SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): JANUARY 7, 1998
ADVANTICA RESTAURANT GROUP, INC.
(Exact Name of registrant as specified in its charter)
DELAWARE 0-18051 13-3487402
(State or other jurisdiction (Commission File No.) (I.R.S. Employer Identifi-
of incorporation) cation No.)
203 EAST MAIN STREET, SPARTANBURG, SC 29319-9966
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 597-8000
Former name or former address, if changed
since last report: FLAGSTAR COMPANIES, INC.
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Pursuant to the Joint Plan described and defined in Item 5 below, as of
January 7, 1998, the Joint Plan's effective date (the "Effective Date"), the
Registrant's existing equity securities were cancelled and new common stock of
the Registrant was authorized and issued to holders of certain classes of debt
securities of the Registrant in exchange for such debt securities. As a result
of such exchange, the classes of debt security holders described below in Item
5, acquired control of the Registrant while former holders of the Registrant's
equity securities relinquished control of the Registrant as of the Effective
Date.
ITEM 5. OTHER EVENTS
As of the Effective Date, the Registrant closed certain transactions in
connection with the Joint Plan of Reorganization (the "Joint Plan") of Flagstar
Companies, Inc. ("FCI") and its wholly-owned subsidiary, Flagstar Corporation
("Flagstar"), dated July 11, 1997 (the "Petition Date"), amended November 7,
1997 and confirmed by order of the United States Bankruptcy Court for the
District of South Carolina entered November 12, 1997, pursuant to Chapter 11 of
Title 11 of the United States Code. In conjunction with such closing, the Joint
Plan became effective.
Material features of the Joint Plan are as follows:
(i) on the Effective Date, Flagstar merged with and into FCI. FCI was
the surviving corporation in the merger and changed its name, as of the
Effective Date, to Advantica Restaurant Group, Inc.
("Advantica").
(ii) general unsecured claims of FCI and Flagstar remained
unimpaired.
(iii) Flagstar's 10 7/8% Senior Notes due 2002 (the "10 7/8% Senior
Notes" and 10 3/4% Senior Notes due 2001 (the "10 3/4% Senior Notes"
and together with the 10 7/8% Senior Notes the "Old Senior Notes") were
cancelled, extinguished and retired as of the Effective Date. Each
holder of the 10 7/8% Senior Notes and 10 3/4% Senior Notes, in
exchange for such Old Senior Notes, is entitled to receive $1,065.55
and $1,087.49, respectively, in principal amount (representing 100% of
the principal of and accrued interest on the Old Senior Notes through
the Effective Date) of Advantica's 11 1/4% Senior Notes due 2008 (the
"Advantica Senior Notes"), per $1,000 principal amount of Old Senior
Notes.
(iv) Flagstar's 11.25% Senior Subordinated Debentures due 2004 (the
"11.25% Debentures") and 11 3/8% Senior Subordinated Debentures due
2003 (the "11 3/8% Debentures" and together with the 11.25% Debentures,
the "Senior Subordinated Debentures") were cancelled, extinguished and
retired as of the Effective Date. Each holder of
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the 11.25% Debentures and the 11 3/8% Debentures, in exchange for the
unpaid principal and accrued interest amounts of such Senior
Subordinated Debentures, is entitled to receive, 44.986 and 45.614
shares, respectively, of Advantica's common stock, par value $0.01 per
share (the "Advantica Common Stock"), per $1,000 principal amount of
the Senior Subordinated Debentures.
(v) Flagstar's 10% Convertible Junior Subordinated Debentures due 2014
(the "10% Convertible Debentures") were cancelled, extinguished and
retired as of the Effective Date. Each holder of the 10% Convertible
Debentures, in exchange for the unpaid principal and accrued interest
amounts of the 10% Convertible Debentures, is entitled to receive,
both (1) 18.134 shares of Advantica Common Stock and (2) warrants to
purchase 40.298613 shares of Advantica Common Stock (the "Advantica
Common Stock Warrants"), per $1,000 principal amount of the 10%
Convertible Debentures.
(vi) Flagstar Companies, Inc. $2.25 Series A Cumulative Convertible
Exchangeable Preferred Stock and FCI's $.50 par value common stock were
cancelled, extinguished and retired as of the Effective Date, with the
holders of such securities receiving or retaining no property under the
Joint Plan.
(vii) a new board of directors of Advantica was elected and appointed
and began service as of the Effective Date.
(viii) as of the Effective Date, Advantica has (1) 100,000,000
authorized shares of $.01 par value common stock, 40,000,000 shares of
which are issued and outstanding, and (2) 25,000,000 authorized shares
of preferred stock. Ten percent (10%) of the Advantica Common Stock, on
a fully diluted basis, will be reserved for a new management stock
option program, in addition to 4,000,000 shares of Advantica Common
Stock reserved for issuance upon the exercise of Advantica Common Stock
Warrants. Such Warrants expire January 7, 2005.
Also, pursuant to the terms of the Joint Plan, on the Effective Date,
the Registrant entered into the following material agreements:
(i) A five-year, $200 million senior secured revolving credit facility
(the "Exit Facility") between certain subsidiaries of the Registrant,
as borrowers, the Registrant, as guarantor, and a syndicate of
financial institutions led by The Chase Manhattan Bank ("Chase"), to be
used for working capital and general corporate purposes. The Exit
Facility replaces the $200 million debtor-in-possession facility (the
"DIP Facility") between FCI, Flagstar, certain subsidiaries of
Flagstar, and Chase utilized during the Chapter 11 proceedings.
(ii) An Indenture, between Advantica and First Trust National
Association, as Trustee, governing the issuance of the Advantica
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Senior Notes.
(iii) A Warrant Agreement, between Advantica and Continental Stock
Transfer and Trust Company, governing the terms and the issuance of the
Advantica Common Stock Warrants.
(iv) A Registration Rights Agreement (the "Registration Rights
Agreement") with each Holder of 10% or more of the Advantica Common
Stock (a "Potentially Affiliated Holder") provides the Potentially
Affiliated Holders with certain shelf, demand and "piggy-back"
registration rights.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
Listed below are all Exhibits filed as a part of this current report.
Certain of the Exhibits to this current report, indicated by an asterisk, are
hereby incorporated by reference to other documents on file with the Commission,
to be a part hereof as of their respective dates.
Exhibit Number Description
*2.1 Joint Plan of Reorganization of Flagstar
Companies, Inc. and Flagstar, amended
November 7, 1997, and as confirmed by order
of the United States Bankruptcy Court for
the District of South Carolina filed
November 12, 1997 (incorporated by reference
to Exhibit 2.1 to Form 8-K, dated
November 12, 1997).
4.1 Indenture, dated as of January 7, 1998,
between Advantica and First Trust National
Association, as Trustee, relating to the
Advantica 11 1/4% Senior Notes Due 2008.
*4.2 Warrant Agreement, dated January 7, 1998,
between Advantica and Continental Stock
Transfer and Trust Company (incorporated by
reference to Exhibit 10.1 to Form 8-A, filed
January 7, 1998 with respect to the
Registrant's Common Stock Warrants).
*4.3 Registration Rights Agreement, dated as of
January 7, 1998, among Advantica and each
holder of registrable securities named
therein (incorporated by reference to Exhibit
10.1 to Form 8-A, filed January 7, 1998 with
respect to the Registrant's Common Stock).
10.1 Credit Agreement, dated January 7, 1998,
among Denny's, Inc., El Pollo Loco, Inc.,
Flagstar
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Enterprises, Inc., Flagstar Systems, Inc.,
and Quincy's Restaurants, Inc., as Borrowers,
Advantica, as a Guarantor, the Lenders named
therein, and The Chase Manhattan Bank, as
administrative agent.
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 hereunto duly authorized.
Advantica Restaurant Group, Inc.
By: /s/ Rhonda J. Parish
---------------------------------
Name: Rhonda J. Parish
Title: Senior Vice President, General
Counsel and Secretary
Date: January 15, 1998
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ADVANTICA RESTAURANT GROUP, INC.
AND
FIRST TRUST NATIONAL ASSOCIATION, Trustee
Indenture
Dated as of January 7, 1998
------------------------------------
$592,005,000
11-1/4% Senior Notes Due 2008
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TABLE OF CONTENTS
Page
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PARTIES........................................................................1
RECITALS
Authorization of Indenture............................................1
Form of Face of Security..............................................1
Form of Reverse of Security...........................................3
Form of Trustee's Certificate of Authentication.......................7
Compliance with Legal Requirements....................................7
Purpose of and Consideration for Indenture............................7
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined....................................8
Acquisition Indebtedness...................8
Adjusted Consolidated Net Worth............8
Affiliate..................................8
Agent ...................................8
Asset Segment..............................8
Bankruptcy Law.............................9
Board of Directors.........................9
Business Day...............................9
Business Segment...........................9
Capital Stock..............................9
Cash Equivalents...........................9
Code ..................................10
Commission................................10
Consolidated Fixed Charges................10
Consolidated Net Income...................10
Consolidated Net Worth....................11
Controlled Corporation EBITDA Amount......11
Corporate Trust Office....................11
Credit Agent..............................11
Credit Agreement..........................11
Default ..................................11
Disqualified Stock........................11
EBITDA ..................................12
Equity Interests..........................12
Event of Default..........................12
Excluded Property.........................12
Existing Indebtedness.....................12
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Fixed Charge Coverage Ratio...............12
FRD ..................................12
FRD Investment............................12
Holder, holder of Securities,
securityholder........................13
Indebtedness..............................13
Indenture.................................13
Interest Rate Agreement...................13
Investment................................13
Issuer ..................................13
Lien ..................................13
Mortgage Financing........................13
Mortgage Financing Proceeds...............13
Mortgage Refinancing......................14
Mortgage Refinancing Proceeds.............14
Net Income................................14
Net Proceeds..............................14
Obligations...............................14
OECD ..................................14
Officers' Certificate.....................15
Opinion of Counsel........................15
Outstanding...............................15
Permitted Investments.....................15
Plan ..................................15
Preferred Stock...........................16
principal.................................16
Remaining Section 355 Amount..............16
Responsible Officer.......................16
Restricted Investments....................16
Section 355 Percentage....................16
Section 355 Transaction...................16
Security or Securities....................17
Senior Indebtedness.......................17
Significant Subsidiary....................17
Specified Issuer EBITDA...................17
Subsidiary................................17
Trustee ..................................17
Trust Indenture Act of 1939...............17
Unrestricted Subsidiary...................18
Weighted Average Life to Maturity.........18
ARTICLE TWO
ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES
SECTION 2.1 Authentication and Delivery of Securities..........18
SECTION 2.2 Execution of Securities............................18
SECTION 2.3 Certificate of Authentication......................19
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SECTION 2.4 Form, Denomination and Date of Securities; Payments
of Interest....................................19
SECTION 2.5 Registration, Transfer and Exchange................20
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities.....................................21
SECTION 2.7 Cancellation of Securities; Destruction Thereof....21
SECTION 2.8 Temporary Securities...............................21
ARTICLE THREE
COVENANTS OF THE ISSUER AND THE TRUSTEE
SECTION 3.1 Payment of Principal and Interest..................22
SECTION 3.2 Offices for Payments, etc..........................22
SECTION 3.3 Appointment to Fill a Vacancy in Office of
Trustee........................................22
SECTION 3.4 Paying Agents......................................22
SECTION 3.5 Certificates to Trustee............................23
SECTION 3.6 Securityholder Lists...............................23
SECTION 3.7 Reports by the Issuer..............................24
SECTION 3.8 Reports by the Trustee.............................24
SECTION 3.9 Limitation on Restricted Payments..................24
SECTION 3.10 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries........... 27
SECTION 3.11 Limitation on Additional Indebtedness and Issuance
of Disqualified Stock..........................28
SECTION 3.12 Limitation on Transactions with Affiliates.........29
SECTION 3.13 Sale of Assets.....................................30
SECTION 3.14 Corporate Existence................................31
SECTION 3.15 Limitation on Liens................................32
SECTION 3.16 Issuer to Cause Certain Subsidiaries to Become
Guarantors.....................................33
SECTION 3.17 Investments in Unrestricted Subsidiaries...........34
SECTION 3.18 Offer to Redeem Upon Change of Control.............34
ARTICLE FOUR
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 4.1 Events of Default..................................35
SECTION 4.2 Acceleration.......................................37
SECTION 4.3 Other Remedies.....................................38
SECTION 4.4 Waiver of Defaults.................................38
SECTION 4.5 Control by Majority................................38
SECTION 4.6 Limitation on Suits................................38
SECTION 4.7 Rights of Holders to Receive Payment...............39
SECTION 4.8 Collection Suit by Trustee.........................39
SECTION 4.9 Trustee May File Proofs of Claim...................39
SECTION 4.10 Priorities.........................................40
SECTION 4.11 Undertaking for Costs..............................40
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ARTICLE FIVE
CONCERNING THE TRUSTEE
SECTION 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default......................40
SECTION 5.2 Certain Rights of the Trustee......................41
SECTION 5.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds
Thereof........................................42
SECTION 5.4 Trustee and Agents May Hold Securities;
Collections, etc...............................42
SECTION 5.5 Moneys Held by Trustee.............................42
SECTION 5.6 Compensation and Indemnification of Trustee and
Its Prior Claim................................43
SECTION 5.7 Right of Trustee to Rely on Officers'
Certificate, etc...............................43
SECTION 5.8 Persons Eligible for Appointment as Trustee........43
SECTION 5.9 Resignation and Removal; Appointment of Successor
Trustee........................................43
SECTION 5.10 Acceptance of Appointment by Successor Trustee.....44
SECTION 5.11 Merger, Conversion, Consolidation or Succession
to Business of Trustee.........................45
ARTICLE SIX
CONCERNING THE SECURITYHOLDERS
SECTION 6.1 Evidence of Action Taken by Securityholders........45
SECTION 6.2 Proof of Execution of Instruments and of Holding
of Securities: Record Date.....................46
SECTION 6.3 Holders to Be Treated as Owners....................46
SECTION 6.4 Securities Owned by Issuer Deemed Not Outstanding..46
SECTION 6.5 Right of Revocation of Action Taken................47
ARTICLE SEVEN
SUPPLEMENTAL INDENTURES
SECTION 7.1 Supplemental Indentures Without Consent of
Securityholders................................47
SECTION 7.2 Supplemental Indentures With Consent of
Securityholders................................48
SECTION 7.3 Effect of Supplemental Indenture...................49
SECTION 7.4 Documents to Be Given to Trustee...................49
SECTION 7.5 Notation on Securities in Respect of Supplemental
Indentures.....................................49
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.1 When Issuer May Merge, etc.........................49
SECTION 8.2 Successor Corporation Substituted..................50
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ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS; DEFEASANCE
SECTION 9.1 Satisfaction and Discharge of Indenture............51
SECTION 9.2 Application by Trustee of Funds Deposited for
Payment of Securities..........................51
SECTION 9.3 Repayment of Moneys Held by Paying Agent...........51
SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Three Years......................51
SECTION 9.5 Defeasance.........................................52
ARTICLE TEN
MISCELLANEOUS PROVISIONS
SECTION 10.1 Incorporators, Stockholders, Officers and Directors
of Issuer Exempt from Individual Liability.....53
SECTION 10.2 Provisions of Indenture for the Sole Benefit of
Parties and Securityholders....................53
SECTION 10.3 Successors and Assigns of Issuer Bound by
Indenture......................................53
SECTION 10.4 Notices and Demands on Issuer, Trustee and
Securityholders................................53
SECTION 10.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein.............54
SECTION 10.6 Payments Due on Saturdays, Sundays and Holidays....55
SECTION 10.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939..........................55
SECTION 10.8 New York Law to Govern.............................55
SECTION 10.9 Counterparts.......................................55
SECTION 10.10 Effect of Headings.................................55
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1 Right of Optional Redemption.......................55
SECTION 11.2 Notice of Redemption; Partial Redemptions..........56
SECTION 11.3 Payment of Securities called for Redemption........56
SECTION 11.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption...................57
SECTION 11.5 Offer to Redeem by Application of Net Proceeds.....57
SECTION 11.6 Provisions Governing Redemption Pursuant to
Change of Control Offer........................58
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THIS INDENTURE, dated as of January 7, 1998 between Advantica
Restaurant Group, Inc., a Delaware corporation (the "Issuer"), and First Trust
National Association, as Trustee (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer has duly authorized the issue of its
11-1/4% Senior Notes Due 2008 (the "Securities") and, to provide, among other
things, for the authentication, delivery and administration thereof, the Issuer
has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Securities and the Trustee's certificate of
authentication shall be in substantially the following form:
[FORM OF FACE OF SECURITY]
No. $
------ --------------------
ADVANTICA RESTAURANT GROUP, INC.
11-1/4% Senior Notes Due 2008
Advantica Restaurant Group, Inc., a Delaware corporation (the
"Issuer"), for value received hereby promises to pay to or registered assigns
the principal sum of Dollars at the Issuer's office or agency for said purpose
on January 15, 2008 in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts, and to pay interest, semi-annually on January 15 and July 15 of
each year, on said principal sum in like coin or currency at the rate per annum
set forth above at said office or agency from the January 15 or the July 15, as
the case may be, next preceding the date of this Security to which interest on
the Securities has been paid or duly provided for, unless the date hereof is a
date to which interest on the Securities has been paid or duly provided for, in
which case from the date of this Security, or unless no interest has been paid
or duly provided for on the Securities, in which case from January 8, 1998 until
payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after January 1 or July 1,
as the case may be, and before the following January 15 or July 15 this Security
shall bear interest from such January 15 or July 15; provided that if the Issuer
shall default in the payment of interest due on such January 15 or July 15, then
this Security shall bear interest from the next preceding January 15 or July 15
to which interest on the Securities has been paid or duly provided for, or, if
no interest has been paid or duly provided for on the Securities, from January
8, 1998. The interest so payable on any January 15 or July 15 will, except as
otherwise provided in the Indenture referred to on the reverse hereof, be paid
to the person in whose name this Security is registered at the close of business
on the January 1 or July 1 preceding such January 15 or July 15, whether or not
such day is a business day; provided that interest may be paid, at the option of
the Issuer, by mailing a check therefor payable to the registered holder
entitled thereto at his last address as it appears on the Security register or
by wire transfer to such holder.
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Reference is made to the further provisions set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Security shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the Trustee
acting under the Indenture.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed under its corporate seal.
Dated:
[Seal]
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[FORM OF REVERSE OF SECURITY]
Advantica Restaurant Group, Inc.
11-1/4% Senior Notes Due 2008
This Security is one of a duly authorized issue of debt
securities of the Issuer, limited to the aggregate principal amount of
$592,005,000 (except as otherwise provided in the Indenture mentioned below),
issued or to be issued pursuant to an indenture dated as of January 7, 1998 (the
"Indenture"), duly executed and delivered by the Issuer to First Trust National
Association, as Trustee (herein called the "Trustee"). Reference is hereby made
to the Indenture and all indentures supplemental thereto for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Issuer and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Securities.
If an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the Trustee or the holders of at least 30% (or
25% in the case of a default with respect to payment of principal of, premium,
if any, or interest on the Securities) in principal amount of the then
outstanding Securities may declare the principal amount of the Securities to be
due and payable immediately; provided, however, that if any Senior Indebtedness
(as defined in the Indenture) is outstanding pursuant to the Credit Agreement
(as defined in the Indenture), upon a declaration of acceleration, such
principal and interest shall be payable upon the earlier of (x) the day that is
five Business Days after the provision to the Issuer and the Credit Agent (as
defined in the Indenture) of such written notice unless such Event of Default
has been cured or waived prior to such date and (y) the date of acceleration of
any Senior Indebtedness under the Credit Agreement. In the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Securities become due and payable immediately without further action or notice.
The Indenture provides that in certain events a declaration of acceleration and
its consequences may be waived by the holders of a majority in aggregate
principal amount of the Securities then outstanding and that the holders of a
majority in aggregate principal amount of the Securities then outstanding may
waive any default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities. Any such consent or waiver by the holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Security and any Security
which may be issued in exchange or substitution herefor, whether or not any
notation thereof is made upon this Security or such other Securities.
The Indenture permits the Issuer and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the Securities at the time outstanding, evidenced as in the Indenture
provided, to execute supplemental indentures adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that no such supplemental indenture shall
(a) extend the final maturity of any Security, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or reduce the premium, if any, payable thereon, or reduce any amount payable on
the redemption thereof or impair or affect the rights of any securityholder to
institute suit for the payment thereof, or waive a default in the payment of
principal of, premium, if any, or interest on any Security, change the currency
of payment of principal of, premium, if any, or interest on any Security, or
modify any provision in the Indenture with respect to the priority
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of the Securities in right of payment without the consent of the holder of each
Security so affected; or (b) reduce the aforesaid percentage of Securities, the
consent of the holders of which is required for any such supplemental indenture,
without the consent of the holders of all Securities then outstanding.
The Securities are senior unsecured obligations of the Issuer
and will rank pari passu in right of payment to all Senior Indebtedness.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Security at the place, times, and rate, and in the
currency, herein prescribed.
The Securities are issuable only as registered Securities
without coupons in denominations of $1,000 and any multiple of $1,000 except as
otherwise required in order to effect the issuance of the Securities pursuant to
the Indenture in accordance with the terms of the Plan (as defined in the
Indenture).
At the office or agency of the Issuer referred to on the face
hereof and in the manner and subject to the limitations provided in the
Indenture, Securities may be exchanged for a like aggregate principal amount of
Securities of other authorized denominations.
Upon due presentment for registration of transfer of this
Security at the above-mentioned office or agency of the Issuer, a new Security
or Securities of authorized denominations, for a like aggregate principal
amount, will be issued to the transferee as provided in the Indenture.
Securities may be presented for registration of transfer in part only in
multiples of $1,000. No service charge shall be made for any such transfer, but
the Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
The Securities may not be redeemed, either in whole or in
part, prior to January 15, 2003. On and after January 15, 2003, the Securities
will be redeemable, in whole or in part, at the option of the Issuer, at the
redemption prices (expressed as percentages of the principal amount) set forth
below, plus accrued and unpaid interest, if any, to the redemption date, if
redeemed during the 12-month period beginning January 15 of the years indicated
below:
Year Percentage
2003..........................................................105.625%
2004..........................................................103.750%
2005..........................................................101.875%
2006 and thereafter...........................................100.000%
provided that, if the dated fixed for redemption is January 15 or July 15, then
the interest payable on such date shall be paid to the holder of record on the
next preceding January 1 or July 1.
Notwithstanding the foregoing, from January 15, 1998 until
January 15, 2001, the Issuer may redeem up to 35% of the aggregate principal
amount of Securities outstanding on the date of the Indenture at a redemption
price (expressed as a percentage of the principal amount) of 110%, plus
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accrued and unpaid interest, if any, to the redemption date from the net
proceeds of any public offering for cash of any equity securities of the Issuer
or any subsidiary thereof.
Notice of redemption shall be mailed at least 30 and not more
than 60 days prior to the date fixed for redemption to each holder of Securities
to be redeemed at his registered address. Securities may be redeemed in part
only in multiples of $1,000.
Subject to the terms of the Indenture, if the Issuer
consummates any Asset Sale or sells a Business Segment (as such terms are
defined in the Indenture), the Issuer shall be obligated to apply the net
proceeds thereof to one or more of the following in such combination as the
Issuer may choose: (i) an investment in another asset or business in the same
line of business as, or a line of business similar to that of, the Issuer and
its Subsidiaries, provided such investment occurs within 366 days of such Asset
Sale or sale of a Business Segment, (ii) an offer, expiring within 366 days of
such Asset Sale or such sale of a Business Segment, to redeem Securities at a
redemption price not less than 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the redemption date (a "Net Proceeds Offer") or
(iii) the prepayment of outstanding Senior Indebtedness within 366 days of such
Asset Sale or sale of a Business Segment; provided, however, that if the net
amount not invested pursuant to clause (i) or applied pursuant to clause (iii)
above to the prepayment of Senior Indebtedness is less than $15,000,000, the
Issuer shall not be further obligated to offer to redeem Securities pursuant to
clause (ii) above. Holders of Securities which are the subject of an offer to
redeem shall receive an offer to redeem from the Issuer prior to any related
redemption date, and may elect to have such Securities redeemed by completing
the form entitled "Option of Holder to Elect to Have Security Redeemed"
appearing below. Notwithstanding any provision of the Indenture to the contrary,
the Issuer may, for a period of 120 days after the last date on which holders of
Securities are permitted to elect to have their Securities redeemed in a Net
Proceeds Offer, use any Net Proceeds that were available to make such Net
Proceeds Offer but not used to redeem Securities pursuant thereto, to purchase,
redeem or otherwise acquire or retire for value securities of the Issuer ranking
junior in right of payment to the Securities at a price, stated as a percentage
of the principal or face amount of such junior securities, not greater than the
price, stated as a percentage of the principal amount of the Securities, offered
in the Net Proceeds Offer; provided that if the Net Proceeds Offer is for a
principal amount (the "Net Proceeds Offer Amount") of the Securities less than
the aggregate principal amount of the Securities then outstanding, then the Net
Proceeds available for use by the Issuer for such a purchase, redemption or
other acquisition or retirement for value of junior securities shall not exceed
the Net Proceeds Offer Amount.
Subject to payment by the Issuer (by deposit with the Trustee
or otherwise) of a sum sufficient to pay the amount due on redemption, interest
on this Security (or portion hereof if this Security is redeemed in part) shall
cease to accrue upon the date duly fixed for redemption of this Security (or
portion hereof if this Security is redeemed in part) and all rights of the
holder with respect to such redeemed Security (or portion thereof if this
Security is redeemed in part) hereunder or under the Indenture, except the right
to payment of amounts payable on such redemption, shall cease.
The Issuer, the Trustee, and any authorized agent of the
Issuer or the Trustee, may deem and treat the registered holder hereof as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon made by
anyone other than the Issuer or the Trustee or any authorized agent of the
Issuer or the Trustee), for the purpose of receiving payment of, or on account
of, the principal hereof and premium, if any, and, subject to the provisions on
the face hereof, interest hereon and for all other purposes, and neither the
Issuer nor the
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Trustee nor any authorized agent of the Issuer or the Trustee shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or premium, if any, or the interest on this Security, for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
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[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
First Trust National Association, as Trustee
--------------------------------------
Authorized Signatory
OPTION OF HOLDER TO ELECT TO HAVE SECURITY REDEEMED
If you have received a Net Proceeds Offer from the Issuer and
want to elect to have this Security redeemed by the Issuer pursuant to Section
11.5 of the Indenture, check the box: [ ]
If you have received a Change of Control Offer from the Issuer
and want to elect to have this Security redeemed by the Issuer pursuant to
Section 3.18 of the Indenture, check the box: [ ]
If you want to elect to have any part of this Security
redeemed by the Issuer pursuant to Section 3.18 of the Indenture, state the
amount: $_______________
Date:_________________ Your Signature: ______________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:_____________________________
AND WHEREAS, all things necessary to make the Securities, when
executed by the Issuer and authenticated and delivered by the Trustee as in this
Indenture provided, the valid, binding and legal obligations of the Issuer, and
to constitute these presents a valid indenture and agreement according to its
terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the holders thereof, the Issuer and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective holders from
time to time of the Securities as follows:
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ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms (except
as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section. All other
terms used in this Indenture which are defined in the Trust Indenture Act of
1939 or the definitions of which in the Securities Act of 1933 are referred to
in the Trust Indenture Act of 1939 (except as herein otherwise expressly
provided or unless the context otherwise clearly requires), shall have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture. All accounting terms
used herein and not expressly defined shall have the meanings given to them in
accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" shall mean such accounting principles
which are generally accepted at the date or time of any computation or at the
date hereof. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The terms defined in this Article include
the plural as well as the singular.
"Acquisition Indebtedness" means Indebtedness of any person
existing at the time such person becomes a Subsidiary of the Issuer (or at the
time such person is merged with or into a Subsidiary of the Issuer), excluding
Indebtedness of any Subsidiary of the Issuer (other than such person) incurred
in connection with, or in contemplation of, such person becoming a Subsidiary of
the Issuer.
"Adjusted Consolidated Net Worth" with respect to the Issuer
means, as of any date, the Consolidated Net Worth of the Issuer plus (i) the
respective amounts reported on the Issuer's most recent consolidated balance
sheet with respect to any preferred stock (other than Disqualified Stock) that
by its terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by the
Issuer upon issuance of such preferred stock or of securities converted into
such preferred stock, excluding (ii) any amount reflecting any equity adjustment
resulting from a foreign currency translation on a consolidated balance sheet of
the Issuer, but only to the extent not excluded in calculating Consolidated Net
Worth of the Issuer, plus (iii) any gain realized upon the sale or other
disposition of any Business Segments to the extent such gains do not exceed the
sum of the aggregate amount of any losses included (on a net after tax basis) in
the computation of Consolidated Net Worth, plus (iv) transaction fees and
expenses related to the Plan or any related transactions including amortization
thereof, but only to the extent such fees and expenses were included in
calculating Consolidated Net Worth of the Issuer.
"Affiliate" means any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Issuer. For the purposes of this definition, beneficial ownership of 10% or more
of the voting common equity of a person shall be deemed to be control unless
ownership of a lesser amount may be deemed to be control under the Trust
Indenture Act.
"Agent" means any registrar, paying agent or co-registrar for
the Securities.
"Asset Segment" means (i) Denny's Holdings, Inc., (ii) Spartan
Holdings, Inc., (iii) FRD, or (iv) any Subsidiary, group of Subsidiaries or
group of assets (other than inventory held for sale in the
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ordinary course of business) of the Issuer or its Subsidiaries which (A)
accounts for at least 20 percent of the total assets of the Issuer and its
Subsidiaries on a consolidated basis as of the end of the last fiscal quarter
immediately preceding the date for which such determination is being made or (B)
accounts for at least 20 percent of the income from continuing operations before
income taxes, extraordinary items and cumulative effects of changes in
accounting principles of the Issuer and its Subsidiaries on a consolidated basis
for the four full fiscal quarters immediately preceding the date for which such
calculation is being made.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means either the Board of Directors of
the Issuer or any committee of such Board duly authorized to act hereunder.
"Business Day" means a day which, in the city (or in any of
the cities if more than one) where amounts are payable in respect of the
Securities, as specified on the face of the form of Security recited above, is
neither a legal holiday nor a day on which banking institutions are authorized
by law or regulation to close.
"Business Segment" means (i) each of the Issuer's Significant
Subsidiaries, (ii) the capital stock of any of the Issuer's Subsidiaries or
(iii) any group of assets of the Issuer or any Subsidiary whether now owned or
hereafter acquired, provided, in each case, that the sale (other than the sale
of inventory in the ordinary course of business), lease, conveyance or other
disposition of such Significant Subsidiary, capital stock or group of assets, as
the case may be, either in a single transaction or group of related transactions
that are part of a common plan, results in Net Proceeds to the Issuer and its
Subsidiaries of $50 million or more.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock.
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit with a maturity date not more than one year from the
date of acquisition issued by any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 or a commercial
bank organized under the laws of any other country that is a member of the OECD
and having total assets in excess of $500,000,000 with a maturity date of not
more than one year from the date of acquisition, (iii) repurchase obligations
with a term of not more than 7 days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
the parent corporation of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 and commercial paper issued
by others rated at least A-2 or the equivalent thereof by Standard & Poor's
Corporation or at least P-2 or the equivalent thereof by Moody's Investors
Service, Inc. and in each case maturing within one year after the date of
acquisition and (v) investments in money market funds substantially all of whose
assets comprise securities of the types described in clauses (i) through (iv)
above.
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"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Commission" means the Securities and Exchange Commission.
"Consolidated Fixed Charges" means, with respect to any person
for a given period, consolidated interest expense of such person and its
consolidated Subsidiaries to the extent deducted in computing Consolidated Net
Income (including, without limitation, amortization of original issue discount
and non-cash interest payments, all net payments and receipts in respect of
Interest Rate Agreements and the interest component of capital leases, but
excluding deferred financing costs existing immediately after the date hereof or
incurred in connection with the Plan and amortization thereof) plus the amount
of all cash dividend payments on any series of preferred stock of such person;
provided that if, during such period (i) such person or any of its Subsidiaries
shall have made any asset sales (other than, in the case of the Issuer and its
Subsidiaries, sales of the Capital Stock of, or any assets of, Unrestricted
Subsidiaries), Consolidated Fixed Charges of such person and its Subsidiaries
for such period shall be reduced by an amount equal to the Consolidated Fixed
Charges directly attributable to the assets which are the subject of such asset
sales for such period and (ii) such person or any of its Subsidiaries has made
any acquisition of assets or Capital Stock (occurring by merger or otherwise),
including, without limitation, any acquisition of assets or Capital Stock
occurring in connection with the transaction causing a calculation to be made
hereunder, Consolidated Fixed Charges of such person and its Subsidiaries shall
be calculated on a pro forma basis as if such acquisition of assets or Capital
Stock (including the incurrence of any Indebtedness in connection with any such
acquisition and the application of the proceeds thereof) took place on the first
day of such period; and provided further, that in the case of the Issuer, if the
closing of any aspect of the Plan occurred during such period, Consolidated
Fixed Charges of the Issuer and its Subsidiaries for such period shall be
calculated on a pro forma basis as if such closing (including the incurrence of
any Indebtedness in connection with such closing and the application of the
proceeds thereof) took place on the first day of such period.
"Consolidated Net Income" with respect to any person (the
"Subject Person") means, for a given period, the aggregate of the Net Income of
such Subject Person and its Subsidiaries for such period, on a consolidated
basis, determined in accordance with generally accepted accounting principles,
provided that (i) the Net Income of any person that is not a Subsidiary of the
Subject Person or is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid to
the Subject Person and its Subsidiaries, (ii) the Net Income of any person that
is a Subsidiary (other than a Subsidiary of which at least 80% of the capital
stock having ordinary voting power for the election of directors or other
governing body of such Subsidiary is owned by the Subject Person directly or
indirectly through one or more Subsidiaries) shall be included only to the
extent of the lesser of (a) the amount of dividends or distributions paid to the
Subject Person and its Subsidiaries and (b) the Net Income of such person, (iii)
the Net Income of any person acquired by the Subject Person and its Subsidiaries
in a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded and (iv) the Net Income (if positive) of any
person that becomes a Subsidiary of the Issuer after the date hereof shall be
included only to the extent that the declaration or payment of dividends on
Capital Stock or similar distributions by that Subsidiary to the Issuer or to
any other consolidated Subsidiary of the Issuer of such Net Income is at the
time permitted under the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations binding
upon or applicable to that Subsidiary, provided that if the exclusion
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from an otherwise positive Net Income of certain amounts pursuant to this clause
(iv) would cause such Net Income to be negative, then such Net Income shall be
deemed to be zero.
"Consolidated Net Worth" means, with respect to any person, at
any date of determination, the sum of the Capital Stock and additional paid-in
capital plus retained earnings (or minus accumulated deficit) of such person and
its Subsidiaries on a consolidated basis, each item to be determined in
conformity with generally accepted accounting principles (excluding the effects
of foreign currency exchange adjustments under Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 52), except that all
effects of the application of Accounting Principles Board Opinions Nos. 16 and
17 and related interpretations shall be disregarded.
"Controlled Corporation EBITDA Amount" means, for any
Controlled Corporation securities of which have been distributed in a Section
355 Transaction, the EBITDA of the Controlled Corporation for the four full
fiscal quarters of the Issuer last preceding the date such Section 355
Transaction is effected.
