<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended September 27, 1998
Commission file number 0-19924
RARE Hospitality International, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-1498312
------------------------------- ------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
8215 Roswell Rd; Bldg 200; Atlanta, GA 30350
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
(770) 399-9595
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
XX Yes No
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
<TABLE>
<S> <C>
Class Outstanding as of November 6, 1998
------ ----------------------------------
Common Stock, no par value 12,073,306 shares
</TABLE>
1
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
RARE Hospitality International, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, unaudited)
<TABLE>
<CAPTION>
September 27, December 28,
Assets 1998 1997
------ ------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents .................. $ 4,124 $ 1,752
Marketable debt securities ................. 648 609
Accounts receivable ........................ 2,832 2,054
Inventories ................................ 9,012 9,152
Prepaid expenses ........................... 349 1,373
Pre-opening costs, net of accumulated
amortization ............................ 2,010 3,385
Refundable income taxes .................... 4,600 6,900
-------- --------
Total current assets .................... 23,575 25,225
Property and equipment, less accumulated
depreciation and amortization .............. 168,452 155,758
Goodwill, less accumulated amortization ....... 5,095 5,304
Deferred income taxes ......................... 3,659 4,408
Other assets .................................. 3,415 2,356
-------- --------
Total assets ............................ $204,196 $193,051
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable ........................... $ 10,781 $ 12,739
Accrued expenses ........................... 16,526 14,873
Current installments of obligations
under capital leases .................... 858 518
-------- --------
Total current liabilities ............... 28,165 28,130
Long-term debt ................................ 42,000 43,000
Obligations under capital leases,
net of current installments ................. 8,870 5,051
-------- --------
Total liabilities ....................... 79,035 76,181
-------- --------
Minority interest ............................. 5,205 4,890
Shareholders' equity:
Preferred stock ............................ -- --
Common stock ............................... 105,049 103,981
Unearned compensation - restricted stock
(540) --
Retained earnings .......................... 15,447 7,999
-------- --------
Total shareholders' equity ............... 119,956 111,980
-------- --------
Total liabilities and shareholders' equity
$204,196 $193,051
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Revenues: Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Restaurant sales:
LongHorn Steakhouse .................... $52,856 $41,375 $156,908 $124,048
Bugaboo Creek Steak House .............. 12,359 10,725 36,902 32,428
The Capital Grille ..................... 11,547 9,542 35,490 27,338
Specialty concepts ..................... 1,671 2,664 4,910 8,084
------- ------- -------- --------
Total restaurant sales ............... 78,433 64,306 234,210 191,898
Franchise revenues ..................... -- -- -- 27
------- ------- -------- --------
Total revenues ....................... 78,433 64,306 234,210 191,925
------- ------- -------- --------
Costs and expenses:
Cost of restaurant sales .................. 28,628 23,875 86,019 70,710
Operating expenses - restaurants .......... 35,491 29,726 104,496 86,814
Depreciation and amortization - restaurants 4,468 3,614 13,378 10,776
General and administrative expenses........ 5,686 4,671 16,435 13,430
------- ------- -------- --------
Total costs and expenses ............... 74,273 61,886 220,328 181,730
------- ------- -------- --------
Operating income .......................... 4,160 2,420 13,882 10,195
Interest expense, net ...................... 701 225 2,092 524
Minority interest .......................... 300 336 992 925
------- ------- -------- --------
Earnings before income taxes ............ 3,159 1,859 10,798 8,746
Income tax expense ......................... 1,050 565 3,350 2,625
------- ------- -------- --------
Net earnings ............................ $ 2,109 $ 1,294 $ 7,448 $ 6,121
======= ======= ======== ========
Basic earnings per common share ............ $ 0.18 $ 0.11 $ 0.62 $ 0.52
======= ======= ======== ========
Weighted average common shares
outstanding (basic) ...................... 12,023 11,742 12,004 11,687
======= ======= ======== ========
Diluted earnings per common share
$ 0.17 $ 0.11 $ 0.61 $ 0.52
======= ======= ======== ========
Weighted average common shares
outstanding (diluted) .................... 12,201 11,777 12,120 11,743
======= ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Unearned
Common Stock compensation Total
------------------- -restricted Retained Shareholders'
Shares Amount Stock Earnings Equity
------ ------ ----- -------- ------
<S> <C> <C> <C> <C> <C>
Balances, December 28, 1997 ............. 11,979 $103,981 $ -- $ 7,999 $111,980
Net earnings ............................ -- -- -- 2,671 2,671
Issuance of shares pursuant to
exercise of stock options ............. 29 308 -- -- 308
------ -------- ------- -------- --------
Balances, March 29, 1998 ................ 12,008 104,289 -- 10,670 114,959
