Sponsor; Fully Guaranteed Pool.
Unless a Credit Event or Unmatured Credit Event has occurred and is
continuing, within the Response Period, the Sponsor shall be
entitled (but not obligated) to, in the case of a Loan Payment
Default, cure such Loan Payment Default and shall be entitled to
waive any other Loan Default except as set forth in Section 4.4.
During a Response Period, the Servicer shall refrain from taking
any legal action against the Defaulted Borrower under the Defaulted
Loan which is the subject of such Response Period, and from
accelerating payment of the Loan Indebtedness under such Defaulted
Loan but the Servicer shall cease funding any further Advances
pursuant to the Loan Commitment. If the Sponsor cures a Loan
Payment Default prior to the expiration of a Response Period and
waives any other Loan Default (subject to Section 4.4) prior to the
expiration of a Response Period, then as to each Loan Payment
Default or other Loan Default so waived or so cured, the Defaulted
Borrower's and the Servicer's respective rights and obligations
under the Loan Documents shall be restored to the same status as if
such waived or cured Loan Default never occurred except that, with
respect to any Loan Payment Default cured by the Sponsor hereunder,
such Loan shall be deemed to have been removed from the Limited
Guaranty Pool and shall thereafter be guaranteed fully and
completely by the Sponsor as provided herein and shall be part of
the Fully Guaranteed Pool.
IV.3 Defaulted Loan Guaranty Demand.
(a) In the event that following the end of a Response
Period, a Loan Payment Default is not cured or in the event that
any other Loan Default is not then waived, the Servicer shall have
the right at any time thereafter, to demand payment of the entire
Loan Indebtedness with respect to such Loan from the Sponsor
pursuant to Article VIII hereof, which amount, subject to the
limitations set forth therein, shall be due and payable on the date
which is five (5) days following demand.
(b) In the event that the Sponsor is not obligated to repay
the Loan Indebtedness with respect to a Defaulted Loan pursuant to
the Article VIII hereof or in the event that a Credit Event has
occurred and is continuing and Sponsor has not purchased all
outstanding Loans hereunder, the Sponsor agrees that the Servicer
shall be released from its obligations to the Sponsor hereunder
with respect to administering and enforcing all Loans and may
administer and enforce such Loans as it deems appropriate, without
regard to any limitations or restrictions set forth herein (but
subject to Article III hereof in all events) or in any other
Operative Document.
IV.4 No Waiver or Cure Available.
Notwithstanding anything contained in this Article to the contrary,
the Sponsor shall, within seven (7) days of its receipt of a
written demand from the Servicer instructing it to do so, make
payment of the Loan Indebtedness of any Loan and assume the Loan
Commitment of a Defaulted Borrower whose Loan Default either arises
from the bankruptcy or insolvency of the Borrower or the
termination of the Sponsor's franchise agreement with such
Borrower.
V. REPRESENTATIONS AND WARRANTIES
V.1 Representations and Warranties. The Sponsor (as to itself and each
of the Consolidated Companies) hereby represents and warrants to the
Servicer and each of the Participants that:
(a) Corporate Existence; Compliance with Law. Each of the
Consolidated Companies is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation, and each of the Credit Parties has the
corporate power and authority and the legal right to own and
operate its property and to conduct its business. Each of the
Consolidated Companies (i) has the corporate power and authority
and the legal right to own and operate its property and to conduct
its business, (ii) is duly qualified as a foreign corporation and
in good standing under the laws of each jurisdiction where its
ownership of property or the conduct of its business requires such
qualification, and (iii) is in compliance with all Requirements of
Law, where (a) the failure to have such power, authority and legal
right as set forth in clause (i), (b) the failure to be so
qualified or in good standing as set forth in clause (ii), or (c)
the failure to comply with Requirements of Law as set forth in
clause (iii), would reasonably be expected, in the aggregate, to
have a Materially Adverse Effect. The jurisdiction of
incorporation or organization, and the ownership of all issued and
outstanding capital stock, for each Subsidiary as of the date of
this Agreement is accurately described on Schedule 5.1(a);
(b) Corporate Power; Authorization. Each of the Credit
Parties has the corporate power and authority to make, deliver and
perform the Operative Documents to which it is a party and has
taken all necessary corporate action to authorize the execution,
delivery and performance of such Operative Documents. No consent
or authorization of, or filing with, any Person (including, without
limitation, any governmental authority), is required in connection
with the execution, delivery or performance by any Credit Party, or
the validity or enforceability against any Credit Party, of the
Operative Documents, other than such consents, authorizations or
filings which have been or will be made or obtained;
(c) Enforceable Obligations. This Agreement has been duly
executed and delivered, and each other Operative Document will be
duly executed and delivered, by the respective Credit Parties, and
this Agreement constitutes, and each other Operative Document when
executed and delivered will constitute, legal, valid and binding
obligations of the Credit Parties, respectively, enforceable
against the Credit Parties in accordance with their respective
terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity;
(d) No Legal Bar. The execution, delivery and performance
by the Credit Parties of the Operative Documents will not violate
any Requirement of Law or cause a breach or default under any of
their respective material Contractual Obligations;
(e) No Material Litigation. Except as set forth on
Schedule 5.1(e) or in any notice furnished to the Participants
pursuant to Section 6.1(g)(v) at or prior to the respective times
the representations and warranties set forth in this Section 5.1(e)
are made or deemed to be made hereunder, no litigation,
investigations or proceedings of or before any courts, tribunals,
arbitrators or governmental authorities are pending or, to the
knowledge of Sponsor, threatened by or against any of the
Consolidated Companies, or against any of their respective
properties or revenues, existing or future (x) with respect to any
Operative Document, or any of the transactions contemplated hereby
or thereby, or (y) seeking money damages in excess of $2,500,000,
either singly or in the aggregate or which, if adversely
determined, would otherwise reasonably be expected to have a
Materially Adverse Effect;
(f) Investment Company Act, Etc. None of the Credit
Parties is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or
used in the Investment Company Act of 1940, as amended). None of
the Credit Parties is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any
foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, as
contemplated hereby or by any other Operative Document;
(g) Margin Regulations. No part of the proceeds of any of
the Loans will be used for any purpose which violates, or which
would be inconsistent or not in compliance with, the provisions of
the applicable Margin Regulations;
(h) Compliance With Environmental Laws.
(i) The Consolidated Companies have received no
notices of claims or potential liability under, and are in
compliance with, all applicable Environmental Laws, where
such claims and liabilities under, and failures to comply
with, such statutes, regulations, rules, ordinances, laws or
licenses, would reasonably be expected to result in
penalties, fines, claims or other liabilities to the
Consolidated Companies in amounts in excess of $500,000,
either individually or in the aggregate (including any such
penalties, fines, claims, or liabilities relating to the
matters set forth on Schedule 5.1(h)(i)), except as set forth
on Schedule 5.1(h)(i) or in any notice furnished to the
Participants pursuant to Section 6.1(g)(vi) at or prior to
the respective times the representations and warranties set
forth in this Section 5.1(h)(i) are made or deemed to be made
hereunder;
(ii) Except as set forth on Schedule 5.1(h)(ii) or in
any notice furnished to the Participants pursuant to Section
6.1(g)(vi) at or prior to the respective times the
representations and warranties set forth in this Section
5.1(h)(ii) are made or deemed to be made hereunder, none of
the Consolidated Companies has received any notice of
violation, or notice of any action, either judicial or
administrative, from any Governmental Authority (whether
United States or foreign) relating to the actual or alleged
violation of any Environmental Law, including, without
limitation, any notice of any actual or alleged spill, leak,
or other release of any Hazardous Substance, waste or
hazardous waste by any Consolidated Company or its employees
or agents, or as to the existence of any contamination on any
properties owned by any Consolidated Company, where any such
violation, spill, leak, release or contamination would
reasonably be expected to result in penalties, fines, claims
or other liabilities to the Consolidated Companies in amounts
in excess of $500,000, either individually or in the
aggregate;
(iii) Except as set forth on Schedule 5.1(h)(iii), the
Consolidated Companies have obtained all necessary
governmental permits, licenses and approvals which are
material to the operations conducted on their respective
properties, including without limitation, all required
material permits, licenses and approvals for (i) the emission
of air pollutants or contaminants, (ii) the treatment or
pretreatment and discharge of waste water or storm water,
(iii) the treatment, storage, disposal or generation of
hazardous wastes, (iv) the withdrawal and usage of ground
water or surface water, and (v) the disposal of solid wastes;
(i) Insurance. The Consolidated Companies currently
maintain insurance with respect to their respective properties and
businesses, with financially sound and reputable insurers, having
coverages against losses or damages of the kinds customarily
insured against by reputable companies in the same or similar
businesses, such insurance being in amounts no less than those
amounts which are customary for such companies under similar
circumstances. The Consolidated Companies have paid all material
amounts of insurance premiums now due and owing with respect to
such insurance policies and coverages, and such policies and
coverages are in full force and effect;
(j) No Default. None of the Consolidated Companies is in
default under or with respect to any Contractual Obligation in any
respect which default or defaults would be reasonably expected in
the aggregate to have a Materially Adverse Effect;
(k) No Burdensome Restrictions. Except as set forth in any
notice furnished to the Participants pursuant to Section 6.1(g)(xi)
at or prior to the respective times the representations and
warranties set forth in this Section 5.1(k) are made or deemed to
be made hereunder, none of the Consolidated Companies is a party to
or bound by any Contractual Obligation or Requirement of Law which
has had or would reasonably be expected to have a Materially
Adverse Effect;
(l) Taxes. Except as set forth on Schedule 5.1(l), each of
the Consolidated Companies have filed or caused to be filed all
declarations, reports and tax returns which are required to have
been filed, and has paid all taxes, custom duties, levies, charges
and similar contributions ("taxes" in this Section 5.1(l)) shown to
be due and payable on said returns or on any assessments made
against it or its properties, and all other taxes, fees or other
charges imposed on it or any of its properties by any governmental
authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have
been provided in its books); and no tax liens have been filed and,
to the knowledge of Sponsor, no claims are being asserted with
respect to any such taxes, fees or other charges;
(m) Subsidiaries. Except as disclosed on Schedule 5.1(m),
on the date of this Agreement, Sponsor has no Subsidiaries and
neither Sponsor nor any Subsidiary is a joint venture partner or
general partner in any partnership. Except as disclosed on
Schedule 5.1(m) or in any notice furnished to the Participants
pursuant to Section 6.1(g)(xii) at or prior to the respective times
the representations and warranties set forth in this Section 5.1(m)
are made or deemed to be made hereunder, Sponsor has no Material
Subsidiaries;
(n) Financial Statements. Sponsor has furnished to the
Servicer and the Participants (i) the audited consolidated balance
sheet as of June 1, 1996 of Sponsor and the related consolidated
and consolidating statements of income, shareholders' equity and
cash flows for the fiscal year then ended, including in each case
the related schedules and notes, (ii) the unaudited balance sheet
of Sponsor presented on a consolidated basis as at the end of the
third fiscal quarter of 1997, and the related unaudited
consolidated and consolidating statements of income, shareholders'
equity and cash flows presented on a consolidated basis for the
year-to-date period then ended, setting forth in each case in
comparative form the figures for the corresponding quarter of
Sponsor's previous fiscal year. The foregoing financial statements
fairly present in all material respects the consolidated and
consolidating financial condition of Sponsor as at the dates
thereof and results of operations for such periods in conformity
with GAAP consistently applied (subject, in the case of the
quarterly financial statements, to normal year-end audit
adjustments and the absence of certain footnotes). The
Consolidated Companies taken as a whole do not have any material
contingent obligations, contingent liabilities, or material
liabilities for known taxes, long-term leases or unusual forward or
long-term commitments not reflected in the foregoing financial
statements or the notes thereto. Since June 1, 1996, there have
been no changes with respect to the Consolidated Companies which
have had or which would reasonably be expected to have a Materially
Adverse Effect.