"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular time,
be principally administered, which office is, at the date as of which this
Indenture is dated, located at 180 East Fifth Street, St. Paul, MN 55101.
"Credit Agent" means The Chase Manhattan Bank, as managing
agent (or in a similar capacity) under the Credit Agreement, or any successor
thereto; provided that "Credit Agent" shall also mean any person acting as
managing agent (or in a similar capacity) under any agreement pursuant to which
the Credit Agreement is refunded or refinanced if such person is designated as
such by each person that is at the time of such designation a Credit Agent; and
provided further that if at any time there shall be more than one Credit Agent,
then "Credit Agent" shall mean each such Credit Agent, and any notice, consent
or waiver to be given by, action to be taken by, or notice to be given to, the
Credit Agent shall be given or taken by, or given to, each such Credit Agent.
"Credit Agreement" means the Credit Agreement dated as of the
date hereof among Denny's, Inc., El Pollo Loco, Inc., Flagstar Enterprises,
Inc., Flagstar Systems, Inc. and Quincy's Restaurants, Inc., as borrowers, the
Issuers as a guarantor, the lenders named therein, and The Chase Manhattan Bank,
as administrative agent, including any and all related notes, collateral and
security documents, instruments and agreements executed in connection therewith
(including, without limitation, all Loan Documents (as defined in such Credit
Agreement)) and all obligations of the Issuer and its Subsidiaries incurred
thereunder or in respect thereof, and in each case as amended, supplemented,
restructured or otherwise modified, extended or renewed and each other agreement
pursuant to which any or all of the foregoing may be refunded or refinanced,
from time to time.
"Default" means any event that is, or after notice or passage
of time would be, an Event of Default.
"Disqualified Stock" means any capital stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Securities.
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"EBITDA" means, with respect to any person and its
consolidated Subsidiaries for a given period, the Consolidated Net Income of
such person for such period plus (i) an amount equal to any net loss realized
upon the sale or other disposition of any Business Segment (to the extent such
loss was deducted in computing Consolidated Net Income), (ii) any provision for
taxes based on income or profits deducted in computing Consolidated Net Income
and any provision for taxes utilized in computing net loss under clause (i)
hereof, (iii) consolidated interest expense (including amortization of original
issue discount and noncash interest payments, all net payments and receipts in
respect of Interest Rate Agreements and the interest component of capital
leases) and (iv) depreciation and amortization (including amortization of
goodwill, deferred financing costs existing immediately after the date hereof or
incurred in connection with the Plan and other intangibles) to the extent
required under generally accepted accounting principles, all on a consolidated
basis; provided that if, during such period (A) such person or any of its
Subsidiaries shall have made any asset sales (other than, in the case of the
Issuer and its Subsidiaries, sales of the Capital Stock of, or any assets of,
Unrestricted Subsidiaries), EBITDA of such person and its Subsidiaries for such
period shall be reduced by an amount equal to the EBITDA directly attributable
to the assets which are the subject of such asset sales for such period and (B)
such person or any of its Subsidiaries has made any acquisition of assets or
Capital Stock (occurring by merger or otherwise), including, without limitation,
any acquisition of assets or Capital Stock occurring in connection with the
transaction causing a calculation to be made hereunder, EBITDA of such person
and its Subsidiaries shall be calculated, excluding any expenses which in the
good faith estimate of management will be eliminated as a result of such
acquisition, on a pro forma basis as if such acquisition of assets or Capital
Stock (including the incurrence of any Indebtedness in connection with any such
acquisition and the application of the proceeds thereof) took place on the first
day of such period; and provided, further that in the case of the Issuer, if the
closing of any aspect of the Plan occurred during such period, EBITDA of the
Issuer and its Subsidiaries for such period shall be calculated on a pro forma
basis as if such closing (including the incurrence of any Indebtedness in
connection with such closing and the application of the proceeds thereof) took
place on the first day of such period.
"Equity Interests" means Capital Stock or warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into or exchangeable for Capital Stock).
"Event of Default" means any event or condition specified as
such in Section 4.1 which shall have continued for the period of time, if any,
therein designated.
"Excluded Property" means the Issuer's corporate headquarters
property in Spartanburg, South Carolina.
"Existing Indebtedness" means Indebtedness of the Issuer or
any subsidiary existing on the date hereof.
"Fixed Charge Coverage Ratio" means, with respect to any
person, for a given period, the ratio of the EBITDA of such person for such
period to the Consolidated Fixed Charges of such person for such period.
"FRD" means FRD Acquisition Co., a Delaware corporation.
"FRD Investment" means up to $75,000,000 of Investments by the
Issuer and its Subsidiaries in FRD as an Unrestricted Subsidiary.
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"Holder", "holder of Securities", "securityholder" or other
similar terms means the registered holder of any Security.
"Indebtedness" with respect to any person means at any date,
without duplication, (i) all obligations of such person for borrowed money, (ii)
all obligations of such person evidenced by bonds, debentures, notes or other
similar instruments other than Interest Rate Agreements, (iii) all reimbursement
obligations and other liabilities of such person with respect to letters of
credit issued for such person's account, (iv) all obligations of such person to
pay the deferred purchase price of property or services, except accounts payable
arising in the ordinary course of business, (v) all obligations of such person
as lessee in respect of capital lease obligations under capital leases and (vi)
all obligations of others of a nature described in any of clauses (i) through
(v) above guaranteed by such person; provided that in the case of clauses (i)
through (v) above, Indebtedness shall include only obligations reported as
liabilities in the financial statements of such person in accordance with
generally accepted accounting principles.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge arrangement to or under which the
Issuer or any of its subsidiaries is or becomes a party or a beneficiary.
"Investment" means any direct or indirect advance (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any person or its subsidiaries),
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
capital stock, bonds, notes, debentures or other securities issued by, any other
person.
"Issuer" means (except as otherwise provided in Article Five)
Advantica Restaurant Group, Inc., a Delaware corporation and, subject to Article
Eight, its successors and assigns.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
capital lease, any option or other agreement to sell and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Mortgage Financing" means the incurrence by the Issuer or a
Subsidiary of the Issuer of any Indebtedness secured by a mortgage or other Lien
on real property acquired or improved by the Issuer or any Subsidiary of the
Issuer after the date hereof.
"Mortgage Financing Proceeds" means, with respect to any
Mortgage Financing, the aggregate amount of cash proceeds received or receivable
by the Issuer or any Subsidiary of the Issuer in connection with such financing
after deducting therefrom brokerage commissions, legal fees, finder's fees,
closing costs and other expenses incidental to such Mortgage Financing and the
amount of taxes payable in connection with or as a result of such transaction,
to the extent, but only to the extent, that
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the amounts so deducted are, at the time of receipt of such cash, actually paid
to a person that is not an Affiliate and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Mortgage Refinancing" means the incurrence by the Issuer or a
Subsidiary of the Issuer of any Indebtedness secured by a mortgage or other Lien
on real property subject to a mortgage or other Lien existing on the date hereof
or created or incurred subsequent to the date hereof as permitted hereby and
owned by the Issuer or any Subsidiary of the Issuer.
"Mortgage Refinancing Proceeds" means, with respect to any
Mortgage Refinancing, the aggregate amount of cash proceeds received or
receivable by the Issuer or any Subsidiary of the Issuer in connection with such
refinancing after deducting therefrom the original mortgage amount of the
underlying indebtedness refinanced therewith and brokerage commissions, legal
fees, finder's fees, closing costs and other expenses incidental to such
Mortgage Refinancing and the amount of taxes payable in connection with or as a
result of such transaction, to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid to a
person that is not an Affiliate and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Net Income" of any person shall mean the net income (loss) of
such person, determined in accordance with generally accepted accounting
principles, excluding, however, (i) any gain or loss, together with any related
provision for taxes on such gain or loss, realized upon the sale or other
disposition (including, without limitation, dispositions pursuant to sale and
leaseback transactions) of a Business Segment, (ii) any charges arising as a
result of the Plan, and (iii) any gain or loss realized upon the sale or other
disposition by such person of any capital stock or marketable securities.
"Net Proceeds" with respect to any Asset Sale, sale and
leaseback transaction or sale or other disposition of a Business Segment, means
(i) cash (freely convertible into U.S. dollars) received by the Issuer or any
Subsidiary from such transaction, after (a) provision for all income or other
taxes measured by or resulting from such transaction, (b) payment of all
brokerage commissions and other expenses (including, without limitation, the
payment of principal, premium (if any) and interest on Indebtedness required
(other than pursuant to Section 3.13(a)) to be paid as a result of such
transaction) in connection with such transaction and (c) deduction of
appropriate amounts to be provided by the Issuer as a reserve, in accordance
with generally accepted accounting principles, against any liabilities
associated with the asset disposed of in such transaction and retained by the
Issuer after such sale or other disposition thereof, including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction and (ii) promissory notes received
by the Issuer or any Subsidiary of the Issuer in connection with such
transaction upon the liquidation or conversion of such notes into cash.
"Obligations" means, with respect to any Indebtedness or any
Interest Rate Agreement, any principal, premium, interest (including, without
limitation, interest, whether or not allowed, after the filing of a petition
initiating certain bankruptcy proceedings), penalties, commissions, charges,
expenses, fees, indemnifications, reimbursements and other liabilities or
amounts payable under or in respect of the documentation governing such
Indebtedness or such Interest Rate Agreement.
"OECD" means the Organization for Economic Cooperation and
Development.
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"Officers' Certificate" means a certificate signed by the
Chairman of the Board of Directors or the President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") and by the Treasurer or the
Secretary or any Assistant Secretary of the Issuer and delivered to the Trustee.
Each such certificate shall comply with Section 314 of the Trust Indenture Act
of 1939 and include the statements provided for in Section 10.5.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel who may be an employee of or counsel to the Issuer. Each such
opinion shall comply with Section 314 of the Trust Indenture Act and include the
statements provided for in Section 10.5, if and to the extent required hereby.
"Outstanding", when used with reference to securities, shall,
subject to the provisions of Section 6.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other
than the Issuer) or shall have been set aside, segregated and held in
trust by the Issuer (if the Issuer shall act as its own paying agent);
provided that if such Securities are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as
herein provided, or provision satisfactory to the Trustee shall have
been made for giving such notice; and
(c) Securities in substitution for which other Securities
shall have been authenticated and delivered, or which shall have been
paid, pursuant to the terms of Section 2.6 (unless proof satisfactory
to the Trustee is presented that any of such Securities is held by a
person in whose hands such Security is a legal, valid and binding
obligation of the Issuer).
"Permitted Investments" means (i) cash (including major
foreign currency or currency of a country in which the Issuer or any of its
Subsidiaries has operations) or Cash Equivalents, (ii) investments that are in
persons at least a majority of whose revenues are derived from food service
operations, ancillary operations or related activities and that have the purpose
of furthering the food service operations of the Issuer or any of its
Subsidiaries, (iii) advances to employees not in excess of $5,000,000 at any one
time outstanding, (iv) accounts receivable created or acquired in the ordinary
course of business, (v) obligations or shares of stock received in connection
with any good faith settlement or bankruptcy proceeding involving a claim
relating to a Permitted Investment, (vi) evidences of Indebtedness, obligations
or other investments not exceeding $5,000,000 in the aggregate held at any one
time by the Issuer or any of its Subsidiaries and (vii) currency swap agreements
and other similar agreements designed to hedge against fluctuations in foreign
exchange rates entered into in the ordinary course of business in connection
with the operation of the business.
"Plan" means the plan of reorganization of Flagstar Companies,
Inc. and Flagstar Corporation, as predecessors to the Issuer pursuant to Chapter
11 of Title II of the United States Code
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as confirmed by the United States Bankruptcy Court for the District of South
Carolina by order entered by such court on November 12, 1997.
"Preferred Stock" means, with respect to any person, any and
all shares, interests, participations or other equivalents (however designated)
of such person's preferred or preference stock whether now outstanding or issued
after the date of the Indenture.
"principal" wherever used with reference to the Securities or
any Security or any portion thereof, shall be deemed to include "and premium, if
any".
"Remaining Section 355 Amount" means at any time an amount
equal to (i) 30% of the Specified Issuer EBITDA less (ii) the sum of the
Controlled Corporation EBITDA Amounts for the Controlled Corporations in each
Section 355 Transaction effected by the Issuer prior to such time.
"Responsible Officer" when used with respect to the Trustee
means the chairman of the board of directors, any vice chairman of the board of
directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any vice
president (whether or not designated by numbers or words added before or after
the title "vice president"), the cashier, the secretary, the treasurer, any
trust officer, any assistant trust officer, any assistant vice president, any
assistant cashier, any assistant secretary, any assistant treasurer, or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Investments" means any investments in, capital
contributions, loans or advances to or purchases of equity interests in, any
person that is not a wholly owned subsidiary, or other transfers of assets to
Subsidiaries or Affiliates that are not wholly owned (other than any such other
transfers of assets to Subsidiaries or Affiliates that are not wholly owned in
transactions the terms of which are fair and reasonable to the transferor and
are at least as favorable as the terms that could be obtained by the transferor
in a comparable transaction made on an arm's length basis between unaffiliated
parties (as conclusively determined, for any such transfer involving aggregate
consideration in excess of $5 million, by a majority of the directors of the
Issuer unaffiliated with such Subsidiary or Affiliate or, if there are no such
directors, by a majority of the directors of the Issuer, and otherwise as
conclusively determined by the Issuer), except in each case for Permitted
Investments and any such investments existing on the date hereof.
"Section 355 Percentage" means, for the first Section 355
Transaction effected after the date hereof, 30%, and shall thereafter be subject
to reduction as follows: Immediately after the time at which any Section 355
Transaction is effected through a distribution of securities of a Controlled
Corporation pursuant to clause (6) of the second paragraph of Section 3.9
hereof, the Section 355 Percentage shall equal (i) the Section 355 Percentage
immediately prior to such time less (ii) the percentage of (x) the EBITDA of the
Issuer for the four full fiscal quarters of the Issuer last preceding the date
such Section 355 Transaction is effected represented by (y) the EBITDA of such
Controlled Corporation for such period.
"Section 355 Transaction" means a transaction that qualifies
for tax-free treatment under Section 355 of the Code, or any similar taxable
transaction, any of which is effected after the date hereof.
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"Security" or "Securities" means any of the 11-1/4% Senior
Notes Due 2008 authenticated and delivered under this Indenture.
"Senior Indebtedness" means (i) all obligations of the Issuer
and its Subsidiaries now or hereafter existing under or in respect of the Credit
Agreement and the Securities, whether for principal, interest (including,
without limitation, interest accruing after the filing of a petition initiating
any proceeding referred to in Section 4.1(6) or Section 4.1(7) hereof, whether
or not such interest is an allowable claim under such proceeding), penalties,
commissions, charges, indemnifications, liabilities, reimbursement obligations
in respect of letters of credit, fees, expenses or other amounts payable under
or in respect of the Credit Agreement and all obligations and claims related
thereto, (ii) all Obligations of the Issuer in respect of Interest Rate
Agreements and (iii) additional Indebtedness permitted by Section 3.11(a),
Section 3.11(b) or Section 3.11(c) hereof which is not expressly by its terms
subordinated to the Securities and all Obligations and claims related thereto.
Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness shall not include (x) any Indebtedness of the Issuer to any
of its Subsidiaries or (y) Indebtedness incurred for the purchase of goods or
materials or for services (other than services provided by the Credit Agent in
connection with the Credit Agreement or any other party to an agreement
evidencing Senior Indebtedness in connection with such agreement) obtained in
the ordinary course of business. Senior Indebtedness under or in respect of the
Credit Agreement and the Securities shall continue to constitute Senior
Indebtedness for all purposes of this Indenture notwithstanding that such Senior
Indebtedness or any obligations or claims in respect thereof may be disallowed,
avoided or subordinated pursuant to any Bankruptcy Law or other applicable
insolvency law or equitable principles.
"Significant Subsidiary" means any Subsidiary of the Issuer
that would be a "significant subsidiary" as defined in Rule 1-02 of Regulation
S-X under the Securities Act of 1933, as amended (the "Act"), and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (as such Regulation is in
effect on the date of the Indenture) (excluding, except for the purposes of
determining an Event of Default, subparagraph (c) of Rule 1-02 of Regulation
S-X).
"Specified Issuer EBITDA" means the EBITDA of the Issuer for
the four full fiscal quarters of the Issuer last preceding the date of the first
Section 355 Transaction effected after the date hereof.
"Subsidiary" of any person means any entity of which shares of
the capital stock or other equity interests (including partnership interests)
entitled to cast at least a majority of the votes that may be cast by all shares
or equity interests having ordinary voting power for the election of directors
or other governing body of such entity is owned by such person directly and/or
through one or more Subsidiaries; provided that each Unrestricted Subsidiary
shall be excluded from the definition of "Subsidiary".
"Trustee" means the entity identified as "Trustee" in the
first paragraph hereof and, subject to the provisions of Article Five, shall
also include any successor trustee.
"Trust Indenture Act of 1939" means the Trust Indenture Act of
1939 as in force at the date as of which this Indenture was originally executed
(except for purposes of the terms of any supplemental indenture executed
pursuant to Article VII).
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"Unrestricted Subsidiary" means (i) any subsidiary of the
Issuer which at the time of determination is an Unrestricted Subsidiary (as
designated by the Board of Directors, as provided below) and (ii) any subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
subsidiary of the Issuer (including any Subsidiary and any newly acquired or
newly formed subsidiary) to be an Unrestricted Subsidiary unless such subsidiary
owns any Capital Stock of, or owns, or holds any Lien on, any property of, any
Subsidiary of the Issuer (other than any subsidiary of the subsidiary to be so
designated), provided that (a) any Unrestricted Subsidiary must be an entity of
which shares of the capital stock or other equity interests (including
partnership interests) entitled to cast at least a majority of the votes that
may be cast by all shares or equity interests having ordinary voting power for
the election of directors or other governing body are owned, directly or
indirectly, by the Issuer, (b) the Issuer certifies that such designation
complies with Section 3.9 and Section 3.17 and (c) each of (I) the subsidiary to
be so designated and (II) its subsidiaries has not at the time of designation,
and does not thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any of the assets of the Issuer or any of
its Subsidiaries. The Board of Directors may designate any Unrestricted
Subsidiary to be a Subsidiary; provided that, immediately after giving effect to
such designation, the Issuer and its Subsidiaries could incur at least $1 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 3.11(a) on a pro forma basis taking into account such
designation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the then
outstanding aggregate principal amount of such Indebtedness into (ii) the total
of the product obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
ARTICLE TWO
ISSUE, EXECUTION, FORM AND REGISTRATION OF SECURITIES
SECTION 2.1 Authentication and Delivery of Securities. Upon
the execution and delivery of this Indenture, or from time to time thereafter,
Securities in an aggregate principal amount not in excess of the amount
specified in the form of Security hereinabove recited (subject to rounding
adjustments, upward or downward, in order to effect the issuance of the
Securities pursuant to the Indenture in accordance with the terms of the Plan
and except as otherwise provided in Section 2.6) may be executed by the Issuer
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Securities to or upon the written order of the
Issuer, signed by both (a) the Issuer's Chairman of the Board of Directors, or
any Vice Chairman of the Board of Directors, or its President or any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President") and (b) by the Issuer's
Treasurer or any Assistant Treasurer without any further action by the Issuer.
SECTION 2.2 Execution of Securities. The Securities shall be
signed on behalf of the Issuer by both (a) its Chairman of the Board of
Directors or any Vice Chairman of the Board of Directors or its President or any
Vice President (whether or not designated by a number or numbers or a word or
words added before or after the title "Vice President") and (b) by its Treasurer
or any Assistant Treasurer
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or its Secretary or any Assistant Secretary, under its corporate seal which may,
but need not, be attested. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Security which
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of
the Securities shall cease to be such officer before the Security so signed
shall be authenticated and delivered by the Trustee or disposed of by the
Issuer, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Security had not ceased to be
such officer of the Issuer; and any Security may be signed on behalf of the
Issuer by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such officer.
SECTION 2.3 Certificate of Authentication. Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee by manual signature of
one of its authorized signatories, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee upon any Security executed by the Issuer shall be conclusive evidence
that the Security so authenticated has been duly authenticated and delivered
hereunder and that the holder is entitled to the benefits of this Indenture.
SECTION 2.4 Form, Denomination and Date of Securities;
Payments of Interest. The Securities and the Trustee's certificates of
authentication shall be substantially in the form recited above. The Securities
shall be issuable as registered securities without coupons and in denominations
provided for in the form of Security above recited. The Securities shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the officers of the Issuer executing the same may determine
with the approval of the Trustee.
Any of the Securities may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law, or with
any rules or regulations pursuant thereto, or with the rules of any securities
market in which the Securities are admitted to trading, or to conform to general
usage.
Each Security shall be dated the date of its authentication,
shall bear interest from the applicable date and shall be payable on the dates
and in the manner specified on the face of the form of Security recited above.
The person in whose name any Security is registered at the
close of business on any record date with respect to any interest payment date
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Security
subsequent to the record date and prior to such interest payment date, except if
and to the extent the Issuer shall default in the payment of the interest due on
such interest payment date, in which case such defaulted interest shall be paid
to the persons in whose names outstanding Securities are registered at the close
of business on a subsequent record date (which shall be not less than five
business days prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the
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Issuer to the holders of Securities not less than 15 days preceding such
subsequent record date. The term "record date", as used with respect to any
interest payment date (except a date for payment of defaulted interest), shall
mean if such interest payment date is the first day of a calendar month, the
fifteenth day of the next preceding calendar month and shall mean, if such
interest payment date is the fifteenth day of a calendar month, the first day of
such calendar month, whether or not such record date is a business day. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.5 Registration, Transfer and Exchange. The Issuer
will keep at each office or agency to be maintained for the purpose as provided
in Section 3.2 a register or registers in which, subject to such reasonable
regulations as it may prescribe, it will register, and will register the
transfer of, Securities as in this Article provided. Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time. At all reasonable times such
register or registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any
Security at each such office or agency, the Issuer shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees a
new Security or Securities in authorized denominations for a like aggregate
principal amount. Securities may be presented for registration of transfer in
part only in multiples of $1,000.
Any Security or Securities may be exchanged for a Security or
Securities in other authorized denominations, in an equal aggregate principal
amount. Securities to be exchanged shall be surrendered at each office or agency
to be maintained by the Issuer for such purpose as provided in Section 3.2, and
the Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Security or Securities which the Securityholder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.
All Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by, the holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities. No service charge shall be
made for any such transaction.
The Trustee shall not be required to exchange or register a
transfer of (a) any Securities for a period of 15 days next preceding the first
mailing of notice of redemption of Securities to be redeemed or (b) any
Securities selected, called or being called for redemption except, in the case
of any Security where public notice has been given that such Security is to be
redeemed in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of
Securities shall be valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
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SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become mutilated,
defaced or be apparently destroyed, lost or stolen, the Issuer in its discretion
may execute, and upon the written request of any officer of the Issuer, the
Trustee shall authenticate and deliver, a new Security, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated or
defaced Security, or in lieu of and substitution for the Security so apparently
destroyed, lost or stolen. In every case the applicant for a substitute Security
shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as may be required by them to indemnify
and defend and to save each of them harmless and, in every case of destruction,
loss or theft evidence to their satisfaction of the apparent destruction, loss
or theft of such Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith. In case any Security
which has matured or is about to mature, or has been called for redemption in
full, shall become mutilated or defaced or be apparently destroyed, lost or
stolen, the Issuer may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Issuer and to the Trustee and any agent of the Issuer or the
Trustee such security or indemnity as any of them may require to save each of
them harmless from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to the Issuer and
the Trustee and any agent of the Issuer or the Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Every substitute Security issued pursuant to the provisions of
this Section by virtue of the fact that any Security is apparently destroyed,
lost or stolen shall constitute an additional contractual obligation of the
Issuer, whether or not the apparently destroyed, lost or stolen Security shall
be at any time enforceable by anyone and shall be entitled to all the benefits
of (but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities duly
authenticated and delivered hereunder. All Securities shall be held and owned
upon the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, defaced or apparently destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement or
payment of negotiable instruments or other securities without their surrender.
SECTION 2.7 Cancellation of Securities; Destruction Thereof.
All Securities surrendered for payment, redemption, registration of transfer or
exchange, if surrendered to the Issuer or any agent of the Issuer or the
Trustee, shall be delivered to the Trustee for cancellation or, if surrendered
to the Trustee, shall be cancelled by it; and no Securities shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall destroy cancelled Securities held by it and deliver
a certificate of destruction to the Issuer. If the Issuer shall acquire any of
the Securities, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the same are delivered to the Trustee for cancellation.
SECTION 2.8 Temporary Securities. Pending the preparation of
definitive Securities, the Issuer may execute and the Trustee shall authenticate
and deliver temporary Securities (printed,
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lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities shall be issuable as
registered Securities without coupons, of any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Issuer with the concurrence of the Trustee. Temporary
Securities may contain such reference to any provisions of this Indenture as may
be appropriate. Every temporary Security shall be executed by the Issuer and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without
unreasonable delay the Issuer shall execute and shall furnish definitive
Securities and thereupon temporary Securities may be surrendered in exchange
therefor without charge at each office or agency to be maintained by the Issuer
for the purpose pursuant to Section 3.2, and the Trustee shall authenticate and
deliver in exchange for such temporary Securities a like aggregate principal
amount of definitive Securities of authorized denominations. Until so exchanged
the temporary Securities shall be entitled to the same benefits under this
Indenture as definitive Securities.
ARTICLE THREE
COVENANTS OF THE ISSUER AND THE TRUSTEE
SECTION 3.1 Payment of Principal and Interest. The Issuer
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of, and interest on, each of the Securities at the place or places
at the respective times and in the manner provided in the Securities. Each
installment of interest on the Securities may, at the option of the Issuer, be
paid by wire transfer or by check mailed to the holders of Securities entitled
thereto as they shall appear on the registry books of the Issuer.
SECTION 3.2 Offices for Payments, etc. So long as any of the
Securities remain outstanding, the Issuer will maintain the following: (a) an
office or agency where the Securities may be presented for payment, (b) an
office or agency where the Securities may be presented for registration of
transfer and for exchange as in this Indenture provided and (c) an office or
agency where notices and demands to or upon the Issuer in respect of the
Securities or of this Indenture may be served. The Issuer will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. The Issuer hereby initially designates the Corporate
Trust Office of the Trustee as the office or agency for each such purpose. In
case the Issuer shall fail to maintain any such office or agency or shall fail
to give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the Corporate
Trust Office.
SECTION 3.3 Appointment to Fill a Vacancy in Office of
Trustee. The Issuer, whenever necessary to avoid or fill a vacancy in the office
of Trustee, will appoint, in the manner provided in Section 5.9, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a
paying agent other than the Trustee, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent
for the payment of the principal of or interest on the Securities
(whether such sums have been paid to it by the Issuer
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or by any other obligor on the Securities) in trust for the benefit of
the holders of the Securities or of the Trustee,
(b) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment
of the principal of or interest on the Securities when the same shall
be due and payable, and
(c) that it will pay any such sums so held in trust by it to
the Trustee upon the Trustee's written request at any time during the
continuance of the failure referred to in clause (b) above.
The Issuer will, on or prior to each due date of the principal
of or interest on the Securities, deposit with the paying agent a sum sufficient
to pay such principal or interest, and (unless such paying agent is the Trustee)
the Issuer will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own paying agent, it will, on
or before each due date of the principal of or interest on the Securities, set
aside, segregate and hold in trust for the benefit of the holders of the
Securities a sum sufficient to pay such principal or interest so becoming due.
The Issuer will promptly notify the Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, the
Issuer may at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Issuer or any paying agent hereunder,
as required by this Section, such sums to be held by the Trustee upon the trusts
herein contained.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section are subject to the
provisions of Sections 9.3 and 9.4.
SECTION 3.5 Certificates to Trustee. The Issuer will, so long
as any of the Securities are outstanding:
(a) deliver to the Trustee, forthwith upon becoming aware of
any default or defaults in the performance of any covenant, agreement
or condition contained in this Indenture (including notice of any event
of default which with the giving of notice and lapse of time would
become an Event of Default under Section 4.1 hereof), an Officers'
Certificate specifying such default or defaults; and
(b) deliver to the Trustee within 120 days after the end of
each fiscal year of the Issuer beginning with the fiscal year ending
December 31, 1998, an Officers' Certificate in compliance with Section
314(a)(4) of the Trust Indenture Act of 1939.
SECTION 3.6 Securityholder Lists. If and so long as the
Trustee shall not be the Security registrar, the Issuer will furnish or cause to
be furnished to the Trustee a list in such form as the Trustee may reasonably
require of the names and addresses of the holders of the Securities pursuant to
Section 312 of the Trust Indenture Act (a) semi-annually not more than 15 days
after each record date for the payment of semi-annual interest on the
Securities, as hereinabove specified, as of such record
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date, and (b) at such other times as the Trustee may request in writing, within
thirty days after receipt by the Issuer of any such request as of a date not
more than 15 days prior to the time such information is furnished.
SECTION 3.7 Reports by the Issuer. The Issuer covenants:
(a) to file with the Commission and, within 15 days after the
Issuer is required to file the same with the Commission, with the
Trustee copies of the annual reports and of the information, documents
and other reports which the Issuer may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act
and, if the Issuer is not required to file such information, documents
or reports with the Commission, to file with the Commission and the
Trustee the same such information, documents or reports as if the
Issuer were so subject;
(b) to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
provided for in this Indenture as may be required from time to time by
such rules and regulations; and
(c) to transmit by mail to the Holders of Securities, within
30 days after the filing thereof with the Trustee, any information,
documents and reports required to be filed by the Issuer with the
Trustee pursuant to (a) and (b) of this Section 3.7.
SECTION 3.8 Reports by the Trustee. Within 60 days after May
15 of each year, beginning May 15, 1998, for so long as any Securities are
outstanding hereunder, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear in the registry books, in
the manner and to the extent provided in Section 313(c) of the Trust Indenture
Act of 1939, a brief report dated as of such May 15 if required by and in
compliance with Section 313(a) of the Trust Indenture Act of 1939.
SECTION 3.9 Limitation on Restricted Payments. Subject to the
other provisions of this Section 3.9, the Issuer shall not and shall not permit
any of its Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any distribution on
account of the Issuer's or any Subsidiary's capital stock or other
Equity Interests (other than (i) dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Issuer or such
Subsidiary and (ii) dividends or distributions payable by a Subsidiary
so long as, in the case of any dividend or distribution payable on any
class or series of securities issued by a Subsidiary other than a
wholly owned Subsidiary, the Issuer or a Subsidiary of the Issuer
receives at least its pro rata share of such dividend or distribution
in accordance with its Equity Interest in such class or series of
securities); or
(b) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Issuer or any Subsidiary of the Issuer
(other than any such Equity Interests owned by the Issuer or any
Subsidiary of the Issuer); or
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(c) voluntarily prepay Indebtedness that is subordinated to
the Securities other than in connection with any (i) refinancing of
such Indebtedness specifically permitted pursuant to Section 3.11(c)
hereof, (ii) Indebtedness between the Issuer and a Subsidiary of the
Issuer or between Subsidiaries of the Issuer or (iii) Mortgage
Financing or Mortgage Refinancing; or
(d) make any Restricted Investments (other than an Investment
in any Unrestricted Subsidiary)
(all of the foregoing dividends, distributions, purchases, redemptions or other
acquisitions, retirements, prepayments or Restricted Investments set forth in
clauses (a) through (d) above being collectively referred to as "Restricted
Payments"), if at the time of such Restricted Payment:
(i) a Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence
thereof;
(ii) immediately after such Restricted Payment and
after giving effect thereto on a pro forma basis, the Issuer
would not be able to incur $1 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 3.11(a); or
(iii) such Restricted Payment, together with (A) the
aggregate of all other Restricted Payments (in each case
valued, where other than cash, at their fair market value as
of the date such Restricted Payments are made) made after the
date hereof and (B) the amount by which the aggregate of all
then outstanding Investments in Unrestricted Subsidiaries
(other than the FRD Investment) exceeds $75 million, is
greater than the sum of: (v) 50% of the aggregate Consolidated
Net Income of the Issuer for the period (taken as one
accounting period) from the beginning of the first quarter
immediately after the date hereof to the end of the Issuer's
most recently ended fiscal quarter at the time of such
Restricted Payment (provided that if Consolidated Net Income
for such period is less than zero, then minus 100% of the
amount of such loss) plus (w) 100% of the aggregate
amortization of goodwill and excess reorganization value for
the period specified in (v) above, plus (x) 100% of the
aggregate net cash proceeds and the fair market value of
marketable securities received by the Issuer from the issue or
sale, after the date hereof, of capital stock of the Issuer
(other than capital stock issued and sold to a Subsidiary of
the Issuer and other than Disqualified Stock), or any
Indebtedness or other security convertible into any such
capital stock that has been so converted plus (y) 100% of the
aggregate amounts contributed to the capital of the Issuer
plus (z) 100% of the aggregate amounts received in cash and
the fair market value of marketable securities (other than
Restricted Investments) received from (I) the sale or other
disposition of Restricted Investments made by the Issuer and
its Subsidiaries or (II) the sale of the stock of an
Unrestricted Subsidiary or the sale of all or substantially
all of the assets of an Unrestricted Subsidiary to the extent
that a liquidating dividend is paid to the Issuer or any
Subsidiary from the proceeds of such sale.
For purposes of clause (iii) above, the fair market value of property other than
cash may be conclusively determined in good faith by the Board of Directors.