Net earnings ............................ -- -- -- 2,668 2,668
Issuance of shares pursuant to restricted
stock award ............................. 45 575 (575)
Issuance of shares pursuant to
exercise of stock options ............. 2 19 -- -- 19
------ -------- ------- -------- --------
Balances, June 28, 1998 ................. 12,055 104,883 (575) 13,338 117,646
Net earnings ............................ -- -- -- 2,109 2,109
Amortization of restricted stock
-- -- 35 -- 35
Issuance of shares pursuant to
exercise of stock options ............. 18 166 -- -- 166
------ -------- ------- -------- --------
Balances, September 27, 1998 ............ 12,073 $105,049 $ (540) $ 15,447 $119,956
====== ======== ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
RARE Hospitality International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Sept. 27, Sept. 28,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net earnings ............................................... $ 7,448 $ 6,121
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................ 14,189 11,168
Changes in operating assets and liabilities .............. (7,631) (8,651)
Minority interest ........................................ 992 925
Preopening costs ......................................... (2,239) (3,607)
Deferred tax (benefit) expense ........................... 750 (2,175)
-------- --------
Net cash provided by operating activities .............. 13,509 3,781
-------- --------
Cash flows from investing activities:
Proceeds from maturity of marketable debt securities ....... -- 252
Purchase of property and equipment ......................... (18,950) (34,860)
Asset acquisitions ......................................... -- (3,262)
-------- --------
Net cash used in investing activities .................. (18,950) (37,870)
-------- --------
Cash flows from financing activities:
Proceeds from (repayments of)lines of credit ............... (1,000) 28,900
Proceeds from minority partners' contributions ............. 1,672 1,313
Distributions to minority partners ......................... (2,349) (2,233)
Increase in bank overdraft included in accounts payable, net 8,997 --
Proceeds from exercise of stock options .................... 493 2,543
-------- --------
Net cash provided by financing activities .............. 7,813 30,523
-------- --------
Net increase (decrease) in cash and cash equivalents .......... 2,372 (3,566)
Cash and cash equivalents, beginning of period ................ 1,752 6,478
-------- --------
Cash and cash equivalents, end of period ...................... $ 4,124 $ 2,912
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
RARE Hospitality International, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1. Basis of Presentation
The consolidated financial statements of RARE Hospitality International, Inc.
and Subsidiaries (the "Company") as of December 28, 1997 and September 27, 1998
and for the quarters and nine-month periods ended September 27, 1998 and
September 28, 1997 have been prepared by the Company, pursuant to the rules and
regulations of the Securities and Exchange Commission. The information furnished
herein reflects all adjustments (consisting of normal recurring accruals and
adjustments) which are, in the opinion of management, necessary to fairly
present the operating results for the respective periods. Certain information
and footnote disclosures normally presented in annual financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. These financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto contained in the Company's annual report on Form 10-K for the year
ended December 28, 1997.
2. Income Taxes
Income tax expense for the quarter has been provided for based on the estimated
effective tax rate then currently expected to be applicable for the full 1998
fiscal year. The effective income tax rate of 33.2% for the third quarter
increased the effective tax rate for the nine-months ended September 27, 1998,
to 31.0%. This effective rate differs from applying the statutory federal income
tax rate of 35% to pre-tax earnings primarily due to employee FICA tip tax
credits (a reduction in income tax expense) partially offset by state income
taxes. Assuming favorable earnings trends continue, the Company expects the
effective tax rate to increase again in the fourth quarter, bringing the
effective rate to 32.0% for the year.
3. Long-Term Debt
On August 26, 1998, the Company amended and restated its revolving credit
facility to increase the aggregate commitment from $60 million to $100 million
with a three year initial term. The revolving credit facility bears interest at
LIBOR plus 1.625% or the prime rate plus 0.375%, at the Company's option, and
requires the Company to pay a commitment fee of 0.325% on any unused portion of
the facility. The revolving credit facility contains various covenants and
restrictions which, among other things, require the maintenance of stipulated
leverage and fixed charge coverage ratios and minimum consolidated net worth, as
defined, and also limit additional indebtedness in excess of specified amounts.
The Company is currently in compliance with such covenants.
At September 27, 1998, $42.0 million was outstanding under the Company's
revolving credit agreement at a weighted average interest rate equal to 7.3125%.
In August 1998, the Company entered into an interest rate swap agreement
6
<PAGE> 7
with a commercial bank, which effectively fixes the interest rate on $40 million
at 7.515%.