(o) ERISA. Except as disclosed on Schedule 5.1(o) or in
any notice to the Participants furnished pursuant to Section
6.1(g)(vii) at or prior to the respective times the representations
and warranties set forth in this Section 5.1(o) are made or deemed
to be made hereunder:
(i) Indemnification of Plans. None of the
Consolidated Companies nor any of their respective ERISA
Affiliates maintains or contributes to, or has during the
past seven years maintained or contributed to, any Plan that
is subject to Title IV of ERISA;
(ii) Compliance. Each Plan maintained by the
Consolidated Companies has at all times been maintained, by
its terms and in operation, in compliance with all applicable
laws, and the Consolidated Companies are subject to no tax or
penalty with respect to any Plan of such Consolidated Company
or any ERISA Affiliate thereof, including without limitation,
any tax or penalty under Title I or Title IV of ERISA or
under Chapter 43 of the Tax Code, or any tax or penalty
resulting from a loss of deduction under Sections 162, 404,
or 419 of the Tax Code, where the failure to comply with such
laws, and such taxes and penalties, together with all other
liabilities referred to in this Section 5.1(o) (taken as a
whole), would in the aggregate have a Materially Adverse
Effect;
(iii) Liabilities. The Consolidated Companies are
subject to no liabilities (including withdrawal liabilities)
with respect to any Plans of such Consolidated Companies or
any of their ERISA Affiliates, including without limitation,
any liabilities arising from Titles I or IV of ERISA, other
than obligations to fund benefits under an ongoing Plan and
to pay current contributions, expenses and premiums with
respect to such Plans, where such liabilities, together with
all other liabilities referred to in this Section 5.1(o)
(taken as a whole), would in the aggregate have a Materially
Adverse Effect;
(iv) Funding. The Consolidated Companies and, with
respect to any Plan which is subject to Title IV of ERISA,
each of their respective ERISA Affiliates, have made full and
timely payment of all amounts (A) required to be contributed
under the terms of each Plan and applicable law, and (B)
required to be paid as expenses (including PBGC or other
premiums) of each Plan, where the failure to pay such amounts
(when taken as a whole, including any penalties attributable
to such amounts) would have a Materially Adverse Effect. No
Plan subject to Title IV of ERISA (other than a Multiemployer
Plan) has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA), determined as if
such Plan terminated on any date on which this representation
and warranty is deemed made, in any amount which, together
with all other liabilities referred to in this Section 5.1(o)
(taken as a whole), would have a Materially Adverse Effect if
such amount were then due and payable. None of the
Consolidated Companies would be subject to withdrawal
liability with respect to any Multiemployer Plan, determined
as if the event resulting in such withdrawal liability
occurred on any date on which this representation is made or
deemed to be made based on the most recent actuarial
valuation data made available to employers participating in
the Multiemployer Plan, in any amount which, together with
all other liabilities referred to in this Section 5.1(o)
(taken as a whole), would have a Materially Adverse Effect if
such amounts were then due and payable. The Consolidated
Companies are subject to no liabilities with respect to post-
retirement medical benefits in any amounts which, together
with all other liabilities referred to in this Section 5.1(o)
(taken as a whole), would have a Materially Adverse Effect if
such amounts were then due and payable;
(p) Patents, Trademarks, Licenses, Etc. Except as set
forth on Schedule 5.1(p), (i) the Consolidated Companies have
obtained and hold in full force and effect all material patents,
trademarks, service marks, trade names, copyrights, licenses and
other such rights, free from material burdensome restrictions,
which are necessary for the operation of their respective
businesses as presently conducted, and (ii) to the best of
Sponsor's knowledge, no product, process, method, service or other
item presently sold by or employed by any Consolidated Company in
connection with such business infringes any patents, trademark,
service mark, trade name, copyright, license or other right owned
by any other person and there is not presently pending, or to the
knowledge of Sponsor, threatened, any claim or litigation against
or affecting any Consolidated Company contesting such Person's
right to sell or use any such product, process, method, substance
or other item where the result of such failure to obtain and hold
such benefits or such infringement would have a Materially Adverse
Effect;
(q) Ownership of Property. Except as set forth on Schedule
5.1(q), each Consolidated Company has good and marketable fee
simple title to or a valid leasehold interest in all of its real
property and good title to, or a valid leasehold interest in, all
of its other property, as such properties are reflected in the
consolidated balance sheet of the Consolidated Companies as of June
30, 1996 referred to in Section 5.1(n), other than properties
disposed of in the ordinary course of business since such date or
as otherwise permitted by the terms of this Agreement, subject to
no Lien or title defect of any kind, except Permitted Liens. The
Consolidated Companies enjoy peaceful and undisturbed possession
under all of their respective material leases;
(r) Indebtedness. As of the Closing Date, except for the
Indebtedness set forth on Schedule 6.2(a), none of the Consolidated
Companies is an obligor in respect of any Indebtedness for borrowed
money, or any commitment to create or incur any Indebtedness for
borrowed money, in an amount greater than $1,000,000 in any single
case, and such Indebtedness and commitments for amounts less than
$1,000,000 do not exceed $2,500,000 in the aggregate for all such
Indebtedness and commitments of the Consolidated Companies;
(s) Financial Condition. On the Closing Date and after
giving effect to the transactions contemplated by this Agreement
and the other Operative Documents, including without limitation,
the making of the Loans hereunder, (i) the assets of each Credit
Party at fair valuation and based on their present fair saleable
value (including, without limitation, the fair and realistic value
of any contribution or subrogation rights in respect of any
Guaranty Agreement given by such Credit Party) will exceed such
Credit Party's debts, including contingent liabilities (as such
liabilities may be limited under the express terms of any Guaranty
Agreement of such Credit Party), (ii) the remaining capital of such
Credit Party will not be unreasonably small to conduct the Credit
Party's business, and (iii) such Credit Party will not have
incurred debts, or have intended to incur debts, beyond the Credit
Party's ability to pay such debts as they mature. For purposes of
this Section 5.1(s), "debt" means any liability on a claim, and
"claim" means (a) the right to payment, whether or not such right
is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured, or (b) the right to an equitable
remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy
is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured;
(t) Labor Matters. The Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work
stoppages due to labor disagreements which have had, or would
reasonably be expected to have, a Materially Adverse Effect, and,
to the best knowledge of Sponsor, there are no such strikes,
disputes, slow downs or work stoppages threatened against any
Consolidated Company. The hours worked and payment made to
employees of the Consolidated Companies have not been in violation
in any material respect of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due
from the Consolidated Companies, or for which any claim may be made
against the Consolidated Companies, on account of wages and
employee health and welfare insurance and other benefits have been
paid or accrued as liabilities on the books of the Consolidated
Companies where the failure to pay or accrue such liabilities would
reasonably be expected to have a Materially Adverse Effect;
(u) Payment or Dividend Restrictions. Except as described
on Schedule 5.1(a), none of the Consolidated Companies is party to
or subject to any agreement or understanding restricting or
limiting the payment of any dividends or other distributions by any
such Consolidated Company;
(v) Sharing Agreements. Each of the Sharing Agreements is
in full force and effect and no material default exists thereunder;
and
(w) Disclosure. No representation or warranty contained in
this Agreement (including the Schedules attached hereto) or in any
other document furnished from time to time pursuant to the terms of
this Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact
necessary to make the statements herein or therein not misleading
in any material respect as of the date made or deemed to be made.
Except as may be set forth herein (including the Schedules attached
hereto), there is no fact known to Sponsor which has had, or is
reasonably expected to have, a Materially Adverse Effect.
V.2 Representations and Warranties with Respect to Specific Loans.
The Sponsor represents and warrants to the Servicer and each
Participant with respect to each Loan Commitment established and
each Advance made pursuant to the Operative Documents that:
(a) The Promissory Note, Loan Agreement and each other Loan
Document executed in connection with such Loan Commitment each
constitutes a valid and binding agreement of each Borrower or
guarantor party thereto and is enforceable against each such party
in accordance with its terms.
(b) The Promissory Note and accompanying Loan Documents
executed in connection with such Loan and delivered to the Servicer
are the only contracts evidencing the transaction described therein
and constitute the entire agreement of the parties thereto with
respect to such transaction and Sponsor has not made any other
promises, agreements or representations and warranties with respect
to the transactions evidenced by such Promissory Note.
(c) The Promissory Note and each accompanying Loan Document
executed in connection with such Loan is genuine and all
signatures, names, amounts and other facts and statements therein
and thereon are true and correct.
(d) All disclosures required to be made under applicable
federal and state law in connection with such Loan have been
properly and completely made with respect to each Promissory Note,
the other Loan Documents and the Loan and each such Promissory
Note, other Loan Documents and Loan is in full compliance with all
applicable federal and state laws, including without limitation,
applicable state and federal usury laws and regulations.
(e) The proceeds of each Promissory Note will be solely for
the purpose of financing the acquisition and expansion of
restaurants franchised by the Sponsor and operated by the relevant
Borrower and not for any non-business purposes.
VI. COVENANTS
VI.1 Affirmative Covenants.
The Sponsor covenants and agrees that it will, as long as the
Commitment is in effect or the Servicer is committed to make
Advances under any Loan Documents and thereafter so long as any
Loans remain outstanding under this Agreement or Sponsor has any
other unsatisfied obligations under the Operative Documents:
(a) Corporate Existence, Etc. Preserve and maintain, and
cause each of its Material Subsidiaries to preserve and maintain,
its corporate existence, its material rights, franchises, and
licenses, and its material patents and copyrights (for the
scheduled duration thereof), trademarks, trade names, and service
marks, necessary or desirable in the normal conduct of its
business, and its qualification to do business as a foreign
corporation in all jurisdictions where it conducts business or
other activities making such qualification necessary, where the
failure to be so qualified would reasonably be expected to have a
Materially Adverse Effect.
(b) Compliance with Laws, Etc. Comply, and cause each of
its Subsidiaries to comply with all Requirements of Law (including,
without limitation, the Environmental Laws subject to the exception
set forth in Section 5.1(h) where the penalties, claims, fines, and
other liabilities resulting from noncompliance with such
Environmental Laws do not involve amounts in excess of $2,500,000
in the aggregate) and Contractual Obligations applicable to or
binding on any of them where the failure to comply with such
Requirements of Law and Contractual Obligations would reasonably be
expected to have a Materially Adverse Effect.
(c) Payment of Taxes and Claims, Etc. Pay, and cause each
of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii)
all claims (including, without limitation, claims for labor,
materials, supplies or services) which might, if unpaid, become a
Lien upon its property, unless, in each case, the validity or
amount thereof is being contested in good faith by appropriate
proceedings and adequate reserves are maintained with respect
thereto.
(d) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account,
containing complete and accurate entries of all their respective
financial and business transactions.
(e) Visitation, Inspection, Etc. Permit, and cause each of
its Subsidiaries to permit, any representative of the Servicer or
any Participant to visit and inspect any of its property, to
examine its books and records and to make copies and take extracts
therefrom, and to discuss its affairs, finances and accounts with
its officers, all at such reasonable times and as often as the
Servicer or such Participant may reasonably request.
(f) Insurance; Maintenance of Properties.