The provisions of this Section 3.9 shall not prohibit:
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(1) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment
would have complied with the provisions hereof;
(2) the retirement of any shares of the Capital Stock of the
Issuer (the "Retired Capital Stock") in exchange for, or out of the net
proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Issuer) of, other shares of the Capital Stock of the
Issuer (the "Refunding Capital Stock"), other than any Disqualified
Stock;
(3) payments for the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests in the
Issuer issued to members of management of the Issuer and its
subsidiaries pursuant to subscription and option agreements in effect
on the date hereof (or effected within 60 days of the date hereof as
contemplated by the disclosure statement relating to the Plan) and
Equity Interests in the Issuer issued to future members of management
pursuant to subscription and option agreements executed subsequent to
the date hereof, containing provisions for the repurchase of such
Equity Interests upon death, disability or termination of employment of
such persons which are substantially identical to those contained in
the subscription and option agreements in effect on the date hereof (or
effected within 60 days hereof as contemplated by the disclosure
statement relating to the Plan), provided that the amount of such
payments, after the date hereof, in the aggregate will not exceed the
sum of (I) $30 million plus (II) the cash proceeds from any reissuance
of such Equity Interests by the Issuer to members of management of the
Issuer and its subsidiaries;
(4) the repurchase, redemption or other acquisition or
retirement for value of Indebtedness of the Issuer which is
subordinated in right of payment to the Securities in exchange for or
with the proceeds of the issuance of shares of the Issuer's Equity
Interests (other than Disqualified Stock);
(5) the redemption, repurchase or retirement of any
Indebtedness that is subordinated to the Securities (A) with the
proceeds of, or in exchange for, Indebtedness incurred pursuant to
Section 3.11(c) or (B) if, after giving effect to such redemption,
repurchase or retirement, the Issuer could incur at least $1 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 3.11(a);
(6) the distribution to stockholders of securities of a
corporation controlled by the Issuer (a "Controlled Corporation") in a
Section 355 Transaction, but only if (a) the EBITDA of the Controlled
Corporation for the four full fiscal quarters of the Issuer last
preceding the date the Section 355 Transaction is effected is no
greater than (I) in the case of the first Section 355 Transaction
effected after the date hereof, a percentage of the Specified Issuer
EBITDA equal to the Section 355 Percentage at the time such first
Section 355 Transaction is effected and (II) in the case of any
subsequent Section 355 Transaction, the lesser of (A) the Remaining
Section 355 Amount at the time of such Section 355 Transaction and (B)
the Section 355 Percentage at the time such Section 355 Transaction is
effected multiplied by the EBITDA of the Issuer for the four full
fiscal quarters of the Issuer last preceding the date such Section 355
Transaction is effected, (b) the Issuer's Fixed Charge Coverage Ratio
for its four full fiscal quarters last preceding the date the Section
355 Transaction is effected would have been at least 2:1, determined on
a pro forma basis as if the Section 355 Transaction had been effected
at the beginning of such four-quarter period and (c) the ratio of the
Indebtedness of the Issuer and its Subsidiaries on a
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consolidated basis immediately after the Section 355 Transaction to
EBITDA of the Issuer for its four full fiscal quarters last preceding
the date the Section 355 Transaction is effected, determined on a pro
forma basis as if such transaction had occurred at the beginning of
such four quarter period, would be no greater than the ratio of the
Indebtedness of the Issuer and its Subsidiaries on a consolidated basis
immediately prior to the Section 355 Transaction to EBITDA of the
Issuer for its four full fiscal quarters last preceding the date the
Section 355 Transaction is effected;
(7) the purchase, redemption or other acquisition or
retirement for value of Equity Interests of any Subsidiary of the
Issuer (other than any such Equity Interests owned by the Issuer or any
Subsidiary of the Issuer) in an amount of (a) up to $5 million for the
first year following the date hereof and (b) for each year thereafter,
up to $5 million plus the unused portion of the amount permitted to be
expended for such purpose in all preceding years;
provided that in determining the aggregate amount expended for Restricted
Payments in accordance with clause (iii) of the first paragraph of this Section
3.9, (i) no amounts expended under clauses (2), (4), (5) and (6) of this
paragraph shall be included, (ii) 100% of the amounts expended under clauses (3)
and (7) of this paragraph shall be included, and (iii) 100% of the amounts
expended under clause (1), to the extent not included under subclauses (i) or
(ii) of this proviso, shall be included.
SECTION 3.10 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries. The Issuer shall not, and shall not permit
any of its Subsidiaries (other than unconsolidated subsidiaries) to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any such Subsidiary to
(a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in, or measured by, its profits, owned by the
Issuer or any Subsidiary of the Issuer, or pay any Indebtedness owed to, the
Issuer or a Subsidiary of the Issuer, (b) make loans or advances to the Issuer
or a Subsidiary of the Issuer or (c) transfer any of its properties or assets to
the Issuer or a Subsidiary of the Issuer, except in each case for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) this Indenture, (iii) the Credit Agreement or any other agreement entered
into in connection therewith or as contemplated thereby, (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of the Issuer or a Subsidiary of the Issuer, (v) any
instrument governing Indebtedness of a Person acquired by the Issuer or any
Subsidiary of the Issuer at the time of such acquisition, (vi) Existing
Indebtedness, or additional Indebtedness in an aggregate principal amount of up
to $250,000,000 at any one time outstanding or other contractual obligation of
the Issuer or any of its Subsidiaries existing on the date hereof or any
amendment, modification, renewal, extension, replacement, refinancing or
refunding thereof, provided that the restrictions contained in any such
amendment, modification, renewal, extension, replacement, refinancing or
refunding are no less favorable in all material respects to the Holders, (vii)
any Mortgage Financing or Mortgage Refinancing, (viii) any Permitted Investment
or (ix) contracts for the sale of assets.
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SECTION 3.11 Limitation on Additional Indebtedness and
Issuance of Disqualified Stock.
(a) Subject to the other provisions of this Section 3.11,
(x) the Issuer shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur,
issue, assume or guarantee any Indebtedness (other than
Indebtedness between the Issuer and a Subsidiary of the Issuer
or between Subsidiaries of the Issuer, or guarantees by any
Subsidiary of Indebtedness of a Subsidiary or the Issuer) and
(y) the Issuer shall not issue any Disqualified
Stock,
unless (i) such Indebtedness or Disqualified Stock is either Acquisition
Indebtedness or is created, incurred, issued, assumed or guaranteed by the
Issuer and not a Subsidiary of the Issuer and (ii) the Issuer's Fixed Charge
Coverage Ratio for its four full fiscal quarters last preceding the date such
additional Indebtedness is created, incurred, assumed or guaranteed, or such
additional stock is issued, would have been at least 2:1, determined on a pro
forma basis (including a pro forma application of the net proceeds of such
Indebtedness or such issuance of stock) as if the additional Indebtedness had
been created, incurred, assumed or guaranteed, or such additional stock had been
issued, at the beginning of such four-quarter period.
The limitations of this Section 3.11(a) shall not apply to the
incurrence by the Issuer or any of its Subsidiaries of any Indebtedness pursuant
to the Credit Agreement; provided, however, that the principal amount of such
Indebtedness incurred pursuant to the Credit Agreement for this purpose shall
not exceed the greater of (i) $250 million and (ii) the aggregate amount of the
commitments under the Credit Agreement on the date hereof.
(b) The limitations of Section 3.11(a) hereof notwithstanding,
the Issuer or any Subsidiary may create, incur, issue, assume or
guarantee Indebtedness pursuant to the Credit Agreement or otherwise
(i) in connection with or arising out of Mortgage Financings, Mortgage
Refinancings or sale and lease-back transactions, provided the Mortgage
Financing Proceeds, Mortgage Refinancing Proceeds (excluding any
Mortgage Refinancing Proceeds received in connection with any
refinancing of any Indebtedness secured by a mortgage or Lien on the
Excluded Property) or Net Proceeds, as the case may be, incurred,
assumed or created in connection therewith are used to pay any
outstanding Senior Indebtedness, (ii) constituting purchase money
obligations for property acquired in the ordinary course of business or
other similar financing transactions (including, without limitation, in
connection with Mortgage Financings), provided that in the case of
Indebtedness exceeding $2 million for any such obligation or
transaction, such Indebtedness exists at the date of the purchase or
transaction or is created within 180 days thereafter, (iii)
constituting capital lease obligations, (iv) in connection with capital
expenditures, (v) constituting reimbursement obligations with respect
to letters of credit, including, without limitation, letters of credit
in respect of workers' compensation claims issued for the account of
the Issuer or a Subsidiary of the Issuer in the ordinary course of its
business, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims, (vi) constituting
additional Indebtedness in an aggregate principal amount of up to
$250,000,000 at any one time outstanding, whether incurred under the
Credit Agreement
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or otherwise, (vii) constituting Indebtedness secured by the Excluded
Property and (viii) constituting Existing Indebtedness and permitted
refinancings thereof in accordance with Section 3.11(c) hereof.
(c) The limitations of Section 3.11(a) hereof notwithstanding,
the Issuer or any Subsidiary may create, incur, issue, assume or
guarantee any Indebtedness which serves to refund, refinance or
restructure its Existing Indebtedness or any other Indebtedness
incurred as permitted under this Indenture or any Indebtedness issued
to so refund, refinance or restructure such Indebtedness, including
additional Indebtedness incurred to pay premiums and fees in connection
therewith (the "Refinancing Indebtedness"), prior to its respective
maturity; provided, that such Refinancing Indebtedness (i) bears an
interest rate per annum which is equal to or less than the interest
rate per annum then payable under such Indebtedness being refunded or
refinanced (calculated in accordance with any formula set forth in the
documents evidencing any such Indebtedness) unless such Refinancing
Indebtedness is incurred, created or assumed within twelve months of
the scheduled maturity of the Indebtedness being refinanced, (ii) has a
Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the remaining Weighted
Average Life to Maturity of such Indebtedness being refunded or
refinanced, and (iii) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinated to the Securities, such
Refinancing Indebtedness is subordinated to the Securities at least to
the same extent as the Indebtedness being refinanced or refunded; and
provided further, however, that clauses (i), (ii) and (iii) above shall
not apply to any refunding or refinancing of any Senior Indebtedness.
(d) The limitations of Section 3.11(a) hereof notwithstanding,
any unconsolidated subsidiary of the Issuer created after the date of
this Indenture may create, incur, issue, assume, guarantee or otherwise
become liable with respect to any additional Indebtedness, provided
that such Indebtedness is nonrecourse to the Issuer and its
consolidated Subsidiaries, and the Issuer and its consolidated
Subsidiaries have no liability with respect to such additional
Indebtedness.
SECTION 3.12 Limitation on Transactions with Affiliates. The
Issuer shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) involving aggregate consideration in excess of $5,000,000 for any one
transaction with any Affiliate, except for (a) transactions (including any
investments or loans or advances by or to any Affiliate) in good faith the terms
of which are fair and reasonable to the Issuer or such Subsidiary, as the case
may be, and are at least as favorable as the terms which could be obtained by
the Issuer or such Subsidiary, as the case may be, in a comparable transaction
made on an arm's length basis between unaffiliated parties (in each case as
conclusively determined by a majority of the directors of the Issuer
unaffiliated with such Affiliate or, if there are no such directors, as
conclusively determined by a majority of the Board of Directors), (b)
transactions in which the Issuer or any of its Subsidiaries, as the case may be,
delivers to the Holders a written opinion of a nationally recognized investment
banking firm stating that such transaction is fair to the Issuer or such
Subsidiary from a financial point of view, (c) transactions between the Issuer
and its subsidiaries or between subsidiaries of the Issuer which are not
otherwise prohibited under Section 3.9 of this Indenture and (d) payments or
loans to employees or consultants pursuant to employment or consultancy
contracts which are approved by the Board of Directors in good faith.
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SECTION 3.13 Sale of Assets.
(a) Neither the Issuer nor any of its Subsidiaries (other than
unconsolidated Subsidiaries) shall (A) (I) sell, lease, convey or
otherwise dispose of in any transaction, or group of transactions that
are part of a common plan, all or substantially all of the assets or
capital stock of any Asset Segment (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the
Issuer's assets shall not be subject to this Section 3.13 but shall be
governed by the provisions of Section 8.1 hereof) or (II) issue or sell
equity securities of any Asset Segment (each of the foregoing, an
"Asset Sale") or (B) sell, lease, convey or otherwise dispose of any
Business Segment, unless in each case, the Issuer shall apply the Net
Proceeds from such Asset Sale or such sale, lease, conveyance or other
disposition of a Business Segment to one or more of the following in
such combination as the Issuer may choose: (i) an investment in another
asset or business in the same line of business as, or a line of
business similar to that of, the line of business of the Issuer and its
Subsidiaries and such investment occurs within 366 days of such Asset
Sale or such sale, lease, conveyance or other disposition of a Business
Segment, (ii) a Net Proceeds Offer (as defined below) expiring within
366 days of such Asset Sale or such sale, lease, conveyance or other
disposition of a Business Segment or (iii) the purchase, redemption or
other prepayment or repayment of outstanding Senior Indebtedness within
366 days of such Asset Sale or such sale, lease, conveyance or other
disposition of a Business Segment; provided, however, if the net amount
not invested pursuant to clause (i) above or applied pursuant to clause
(iii) above is less than $15,000,000 the Issuer shall not be further
obligated to offer to redeem Securities pursuant to clause (ii) above.
Notwithstanding the foregoing, (i) the receipt of all proceeds of
insurance paid on account of the loss of or damage to any Business
Segment and awards of compensation for any such Business Segment taken
by condemnation or eminent domain which result in Net Proceeds to the
Issuer and its Subsidiaries of $50 million or more (excluding proceeds
to be used for replacement of such Business Segment, provided the
Trustee has received notice from the Issuer, within 90 days of such
receipt, of its intention to use such proceeds for such purpose) will
be deemed an "Asset Sale" and (ii) Permitted Investments and sales,
leases, conveyances or other dispositions of assets by the Issuer or
any Subsidiary to the Issuer or any wholly owned Subsidiary of the
Issuer will not be deemed an "Asset Sale" or a sale or other
disposition of a Business Segment.
(b) For purposes of subsection (ii) of clause (a) of this
Section, the Issuer shall apply the Net Proceeds of the Asset Sale or
the sale, lease, conveyance or other disposition of a Business Segment
to make a tender offer in accordance with applicable law (a "Net
Proceeds Offer") to repurchase the Securities at a price not less than
100% of the principal amount of the Securities plus accrued and unpaid
interest thereon. Any Net Proceeds Offer shall be made by the Issuer
only if and to the extent permitted under, and subject to prior
compliance with, the terms of any agreement governing Senior
Indebtedness. If on the date any Net Proceeds Offer is commenced,
securities of the Issuer ranking pari passu in right of payment with
the Securities are outstanding and the terms of such securities provide
that an offer to repurchase such securities similar to the Net Proceeds
Offer is to be made with respect thereto, then the Net Proceeds Offer
shall be made concurrently with such other offer, and securities of
each issue shall be accepted on a pro rata basis, in proportion to the
principal or face amount, as the case may be, of securities of each
issue which the holders thereof elect to have redeemed. After the last
date on which holders of the Securities are permitted to tender their
Securities in a Net Proceeds Offer, the Issuer shall not be restricted
under this Section 3.13 as to its use of any Net Proceeds
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available to make such Net Proceeds Offer (up to the amount of Net
Proceeds that would have been used to redeem Securities assuming 100%
acceptance of the Net Proceeds Offer) but not used to redeem Securities
pursuant thereto.
(c) Notwithstanding any other provision hereof to the
contrary, for a period of 120 days after the last date on which holders
of the Securities are permitted to elect to have their Securities
redeemed in the Net Proceeds Offer, the Issuer may use any Net Proceeds
available to make such Net Proceeds Offer but not used to redeem
Securities pursuant thereto to purchase, redeem or otherwise acquire or
retire for value any securities of the Issuer ranking junior in right
of payment to the Securities at a price, stated as a percentage of the
principal or face amount of such junior securities, not greater than
the price, stated as a percentage of the principal amount of the
Securities offered in the Net Proceeds Offer; provided that if the Net
Proceeds Offer is for a principal amount (the "Net Proceeds Offer
Amount") of the Securities less than the aggregate principal amount of
the Securities then outstanding, then the Net Proceeds available for
use by the Issuer for such a purchase, redemption or other acquisition
or retirement for value of junior securities shall not exceed the Net
Proceeds Offer Amount.
(d) An offer to repurchase Securities pursuant to this Section
3.13 shall be made pursuant to the provisions of Section 11.5 hereof.
Simultaneously with the notification of such offer of redemption to the
Trustee as required by Section 11.5 hereof, the Issuer shall provide
the Trustee with an Officers' Certificate setting forth the information
required to be included therein by Section 10.5 hereof and, in
addition, setting forth the calculations used in determining the amount
of Net Proceeds to be applied to the redemption of Securities.
(e) In the event that the Issuer shall make any payment of Net
Proceeds to the Trustee which, to the actual knowledge of a trust
officer of the Trustee, should properly have been made to holders or to
the representative of the holders of any Senior Indebtedness for the
prepayment or repayment of such Senior Indebtedness pursuant to the
provisions of this Section 3.13, such payment shall be held by the
Trustee for the benefit of, and, upon written request of the holders of
such Senior Indebtedness or their representative, shall be paid
forthwith over and delivered to, the holders of such Senior
Indebtedness or their representative for application in accordance with
the provisions of this Section 3.13. With respect to the holders of
such Senior Indebtedness, the Trustee undertakes to perform only such
obligations on the part of the Trustee as are specifically set forth in
this Section 3.13(e), and no implied covenants or obligations with
respect to the holders of such Senior Indebtedness shall be read into
this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior Indebtedness. If
Net Proceeds are received by Holders which, pursuant to the provisions
of this Section 3.13, should properly have been received by the holders
of such Senior Indebtedness or their representative for the prepayment
or repayment of such Senior Indebtedness, the Holders who receive such
Net Proceeds shall hold such Net Proceeds in trust for, and pay such
Net Proceeds over to, the holders of such Senior Indebtedness or their
representative.
SECTION 3.14 Corporate Existence. Subject to Article 8 hereof
and other than as permitted by the Credit Agreement, the Issuer shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each Significant Subsidiary in accordance with the respective organizational
documents as they may be from time to time amended of the Issuer and each such
Subsidiary and the rights (charter
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and statutory), governmental licenses and governmental franchises of the Issuer
and its Subsidiaries; provided, however, that the Issuer shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any such Subsidiary, if the preservation thereof is no
longer necessary in the conduct of the business of the Issuer and its
Subsidiaries taken as a whole and the loss thereof is not adverse in any
material respect to the Holders (which determination, if made in good faith by
the Board of Directors, shall be conclusive).
SECTION 3.15 Limitation on Liens.
(a) The Issuer shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by the Issuer or any such
Subsidiary, except:
(i) Liens existing on the date hereof, Liens securing
or arising under or in connection with any Indebtedness of the
Issuer not expressly by its terms subordinate or junior in
right of payment to any other Indebtedness of the Issuer
(including, without limitation, Liens permitted by or required
pursuant to the Credit Agreement), Liens arising under or in
connection with Section 9.1 hereof and Liens relating to
judgments to the extent such judgments do not give rise to an
Event of Default pursuant to Section 4.1(5) hereof;
(ii) Liens for taxes or assessments and similar
charges either (x) not delinquent or (y) contested in good
faith by appropriate proceedings and as to which the Issuer or
a Subsidiary shall have set aside on its books such reserves
as may be required pursuant to generally accepted accounting
principles;
(iii) Liens incurred or pledges and deposits in
connection with workers' compensation, unemployment insurance
and other social security benefits, or securing performance
bids, tenders, leases, contracts (other than for the repayment
of borrowed money), statutory obligations, progress payments,
surety and appeal bonds and other obligations of like nature,
incurred in the ordinary course of business;
(iv) Liens imposed by law, such as mechanics',
carriers', warehousemen's, materialmen's and vendors' Liens,
incurred in good faith in the ordinary course of business;
(v) zoning restrictions, easements of licenses,
covenants, reservations, restrictions on the use of real
property or minor irregularities of title incident thereto
which do not in the aggregate materially detract from the
value of the property or assets of the Issuer and its
Subsidiaries, taken as a whole, or materially impair the
operation of the business of the Issuer and its Subsidiaries,
taken as a whole;
(vi) Liens created by Subsidiaries to secure
Indebtedness of such Subsidiaries to the Issuer or its
Subsidiaries;
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(vii) pledges of or Liens on raw materials or on
manufactured products as security for any drafts or bills of
exchange in connection with the importation of such raw
materials or manufactured products in the ordinary course of
business;
(viii) a Lien on any assets (x) securing Indebtedness
incurred or assumed pursuant to Section 3.11(b) hereof for the
purpose of financing all or any part of the cost of acquiring
such asset or construction thereof or thereon or (y) existing
on assets or businesses at the time of the acquisition
thereof;
(ix) the Lien granted to the Trustee pursuant to
Section 5.6 hereof and any substantially equivalent Lien
granted to the respective trustees under the indentures for
other debt securities of the Issuer;
(x) Liens arising in connection with any Mortgage
Financing or Mortgage Refinancing by the Issuer or any of its
Subsidiaries;
(xi) Liens securing reimbursement obligations with
respect to letters of credit issued for the account of the
Issuer or any of its Subsidiaries in the ordinary course of
business;
(xii) any Lien on the Excluded Property;
(xiii) Liens securing an interest of a landlord in
real property leases;
(xiv) all other Liens incurred in the ordinary course
of business; provided that the aggregate amount of
Indebtedness secured by such Liens shall not exceed $5,000,000
at any one time outstanding; or
(xv) Liens created in connection with the refinancing
of any Indebtedness secured by Liens permitted to be incurred
or to exist pursuant to the foregoing clauses; provided,
however, that no additional assets are encumbered by such
Liens in connection with such refinancing, unless permitted by
clause (i) above or Section 3.15(b).
(b) Notwithstanding the provisions of paragraph (a) above, the
Issuer or any Subsidiary may create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, if the
Issuer makes or causes to be made effective provision whereby the
Securities will be equally and ratably secured with any and all other
Indebtedness secured by such Lien as long as any such other
Indebtedness shall be so secured, provided that if such Lien ceases to
exist, such equal and ratable Lien shall thereupon automatically cease
to exist.
SECTION 3.16 Issuer to Cause Certain Subsidiaries to Become
Guarantors. The Issuer shall not permit any of its Subsidiaries to guarantee the
payment of any Indebtedness of the Issuer that is expressly by its terms
subordinate or junior in right of payment to any other Indebtedness of the
Issuer (a "Subordinated Indebtedness Guarantee") unless (i) such Subsidiary
executes and delivers a supplemental indenture evidencing its guarantee of the
Issuer's Obligations hereunder and under the Securities on a substantially
similar basis (the "Securities Guarantee") and (ii) the Securities Guarantee is
senior in right
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of payment to such Subordinated Indebtedness Guarantee to the same extent as the
Securities are senior in right of payment to such junior Indebtedness of the
Issuer; provided that if such Subordinated Indebtedness Guarantee ceases to
exist for any reason, then the Securities Guarantee shall thereupon
automatically cease to exist.
SECTION 3.17 Investments in Unrestricted Subsidiaries. The
Issuer will not, and will not permit any of its Subsidiaries to, directly or
indirectly, make any Investment in any Unrestricted Subsidiary unless (i) the
amount of such Investment does not exceed the amount then permitted to be used
to make a Restricted Payment pursuant to clause (iii) of the first paragraph of
Section 3.9 and (ii) immediately after such Investment, and after giving effect
thereto on a pro forma basis deducting from Net Income the amount of any
Investment the Issuer or any Subsidiary of the Issuer has made in an
Unrestricted Subsidiary during the four full fiscal quarters last preceding the
date of such Investment, the Issuer or any Subsidiary of the Issuer would be
able to incur $1 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 3.11(a). Notwithstanding clause (i) and
(ii) of this Section 3.17 or any other provisions hereof to the contrary, the
Issuer and its Subsidiaries shall be permitted to make (i) the FRD Investment
and (ii) Investments in other Unrestricted Subsidiaries in an aggregate amount
not to exceed $75 million (without regard to the FRD Investment) at any one time
outstanding. The amount by which the aggregate of all Investments in
Unrestricted Subsidiaries exceeds $75 million (without regard to the FRD
Investment) shall be counted in determining the permissible amount of Restricted
Payments pursuant to clause (iii) of the first paragraph of Section 3.9. The
Issuer will not permit any Unrestricted Subsidiary to become a Subsidiary except
pursuant to the last sentence of the definition of Unrestricted Subsidiary set
forth in Section 1.1.
SECTION 3.18 Offer to Redeem Upon Change of Control. If at any
time (the "Change of Control Date") (i) all or substantially all of the Issuer's
assets are sold as an entirety to any person or related group of persons, (ii)
the Issuer is merged with or into another corporation or another corporation is
merged with or into the Issuer with the effect that immediately after such
transaction the stockholders of the Issuer immediately prior to such transaction
hold less than a majority in interest of the total voting power entitled to vote
in the election of directors, managers or trustees of the person surviving such
transaction, (iii) any person or related group of persons acquires a majority in
interest of the total voting power or voting stock of the Issuer, (iv) the
persons constituting the Board of Directors of the Issuer on the date hereof or
persons nominated or elected to the Board of Directors of the Issuer by a
majority vote of such directors (the "Continuing Directors") or by a majority
vote of the Continuing Directors do not constitute a majority of the members of
the Board of Directors of the Issuer (each, a "Change of Control"), then the
Issuer will notify the Holders of the Securities in writing of such occurrence
and will make an offer to redeem in accordance with the terms of this Indenture
(the "Change of Control Offer") all Securities then outstanding at a redemption
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date; provided, however, that such
redemption will only occur if there has been no acceleration which has not been
withdrawn or paid pursuant to the Credit Agreement prior to the time of notice
of a Change of Control Offer. Prior to the mailing of the notice to Holders
provided for above, the Issuer will (x)(I) to the extent then repayable or
prepayable, repay in full all Indebtedness under the Credit Agreement and, to
the extent not then repayable or prepayable, offer to repay in full all such
Indebtedness and to repay the Indebtedness of each lender under the Credit
Agreement who has accepted such offer or (II) obtain the requisite consent under
the Credit Agreement to permit the redemption of the Securities. The Issuer
shall first comply with the proviso in the preceding sentence before it shall be
required to redeem the Securities pursuant to this Section 3.18.
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The Issuer shall comply with all applicable tender offer rules
(including, without limitation, Rule 14e-1 under the Exchange Act, if
applicable) in the event that the Holders' option pursuant to this Section 3.18
is triggered under the circumstances described herein. No less than 30 or more
than 60 days following any Change of Control, the Issuer shall mail a notice to
each Holder of any Securities stating (a) that a Change of Control has occurred
and that a Change of Control Offer is being made as described in this Section
3.18 and that all Securities properly tendered will be accepted for payment, (b)
the redemption price and the redemption date, which will be no later than 30
business days from the date such notice is mailed (the "Change of Control
Payment Date"), (c) that only Securities not tendered will continue to accrue
interest, (d) that any Securities accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date, (e) that Holders electing to have Securities redeemed pursuant to the
Change of Control Offer will be required to surrender the Securities, with the
form entitled "Option of Holder to Elect to Have Security Redeemed" on the
reverse of the Security completed (with the box checked referencing the Change
of Control Offer pursuant to this Section 3.18), to the Issuer or paying agent
prior to the close of business on the third Business Day preceding the Change of
Control Payment Date, (f) that Holders will be entitled to withdraw their
election if the Issuer or paying agent receives, not later than the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Securities delivered for redemption, and a statement that
such Holder is withdrawing his election to have the Securities redeemed, (g)
that Holders whose Securities are being redeemed only in part will be issued new
Securities equal in principal amount to the unredeemed portion of the Securities
surrendered, which unredeemed portion must be equal to $1,000 in principal
amount or an integral multiple thereof, and (h) such other instructions
determined by the Issuer, consistent with this provision, that a Holder of the
Securities must follow in order to have such Holder's Securities redeemed.
On the Change of Control Payment Date, the Issuer shall, to the extent
lawful, (i) accept for payment Securities or portions thereof tendered pursuant
to the Change of Control Offer, (ii) deposit with the paying agent money
sufficient to pay the redemption price of all Securities or portions thereof so
tendered and (iii) deliver to the Trustee Securities so accepted together with
an Officer's Certificate stating the Securities or portions thereof tendered to
the Issuer. The paying agent shall promptly mail to the Holder of Securities so
accepted payment in an amount equal to the redemption price, and the Trustee
shall promptly authenticate and mail to Holders whose Securities are redeemed
only in part new Securities equal in principal amount to any unredeemed portion
of the Securities surrendered, provided that such new Securities shall be in a
principal amount of $1,000 or an integral multiple thereof.
ARTICLE FOUR
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 4.1 Events of Default. An "Event of Default" occurs
if:
(1) the Issuer defaults in the payment of interest on any
Security when the same becomes due and payable and the Default con-
tinues for a period of 30 days;
(2) the Issuer defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon
redemption or otherwise;
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(3) the Issuer fails to comply with any of its other
agreements or covenants in, or any other provisions of, the Securities
or this Indenture and the Default continues for the period and after
the notice specified in this Section 4.1;
(4) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Issuer
or any of its Subsidiaries (or the payment of which is guaranteed by
the Issuer or any of its Subsidiaries) other than (i) Indebtedness of
the Issuer or any Subsidiary of the Issuer to the Issuer or any
Subsidiary of the Issuer or (ii) Indebtedness permitted pursuant to
Section 3.11(d) hereof, whether such Indebtedness or guarantee now
exists or shall be created hereafter, if (a) either (x) such default
results from the failure to pay principal upon the final maturity of
such Indebtedness (after the expiration of any applicable grace period)
or (y) as a result of such default the maturity of such Indebtedness
has been accelerated prior to its final maturity, (b) the principal
amount of such Indebtedness, together with the principal amount of any
such Indebtedness with respect to which the principal amount remains
unpaid upon its final maturity (after the expiration of any applicable
grace period), or the maturity of which has been so accelerated,
aggregates $30,000,000 or more and (c) such default does not result
from compliance with any applicable law or any court order or
governmental decree to which the Issuer or any of its Subsidiaries is
subject;
(5) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Issuer or any of its Subsidiaries and such judgment or
judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the
aggregate of all such judgments (net of amounts covered by insurance,
treating any deductibles, self insurance or retention as not so
covered) exceeds $10,000,000;
(6) the Issuer or any Significant Subsidiary of the
Issuer pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(d) makes a general assignment for the benefit of
its creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Issuer or any
Significant Subsidiary of the Issuer in an involuntary case,
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(b) appoints a Custodian of the Issuer or any
Significant Subsidiary of the Issuer or for all or sub-
stantially all of its property, or
(c) orders the liquidation of the Issuer or any
Significant Subsidiary of the Issuer,
and the order or decree remains unstayed and in effect for 60 days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
An Event of Default shall not be deemed to have occurred under
clause (4) or (5) until the Issuer shall have received written notice from the
Trustee or the Holders of at least 30% in principal amount of the then
outstanding Securities. A Default under clause (3) is not an Event of Default
until the Trustee notifies the Issuer, or the Holders of at least 30% in
principal amount of the then outstanding Securities notify the Issuer and the
Trustee, of the Default and the Issuer does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default".
In the case of any Event of Default pursuant to the provisions
of this Section 4.1 occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Issuer with the intention of
avoiding payment of the premium which the Issuer would have to pay if the Issuer
then had elected to redeem the Securities pursuant to Section 11.1, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law, anything in this Indenture or in the Securities
contained to the contrary notwithstanding.
SECTION 4.2 Acceleration. If an Event of Default (other than
an Event of Default specified in clause (6) or (7) of Section 4.1) occurs and is
continuing, the Trustee may, by written notice to the Issuer, or the Holders of
at least 30% (or 25% in the case of an Event of Default specified in Section
4.1(1) or 4.1(2)) in principal amount of the then outstanding Securities may, by
written notice to the Issuer and the Trustee, and the Trustee shall, upon the
request of such Holders, declare 100% of the unpaid principal of and any accrued
but unpaid interest on the Securities to be due and payable. Upon such
declaration the principal and interest shall be due and payable immediately;
provided, however, that if any Senior Indebtedness is outstanding pursuant to
the Credit Agreement, upon a declaration of acceleration, such principal and
interest shall be due and payable upon the earlier of (x) the day that is five
Business Days after the provision to the Issuer and the Credit Agent of such
written notice, unless such Event of Default is cured or waived prior to such
date, and (y) the date of acceleration of any Senior Indebtedness under the
Credit Agreement. In the event of a declaration of acceleration because an Event
of Default specified in Section 4.1(4) has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if such payment
default is cured or waived or the holders of the Indebtedness which is the
subject of such Event of Default have rescinded their declaration of
acceleration in respect of such Indebtedness within 60 days thereof and the
Trustee has received written notice of such cure, waiver or rescission and no
other Event of Default under Section 4.1(4) has occurred and is continuing with
respect to which 60 days have elapsed since the declaration of acceleration of
the Indebtedness which is the subject of such other event of default (without
rescission of the declaration of acceleration of such Indebtedness). If an Event
of Default specified in clause (6) or (7) of Section 4.1 occurs, the unpaid
principal of and any accrued but unpaid interest on all the Securities shall
ipso facto
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become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. The Holders of a majority in principal
amount of the then outstanding Securities by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived. No such rescission shall affect
any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 4.3 Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. Except as set
forth in Section 2.6 hereof, all remedies are cumulative to the extent permitted
by law.
SECTION 4.4 Waiver of Defaults. Subject to Section 7.2 hereof,
the Holders of a majority in principal amount of the then outstanding Securities
by notice to the Trustee may waive any past Default or Event of Default and its
consequences except a continuing Default or Event of Default in the payment of
the principal of or interest on any Security. Upon any such waiver, such Default
or Event of Default shall cease to exist and together with any Event of Default
arising therefrom, shall be deemed to have been cured for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 4.5 Control by Majority. The Holders of a majority in
principal amount of the then outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may (i)
refuse to follow any direction that conflicts with law or this Indenture, that
the Trustee reasonably determines may be unduly prejudicial to the rights of
other Holders or that may subject the Trustee to personal liability or (ii) take
any other action that it deems proper that is not inconsistent with such
decision. The Trustee shall be entitled to indemnification reasonably
satisfactory to it against losses or expenses caused by the taking or not taking
of such action.
SECTION 4.6 Limitation on Suits. A Holder may pursue a remedy
with respect to this Indenture or the Securities only if:
(1) the Holder gives to the Trustee written notice of a con-
tinuing Event of Default;
(2) the Holders of at least 30% (or 25% in the case of an
Event of Default specified in Section 4.1(1) or 4.1(2) hereof) in
principal amount of the then outstanding Securities make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
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(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
SECTION 4.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
SECTION 4.8 Collection Suit by Trustee. If an Event of Default
specified in Section 4.1(1) or 4.1(2) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Issuer for the whole amount of principal and interest
remaining unpaid on the Securities and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 4.9 Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Issuer (or any other obligor upon the Securities),
its creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 5.6 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 5.6 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding. If
the Trustee does not file a proper claim or proof of debt in the form required
in any such proceeding prior to 30 days before the expiration of the time to
file such claim or claims, then the Credit Agent shall have the right to file
and is hereby authorized to file an appropriate claim for and on behalf of the
Holders.
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SECTION 4.10 Priorities. If the Trustee collects any money
pursuant to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 5.6, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to the Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
Third: to the Issuer.
The Trustee may fix a record date and payment date for any
payment to Holders.
SECTION 4.11 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 4.7, or a suit by
Holders of more than 10% in principal amount of the then outstanding Securities.
ARTICLE FIVE
CONCERNING THE TRUSTEE
SECTION 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default which may have
occurred:
(i) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Indenture,
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and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a responsible officer or responsible officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of not less than a majority in principal
amount of the Securities at the time outstanding relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
This Section 5.1 is in furtherance of and subject to Sections
315 and 316 of the Trust Indenture Act of 1939.
SECTION 5.2 Certain Rights of the Trustee. In furtherance of
and subject to the Trust Indenture Act of 1939, and subject to Section 5.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or
any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon, security or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice
or Opinion of Counsel;
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(d) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders pursuant to the
provisions of this Indenture, unless such Securityholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred therein or
thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless
requested in writing so to do by the holders of not less than a
majority in aggregate principal amount of the Securities then
outstanding; provided that, if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such
examination shall be paid by the Issuer or, if paid by the Trustee or
any predecessor Trustee, shall be repaid by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys not regularly in its employ and the Trustee
shall not be responsible for any misconduct or negligence on the part
of any such agent or attorney appointed with due care by it hereunder.
SECTION 5.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities or as to the adequacy of any disclosure document used in connection
with the sale of the Securities. The Trustee shall not be accountable for the
use or application by the Issuer of any of the Securities or of the proceeds
thereof.
SECTION 5.4 Trustee and Agents May Hold Securities;
Collections, etc. The Trustee or any agent of the Issuer or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
with the same rights it would have if it were not the Trustee or such agent and
may otherwise deal with the Issuer and receive, collect, hold and retain
collections from the Issuer with the same rights it would have if it were not
the Trustee or such agent.