4. Earnings Per Common Share
Basic earnings per common share equals net earnings divided by the weighted
average number of common shares outstanding and does not include the dilutive
effect of stock options. Diluted earnings per common share equals net earnings
divided by the weighted average number of common shares outstanding, after
giving effect to dilutive stock options and restricted stock. A reconciliation
between basic and diluted weighted average shares outstanding and the related
earnings per share calculation is presented below (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Earnings .............................. $ 2,109 $ 1,294 $ 7,448 $ 6,121
======= ======= ======= =======
Basic weighted average
Shares outstanding ...................... 12,023 11,742 12,004 11,687
Dilutive effect of stock options .......... 176 35 116 56
Dilutive effect of restricted stock 2 -- -- --
------- ------- ------- -------
Diluted weighted average shares outstanding 12,201 11,777 12,120 11,743
======= ======= ======= =======
Basic net earnings per common share ....... $ 0.18 $ 0.11 $ 0.62 $ 0.52
======= ======= ======= =======
Diluted net earnings per common share ..... $ 0.17 $ 0.11 $ 0.61 $ 0.52
======= ======= ======= =======
</TABLE>
5. Comprehensive Income
In 1997, the Financial Accounting Standards Board (the "FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 which is effective for the Company in 1998, establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. It
includes all changes in equity during a period, except those resulting from
investments by owners and distributions to owners. For the quarter and
nine-month period ended September 27, 1998, there were no differences between
the Company's net earnings and comprehensive income.
6. Subsequent Event
In November 1998, the Company acquired the ownership interests of its joint
venture partner in ten LongHorn Steakhouse restaurants located in the Cleveland,
Ohio and St. Louis, Missouri markets for an aggregate purchase price of $5.5
million in cash.
7
<PAGE> 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
REVENUES
The Company currently derives all of its revenues from restaurant sales. Total
revenues increased 22.0% for both the quarter and nine-months ended September
27, 1998, respectively, from the same periods of the prior year.
Same store sales comparisons for each of the Company's restaurant concepts for
the quarter ended September 27, 1998, consist of sales at restaurants opened
prior to December 29, 1996.
LongHorn Steakhouse:
Sales in the LongHorn Steakhouse restaurants for the third quarter and the
nine-months ended September 27, 1998, increased 27.7% and 26.5%, respectively,
as compared to the same periods of the prior year. The increase reflects a 18.1%
and 19.3% increase in restaurant weeks in the third quarter and first nine
months of 1998, respectively, as compared to the same periods of the prior year,
resulting from an increase in the restaurant base from 90 LongHorn Steakhouse
restaurants at the end of the third quarter of 1997 to 100 restaurants at the
end of the third quarter of 1998. Average weekly sales for all LongHorn
Steakhouse restaurants in the third quarter of 1998 was $41,005, an 8.3%
increase over the comparable period in 1997. Same store sales for the 73
comparable LongHorn Steakhouse restaurants increased 5.5% in the third quarter
of 1998 as compared to the same period in 1997, primarily due to an increase in
customer counts.
Bugaboo Creek Steak House:
Sales in the Bugaboo Creek Steak House restaurants for the third quarter and the
nine-months ended September 27, 1998 increased 15.2% and 13.8% compared to the
same periods of the prior year. The increase reflects an 8.1% and 10.0% increase
in restaurant weeks in the third quarter and first nine months of 1998,
respectively, as compared to the same periods of the prior year, resulting from
an increase in the restaurant base from 15 Bugaboo Creek Steak House restaurants
at the end of the third quarter of 1997 to 16 restaurants at the end of the
third quarter of 1998. Average weekly sales for all Bugaboo Creek Steak House
restaurants in the third quarter of 1998 were $61,491, a 6.6% increase from the
comparable period for 1997. Same store sales for the 13 comparable Bugaboo Creek
Steak House restaurants in the third quarter of 1998 decreased 0.1% as compared
to the same period in 1997. The increase in average weekly sales was greater
than the percentage change in same store sales due to i) the closure of one
Bugaboo Creek Steak House restaurant that was operating well below the system
average sales volume and ii) significantly higher than system average sales
volumes for the Bugaboo Creek Steak House restaurant that opened during the
first nine months of 1998 and one of the Bugaboo Creek Steak House restaurants
that opened during 1997.
8
<PAGE> 9
The Capital Grille:
Sales in The Capital Grille restaurants increased 21.0% and 29.8% for the third
quarter and the nine-months ended September 27, 1998, compared to the same
periods in 1997. The increase reflects a 40.4% and 48.0% increase in restaurant
weeks in the third quarter and first nine months of 1998, respectively, as
compared to the same periods in 1997, resulting from an increase in the
restaurant base from eight The Capital Grille restaurants at the end of the
third quarter of 1997 to 12 restaurants at the end of the third quarter of 1998.