(i) Maintain or cause to be maintained with
financially sound and reputable insurers, insurance with
respect to its properties and business, and the properties
and business of its Subsidiaries, against loss or damage of
the kinds customarily insured against by reputable companies
in the same or similar businesses, such insurance to be of
such types and in such amounts as is customary for such
companies under similar circumstances; provided, however,
that in any event Sponsor shall use its best efforts to
maintain, or cause to be maintained, insurance in amounts and
with coverages not materially less favorable to any
Consolidated Company as in effect on the date of this
Agreement.
(ii) Cause, and cause each of the Consolidated
Companies to cause, all properties used or useful in the
conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, settlements and improvements
thereof, all as in the judgment of Sponsor may be necessary
so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.
(g) Reporting Covenants. Furnish to each Participant:
(i) Annual Financial Statements. As soon as
available and in any event within 90 days after the end of
each Fiscal Year of Sponsor, balance sheets of the
Consolidated Companies as at the end of such year, presented
on a consolidated basis, and the related statements of
income, shareholders' equity, and cash flows of the
Consolidated Companies for such Fiscal Year, presented on a
consolidated basis, setting forth in each case in comparative
form the figures for the previous Fiscal Year, all in
reasonable detail and accompanied by a report thereon of
Ernst & Young or other independent public accountants of
comparable recognized national standing, which such report
shall be unqualified as to going concern and scope of audit
and shall state that such financial statements present fairly
in all material respects the financial condition as at the
end of such Fiscal Year on a consolidated basis, and the
results of operations and statements of cash flows of the
Consolidated Companies for such Fiscal Year in accordance
with GAAP and that the examination by such accountants in
connection with such consolidated financial statements has
been made in accordance with generally accepted auditing
standards;
(ii) Quarterly Financial Statements. As soon as
available and in any event within 45 days after the end of
each fiscal quarter of Sponsor (other than the fourth fiscal
quarter), balance sheets of the Consolidated Companies as at
the end of such quarter presented on a consolidated basis and
the related statements of income, shareholders' equity, and
cash flows of the Consolidated Companies for such fiscal
quarter and for the portion of Sponsor's Fiscal Year ended at
the end of such quarter, presented on a consolidated basis
setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion
of Sponsor's previous Fiscal Year, all in reasonable detail
and certified by the chief financial officer or principal
accounting officer of Sponsor that such financial statements
fairly present in all material respects the financial
condition of the Consolidated Companies as at the end of such
fiscal quarter on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated
Companies for such fiscal quarter and such portion of
Sponsor's Fiscal Year, in accordance with GAAP consistently
applied (subject to normal year-end audit adjustments and the
absence of certain footnotes);
(iii) No Default/Compliance Certificate. Together with
the financial statements required pursuant to subsections (i)
and (ii) above, a certificate of the treasurer or chief
financial officer of Sponsor (x) to the effect that, based
upon a review of the activities of the Consolidated Companies
and such financial statements during the period covered
thereby, there exists no Credit Event or Unmatured Credit
Event under this Agreement, or if there exists a Credit Event
or Unmatured Credit Event hereunder, specifying the nature
thereof and the proposed response thereto, and (y)
demonstrating in reasonable detail compliance as at the end
of such Fiscal Year or such fiscal quarter with Section
6.1(h) and Sections 6.2(a) through 6.2(e);
(iv) Notice of Credit Event. Promptly after any
Executive Officer of Sponsor has notice or knowledge of the
occurrence of a Credit Event or an Unmatured Credit Event, a
certificate of the chief financial officer or principal
accounting officer of Sponsor specifying the nature thereof
and the proposed response thereto;
(v) Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of or any material adverse
development in any material action, suit or proceeding or any
governmental investigation or any arbitration, before any
court or arbitrator or any governmental or administrative
body, agency or official, against any Consolidated Company,
or any material property of any thereof seeking money damages
in excess of $2,500,000 or which, if adversely determined,
would otherwise reasonably be expected to have a Materially
Adverse Effect, or (ii) actual knowledge thereof, notice of
the threat of any such action, suit, proceeding,
investigation or arbitration;
(vi) Environmental Notices. Promptly after receipt
thereof, notice of any actual or alleged violation, or notice
of any action, claim or request for information, either
judicial or administrative, from any governmental authority
relating to any actual or alleged claim, notice of potential
responsibility under or violation of any Environmental Law,
or any actual or alleged spill, leak, disposal or other
release of any waste, petroleum product, or hazardous waste
or Hazardous Substance by any Consolidated Company which
could result in penalties, fines, claims or other liabilities
to any Consolidated Company in amounts in excess of $500,000;
(vii) ERISA. (A) Promptly after the occurrence
thereof with respect to any Plan of any Consolidated Company
or any ERISA Affiliate thereof, or any trust established
thereunder, notice of (A) a "reportable event" described in
Section 4043 of ERISA and the regulations issued from time to
time thereunder (other than a "reportable event" not subject
to the provisions for 30-day notice to the PBGC under such
regulations), or (B) any other event which could subject any
Consolidated Company to any tax, penalty or liability under
Title I or Title IV of ERISA or Chapter 43 of the Tax Code,
or any tax or penalty resulting from a loss of deduction
under Sections 162, 404 or 419 of the Tax Code, where any
such taxes, penalties or liabilities exceed or could exceed
$500,000 in the aggregate;
(B) Promptly after such notice must be provided
to the PBGC, or to a Plan participant, beneficiary or
alternative payee, any notice required under
Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or
4041(c)(1)(A) of ERISA or under Section 401(a)(29) or
412 of the Tax Code with respect to any Plan of any
Consolidated Company or any ERISA Affiliate thereof;
(C) Promptly after receipt, any notice received
by any Consolidated Company or any ERISA Affiliate
thereof concerning the intent of the PBGC or any other
governmental authority to terminate a Plan of such
Company or ERISA Affiliate thereof which is subject to
Title IV of ERISA, to impose any liability on such
Company or ERISA Affiliate under Title IV of ERISA or
Chapter 43 of the Tax Code;
(D) Upon the request of the Servicer, promptly
upon the filing thereof with the Internal Revenue
Service ("IRS") or the Department of Labor ("DOL"), a
copy of IRS Form 5500 or annual report for each Plan of
any Consolidated Company or ERISA Affiliate thereof
which is subject to Title IV of ERISA;
(E) Upon the request of the Servicer, (A) true
and complete copies of any and all documents,
government reports and IRS determination or opinion
letters or rulings for any Plan of any Consolidated
Company from the IRS, PBGC or DOL, (B) any reports
filed with the IRS, PBGC or DOL with respect to a Plan
of the Consolidated Companies or any ERISA Affiliate
thereof, or (C) a current statement of withdrawal
liability for each Multiemployer Plan of any
Consolidated Company or any ERISA Affiliate thereof;
(viii) Liens. Promptly upon any Consolidated
Company becoming aware thereof, notice of the filing of any
federal statutory Lien, tax or other state or local
government Lien or any other Lien affecting their respective
properties, other than Permitted Liens;
(ix) Public Filings, Etc. Promptly upon the filing
thereof or otherwise becoming available, copies of all
financial statements, annual, quarterly and special reports,
proxy statements and notices sent or made available generally
by Sponsor to its public security holders, of all regular and
periodic reports and all registration statements and
prospectuses, if any, filed by any of them with any
securities exchange, and of all press releases and other
statements made available generally to the public containing
material developments in the business or financial condition
of Sponsor and the other Consolidated Companies;
(x) Accountants' Reports. Promptly upon receipt
thereof, copies of all financial statements of, and all
reports submitted by, independent public accountants to
Sponsor in connection with each annual, interim, or special
audit of Sponsor's financial statements, including without
limitation, the comment letter submitted by such accountants
to management in connection with their annual audit;
(xi) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the existence or
occurrence of (i) any Contractual Obligation or Requirement
of Law described in Section 5.1(k), (ii) failure of any
Consolidated Company to hold in full force and effect those
material trademarks, service marks, patents, trade names,
copyrights, licenses and similar rights necessary in the
normal conduct of its business, and (iii) any strike, labor
dispute, slow down or work stoppage as described in Section
5.1(t);
(xii) New Material Subsidiaries. Within 30 days after
the formation or acquisition of any Material Subsidiary, or
any other event resulting in the creation of a new Material
Subsidiary, notice of the formation or acquisition of such
Material Subsidiary or such occurrence, including a
description of the assets of such entity, the activities in
which it will be engaged, and such other information as the
Servicer and any of the Participants may request;
(xiii) Intercompany Asset Transfers. Promptly
upon the occurrence thereof, notice of the transfer of any
assets from any Credit Party to any other Consolidated
Company that is not a Credit Party in any transaction or
series of related transactions where either the book value or
the fair market value of such assets is greater than
$2,500,000 (excluding sales or other transfers of assets in
the ordinary course of business); and
(xiv) Other Information. With reasonable promptness,
such other information about the Consolidated Companies as
the Servicer or any Participant may reasonably request from
time to time.
(h) Financial Covenants.
(i) Fixed Charge Coverage. Maintain, during the
period set forth below, a Fixed Charge Coverage Ratio greater
than the ratio set forth opposite such period, measured as of
the last day of each fiscal quarter during such period for
the immediately preceding four quarters ending on such date:
Applicable Period Ratio
Closing Date
through Fiscal Year End 1997 1.75:1.00
First day of Fiscal Year
1998 and thereafter 2.00:1.00
(ii) Consolidated Funded Debt to Total Capitalization.
Maintain at all times, measured as of the last day of each
fiscal quarter of the Sponsor, a ratio of Consolidated Funded
Debt to Total Capitalization of less than 0.60:1.0.
(iii) Consolidated Net Worth. Maintain at all times
Consolidated Net Worth in an amount not less than the sum of
(i) $180,000,000.00, plus (ii) the greater of (x) $0, and (y)
fifty percent (50%) of the Consolidated Net Income (Loss)
earned by Sponsor during the period commencing on June 2,
1996 and ending on the last day of the fiscal quarter of the
Sponsor immediately preceding the date of any calculation
hereof (with such period calculated as a single accounting
period and taking into account 100% of all losses during such
period), plus (iii) an amount equal to 100% of the Net
Proceeds of all issuances of stock, warrants, Subordinated
Debt, or other equity of the Sponsor issued following the
date hereof.
(i) Notices Under Certain Other Indebtedness. Immediately
upon its receipt thereof, Sponsor shall furnish the Servicer with a
copy of any notice received by it or any other Consolidated Company
from the holder(s) of Indebtedness referred to in Section 6.2(a)
(ii), (iii), (vi), (vii) or (ix) (or from any trustee, agent,
attorney, or other party acting on behalf of such holder(s)) in an
amount which, in the aggregate, exceeds $2,500,000, where such
notice states or claims (x) the existence or occurrence of any
default or event of default with respect to such Indebtedness under
the terms of any indenture, loan or credit agreement, debenture,
note, or other document evidencing or governing such Indebtedness,
or (y) the existence or occurrence of any event or condition which
requires or permits holder(s) of any Indebtedness to exercise
rights under any Change in Control Provision.
(j) Additional Credit Parties and Collateral. Promptly
after (i) the formation or acquisition of any Material Subsidiary
not listed on Schedule 5.1(m), (ii) the transfer of assets to any
Consolidated Company if notice thereof is required to be given
pursuant to Section 6.1(g)(xii) and as a result thereof the
recipient of such assets becomes a Material Subsidiary, or (iii)
the occurrence of any other event creating a new Material
Subsidiary, Sponsor shall cause to be executed and delivered a
Guaranty Agreement from each such Material Subsidiary, together
with related corporate authorization documents, organizational
documents, secretary's certificates and opinions, all in form and
substance satisfactory to the Servicer and the Required
Participants.