SECTION 5.5 Moneys Held by Trustee. Subject to the provisions
of Section 9.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
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SECTION 5.6 Compensation and Indemnification of Trustee and
Its Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) and the Issuer covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf
of it in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Issuer also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this Indenture or the trusts hereunder
and its duties hereunder, including the costs and expenses of defending itself
against or investigating any claim of liability in the premises. The obligations
of the Issuer under this Section to compensate and indemnify the Trustee and
each predecessor Trustee and to pay or reimburse the Trustee and each
predecessor Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. Such additional indebtedness shall be a senior
claim to that of the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the holders
of particular Securities, and the Securities are hereby subordinated to such
senior claim. If the Trustee incurs expenses or renders services after an Event
of Default specified in clause (6) or (7) of Section 4.1 occurs, such expenses
and the compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 5.7 Right of Trustee to Rely on Officers' Certificate,
etc. Subject to Sections 5.1 and 5.2, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 5.8 Persons Eligible for Appointment as Trustee. The
Trustee hereunder shall at all times be a corporation having a combined capital
and surplus of at least $5,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a federal, state or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
SECTION 5.9 Resignation and Removal; Appointment of Successor
Trustee.
(a) The Trustee may at any time resign by giving written
notice of resignation to the Issuer and by mailing notice thereof by
first-class mail to holders of Securities at their last addresses as
they shall appear on the Security register. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee
by written instrument in duplicate, executed by authority of the Board
of Directors, one copy of which instrument shall
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be delivered to the resigning Trustee and one copy to the successor
trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any
securityholder who has been a bona fide holder of a Security or
Securities for at least six months may, on behalf of himself and all
others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture Act of
1939, after written request therefor by the Issuer or by any
Securityholder who has been a bona fide holder of a Security
or Securities for at least six months; or
(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 5.8 and shall fail
to resign after written request therefor by the Issuer or by
any such Securityholder; or
(iii) the Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or
liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors of the Issuer, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee, or, subject to Section 315(e) of the Trust
Indenture Act of 1939, any securityholder who has been a bona fide
holder of a Security or Securities for at least six months may on
behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Securities at the time outstanding may at any time remove the
Trustee and appoint a successor trustee by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 6.1 of the action in that regard taken
by the Securityholders.
(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the provisions of
this Section 5.9 shall become effective upon acceptance of appointment
by the successor trustee as provided in Section 5.10.
SECTION 5.10 Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 5.9 shall execute and
deliver to the Issuer and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
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predecessor Trustee shall become effective and such successor trustee, without
any further act deed or conveyance, shall become vested with all rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as trustee herein; but, nevertheless, on the written request of
the Issuer or of the successor trustee, upon payment of its charges then unpaid,
the Trustee ceasing to act shall, subject to Section 9.4, pay over to the
successor trustee all moneys at the time held by it hereunder and shall execute
and deliver an instrument transferring to such successor trustee all such
rights, powers, duties and obligations. Upon request of any such successor
trustee, the Issuer shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by such Trustee to
secure any amounts then due it pursuant to the provisions of Section 5.6.
Upon acceptance of appointment by a successor trustee as
provided in this Section 5.10, the Issuer shall mail notice thereof by
first-class mail to the holders of Securities at their last addresses as they
shall appear in the Security register. If the acceptance of appointment is
substantially contemporaneous with the predecessor's resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 5.9. If the Issuer fails to mail such notice within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Issuer.
SECTION 5.11 Merger, Conversion, Consolidation or Succession
to Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 5.8, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor Trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; provided,
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
ARTICLE SIX
CONCERNING THE SECURITYHOLDERS
SECTION 6.1 Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by securityholders may be
embodied in and evidenced by one or more instruments of
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substantially similar tenor signed by such securityholders in person or by agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee. Proof of execution of any instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Sections 5.1 and 5.2) conclusive in favor of the Trustee and the
Issuer, if made in the manner provided in this Article.
SECTION 6.2 Proof of Execution of Instruments and of Holding
of Securities: Record Date. Subject to Sections 5.1 and 5.2, the execution of
any instrument by a securityholder or his agent or proxy may be proved in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Securities shall be proved by the Security register or by a
certificate of the registrar thereof. The Issuer may set a record date for
purposes of determining the identity of holders of Securities entitled to vote
or consent to any action referred to in Section 6.1, which record date may be
set at any time or from time to time by notice to the Trustee, for any date or
dates (in the case of any adjournment or resolicitation) not more than 60 days
nor less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only holders of
Securities of record on such record date shall be entitled to so vote or give
such consent or to withdraw such vote or consent.
SECTION 6.3 Holders to Be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the person
in whose name any Security shall be registered upon the Security register as the
absolute owner of such Security (whether or not such Security shall be overdue
and notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of and, subject
to the provisions of this Indenture, interest on such Security and for all other
purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 6.4 Securities Owned by Issuer Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate principal amount
of Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Issuer or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver only Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Issuer or any other obligor upon the Securities or any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer or any other obligor on the Securities.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above-described persons; and, subject to Sections 5.1 and
5.2, the Trustee shall be entitled to
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accept such Officers' Certificate as conclusive evidence of the facts therein
set forth and of the fact that all Securities not listed therein are outstanding
for the purpose of any such determination.
SECTION 6.5 Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
6.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Securities specified in this Indenture in connection
with such action, any holder of a Security the certificate number of which is
shown by the evidence to be included among the certificate numbers of the
Securities the holders of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Security.
Except as aforesaid, any such action taken by the holder of any Security shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Security and of any Securities issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon any such Security. Any action taken by the holders of the percentage in
aggregate principal amount of the Securities specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the holders of all the Securities.
ARTICLE SEVEN
SUPPLEMENTAL INDENTURES
SECTION 7.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of its Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to evidence the succession of another corporation to the
Issuer, or successive successions and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer
pursuant to Article Eight;
(b) to add to the covenants of the Issuer such further
covenants, restrictions, conditions or provisions as its Board of
Directors and the Trustee shall consider to be for the protection of
the holders of Securities, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, that in
respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default or may
limit the right of the holders of a majority in aggregate principal
amount of the Securities to waive such an Event of Default;
(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture; or to make such other provisions in
regard
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to matters or questions arising under this Indenture or under any
supplemental indenture as the Board of Directors may deem necessary or
desirable and which shall not materially and adversely affect the
interests of the holders of the Securities; and
(d) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities registrable as to
principal only) and to provide for exchangeability of such Securities
with Securities issued hereunder in fully registered form, and to make
all appropriate changes for such purpose.
The Trustee is hereby authorized to join in the execution of
any such supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section may be executed without the consent of the holders of any of the
Securities at the time outstanding, notwithstanding any of the provisions of
Section 7.2.
SECTION 7.2 Supplemental Indentures With Consent of
Securityholders. With the consent (evidenced as provided in Article Six) of the
holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding, the Issuer, when authorized by a resolution
of its Board of Directors, and the Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the holders of the Securities; provided, that no such
supplemental indenture shall (a) extend the final maturity of any Security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon or reduce the premium, if any, payable thereon, or
reduce any amount payable on redemption thereof, or impair or affect the right
of any Securityholder to institute suit for the payment thereof, or waive a
default in the payment of principal of, premium, if any, or interest on any
Security, change the currency of payment of principal of, premium, if any, or
interest on any Security, or modify any provision of this Indenture with respect
to the priority of the Securities in right of payment without the consent of the
holder of each Security so affected, or (b) reduce the aforesaid percentage of
Securities, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all Securities
then outstanding.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors certified by the Secretary or an Assistant
Secretary of the Issuer authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
securityholders and other documents, if any, required by Section 6.1, the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the
securityholders under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
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Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Issuer shall mail a notice thereof by first-class mail to the holders of
Securities at their addresses as they shall appear on the registry books of the
Issuer, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 7.3 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Issuer and the holders
of Securities shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 7.4 Documents to Be Given to Trustee. The Trustee,
subject to the provisions of Sections 5.1 and 5.2, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any such
supplemental indenture complies with the applicable provisions of this
Indenture.
SECTION 7.5 Notation on Securities in Respect of Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for by such
supplemental indenture or as to any action taken at any such meeting. If the
Issuer or the Trustee shall so determine, new Securities so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Issuer, authenticated by the Trustee and delivered in
exchange for the Securities then outstanding.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 8.1 When Issuer May Merge, etc. The Issuer shall not
consolidate or merge with or into, or sell, transfer, lease or convey all or
substantially all of its assets to, any person unless:
(1) the person formed by or surviving any such consolidation
or merger (if other than the Issuer), or to which such sale, transfer,
lease or conveyance shall have been made, is a corporation organized
and existing under the laws of the United States, any state thereof or
the District of Columbia;
(2) the corporation formed by or surviving any such
consolidation or merger (if other than the Issuer), or to which such
sale, transfer, lease or conveyance shall have been made, assumes by
supplemental indenture in a form reasonably satisfactory to the Trustee
all the obligations of the Issuer under the Securities and this
Indenture;
(3) immediately after the transaction no Default or Event of
Default exists;
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(4) the Issuer or any corporation formed by or surviving any
such consolidation or merger, or to which such sale, transfer, lease or
conveyance shall have been made, shall have an Adjusted Consolidated
Net Worth (immediately after the transaction but prior to any purchase
accounting adjustments resulting from the transaction) equal to or
greater than the Adjusted Consolidated Net Worth of the Issuer
immediately preceding the transaction; provided, however, that this
clause (4) shall not apply to any transaction where the consideration
consists solely of common stock or other Equity Interests of the Issuer
or any surviving corporation and any liabilities of such other person
are not assumed by and are specifically non-recourse to the Issuer or
such surviving corporation; and
(5) after giving effect to such transaction and immediately
thereafter, the Issuer or any corporation formed by or surviving any
such consolidation or merger, or to which such sale, transfer, lease or
conveyance shall have been made, shall be permitted to incur at least
$1.00 of additional Indebtedness pursuant to Section 3.11(a), provided
that, if the Fixed Charge Coverage Ratio of the Issuer immediately
prior to such transaction is within the range set forth in Column A
below, then the pro forma Fixed Charge Coverage Ratio of the Issuer or
the surviving entity, as the case may be, immediately after such
transaction, shall be at least equal to the lesser of (1) the ratio
determined by multiplying the percentage set forth in Column (B) below
by the Fixed Charge Coverage Ratio of the Issuer prior to such
transaction and (2) the ratio set forth in Column (C) below:
(A) (B) (C)
1.11:1 to 1.99:1....................... 90% 1.5:1
2.00:1 to 2.99:1....................... 80% 2.1:1
3.00:1 to 3.99:1....................... 70% 2.4:1
4.00:1 or more......................... 60% 2.5:1
and provided, further, that if, immediately after giving effect to such
transaction on a pro forma basis, the Fixed Charge Coverage Ratio of
the Issuer or the surviving entity, as the case may be, is 2.5:1 or
more, the calculation in the preceding proviso shall be inapplicable
and such transaction shall be deemed to have complied with the
requirements of this clause (5).
The Issuer shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with this Section 8.1. The Trustee shall
be entitled to rely conclusively upon such Officers' Certificate and Opinion of
Counsel.
SECTION 8.2 Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, transfer, lease, conveyance or other
disposition of all or substantially all of the assets of the Issuer in
accordance with Section 8.1, the successor corporation formed by such
consolidation or into or with which the Issuer is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such successor person has been named
as the Issuer herein and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities.
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ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS; DEFEASANCE
SECTION 9.1 Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or caused to be paid the principal of and
interest on all the Securities outstanding hereunder, as and when the same shall
have become due and payable, or (b) the Issuer shall have delivered to the
Trustee for cancellation all Securities theretofore authenticated (other than
any Securities which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.6) or (c) all Securities not
theretofore cancelled or delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within 1
year or are to be called for redemption within 1 year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and the
Issuer shall deposit with the Trustee, in trust, funds sufficient to pay at
maturity or upon redemption of all the Securities (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.6) not theretofore cancelled or
delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or redemption date, as the case may
be, but excluding, however, the amount of any moneys for the payment of
principal of or interest on the Securities theretofore repaid to the Issuer in
accordance with the provisions of Section 9.4 or paid to any state or the
District of Columbia pursuant to its unclaimed property or similar laws, and if
the Issuer shall also pay or cause to be paid all other sums payable hereunder
by the Issuer, then this Indenture shall cease to be of further effect (except
as to (i) rights of registration of transfer and exchange, and the Issuer's
right of optional redemption, (ii) substitution of apparently mutilated,
defaced, destroyed, lost or stolen securities, (iii) rights of holders to
receive payments of principal thereof and interest thereon, (iv) the rights,
obligations and immunities of the Trustee hereunder, (v) the rights of the
securityholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them and (vi) the obligation
of the Issuer to maintain an office or agency as provided in Section 3.2) and
the Trustee, on demand of the Issuer accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Issuer, shall execute
proper instruments acknowledging such satisfaction of and discharging this
Indenture. The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Trustee for
any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities.
SECTION 9.2 Application by Trustee of Funds Deposited for
Payment of Securities. Subject to Section 9.4, all moneys deposited with the
Trustee pursuant to Section 9.1 or 9.5 shall be held in trust and applied by it
to the payment, either directly or through any paying agent (including the
Issuer acting as its own paying agent), to the holders of the particular
Securities for the payment or redemption of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest; but such money need not be segregated from other funds
except to the extent required by law.
SECTION 9.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture all moneys then
held by any paying agent under the provisions of this Indenture shall, upon
demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such
paying agent shall be released from all further liability with respect to such
moneys.
SECTION 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Three Years. Any moneys deposited with or paid to the Trustee or
any paying agent for the payment
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of the principal of or interest on any Security and not applied but remaining
unclaimed for three years after the date upon which such principal or interest
shall have become due and payable, shall, upon the written request of the Issuer
and unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be repaid to the Issuer by the Trustee or
such paying agent, and the holder of such Security shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property laws, thereafter look only to the Issuer for any payment which such
holder may be entitled to collect, and all liability of the Trustee or any
paying agent with respect to such moneys shall thereupon cease.
SECTION 9.5 Defeasance. At the Issuer's option, either (a) the
Issuer shall be deemed to have been Discharged (as defined below) from its
respective obligations under the Securities on the 91st day after the applicable
conditions set forth below have been satisfied or (b) the Issuer shall cease to
be under any obligation to comply with any term, provision or condition set
forth in Sections 3.9 through 3.18, 8.1 and 8.2 with respect to the Securities
at any time after the applicable conditions set forth below have been satisfied:
(1) the Issuer shall have deposited or caused to be deposited
irrevocably with the Trustee as funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Securities (i) funds in an amount sufficient to pay (A) principal
amount of the Securities in full on the date of maturity of the
Securities or a selected date of redemption of the Securities as
permitted under this Indenture (if such Securities are to be called for
redemption and satisfactory arrangements have been made with the
Trustee for the giving of notice of redemption) and (B) the interest on
such aggregate principal amount to the date of maturity of the
Securities or such date of redemption, taking into account all
intervening interest payment dates, for the period from the date
through which interest on the Securities has been paid to the date of
maturity of the Securities or such date of redemption and all other
sums payable hereunder by the Issuer; provided that such funds, if
invested, shall be invested only in U.S. Government obligations
maturing prior to the date of maturity of the Securities or, to the
extent applicable, such date of redemption and such intervening
interest payment dates; and, provided further, however, that the
Trustee shall have no obligation to invest such funds; or (ii) U.S.
Government obligations in such aggregate principal amount and maturity
on such dates as will, together with the income or increment to accrue
thereon, but without consideration of any reinvestment of such income
or increment, be sufficient to pay when due (including any intervening
interest payment dates) the amounts set forth in the foregoing clauses
(A) and (B); or (iii) a combination of (i) and (ii) sufficient (in the
cases of deposits made pursuant to (ii) or (iii)), in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge each installment of principal of, and interest on, the
outstanding Securities on the dates such installments of principal or
interest are due;
(2) no Event of Default or event which with notice or lapse of
time would become an Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit;
(3) the Issuer shall have delivered to the Trustee (A) an
Opinion of Counsel to the effect that the deposit of such funds or
investments or both to defease the Issuer's obligations in respect of
the Securities is in accordance with the provisions of this Indenture
and (B) either (i) an Opinion of Counsel to the effect that Holders of
the Securities will not recognize income, gain or loss for United
States federal income tax purposes as a result of the exercise of the
option
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under this Section 9.5 and will be subject to United States federal
income tax on the same amount and in the same manner and at the same
time as would have been the case if such option had not been exercised,
or (ii) a private letter ruling to that effect directed to the Trustee
received from the United States Internal Revenue Service; and
(4) the deposit of such funds or investments shall not
contravene applicable law.
"Discharged" means that the Issuer shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Securities and to have satisfied all the obligations under this
Indenture and the Securities (and the Trustee, at the request and the expense of
the Issuer, shall execute proper instruments acknowledging the same), except (i)
the rights of Holders of Securities to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest on the Securities
when such payments are due; (ii) the Issuer's obligations with respect to the
Securities under Section 2.5, 2.6, and 9.4; (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder, and (iv) the obligation of the
Issuer to maintain an office or agency as provided in Section 3.2.
ARTICLE TEN
MISCELLANEOUS PROVISIONS
SECTION 10.1 Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or upon
any obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer or director, as such, of the Issuer or of any successor, either directly
or through the Issuer or any successor, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Securities by the holders thereof and as
part of the consideration for the issue of the Securities.
SECTION 10.2 Provisions of Indenture for the Sole Benefit of
Parties and Securityholders. Nothing in this Indenture or in the Securities,
expressed or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and their successors and the holders
of Senior Indebtedness and the holders of the Securities, any legal or equitable
right, remedy or claim under this Indenture or under any covenant or provision
herein contained, all such covenants and provisions being for the sole benefit
of the parties hereto and their successors and of the holders of Senior
Indebtedness and the holders of the Securities.
SECTION 10.3 Successors and Assigns of Issuer Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.
SECTION 10.4 Notices and Demands on Issuer, Trustee and
Securityholders. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities to or on the Issuer may be given or served by hand delivery, by
overnight courier or by being deposited postage prepaid, first-class mail
(except, in each case, as otherwise specifically provided herein), in each case
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to Advantica Restaurant Group, Inc., 203 East Main Street,
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Spartanburg, South Carolina 29319, Attention: Chief Financial Officer. Any
notice, direction, request or demand by the Issuer or any securityholder to or
upon the Trustee shall be deemed to have been sufficiently given or made, for
all purposes, if given or made at the Corporate Trust Office.
Where this Indenture provides for notice to Holders, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and delivered by hand, delivered by overnight courier or mailed,
first-class postage prepaid, to each Holder entitled thereto, at his last
address as it appears in the Security register. In any case where notice to
Holders is given by any of the foregoing means, neither the failure to give such
notice by such means, nor any defect in any notice so given, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Issuer and
securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 10.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the Issuer
to the Trustee to take any action under any of the provisions of this Indenture,
the Issuer shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of counsel may be based, insofar as it
relates to factual matters information with respect to which is in the
possession of the Issuer, upon the certificate, statement or opinion of or
representations by an officer or officers of the Issuer, unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.
54
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Any certificate, statement or opinion of an officer of the
Issuer or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
SECTION 10.6 Payments Due on Saturdays, Sundays and Holidays.
If the date of maturity of interest on or principal of the Securities or the
date fixed for redemption of any Security shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest shall
accrue for the period after such date.
SECTION 10.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act of
1939 (an "incorporated provision"), such incorporated provision shall control.
SECTION 10.8 New York Law to Govern. This Indenture and each
Security shall be deemed to be a contract under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said state, except as may otherwise be required by mandatory provisions of law.
SECTION 10.9 Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 10.10 Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1 Right of Optional Redemption. The Securities not
may be redeemed, in whole or in part, at the option of the Issuer prior to
January 15, 2003. On and after such date, the Securities may be redeemed, in
whole or in part, at the option of the Issuer upon the terms and subject to the
conditions set forth in the form of Security hereinabove recited.
Notwithstanding the foregoing, from January 15, 1998 until January 15, 2001, the
Issuer may redeem up to 35% of the aggregate principal amount of Securities
outstanding on the date hereof at a redemption price (expressed as a percentage
of the principal amount) of 110%, plus accrued and unpaid interest, if any, to
the redemption date, from the net proceeds of any public offering for cash of
any Equity Interests of the Issuer or any subsidiary thereof.
55
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SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice
of redemption to the holders of Securities to be redeemed as a whole or in part
shall be given by mailing notice of such redemption by first class mail, postage
prepaid, at least 30 days and not more than 60 days prior to the date fixed for
redemption to such holders of Securities at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
The notice of redemption to each such holder shall specify the
principal amount of each Security held by such holder to be redeemed, the date
fixed for redemption, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of such Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. In case any Security is to be
redeemed in part only the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof will be
issued.
The notice of redemption of Securities to be redeemed at the
option of the Issuer shall be given by the Issuer or, at the Issuer's request,
by the Trustee in the name and at the expense of the Issuer.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with the
Trustee or with one or more paying agents (or, if the Issuer is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
3.4) an amount of money sufficient to redeem on the redemption date all the
Securities so called for redemption at the appropriate redemption price,
together with accrued interest to the date fixed for redemption. If less than
all the outstanding Securities are to be redeemed the Issuer will deliver to the
Trustee at least 70 days prior to the date fixed for redemption an Officers'
Certificate stating the aggregate principal amount of Securities to be redeemed.
If less than all the Securities are to be redeemed the Trustee
shall select in such manner as it shall deem appropriate and fair but generally
pro rata or by lot, Securities to be redeemed in whole or in part. Securities
may be redeemed in part in multiples of $1,000 only. The Trustee shall promptly
notify the Issuer in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed. For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.
SECTION 11.3 Payment of Securities called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue and, except as provided in Sections 5.5 and 9.4, such
Securities shall cease from and after the date fixed for redemption to be
entitled to any benefit or security under this Indenture, and the holders
56
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thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice said Securities or the specified portions
thereof shall be paid and redeemed by the Issuer at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption;
provided that any semi-annual payment of interest becoming due on the date fixed
for redemption shall be payable to the holders of such Securities registered as
such on the relevant record date subject to the terms and provisions of Section
2.4 hereof.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Security.
Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on the
order of the holder thereof, at the expense of the Issuer, a new Security or
Securities, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
SECTION 11.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Issuer and
delivered to the Trustee at least 40 days prior to the last date on which notice
of redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated, by either (a) the Issuer or (b) an entity specifically
identified in such written statement directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuer.
SECTION 11.5 Offer to Redeem by Application of Net Proceeds.
At such time as the Issuer determines to make a Net Proceeds Offer pursuant to
the provisions of Section 3.13 hereof, the Issuer shall deliver to the Trustee a
notice to such effect specifying the aggregate principal amount of the
Securities for which the Net Proceeds Offer will be made. Within 15 days
thereafter, the Trustee shall select the Securities to be offered to be redeemed
in accordance with Section 11.2 hereof. Within 10 days thereafter the Issuer
shall mail or cause the Trustee to mail (in the Issuer's name and at its expense
and pursuant to an Officer's Certificate as required by Section 3.13 hereof) a
Net Proceeds Offer to redeem to each Holder of Securities whose Securities are
to be offered to be redeemed. The Net Proceeds Offer shall identify the
Securities to which it relates and shall contain the information required by the
second paragraph of Section 11.2 hereof and shall provide for a redemption date
no earlier than 65 days after the mailing of the Net Proceeds Offer.
A Holder receiving a Net Proceeds Offer may elect to have
redeemed the Securities to which the Net Proceeds Offer relates by providing
written notice thereof to the Trustee and the Issuer on or before 35 days
preceding the redemption date and shall thereafter complete the form entitled
"Option of Holder to Elect to Have Security Redeemed" on the reverse of the
Security (with the box checked referencing the Net Proceeds Offer pursuant to
this Section 11.5) and surrender the Security to the Issuer, or depositary, if
appointed by the Issuer, or a paying agent at least three days prior to the
redemption date. A Holder may not elect to have redeemed less than all of the
Securities to which the Net Proceeds Offer relates.
Other than as specifically provided in this Section 11.5, any
redemption pursuant to this Section 11.5 shall be made pursuant to the
provisions of Sections 11.2 through 11.4 hereof.
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SECTION 11.6 Provisions Governing Redemption Pursuant to
Change of Control Offer. Any redemption of Securities pursuant to any Holder's
acceptance of a Change of Control Offer shall be governed by the provisions of
Section 3.18 of this Indenture and, to the extent applicable and not
inconsistent therewith, the provisions of Sections 11.2 through 11.4 hereof.
58
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed all as of the date first above written.
ADVANTICA RESTAURANT GROUP, INC.
By
-----------------------------------
Ronald B. Hutchison, Vice President
Attest:
By
------------------------------
Rhonda J. Parish, Secretary
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By
-----------------------------------
Title:
59
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CREDIT AGREEMENT
dated as of January 7, 1998
Among
DENNY'S, INC.,
EL POLLO LOCO, INC.,
FLAGSTAR ENTERPRISES, INC.,
FLAGSTAR SYSTEMS, INC.,
QUINCY'S RESTAURANTS, INC.,
as Borrowers,
ADVANTICA RESTAURANT GROUP, INC.,
as a Guarantor,
THE LENDERS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms ....................................... 1
SECTION 1.02. Terms Generally ..................................... 22
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments ......................................... 22
SECTION 2.02. Loans ............................................... 22
SECTION 2.03. Borrowing Procedure ................................. 24
SECTION 2.04. Evidence of Debt; Repayment of Loans ................ 25
SECTION 2.05. Fees ................................................ 26
SECTION 2.06. Interest on Loans ................................... 26
SECTION 2.07. Default Interest .................................... 27
SECTION 2.08. Alternate Rate of Interest .......................... 27
SECTION 2.09. Termination and Reduction of Commitments ............ 27
SECTION 2.10. Conversion and Continuation of Borrowings .......... 28
SECTION 2.11. Prepayment .......................................... 29
SECTION 2.12. Reserve Requirements; Change in Circumstances........ 30
SECTION 2.13. Change in Legality .................................. 31
SECTION 2.14. Indemnity............................................ 32
SECTION 2.15. Pro Rata Treatment................................... 32
SECTION 2.16. Sharing of Setoffs................................... 32
SECTION 2.17. Payments............................................. 33
SECTION 2.18. Taxes................................................ 33
SECTION 2.19. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate............................... 35
SECTION 2.20. Letters of Credit.................................... 36
SECTION 2.21. Swingline Loans...................................... 39
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers ................................ 41
SECTION 3.02. Authorization ....................................... 41
SECTION 3.03. Enforceability ...................................... 41
<PAGE>
Contents, p. 2
Page
SECTION 3.04. Governmental Approvals .............................. 41
SECTION 3.05. Financial Statements; Registration Statement ........ 41
SECTION 3.06. No Material Adverse Change .......................... 42
SECTION 3.07. Title to Properties; Possession Under Leases ........ 42
SECTION 3.08. Subsidiaries; Parties to Receive Equity ............. 42
SECTION 3.09. Litigation; Compliance with Laws .................... 43
SECTION 3.10. Agreements .......................................... 43
SECTION 3.11. Federal Reserve Regulations ......................... 43
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act ................................................ 44
SECTION 3.13. Use of Proceeds ..................................... 44
SECTION 3.14. Tax Returns ......................................... 44
SECTION 3.15. No Material Misstatements ........................... 44
SECTION 3.16. Employee Benefit Plans .............................. 44
SECTION 3.17. Environmental Matters ............................... 45
SECTION 3.18. Insurance ........................................... 45
SECTION 3.19. Security Documents .................................. 45
SECTION 3.20. Labor Matters ....................................... 46
SECTION 3.21. Solvency ............................................ 46
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. All Credit Events ................................... 47
SECTION 4.02. First Credit Event ............. .................... 47
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Existence; Businesses and Properties ................ 53
SECTION 5.02. Insurance ........................................... 54
SECTION 5.03. Obligations and Taxes ............................... 54
SECTION 5.04. Financial Statements, Reports, etc. ................. 54
SECTION 5.05. Litigation and Other Notices ........................ 55
SECTION 5.06. Employee Benefits ................................... 56
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections ........................................ 56
SECTION 5.08. Use of Proceeds ..................................... 56
SECTION 5.09. Compliance with Environmental Laws .................. 56
SECTION 5.10. Preparation of Environmental Reports ................ 56
SECTION 5.11. Further Assurances................................... 56
<PAGE>
Contents, p. 3
Page
SECTION 5.12 Additional Covenants Regarding Real Estate Financing
Documents........................................... 57
SECTION 5.13. Concentration Accounts............................... 57
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness ........................................ 58
SECTION 6.02. Liens ............................................... 59
SECTION 6.03. Sale and Lease-Back Transactions .................... 60
SECTION 6.04. Investments, Loans and Advances ..................... 60
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions ....................................... 61
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends ...................... 63
SECTION 6.07. Transactions with Affiliates ........................ 63
SECTION 6.08. Other Indebtedness and Agreements.................... 64
SECTION 6.09. Operating Leases .................................... 64
SECTION 6.10. Capital Expenditures................................. 64
SECTION 6.11. Consolidated Total Debt Ratio........................ 65
SECTION 6.12. Consolidated Senior Secured Debt Ratio............... 65
SECTION 6.13. Consolidated Interest Coverage Ratio................. 66
SECTION 6.14. Consolidated Fixed Charge Coverage Ratio............. 66
SECTION 6.15. Business of Parent, the Borrower and the
Subsidiaries........................................ 67
SECTION 6.16. Fiscal Year ......................................... 67
ARTICLE VII
EVENTS OF DEFAULT 67
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT 70
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices ............................................. 72
SECTION 9.02. Survival of Agreement ............................... 72
<PAGE>
Contents, p. 4
Page
SECTION 9.03. Binding Effect ...................................... 73
SECTION 9.04. Successors and Assigns .............................. 73
SECTION 9.05. Expenses; Indemnity ................................. 75
SECTION 9.06. Right of Setoff ..................................... 76
SECTION 9.07. Applicable Law ...................................... 76
SECTION 9.08. Waivers; Amendment .................................. 77
SECTION 9.09. Interest Rate Limitation ............................ 77
SECTION 9.10. Entire Agreement .................................... 78
SECTION 9.11. WAIVER OF JURY TRIAL ................................ 78
SECTION 9.12. Severability ........................................ 78
SECTION 9.13. Counterparts ........................................ 78
SECTION 9.14. Headings ............................................ 78
SECTION 9.15. Jurisdiction; Consent to Service of Process ......... 78
EXHIBITS AND SCHEDULES
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E Form of Mortgage
Exhibit F Form of Parent Guarantee
Exhibit G Form of Pledge Agreement
Exhibit H Form of Security Agreement
Exhibit I Form of Subsidiary Guarantee Agreement
Exhibit J Form of Opinion of Parker, Poe, Adams and
Bernstein, L.L.P.
Exhibit K Form of Plan of Reorganization
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Mortgaged Property
Schedule 1.01(c) Guarantors
Schedule 2.01 Commitments
Schedule 3.08(a) Subsidiaries
Schedule 3.08(b) Parties to Receive Equity
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
Schedule 6.05 Restaurants to be Sold
Schedule 6.06 Agreements Restricting Dividends
<PAGE>
CREDIT AGREEMENT dated as of January 7, 1998
(this "AGREEMENT"), among DENNY'S INC., a California
corporation, EL POLLO LOCO, INC., a Delaware
corporation, FLAGSTAR ENTERPRISES, INC., an Alabama
corporation, FLAGSTAR SYSTEMS, INC., a Delaware
corporation, QUINCY'S RESTAURANTS, INC., an Alabama
corporation (each of the foregoing, individually, a
"BORROWER" and, collectively, the "BORROWERS"),
ADVANTICA RESTAURANT GROUP, INC., a Delaware
corporation ("PARENT"), the Lenders (as defined in
Article I) and THE CHASE MANHATTAN BANK, a New York
banking corporation ("CHASE"), as swingline lender
(in such capacity, the "SWINGLINE LENDER"), as
issuing bank, as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") and as
collateral agent (in such capacity, the "COLLATERAL
AGENT") for the Lenders.
The Borrowers have requested the Lenders to extend credit in the form
of Loans (such term and each other capitalized term used but not otherwise
defined herein having the meaning given it in Article I) at any time and from
time to time prior to the Maturity Date, in an aggregate principal amount at any
time outstanding not in excess of $200,000,000 minus the aggregate L/C Exposure
at such time. The Borrowers have requested the Swingline Lender to extend
credit, at any time and from time to time prior to the Maturity Date, in the
form of Swingline Loans. The Borrowers have requested the Issuing Bank to issue
letters of credit, in an aggregate face amount at any time outstanding not in
excess of $200,000,000 minus the aggregate principal amount of Loans outstanding
at such time, to support payment obligations incurred in the ordinary course of
business by the Borrowers and their respective subsidiaries. The proceeds of the
Loans are to be used solely (a) on the Closing Date, to repay or refinance loans
under the DIP Credit Agreement and (b) after the Closing Date, for working
capital and general corporate purposes.
The Lenders and the Swingline Lender are willing to extend such credit
to the Borrowers and the Issuing Bank is willing to issue letters of credit for
the account of the Borrowers on the terms and subject to the conditions set
forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
<PAGE>
2
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"ADMINISTRATIVE AGENT FEES" shall have the meaning assigned to such
term in Section 2.05(b).
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Question-
naire in the form of Exhibit A.
"AFFILIATE" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"AGGREGATE CREDIT EXPOSURE" shall mean the aggregate amount of the
Lenders' Credit Exposures.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) or (c), or both, of the preceding sentence, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively. The term "PRIME RATE" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective. The term "BASE CD RATE" shall mean the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate. The term "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"APPLICABLE PERCENTAGE" of any Lender at any time shall mean the
percentage of the Total Commitment represented by such Lender's Commitment. In
the event the Commitments shall have expired or been terminated, the Applicable
Percentages shall be determined on the basis of the Commitments most recently in
effect.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor thereto) for insurance
by such Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
<PAGE>
3
"ASSET SALE" shall mean any sale, lease, transfer, assignment, loss,
damage or destruction (in the case of loss, damage or destruction, to the extent
covered by insurance) or other disposition (by merger or otherwise) of assets
(including trademarks and other intangibles), business units, individual
business assets or property of Parent, any Borrower or any Specified Subsidiary,
including the sale, transfer or disposition of any capital stock or real
property, to any person other than Parent, any Borrower or any Specified
Subsidiary; PROVIDED, HOWEVER, that none of the following shall be deemed to be
an Asset Sale: (a) the sale of inventory in the ordinary course of business or
(b) the sale in the ordinary course of business of damaged, worn out or obsolete
assets that are no longer necessary for the proper conduct of the applicable
Borrower's or Specified Subsidiary's business.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"BORROWING" shall mean (a) a group of Revolving Loans of a single Type
made by the Lenders on a single date to one or more Borrowers and as to which a
single Interest Period is in effect or (b) a Swingline Loan.
"BORROWING REQUEST" shall mean a request by one or more Borrowers in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the term
"BUSINESS DAY" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPEX FINANCING" shall mean, with respect to any Consolidated Capital
Expenditure, the incurrence by Parent, any Borrower or any Specified Subsidiary
of any Indebtedness secured (whether such security is limited to principal or
otherwise) by a mortgage or other Lien, including any Lien under a Capital Lease
Obligation, on the asset that is the subject of such Consolidated Capital
Expenditure, to the extent that the Net Cash Proceeds of such Indebtedness do
not exceed the amount of such Consolidated Capital Expenditure.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CASES" shall mean the Chapter 11 Cases of Parent, Flagstar Corporation
and Flagstar Holdings.
"CASUALTY" shall have the meaning set forth in the Mortgage.
"CASUALTY PROCEEDS" shall have the meaning set forth in the Mortgage.