Average weekly sales for all The Capital Grille restaurants in the third quarter
of 1998 were $79,085, a 13.8% decrease from the comparable period in 1997. The
decrease in average weekly sales is due to i) expected lower than system average
sales volumes at the Company's newer The Capital Grille restaurants and ii)
significantly lower than system average sales volumes at one The Capital Grille,
which opened in the fourth quarter of 1997. Same store sales for the six
comparable The Capital Grille restaurants increased 2.2% in the third quarter of
1998 as compared to the same period in 1997, which is primarily attributable to
an increase in customer counts.
Company-wide:
Franchise revenues were eliminated prior to the first quarter of 1998. During
1997, the two remaining LongHorn Steakhouse restaurants, which operated as a
franchise and paid a royalties, were acquired by the Company. In September 1998,
a Franchise Longhorn Steakhouse restaurant opened in Puerto Rico. No royalties
were earned during the quarter ended September 27, 1998.
COSTS AND EXPENSES
Cost of restaurant sales as a percentage of restaurant sales decreased to 36.5%
from 37.1% for the third quarter of 1998 and decreased to 36.7% from 36.8% for
the first nine-months of 1998 as compared to the respective periods of 1997. The
decrease in the cost of sales percentage for the 1998 periods were primarily due
to the favorable comparisons with the second and third quarters of 1997 when
operational difficulties were occuring in the LongHorn concept. Additionally,
effective in February 1998, the Company began purchasing meat under a
contract at prices which have stabilized the cost of restaurant sales as a
percentage of restaurant sales. This contract continues for the remainder of
1998. The impact of this favorable meat pricing has been partially offset by
higher dairy prices incurred industry wide during the third quarter of 1998.
Restaurant operating expenses as a percentage of restaurant sales decreased to
45.3% from 46.2% for the third quarter of 1998 and to 44.6% from 45.2% for the
first nine-months of 1998 as compared to the respective periods for 1997. The
decreases in operating expenses as a percentage of sales for the third quarter
and first nine months of 1998 were due to the increase in average unit sales
providing greater leverage of fixed and semi-fixed expenses, principally rent
and certain other restaurant operating expenses.
Restaurant depreciation and amortization increased over the corresponding
periods of the prior year primarily due the construction of new restaurants.
General and administrative expenses as a percentage of total revenues decreased
to 7.2% from 7.3% for the third quarter and remained constant at 7.0% for the
first nine-months of 1998 as compared to the respective
9
<PAGE> 10
periods of the prior year. This decrease in the third quarter of 1998 is
primarily due to the increase in sales leveraging fixed and semi-fixed
expenses, partially offset by an increase in staffing levels to allow for future
acceleration of the Company's new restaurant openings.
As a result of the relationships between revenues and expenses discussed above,
the Company's operating income increased to $4.2 million for the third quarter
of 1998 as compared to $2.4 million for the corresponding period of the prior
year.
Interest expense, net increased to $701 thousand in the third quarter of 1998
from $225 thousand for the same period of the prior year due to an increase in
the average balance outstanding under the Company's revolving credit agreements
as well as more capitalized interest in 1997 relating to the relatively higher
development activity during the third quarter of 1997.
Minority interest expense decreased to $300 thousand for the third quarter of
1998 from $336 thousand for the same period of the prior year due to a change in
the Company's ownership percentage and in the average profitability of certain
LongHorn Steakhouse restaurants.
Income tax expense for the third quarter of 1998 was 33.2% of earnings before
income taxes, which brings the effective income tax rate to 31.0% for the
nine-month period. Further, assuming favorable earnings trends continue, the
Company expects the effective tax rate to increase again in the fourth quarter,
bringing the effective rate to 32.0% for the year. The Company's effective
income tax rate differs from applying the statutory federal income tax rate of
35% to earnings before income taxes primarily due to employee FICA tip tax
credits partially offset by state income taxes.
Net earnings increased 63.0% to $2.1 million for the third quarter of 1998 from
net earnings of $1.3 million for the third quarter of 1997, reflecting the net
effect of the items discussed above.
Liquidity and Capital Resources:
The Company requires capital primarily for the development of new restaurants,
selected acquisitions and the remodeling of existing restaurants. During the
first nine-months of 1998, the Company's principal source of cash was cash
provided by operating activities ($13.5 million). The principal use of cash was
capital expenditures ($19.0 million) for new and improved facilities.
On August 26, 1998, the Company amended and restated it's revolving credit
facility to increase the aggregate commitment from $60 million to $100 million
with a three year initial term. The revolving credit facility bears interest at
LIBOR plus 1.625% or the prime rate plus 0.375%, at the Company's option, and
requires the Company to pay a commitment fee of 0.325% on any unused portion of
the facility. The revolving credit facility contains various covenants and
restrictions which, among other things, require the maintenance of stipulated
leverage and fixed charge coverage ratios and minimum consolidated net worth, as
defined, and also limit additional indebtedness in excess of specified amounts.
The Company
10
<PAGE> 11
is currently in compliance with such covenants.