VI.2 Negative Covenants
The Sponsor covenants and agrees that so long as the Commitment
remains outstanding or any Loans remain outstanding or the Sponsor
has any obligations under the Operative Documents, it will not
allow its Subsidiaries, without the prior written consent of the
Required Participants to:
(a) Indebtedness. Create, incur, assume, guarantee, suffer
to exist or otherwise become liable on or with respect to, directly
or indirectly, any Indebtedness, other than:
(i) Indebtedness of the Sponsor under this Agreement
and of the Material Subsidiaries of Sponsor pursuant to the
Guaranty Agreement;
(ii) Indebtedness outstanding or incurred on the
Closing Date and described on Schedule 6.2(a);
(iii) purchase money Indebtedness to the extent secured
by a Lien permitted by Section 6.2(a)(ii) or Indebtedness of
a Person acquired by the Sponsor to the extent secured by a
Lien permitted by Section 6.2(a)(viii);
(iv) unsecured current liabilities (other than
liabilities for borrowed money or liabilities evidenced by
promissory notes, bonds or similar instruments) incurred in
the ordinary course of business and either (x) not more than
30 days past due, or (y) being disputed in good faith by
appropriate proceedings with reserves for such disputed
liability maintained in conformity with GAAP;
(v) Indebtedness of Sponsor or any of its
Subsidiaries under (x) Interest Rate Contracts, or (y) to the
extent constituting Indebtedness, the LIBOR Lease
Transaction;
(vi) Subordinated Debt of the Sponsor (but not
Subsidiaries of the Sponsor);
(vii) Guarantees of advances to officers and employees
in the ordinary course of business, or Guarantees otherwise
disclosed to and approved in writing by the Servicer and the
Required Participants;
(viii) Endorsements of instruments for deposit or
collection in the ordinary course of business; and
(ix) Other unsecured Indebtedness of the Sponsor (but
not Subsidiaries of the Sponsor) (other than Guarantees)
which does not result in a Unmatured Credit Event or an
Credit Event pursuant hereto.
(b) Liens. Create, incur, assume or suffer to exist any
Lien on any of its property now owned or hereafter acquired to
secure any Indebtedness other than:
(i) Liens existing on the Closing Date and disclosed
on Schedule 6.2(b);
(ii) any Lien on any property and proceeds thereof
securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the acquisition cost of such
property and any refinancing thereof, provided that such Lien
does not extend to any other property (other than the
proceeds of such property) including any Lien arising
pursuant to the LIBOR Lease Transaction;
(iii) Liens for taxes not yet due, and Liens for taxes
or Liens imposed by ERISA which are being contested in good
faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with
GAAP;
(iv) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
Liens imposed by law and created in the ordinary course of
business for amounts not yet due or which are being contested
in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance
with GAAP;
(v) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of
borrowed money);
(vi) zoning, easements and restrictions on the use of
real property which do not materially impair the use of such
property;
(vii) rights in property reserved or vested in any
governmental authority which do not materially impair the use
of such property; and
(viii) any Lien existing on property of a Person
immediately prior to its being consolidated with or merged
into the Sponsor or into any Consolidated Company, or any
Lien existing on any property acquired by any Consolidated
Company at the time such property is so acquired (whether or
not the Indebtedness secured thereby shall have been
assumed), provided that (x) no such Lien shall have been
created or assumed in contemplation of consolidation or
merger or such Person's becoming a Consolidated Company or
such acquisition of property and (y) each such Lien shall at
all times be confined solely to the item or items of property
so acquired and, if required by the terms of the instruments
originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection
with such acquired property;
provided that, the aggregate amount of Indebtedness secured by
Liens permitted pursuant to this Section 6.2(b), excluding
Indebtedness, if any arising pursuant to LIBOR Lease Transaction,
shall at no time exceed 15% of the Consolidated Net Worth of the
Sponsor calculated as of the last day of the most recently ended
fiscal quarter of the Sponsor.
(c) Mergers, Sales, Etc. (A) Merge or consolidate with any
other Person, except that this Section 6.2(c) shall not apply to
(i) any merger or consolidation of Sponsor with any other Person
provided that the Sponsor is the surviving corporation after such
merger or consolidation, (ii) any merger or consolidation of any of
the Sponsor's Subsidiaries with any other Person provided that any
such Subsidiary shall be the surviving corporation after such
merger or consolidation or (iii) any merger between Subsidiaries of
Sponsor, and (B) sell, lease, transfer or otherwise dispose of its
accounts, property or other assets (including capital stock of any
Subsidiary of Sponsor), except that this Section 6.2(c) shall not
apply to (i) any sale, lease, transfer or other disposition of
assets of any Subsidiary of the Sponsor to the Sponsor or any of
its Material Subsidiaries, (ii) sales of inventory in the ordinary
course of business of the Sponsor and its Subsidiaries,
(iii) disposition of equipment or inventory determined in good
faith to be obsolete or unusable by the Sponsor or its
Subsidiaries, or (iv) any other sale of the Sponsor's assets during
the term of this Agreement with an aggregate book value, when
aggregated with all other such sales since March 6, 1996, not
exceeding 7.5% of the aggregate book value of all of the Sponsor's
assets on the date of such transfer; provided, however, that no
transaction pursuant to clause (A), clause (B)(i) or clause (b)(iv)
above shall be permitted if any Unmatured Credit Event or Credit
Event exists at the time of such transaction or would exist as a
result of such transaction.
(d) Investments, Loans, Etc. Make, permit or hold any
Investments in any Person, or otherwise acquire or hold any
Subsidiaries, other than:
(i) Investments in Subsidiaries of Sponsor existing
as of March 6, 1996 and Investments in Franchisees arising
out of the guarantee of Loans hereunder;
(ii) Investments in the stock or other assets of any
other Person that is engaged in a business permitted by
Section 6.2(h) hereof that, as a result of such Investment,
becomes a Subsidiary of Sponsor (other than Hostile
Acquisitions); provided, however, that the aggregate amount
of Investments made pursuant to this subsection (ii) shall
not exceed, during the term of this Agreement, a total value
of ten percent (10%) of the Consolidated Net Worth of the
Sponsor as calculated on the last day of the most recently
ended fiscal quarter of the Sponsor;
(iii) marketable direct obligations of the United
States or any agency thereof, or obligations guaranteed by
the United States or any agency thereof, in each case
supported by the full faith and credit of the United States
and maturing within one year from the date of creation
thereof;
(iv) Investments received in settlement of
Indebtedness created in the ordinary course of business;
(v) marketable direct obligations issued by any state
of the United States of America or any political subdivision
of any such state or any public instrumentality thereof, the
interest from which is exempt from Federal income taxes,
maturing within one year from the date of acquisition thereof
and either having as at any date of determination the one of
the two highest ratings obtainable from either Standard &
Poor's or Moody's;
(vi) unsecured commercial paper, the interest from
which is exempt from Federal income taxes, maturing no more
than 270 days from the date of creation and having as at any
date of determination either the highest rating obtainable
from either Standard & Poor's or Moody's;
(vii) commercial paper issued by corporations, each of
which has a consolidated net worth of not less than
$500,000,000, and conducts a substantial portion of its
business in the United States of America, maturing no more
than 365 days from the date of acquisition thereof and having
as at any date of determination the highest rating obtainable
from either Standard & Poor's or Moody's; and
(viii) money market or similar depository
accounts, certificates of deposit or bankers acceptances, in
each case redeemable upon demand or maturing within one year
from the date of acquisition thereof, issued by commercial
banks incorporated under the laws of the United States of
America or any state thereof or the District of Columbia,
provided (x) each such bank has at any date of determination
combined capital and surplus of not less than $1,000,000,000
and a rating of its long-term debt of at least A by
Standard & Poor's or at least A by Moody's or a long-term
deposit rating of at least A issued by Standard & Poor's or
at least A issued by Moody's, (y) the aggregate amount of all
such certificates of deposit issued by such bank are fully
insured at all times by the Federal Deposit Insurance
Company;
provided however, notwithstanding the foregoing, the Sponsor and
any Subsidiary may continue to own any Investment which (A)
complied with the provisions of clauses (f), (g) or (h) at the time
such Investment was made and (B) at any date of determination does
not so comply solely because (x) such Investment no longer has the
rating required from Standard & Poor's or Moody's or (y) the bank
having the money market or depository account or issuing the
certificate of deposit or bankers acceptance ceases to have the
required level of capital and surplus or to have a rating of its
long-term debt of at least A by Standard & Poor's or at least A by
Moody's or to have a long-term deposit rating of at least A by
Standard & Poor's or at least A by Moody's, if, and for so long as,
in the good faith judgment of the relevant Executive Officer, no
loss of the principal amount of such Investment would occur as the
result of the Sponsor or such Subsidiary continuing to own such
Investment to maturity. Nothing contained in the foregoing proviso
shall be deemed to be applicable to any new or renewed Investment
at the time such Investment is made or renewed.
(e) Letters of Credit. Create, incur, issue, assume,
guarantee, suffer to exist or otherwise become liable on or with
respect to, directly or indirectly, letters of credit where the
maximum amount available to be drawn under all such letters of
credit would exceed, at any one time outstanding, $50,000,000 in
the aggregate.
(f) Sale and Leaseback Transactions. Sell or transfer any
property, real or personal, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other
property which any Consolidated Company intends to use for
substantially the same purpose or purposes as the property being
sold or transferred; provided that, the Consolidated Companies
shall be permitted to sell or transfer property and rent or lease
such property or other property back so long as the aggregate
market value of such property sold or transferred during the term
of this Agreement does not exceed $5,000,000.
(g) Transactions with Affiliates.
(i) Enter into any transaction or series of related
transactions which in the aggregate would be material,
whether or not in the ordinary course of business, with any
Affiliate of any Consolidated Company (but excluding any
Affiliate which is also a wholly-owned Subsidiary of Sponsor
and any compensation arrangement with an officer or director
of the Sponsor or any other Consolidated Company entered into
in the ordinary course of business), other than on terms and
conditions substantially as favorable to such Consolidated
Company as would be obtained by such Consolidated Company at
the time in a comparable arm's-length transaction with a
Person other than an Affiliate.
(ii) Convey or transfer to any other Person
(including any other Consolidated Company) any real property,
buildings, or fixtures used in the manufacturing or
production operations of any Consolidated Company, or convey
or transfer to any other Consolidated Company any other
assets (excluding conveyances or transfers in the ordinary
course of business) if at the time of such conveyance or
transfer any Credit Event or Unmatured Credit Event exists or
would exist as a result of such conveyance or transfer.
(h) Changes in Business. Enter into or engage in any
business which is substantially different from the business engaged
in by the Sponsor and its Subsidiaries on the Closing Date.
(i) ERISA. Take or fail to take any action with respect to
any Plan of any Consolidated Company or, with respect to its ERISA
Affiliates, any Plans which are subject to Title IV of ERISA or to
continuation health care requirements for group health plans under
the Tax Code, including without limitation (i) establishing any
such Plan, (ii) amending any such Plan (except where required to
comply with applicable law), (iii) terminating or withdrawing from
any such Plan, or (iv) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, or any
withdrawal liability under Title IV of ERISA with respect to any
such Plan, which together with any other action or omission
referred to in this Section 6.2(i) (taken as a whole) would have a
Materially Adverse Effect, without first obtaining the written
approval of the Required Participants.
(j) Limitation on Payment Restrictions Affecting
Consolidated Companies. Create or otherwise cause or suffer to
exist or become effective, any consensual encumbrance or
restriction on the ability of any Consolidated Company to (i) pay
dividends or make any other distributions on any stock of a
Subsidiary of the Sponsor, or (ii) pay any intercompany debt owed
to Sponsor or any other Consolidated Company, or (iii) transfer any
of its property or assets to Sponsor or any other Consolidated
Company, except any consensual encumbrance or restriction existing
as of the Closing Date.