<PAGE>
4
"CHANGE IN CONTROL" shall mean (a) any person or group (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the
date hereof) shall own, directly or indirectly, beneficially or of record,
shares representing more than 25% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Parent, PROVIDED that
Loomis Sayles Company, Inc., Magten Asset Management Corporation, and Moore
Capital Management, Inc. may each own, directly or indirectly, beneficially or
of record, shares representing up to 35% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Parent without
causing a Change of Control; (b) any person (other than Parent or any wholly
owned Subsidiary) shall own, directly or indirectly, beneficially or of record
any shares of capital stock of (i) any Borrower or (ii) any Subsidiary that
owns, directly or indirectly, beneficially or of record, any shares of capital
stock of any Borrower; (c) a majority of the seats (other than vacant seats) on
the board of directors of Parent shall at any time be occupied by persons who
were neither (i) nominated by the board of directors of Parent, nor (ii)
appointed by directors so nominated; (d) any change in control (or similar
event, however denominated) with respect to Parent shall occur under and as
defined in any indenture or agreement in respect of Indebtedness to which Parent
is a party; or (e) any person or group shall otherwise directly or indirectly
Control Parent.
"CLOSING DATE" shall mean the date of the first Credit Event.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Property.
"COMMITMENT" shall mean, with respect to each Lender, the commitment of
such Lender to make Loans hereunder and participate in Letters of Credit and
Swingline Loans as set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender assumed its Commitment, as applicable,
as the same may be (a) reduced from time to time pursuant to Section 2.09 or
pursuant to Section 2.19 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04.
"COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.05(a).
"CONCENTRATION ACCOUNT" shall have the meaning set forth in the
Security Agreement.
"CONDEMNATION" shall have the meaning set forth in the Mortgage.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in the
Mortgage.
"CONFIDENTIAL INFORMATION MEMORANDUM" shall mean the Confidential
Information Memorandum of Flagstar Corporation and the Borrowers dated July
1997.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, without
duplication, the sum of the aggregate of all expenditures (whether paid in cash
or other consideration or accrued as a liability) by Parent, the Borrowers and
the Specified Subsidiaries during such period that, in conformity with GAAP,
would be included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Parent, the
Borrowers and the Specified Subsidiaries for such period, including
<PAGE>
5
(a) Capital Lease Obligations and (b) expenditures for equipment that is
purchased simultaneously with the trade-in of existing equipment owned by any
Borrower or any of the Specified Subsidiaries to the extent of the gross amount
of the purchase price less the book value of the equipment being traded in at
such time, but excluding (c) interest capitalized during construction and (d)
expenditures made in connection with the replacement or restoration of assets,
to the extent reimbursed or financed from insurance proceeds paid on account of
the loss of or the damage to the assets being replaced or restored, or from
awards of compensation arising from the taking by condemnation or eminent domain
of such assets being replaced, and net of cash amounts received by the Borrowers
and the Specified Subsidiaries from other persons during that period in
reimbursement of Consolidated Capital Expenditures made by the Borrowers and the
Specified Subsidiaries.
"CONSOLIDATED CASH INTEREST EXPENSE" shall mean, for any period,
Consolidated Interest Expense MINUS (a) interest not paid in cash (including
amortization of (i) discount and deferred debt expenses (but excluding any
capitalized interest expense with respect to the Old Senior Notes) and (ii) fees
with respect to Interest Rate Protection Agreements) payable in connection with
the incurrence of Indebtedness to the extent included in interest expense in
accordance with GAAP (including fees and expenses in connection with the
Transactions), PLUS (b) the amortization of the write-up of indebtedness
relating to the fresh-start accounting treatment (in accordance with GAAP) of
Parent's consolidated financial statements resulting from the Cases and Parent's
emergence therefrom.
"CONSOLIDATED EBITDA" shall mean with respect to Parent, the Borrowers
and the Specified Subsidiaries for any period, all as determined in accordance
with GAAP on a consolidated basis after eliminating intercompany items, the net
income (or net loss) for such period, PLUS (a) to the extent deducted in
computing such net income (or net loss) the sum of (i) depreciation expense,
(ii) amortization expense, (iii) other non-cash charges, (iv) provisions for
LIFO adjustment for inventory valuation, (v) net total Federal, state and local
income tax expense, (vi) Consolidated Interest Expense, (vii) extraordinary
losses, (viii) any non-recurring charge or restructuring charge that in
accordance with GAAP is excluded from operating income, (ix) the cumulative
effect of any change in accounting principles and (x) "Chapter 11 expenses" (or
"administrative costs reflecting Chapter 11 expenses") as shown on Parent's
consolidated statement of income for such period MINUS (b) extraordinary gains
MINUS (c) the amount of cash expended in such period in respect of any amount
that, under clause (viii) above, was taken into account in determining
Consolidated EBITDA for such or any prior period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean, for any period,
the ratio of (a) the sum of (i) Consolidated EBITDA for such period and (ii)
Consolidated Lease Expense for such period to (b) the sum of (i) Consolidated
Cash Interest Expense for such period and (ii) Consolidated Lease Expense for
such period.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Cash
Interest Expense for such period.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, all
interest expense (including the interest component in respect of Capital Lease
Obligations), net of interest income, accrued or paid by Parent, the Borrowers
and the Specified Subsidiaries during such period in respect of Indebtedness of
Parent, the Borrowers and the Specified Subsidiaries, including (a) any
amortization of initial debt discount or any fees (including fees with respect
to Interest Rate Protection Agreements) payable in connection with the
incurrence of Indebtedness to the extent included in interest expense in
accordance with GAAP (including fees and expenses in connection with the
Transactions), (b) any commitment fees, agent's and other regularly scheduled
<PAGE>
6
fees and charges in respect of such Indebtedness, (c) commissions and other fees
and charges payable in connection with letters of credit, (d) the net payment,
if any, payable in connection with all interest rate protection contracts and
(e) interest capitalized during construction, all determined on a consolidated
basis in accordance with GAAP after eliminating all intercompany items.
"CONSOLIDATED LEASE EXPENSE" shall mean, for any period, all payment
obligations of Parent, the Borrowers and the Specified Subsidiaries during such
period under Operating Leases, as determined on a consolidated basis for Parent,
the Borrowers and the Specified Subsidiaries in accordance with GAAP.
"CONSOLIDATED SENIOR SECURED DEBT" shall mean, at any date and without
duplication, Consolidated Total Debt at such date MINUS (a) the aggregate
principal amount of New Senior Notes outstanding on such date and (b) to the
extent included in computing such Consolidated Total Debt, the aggregate amount
of other unsecured Indebtedness of Parent at such date on a consolidated basis
in accordance with GAAP.
"CONSOLIDATED SENIOR SECURED DEBT RATIO" shall mean, for any period,
the ratio of (a) Consolidated Senior Secured Debt on the last day of such period
to (b) Consolidated EBITDA for such period.
"CONSOLIDATED TOTAL DEBT" shall mean, at any date and without
duplication, the aggregate amount of all Indebtedness of Parent, the Borrowers
and the Specified Subsidiaries at such date on a consolidated basis in
accordance with GAAP (other than (a) the undrawn amount of (i) outstanding
letters of credit and (ii) other obligations under similar facilities and (b)
Indebtedness of the type described in clause (g) of the definition of the term
"Indebtedness" or Indebtedness of the type referred to in clause (h) or (i) or
the final sentence of such definition to the extent that the Indebtedness of the
other person referred to in such clause (h) or (i) or such final sentence is
Indebtedness of the type referred to in clause (a) or (b) above).
"CONSOLIDATED TOTAL DEBT RATIO" shall mean, for any period, the ratio
of (a) Consolidated Total Debt on the last day of such period to (b)
Consolidated EBITDA for such period.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings
correlative thereto.
"COURT" shall mean the United States Bankruptcy Court for the District
of South Carolina or any other court having jurisdiction over the Cases from
time to time.
"CREDIT EVENT" shall have the meaning assigned to such term in Section
4.01.
"CREDIT EXPOSURE" shall mean, with respect to any Lender at any time,
the aggregate principal amount at such time of all outstanding Loans of such
Lender, PLUS the aggregate amount at such time of such Lender's L/C Exposure,
PLUS the aggregate amount at such time of such Lender's Swingline Exposure.
"DEFAULT" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"DENNY'S" shall mean Denny's, Inc., a California corporation and an
indirect, wholly owned subsidiary of Parent.
<PAGE>
7
"DENNY'S HOLDINGS" shall mean Denny's Holdings, Inc., a New York
corporation and a direct, wholly owned subsidiary of Parent.
"DENNY'S INDENTURE" shall mean the Indenture dated as of July 12, 1990,
between Denny's Realty and State Street Bank and Trust Company, as Trustee.
"DENNY'S LEASE" shall mean the Amended and Restated Lease dated as of
July 12, 1990, between Denny's Realty, as landlord, and Denny's, as tenant.
"DENNY'S REALTY" shall mean Denny's Realty, Inc., a Delaware
corporation and an indirect, wholly owned subsidiary of Denny's.
"DENNY'S TRUSTEE" shall mean the Trustee, as defined in the Denny's
Indenture.
"DIP CREDIT AGREEMENT" shall mean the Credit Agreement dated as of July
11, 1997, as amended, among Parent, Flagstar Corporation, the Subsidiary
Guarantors, the financial institutions party thereto and The Chase Manhattan
Bank, as agent.
"DISCLOSURE STATEMENT" shall mean the Disclosure Statement to the Plan
of Reorganization consisting of the prospectus of Parent and Flagstar
Corporation dated June 5, 1997, as approved by the Court by order entered on
November 12, 1997.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARIES" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"ELIGIBLE ASSIGNEE" shall mean (a) a commercial bank having total
assets in excess of $1,000,000,000; (b) a finance company, insurance company or
other financial institution or fund, in each case acceptable to the
Administrative Agent, that in the ordinary course of business extends credit of
the type represented by the Loans and has total assets in excess of $200,000,000
and whose becoming an assignee would not constitute a prohibited transaction
under Section 4975 of ERISA; and (c) any other financial institution reasonably
satisfactory to Parent and the Administrative Agent.
"EMERGENCE TRANSACTIONS" shall mean the following transactions, as more
particularly described in the Plan of Reorganization and the Disclosure
Statement:
(a) the merger of Flagstar Corporation into Parent;
(b) the discharge of the claims of the holders of the Old
Senior Notes in exchange for the issuance to such holders of the New
Senior Notes;
(c) the discharge of the claims of the holders of the Senior
Subordinated Debentures in exchange for the issuance to such holders of
shares of New Common Stock representing in the aggregate 95.50% of all
the shares of New Common Stock expected to be outstanding immediately
following the consummation of the Plan of Reorganization;
<PAGE>
8
(d) the discharge of the claims of the holders of the Junior
Subordinated Debentures in exchange for the issuance to such holders of
New Common Stock representing in the aggregate 4.50% of all the shares
of New Common Stock expected to be outstanding immediately following
the consummation of the Plan of Reorganization and warrants to purchase
shares of New Common Stock that, upon issuance, will represent in the
aggregate 10% of the New Common Stock expected to be outstanding
immediately following the consummation of the Plan of Reorganization;
(e) the discharge of the Subordinated Promissory Note;
(f) the cancelation of the Old Preferred Stock;
(g) the cancelation of the Old Common Stock; and
(h) the cancelation of all outstanding warrants and options to
purchase Old Common Stock.
"ENTERPRISES" shall mean Flagstar Enterprises, Inc., an Alabama
corporation and a direct, wholly owned subsidiary of Spartan.
"ENVIRONMENT" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"ENVIRONMENTAL CLAIM" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
other person not a party to this Agreement for damages, injunctive or equitable
relief, personal injury (including sickness, disease or death), Remedial Action
costs, tangible or intangible property damage, natural resource damages,
nuisance, pollution, any adverse effect on the environment caused by any
Hazardous Material, or for fines, penalties or restrictions, resulting from or
based upon (a) the existence, or the continuation of the existence, of a Release
(including sudden or non-sudden, accidental or non-accidental Releases), (b)
exposure to any Hazardous Material, (c) the presence, use, handling,
transportation, storage, treatment or disposal of any Hazardous Material or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"ENVIRONMENTAL LAW" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
<PAGE>
9
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with Parent or any Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than events the reporting of which has been waived by the PBGC); (b)
the adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
with respect to the termination of any Plan or the withdrawal or partial
withdrawal of Parent or any Borrower or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by any Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by any Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "PROHIBITED
TRANSACTION" with respect to which Parent, any Borrower or any of their
respective subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which Parent, any Borrower or any
such Subsidiary could otherwise be liable; and (i) any other event or condition
with respect to a Plan or Multiemployer Plan that could reasonably be expected
to result in liability of Parent or any Borrower.
"EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"EXCLUDED SUBSIDIARIES" shall mean FRD and its subsidiaries.
"EXISTING LETTERS OF CREDIT" shall mean each letter of credit that (a)
was issued under the DIP Credit Agreement for the account of Flagstar
Corporation, (b) is outstanding on the Closing Date and (c) is listed on
Schedule 1.01(a).
"FAIR MARKET VALUE" shall mean, with respect to any asset, the value of
the consideration obtainable in a sale of such asset in the open market at a
specific date assuming a sale by a willing seller to a willing purchaser dealing
at arm's length and arranged in an orderly manner over a reasonable period of
time having regard to the nature and characteristics of such asset, which value
shall, for any asset with a Fair Market Value in excess of $5,000,000, be either
(a) the value of such asset as determined in good faith by the Board of
Directors of Parent or (b) if such asset shall have been the subject of an
appraisal done reasonably contemporaneously by any independent third party
appraiser and the basic assumptions underlying such appraisal are reasonable,
the value of such asset as stated in such appraisal.
<PAGE>
10
"FEE LETTER" shall mean the Fee Letter dated May 12, 1997, between
Parent, Flagstar Corporation and the Administrative Agent relating to the credit
facilities being made available to the Borrowers under this Agreement.
"FEES" shall mean the Commitment Fees, the Administrative Agent's Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer, or
Controller of such corporation.
"FIRST-TIER SUBSIDIARIES" shall mean each of TWS, Denny's Holdings,
Spartan and each other Subsidiary Guarantor that is not a subsidiary of another
subsidiary of Parent, other than Flagstar Holdings and IM Purchasing, Inc., a
Delaware corporation.
"FLAGSTAR CORPORATION" shall mean Flagstar Corporation, a Delaware
corporation and, immediately prior to the consummation of the Emergence
Transactions, a direct, wholly owned subsidiary of Parent.
"FLAGSTAR HOLDINGS" shall mean Flagstar Holdings, Inc., a New York
corporation and a direct, wholly owned subsidiary of Parent.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"FRD" shall mean FRD Acquisition Co., a Delaware corporation and a
direct, wholly owned subsidiary of Parent.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"GUARANTEE" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"GUARANTEE AGREEMENTS" shall mean the Parent Guarantee Agreement and
the Subsidiary Guarantee Agreement.
"GUARANTORS" shall mean Parent, the Borrowers and the Subsidiary
Guarantors.
<PAGE>
11
"HAZARDOUS MATERIALS" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants or
contaminants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls ("PCBS"), PCB-containing
materials or equipment, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
indebtedness of such person for borrowed money; (b) all indebtedness of such
person for the deferred purchase price of property or services (other than
property, including inventory, and services purchased, and expense accruals and
deferred compensation items arising, in the ordinary course of business); (c)
all obligations of such person evidenced by notes, bonds, debentures or other
similar instruments (other than performance, surety and appeal bonds arising in
the ordinary course of business); (d) all indebtedness of such person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property); (e) all Capital Lease Obligations of
such person; (f) all reimbursement, payment or similar obligations of such
person, contingent or otherwise, under acceptance, letter of credit or similar
facilities; (g) all obligations of such person in respect of (i) currency swap
agreements, currency future or option contracts and other similar agreements
designed to hedge against fluctuations in foreign interest rates and (ii)
interest rate swap, cap or collar agreements, interest rate future or option
contracts and other similar agreements designed to hedge against fluctuations in
interest rates; (h) all Guarantees by such person of Indebtedness referred to in
clauses (a) through (g) above; and (i) all Indebtedness referred to in clauses
(a) through (h) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including accounts and contract rights) owned by such person,
even though such person has not assumed or become liable for the payment of such
Indebtedness. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner. Notwithstanding the
foregoing, the amount of Indebtedness of Parent and the Subsidiaries (or any of
them) shall exclude, for all purposes in this Agreement, the fair market value
write-up of indebtedness relating to the fresh-start accounting treatment (in
accordance with GAAP) of Parent's consolidated financial statements resulting
from the Cases and Parent's emergence therefrom.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrowers, the Subsidiary Guarantors and the Collateral
Agent.
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing, and, in addition, the date of any prepayment of such
Borrowing or refinancing of such Borrowing with a Borrowing of a different Type.
"INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month (i) that in the case of any Borrowing during the
first 90 days following the Closing Date, is one month thereafter and (ii) that
in the case of any Borrowing after
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12
the first 90 days following the Closing Date, is 1, 2, 3 or 6 months thereafter,
as the Borrower may elect, and (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earliest of (i) the
next succeeding March 31, June 30, September 30 or December 31, (ii) the
Maturity Date and (iii) the date such Borrowing is prepaid in accordance with
Section 2.11; PROVIDED, HOWEVER, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, (i) any currency swap
agreement, currency future or option contract or other similar agreement or
arrangement designed to protect any Loan Party against fluctuations in foreign
interest rates and (ii) any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate future or option
contract or other similar agreement or arrangement designed to protect any Loan
Party against fluctuations in interest rates, and, in each case, not entered
into for speculation.
"ISSUING BANK" shall mean Chase, any Affiliate of Chase or one or more
other issuing banks satisfactory to the Administrative Agent.
"ISSUING BANK FEES" shall have the meaning assigned to such term in
Section 2.05(c).
"JUNIOR SUBORDINATED DEBENTURES" shall mean Flagstar Corporation's 10%
Convertible Junior Subordinated Debentures due 2014.
"L/C COMMITMENT" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.20.
"L/C DISBURSEMENT" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C EXPOSURE" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time PLUS (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Lender at any time shall mean
its Applicable Percentage of the aggregate L/C Exposure at such time.
"L/C PARTICIPATION FEE" shall have the meaning assigned to such term in
Section 2.05(c).
"LENDERS" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"LETTER OF CREDIT" shall mean any letter of credit issued pursuant to
Section 2.20.
"LIBO RATE" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate (rounded upwards, if necessary, to the next 1/16
of 1%) at which dollar deposits approximately equal in
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13
principal amount to such Eurodollar Borrowing and for a maturity comparable to
such Interest Period are offered to the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LIQUOR LICENSE AFFILIATES" shall mean La Mirada Enterprises No. 1,
Inc., a Texas corporation, and each other Affiliate of Parent or any Borrower or
any Specified Subsidiary that may be organized from time to time and the
business of which will be limited to the holding of a liquor license for any
business maintained by Parent or any Borrower or any Specified Subsidiary in any
jurisdiction where Parent, such Borrower or such Specified Subsidiary are
prohibited from holding a liquor license or where the holding by Parent, such
Borrower or any such Specified Subsidiary of a liquor license would in the best
judgment of Parent be impracticable.
"LOAN DOCUMENTS" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"LOAN PARTIES" shall mean the Borrowers and the Guarantors.
"LOANS" shall mean the Revolving Loans and the Swingline Loans.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect on
or change in the business, assets, operations, properties, condition, financial
or otherwise, contingent liabilities, prospects or material agreements of
Parent, the Borrowers and the Subsidiaries, taken as a whole, (b) material
impairment of the ability of any Borrower or any other Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits available to the Lenders
under any Loan Document.
"MATURITY DATE" shall mean the fifth anniversary of the Closing Date.
"MORTGAGE NOTES" shall mean (a) the 11.03% Mortgage Notes of Denny's
Realty due 2000, (b) the Mortgage Notes of Spardee's Realty relating to the
10.25% Guaranteed Secured Bonds due 2000 of Secured Restaurants Trust and (c)
the Mortgage Notes of Quincy's Realty relating to the 10.25% Guaranteed Secured
Bonds due 2000 of Secured Restaurants Trust.
"MORTGAGED PROPERTY" shall mean the owned real property specified on
Schedule 1.01(b).
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14
"MORTGAGES" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to clause (i) of Section 4.02(j) or pursuant to
Section 5.11, each substantially in the form of Exhibit E.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, or the
sale or issuance of any Indebtedness by Parent, any Borrower or any Specified
Subsidiary, the aggregate amount of cash received from time to time by or on
behalf of such person in connection with such transaction after deducting
therefrom only (a) reasonable and customary brokerage commissions, underwriting
fees and discounts, legal fees, finder's fees and other similar fees and
commissions, (b) the amount of taxes and other governmental fees and charges, if
any, payable in connection with or as a result of such transaction, (c) the
amount of any Indebtedness secured by a Lien on the asset that is the subject of
such Asset Sale that, by the terms of such transaction, is required to be repaid
upon such disposition, in each case to the extent, but only to the extent, that
the amounts so deducted are, at the time of receipt of such cash, properly
attributable to such transaction or to the asset that is the subject of such
Asset Sale and are actually paid by such person to a person that is not an
Affiliate and (d) in the case of Asset Sales only, an amount of such proceeds
equal to the amount of liabilities associated with such asset (including accrued
tax liabilities) incurred or retained by the person disposing of such asset as
part of such transaction to the extent, and for the period, such liabilities are
reserved against in accordance with GAAP or actually paid by such person to a
person that is not an Affiliate, PROVIDED that such proceeds shall be deemed
received by such person as and when such reserves are no longer maintained and
such liabilities are not actually so paid by such person.
"NEW COMMON STOCK" shall mean the common stock of Parent following the
consummation of the Plan of Reorganization.
"NEW SENIOR NOTES" shall mean Parent's 11-1/4% Senior Notes due 2008.
"NEW SENIOR NOTES DOCUMENTS" shall mean the New Senior Notes, the New
Senior Notes Indenture and all material agreements, documents and instruments
related thereto, in each case as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"NEW SENIOR NOTES INDENTURE" shall mean the Indenture between Parent
and the New Senior Notes Trustee, as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"NEW SENIOR NOTES TRUSTEE" shall mean First Trust National Association,
as Trustee for the holders of the New Senior Notes, and its successors and
assigns in such capacity.
"OBLIGATIONS" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
"OLD COMMON STOCK" shall mean Parent's common stock outstanding
immediately prior to the consummation of the Plan of Reorganization.
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15
"OLD PREFERRED STOCK" shall mean Parent's Series A Cumulative
Convertible Exchangeable Preferred Stock outstanding immediately prior to the
consummation of the Plan of Reorganization.
"OLD SENIOR NOTES" shall mean the 10-3/4% Senior Notes of Flagstar
Corporation due 2001 and the 10-7/8% Senior Notes of Flagstar Corporation due
2002.
"OPERATING LEASES" shall mean, as applied to any person, any lease
(including leases that may be terminated by the lessee at any time) by such
person of any property (whether real, personal or mixed) that is not required to
be classified and accounted for as a capital lease on such person's balance
sheet in accordance with GAAP, other than any such lease under which such person
is the lessor.
"ORDER" shall mean the Order entered by the Court approving
confirmation of the Plan of Reorganization, the Emergence Transactions and the
Loan Documents and all related documentation contemplated herein or therein.
"PARENT GUARANTEE AGREEMENT" shall mean the Parent Guarantee Agreement,
substantially in the form of Exhibit F, made by Parent in favor of the
Collateral Agent for the benefit of the Secured Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"PERFECTION CERTIFICATE" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"PERMITTED AMENDMENTS" means (a) any amendment or supplement to the
Real Estate Financing Documents, the New Senior Notes Documents or the
documentation in respect of the Real Estate Refinancing that does not require a
waiver or consent of the holders of the Indebtedness evidenced thereby, other
than an amendment or supplement that (i) adds, directly or indirectly, any new
provision commonly characterized as an affirmative, negative or financial
covenant or any new event of default, collateral requirements or repayment
requirement (including any put requirement) that relates to any date prior to 91
days after the Maturity Date, (ii) modifies in any manner adverse to the issuer
or guarantors thereof any existing provision commonly characterized as an
affirmative, negative or financial covenant or any existing event of default,
collateral requirement or repayment requirement (including any shortening of any
amortization requirement) that relates to any date prior to 91 days after the
Maturity Date or (iii) increases the interest rate thereon or modifies in any
manner adverse to the issuer or guarantors thereof the time or manner of payment
of such interest (including any option or right to pay such interest in kind) or
(b) any amendment or supplement (i) to the Real Estate Financing Documents, the
New Senior Notes Documents or the documentation in respect of the Real Estate
Refinancing that is prohibited under clause (a) above (other than any amendment
or supplement prohibited by subclauses (i), (ii) or (iii) of clause (a) above)
or (ii) to any other indenture, instrument or agreement pursuant to which any
Indebtedness or preferred stock is outstanding that, in each case, is not
materially adverse to the interests of the Lenders.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent
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16
such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date
of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within 180 days from the date
of acquisition thereof and having, at such date of acquisition, a
rating of at least "A-1" or the equivalent thereof from Standard &
Poor's Ratings Service or of at least "P-1" or the equivalent thereof
from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits (including Eurodollar time deposits)
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with (i) any domestic office of the
Administrative Agent or the bank with whom the Borrowers and the
Specified Subsidiaries maintain their cash management system, provided
that if such bank is not a Lender hereunder, such bank shall have
entered into an agreement with the Administrative Agent pursuant to
which such bank shall have waived all rights of setoff and confirmed
that such bank does not have, nor shall it claim, a security interest
therein or (ii) any domestic office of any other commercial bank of
recognized standing organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $250,000,000 and is the
principal banking subsidiary of a bank holding company having a
long-term unsecured debt rating of at least "A" or the equivalent
thereof from Standard & Poor's Ratings Service or at least "A2" or the
equivalent thereof from Moody's Investors Service, Inc.;
(d) investments in commercial paper maturing within 180 days
from the date of acquisition thereof and issued by (i) the holding
company of the Administrative Agent or (ii) the holding company of any
other commercial bank of recognized standing organized under the laws
of the United States of America or any State thereof that has (A) a
combined capital and surplus in excess of $250,000,000 and (B)
commercial paper rated at least "A-1" or the equivalent thereof from
Standard & Poor's Ratings Service or of at least "P-1" or the
equivalent thereof from Moody's Investors Service, Inc.;
(e) investments in repurchase obligations with a term of not
more than seven days for underlying securities of the types described
in clause (a) above entered into with any office of a bank or trust
company meeting the qualifications specified in clause (c) above; and
(f) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in
clauses (a) through (e) above.
"PERMITTED LIENS" shall mean (a) Liens imposed by law (other than
Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP; (b) statutory and other Liens of landlords, Liens of
tenants arising from occupancy rights and statutory Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than Environmental
Liens and any Lien imposed under ERISA) imposed by law 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 or
other appropriate provisions are being maintained in accordance with GAAP; (c)
Liens (other than any Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business (including surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types
<PAGE>
17
of social security benefits or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Indebtedness), statutory
obligations and other similar obligations or arising as a result of progress
payments under government contracts; (d) easements (including reciprocal
easement agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of any Borrower or any
Guarantor, as the case may be, and which do not materially detract from the
value of the property to which they attach or materially impair the use thereof
to any Borrower or any Guarantor, as the case may be; (e) purchase money Liens
upon or in any property acquired or held in the ordinary course of business to
secure the purchase price of such property or to secure Indebtedness permitted
by Section 6.01(d) or 6.01(e), PROVIDED that any such Liens shall be placed on
such property (and the Indebtedness secured by such Liens shall be created)
within 180 days following the acquisition of such property, such Liens do not
apply to any other property or assets of Parent, any Borrower or any Specified
Subsidiary and the Indebtedness secured by such Liens does not exceed 100% of
the lesser of the cost or Fair Market Value of such property at the time of
acquisition; and (f) extensions, renewals or replacements of any Lien referred
to in paragraphs (a) through (e) above, PROVIDED that the principal amount of
the obligation secured thereby is not increased and that any such extension,
renewal or replacement is limited to the property originally encumbered thereby.
"PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which any Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLAN OF REORGANIZATION" shall mean Parent's and Flagstar Corporation's
Joint Plan of Reorganization, in the form of Exhibit K, dated as of July 11,
1997, as amended as of November 7, 1997, and confirmed by the Court by order
entered on November 12, 1997.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, substantially in
the form of Exhibit G, among the Borrowers, Parent, the Subsidiary Guarantors
party thereto and the Collateral Agent for the benefit of the Secured Parties.
"QUINCY'S" shall mean Quincy's Restaurants, Inc., an Alabama
corporation and a direct, wholly owned subsidiary of Spartan.
"QUINCY'S LEASE" shall mean the Amended and Restated Lease dated as of
November 1, 1990, between Quincy's Realty, as lessor, and Quincy's, as lessee.
"QUINCY'S REALTY" shall mean Quincy's Realty, Inc., an Alabama
corporation and a direct, wholly owned subsidiary of Quincy's.
"REAL ESTATE FINANCING DOCUMENTS" shall mean, collectively, the Denny's
Indenture, the Real Estate Security Documents (as defined in the Denny's
Indenture), the Spartan Indenture, the Security Documents (as defined in the
Spartan Indenture), the Denny's Lease, the Quincy's Lease and the Spardee's
Lease.
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18
"REAL ESTATE REFINANCING" shall mean the refinancing of each series of
the Mortgage Notes with Indebtedness of the Real Estate Subsidiary that issued
such series of the Mortgage Notes; PROVIDED, HOWEVER, that (a) the proceeds of
such Indebtedness are used to repay in full the series of Mortgage Notes being
refinanced by such Indebtedness and all Liens securing the series of Mortgage
Notes being refinanced are released, (b) such Indebtedness shall have a final
maturity not earlier than 91 days after the Maturity Date, (c) no more than 10%
of the principal amount of such Indebtedness shall amortize prior to 91 days
after the Maturity Date, (d) such Indebtedness shall bear a market rate of
interest (determined in good faith by the Board of Directors of Parent) at the
time of issuance of such Indebtedness, (e) the principal amount of such
Indebtedness shall be less than or equal to the original principal amount of the
Mortgaged Notes being refinanced by such Indebtedness, (f) the Liens securing
such Indebtedness shall not apply to any property or assets other than the
specific property or assets that are subject to the Liens securing the Mortgage
Notes being refinanced by such Indebtedness (or other similar property or assets
of the Real Estate Subsidiary that issued such Mortgage Notes or of another Real
Estate Subsidiary that is a member of the same Significant Subsidiary Group as
the Real Estate Subsidiary that issued such Mortgage Notes that have been
substituted for such specific property or assets), (g) no material terms
applicable to such Indebtedness (including the existence of any credit support
for such Indebtedness by Parent or any Subsidiary) shall be more favorable to
the refinancing lenders than the terms that are applicable to the Mortgage Notes
being refinanced by such Indebtedness under the Real Estate Financing Documents
immediately prior to such refinancing, (h) no material terms of the leases
entered into with any Real Estate Subsidiary or of any guarantees of (or other
form of credit support for) such leases given by any Borrower or Specified
Subsidiary shall be more favorable to the refinancing lenders than the terms
that are applicable to the leases (and the related guarantees of (or other form
of credit support for) such leases) under the Real Estate Financing Documents
immediately prior to such refinancing and (i) without limiting the generality of
the foregoing, no Subsidiary that is a member of a Significant Subsidiary Group
shall guarantee or provide any other form of credit support for any lease
entered into with any Real Estate Subsidiary that is not a member of such
Subsidiary's Significant Subsidiary Group.
"REAL ESTATE REFINANCING DATE" shall mean the date on which the Real
Estate Refinancing is consummated.
"REAL ESTATE SUBSIDIARIES" shall mean (a) Denny's Realty, (b) Spardee's
Realty and (c) Quincy's Realty.
"REGISTER" shall have the meaning given such term in Section 9.04(d).
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4 filed by Parent with the Securities and Exchange Commission on March 24,
1997, as amended by Amendment No. 1 thereto filed with the Securities and
Exchange Commission on May 8, 1997, Amendment No. 2 thereto filed with the
Securities and Exchange Commission on May 21, 1997, and Amendment No. 3 thereto
filed with the Securities and Exchange Commission on June 3, 1997.
"REGULATION G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
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19
"REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"RELATED PARTIES" shall mean, with respect to any Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person or such Person's Affiliates.
"RELEASE" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, emanating or migrating of any Hazardous Material in, into, onto or
through the environment.
"REMEDIAL ACTION" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority to: (i) cleanup, remove, treat, abate or
in any other way address any Hazardous Material in the environment; (ii) prevent
the Release or threat of Release, or minimize the further Release, of any
Hazardous Material so it does not migrate or endanger or threaten to endanger
public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, (i) or (ii) above.
"REQUIRED LENDERS" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Commitments representing at least 50% of the sum of all Loans (excluding
Swingline Loans) outstanding, L/C Exposure, Swingline Exposure and unused
Commitments at such time.
"RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"REVOLVING LOANS" shall mean the revolving loans made by the Lenders to
the Borrowers pursuant to Section 2.01. Each Revolving Loan shall be a
Eurodollar Loan or an ABR Loan.
"SECURED PARTIES" shall have the meaning assigned to such term in the
Security Agreement.
"SECURITY AGREEMENT" shall mean the Security Agreement, substantially
in the form of Exhibit H, among Parent, the Borrowers, the Subsidiary Guarantors
party thereto and the Collateral Agent for the benefit of the Secured Parties.
"SECURITY DOCUMENTS" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
" SENIOR SUBORDINATED DEBENTURES" shall mean Flagstar Corporation's
11.25% Senior Subordinated Debentures due 2004 and 11 3/8% Senior Subordinated
Debentures due 2003.
"SIGNIFICANT SUBSIDIARY GROUP" shall mean each of (a) Denny's Holdings
and its subsidiaries, taken as a whole, (b) Spartan and its subsidiaries, taken
as a whole, and (c) each other First Tier Subsidiary and its subsidiaries, taken
as a whole, that at any time (i) has assets with a value of not less than 15% of
the total value of the assets of Parent, the Borrowers and the Specified
Subsidiaries, taken as a whole, or (ii) accounted for
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20
a portion of Consolidated EBITDA of not less than 15% of the Consolidated EBITDA
for the most recent four fiscal quarters.
"SPARDEE'S LEASE" shall mean the Amended and Restated Lease dated as of
November 1, 1990, between Spardee's Realty, as lessor, and Enterprises, as
lessee.
"SPARDEE'S REALTY" shall mean Spardee's Realty, Inc., an Alabama
corporation and a direct, wholly owned subsidiary of Enterprises.
"SPARTAN" shall mean Spartan Holdings, Inc., a New York corporation and
a direct, wholly owned subsidiary of Parent.
"SPARTAN INDENTURE" shall mean the Indenture dated as of November 1,
1990, between Secured Restaurants Trust, as Issuer, and The Bank of New York
Trust Company of Florida, as successor Trustee.
"SPARTAN TRUSTEE" shall mean the Trustee, as defined in the Spartan
Indenture.
"SPECIFIED SUBSIDIARY" shall mean any Subsidiary other than an Excluded
Subsidiary.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch, Affiliate
or other fronting office making or holding a Loan) is subject (a) with respect
to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of
over $100,000 with maturities approximately equal to three months, and (b) with
respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"SUBORDINATED PROMISSORY NOTE" shall mean the subordinated promissory
note dated as of July 28, 1992, made by Flagstar Corporation to Parent relating
to the Old Preferred Stock.
"SUBSIDIARY" shall mean, with respect to any person (herein referred to
as the "PARENT"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" shall mean any subsidiary of Parent.