At September 27, 1998, $42.0 million was outstanding and $58 million was
available under the Company's revolving credit agreement at a weighted average
interest rate equal to 7.3125%.
In August 1998, the Company entered into an interest rate swap agreement with a
commercial bank, which effectively fixes the interest rate on $40 million at
7.515%. The Company is exposed to credit losses in the event of counterparty
nonperformance, but does not anticipate any such losses.
During the first nine months of 1998, the Company opened six LongHorn Steakhouse
restaurants, one Bugaboo Creek Steak House restaurant and two The Capital Grille
restaurants. During the first nine months of 1998, the Company also closed one
Bugaboo Creek Steak House restaurant and closed two other specialty concept
restaurants, all of which the Company had provided reserves for in the fourth
quarter of 1997. In the fourth quarter of 1998, the Company has already opened
one Bugaboo Creek Steak House restaurant and intends to open three new LongHorn
Steakhouse restaurants, bringing the total restaurant development for 1998 to
nine Company-owned and joint venture Longhorn Steakhouse restaurants, two
Bugaboo Creek Steak House restaurants and two The Capital Grille restaurants in
1998. The Company estimates that its capital expenditures for 1998 will be
approximately $23 to $25 million. The Company intends to open 15 to 18
Company-owned and joint venture restaurants in 1999. The Company estimates that
its capital expenditures (without consideration of contributions from joint
venture partners) will be approximately $48 to $52 million for 1999. Management
believes that available cash, cash provided by operations, and available
borrowings under the Company's existing and amended lines of credit will provide
sufficient funds to finance restaurant expansion plans into the year 2000.
Since substantially all sales in the Company's restaurants are for cash, and
accounts payable are generally due in seven to 30 days, the Company operates
with little or negative working capital.
IMPACT OF THE YEAR 2000 ISSUE
INTRODUCTION. The term "Year 2000" issue is a general term used to describe the
various problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery as the year 2000 is
approached and reached. These problems generally arise from the fact that most
of the world's computer hardware and software has historically used only two
digits to identify the year in a date, often meaning that the computer will fail
to distinguish dates in the "2000's" from dates in the "1900's." These problems
may also arise from other sources as well, such as the use of special codes and
conventions in software that make use of the date field. The following
information was prepared to comply with the guidelines for Year 2000 disclosure
that the Securities and Exchange Commission issued in an Interpretive Release,
effective August 4, 1998. These guidelines required significantly more and
detailed information than was previously required by the Securities and Exchange
Commission.
THE COMPANY'S STATE OF READINESS. The Company's key financial, informational and
operational systems have been assessed and detailed plans have been developed to
address system modifications required by September 30, 1999. These systems
include information technology systems ("IT"). The
11
<PAGE> 12
Company has assessed its major IT vendors and technology providers and is in the
process of testing its systems to determine Year 2000 compliance. In addition,
the Company is in the process of assessing its non-IT systems that utilize
embedded technology such as microcontrollers and reviewing them for Year 2000
compliance.
To operate its business, the Company relies upon government agencies, utility
companies, providers of telecommunication services, suppliers, and other third
party service providers ("Material Relationships"), over which it can assert
little control. The Company's ability to conduct its core business is dependent
upon the ability of these Material Relationships to fix their Year 2000 issues
to the extent they affect the Company. If the telecommunications carriers,
public utilities and other Material Relationships do not appropriately rectify
their Year 2000 issues, the Company's ability to conduct its core business may
be materially impacted, which could result in a material adverse effect on the
Company's financial condition.
The Company has begun an assessment of all Material Relationships to determine
risk and assist in the development of contingency plans. This effort is to be
completed by March 1, 1999.
COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES. The Company expenses costs
associated with Year 2000 system changes as the costs are incurred except for
system change costs that the Company would otherwise capitalize. To date, the
Company has incurred costs of approximately $37,500 in connection with its Year
2000 compliance plan ("Year 2000 Plan") and estimates it will spend an
additional $75,000 to $150,000 to complete its Year 2000 Plan. The financial
impact of these expenses has not been material, and the Company does not expect
future remediation costs to be material to the Company's consolidated financial
position or results of operations. However, the Company is unable to estimate
the costs that it may incur as a result of Year 2000 problems suffered by the
parties with which it deals, such as Material Relationships, and there can be no
assurance that the Company will successfully address the Year 2000 problems
present in its own systems.
RISKS PRESENTED BY YEAR 2000 PROBLEMS. The Company has recently begun the system
integration testing phase of its Year 2000 Plan. However, until system
integration testing is substantially in process the Company cannot fully assess
the risks of its Year 2000 issue. As a result of system integration testing, the
Company may identify areas of its business that are at risk of Year 2000
disruption. The absence of any such determination at this point represents only
the status currently in the implementation of the Company's Year 2000 Plan, and
should not be construed to mean that there is no area of the Company's business
which is at risk of a Year 2000 related disruption. As noted above, many of the
Company's business critical Material Relationships may not appropriately address
their Year 2000 issues, the result of which could have a material adverse affect
on the Company's financial condition and results of operations.