(k) Actions Under Certain Documents. Without the prior
written consent of the Required Participants (i) modify, amend,
cancel or rescind any agreements or documents evidencing or
governing Subordinated Debt or intercompany debt, (ii) make any
payment with respect to Subordinated Debt, except that current
interest accrued on such Subordinated Debt as of the date of this
Agreement and all interest subsequently accruing thereon (whether
or not paid currently) may be paid unless a Credit Event or
Unmatured Credit Event has occurred and is continuing, (iii)
voluntarily prepay any portion of intercompany debt, or (iv) amend
or revise the Sharing Agreements so as to materially increase the
liabilities or obligations of the Consolidated Companies
thereunder.
(l) Changes in Fiscal Year. Change the calculation of the
Fiscal Year of the Sponsor.
(m) Issuance of Stock by Subsidiaries. Permit any
Subsidiary (either directly or indirectly by the issuance of rights
or options for, or securities convertible into such shares) to
issue, sell or dispose of any shares of its stock of any class
(other than directors' qualifying shares, if any) except to the
Sponsor or another Subsidiary.
VII. CREDIT EVENT
VII.1 Credit Events.
In the event that:
(a) Payments. Sponsor shall fail to pay any amount due and
payable hereunder on the due date thereof and, if such amount is
with respect to interest or fees, such nonpayment continues for
three (3) days thereafter;
(b) Covenants Without Notice. Sponsor shall fail to
observe or perform any covenant or agreement contained in Sections
6.1(a), 6.1(e), 6.1(g), 6.1(h), 6.1(i) or Section 6.2;
(c) Other Covenants. Sponsor shall fail to observe or
perform any covenant or agreement contained in this Agreement,
other than those referred to in subsection (a) and (b) above, if
capable of being remedied, such failure shall remain unremedied for
30 days after the earlier of (i) Sponsor's obtaining knowledge
thereof, or (ii) written notice thereof shall have been given to
Sponsor by Servicer or any Participant;
(d) Representations. Any representation or warranty made
or deemed to be made by Sponsor or any other Credit Party or by any
of its officers under this Agreement or any other Operative
Document (including the Schedules attached thereto), or any
certificate or other document submitted to the Servicer or the
Participants by any such Person pursuant to the terms of this
Agreement or any other Operative Document, shall be incorrect in
any material respect when made or deemed to be made or submitted.
(e) Non-Payments of Other Indebtedness. Any Consolidated
Company shall fail to make when due (whether at stated maturity, by
acceleration, on demand or otherwise, and after giving effect to
any applicable grace period) any payment of principal of or
interest on any Indebtedness (other than Indebtedness hereunder)
exceeding $2,500,000 individually or in the aggregate.
(f) Defaults Under Other Agreements; Change In Control
Provisions. (a) Any Consolidated Company shall fail to observe or
perform any covenants or agreements (whether or not waived)
contained in any agreements or instruments relating to any of its
Indebtedness exceeding $2,500,000 individually or in the aggregate,
or any other event shall occur if the effect of such failure or
other event is to accelerate, or with notice or passage of time or
both, to permit the holder of such Indebtedness or any other Person
to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a
regularly scheduled required prepayment) in whole or in part prior
to its stated maturity; or (b) any event or condition shall occur
or exist which, pursuant to the terms of any Change in Control
Provision, requires or permits the holder(s) of the Indebtedness
subject to such Change in Control Provision to require that such
Indebtedness be redeemed, repurchased, defeased, prepaid or repaid,
in whole or in part, or the maturity of such Indebtedness to be
accelerated;
(g) Bankruptcy. The Sponsor or any Material Subsidiary
shall commence a voluntary case concerning itself under the
Bankruptcy Code or applicable foreign bankruptcy laws; or an
involuntary case for bankruptcy is commenced against Sponsor or any
Material Subsidiary and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) or similar
official under applicable foreign bankruptcy laws is appointed for,
or takes charge of, all or any substantial part of the property of
the Sponsor or any Material Subsidiary; or the Sponsor or any
Material Subsidiary commences proceedings of its own bankruptcy or
to be granted a suspension of payments or any other proceeding
under any reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction, whether now or hereafter in effect, relating
to the Sponsor or any Material Subsidiary or there is commenced
against the Sponsor or any Material Subsidiary any such proceeding
which remains undismissed for a period of 60 days; or the Sponsor
or any Material Subsidiary is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or
proceeding is entered; or the Sponsor or any Material Subsidiary
suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Sponsor or any Material
Subsidiary makes a general assignment for the benefit of creditors;
or the Sponsor or any Material Subsidiary shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay,
its debts generally as they become due; or the Sponsor or any
Material Subsidiary shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; or the
Sponsor or any Material Subsidiary shall by any act or failure to
act indicate its consent to, approval of or acquiescence in any of
the foregoing; or any corporate action is taken by the Sponsor or
any Material Subsidiary for the purpose of effecting any of the
foregoing;
(h) ERISA. A Plan of either a Consolidated Company or of
any of its ERISA Affiliates which is subject to Title IV of ERISA:
(i) shall fail to be funded in accordance with the
minimum funding standard required by applicable law, the
terms of such Plan, Section 412 of the Tax Code or Section
302 of ERISA for any plan year or a waiver of such standard
is sought or granted with respect to such Plan under
applicable law, the terms of such Plan or Section 412 of the
Tax Code or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject
of termination proceedings under applicable law or the terms
of such Plan; or
(iii) shall require a Consolidated Company to provide
security under applicable law, the terms of such Plan,
Section 401 or 412 of the Tax Code or Section 306 or 307 of
ERISA; or
(iv) results in a liability to a Consolidated Company
under applicable law, the terms of such Plan, or Title IV of
ERISA;
and there shall result from any such failure, waiver, termination
or other event described in clauses (i) through (iv) above a
liability to the PBGC or a Plan that would have a Materially
Adverse Effect;
(i) Judgments. Judgments or orders for the payment of
money in excess of $2,500,000 individually or in the aggregate or
otherwise having a Materially Adverse Effect shall be rendered
against Sponsor or any other Consolidated Company and such judgment
or order shall continue unsatisfied (in the case of a money
judgment) and in effect for a period of 30 days during which
execution shall not be effectively stayed or deferred (whether by
action of a court, by agreement or otherwise);
(j) Ownership of Credit Parties. If Sponsor shall at any
time fail to own and control the shares of Voting Stock of any
Guarantor which it owned or controlled at the time such Guarantor
became a Credit Party hereunder other than due to sale of the
Voting Stock of such Guarantor permitted pursuant to Section 6.2(c)
hereof;
(k) Change in Control of Sponsor. Any person or group
(within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) shall become the owner,
beneficially or of record, of shares representing more than thirty
percent (30%) of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Sponsor.
(l) Default Under Other Operative Documents; Sharing
Agreements. (x) There shall exist or occur any default as provided
under the terms of any other Operative Document, or any Operative
Document ceases to be in full force and effect or the validity or
enforceability thereof is disaffirmed by or on behalf of Sponsor or
any other Credit Party, or at any time it is or becomes unlawful
for Sponsor or any other Credit Party to perform or comply with its
obligations under any Operative Document, or the obligations of
Sponsor or any other Credit Party under any Operative Document are
not or cease to be legal, valid and binding on Sponsor or any such
Credit Party or (y) any party to the Sharing Agreements shall
default with respect to its covenants or obligations thereunder
where such default results in a Materially Adverse Effect with
respect to the Credit Parties;
then upon the occurrence and continuation of any such event (each, a
"Credit Event"):
the Servicer may, and upon the written request of the Required
Participants, shall, take any or all of the following actions, without
prejudice to the rights of the Servicer or any Participant to enforce its
claims against Sponsor, any other Credit Party, any Borrower or other
obligor with respect to any Loan: (i) declare the Commitment terminated,
whereupon the Commitment shall terminate immediately and any commitment
fee shall forthwith become due and payable without any other notice of
any kind; (ii) demand that the Sponsor purchase specified or all
outstanding Loans and Loan Commitments by paying to the Servicer the Loan
Indebtedness of each such Loan and assuming the Servicer's obligations
thereunder; whereupon such amount shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Sponsor; provided, that, if a Credit Event
specified in Section 7.1(g) shall occur, the result which would occur
upon the giving of notice by the Servicer to any Credit Party, shall
occur automatically without the giving of any such notice, and (iii) may
exercise any other rights or remedies available under the Operative
Documents, at law or in equity. In addition, the Servicer may, and upon
the written request of the Required Participants, shall (x) cease funding
further Advances pursuant to the Loan Commitments and (y) declare all
Loan Indebtedness thereunder to be immediately due and payable in
accordance with the terms of the Loan Documents and exercise all rights
and remedies provided under the Loan Documents; provided that, the
Servicer shall not take the actions authorized under clause (y) unless
the Sponsor has failed to honor its obligation to pay the entire Loan
Indebtedness demanded by the Servicer (or deemed demanded) within ten
(10) Business Days.
VIII. GUARANTY
In addition to its obligations to repurchase the Loans upon the
occurrence of a Credit Event and its other obligations hereunder,
the Sponsor hereby agrees as follows:
VIII.1 Unconditional Guaranty.
The Sponsor hereby unconditionally and irrevocably guarantees to
the Servicer, each Participant and any permitted assignee thereof,
the full and prompt payment of all Guaranteed Obligations and all
costs, charges and expenses (including reasonable attorneys' fees)
actually incurred or sustained by the Servicer or any Participant
in enforcing the obligations of the Sponsor hereunder. If any
portion of the Guaranteed Obligations is not paid when due, Sponsor
hereby agrees to and will immediately pay same, without resort by
Servicer or any Participant to any other person or party. The
obligation of Sponsor to Servicer and each Participant hereunder is
primary, absolute and unconditional. This is a guaranty of payment
and not of collection.
The obligation of the Sponsor pursuant to this Article VIII with
respect to the Limited Guaranty Pool shall be limited, as of any
date of determination, to an amount (the "Maximum Amount") equal to
the greater of (a) fifty percent (50%) of the aggregate outstanding
principal amount of the Limited Guaranty Pool on such date (after
giving effect to any payments, recoveries on Collateral or other
recoveries made by the Servicer or any Participant on such date
with respect to the Loans or the Limited Guaranty Pool), (b) three
(3) times the largest aggregate outstanding Loan, and (c)
$10,000,000; provided that, the Maximum Amount shall not on any
date of determination exceed the outstanding principal amount of
the Loans comprising the Limited Guaranty Pool. As a material
inducement to the Servicer's and each Participant's entering into
this Agreement, the parties hereto expressly agree that the Maximum
Amount shall be redetermined (and the obligation of the Sponsor to
pay such replenished Maximum Amount shall be enforceable by the
Servicer and the Participants hereunder) on each day that any Loan
Indebtedness remains outstanding regardless of (i) the date on
which any such Loan remaining outstanding became a Defaulted Loan,
(ii) any previous payments made by the Sponsor hereunder on any
prior date, whether or not constituting the Maximum Amount payable
on such prior date, or (iii) the number of prior demands made by
the Servicer or the Participants hereunder.
The foregoing limitation shall not in any way limit the obligation
of the Sponsor with respect to the Guaranteed Obligations relating
to the Fully Guaranteed Pool or any obligation of the Sponsor to
purchase the Loans upon the occurrence of a Credit Event.
VIII.2 Continuing Guaranty.
The obligations of the Sponsor pursuant to this Article VIII
constitute a guarantee which is continuing in nature and shall be
effective with respect to the full amount outstanding under all
Guaranteed Obligations, now existing or hereafter made or extended,
regardless of the amount, subject only to the limitations set forth
in the preceding Section 8.1.