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21
"SUBSIDIARY GUARANTEE AGREEMENT" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit I, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"SUBSIDIARY GUARANTOR" shall mean each Subsidiary listed on Schedule
1.01(b), and each other Subsidiary that is or becomes a party to a Subsidiary
Guarantee Agreement.
"SWINGLINE COMMITMENT" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.21, as the same may be reduced from
time to time pursuant to Section 2.09.
"SWINGLINE EXPOSURE" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Lender at any time shall equal its Pro Rata Percentage of the aggregate
Swingline Exposure at such time.
"SWINGLINE LOAN" shall mean any loan made by the Swingline Lender
pursuant to Section 2.21(a).
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"TOTAL COMMITMENT" shall mean, at any time, the aggregate amount of the
Commitments, as in effect at such time.
"TRANSACTIONS" shall have the meaning assigned to such term in Section
3.02.
"TWS CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
April 10, 1996, as amended from time to time, among TWS Funding Inc., a Delaware
corporation, Flagstar Corporation, the financial institutions party thereto,
Bankers Trust Company, Chase and Citibank, N.A.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "RATE" shall consist
of the Adjusted LIBO Rate and the Alternate Base Rate.
"WHOLLY OWNED SUBSIDIARY" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
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22
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; PROVIDED, HOWEVER, that for purposes of determining compliance
with the covenants contained in Article VI, all accounting terms herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the date of this Agreement and applied on a
basis consistent with the application used in the financial statements referred
to in Section 3.05.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Loans to any Borrower, at any time
and from time to time on or after the date hereof, and until the earlier of the
Maturity Date and the termination of the Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not result in (i) such Lender's Credit Exposure exceeding (ii) such
Lender's Commitment. Within the limits set forth in the preceding sentence and
subject to the terms, conditions and limitations set forth herein, each Borrower
may borrow, pay or prepay and reborrow Loans.
SECTION 2.02. LOANS. (a) Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Commitments; PROVIDED, HOWEVER, that the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). The Loans (other than Swingline
Loans) comprising any Borrowing shall be in an aggregate principal amount that
is (i) an integral multiple of (A) $1,000,000 in the case of Eurodollar
Borrowings or (B) $100,000 in the case of ABR Borrowings and not less than (C)
$5,000,000 in the case of Eurodollar Borrowings or (D) $500,000 in the case of
ABR Borrowings or (ii) equal to the remaining available balance of the
applicable Commitments, PROVIDED that (X) an ABR Borrowing may be made in an
aggregate amount that is required to finance the reimbursement of an L/C
Disbursement as contemplated by Section 2.20(e) and (Y) for the purposes of
clauses (i) and (ii) above, the aggregate principal amount of any Borrowing
shall equal the aggregate principal amount of all Loans made pursuant to such
Borrowing, whether or not such Loans are requested by the same Borrower.
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23
(b) Subject to Sections 2.08, 2.13 and 2.21(d), each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the applicable
Borrower(s) may request pursuant to Section 2.03. Each Lender may at its option
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan, PROVIDED that any exercise of such option
shall not affect the obligation of such Borrower to repay such Loan in
accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time; PROVIDED, HOWEVER, that no Borrower shall
be entitled to request any Borrowing that, if made, would result in more than
five Eurodollar Borrowings outstanding hereunder at any time. For purposes of
the foregoing, Borrowings having different Interest Periods, regardless of
whether they commence on the same date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 12:00 noon, New York City time, PROVIDED that Swingline Loans shall be made
as provided in Section 2.21. The Administrative Agent shall use reasonable
efforts to credit by 2:00 p.m., New York City time, the amounts so received to
the Concentration Account (PROVIDED that ABR Loans made to finance the
reimbursement of an L/C Disbursement as provided in Section 2.20(e) shall be
remitted by the Administrative Agent to the Issuing Bank) or, if a Borrowing
shall not occur on such date because any condition precedent herein specified
shall not have been met, return the amounts so received to the respective
Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower(s) on
such date a corresponding amount. If the Administrative Agent shall have so made
funds available then, to the extent that such Lender shall not have made such
portion available to the Administrative Agent, such Lender and the applicable
Borrower(s) (without prejudice to any claims of such Borrower(s) against such
Lender with respect to such Borrowing) severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
such Borrower(s) until the date such amount is repaid to the Administrative
Agent at (i) in the case of any Borrower, the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such Lender,
a rate determined by the Administrative Agent to represent its cost of overnight
or short-term funds (which determination shall be conclusive absent manifest
error). If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, no Borrower
shall be entitled to request any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.
(f) Any Borrower may refinance all or any part of a Borrowing with
another Borrowing, subject to the conditions and limitations set forth in this
Agreement. Any Borrowing or part thereof so refinanced shall be deemed to be
repaid or prepaid in accordance with the applicable provisions of this Agreement
with the proceeds of the new Borrowing, and the proceeds of such new Borrowing,
to the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to such Borrower pursuant to paragraph (c) above;
PROVIDED, HOWEVER,
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24
that (i) if the principal amount extended by a Lender in a refinancing is
greater than the principal amount extended by such Lender in the Borrowing being
refinanced then such Lender shall pay such difference to the Administrative
Agent for distribution to the Lenders described in clause (ii) below, (ii) if
the principal amount extended by a Lender in the Borrowing being refinanced is
greater than the principal amount being extended by such Lender in the
refinancing, the Administrative Agent shall return the difference to such Lender
out of amounts received pursuant to clause (i) above, and (iii) to the extent
any Lender fails to pay the Administrative Agent amounts due from it pursuant to
clause (i) above, any Loan or portion thereof being refinanced shall not be
deemed repaid in accordance with Section 2.04 and shall be payable by the
applicable Borrower (without prejudice to any claims of such Borrower against
such Lender with respect to such Borrowing).
(g) If the Borrowers fail to make any payment required by Section
2.20(e) when due, the Administrative Agent shall notify each Lender of the
applicable L/C Disbursement, the payment then due from the Borrowers in respect
thereof and such Lender's Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrowers, in the same
manner as provided in Section 2.02 with respect to Loans made by such Lender
(and Section 2.02 shall apply, MUTATIS MUTANDIS, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the Issuing
Bank the amounts so received by it from the Lenders. Promptly following receipt
by the Administrative Agent of any payment from any Borrower pursuant to Section
2.20(e), the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse the Issuing Bank for any L/C Disbursement (other
than the funding of ABR Loans or a Swingline Loan as contemplated by Section
2.20(e)) shall not constitute a Loan and shall not relieve the Borrowers of
their obligation to reimburse such L/C Disbursement. If the Issuing Bank shall
make any L/C Disbursement, then, unless the Borrowers shall reimburse such L/C
Disbursement in full on the date such L/C Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such L/C Disbursement is made to but excluding the date that the Borrowers
reimburse such L/C Disbursement, at the rate per annum then applicable to ABR
Loans, PROVIDED that, if the Borrower fails to reimburse such L/C Disbursement
when due pursuant to paragraph (e) of Section 2.20, then Section 2.07 shall
apply. Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Bank, except that interest accrued on and after the date of payment
by any Lender pursuant to this paragraph (g) to reimburse the Issuing Bank shall
be for the account of such Lender to the extent of such payment.
SECTION 2.03. BORROWING PROCEDURE. In order to request a Borrowing
(other than a Swingline Loan, as to which this Section 2.03 shall not apply),
the applicable Borrower(s) shall hand-deliver or telecopy to the Administrative
Agent a duly completed Borrowing Request (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three Business Days
before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before a proposed
Borrowing, PROVIDED that any such notice of an ABR Borrowing to finance the
reimbursement of an L/C Disbursement as contemplated by Section 2.20(e) may be
given no later than 10:00 a.m. New York City time, on the date of the proposed
Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or on
behalf of the applicable Borrower(s) and shall specify the following
information: (i) whether the Borrowing then being requested is to be a
Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day); (iii) the number and location of the account to which
funds are to be disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
<PAGE>
25
thereto; PROVIDED, HOWEVER, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then such Borrower(s) shall be deemed to have
selected an Interest Period of one month's duration. The Administrative Agent
shall promptly advise the Lenders of any notice given pursuant to this Section
2.03 (and the contents thereof), and of each Lender's portion of the requested
Borrowing.
If any Borrower shall not have delivered a Borrowing Request in
accordance with this Section 2.03 prior to the end of the Interest Period then
in effect for any Borrowing and requesting that such Borrowing be refinanced,
then such Borrower shall (unless such Borrower has notified the Administrative
Agent, not less than three Business Days prior to the end of such Interest
Period, that such Borrowing is to be repaid at the end of such Interest Period)
be deemed to have delivered a Borrowing Request requesting that such Borrowing
be refinanced with a new Borrowing of equivalent amount, and such new Borrowing
shall be an ABR Borrowing.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) Each Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender, the then unpaid principal amount of each Revolving Loan
on the Maturity Date (or on such earlier date on which such Loan shall become
due and payable hereunder, pursuant to Article VII or otherwise) and (ii) to the
Swingline Lender the then unpaid principal amount of each Swingline Loans on the
earlier of the Maturity Date and the first date after such Swingline Loan is
made that is the 15th or last day of a calender month and is at least two
Business Days after such Swingline Loan is made (or on such earlier date on
which such Loan shall become due and payable hereunder, pursuant to Article VII
or otherwise), PROVIDED that on each date that the Borrowing of a Revolving Loan
is made, the Borrower shall repay all Swingline Loans then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrowers to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from any Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; PROVIDED, HOWEVER, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrowers to repay
the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
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26
SECTION 2.05. FEES. (a) The Borrowers agree, jointly and severally, to
pay to each Lender, through the Administrative Agent, on the last day of March,
June, September and December in each year and on each date on which the
Commitment of such Lender shall expire or be terminated as provided herein, a
commitment fee (a "COMMITMENT FEE") of 0.50% per annum on the average daily
unused amount of the Commitment (other than the Swingline Commitment) of such
Lender during the preceding quarter (or other period commencing with the date
hereof or ending with the Maturity Date or the date on which the Commitments of
such Lender shall expire or be terminated). All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. The Commitment Fee due to each Lender shall commence to accrue on the date
hereof and shall cease to accrue on the date on which the Commitment of such
Lender shall expire or be terminated as provided herein. For purposes of
calculating Commitment Fees only, no portion of the Commitments shall be deemed
utilized under Section 2.15 as a result of outstanding Swingline Loans.
(b) The Borrowers agree, jointly and severally, to pay to the
Administrative Agent, for its own account, the administrative fees set forth in
the Fee Letter at the times and in the amounts specified therein (the
"ADMINISTRATIVE AGENT FEES").
(c) The Borrowers agree, jointly and severally, to pay (i) to each
Lender, through the Administrative Agent, on the last day of March, June,
September and December of each year and on the date on which the Commitment of
such Lender shall be terminated as provided herein, a fee (an "L/C PARTICIPATION
FEE") calculated on such Lender's Applicable Percentage of the average daily
aggregate L/C Exposure (excluding the portion thereof attributable to
unreimbursed L/C Disbursements) during the preceding quarter (or shorter period
commencing with the date hereof or ending with the Maturity Date or the date on
which all Letters of Credit have been canceled or have expired and the
Commitments of all Lenders shall have been terminated) at a rate per annum equal
to 2.75%, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the
rate of 0.25% per annum on the average daily aggregate L/C Exposure (excluding
the portion thereof attributable to unreimbursed L/C Disbursements) during the
preceding quarter (or shorter period commencing with the date hereof or ending
with the Maturity Date or that date on which all Letters of Credit have been
canceled or have expired and the Commitments of all Lenders shall have been
terminated), as well as the standard issuance and drawing fees specified from
time to time by the Issuing Bank (the "ISSUING BANK FEES"). All L/C
Participation Fees and Issuing Bank Fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days.
All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the Issuing Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base Rate
plus 1.75%.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus 2.75%.
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27
Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. DEFAULT INTEREST. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
such Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal
of any Loan, at the rate otherwise applicable to such Loan pursuant to Section
2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) equal to the sum of the
Alternate Base Rate plus 4.00%.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrowers and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrowers
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by a Borrower for a Eurodollar Borrowing pursuant to Section
2.03 shall be deemed to be a request for an ABR Borrowing. Each determination by
the Administrative Agent hereunder shall be conclusive absent manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The
Commitments, the Swingline Commitment and the L/C Commitment shall automatically
terminate on the earlier of (a) 5:00 p.m., New York City time, on March 31,
2000, if the Real Estate Refinancing shall not have been consummated by such
time, and (b) the Maturity Date. Notwithstanding the foregoing, all the
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
July 11, 1998, if the initial Credit Event shall not have occurred by such time.
(b) Not later than the third Business Day following the completion of
any Asset Sale (other than any Asset Sale permitted under Section 6.05), the
Commitments shall be reduced by an amount equal to 100% of the Net Cash Proceeds
received with respect thereto; PROVIDED, HOWEVER, that the Commitments shall be
reduced by an amount equal to 100% of the Net Cash Proceeds received with
respect to any Asset Sale made pursuant to Section 6.05(f) of assets that secure
the Mortgage Notes of Spardee's Realty or Quincy's Realty, in each case,
relating to the 10.25% Guarantee Secured Bonds due 2000 of Secured Restaurants
Trust, if, and to the extent that, for any fiscal year, the aggregate amount of
the Net Cash Proceeds received during such fiscal year with respect to all such
Asset Sales exceeds $5,000,000.
(c) In the event that any Loan Party or any subsidiary of a Loan Party
(other than any Excluded Subsidiary) shall receive Net Cash Proceeds from the
issuance or other disposition of Indebtedness for money
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28
borrowed of any Loan Party or any subsidiary of a Loan Party (other than any
Excluded Subsidiary) (other than Indebtedness for money borrowed permitted
pursuant to Section 6.01), the Commitments shall be reduced substantially
simultaneously with (and in any event not later than the third Business Day next
following) the receipt by such Loan Party or subsidiary of a Loan Party of such
Net Cash Proceeds by an amount equal to 100% of such Net Cash Proceeds.
(d) In the event that there shall occur any Casualty or Condemnation
and, pursuant to the Mortgage, the Commitments are required to be reduced by the
amount of any Casualty Proceeds or Condemnation Proceeds, as the case may be,
received with respect to such Casualty or Condemnation, then the Commitments
shall be reduced by an amount equal to 100% of such Casualty Proceeds or
Condemnation Proceeds, as the case may be.
(e) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrowers may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Commitments; PROVIDED, HOWEVER, that (i) each partial reduction of the
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $5,000,000 and (ii) the Total Commitment shall not be reduced to an
amount that is less than the Aggregate Credit Exposure at the time.
(f) Each reduction in the Commitments hereunder shall be made ratably
among the Lenders in accordance with their respective Commitments. The Borrowers
shall pay to the Administrative Agent for the account of the applicable Lenders,
on the date of each termination or reduction, the Commitment Fees on the amount
of the Commitments so terminated or reduced accrued to but excluding the date of
such termination or reduction.
SECTION 2.10. CONVERSION AND CONTINUATION OF BORROWINGS. Each Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 noon, New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 12:00 noon, New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 12:00 noon,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
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29
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.17;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing; and
(vii) upon notice to the Borrowers from the Administrative
Agent given at the request of the Required Lenders, after the
occurrence and during the continuance of a Default or Event of Default,
no outstanding Loan may be converted into, or continued as, a
Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that any Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
applicable Borrower shall be deemed to have selected an Interest Period of one
month's duration. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If the applicable Borrower shall not have
given notice in accordance with this Section 2.10 to continue any Borrowing into
a subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing. This Section will not apply to Swingline Loans,
which may not be converted or continued.
SECTION 2.11. PREPAYMENT. (a) Each Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, (i)
with respect to Eurodollar Borrowings, upon at least three Business Days' prior
written or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) to the Administrative Agent before 12:00 noon, New York City
time or (ii) with respect to ABR Borrowings, upon prior written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy notice) on
or prior to the date of prepayment to the Administrative Agent before 12:00
noon, New York City time; PROVIDED, HOWEVER, that each partial prepayment shall
be in an amount that is an integral multiple of $100,000 and not less than (A)
$5,000,000 in the case of Eurodollar Borrowings or (B) $500,000 in the case of
ABR Borrowings.
(b) In the event of any termination of all the Commitments, the
Borrowers shall prepay all outstanding Borrowings and replace or cash
collateralize all outstanding Letters of Credit on the date of such termination.
In the event of any partial reduction of the Commitments, then (i) at or prior
to the effective date of such reduction, the Administrative Agent shall notify
the Borrowers and the Lenders of the Aggregate Credit Exposure after giving
effect thereto and (ii) if the Aggregate Credit Exposure would exceed the Total
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Commitment after giving effect to such reduction, then the Borrowers shall, on
the date of such reduction and in an amount sufficient to eliminate such excess,
first, prepay the then outstanding Revolving Loans (if any) and Swingline Loans
(if any) and second, to the extent of any remaining excess (after the prepayment
of Revolving Loans and Swingline Loans), replace outstanding Letters of Credit
or deposit an amount in cash in a cash collateral account established with the
Collateral Agent for the benefit of the Secured Parties.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the applicable Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein. All prepayments under this
Section 2.11 shall be subject to Section 2.14 but otherwise without premium or
penalty. All prepayments under this Section 2.11 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of payment.
SECTION 2.12. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any Eurodollar Loan made by such Lender
or any Fees or other amounts payable hereunder (other than changes in respect of
taxes imposed on the overall net income of such Lender or the Issuing Bank by
the jurisdiction in which such Lender or the Issuing Bank has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender or the Issuing Bank (except any such reserve requirement
which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or
the Issuing Bank or the London interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein, and the result of any of the foregoing shall be to
increase the cost to such Lender or the Issuing Bank of making or maintaining
any Eurodollar Loan or increase the cost to any Lender of issuing or maintaining
any Letter of Credit or purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or the Issuing Bank to be material, then the
Borrowers will pay to such Lender or the Issuing Bank, as the case may be, upon
demand such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding
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31
company could have achieved but for such applicability, adoption, change or
compliance (taking into consideration such Lender's or the Issuing Bank's
policies and the policies of such Lender's or the Issuing Bank's holding company
with respect to capital adequacy) by an amount deemed by such Lender or the
Issuing Bank to be material, then from time to time the Borrowers shall pay to
such Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank or such Lender's or
the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as applicable, as specified in paragraph (a) or (b) above shall
be delivered to the applicable Borrower and shall be conclusive absent manifest
error. The Borrowers shall pay such Lender or the Issuing Bank the amount shown
as due on any such certificate delivered by it within 10 days after the receipt
of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and the Issuing
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed.
SECTION 2.13. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Gov ernmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrowers and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder, whereupon any request for a Eurodollar Borrowing
shall, as to such Lender only, be deemed a request for an ABR Loan,
unless such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans, as to such Lender only, shall be automatically
converted to ABR Loans as of the effective date of such notice as
provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.13, a notice to the Borrowers by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrowers.
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32
SECTION 2.14. INDEMNITY. The Borrowers shall, jointly and severally,
indemnify each Lender against any loss or expense that such Lender may sustain
or incur as a consequence of (a) any event, other than a default by such Lender
in the performance of its obligations hereunder, which results in (i) such
Lender receiving or being deemed to receive any amount on account of the
principal of any Eurodollar Loan prior to the end of the Interest Period in
effect therefor or (ii) any Eurodollar Loan to be made by such Lender not being
made after notice of such Loan shall have been given by any Borrower hereunder
(any of the events referred to in this clause (a) being called a "BREAKAGE
EVENT") or (b) any default in the making of any payment or prepayment required
to be made hereunder. In the case of any Breakage Event, such loss shall include
an amount equal to the excess, as reasonably determined by such Lender, of (i)
the actual cost of obtaining funds for the Eurodollar Loan that is the subject
of such Breakage Event for the period from the date of such Breakage Event to
the last day of the Interest Period in effect (or that would have been in
effect) for such Loan over (ii) the amount of interest likely to be realized by
such Lender in redeploying the funds released or not utilized by reason of such
Breakage Event for such period. A certificate of any Lender setting forth any
amount or amounts which such Lender is entitled to receive pursuant to this
Section 2.14 shall be delivered to the applicable Borrower and shall be
conclusive absent manifest error.
SECTION 2.15. PRO RATA TREATMENT. Except as provided below in this
Section 2.15 with respect to the Swingline Loans and as required under Section
2.13, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees and
each reduction of the Commitments shall be allocated pro rata among the Lenders
in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). For purposes of
determining the available Commitments of the Lenders at any time, each
outstanding Swingline Loan shall be deemed to have utilized the Commitments of
the Lenders (including those Lenders which shall not have made Swingline Loans)
pro rata in accordance with the Lenders' respective Commitments. Each Lender
agrees that in computing such Lender's portion of any Borrowing to be made
hereunder, the Administrative Agent may, in its discretion, round each Lender's
percentage of such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.16. SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
any Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender 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
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Loans and participations in L/C Disbursements shall be
proportionately less than the unpaid principal portion of the Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Loans and L/C Exposure of such other Lender, so that the aggregate unpaid
principal amount of the Loans and L/C Exposure and participations in Loans and
L/C Exposure held by each Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Loans and L/C Exposure then outstanding
as the principal amount of its Loans and L/C Exposure prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all Loans and L/C Exposure 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 2.16
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be
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33
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. Each Borrower and Parent expressly consent
to the foregoing arrangements and agree that any Lender holding a participation
in a Loan or L/C Disbursement 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 such Borrower and Parent to such Lender by reason thereof as
fully as if such Lender had made a Loan directly to such Borrower in the amount
of such participation.
SECTION 2.17. PAYMENTS. (a) Each Loan Party shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 12:00 noon, New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than (i) Issuing Bank Fees, which shall be paid directly to the Issuing
Bank and (ii) principal of and interest on Swingline Loans, which shall be paid
directly to the Swingline Lender except as otherwise directed in Section
2.21(e)) shall be made to the Administrative Agent at its offices at 270 Park
Avenue, New York, New York.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
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 Fees, if applicable.
SECTION 2.18. TAXES. (a) Any and all payments by or on behalf of the
Loan Parties hereunder and under any other Loan Document shall be made, in
accordance with Section 2.17, free and clear of and without deduction for any
and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING (i) income
taxes imposed on the net income of the Administrative Agent, any Lender or the
Issuing Bank (or any transferee or assignee thereof, including a participation
holder (any such entity a "TRANSFEREE")) and (ii) franchise taxes imposed on the
net income of the Administrative Agent, any Lender or the Issuing Bank (or
Transferee), in each case by the jurisdiction under the laws of which the
Administrative Agent, such Lender or the Issuing Bank (or Transferee) is
organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities, collectively
or individually, being called "TAXES"). If any Loan Party shall be required to
deduct any Taxes from or in respect of any sum payable hereunder or under any
other Loan Document to the Administrative Agent, any Lender or the Issuing Bank
(or any Transferee), (i) the sum payable shall be increased by the amount (an
"ADDITIONAL AMOUNT") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.18) the Administrative Agent, such Lender or the Issuing Bank (or Transferee),
as the case may be, shall receive an amount equal to the sum it would have
received had no such deductions been made, (ii) such Loan Party shall make such
deductions and (iii) such Loan Party shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, each Loan Party agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies (including, without limitation, mortgage recording taxes and
similar fees) that arise from any payment made hereunder or under any other Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document ("OTHER TAXES").
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(c) The Borrowers will, jointly and severally, indemnify the
Administrative Agent, each Lender and the Issuing Bank (or Transferee) for the
full amount of Taxes and Other Taxes paid by the Administrative Agent, such
Lender or the Issuing Bank (or Transferee), as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by the Administrative Agent, a Lender or the
Issuing Bank (or Transferee), or the Administrative Agent on its behalf, absent
manifest error, shall be final, conclusive and binding for all purposes. Such
indemnification shall be made within 30 days after the date the Administrative
Agent, any Lender or the Issuing Bank (or Transferee), as the case may be, makes
written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by any Borrower or any other Loan Party to the relevant Governmental
Authority, such Borrower or such other Loan Party will deliver to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "NON-U.S. LENDER") shall deliver to the Borrowers and the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of any Borrower and is not a
controlled foreign corporation related to any Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrowers under this Agreement and
the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "NEW LENDING OFFICE"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.18(e), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.18(e) that
such Non-U.S. Lender is not legally able to deliver.
(f) The Borrowers shall not be required to indemnify any Non-U.S.
Lender or to pay any additional amounts to any Non-U.S. Lender, in respect of
United States Federal withholding tax pursuant to paragraph (a) or (c) above to
the extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; PROVIDED, HOWEVER,
that this paragraph (f) shall not apply (x) to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of the
Borrowers and (y) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee), acting
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35
through a New Lending Office, would be entitled to receive (without regard to
this paragraph (f)) do not exceed the indemnity payment or additional amounts
that the person making the assignment, participation or transfer to such
Transferee, or Lender (or Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of paragraph (e) above.
(g) Nothing contained in this Section 2.18 shall require any Lender or
the Issuing Bank (or any Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.19. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES;
DUTY TO MITIGATE. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.12, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.13 or (iii) any
Borrower is required to pay any additional amount to any Lender or the Issuing
Bank or any Governmental Authority on account of any Lender or the Issuing Bank
pursuant to Section 2.18, any Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or the Issuing Bank and the
Administrative Agent, require such Lender or the Issuing Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); PROVIDED
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) the
Borrowers shall have received the prior written consent of the Administrative
Agent (and, if a Commitment is being assigned, of the Issuing Bank and the
Swingline Lender), which consent shall not unreasonably be withheld, and (z) the
Borrowers or such assignee shall have paid to the affected Lender or the Issuing
Bank in immediately available funds an amount equal to the sum of the principal
of and interest accrued to the date of such payment on the outstanding Loans or
L/C Disbursements of such Lender or the Issuing Bank, respectively, plus all
Fees and other amounts accrued for the account of such Lender or the Issuing
Bank hereunder (including any amounts under Section 2.12 and Section 2.14);
PROVIDED FURTHER that, if prior to any such transfer and assignment the
circumstances or event that resulted in such Lender's or the Issuing Bank's
claim for compensation under Section 2.12 or notice under Section 2.13 or the
amounts paid pursuant to Section 2.18, as the case may be, cease to cause such
Lender or the Issuing Bank to suffer increased costs or reductions in amounts
received or receivable or reduction in return on capital, or cease to have the
consequences specified in Section 2.13, or cease to result in amounts being
payable under Section 2.18, as the case may be (including as a result of any
action taken by such Lender or the Issuing Bank pursuant to paragraph (b)
below), or if such Lender or the Issuing Bank shall waive its right to claim
further compensation under Section 2.12 in respect of such circumstances or
event or shall withdraw its notice under Section 2.13 or shall waive its right
to further payments under Section 2.18 in respect of such circumstances or
event, as the case may be, then such Lender or the Issuing Bank shall not
thereafter be required to make any such transfer and assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.12, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.13 or (iii) any Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.18, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or
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36
unreimbursed cost or expense or otherwise take any action inconsistent with its
internal policies or legal or regulatory restrictions or suffer any disadvantage
or burden deemed by it to be significant) (x) to file any certificate or
document reasonably requested in writing by the Borrowers or (y) to assign its
rights and delegate and transfer its obligations hereunder to another of its
offices, branches or affiliates, if such filing or assignment would reduce its
claims for compensation under Section 2.12 or enable it to withdraw its notice
pursuant to Section 2.13 or would reduce amounts payable pursuant to Section
2.18, as the case may be, in the future. The Borrowers hereby agree, jointly and
severally, to pay all reasonable costs and expenses incurred by any Lender or
the Issuing Bank in connection with any such filing or assignment, delegation
and transfer.
SECTION 2.20. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms and
conditions set forth herein, (i) each of the Existing Letters of Credit shall,
upon the Closing Date and without further action on the part of the Issuing Bank
or any other person, be deemed for all purposes to be a Letter of Credit
hereunder and (ii) any Borrower may request the issuance of a Letter of Credit
for its own account, in a form reasonably acceptable to the Administrative Agent
and the Issuing Bank, at any time and from time to time while the Commitments
remain in effect. This Section shall not be construed to impose an obligation
upon the Issuing Bank to issue any Letter of Credit that is inconsistent with
the terms and conditions of this Agreement.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), any Borrower shall hand deliver
or telecopy to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) below), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if, and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrowers shall be
deemed to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension, the Aggregate Credit Exposure shall not exceed
the Total Commitment.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at the close of
business on the earlier of (i) the date one year after the date of the issuance
of such Letter of Credit and (ii) the date that is five Business Days prior to
(A) in the case of any Letter of Credit issued prior to the Real Estate
Refinancing Date, March 31, 2000 and (B) in the case of any Letter of Credit
issued on or after the Real Estate Refinancing Date, the Maturity Date, unless
such Letter of Credit expires by its terms on an earlier date; PROVIDED,
HOWEVER, that any Letter of Credit that complies with clause (i) above may, at
the sole discretion of the Issuing Bank that issues, renews or extends such
Letter of Credit, expire after March 31, 2000 or the Maturity Date, as
applicable, but not more than 91 days after March 31, 2000 or the Maturity Date,
as applicable, PROVIDED that the applicable Borrower deposits in a cash
collateral account established with the Administrative Agent, on or prior to
five Business Days prior to March 31, 2000, or the Maturity Date, as applicable,
an amount in cash equal to 105% of the face amount of such Letter of Credit.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Lender, and each such Lender hereby acquires from the
applicable Issuing Bank, a participation in such Letter of Credit equal to such
Lender's
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Applicable Percentage of the aggregate amount available to be drawn under such
Letter of Credit, effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account
of the Issuing Bank, such Lender's Applicable Percentage of each L/C
Disbursement made by the Issuing Bank and not reimbursed by the applicable
Borrower (or, if applicable, another party pursuant to its obligations under any
other Loan Document) forthwith on the date due as provided in Section 2.02(e).
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrowers shall reimburse such L/C
Disbursement by paying to the Administrative Agent an amount equal to such L/C
Disbursement not later than 12:00 noon, New York City time, on the date that
such L/C Disbursement is made, if the Borrowers shall have received notice of
such L/C Disbursement prior to 10:00 a.m., New York City time, on such date, or,
if such notice has not been received by the Borrowers prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrowers receive such notice, if such
notice is not received prior to such time on the day of receipt, PROVIDED that
if such L/C Disbursement is not less than $500,000, the Borrowers may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 that such payment be financed with an ABR Borrowing or Swingline
Loan in an equivalent amount and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing or Swingline Loan.
(f) OBLIGATIONS ABSOLUTE. Each Borrower's obligation to reimburse L/C
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, any Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank, PROVIDED that the foregoing shall not be construed to excuse the
Issuing Bank from liability to any Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by each Borrower to the extent permitted by applicable law) suffered by
such Borrower that are caused by the Issuing Bank's failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the
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38
terms thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative Agent
and the applicable Borrower of such demand for payment and whether the Issuing
Bank has made or will make an L/C Disbursement thereunder; PROVIDED that any
failure to give or delay in giving such notice shall not relieve such Borrower
of its obligation to reimburse the Issuing Bank and the Lenders with respect to
any such L/C Disbursement. The Administrative Agent shall promptly give each
Lender notice thereof.
(h) INTERIM INTEREST. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the applicable
Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid
amount thereof shall bear interest for the account of the Issuing Bank, for each
day from and including the date of such L/C Disbursement, to but excluding the
earlier of the date of payment or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(g), at the rate per annum that would
apply to such amount if such amount were an ABR Loan.
(i) RESIGNATION OR REMOVAL OF THE ISSUING BANK. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrowers, and may be removed at any
time by the Borrowers by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrowers shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment
as the Issuing Bank hereunder by a successor Lender shall be evidenced by an
agreement entered into by such successor, in a form satisfactory to the
Borrowers and the Administrative Agent, and, from and after the effective date
of such agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term
"Issuing Bank " shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the resignation or removal of the Issuing Bank
hereunder, the retiring Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement and the other Loan Documents with respect to Letters of Credit issued
by it prior to such resignation or removal, but shall not be required to issue
additional Letters of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, the Borrowers shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders thereof and of
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39
the amount to be deposited, deposit in an account with the Collateral Agent, for
the benefit of the Lenders, an amount in cash equal to 105% of the L/C Exposure
as of such date. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Issuing Bank for L/C
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrowers for the L/C
Exposure at such time and (iii) if the maturity of the Loans has been
accelerated, be applied to satisfy the Obligations. If the Borrowers are
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three Business Days after
all Events of Default have been cured or waived.
SECTION 2.21. SWINGLINE LOANS. (a) SWINGLINE COMMITMENT. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, the Swingline Lender agrees to make loans to the Borrowers at any
time and from time to time on and after the Closing Date and until the earlier
of the Maturity Date and the termination of the Commitments in accordance with
the terms hereof, in an aggregate principal amount at any time outstanding that
will not result in (i) the aggregate principal amount of all Swingline Loans
exceeding $15,000,000 or (ii) the Aggregate Credit Exposure, after giving effect
to any Swingline Loan, exceeding the Total Commitment. Each Swingline Loan shall
be in a principal amount that is an integral multiple of $100,000 and not less
than $500,000. The Swingline Commitment may be terminated or reduced from time
to time as provided herein. Within the foregoing limits, the Borrowers may
borrow, pay or prepay and reborrow Swingline Loans hereunder, subject to the
terms, conditions and limitations set forth herein.
(b) SWINGLINE LOANS. The applicable Borrower(s) shall notify the
Administrative Agent in writing or by telecopy (or by telephone promptly
confirmed in writing or by telecopy), not later than 12:00 noon, New York City
time, on the day of a proposed Swingline Loan. Such notice shall be delivered on
a Business Day, shall be irrevocable and shall refer to this Agreement and shall
specify the requested date (which shall be a Business Day) and amount of such
Swingline Loan. The Administrative Agent will promptly advise the Swingline
Lender of any notice received from such Borrower(s) pursuant to this paragraph
(b). The Swingline Lender shall make each Swingline Loan available to the
applicable Borrower(s) by means of a credit to the Concentration Account by 3:00
p.m. on the date such Swingline Loan is so requested.
(c) PREPAYMENT. Each Borrower shall have the right at any time and from
time to time to prepay any Swingline Loan, in whole or in part, upon giving
written or telecopy notice (or telephonic notice promptly confirmed by written
or telecopy notice) to the Swingline Lender and to the Administrative Agent
before 12:00 noon, New York City time, on the date of prepayment at the
Swingline Lender's address for notices specified on Schedule 2.01, PROVIDED that
all or any portion of a Swingline Loan borrowed and prepaid on the same date
shall be deemed to have been outstanding for one day.
(d) INTEREST. Each Swingline Loan shall be an ABR Loan and, subject to
the provisions of Section 2.07, shall bear interest as provided in Section
2.06(a).
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40
(e) PARTICIPATIONS. The Swingline Lender may by written notice given to
the Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. The Administrative Agent will, promptly upon receipt of such
notice, give notice to each Lender, specifying in such notice such Lender's Pro
Rata Percentage of such Swingline Loan or Loans. In furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Administrative Agent, for the
account of the Swingline Lender, such Lender's Pro Rata Percentage of such
Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation
to acquire participations in Swingline Loans pursuant to this paragraph is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available funds,
in the same manner as provided in Section 2.02(c) with respect to Loans made by
such Lender (and Section 2.02(c) shall apply, MUTATIS MUTANDIS, to the payment
obligations of the Lenders) and the Administrative Agent shall promptly pay to
the Swingline Lender the amounts so received by it from the Lenders. The
Administrative Agent shall notify the applicable Borrower of any participations
in any Swingline Loan acquired pursuant to this paragraph and thereafter
payments in respect of such Swingline Loan shall be made to the Administrative
Agent and not to the Swingline Lender. Any amounts received by the Swingline
Lender from any Borrower (or other party on behalf of any Borrower) in respect
of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a
sale of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrowers (or other party
liable for obligations of the Borrowers) of any default in the payment thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of Parent and the Borrowers represents and warrants to the
Administrative Agent, the Collateral Agent, the Issuing Bank and each of the
Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of Parent, the Borrowers and
each of the Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure so to qualify
could not reasonably be expected to result in a Material Adverse Effect, and (d)
has the corporate power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated hereby to which it is or will be a party and, in the
case of the Borrowers, to borrow hereunder.