THE COMPANY'S CONTINGENCY PLANS. The Company's Year 2000 Plan calls for the
development of contingency plans for areas of the business that are susceptible
to a substantive risk of a disruption resulting from a Year 2000 related event.
Because the Company has only recently begun system integration testing, and
accordingly has not fully assessed its risk from potential Year 2000 failures,
the Company has not yet developed detailed contingency plans specific to Year
2000 event for any specific area of
12
<PAGE> 13
business. The Company does, however, maintain contingency plans, outside of the
scope of the Year 2000 issue, designed to address various other business
interruptions. The Company is prepared for the possibility that system
integration testing may hereafter identify certain areas of business at risk.
Consistent with its Year 2000 Plan, the Company will develop specific Year 2000
contingency plans for such areas of business as and if such determinations are
made.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued, SFAS No. 131 Disclosure about Segments of an
Enterprise and Related Information. SFAS No. 131 establishes standards for the
way public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. This statement is
effective for financial statements for periods beginning after December 15,
1997. In the initial year of application, comparative information for earlier
years is to be presented. This statement need not be applied to interim
financial statements in the initial year of its application, but comparative
information for interim periods is to be reported in financial statements for
interim periods in the second year of application.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. SOP 98-1 identifies the characteristics
of internal-use software and specifies that once the preliminary project stage
is complete, certain external direct costs, certain direct internal payroll and
payroll-related costs and interest costs incurred during the development of
computer software for internal use should be capitalized and amortized. SOP 98-1
is effective for financial statements for fiscal years beginning after December
15, 1998, with earlier application encouraged, and must be applied to
internal-use computer software costs incurred in those fiscal years for all
projects, including those projects in progress upon initial application of this
SOP. The Company currently expenses all such costs as incurred. Management has
not yet quantified the dollar impact of adopting SOP 98-1; however, when
implemented in 1999, it will result in the capitalization of costs which would
have been previously expensed.
As is currently the practice of many casual dining and upscale restaurant
entities, the Company defers its restaurant pre-opening costs and amortizes them
over the twelve-month period following the opening of each respective
restaurant.
Statement of Position 98-5 Reporting on the Costs of Start-Up Activities was
issued in April 1998. SOP 98-5 requires entities to expense as incurred all
start-up and pre-opening costs that are not otherwise capitalizable as
long-lived assets. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998, although earlier adoption is encouraged. Restatement of
previously issued financial statements is not permitted by SOP 98-5, and
entities are not required to report the pro forma effects of
13
<PAGE> 14
the retroactive application of the new accounting standard. The Company's
adoption of the expense-as-incurred accounting principle required by SOP 98-5
will involve the recognition of the cumulative effect of the change in
accounting principle required by SOP 98-5 as a one-time charge against earnings,
net of any related income tax effect, retroactive to the beginning of the fiscal
year of adoption. The Company expects to adopt SOP 98-5 in the first quarter of
1999. The adoption of this change in accounting method is expected to result in
a one-time charge of approximately $1.5 to $1.7 million, less applicable income
taxes.
FORWARD-LOOKING STATEMENTS
Statements contained in this Report concerning future results, performance or
expectations, including those regarding the opening of additional restaurants,
planned capital expenditures, the adequacy of the Company's capital resources,
disclosures related to the effect of the advent of the year 2000 on the Company
and its systems and other statements regarding trends relating to various
revenue and expense items, are forward looking statements. These statements are
subject to a number of risks and uncertainties beyond the Company's control that
could cause the Company's actual results to differ materially from those
projected in such forward-looking statements.
Actual results, performance or developments could differ materially from those
expressed or implied by those forward-looking statements as a result of known or
unknown risks, uncertainties and other factors, including those associated with
restaurant openings, restaurant sales and operating expenses and others
described from time to time in the Company's filings with the Securities and
Exchange Commission, press releases and other communications.
Part II - Other Information
Item 1. Legal Proceedings.
In January 1996, the Company and Moo Management, Inc. ("Moo") formed a joint
venture ("RTL Joint Venture") for the development of Longhorn Steaks
restaurants. The parties never developed Longhorn Steaks restaurants and,
beginning in the fall of 1996, negotiated to amend their joint venture agreement
to develop Bugaboo Creek Steak House restaurants in an expanded territory. While
these negotiations were taking place, the parties entered into a ground lease
(the "Ground Lease") in the name of RTL Joint Venture and the Company, with its
own funds, subsequently built on the leased premises a Bugaboo Creek Steak House
restaurant. In the fall of 1997, the negotiations between the Company and Moo
broke down. The Company believes that the parties did not reach a binding
agreement to develop Bugaboo Creek Steak House restaurants while Moo asserts
that such an agreement was reached.