VIII.3 Waivers.
The Sponsor hereby waives notice of Servicer's and each
Participant's acceptance of this Agreement and the creation,
extension or renewal of any Loans or other Guaranteed Obligations.
Sponsor hereby consents and agrees that, at any time or times,
without notice to or further approval from Sponsor, and without in
any way affecting the obligations of Sponsor hereunder, Servicer
and the Participants may, with or without consideration (i)
release, compromise with, or agree not to sue, in whole or in part,
any Borrower or any other obligor, guarantor, endorser or surety on
any Loans or any other Guaranteed Obligations, (ii) renew, extend,
accelerate, or increase or decrease the principal amount of any
Loans or other Guaranteed Obligations, either in whole or in part,
(iii) amend, waive, or otherwise modify any of the terms of any
Loans or other Guaranteed Obligations or of any mortgage, deed of
trust, security agreement, or other undertaking of any of the
Borrowers or any other obligor, endorser, guarantor or surety in
connection with any Loans or other Guaranteed Obligations, and (iv)
apply any payment received from Borrowers or from any other
obligor, guarantor, endorser or surety on the Loans or other
Guaranteed Obligations to any of the liabilities of Borrowers or of
such other obligor, guarantor, endorser, or surety which Servicer
may choose.
VIII.4 Additional Actions.
Sponsor hereby consents and agrees that the Servicer may at any
time or times, either with or without consideration, surrender,
release or receive any property or other Collateral of any kind or
nature whatsoever held by it or for its account securing any Loans
or other Guaranteed Obligations, or substitute any Collateral so
held by Servicer for other Collateral of like or different kind,
without notice to or further consent from Sponsor, and such
surrender, receipt, release or substitution shall not in any way
affect the obligations of Sponsor hereunder. Servicer shall have
full authority to adjust, compromise, and receive less than the
amount due upon any such Collateral, and may enter into any accord
and satisfaction agreement with respect to the same as Servicer may
deem advisable without affecting the obligations of Sponsor
hereunder. Servicer shall be under no duty to undertake to collect
upon such Collateral or any part thereof, and Sponsor's obligations
hereunder shall not be affected by Servicer's alleged negligence or
mistake in judgment in handling, disposing of, obtaining, or
failing to collect upon or perfect a security interest in, any such
Collateral.
VIII.5 Additional Waivers.
Sponsor hereby waives presentment, demand, protest, and notice of
dishonor of any of the liabilities guaranteed hereby. Neither
Servicer nor any Participant shall have any duty or obligation (i)
to proceed or exhaust any remedy against any Borrower, any other
obligor, guarantor, endorser, or surety on any Loans or other
Guaranteed Obligations, or any other security held by Servicer or
any Participant for any Loans or other Guaranteed Obligations, or
(ii) to give any notice whatsoever to Borrowers, Sponsor, or any
other obligor, guarantor, endorser, or surety on any Loans or other
Guaranteed Obligations, before bringing suit, exercising rights to
any such security or instituting proceedings of any kind against
Sponsor, any Borrower, or any of them, and Sponsor hereby waives
any requirement for such actions by Servicer or any Participant.
Upon default by any Borrower and Servicer's demand to Sponsor
hereunder, Sponsor shall be held and bound to Servicer and each
Participant directly as principal debtor in respect of the payment
of the amounts hereby guaranteed, such liability of Sponsor being
joint and several with each Borrower and all other obligors,
guarantors, endorsers and sureties on the Loans or other Guaranteed
Obligations.
VIII.6 Postponement of Obligations.
Until the Loan and other Guaranteed Obligations of any Borrower to
the Servicer and the Participants have been paid in full (i) all
present and future indebtedness of such Borrower to Sponsor is
hereby postponed to the present and future indebtedness of such
Borrower to Servicer and each Participant, and all monies received
from such Borrower or for its account by Sponsor with respect to
such indebtedness shall be received in trust for Servicer and the
Participants, and promptly upon receipt, shall be paid over to
Servicer for distribution to the Participants in accordance
herewith until such Borrower's indebtedness to Servicer and the
Participants is fully paid and satisfied, all without prejudice to
and without in any way affecting the obligations of Sponsor
hereunder; provided that unless and until the occurrence of a Loan
Default or Loan Payment Default, the Sponsor may accept and retain
any payments made by any Borrower to the Sponsor in the ordinary
course of business, and (ii) Sponsor shall not have any rights of
subrogation or otherwise to participate in any security held by the
Servicer for any Loan to such Borrower or any other Guaranteed
Obligations arising therefrom, and Sponsor hereby waives such
rights until such time as such Loan and other Guaranteed
Obligations have been paid in full to the Servicer and each
Participant (whether by repurchase by the Sponsor, pursuant to this
Article VIII or otherwise).
VIII.7 Effect on additional Guaranties.
The obligations of the Sponsor pursuant to this Article VIII are in
addition to, and are not intended to supersede or be a substitute
for any other guarantee, suretyship agreement, or instrument which
Servicer may hold in connection with any Loans or other Guaranteed
Obligations.
VIII.8 Reliance on Guaranty and Purchase Obligation; Disclaimer of
Liability.
Sponsor expressly acknowledges and agrees that each of the Servicer
and the Participants, in making its credit decision with regard to
the funding of the Loans, will rely solely upon the guaranty and
purchase obligation of Sponsor set forth above and in Article VII
and that neither the Servicer nor any Participant is under any
obligation or duty to perform any credit analysis or investigation
with regard to the creditworthiness of any Borrower. In addition,
the Servicer expressly disclaims any responsibility or liability
for the authenticity of signatures on any of the Loan Documents
(other than the Servicer's), the authority of the Persons executing
the Loan Documents (other than the Servicer) or the enforceability
or compliance with laws of any of the Loan Documents.
SPONSOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT SPONSOR'S
OBLIGATIONS TO PURCHASE LOANS UNDER THIS AGREEMENT ARE ABSOLUTE AND
UNCONDITIONAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SPONSOR'S OBLIGATION SHALL NOT BE AFFECTED BY THE EXISTENCE OF ANY
DEFAULT BY ANY BORROWER UNDER THE APPLICABLE LOAN DOCUMENTS, ANY
EXCHANGE, RELEASE OR NONPERFECTION OF ANY LIEN WITH RESPECT TO ANY
COLLATERAL SECURING PAYMENT OF ANY LOAN, THE SUBSTITUTION OR
RELEASE OF ANY ENTITY PRIMARILY OR SECONDARILY LIABLE FOR ANY LOAN,
ANY LACK OF ENFORCEABILITY OF ANY LOAN DOCUMENT, ANY LAW,
REGULATION, OR ORDER OF ANY JURISDICTION AFFECTING ANY LOAN OR LOAN
DOCUMENT OR THE RIGHTS OF THE HOLDER THEREOF, ANY CHANGE IN THE
CONDITION OR PROSPECTS OF THE BORROWER, INCLUDING WITHOUT
LIMITATION, INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDING, OR ANY OTHER CIRCUMSTANCE WHICH MIGHT, BUT FOR THE
PROVISIONS OF THIS PARAGRAPH, CONSTITUTE A LEGAL OR EQUITABLE
DISCHARGE OF SPONSOR'S OBLIGATIONS HEREUNDER. SPONSOR'S OBLIGATIONS
HEREUNDER SHALL NOT BE AFFECTED BY ANY SET-OFF OR CLAIM WHICH IT
MIGHT HAVE AGAINST THE SERVICER OR ANY PARTICIPANT, WHETHER ARISING
OUT OF THIS AGREEMENT OR OTHERWISE.
VIII.9 Reinstatement of Obligations.
The obligations of the Sponsor pursuant to the Operative Documents
shall continue to be effective or be reinstated, as the case may
be, if at any time payment or any part thereof, of principal of,
interest on or any other amount with respect to any Loan or any
obligation of Sponsor pursuant to the Operative Documents is
rescinded or must otherwise be restored by the Servicer or any
Participant upon the bankruptcy or reorganization of Sponsor, any
Borrower or any guarantor or otherwise.
VIII.10 Right to Bring Separate Action.
Nothing contained in this Article VIII shall be construed to affect
any other right that Sponsor may otherwise have under this
Agreement, or any Operative Document, at law or in equity to
institute an action or assert a claim against the Servicer or any
Participant based upon a breach of Servicer's or such
Participant's obligations set forth in the Operative Documents or
to assert a compulsory counterclaim with respect thereto and any
waiver of notice or other matter set forth in this Article VIII
shall not affect Sponsor's right to seek damages arising from the
failure of the Servicer to give such notice otherwise required by
the terms of the Operative Documents.
IX. INDEMNIFICATION
IX.1 Indemnification.
(a) In addition to the other rights of the Servicer and the
Participants hereunder, Sponsor hereby agrees to protect, indemnify
and save harmless the Servicer, each Participant, and the officers,
directors, shareholders, employees, agents and representatives
thereof (each an "Indemnified Party") from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs (including, without limitation, reasonable
attorney's fees and costs actually incurred), expenses or
disbursements of any kind or nature whatsoever, whether direct,
indirect, consequential or incidental, with respect to or in
connection with or arising out of (i) the execution and delivery of
this Agreement, any other Operative Document or any agreement or
instrument contemplated hereby or thereby, including without
limitation, the Loan Documents, the performance by the parties
hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated
hereby, (ii) the making or administration of the Loan Commitments,
the Loans or any of them, including any violation of federal or
state usury or other laws, provided that with respect to clauses
(i) and (ii), Sponsor shall have no obligation to indemnify the
Servicer and all Participants for more than one (1) counsel's
reasonable fees and expenses, (iii) the enforcement, performance
and administration of this Agreement or the Loan Documents or any
powers granted to the Servicer hereunder or under any Loan
Documents, (iv) any misrepresentation of the Sponsor hereunder,
(v) any matter arising pursuant to any Environmental Laws as a
result of the Collateral or (vi) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory,
whether or not the Indemnified Party is a named party thereto,
except to the extent that such losses, claims, damages, liabilities
or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnified
Party.
(b) This indemnity shall survive the termination of this
Agreement.
IX.2 Notice Of Proceedings; Right To Defend
(a) Any Person with an indemnification claim (or potential claim)
pursuant to Section 9.1 ("Potential Indemnitee") agrees to
notify Sponsor (the "Potential Indemnitor") in writing within
a reasonable time after receipt by it of written notice of
the commencement of any administrative, legal or other
proceeding, suit or action by a Person (other than Indemnitee
or an affiliate thereof), if a claim for indemnification may
be made by the Potential Indemnitee against the Potential
Indemnitor under this Article IX.
(b) Following receipt by the Potential Indemnitor of any such
notice from a Potential Indemnitee, (an "Indemnity Notice"),
the Potential Indemnitor shall be entitled at its own cost
and expense to investigate and participate in the proceeding,
suit or action referred to in the Indemnity Notice. At such
time as the Potential Indemnitor shall have acknowledged in
writing to the Potential Indemnitee that it will pay any
judgment, damages, or losses incurred by the Potential
Indemnitee in the proceeding, suit or action referred to in
the Indemnity Notice other than those for gross negligence or
willful misconduct on the part of the Potential Indemnitee
(at which time the "Potential Indemnitor" shall be deemed to
be the "Indemnitor" and the "Potential Indemnitee" shall be
deemed to be the "Indemnitee"), the Indemnitor shall be
entitled, to the extent that it shall desire, to assume the
defense of such proceeding, suit or action, with counsel
reasonably satisfactory to the Indemnitee. If the Indemnitor
shall so assume the defense of such proceeding, suit or
action, the Indemnitor shall conduct such defense with due
diligence and at its own cost and expense.