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41
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance by
each Loan Party of each of the Loan Documents and the borrowings hereunder
(collectively, the "TRANSACTIONS") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and (b) will not (i)
violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Parent, any Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which Parent, any Borrower or any Subsidiary is a party or by
which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Parent, any Borrower or any Subsidiary
(other than any Lien created hereunder or under the Security Documents).
SECTION 3.03. ENFORCEABILITY. This Agreement has been duly executed and
delivered by Parent and each Borrower and constitutes, and each other Loan
Document when executed and delivered by each Loan Party party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms.
SECTION 3.04. GOVERNMENTAL APPROVALS. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgage and (c) such as have been made or
obtained and are in full force and effect.
SECTION 3.05. FINANCIAL STATEMENTS; REGISTRATION STATEMENT. (a) Parent
has heretofore furnished to the Lenders its consolidated and consolidating
balance sheets and statements of income and changes in financial condition (i)
as of and for the fiscal year ended December 31, 1996, which in the case of such
consolidated statements shall be audited by and accompanied by the opinion of
Deloitte & Touche, LLP, independent public accountants, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended October 1, 1997,
certified by its chief financial officer. Such financial statements present
fairly the financial condition and results of operations and cash flows of
Parent and the consolidated Subsidiaries as of such dates and for such periods.
Such balance sheets and the notes thereto disclose, as and to the extent
required by GAAP, all material liabilities, direct or contingent, of Parent and
the consolidated Subsidiaries as of the dates thereof and, as of such dates,
there were no other material liabilities, direct or contingent, of Parent or the
Subsidiaries except as disclosed in (i) the Confidential Information Memorandum,
(ii) the Registration Statement or (iii) the Disclosure Statement. The financial
statements referred to in this Section 3.05(a) were prepared in accordance with
GAAP applied on a consistent basis.
(b) No amendment to the Registration Statement has been filed with the
Securities and Exchange Commission since June 3, 1997, and no supplement to the
final prospectus dated June 5, 1997, has been distributed.
SECTION 3.06. NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
prospectus dated June 5, 1997, that constitutes the Disclosure Statement and
except for the filing of the Cases in connection therewith, there has been no
material adverse change in the business, assets, operations, properties,
condition, financial
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or otherwise, contingent liabilities (including but not limited to potential
environmental and employee health and safety liabilities), prospects or material
agreements of Parent, the Borrowers and the Subsidiaries, taken as a whole,
since December 31, 1996.
SECTION 3.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a) Each of
Parent, the Borrowers and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
the Mortgaged Property), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.
(b) Each of Parent, the Borrowers and the Subsidiaries has complied
with all obligations under all material leases to which it is a party and all
such leases are in full force and effect. Each of Parent, the Borrowers and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
(c) None of the Loan Parties has received any notice of, or has any
knowledge of, any pending or contemplated condemnation proceeding affecting the
Mortgaged Property or any sale or disposition thereof in lieu of condemnation.
(d) Parent is not obligated under any right of first refusal, option or
other contractual right to sell, assign or otherwise dispose of the Mortgaged
Property or any interest therein.
SECTION 3.08. SUBSIDIARIES; PARTIES TO RECEIVE EQUITY. (a) Schedule
3.08(a) sets forth as of the Closing Date a list of all Subsidiaries and the
percentage ownership interest of Parent, any Borrower or any Subsidiary therein.
The shares of capital stock or other ownership interests so indicated on
Schedule 3.08(a) are fully paid and non-assessable and (other than the shares of
the capital stock of the Real Estate Subsidiaries and FRD's direct and indirect
subsidiaries) are owned by Parent, a Borrower or a Subsidiary free and clear of
all Liens, except for Liens created under the DIP Credit Agreement to be
released in connection with the first Credit Event hereunder.
(b) To the best of the Parent's and the Borrowers' knowledge, Schedule
3.08(b) sets forth a complete and correct list of each person that owns of
record or beneficially, immediately prior to the consummation of the Emergence
Transactions, (i) Senior Subordinated Debentures or (ii) Junior Subordinated
Debentures and sets forth opposite such person's name (A) the respective amounts
of the securities listed in clauses (i) and (ii) above so owned by such person
immediately prior to the consummation of the Emergence Transactions and (B) the
percentage of the outstanding New Common Stock that will be so owned by such
person after giving effect to the Emergence Transactions.
SECTION 3.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of Parent or any Borrower, threatened against or affecting Parent, any
Borrower or any Subsidiary or any business, property or rights of any such
person (i) that involve any Loan Document or the Transactions or (ii) that have
had or are reasonably likely to have, either individually or in the aggregate, a
Material Adverse Effect.
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(b) None of Parent, the Borrowers or any of the Subsidiaries or any of
their respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Mortgaged Property, or is in
default with respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
(c) Certificates of occupancy and permits are in effect for the
Mortgaged Property as currently constructed, and true and complete copies of
such certificates of occupancy have been delivered to the Collateral Agent as
mortgagee with respect to the Mortgaged Property.
SECTION 3.10. AGREEMENTS. (a) None of Parent, the Borrowers or any of
the Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Except for defaults by Flagstar Corporation being discharged
pursuant to the Emergence Transactions, none of Parent, the Borrowers or any of
the Subsidiaries is in default in any manner under any provision of any
indenture or other agreement or instrument evidencing Indebtedness, or any other
material agreement or instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, where such default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) None of Parent, the
Borrowers or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation G, U
or X.
SECTION 3.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. None of Parent, the Borrowers or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. USE OF PROCEEDS. The Borrowers will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. TAX RETURNS. Each of Parent, the Borrowers and the
Subsidiaries has filed or caused to be filed all Federal, state, local and
foreign tax returns or materials required to have been filed by it (except for
any non-material state, local or foreign returns) and has paid or caused to be
paid all taxes due and payable by it and all assessments received by it, except
taxes that are being contested in good faith by appropriate proceedings and for
which Parent, the Borrowers or such Subsidiary, as applicable, shall have set
aside on its books adequate reserves.
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44
SECTION 3.15. NO MATERIAL MISSTATEMENTS. None of (a) the Confidential
Information Memorandum, the Registration Statement and the Disclosure Statement,
taken as a whole, or (b) any other information, report, financial statement,
exhibit or schedule furnished by or on behalf of Parent or the Borrowers to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto, taken as a
whole together with any other information (including the Confidential
Information Memorandum, the Registration Statement and the Disclosure Statement)
so furnished, contained, contains or will contain any material misstatement of
fact or omitted, omits or will omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were,
are or will be made, not misleading, PROVIDED that to the extent that such
information was subsequently replaced, prior to the date hereof, by other
information expressly correcting such earlier information (and the
Administrative Agent and Lenders were expressly informed by or on behalf of
Parent or the Borrowers that such other information was correcting such earlier
information), the foregoing representation does not apply to such earlier
information.
SECTION 3.16. EMPLOYEE BENEFIT PLANS. Each of Parent, the Borrowers and
their ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of Parent, the
Borrowers or any of their ERISA Affiliates. The present value of all benefit
liabilities under each Plan (based on those assumptions used to fund such Plan)
did not, as of the last annual valuation date applicable thereto, exceed by more
than $ [ ] the fair market value of the assets of such Plan (assuming the
accrual of contributions for the current or immediately preceding Plan year not
yet due), and the present value of all benefit liabilities of all underfunded
Plans (based on those assumptions used to fund each such Plan) did not, as of
the last annual valuation dates applicable thereto, exceed by more than $[ ] the
fair market value of the assets (assuming the accrual of contributions for the
current or immediately preceding Plan year not yet due) of all such underfunded
Plans.
SECTION 3.17. ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 3.17:
(a) The properties owned or operated by Parent, the Borrowers and the
Subsidiaries (the "PROPERTIES") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could otherwise give rise to
liability under, Environmental Laws, which violations, Remedial Actions and
liabilities, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect;
(b) The Properties and all operations of Parent, the Borrowers and the
Subsidiaries are in compliance, and in the last five years have been in
compliance, with all Environmental Laws, and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the operations of
Parent, the Borrowers or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect;
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(d) None of Parent, the Borrowers or any of the Subsidiaries has
received any notice of an Environmental Claim in connection with the Properties
or the operations of Parent, the Borrowers or the Subsidiaries or with regard to
any person whose liabilities for environmental matters Parent, the Borrowers or
the Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, nor do Parent, the Borrowers or
the Subsidiaries have reason to believe that any such notice will be received or
is being threatened; and
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could give rise to liability
under any Environmental Law, nor have Parent, the Borrowers or the Subsidiaries
retained or assumed any liability, contractually, by operation of law or
otherwise, with respect to the generation, treatment, storage or disposal of
Hazardous Materials, which transportation, generation, treatment, storage or
disposal, or retained or assumed liabilities, in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.18. INSURANCE. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by Parent or any Borrower or by
Parent or any Borrower for the Subsidiaries as of the date hereof and the
Closing Date. As of each such date, such insurance is in full force and effect
and all premiums have been duly paid. Parent, the Borrowers and the Subsidiaries
have insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice.
SECTION 3.19. SECURITY DOCUMENTS. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement) as
to which perfection is effected through the filing of such financing statements,
in each case prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof).
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(d) The Mortgage is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the right, title and interest in and to the Mortgaged
Property thereunder and the proceeds thereof, and when the Mortgage is filed in
the office specified on Schedule 3.19(d), the Mortgage shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
Spartan Realty, Inc., a Delaware corporation, in the Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other person,
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02.
SECTION 3.20. LABOR MATTERS. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against Parent, any Borrower
or any Subsidiary pending or, to the knowledge of Parent or Borrower,
threatened. The hours worked by and payments made to employees of Parent, each
Borrower and each Subsidiary have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters (except for any violations that, individually or in
the aggregate, would not be material). All payments due from Parent, any
Borrower or any Subsidiary, or for which any claim may be made against Parent,
any Borrower or such Subsidiary, on account of wages and employee health and
welfare insurance and other benefits (except for any payments or claims that,
individually or in the aggregate, if not paid, would not be material), have been
paid or accrued as a liability on the books of Parent, any Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Parent, any Borrower or any Subsidiary
is bound.
SECTION 3.21. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan made on the Closing Date and after giving effect to the application
of the proceeds of such Loans, (a) the fair value of the assets of each Loan
Party, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(c) each Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted following the Closing Date.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. ALL CREDIT EVENTS. On the date of each Borrowing,
including each Borrowing in which Loans are refinanced with new Loans as
contemplated by Section 2.02(f), and on the date of each issuance of a Letter of
Credit (each such event being called a "CREDIT EVENT"):
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47
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance of a
Letter of Credit, the Issuing Bank and the Administrative Agent shall have
received a notice requesting the issuance of such Letter of Credit as required
by Section 2.20(b), or, in the case of the Borrowing of a Swingline Loan, the
Swingline Lender and the Administrative Agent shall have received a notice
requesting such Swingline Loan as required by Section 2.21(b).
(b) The representations and warranties set forth in Article III
(except, in the case of a refinancing that does not increase the aggregate
principal amount of Loans outstanding, the representations set forth in Sections
3.06 and 3.09) shall be true and correct in all material respects on and as of
the date of such Credit Event with the same effect as though made on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date, in which case the representations and warranties that
expressly relate to an earlier date shall have been true and correct in all
material respects as of such earlier date.
(c) The Borrowers and each other Loan Party shall be in compliance with
all the terms and provisions set forth herein and in each other Loan Document on
its part to be observed or performed, and at the time of and immediately after
such Credit Event, no Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a representation and
warranty by Parent and each Borrower on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. FIRST CREDIT EVENT. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion
of Parker, Poe, Adams & Bernstein L.L.P., counsel for Parent and the
Borrowers, substantially to the effect set forth in Exhibit J, (A)
dated the Closing Date, (B) addressed to the Issuing Bank, the
Administrative Agent, the Collateral Agent and the Lenders and (C)
covering such other matters relating to the Loan Documents and the
Transactions as the Administrative Agent shall reasonably request, and
Parent and the Borrowers hereby request such counsel to deliver such
opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be satisfactory to the Lenders, to the Issuing Bank and
to Cravath, Swaine & Moore, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all
times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy
of resolutions duly adopted by the Board of Directors of
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48
such Loan Party authorizing the execution, delivery and performance of
the Loan Documents to which such person is a party and, in the case of
the Borrowers, the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles of incorporation of such
Loan Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature
of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan Party; (iii) a
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; and (iv) such other documents as
the Lenders, the Issuing Bank or Cravath, Swaine & Moore, counsel for
the Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of Parent, confirming compliance with the conditions precedent set
forth in paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrowers hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all the outstanding capital stock of the
Borrowers and the Subsidiaries (other than the capital stock of (i) any
subsidiary of FRD and (ii) the Real Estate Subsidiaries) shall have
been duly and validly pledged thereunder to the Collateral Agent for
the ratable benefit of the Secured Parties and certificates
representing such shares, accompanied by instruments of transfer and
stock powers endorsed in blank, shall be in the actual possession of
the Collateral Agent; PROVIDED that to the extent to do so would cause
adverse tax consequences to Parent or any Borrower, (A) none of Parent,
the Borrowers or any Domestic Subsidiary shall be required to pledge
more than 65% of the capital stock of any Foreign Subsidiary and (B) no
Foreign Subsidiary shall be required to pledge the capital stock of any
of its subsidiaries.
(g) The Security Agreement shall have been duly executed by
the Loan Parties party thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest
in and lien on the Collateral (subject to any Lien expressly permitted
by Section 6.02) described in such agreement shall have been delivered
to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code filings (or equivalent filings)
made with respect to the Loan Parties in the states (or other
jurisdictions) in which the chief executive office of each such person
is located, any offices of such persons in which records have been kept
relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant
to the preceding
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49
paragraph, together with copies of the financing statements (or similar
documents) disclosed by such search, and accompanied by evidence
satisfactory to the Collateral Agent that the Liens indicated in any
such financing statement (or similar document) would be permitted under
Section 6.02 or have been released (or will be released pursuant to UCC
termination statements which have been received by, and are
satisfactory to, the Collateral Agent).
(i) The Collateral Agent shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and
duly executed by a Responsible Officer of Parent.
(j)(i) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to the Mortgaged Property shall
have been duly executed by the parties thereto and delivered to the
Collateral Agent and shall be in full force and effect, (ii) the
Mortgaged Property shall not be subject to any Lien other than those
permitted under Section 6.02, (iii) each of such Security Documents
shall have been filed and recorded in the recording office as specified
on Schedule 3.19(d) (or a lender's title insurance policy, in form and
substance acceptable to the Collateral Agent, insuring such Security
Document as a first lien on the Mortgaged Property (subject to any Lien
permitted by Section 6.02) shall have been received by the Collateral
Agent) and, in connection therewith, the Collateral Agent shall have
received evidence satisfactory to it of each such filing and
recordation and (iv) the Collateral Agent shall have received such
other documents, including a policy or policies of title insurance
issued by a nationally recognized title insurance company, together
with such endorsements, coinsurance and reinsurance as may be
reasonably requested by the Collateral Agent and the Lenders, insuring
the Mortgage as a valid first lien on the Mortgaged Property, free of
Liens other than those permitted under Section 6.02, together with such
surveys, abstracts, evidence of zoning and other legal compliance,
certificates of occupancy and other permits (including such
endorsements as the Administrative Agent may require), and legal
opinions required to be furnished pursuant to the terms of the Mortgage
or as reasonably requested by the Collateral Agent or the Lenders.
(k) Each of the Parent Guarantee Agreement and the Subsidiary
Guarantee Agreement shall have been duly executed by the parties
thereto, shall have been delivered to the Collateral Agent and shall be
in full force and effect.
(l) The Indemnity, Subrogation and Contribution Agreement
shall have been duly executed by the parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and
effect.
(m) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name
the Collateral Agent as additional insured, in form and substance
satisfactory to the Administrative Agent.
(n) The Administrative Agent shall be reasonably satisfied
with all of Parent's and the Subsidiaries' material agreements and
other arrangements with their suppliers (including the terms of sale
and any financing arrangements with such suppliers), service providers,
franchisees and franchisors after giving effect to the consummation of
the Plan of Reorganization.
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(o) The Administrative Agent shall have received for the
Mortgaged Property the following:
(i) a copy of the original permanent or temporary
certificate of occupancy, if any, issued upon completion of
the Mortgaged Property (or any amendment issued upon
completion of any alteration) by the appropriate Governmental
Authority or appropriate evidence that the use and occupancy
of the Mortgaged Property is authorized; and
(ii) a copy of all applications, licenses, permits and
authorizations which are necessary for the construction and
operation of the Mortgaged Property.
(p) The Administrative Agent shall have received a Borrowing
Request pursuant to Section 2.03(b).
(q) The Court shall have entered the Order reasonably
satisfactory in substance to the Lenders. The Order shall not be
subject to any appeal or stay and there shall not have been entered by
the Court any reversal, modification or vacatur, in whole or in part,
of the Order. All other requisite Governmental Authorities shall have
approved or consented to the Transactions to the extent required or
deemed advisable by the Administrative Agent and its counsel (and such
approvals shall be in full force and effect and all appeal periods with
respect thereto shall have expired) and there shall be no action,
actual or threatened, before any Governmental Authority or arbitrator
that (i) has a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the Transactions or (ii) if adversely
determined, could reasonably be expected to result in a Material
Adverse Effect.
(r) Parent shall have emerged from Chapter 11 proceedings and,
concurrently with the first Credit Event, shall have consummated the
Emergence Transactions in accordance with the Plan of Reorganization.
(s) The Lenders shall be satisfied with any differences that
are adverse to the Lenders between (i) the Plan of Reorganization in
the form confirmed by the Court or any aspect of the Emergence
Transactions as approved by the Court and (ii) the Plan of
Reorganization or any aspect of the Emergence Transactions as they are
described in the Disclosure Statement.
(t) The Lenders shall have received a pro forma consolidated
balance sheet of Parent as of the Closing Date, after giving effect to
the consummation of the Emergence Transactions and the other
transactions contemplated thereby, which shall not be materially
inconsistent with the forecasts previously provided to the Lenders.
(u) After giving effect to the consummation of the Emergence
Transactions and the other transactions contemplated hereby, Parent and
the Subsidiaries shall have no outstanding Indebtedness or preferred
stock other than (i) Indebtedness listed on Schedule 6.01, (ii) its
Obligations hereunder, (iii) the New Senior Notes and (iv) other
Indebtedness permitted under Section 6.01.
(v) The amounts, terms and conditions of all Indebtedness
(including the New Senior Notes) and Capital Lease Obligations to
remain outstanding after the Closing Date (including terms and
conditions relating to the interest rate, fees, amortization, maturity,
prepayment requirements,
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51
mandatory call or redemption features, sinking funds, security,
subordination (if any), covenants, events of default and remedies)
shall be satisfactory in all respects to the Lenders. Without limiting
the generality of the foregoing, it is understood that (i) the New
Senior Notes (A) shall be unsecured obligations of Parent and (B) shall
not be guaranteed by any Subsidiary of Parent and (ii) the terms of the
New Senior Notes, the Mortgage Notes and the other Indebtedness
described in the Confidential Information Memorandum, the Registration
Statement and the Disclosure Statement shall, to the extent
specifically described in such documents, be deemed satisfactory to the
Lenders.
(w) Prior to or substantially simultaneously with the first
Credit Event, (i) the principal, interest, fees and other amounts due
under the TWS Credit Agreement and the DIP Credit Agreement shall have
been repaid in full, (ii) all commitments to lend under the TWS Credit
Agreement and the DIP Credit Agreement shall have been permanently
terminated, (iii) all obligations under or relating to the TWS Credit
Agreement and the DIP Credit Agreement and all security interests
related thereto shall have been discharged and (iv) the Administrative
Agent shall have received satisfactory evidence of such repayment,
termination and discharge.
(x) The Administrative Agent shall be satisfied in all
respects with the composition of the management and board of directors
of Parent and the Subsidiaries after giving effect to the consummation
of the Plan of Reorganization, the arrangements for the retention of
such management and the contracts and other compensatory arrangements
of Parent and the Subsidiaries with such management.
(y) The Lenders shall be satisfied with the capitalization,
structure and equity ownership of Parent and the Subsidiaries after
giving effect to the consummation of the Plan of Reorganization (it
being understood that the post-Emergence Transactions capitalization
and structure of Parent and the Subsidiaries that are described in the
Disclosure Statement shall, to the extent specifically described in
such Disclosure Statement, be deemed satisfactory to the Lenders).
(z) The Lenders shall have received (i) audited consolidated
and, to the extent available, unaudited consolidating balance sheets
and related statements of income, stockholders' equity and cash flows
for Parent for the five fiscal years ended prior to the Closing Date
and (ii) unaudited consolidated and consolidating balance sheets and
related statements of income, stockholders' equity and cash flows for
Parent for the 1997 fiscal quarters preceding the Closing Date by more
than 45 days, which financial statements shall not be materially
inconsistent with the financial statements or forecasts previously
provided to the Lenders.
(aa) The Administrative Agent shall be reasonably satisfied as
to the amount and nature of capital expenditures required or expected
to be made by Parent and the Subsidiaries through the Maturity Date and
Parent's plans with respect to the funding of such expenditures.
(bb) The Lenders shall be reasonably satisfied as to the
amount and nature of any contingent liabilities (including but not
limited to (i) environmental and employee health and safety exposures
and (ii) potential liabilities relating to the arbitration proceedings
with respect to Parent's Hardee's restaurant operations commenced by a
Subsidiary against Hardee's Food Systems, Inc. or that may otherwise
arise in connection with Parent's Hardee's restaurant operations
(including Parent's proposed changes in such operations)) to which
Parent and the Subsidiaries may be subject after giving
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52
effect to the Plan of Reorganization (including but not limited to
contingent liabilities arising out of events or conditions prior to the
commencement of Parent's Chapter 11 case, but excluding any liabilities
to the extent the amount and nature of such liabilities are (A)
specifically disclosed in the Disclosure Statement (without giving
effect to any amendments to the Disclosure Statement filed after June
5, 1997) or (B) otherwise specifically disclosed to the Lenders prior
to the date hereof), and with the plans of Parent with respect thereto,
and, if requested by the Administrative Agent, the Lenders shall have
received environmental assessments (including Phase I reports)
satisfactory to the Administrative Agent from an environmental
consulting firm satisfactory to the Administrative Agent with respect
to the Mortgaged Property.
(cc) There shall be no litigation, arbitration or
administrative proceeding or consent decree that would reasonably be
expected to have a material adverse effect on the business, assets,
operations, properties, condition (financial or otherwise), prospects
or material agreements of Parent and the Subsidiaries, taken as a
whole, or on the ability of the parties to consummate the Emergence
Transactions.
(dd) The Administrative Agent shall be reasonably satisfied
with the liquidity, and sufficiency of amounts available under this
Agreement to meet the ongoing working capital and other cash
requirements, of Parent and the Subsidiaries following the consummation
of the Emergence Transactions and the other transactions contemplated
hereby.
(ee) The Lenders shall have received the written certification
of a Financial Officer of Parent that Consolidated EBITDA for each
fiscal month after the most recent 1997 fiscal quarter for which
unaudited financial statements were received by the Lenders and ended
prior to the Closing Date is not materially inconsistent with the
forecast for any such month previously provided to the Administrative
Agent.
(ff) The Lenders shall have received (i) a detailed business
plan of Parent and the Subsidiaries for fiscal year 1997 and (ii)
financial projections for Parent and the Subsidiaries for fiscal years
1997 through 2000, in each case in form and substance satisfactory to
the Administrative Agent.
(gg) Key management personnel, including James B. Adamson and
such other management personnel as are satisfactory to Mr. Adamson, of
Parent and the Subsidiaries, shall have waived, on terms and conditions
reasonably satisfactory to the Administrative Agent, any rights they
may have, as a result of the consummation of the Plan of
Reorganization, to any severance or other special payments or any other
special benefits, and the Administrative Agent shall be reasonably
satisfied with all benefits (including stock options) granted or to be
granted to such personnel or to any other management personnel of
Parent and the Subsidiaries in connection with such waivers or any
similar waivers.
(hh) The consummation of the Emergence Transactions shall not
(i) violate any applicable law, statute, consent decree, rule or
regulation or (ii) conflict with, or result in a default or event of
default under, or a termination or interruption of, any material
agreement of Parent or any of the Subsidiaries, and the Administrative
Agent shall have received one or more legal opinions to such effect,
satisfactory to the Administrative Agent, from counsel to Parent
satisfactory to the Administrative Agent.
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53
ARTICLE V
AFFIRMATIVE COVENANTS
Each of Parent and the Borrowers covenants and agrees with each Lender
that so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all Fees
and all other expenses or amounts payable under any Loan Document shall have
been paid in full and all Letters of Credit have been canceled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, each of Parent and the
Borrowers will, and will cause each of the Subsidiaries to:
SECTION 5.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations (including
any zoning, building, Environmental Law, ordinance, code or approval or any
building permits or any restrictions of record or agreements affecting the
Mortgaged Property) and decrees and orders of any Governmental Authority,
whether now in effect or hereafter enacted; and at all times maintain and
preserve all property material to the conduct of such business and keep such
property in good repair, working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
SECTION 5.02. INSURANCE. Maintain with responsible and reputable
insurance companies or associations insurance in such amounts and covering such
risks as is consistent with prudent business practice for comparable companies
in the industry and such additional insurance as is required by applicable law;
PROVIDED, HOWEVER, that Parent, the Borrowers and the Subsidiaries may
self-insure, pursuant to policies adopted by the Board of Directors of Parent
and reviewed at least once annually, to the extent determined in good faith by
senior management of Parent to be consistent with prudent business practice, in
the best interest of Parent, the Borrowers and the Subsidiaries and not
materially adverse to the rights and interests of the Lenders under this
Agreement and the other Loan Documents.
SECTION 5.03. OBLIGATIONS AND TAXES. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
(other than any tax, assessment or governmental charge or levy in an amount less
than $250,000, PROVIDED that the failure to pay or discharge the same,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect) imposed upon it or upon its income or profits or in
respect of its property, before the same shall become delinquent or in default,
as well as all lawful claims for labor, materials and supplies or otherwise
(other than any claim for an amount less than $250,000, PROVIDED that the
failure to pay or discharge the same, individually or in the aggregate, could
not reasonably
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54
be expected to result in a Material Adverse Effect that, if unpaid, might give
rise to a Lien upon such properties or any part thereof; PROVIDED, HOWEVER, that
such payment and discharge shall not be required with respect to any such tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and Parent and such
Borrower, as applicable, shall have set aside on its books adequate reserves
with respect thereto in accordance with GAAP and such contest operates to
suspend collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien and, in the case of the Mortgaged Property, there is no
risk of forfeiture of such property.
SECTION 5.04. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of
Parent, furnish to the Administrative Agent:
(a) within 90 days after the end of each fiscal year, its
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows showing the financial
condition of Parent and the consolidated Subsidiaries as of the close
of such fiscal year and the results of its operations and the
operations of such Subsidiaries during such year, all audited by
Deloitte & Touche LLP or other independent public accountants of
recognized national standing acceptable to the Required Lenders and
accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of Parent and the consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated and consolidating
balance sheets and related statements of operations, stockholders'
equity and cash flows showing the financial condition of Parent and the
consolidated Subsidiaries as of the close of such fiscal quarter and
the results of its operations and the operations of such Subsidiaries
during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly
presenting the financial condition and results of operations of Parent
and the consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments;
(c) within 60 days after the end of the last fiscal month of
each fiscal year, 45 days after the end of the third, sixth and ninth
fiscal months of each fiscal year, and 35 days after the end of each
other fiscal month, its consolidated and consolidating balance sheets
and related statements of operations and stockholders' equity and
consolidated cash flows showing the financial condition of Parent and
the consolidated Subsidiaries as of the close of such month and the
results of its operations, the operations of such Subsidiaries during
such month and the then elapsed portion of the fiscal year and the
monthly management reports that have been provided historically by
Parent with such financial statements, all certified by one of its
Financial Officers as fairly presenting the financial condition and
results of operations of Parent and the consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments;
(d) concurrently with any delivery of financial statements
under sub-paragraph (a) or (b) above, a certificate of the accounting
firm or Financial Officer (i) opining on or certifying such statements
(which certificate, when furnished by an accounting firm, may be
limited to accounting matters and disclaim responsibility for legal
interpretations) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature
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55
and extent thereof and any corrective action taken or proposed to be
taken with respect thereto and (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.10, 6.11, 6.12,
6.13 and 6.14;
(e) as soon as available and in any event no later than 45
days after the end of each fiscal year of Parent, provide to the
Administrative Agent (i) the annual business plan of Parent and the
Specified Subsidiaries, (ii) projections prepared by management of
Parent of (A) statements concerning selected financial data (consisting
of net sales, earnings before interest and taxes, working capital
items, capital expenditures and depreciation) on a monthly basis for
the first year following such fiscal year, and (B) balance sheets,
income statements and cash flow statements, on a quarterly basis for
the first year following such fiscal year and on an annual basis for
each year thereafter during the term of this Agreement, and (iii) a
statement in reasonable detail of the assumptions used in preparing
such projections, all in form and substance reasonably satisfactory to
the Administrative Agent.
(f) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by Parent or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed to its shareholders, as the case may be; and
(g) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
Parent, any Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.05. LITIGATION AND OTHER NOTICES. Furnish to the Administra-
tive Agent, the Issuing Bank and each Lender prompt written notice of the
following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against Parent, any Borrower or any Subsidiary
that could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
SECTION 5.06. EMPLOYEE BENEFITS. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent as soon as possible after, and in any event within 30 days
after any Responsible Officer of Parent or any Borrower or any ERISA Affiliate
knows or has reason to know that, any ERISA Event has occurred that, alone or
together with any other ERISA Event, could reasonably be expected to result in
liability of Parent or any Subsidiary in an aggregate amount exceeding
$5,000,000 or requiring payments exceeding $1,000,000 in any year, a statement
of a Financial Officer of Parent setting forth details as to such ERISA Event
and the action, if any, that Parent proposes to take with respect thereto.
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56
SECTION 5.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of Parent, any Borrower or
any Subsidiary at reasonable times and as often as reasonably requested and to
make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of Parent, any Borrower or any Subsidiary
with the officers thereof and independent accountants therefor.
SECTION 5.08. USE OF PROCEEDS. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause all
lessees and other persons occupying its Properties to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to its
operations and Properties; obtain and renew all material Environmental Permits
necessary for its operations and Properties; and conduct any Remedial Action in
accordance with Environmental Laws; PROVIDED, HOWEVER, that none of Parent, the
Borrowers or any of the Subsidiaries shall be required to undertake any Remedial
Action to the extent that its obligation to do so is being contested in good
faith and by proper proceedings and appropriate reserves are being maintained
with respect to such circumstances.
SECTION 5.10. PREPARATION OF ENVIRONMENTAL REPORTS. If a Default caused
by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 60 days after such request, at the expense
of the Borrowers, an environmental site assessment report for the Properties
which are the subject of such default prepared by an environmental consulting
firm acceptable to the Administrative Agent and indicating the presence or
absence of Hazardous Materials and the estimated cost of any compliance or
Remedial Action in connection with such Properties.
SECTION 5.11. FURTHER ASSURANCES. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. Parent and the Borrowers will
cause any subsequently acquired or organized Domestic Subsidiary (other than a
subsidiary of FRD) to execute a Subsidiary Guarantee Agreement, Indemnity,
Subrogation and Contribution Agreement and each applicable Security Document in
favor of the Collateral Agent. In addition, from time to time, Parent, the
Borrowers and the Specified Subsidiaries will, at their cost and expense,
promptly secure the Obligations by pledging or creating, or causing to be
pledged or created, perfected security interests with respect to such of its
assets and properties as the Administrative Agent or the Required Lenders shall
designate (it being understood that it is the intent of the parties that the
Obligations shall be secured by, among other things, substantially all the
assets of Parent, the Borrowers and the Specified Subsidiaries (including real
and other properties acquired subsequent to the Closing Date)). Such security
interests and Liens will be created under the Security Documents and other
security agreements, mortgages,
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57
deeds of trust and other instruments and documents in form and substance
satisfactory to the Collateral Agent, and the Borrowers shall deliver or cause
to be delivered to the Lenders all such instruments and documents (including
legal opinions, title insurance policies and lien searches) as the Collateral
Agent shall reasonably request to evidence compliance with this Section. The
Borrowers agree to provide such evidence as the Collateral Agent shall
reasonably request as to the perfection and priority status of each such
security interest and Lien.
SECTION 5.12. ADDITIONAL COVENANTS REGARDING REAL ESTATE FINANCING
DOCUMENTS. (a) Furnish to the Administrative Agent and the Lenders as soon as
possible, and in any event within three Business Days, after the occurrence of
each Default or Event of Default, as the case may be, under (and as defined in)
any Real Estate Financing Document, which Default or Event of Default is
continuing on the date of such statement, a statement of the chief financial
officer of Parent setting forth details of such Default or Event of Default and
the action that Parent proposes to take with respect thereto and (b) cause each
of Denny's, Quincy's, Enterprises and each of the Real Estate Subsidiaries not
to amend, modify or change, or permit or suffer to exist any amendment or
modification to or change in, any term or condition of any Real Estate Financing
Document to which such corporation is a party or provide or give any consent,
waiver or approval thereunder except for Permitted Amendments.
SECTION 5.13. CONCENTRATION ACCOUNTS. Except for any Excluded
Subsidiary, maintain, and cause the Borrowers to maintain, concentration
accounts with Chase and, to that end, (a) in the case of Parent, maintain the
Concentration Account, and except for Parent's daily operating account with
Branch Banking and Trust Company at its Spartanburg, South Carolina
headquarters, maintain other accounts of Parent and the Borrowers with Chase as
the principal operating accounts of Parent and the Borrowers, respectively; (b)
pay or cause to be paid, at or prior to the end of each Business Day, to Chase
for deposit in the Concentration Account all cash of Parent or any Borrower
(including all proceeds of collateral in which Parent or any Borrower is
granting a security interest under the Security Documents) in excess of the
amount determined by Parent or such Borrower, in the exercise of its prudent
business judgment, to be required by Parent or such Borrower for the conduct of
its business operations in the ordinary course; and (c) cause each of its
Specified Subsidiaries to pay or cause to be paid, at or prior to the end of
each Business Day, to Chase for deposit in the Concentration Account all cash of
such Specified Subsidiary (including all proceeds of Collateral in which such
Specified Subsidiary is granting a security interest under the Security
Documents) in excess of the amount determined by such Specified Subsidiary, in
the exercise of its prudent business judgment, to be required by such Specified
Subsidiary for the conduct of its business operations in the ordinary course, in
each case as and to the extent required under the terms of the Security
Documents to which such Specified Subsidiary is a party.