On, April 30, 1998, the Company filed a Petition for Declaratory Relief and
Contract Reformation styled Rare Hospitality International, Inc. v. Centercap
Associates, L.L.C. and Moo Management, Inc., C.A. No. 16350 NC in the Chancery
Court of New Castle County, Delaware seeking a determination that the Company,
and not RTL Joint Venture, is the tenant under the Ground Lease. In its amended
Answer and Counterclaim in this action, Moo alleges
14
<PAGE> 15
that the Company and Moo agreed to the terms of a binding joint venture
agreement to develop Bugaboo Creek Steak House restaurants and entered into the
Ground Lease in furtherance thereof. In its Counterclaim, Moo alleges that the
Company has breached the alleged agreement and, as a result, Moo has been
deprived of the profit that it would have earned from the purchase and operation
of three Bugaboo Creek Steak House restaurants owned by the Company, has been
damaged by the efforts undertaken and the expenses incurred by Moo in
preparation for performance of the alleged joint venture agreement and has been
deprived of the profits lost and that would be lost as the result of the
Company's failure to perform the alleged joint venture agreement. Moo seeks an
unspecified amount of monetary damages and the dismissal of the Company's
petition.
On June 9, 1998, the Company filed a demand for arbitration versus Moo with the
American Arbitration Association in Atlanta, Georgia. In this arbitration, the
Company sought an immediate hearing and injunctive relief directing that the
Ground Lease be transferred to the Company and that Moo and its principals be
relieved from liability on the Ground Lease. The Company further requested an
award declaring that there is no joint venture or partnership between the
Company and Moo to develop Bugaboo Creek Steak house restaurants and granting
monetary damages for the Company's losses incurred as a result of the wrongful
conduct of Moo.
On July 7, 1998, the Company filed a complaint in the Superior Court of Fulton
County, Georgia in the matter styled Rare Hospitality International, Inc. v. Moo
Management, Inc., Robert C. Rosenblit, David C. Tuttleman, Mark Greene and RTL
Joint Venture, C.A. File No. E-71219. In this action, the Company seeks
injunctive relief and damages resulting from the defendants', Rosenblit, Greene,
Tuttleman and Moo, enticing certain of the Company's top managers to discontinue
their employment with the Company and enticing others not to enter into or
continue business relationships with the Company.
Moo has not yet filed an answer to the Company's demand for arbitration and the
defendants have not yet filed an answer in the action in Fulton County, Georgia.
A hearing was held on July 23, 1998 in the arbitration in Atlanta, Georgia, with
respect to the Company's request for preliminary relief. On July 29, 1998, the
arbitrator entered an Order determining that the Company's request for
preliminary injunctive relief was subject to arbitration, that the arbitrator
had jurisdiction to decide that request and granting the Company's request for
preliminary relief by ordering Moo to sign on behalf of RTL Joint Venture an
assignment of the Ground Lease to the Company. This Order also directs the
Company to use its best efforts to cause the landlord to release Moo, Robert C.
Rosenblit, Maryellen Rosenblit and David C. Tuttleman from all liability under
the Ground Lease and the guaranty thereof and to indemnity Moo, Robert C.
Rosenblit, Maryellen Rosenblit and David C. Tuttleman against all liabilities
arising out of the Ground Lease or the guaranty thereof. If the Company does not
obtain a release from the landlord within 180 days following the date of the
Order, the Company must deposit $200,000 in escrow as collateral for this
indemnity. The Company must also make an accounting to Moo on a monthly basis of
the operations of the Bugaboo Creek Steak House restaurant operated on the
Ground Lease until further order of the arbitrator.
15
<PAGE> 16
The Company denies any liability with respect to the claims of Moo in its
counterclaim against the Company. The Company intends to vigorously pursue its
interest in the New Castle County, Delaware restaurant and to vigorously defend
the counterclaim. This action is in its earliest stages and it is not possible
at this time to determine the outcome of the Delaware lawsuit, the arbitration
or the Georgia lawsuit or the effect of the resolution of these disputes on the
Company's financial position or operating results. Management believes that the
Company's position has merit in the resolution of these matters will not have a
material adverse effect on the Company's financial condition or results of
operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed.
10.1 - Amended and Restated Credit Agreement dated as of August 26,
1998, by and among RARE Hospitality International, Inc., and
First Union National Bank as administrative agent and
BankBoston, N.A. and Fleet National Bank as Co- Agents.
10.2 - Pledge Agreement dated as of August 26, 1998, by Rare
Hospitality International, Inc. in favor of First Union
National Bank.