(c) In the event that the Indemnitor so assumes the defense of
such proceeding, suit or action, the Indemnitor shall not be
entitled to settle such proceeding, suit or action without
the written consent of the Indemnitee, provided that in the
event that the Indemnitee does not consent to such settlement
not to be unreasonably withheld or delayed (i) the
Indemnitor's indemnification liability in connection with
such proceeding, suit or action shall not exceed the amount
of such proposed settlement and (ii) Indemnitee shall assume
and pay all costs and expenses, including reasonable
attorneys' fees, incurred by Indemnitor from the date that
the Indemnitor presented the Indemnitee the terms of the
proposed settlement. An Indemnitor shall not be liable to an
Indemnitee for any settlement of a claim in any proceeding,
suit or other action referred to in an Indemnity Notice,
consented to by the Indemnitee without the consent of the
Indemnitor.
(d) A Potential Indemnitor shall be liable to a Potential
Indemnitee for a settlement of a claim in any proceeding,
suit or other action referred to in an Indemnity Notice
consented to by such Potential Indemnitee only if (i) such
Potential Indemnitor first had a reasonable opportunity to
investigate such claim and participate in such proceeding,
suit or action, (ii) the Potential Indemnitee gave the
Potential Indemnitor at least ten (10) Business Days notice
of the proposed terms of such settlement prior to entering
into such settlement and (iii) the Potential Indemnitor did
not acknowledge in writing to the Potential Indemnitee, by
the expiration of such ten (10) Business Days period, or such
longer period as may be agreed to by the Potential Indemnitee
and Potential Indemnitor that it would pay any judgment,
damages or losses incurred by the Potential Indemnitee in
such proceeding suit or action.
IX.3 Third Party Beneficiaries
No Persons shall be deemed to be third party beneficiaries of this
Agreement. Except as expressly otherwise provided in this
Agreement, this Agreement is solely for the benefit of Sponsor and
the Servicer, the Participants and their respective successors and
permitted assigns, and no other Person shall have any right,
benefit, priority or interest under, or because of the existence
of, this Agreement.
X. SURVIVAL OF LOAN FACILITY
The terms of this Loan Facility Agreement shall survive the
termination of the Commitment hereunder and the termination of any Loan
Commitment established pursuant the terms hereof until the indefeasible
payment in full of each of the Loans outstanding hereunder and Article IX
hereof shall survive the termination of this Agreement upon such
repayment.
XI. CONDITIONS PRECEDENT
The obligation of the Servicer to establish the initial Loan
Commitment pursuant to this Agreement is subject to satisfaction of the
following conditions:
XI.1 Receipt of Documents.
The Servicer shall have received the following, each dated as of
the date of this Agreement, in form and substance satisfactory to
the Servicer and (except in the case of the Servicing Agreement and
the Fee Letter) the Participants:
(a) Duly executed counterparts of this Agreement.
(b) Duly executed counterparts of the Servicing Agreement
and the Fee Letter.
(c) Duly executed counterparts of the Guaranty Agreement.
(d) Copies of the organizational papers of Sponsor and each
Guarantor, certified as true and correct by the Secretaries of
State of their respective States of incorporation, and certificates
from the Secretaries of State of such States of incorporation
certifying Sponsor's and each Guarantor's good standing as a
corporation in such State.
(e) A certificate of the Secretary or Assistant Secretary
of each of Sponsor and each Guarantor certifying (i) the names and
true signatures of the officers of Sponsor and each Guarantor
authorized to execute the Guaranty Agreement, this Agreement, the
Servicing Agreement and the other Operative Documents to be
delivered hereunder to which each is a party, (ii) the bylaws of
Sponsor and each Guarantor, respectively, and (iii) the resolutions
of the Board of Directors of each of Sponsor and each Guarantor,
respectively, approving the Operative Documents to which each is a
party and the transactions contemplated hereby.
(f) A favorable written opinion of Powell, Goldstein,
Frazer & Murphy, counsel for Sponsor and Guarantor, in a form
satisfactory to the Servicer and each Participant and covering such
matters relating to the transactions contemplated hereby as the
Servicer may reasonably request.
(g) All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and
all documents incident hereto or delivered in connection therewith
shall be satisfactory in form and substance to the Servicer and the
Participants.
(h) In addition, each of the Participants shall have
received a duly executed Participation Certificate from the
Servicer.
XII. THE SERVICER
XII.1 Appointment of Servicer as Agent.
To the extent of its ownership interest in the Loans, each
Participant hereby designates Servicer as its agent to administer
all matters concerning the Loans and to act as herein specified.
Each Participant hereby irrevocably authorizes the Servicer to take
such actions on its behalf under the provisions of this Agreement,
the other Operative Documents, and all other instruments and
agreements referred to herein or therein, and to exercise such
powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Servicer by the terms
hereof and thereof and such other powers as are reasonably
incidental thereto. The Servicer may perform any of its duties
hereunder by or through its agents or employees.
XII.2 Nature of Duties of Servicer.
The Servicer shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Operative
Documents. None of the Servicer nor any of its respective
officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful
misconduct. The Servicer shall not have by reason of this
Agreement a fiduciary relationship in respect of any Participant;
and nothing in this Agreement, express or implied, is intended to
or shall be so construed as to impose upon the Servicer any
obligations in respect of this Agreement or the other Operative
Documents except as expressly set forth herein.
XII.3 Lack of Reliance on the Servicer.
(a) Independently and without reliance upon the Servicer,
each Participant, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the
financial condition and affairs of the Credit Parties in connection
with the taking or not taking of any action in connection herewith,
and (ii) its own appraisal of the creditworthiness of the Credit
Parties, and, except as expressly provided in this Agreement, the
Servicer shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Participant with any credit
or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times
thereafter.
(b) The Servicer shall not be responsible to any
Participant for any recitals, statements, information,
representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this
Agreement, the Guaranty Agreement, and Loan Document or any other
documents contemplated hereby or thereby, or the financial
condition of the Credit Parties or any Borrower, or be required to
make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement, the
Guaranty Agreement or the other documents contemplated hereby or
thereby, or the financial condition of the Credit Parties or any
Borrower, or the existence or possible existence of any Unmatured
Credit Event or Credit Event.
XII.4 Certain Rights of the Servicer.
If the Servicer shall request instructions from the Required
Participants with respect to any action or actions (including the
failure to act) in connection with this Agreement, the Servicer
shall be entitled to refrain from such act or taking such act,
unless and until the Servicer shall have received instructions from
the Required Participants; and the Servicer shall not incur
liability in any Person by reason of so refraining. Without
limiting the foregoing, no Participant shall have any right of
action whatsoever against the Servicer as a result of the Servicer
acting or refraining from acting hereunder in accordance with the
instructions of the Required Participants.
XII.5 Reliance by Servicer.
The Servicer shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message,
cable gram, radiogram, order or other documentary, teletransmission
or telephone message believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person. The
Servicer may consult with legal counsel (including counsel for any
Credit Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
XII.6 Indemnification of Servicer.
To the extent the Servicer is not reimbursed and indemnified by the
Credit Parties, each Participant will reimburse and indemnify the
Servicer, ratably according to the respective Pro Rata Shares, in
either case, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Servicer in performing its
duties hereunder, in any way relating to or arising out of this
Agreement or the other Operative Documents; provided that no
Participant shall be liable to the Servicer for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
the Servicer's gross negligence or willful misconduct.
XII.7 The Servicer in its Individual Capacity.
With respect to its obligations under this Agreement and the
amounts advanced by it, the Servicer shall have the same rights and
powers hereunder as any other Participant and may exercise the same
as though it were not performing the duties specified herein; and
the terms "Participants", "Required Participants", or any similar
terms shall, unless the context clearly otherwise indicates,
include the Servicer in its individual capacity. The Servicer may
accept deposits from, lend money to, and generally engage in any
kind of banking, trust, financial advisory or other business with
the Consolidated Companies or any affiliate of the Consolidated
Companies as if it were not performing the duties specified herein,
and may accept fees and other consideration from the Consolidated
Companies for services in connection with this Agreement and
otherwise without having to account for the same to the
Participants.
XII.8 Holders of Participation Certificates.
The Servicer may deem and treat the payee of any Participation
Certificate as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall
have been filed with the Servicer. Any request, authority or
consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any
Participation Certificate shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Participation
Certificate or of any Participation Certificate or Certificates
issued in exchange therefor.
XIII. MISCELLANEOUS
XIII.1 Notices.
All notices, requests and other communications to any party
hereunder shall be in writing (including bank wire, telex, telecopy
or similar teletransmission or writing) and shall be given to such
party at its address or applicable teletransmission number set
forth on the signature pages hereof, or such other address or
applicable teletransmission number as such party may hereafter
specify by notice to the Servicer and Sponsor. Each such notice,
request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number specified
in this Section and the appropriate answerback is received, (ii) if
given by mail, 72 hours after such communication is deposited in
the mails with first class postage prepaid, addressed as aforesaid,
(iii) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified in this Section and the appropriate
confirmation is received, or (iv) if given by any other means
(including, without limitation, by air courier), when delivered or
received at the address specified in this Section; provided that
notices to the Servicer shall not be effective until received.
XIII.2 Amendments, Etc.
No amendment or waiver of any provision of this Agreement or the
other Operative Documents, nor consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Participants
(and in the case of any amendment, the applicable Credit Party),
and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given;
provided that no amendment, waiver or consent shall, unless in
writing and signed by all the Participants do any of the following:
(i) waive any of the conditions specified in Section 2.1 or 11.1,
(ii) increase the Participating Commitments or contractual
obligations of the Participants to Servicer or Sponsor under this
Agreement, (iii) reduce the principal of, or interest on, the
Participation Certificates or any fees hereunder, (iv) postpone any
date fixed for the payment in respect of principal of, or interest
on, the Participation Certificates or any fees hereunder, (v) agree
to release any Guarantor from its obligations under any Guaranty
Agreement or the Sponsor from its obligations pursuant to
Article VIII, (vi) modify the definition of "Required
Participants," or (vii) modify Article IV, Article VIII or this
Section 13.2. Notwithstanding the foregoing, no amendment, waiver
or consent shall, unless in writing and signed by the Servicer in
addition to the Participants required hereinabove to take such
action, affect the rights or duties of the Servicer under this
Agreement or under any other Operative Document or Loan Document.
In addition, notwithstanding the foregoing, the Servicer and the
Sponsor may, without the consent of or notice to the Participants,
enter into amendments, modifications or waivers with respect to the
Servicing Agreement and the Fee Letter as long as such amendments
or modifications do not conflict with the terms of this Agreement.
XIII.3 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Servicer or any Participant
in exercising any right or remedy hereunder or under any other
Operative Document, and no course of dealing between any Credit
Party and the Servicer or any Participant shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or
remedy hereunder or under any other Operative Document preclude any
other or further exercise thereof or the exercise of any other
right or remedy hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Servicer or any Participant would
otherwise have. No notice to or demand on any Credit Party not
required hereunder or under any other Operative Document in any
case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver
of the rights of the Servicer or the Participants to any other or
further action in any circumstances without notice or demand.