ARTICLE VI
NEGATIVE COVENANTS
Each of Parent and the Borrowers covenants and agrees with each Lender
that, so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all Fees
and all other expenses or amounts payable under any Loan Document have been paid
in full and all Letters of Credit have been canceled or have expired and all
amounts drawn
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58
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, neither Parent nor the Borrowers will, nor will
they cause or permit any of the Specified Subsidiaries to:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth in
Schedule 6.01;
(b) Indebtedness arising hereunder or evidenced by (i) the
Loan Documents, (ii) the New Senior Notes Documents, (iii) the Mortgage
Notes and (iv) the Real Estate Financing Documents;
(c) Indebtedness arising under the Real Estate Refinancing;
(d) Indebtedness incurred by Parent, any Borrower or any
Specified Subsidiary subsequent to the Closing Date secured by purchase
money Liens (exclusive of Capex Financings) in an aggregate amount not
to exceed $5,000,000 at any one time outstanding;
(e) subject to Section 6.10, Capex Financings;
(f) Indebtedness arising under (i) any purchasing card program
established to enable headquarters and field staff of Parent or any
Specified Subsidiary to purchase goods and supplies from vendors and
(ii) any travel and entertainment card program established to enable
headquarters and field staff of Parent or any Specified Subsidiary to
make payments for expenses incurred related to travel and
entertainment, PROVIDED that the aggregate amount of such Indebtedness
shall not exceed $10,000,000 at any time outstanding;
(g) Indebtedness arising from investments among Parent, any
Borrower and any Specified Subsidiary that are permitted hereunder;
(h) Indebtedness owed to Chase or any of its banking
Affiliates in respect of any overdrafts and related liabilities arising
from treasury, depository and cash management services or in connection
with any automated clearing house transfers of funds, PROVIDED that the
aggregate principal amount of such Indebtedness shall not exceed
$40,000,000 at any one time outstanding;
(i) in the case of Parent, any Borrower or Subsidiary
Guarantor (other than a First-Tier Subsidiary);
(A) all interest, fees, reimbursement and indemnification
amounts, and all other accruals and obligations under the
Indebtedness described in Section 6.01(a) and renewals,
extensions, modifications or refinancings of such
Indebtedness, PROVIDED that such renewals, extensions,
modifications and refinancings (i) do not increase the
outstanding principal amount of the Indebtedness being
renewed, extended, modified or refinanced, or shorten the
maturity thereof to a date earlier than one year after the
Maturity Date, and (ii) are otherwise on terms consistent with
prudent business practice and then prevailing market practices
and prices in the applicable geographic area;
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59
(B) additional unsecured Indebtedness not otherwise
permitted by this Section 6.01 aggregating not more than
$10,000,000 in principal amount at any one time outstanding;
(C) obligations under performance or surety bonds that
constitute Indebtedness (if any) incurred in the ordinary
course of business, PROVIDED that the aggregate maximum amount
available to be paid or drawn under such performance or surety
bonds that are not supported by Letters of Credit shall not
exceed $10,000,000 at any time outstanding;
(D) Indebtedness incurred or assumed in any transaction
permitted under Sections 6.04(k) and 6.10; and
(j) Indebtedness in respect of Interest Rate Protection
Agreements entered into with Lenders, PROVIDED that the aggregate
notional amount thereof shall not exceed $250,000,000.
SECTION 6.02. LIENS. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Specified Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrowers and Specified
Subsidiaries existing on the date hereof and set forth in Schedule
6.02, PROVIDED that such Liens shall secure only those obligations
which they secure on the date hereof, and with respect to Liens
existing on the property of the Borrowers or Subsidiary Guarantors
(other than the First-Tier Subsidiaries), extensions, renewals,
refinancings or replacements thereof; PROVIDED, HOWEVER, that no such
extensions, renewals refinancings or replacements will extend to or
cover any property not theretofore subject to the Lien being extended,
renewed, refinanced or replaced; and PROVIDED FURTHER that the
Borrowers and Subsidiary Guarantors (other than the First-Tier
Subsidiaries) may substitute for the property subject to any such Lien
other property with substantially the same Fair Market Value and not
otherwise subject to the Lien of a Loan Document, so long as (i) the
property for which such substitution is made is fully and effectively
released from such Lien and (ii) the property being subjected to such
Lien is held (A) by a Borrower or Subsidiary Guarantor (other than a
First-Tier Subsidiary) that is a member of the same Significant
Subsidiary Group as the Subsidiary Guarantor holding the property being
released or (B) if the Borrower or Subsidiary Guarantor holding the
property being released is not a member of a Significant Subsidiary
Group, by another Subsidiary Guarantor or Borrower that is not a member
of a Significant Subsidiary Group;
(b) any Lien created pursuant to any Indebtedness permitted
under Section 6.01(b)(i) or (iii) or Section 6.01(c);
(c) any Lien existing on any property or asset prior to the
acquisition thereof by Parent, any Borrower or any Specified
Subsidiary, PROVIDED that (i) such Lien is not created in contemplation
of or in connection with such acquisition, (ii) such Lien does not
apply to any other property or assets of Parent, any Borrower or any
Specified Subsidiary and (iii) such Lien does not (A) materially
interfere with the use, occupancy and operation of the Mortgaged
Property, (B) materially reduce the fair market value of the Mortgaged
Property but for such Lien or (C) result in any material increase in
the cost of operating, occupying or owning or leasing the Mortgaged
Property;
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(d) Permitted Liens;
(e) Liens in favor of the Administrative Agent and the
Lenders;
(f) unperfected Liens on property of the Borrowers or
Subsidiary Guarantors (other than First-Tier Subsidiaries) in favor of
other Borrowers or Subsidiary Guarantors (other than First-Tier
Subsidiaries) arising in connection with intercompany transactions
among Borrowers or Subsidiary Guarantors that (i) are members of the
same Significant Subsidiary Group or (ii) are not members of any
Significant Subsidiary Group;
(g) Liens on real property securing Indebtedness outstanding
under the Real Estate Financing Documents or under the documentation in
respect of the Real Estate Refinancing; and
(h) Liens upon or on any other assets of the Borrowers or
Subsidiary Guarantors securing obligations in an aggregate amount not
to exceed $5,000,000 at any time outstanding.
SECTION 6.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer (other than pursuant to Section 6.05(c)) any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred; PROVIDED, HOWEVER, that Parent, any Borrower or any
Specified Subsidiary may enter into such a transaction provided that the Fair
Market Value of all property sold or transferred pursuant to such transactions
shall not exceed in the aggregate $5,000,000.
SECTION 6.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments by Parent, the Borrowers or the Specified Sub-
sidiaries existing on the date hereof in the capital stock of their
respective subsidiaries;
(b) Permitted Investments;
(c) advances and loans made by any Specified Subsidiary to
Parent in the ordinary course of business and (i) advances and loans
made by any Specified Subsidiary to and (ii) investments made by any
Specified Subsidiary in any other Subsidiary that is a Borrower or a
Subsidiary Guarantor in the ordinary course of business, PROVIDED that
(A) both such Subsidiaries are members of the same Significant
Subsidiary Group or (B) neither of such Subsidiaries is a member of any
Significant Subsidiary Group;
(d) advances and loans made by Parent to any Borrower in the
ordinary course of business so long as no Default or Event of Default
shall have occurred and be continuing;
(e) the investment by Parent existing on the date hereof in
the capital stock of Simeus Holdings, Inc., a Delaware corporation.
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61
(f) investments by any Borrower or any Specified Subsidiary
(other than First-Tier Subsidiaries) made pursuant to joint venture or
franchise arrangements entered into in accordance with prudent business
practice and in an aggregate amount of not more than $5,000,000 at any
one time outstanding;
(g) non-cash consideration received from any sale, lease,
transfer or other disposition of assets permitted under Section 6.05;
(h) loans or advances to employees made in the ordinary course
of business consistent with prudent business practice and in an
aggregate amount not to exceed $2,500,000 at any one time outstanding;
(i) loans or advances to or investments in Liquor License
Affiliates to the extent necessary to enable Liquor License Affiliates
to pay taxes, fees and other expenses as and when required to maintain
the liquor licenses held by them in an aggregate amount not to exceed
$100,000;
(j) additional investments not otherwise permitted by this
Section 6.04, in an aggregate amount not to exceed $3,000,000;
(k) subject to Section 6.10, acquisitions of restaurant
properties and related assets by means of investments in new
operations, properties or franchises through the purchase or other
acquisition of assets of any person or stock of new Subsidiaries where
any Borrower or any Specified Subsidiary making such purchase or
acquisition determines in its prudent business judgment that such
purchase or acquisition would be beneficial in lieu of making
Consolidated Capital Expenditures; and
(l) investments made by Parent in FRD in an aggregate amount
not to exceed $75,000,000 at any time outstanding.
SECTION 6.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND
ACQUISITIONS. Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired) or
any capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that:
(a) Parent, any Borrower or any Specified Subsidiary may pur-
chase and sell inventory, fixtures and equipment in the ordinary course
of business;
(b) Parent, any Borrower or any Specified Subsidiary may sell
or otherwise dispose of obsolete or worn out property, in each case in
the ordinary course of business and consistent with past practice,
PROVIDED that the aggregate Fair Market Value of all such assets
disposed of pursuant to this clause (b) in any fiscal year shall not
exceed $5,000,000;
(c) Parent, any Borrower or any Specified Subsidiary may
exchange real property, fixtures and improvements for other real
property, fixtures and improvements, PROVIDED that any consideration
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62
(other than real property, fixtures and improvements) received by any
Loan Party in connection with such exchanges is received by such Loan
Party in cash;
(d) any Specified Subsidiary may sell, transfer or otherwise
dispose of any of its assets to any Subsidiary Guarantor, PROVIDED that
each such Subsidiary is a member of the same Significant Subsidiary
Group or that neither such Subsidiary is a member of a Significant
Subsidiary Group;
(e) (i) dispositions of all or any portion of the assets
constituting the restaurants of Denny's Holdings and its subsidiaries
set forth on Schedule 6.05 (other than sales, but not licenses, of
Trademarks (as defined in the Security Agreement) for a consideration
determined by the board of directors of the Subsidiary that owns such
assets (which board of directors shall include members of senior
management of Parent) to be equal to the Fair Market Value of the
assets disposed of, PROVIDED that the aggregate Fair Market Value of
the assets disposed of pursuant to this clause (i) shall not exceed
$8,000,000 and (ii) dispositions from time to time in an aggregate
amount not to exceed $5,000,000 (excluding the Fair Market Value of
assets disposed of pursuant to clause (i) of this paragraph (e)) in any
fiscal year of all or any portion of the assets constituting any of the
restaurants of Denny's Holdings and its subsidiaries (other than sales,
but not licenses, of Trademarks) for a consideration determined by the
board of directors of the Subsidiary that owns such assets (which board
of directors shall include members of senior management of Parent) to
be equal to the Fair Market Value of the assets disposed of;
(f) Parent, any Borrower or any Specified Subsidiary may sell,
transfer or otherwise dispose of underperforming restaurants (as
determined in the good faith judgment of Parent) for a consideration
determined by the board of directors of the person that owns such
restaurants (which board of directors shall include members of senior
management of Parent) to be equal to the Fair Market Value of the
restaurants sold, transferred or otherwise disposed of, PROVIDED that
the aggregate Fair Market Value of all assets (other than any assets
that secure the Mortgage Notes of Spardee's Realty or Quincy's Realty,
in each case, relating to the 10.25% Guaranteed Secured Bonds of
Secured Restaurants Trust) disposed of pursuant to this clause (f)
shall not exceed $5,000,000 in any fiscal year; and
(g) any Subsidiary Guarantor (other than a First-Tier
Subsidiary) may (i) merge or consolidate with or transfer all or
substantially all of its assets to any other Subsidiary Guarantor
within the same Significant Subsidiary Group or, if such Subsidiary
Guarantor is not a member of any Significant Subsidiary Group, with any
other Subsidiary Guarantor that is not a member of any Significant
Subsidiary Group and (ii) acquire by merger the assets of any person to
the extent permitted by Section 6.04(k), PROVIDED that no such merger,
consolidation, transfer or acquisition involving a Subsidiary Guarantor
results in any loss of ownership by Parent of such Subsidiary
Guarantor;
PROVIDED, HOWEVER, that any sale, transfer, exchange or other disposition of
assets permitted by clauses (b), (c) or (e) above shall not be permitted unless
such disposition is for Fair Market Value; and PROVIDED FURTHER that any
transaction permitted by clause (c), (e), (f) or (g) above shall not be
permitted unless at the time thereof and immediately after giving effect thereto
no Event of Default or Default shall have occurred and be continuing.
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63
SECTION 6.06. DIVIDENDS AND DISTRIBUTIONS; RESTRICTIONS ON ABILITY OF
SUBSIDIARIES TO PAY DIVIDENDS. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any shares of its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any Specified Subsidiary to
purchase or acquire) any shares of any class of its capital stock or set aside
any amount for any such purpose; PROVIDED, HOWEVER, that (i) any Subsidiary may
declare and pay dividends or make other distributions to Parent, to the
Borrowers or to the Subsidiary Guarantors and (ii) Subsidiary Guarantors may pay
cash dividends in an aggregate amount for all Subsidiary Guarantors combined not
to exceed $2,000,000 in any fiscal year to the holders of minority interests in
such Subsidiary Guarantors ratably in accordance with the ownership interests of
such holders in such Subsidiary Guarantors.
(b) Permit any Specified Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to Parent, any Borrower, any Specified
Subsidiary or the parent of such subsidiary (subclauses (i) and (ii) above are
collectively referred to as an "UPSTREAM PAYMENT") except for such encumbrances
or restrictions existing under or by reason of (A) applicable law, (B) this
Agreement, any other Loan Document or any other agreement entered into hereunder
or thereunder or as contemplated hereby or thereby, (C) the New Senior Notes
Documents, (D) customary provisions restricting (1) subletting or assignment of
any lease governing a leasehold interest of Parent or any of the Specified
Subsidiaries, (2) the transfer of intellectual property rights held by Parent or
any of the Specified Subsidiaries through license agreements with the owners of
such rights and (3) the assignment of supply contracts, (E) any instrument
governing Indebtedness, which is permitted by Section 6.01, of a Person acquired
by Parent or any of the Specified Subsidiaries after the date hereof, PROVIDED
that (1) such instrument was in existence at the time of such acquisition and
was not created in contemplation of or in connection with such acquisition, (2)
the officers of the Parent reasonably believe at the time of such acquisition
that the terms of such instrument will not encumber or restrict the ability of
such acquired person to make an Upstream Payment and (3) such instrument
contains no express encumbrances or restrictions on the ability of such acquired
person to make an Upstream Payment and (F) Indebtedness and other contractual
obligations of Parent or any of the Specified Subsidiaries existing on the
Closing Date and set forth on Schedule 6.06 and any amendment, modification,
renewal, extension, replacement, refinancing or refunding thereof permitted
under the terms of this Agreement, PROVIDED that the encumbrances and
restrictions contained in any such amendment, modification, renewal, extension,
replacement, refinancing or refunding are in the aggregate no less favorable in
all material respects to the Lenders.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that Parent, any Borrower or any Specified Subsidiary may engage in any of the
foregoing transactions in the ordinary course of business at prices and on terms
and conditions not less favorable to Parent, such Borrower or such Specified
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties.
SECTION 6.08. OTHER INDEBTEDNESS AND AGREEMENTS. (a) Make any voluntary
or optional payments, prepayments or redemptions of principal or premium or
voluntarily repurchase, acquire or retire for value prior to the stated maturity
with respect to Indebtedness (other than Indebtedness arising under the Loan
Documents), PROVIDED that the Mortgage Notes may be repaid with the proceeds of
the Real Estate
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Refinancing; PROVIDED FURTHER that such payments shall be permitted to retire
Indebtedness to the extent required under a "due on sale" clause applicable to
any disposition of assets permitted under Section 6.05.
(b) Except for Permitted Amendments, permit any waiver, supplement,
modification, amendment, termination or release of the New Senior Notes
Documents, the Real Estate Financing Documents, the documentation in respect of
the Real Estate Refinancing or any indenture, instrument or agreement pursuant
to which any Indebtedness or preferred stock is outstanding.
SECTION 6.09. OPERATING LEASES. Permit the aggregate amount of payments
under Operating Leases of Parent, any Borrower or any Specified Subsidiary to be
in excess of the fair rental value of the properties subject to such Operating
Leases.
SECTION 6.10. CAPITAL EXPENDITURES. Incur Consolidated Capital
Expenditures (the amount of which shall be deemed to include, for purposes of
this Section 6.10, the amount of any investments made or any Indebtedness
incurred or assumed pursuant to Sections 6.04(k) and 6.01(i)(D)) in excess of,
for any fiscal year ending on or about any date set forth below, the amount set
forth below opposite such date:
Fiscal Year Maximum Consolidated
Ending December 31, Capital Expenditures
------------------- --------------------
1997 $ 90,000,000
1998 100,000,000
1999 100,000,000
2000 100,000,000
2001 and thereafter 100,000,000
PROVIDED, HOWEVER, that the amount of Consolidated Capital Expenditures in any
fiscal year permitted to be incurred pursuant to this Section 6.10 shall be
increased by an amount equal to the amount of unused Consolidated Capital
Expenditures permitted to be incurred pursuant to this Section 6.10 for the
immediately preceding fiscal year (without giving effect to this proviso).
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SECTION 6.11. CONSOLIDATED TOTAL DEBT RATIO. Permit the Consolidated
Total Debt Ratio for any period of four consecutive fiscal quarters ending on or
about any date set forth below to be greater than the ratio set forth below
opposite such date:
Date Ratio
---- -----
March 31, 1998 5.10 to 1.00
June 30, 1998 5.10 to 1.00
September 30, 1998 5.00 to 1.00
December 31, 1998 4.95 to 1.00
March 31, 1999 4.90 to 1.00
June 30, 1999 4.75 to 1.00
September 30, 1999 4.60 to 1.00
December 31, 1999 4.60 to 1.00
March 31, 2000 4.60 to 1.00
June 30, 2000 4.60 to 1.00
September 30, 2000 4.60 to 1.00
December 31, 2000 4.30 to 1.00
March 31, 2001 4.30 to 1.00
June 30, 2001 4.30 to 1.00
September 30, 2001 4.30 to 1.00
December 31, 2001 and thereafter 4.00 to 1.00
SECTION 6.12. CONSOLIDATED SENIOR SECURED DEBT RATIO. Permit the
Consolidated Senior Secured Debt Ratio for any period of four consecutive fiscal
quarters ending on or about any date set forth below to be greater than the
ratio set forth below opposite such date:
Date Ratio
---- -----
March 31, 1998 2.35 to 1.00
June 30, 1998 2.30 to 1.00
September 30, 1998 2.25 to 1.00
December 31, 1998 2.25 to 1.00
March 31, 1999 2.20 to 1.00
June 30, 1999 2.20 to 1.00
September 30, 1999 2.00 to 1.00
December 31, 1999 2.00 to 1.00
March 31, 2000 2.00 to 1.00
June 30, 2000 2.00 to 1.00
September 30, 2000 2.00 to 1.00
December 31, 2000 2.00 to 1.00
March 31, 2001 2.00 to 1.00
June 30, 2001 2.00 to 1.00
September 30, 2001 2.00 to 1.00
December 31, 2001 and thereafter 2.00 to 1.00
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66
SECTION 6.13. CONSOLIDATED INTEREST COVERAGE RATIO. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters ending on or about any date set forth below to be less than the ratio
set forth below opposite such date:
Date Ratio
---- -----
December 31, 1997 1.65 to 1.00
March 31, 1998 1.70 to 1.00
June 30, 1998 1.70 to 1.00
September 30, 1998 1.70 to 1.00
December 31, 1998 1.70 to 1.00
March 31, 1999 1.75 to 1.00
June 30, 1999 1.75 to 1.00
September 30, 1999 1.80 to 1.00
December 31, 1999 1.85 to 1.00
March 31, 2000 1.85 to 1.00
June 30, 2000 1.85 to 1.00
September 30, 2000 1.85 to 1.00
December 31, 2000 1.85 to 1.00
March 31, 2001 1.85 to 1.00
June 30, 2001 1.85 to 1.00
September 30, 2001 1.85 to 1.00
December 31, 2001 and thereafter 1.85 to 1.00
SECTION 6.14. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters ending on or about any date set forth below to be less than the
ratio set forth opposite such date:
Date Ratio
---- -----
December 31, 1997 1.35 to 1.00
March 31, 1998 1.40 to 1.00
June 30, 1998 1.40 to 1.00
September 30, 1998 1.40 to 1.00
December 31, 1998 1.40 to 1.00
March 31, 1999 1.40 to 1.00
June 30, 1999 1.45 to 1.00
September 30, 1999 1.45 to 1.00
December 31, 1999 1.45 to 1.00
March 31, 2000 1.45 to 1.00
June 30, 2000 1.45 to 1.00
September 30, 2000 1.45 to 1.00
December 31, 2000 1.55 to 1.00
March 31, 2001 1.55 to 1.00
June 30, 2001 1.55 to 1.00
September 30, 2001 1.55 to 1.00
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67
December 31, 2001 and thereafter 1.55 to 1.00
SECTION 6.15. BUSINESS OF PARENT, THE BORROWERS AND THE SUBSIDIARIES.
(a) In the case of Parent, conduct any business or enter into any transaction
inconsistent with its status as a holding company, or permit a First-Tier
Subsidiary to conduct any business or enter into any transaction inconsistent
with such First-Tier Subsidiary's status as a holding company, (b) engage at any
time in any business or business activity other than the conduct of restaurant
operations and other business currently conducted by it and business activities
reasonably incidental thereto or (c) in the case of Denny's Realty, Quincy's
Realty and Spardee's Realty, engage in any business other than the acquisition,
leasing and financing of real property, improvements and personalty comprising
restaurants and other activities incident to, connected with or necessary or
convenient to the foregoing.
SECTION 6.16. FISCAL YEAR. Change the end of its fiscal year from the
last Wednesday before December 31 in each year to any other date.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) any material representation or warranty made or deemed
made or in connection with any Loan Document or the borrowings or
issuances of Letters of Credit hereunder, or any material
representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made,
deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Fee or L/C Disbursement or any other amount (other than
an amount referred to in (b) above) due under any Loan Document, when
and as the same shall become due and payable, and such default shall
continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance
by Parent, any Borrower or any Specified Subsidiary of any covenant,
condition or agreement contained in Section 5.01(a), 5.05 or 5.08 or in
Article VI;
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(e) default shall be made in the due observance or performance
by Parent, any Borrower or any Specified Subsidiary of any covenant,
condition or agreement contained in any Loan Document (other than those
specified in (b), (c) or (d) above) and such default shall continue
unremedied for a period of more than 10 days;
(f) Parent, any Borrower or any Subsidiary shall (i) fail to
pay any principal or interest, regardless of amount, due in respect of
any Indebtedness in a principal amount in excess of $10,000,000, when
and as the same shall become due and payable, or (ii) fail to observe
or perform any other term, covenant, condition or agreement contained
in any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of Parent, any Borrower or
any Subsidiary, or of a substantial part of the property or assets of
Parent, any Borrower or any Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Parent, any Borrower
or any Subsidiary or for a substantial part of the property or assets
of Parent, any Borrower or any Subsidiary or (iii) the winding-up or
liquidation of Parent, any Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 30 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(h) Parent, any Borrower or any Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Parent,
any Borrower or any Subsidiary or for a substantial part of the
property or assets of Parent, any Borrower or any Subsidiary, (iv) file
an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the
foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against
Parent, any Borrower, any Specified Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
levy upon assets or properties of Parent, any Borrower or any Specified
Subsidiary to enforce any such judgment;
(j) any non-monetary judgment or order shall be rendered
against Parent, any Borrower or any Specified Subsidiary that is
reasonably likely to have a Material Adverse Effect and either
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69
(x) enforcement proceedings shall have been commenced by any person
upon such judgment or order and a stay of such enforcement proceedings
shall not be in effect or (y) there shall be any period of 20
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in
effect;
(k) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of Parent,
any Borrower and its ERISA Affiliates in an aggregate amount exceeding
$5,000,000 or requires payments exceeding $1,000,000 in any year;
(l) any security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by any Loan
Party not to be, a valid, perfected, first priority (except as
otherwise expressly provided in this Agreement or such Security
Document) security interest in the securities, assets or properties
covered thereby, except to the extent that any such loss of perfection
or priority results from the failure of the Collateral Agent to
maintain possession of certificates representing securities pledged
under the Pledge Agreement or any other action or inaction of the
Collateral Agent with respect to any of its obligations or duties under
this Agreement or any other Loan Document and except to the extent that
such loss is covered by a lender's title insurance policy and the
related insurer promptly after such loss shall have acknowledged in
writing that such loss is covered by such title insurance policy;
(m) there shall have occurred a Change in Control; or
(n) the Order shall be stayed, reversed, modified or vacated
in whole or in part;
then, and in every such event (other than an event with respect to Parent or any
Borrower described in paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrowers, take either
or both of the following actions, at the same or different times: (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of Parent or any Borrower
accrued hereunder and under any other Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by Parent and the Borrowers,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to Parent or any Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of Parent
or any Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by Parent
and the Borrowers, anything contained herein or in any other Loan Document to
the contrary notwithstanding.
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ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this Agreement,
The Chase Manhattan Bank is hereby appointed to act as Administrative Agent and
Collateral Agent on behalf of the Lenders and the Issuing Bank (for purposes of
this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "AGENTS"). Each of the Lenders and each assignee
of any such Lender, hereby irrevocably authorizes the Agents to take such
actions on behalf of such Lender or assignee or the Issuing Bank and to exercise
such powers as are specifically delegated to the Agents by the terms and
provisions hereof and of the other Loan Documents, together with such actions
and powers as are reasonably incidental thereto. The Administrative Agent is
hereby expressly authorized by the Lenders and the Issuing Bank, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders and the
Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or the Issuing Bank
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrowers of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by
Parent or the Borrowers or any other Loan Party pursuant to this Agreement or
the other Loan Documents as received by the Administrative Agent. Without
limiting the generality of the foregoing, the Agents are hereby expressly
authorized to execute any and all documents (including releases) with respect to
the Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by
Parent or the Borrowers or any other Loan Party of any of the terms, conditions,
covenants or agreements contained in any Loan Document. The Agents shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement or any other Loan Documents,
instruments or agreements. The Agents shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders. Each Agent shall, in the absence of knowledge to the
contrary, be entitled to rely on any instrument or document believed by it in
good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. Neither the Agents nor any of their respective
directors, officers, employees or agents shall have any responsibility to the
Borrowers or any other Loan Party on account of the failure of or delay in
performance or breach by any Lender or the Issuing Bank of any of its
obligations hereunder or to any Lender or the Issuing Bank on account of the
failure of or delay in performance or breach by any other Lender or the Issuing
Bank or the Borrowers or any other Loan Party of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. Each of the Agents may execute any and all duties hereunder by or
through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
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The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Parent, any Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitment hereunder) of any expenses
incurred for the benefit of the Lenders by the Agents, including counsel fees
and compensation of agents and employees paid for services rendered on behalf of
the Lenders, that shall not have been reimbursed by the Borrowers or any other
Loan Party and (b) to indemnify and hold harmless each Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against it in its capacity as Agent or any of them in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by it or any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrowers or any other Loan Party, PROVIDED that no Lender shall be liable to an
Agent or any such other indemnified person for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
wilful misconduct of such Agent or any of its directors, officers, employees or
agents. Each Lender agrees to reimburse the Issuing Bank and its directors,
employees and agents, in each case, to the same extent and subject to the same
limitations as provided above for the Agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
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72
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to any Borrower or Parent, to it at 203 East Main
Street, Spartanburg SC 29319, Attention of Treasurer (Telecopy No.
(864) 597-8216);
(b) if to the Administrative Agent or the Issuing Bank, to The
Chase Manhattan Bank, Loan and Agency Services Group, One Chase
Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Anne
Hickey (Telecopy No. (212) 552-7500), with a copy to The Chase
Manhattan Bank, at 270 Park Avenue, New York 10017, Attention of
William Rindfuss (Telecopy No. (212) 270-1474); and
(c) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrowers or Parent herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not been terminated. The provisions of Sections 2.12, 2.14, 2.18 and 9.05
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the expiration of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent, any Lender or the Issuing Bank.
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SECTION 9.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrowers, Parent and the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrowers, Parent, the
Administrative Agent, the Issuing Bank or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
(b) Each Lender may assign to one or more Lenders or any of their
respective Affiliates or any Eligible Assignee all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); PROVIDED,
HOWEVER, that (i) except in the case of an assignment to a Lender or an
Affiliate of such Lender, (x) the Administrative Agent (and, in the case of any
assignment of a Commitment, the Issuing Bank and the Swingline Lender) must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld) and (y) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (or, if less, the entire
remaining amount of such Lender's Commitment), (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500 and
(iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and (B) the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.12, 2.14, 2.18 and 9.05, as well as to any Fees accrued for its account and
not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment, and the outstanding balance of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance; (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of Parent, any Borrower or any Subsidiary or
the performance or observance by Parent, any Borrower or any Subsidiary of any
of its obligations under this Agreement, any other Loan Document or any other
instrument or document furnished
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pursuant hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent financial statements referred to in Section 3.05 or delivered
pursuant to Section 5.04 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee appoints
and authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and Parent, any Borrower, the Administrative Agent, the Issuing Bank,
the Collateral Agent and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by Parent, any Borrower, the Issuing
Bank, the Collateral Agent and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Issuing Bank, the
Swingline Lender and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders, the Swingline Lender, the Issuing Bank and
Parent. No assignment shall be effective unless it has been recorded in the
Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrowers, the Issuing
Bank, the Swingline Lender or the Administrative Agent 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 Commitment
and the Loans owing to it); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.12, 2.14 and 2.18 to the same extent as if they were Lenders and (iv) Parent,
the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of Parent and the Borrowers
relating to the Loans or L/C Disbursements and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable
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75
hereunder or the amount of principal of or the rate at which interest is payable
on the Loans, extending any scheduled principal payment date or date fixed for
the payment of interest on the Loans or increasing or extending the
Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of Parent or the Borrowers; PROVIDED that, prior to any such
disclosure of information designated by Parent or the Borrowers as confidential,
each such assignee or participant or proposed assignee or participant shall
execute an agreement whereby such assignee or participant shall agree (subject
to customary exceptions) to preserve the confidentiality of such confidential
information.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of credit by
such Federal Reserve Bank to such Lender; PROVIDED that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, each Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to such Borrower by the assigning Lender
hereunder.
(i) Neither Parent nor any Borrower shall assign or delegate any of its
rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank and each Lender, and any attempted
assignment without such consent shall be null and void.
(j) In the event that Standard & Poor's Ratings Group, Moody's
Investors Service, Inc., and Thompson's BankWatch (or Insurance Watch Ratings
Service, in the case of Lenders that are insurance companies (or Best's
Insurance Reports, if such insurance company is not rated by Insurance Watch
Ratings Service)) shall, after the date that any Lender becomes a Lender,
downgrade the long-term certificate of deposit ratings of such Lender, and the
resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a
Lender that is an insurance company (or B, in the case of an insurance company
not rated by Insurance Watch Ratings Service)), then the Issuing Bank shall have
the right, but not the obligation, at its own expense, upon notice to such
Lender and the Administrative Agent, to replace (or to request the Borrowers to
use their reasonable efforts to replace) such Lender with an assignee (in
accordance with and subject to the restrictions contained in paragraph (b)
above), and such Lender hereby agrees to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in paragraph (b)
above) all its interests, rights and obligations in respect of its Commitment to
such assignee; PROVIDED, HOWEVER, that (i) no such assignment shall conflict
with any law, rule and regulation or order of any Governmental Authority and
(ii) the Issuing Bank or such assignee, as the case may be, shall pay to such
Lender in immediately available funds on the date of such assignment the
principal of and interest accrued to the date of payment on the Loans made by
such Lender hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder.
SECTION 9.05. EXPENSES; INDEMNITY. (a) The Borrowers and Parent agree,
jointly and severally, to pay all reasonable out-of-pocket expenses incurred by
the Administrative Agent, the Collateral Agent, the Issuing Bank and the
Swingline Lender in connection with the syndication of the credit facilities
provided for herein and the preparation and administration of this Agreement and
the other Loan Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or incurred by the
Administrative
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76
Agent, the Collateral Agent or any Lender in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or Letters of Credit issued
hereunder, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent and the Collateral Agent,
and, in connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel for the Administrative Agent, the
Collateral Agent or any Lender.
(b) The Borrowers and Parent agree, jointly and severally, to indemnify
the Administrative Agent, the Collateral Agent, each Lender, the Issuing Bank,
each Affiliate of any of the foregoing persons and each of their respective
directors, officers, employees and agents (each such person being called an
"INDEMNITEE") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees, charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged
presence or Release of Hazardous Materials on any property owned or operated by
Parent, any Borrower or any of the Specified Subsidiaries, or any Environmental
Claim related in any way to Parent, the Borrowers or the Specified Subsidiaries;
PROVIDED that such indemnity shall not, as to any Indemnitee, be available 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 wilful misconduct of such
Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or the Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
SECTION 9.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of any Borrower or Parent against any of and all
the obligations of any Borrower or Parent now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
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77
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH
LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by Parent, any Borrower or any other Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on any Borrower or
Parent in any case shall entitle any Borrower or Parent to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers, Parent and the Required Lenders; PROVIDED,
HOWEVER, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan or any date for reimbursement of an L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the prior
written consent of each Lender affected thereby, (ii) change or extend the
Commitment or decrease or extend the date for payment of the Commitment Fees of
any Lender without the prior written consent of such Lender or (iii) amend or
modify the provisions of Section 2.15 or 9.04(i), the provisions of this Section
or the definition of the term "REQUIRED LENDERS" or release any Guarantor or all
or any substantial part of the Collateral (other than in connection with any
sale of Collateral permitted under this Agreement), without the prior written
consent of each Lender; PROVIDED FURTHER that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender hereunder or under
any other Loan Document without the prior written consent of the Administrative
Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender.
SECTION 9.09. INTEREST RATE LIMITATION. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be
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78
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or participations or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender.
SECTION 9.10. ENTIRE AGREEMENT. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement, the Fee Letter or the other
Loan Documents, expressed or implied, is intended to confer upon any party other
than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement, the Fee Letter or the other
Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of
the parties to this Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
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79
any New York State court or Federal court of the United States of America
sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto or to any of the other
Loan Documents may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any of the other parties
hereto or thereto or their respective properties in the courts of any
jurisdiction.
(b) Each of Parent and the Borrowers hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
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80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
DENNY'S, INC.,
by
-------------------------
Name:
Title:
EL POLLO LOCO, INC.,
by
-------------------------
Name:
Title:
FLAGSTAR ENTERPRISES, INC.,
by
-------------------------
Name:
Title:
FLAGSTAR SYSTEMS, INC.,
by
-------------------------
Name:
Title:
QUINCY'S RESTAURANTS, INC.,
by
-------------------------
Name:
Title:
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81
ADVANTICA RESTAURANT GROUP, INC.,
by
-------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent, Collateral Agent,
Swingline Lender and Issuing Bank,
by
-------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT,
by
-------------------------
Name:
Title:
CIBC, INC.,
by
-------------------------
Name:
Title:
KZH HOLDING CORPORATION III,
by
-------------------------
Name:
Title:
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82
KZH-CRESCENT CORPORATION,
by
-------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
-------------------------
Name:
Title:
SANWA BUSINESS CREDIT CORPORATION,
by
-------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by
-------------------------
Name:
Title:
<PAGE>