XIII.4 Payment of Expenses, Etc. Sponsor shall:
(i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable, out-of-
pocket costs and expenses of the Servicer in the
administration (both before and after the execution hereof
and including reasonable expenses actually incurred relating
to advice of counsel as to the rights and duties of the
Servicer and the Participants with respect thereto) of, and
in connection with the preparation, execution and delivery
of, preservation of rights under, enforcement of, and, after
a Unmatured Credit Event or Credit Event, refinancing,
renegotiation or restructuring of, this Agreement and the
other Operative Documents and the documents and instruments
referred to therein, and any amendment, waiver or consent
relating thereto (including, without limitation, the
reasonable fees actually incurred and disbursements of
counsel for the Servicer), and in the case of enforcement of
this Agreement or any Operative Document after an Credit
Event, all such reasonable, out-of-pocket costs and expenses
(including, without limitation, the reasonable fees actually
incurred and reasonable disbursements and changes of
counsel), for any of the Participants; and
(ii) Pay and hold the Servicer and each of the
Participants harmless from and against any and all present
and future stamp, documentary, and other similar Taxes with
respect to this Agreement, the Participation Certificates,
the Loan Documents and any other Operative Documents, any
collateral described therein, or any payments due thereunder,
and save the Servicer and each Participant harmless from and
against any and all liabilities with respect to or resulting
from any delay or omission to pay such Taxes.
XIII.5 Right of Setoff.
In addition to and not in limitation of all rights of offset that
any Participant may have under applicable law, each Participant
shall, upon the occurrence of any Credit Event and whether or not
such Participant has made any demand or any Credit Party's
obligations have matured, have the right to appropriate and apply
to the payment of any Credit Party's obligations hereunder and
under the other Operative Documents, all deposits of any Credit
Party (general or special, time or demand, provisional or final)
then or thereafter held by and other indebtedness or property then
or thereafter owing by such Participant or other holder to any
Credit Party, whether or not related to this Agreement or any
transaction hereunder.
XIII.6 Benefit of Agreement; Assignments; Participations.
(a) This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that Sponsor may not assign
or transfer any of its interest hereunder without the prior written
consent of the Participants.
(b) Any Participant may make, carry or transfer Loans
at, to or for the account of, any of its branch offices or the
office of an Affiliate of such Participant.
(c) Each Participant may assign all of its interests,
rights and obligations under this Agreement (including all of its
Participating Commitments and the Funded Participant's Interest at
the time owing to it and the Participation Certificates held by it)
to any Eligible Assignee; provided, however, that (i) the Sponsor
has given its prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed) unless such
assignment is an Affiliate of the assigning Participant or unless a
Credit Event has occurred and is continuing hereunder, (ii) the
amount of the Participating Commitment of the assigning Participant
subject to each assignment (determined as of the date the
assignment and acceptance with respect to such assignment is
delivered to the Servicer) shall not be less than the entire
Participating Commitment of such assignor and (iii) the parties to
each such assignment shall execute and deliver to the Servicer an
Assignment and Acceptance, together with the Participation
Certificate subject to such assignment and, unless such assignment
is to an Affiliate of such Participant, a processing and
recordation fee of $2,500. Within ten (10) Business Days after
receipt of the notice and the Assignment and Acceptance, Servicer
shall execute and deliver, in exchange for the surrendered
Participation Certificate, a new Participation Certificate to the
order of such assignee in a principal amount equal to the
applicable Participating Commitment assumed by it pursuant to such
Assignment and Acceptance. Such new Participation Certificate
shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Participation Certificate,
shall be dated the date of the surrendered Participation
Certificate which it replaces, and shall otherwise be in
substantially the form attached hereto.
(d) Each Participant may, without the consent of
Sponsor or the Servicer, sell participations to one or more banks
or other entities in all or a portion of its rights and obligations
under this Agreement (including all or a portion of its
Participating Commitment and the Funded Participant's Interest
owing to it), provided, however, that (i) no Participant may sell a
participation in its Participating Commitment (after giving effect
to any permitted assignment hereof) unless it retains an aggregate
exposure of 50% of its original Participating Commitment, provided,
however, sales of participations to an Affiliate of such
Participant shall not be included in such calculation; provided,
however, no such maximum amount shall be applicable to any such
participation sold at any time there exists an Credit Event
hereunder, (ii) such Participant's obligations under this Agreement
shall remain unchanged, (iii) such Participant shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and (iv) the participating bank or other entity shall
not be entitled to the benefit (except through its selling
Participant) of the cost protection provisions contained in Article
II of this Agreement, and (v) Sponsor, Servicer and the other
Participants shall continue to deal solely and directly with each
Participant in connection with such Participant's rights and
obligations under this Agreement and the other Operative Documents,
and such Participant shall retain the sole right to enforce the
obligations of Sponsor relating to the Loans and to approve any
amendment, modification or waiver of any provisions of this
Agreement (other than an amendment requiring approval of 100% of
the Participants). Each Participant shall promptly notify in
writing the Servicer and the Sponsor of any sale of a participation
hereunder and shall certify to Sponsor and Servicer its compliance
with the terms hereof.
(e) Any Participant or participant may, in connection
with the assignment or participation or proposed assignment or
participation, pursuant to this Section, disclose to the assignee
or participant or proposed assignee or participant any information
relating to Sponsor or the other Consolidated Companies furnished
to such Participant by or on behalf of Sponsor or any other
Consolidated Company. With respect to any disclosure of
confidential, non-public, proprietary information, such proposed
assignee or participant shall agree to use the information only for
the purpose of making any necessary credit judgments with respect
to this credit facility and not to use the information in any
manner prohibited by any law, including without limitation, the
securities laws of the United States. The proposed participant or
assignee shall agree not to disclose any of such information except
(i) to directors, employees, auditors or counsel to whom it is
necessary to show such information, each of whom shall be informed
of and shall acknowledge the confidential nature of the
information, (ii) in any statement or testimony pursuant to a
subpoena or order by any court, governmental body or other agency
asserting jurisdiction over such entity, or as otherwise required
by law (provided prior notice is given to Sponsor and the Servicer
unless otherwise prohibited by the subpoena, order or law), and
(iii) upon the request or demand of any regulatory agency or
authority with proper jurisdiction. The proposed participant or
assignee shall further agree to return all documents or other
written material and copies thereof received from any Participant,
the Servicer or Sponsor relating to such confidential information
unless otherwise properly disposed of by such entity.
(f) Any Participant may at any time assign all or any
portion of its rights in this Agreement to a Federal Reserve Bank;
provided that no such assignment shall release the Participant from
any of its obligations hereunder.
XIII.7 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT MAY BE BROUGHT IN THE
SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE
STATE OF GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE
NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, SPONSOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE
TRIAL BY JURY, AND SPONSOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS.
(c) SPONSOR HEREBY IRREVOCABLY DESIGNATES PRENTICE HALL
CORPORATION, ATLANTA, GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL
AGENT TO RECEIVE, FOR AND ON BEHALF OF SPONSOR, SERVICE OF PROCESS
IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO. IT
IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL
AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE
SERVER OF SUCH PROCESS BY MAIL TO SPONSOR AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF SPONSOR TO RECEIVE
SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
SPONSOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SPONSOR AT ITS SAID ADDRESS, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the Servicer,
any Participant, or any Credit Party to serve process in any other
manner permitted by law or to commence legal proceedings or
otherwise proceed against Sponsor in any other jurisdiction.
XIII.8 Counterparts.
This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument.
XIII.9 Severability.
In case any provision in or obligation under this Agreement or the
other Operative Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the
validity, legality and enforceability of the remaining provisions
or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
XIII.10 Independence of Covenants.
All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitation of, another covenant, shall
not avoid the occurrence of a Unmatured Credit Event or an Credit
Event if such action is taken or condition exists.
XIII.11 Change in Accounting Principles, Fiscal Year or Tax Laws.
If (i) any preparation of the financial statements referred to in
Section 6.1(g) hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American Institute of
Certified Public Accounts (or successors thereto or agencies with
similar functions) result in a material change in the method of
calculation of financial covenants, standards or terms found in
this Agreement, (ii) there is any change in Sponsor's fiscal
quarter or Fiscal Year, or (iii) there is a material change in
federal tax laws which materially affects any of the Consolidated
Companies' ability to comply with the financial covenants,
standards or terms found in this Agreement, Sponsor and the
Required Participants agree to enter into negotiations in order to
amend such provisions so as to equitably reflect such changes with
the desired result that the criteria for evaluating any of the
Consolidated Companies' financial condition shall be the same after
such changes as if such changes had not been made. Unless and
until such provisions have been so amended, the provisions of this
Agreement shall govern.
XIII.12 Headings Descriptive; Entire Agreement.
The headings of the several sections and subsections of this
Agreement are inserted for convenience only and shall not in any
way affect the meaning or construction of any provision of this
Agreement. This Agreement, the other Operative Documents, and the
agreements and documents required to be delivered pursuant to the
terms of this Agreement constitute the entire agreement among the
parties hereto and thereto regarding the subject matters hereof and
thereof and supersede all prior agreements, representations and
understandings related to such subject matters.
[Signatures Set Forth on Next Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
Address for Notices: RUBY TUESDAY, INC.
4271 Morrison Drive
P. O. Box 160266-0001
Mobile, Alabama 36625
By:______________________________
Attention: J. Russell Mothershed Title:
Telecopy: (205) 344-9513
[CORPORATE SEAL]
STATE OF GEORGIA
COUNTY OF _____________
Signed, sealed and delivered
in the presence of:
_____________________________
Notary Public
Date Executed by Notary:
_____________________________
My commission expires:
______________________________
[NOTARIAL SEAL]
Address for Notices: SUNTRUST BANK, ATLANTA, as
Servicer
25 Park Place, N.E.
Atlanta, Georgia 30303
Attention: Center No. 113
By:______________________________
Telecopy No. (404) 724-3716 Title:
with a copy to:
By:______________________________
F. M. Clell Deaver, III Title:
25 Park Place
24th Floor
Atlanta, Georgia 30303
Address for Notices: SUNTRUST BANK, ATLANTA
25 Park Place, N.E.
Atlanta, Georgia 30303
Attention: Center No. 113 By:
Telecopy No.: (404) 724-3716 Name:
Title:
with a copy to:
F. M. Clell Deaver, III By:
25 Park Place Name:
24th Floor Title:
Atlanta, Georgia 30303
Participating Commitment: $8,750,000.00
Pro Rata Share: 25%
Address for Notices: AMSOUTH BANK OF ALABAMA
63 South Royal Street
Commercial Lending Department
Second Floor By:
Mobile, Alabama 36602 Title:
Attention: J. Walters Ginn
Telecopy: (334) 438-8377
Participating Commitment: $4,666,666.67
Pro Rata Share: 13.333%
Address for Notices: WACHOVIA BANK OF GEORGIA,
N.A.
191 Peachtree Street, N.W.
Atlanta, Georgia 30303
Attention: Leif Murphy
Telecopy: (404) 332-5016
By:
Title:
Participating Commitment: $4,666,666.67
Pro Rata Share: 13.333%
Address for Notices: FIRST AMERICAN NATIONAL BANK
First American Center
4th and Union
Nashville, TN 37237-0310 By:
Attention: Russell S. Rogers Title:
Telecopy: (615) 748-6072
Participating Commitment: $4,666,666.67
Pro Rata Share: 13.333%
Address for Notices: BARNETT BANK, N.A.
50 North Laura Street
17th Floor By:
Jacksonville, Florida 32202 Title:
Attention: Melinda J. Lemen
Telecopy: (904) 791-7023
Participating Commitment: $4,666,666.67
Pro Rata Share: 13.333%
Address for Notices: HIBERNIA NATIONAL BANK
313 Carondelet Street
New Orleans, LA 70130
Attention: Troy Villaffara By:
Telecopy: (504) 533-5344 Title:
Participating Commitment: $4,666,666.66
Pro Rata Share: 13.333%
Address for Notices: FIRST TENNESSEE BANK
800 South Gay Street
Knoxville, TN 37901
Attention: John Fisher By:
Telecopy: (423) 971-2883 Title:
Participating Commitment: $2,916,666.66
Pro Rata Share: 8.333%