27.1 - Financial Data Schedules (for SEC use only)
27.2 - Financial Data Schedules (for SEC use only)
(b) Reports filed on Form 8-K.
None.
16
<PAGE> 17
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RARE Hospitality International, Inc.
Date: November 12, 1998 /s/ W. Douglas Benn
-------------------------- --------------------
W. Douglas Benn
Executive Vice President and
Chief Financial Officer
(Principal Financial
Officer and Chief Accounting
Officer, and a duly authorized
officer)
17
<PAGE> 1
EXHIBIT 10.1
===============================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of August 26, 1998,
by and among
RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
and
BANKBOSTON, N.A.
and
FLEET NATIONAL BANK,
as Co-Agents
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1 Definitions..................................................................................1
SECTION 1.2 General.....................................................................................14
SECTION 1.3 Other Definitions and Provisions............................................................14
ARTICLE II REVOLVING CREDIT/TERM FACILITY........................................................................14
SECTION 2.1 Revolving Credit Loans......................................................................14
SECTION 2.2 Swingline Loans.............................................................................15
SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline Loans..............................16
SECTION 2.4 Repayment of Loans..........................................................................17
SECTION2.5 Notes.......................................................................................17
SECTION 2.6 Permanent Reduction of the Aggregate Commitment/Term-Out Amount.............................18
SECTION 2.7 Termination of Credit Facility; Term-Out of Loans...........................................19
SECTION 2.8 Increase in Aggregate Commitment............................................................19
SECTION 2.9 Use of Proceeds.............................................................................20
ARTICLE III LETTER OF CREDIT FACILITY............................................................................20
SECTION 3.1 L/C Commitment..............................................................................20
SECTION 3.2 Procedure for Issuance of Letters of Credit.................................................21
SECTION 3.3 Commissions and Other Charges...............................................................21
SECTION 3.4 L/C Participations..........................................................................22
SECTION 3.5 Reimbursement Obligation of the Borrower....................................................23
SECTION 3.6 Obligations Absolute........................................................................23
SECTION 3.7 Existing Letters of Credit..................................................................23
SECTION 3.8 Effect of Application.......................................................................24
ARTICLE IV GENERAL LOAN PROVISIONS...............................................................................24
SECTION 4.1 Interest....................................................................................24
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans....................................27
SECTION 4.3 Fees........................................................................................28
SECTION 4.4 Manner of Payment...........................................................................28
SECTION 4.5 Crediting of Payments and Proceeds..........................................................29
SECTION 4.6 Adjustments.................................................................................29
SECTION 4.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the
Administrative Agent........................................................................30
SECTION 4.8 Changed Circumstances.......................................................................30
SECTION 4.9 Indemnity...................................................................................32
SECTION 4.10 Capital Requirements........................................................................33
SECTION 4.11 Taxes.......................................................................................33
SECTION 4.12 Affected Lenders............................................................................35
SECTION 4.13 Security....................................................................................35
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING...........................................................35
SECTION 5.1 Closing.....................................................................................35
SECTION 5.2 Conditions to Closing, Initial Loans and Letters of Credit..................................36
SECTION 5.3 Conditions to All Loans and Letters of Credit...............................................39
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWER........................................................39
SECTION 6.1 Representations and Warranties..............................................................39
SECTION 6.2 Survival of Representations and Warranties, Etc.............................................46
ARTICLE VII FINANCIAL INFORMATION AND NOTICES....................................................................47
SECTION 7.1 Financial Statements and Projections........................................................47
SECTION 7.2 Officer's Compliance Certificate............................................................48
SECTION 7.3 Other Reports...............................................................................48
SECTION 7.4 Notice of Litigation and Other Matters......................................................48
SECTION 7.5 Accuracy of Information.....................................................................49
ARTICLE VIII AFFIRMATIVE COVENANTS...............................................................................50
SECTION 8.1 Preservation of Corporate Existence and Related Matters.....................................50
SECTION 8.2 Maintenance of Property.....................................................................50
SECTION 8.3 Insurance...................................................................................50
SECTION 8.4 Accounting Methods and Financial Records....................................................50
SECTION 8.5 Payment and Performance of Obligations......................................................50
SECTION 8.6 Compliance With Laws and Approvals..........................................................51
SECTION 8.7 Environmental Laws..........................................................................51
SECTION 8.8 Compliance with ERISA.......................................................................51
SECTION 8.9 Compliance With Agreements..................................................................51
SECTION 8.10 Conduct of Business.........................................................................52
SECTION 8.11 Visits and Inspections......................................................................52
SECTION 8.12 Additional Subsidiaries.....................................................................52
SECTION 8.13 Year 2000 Compatibility.....................................................................52
SECTION 8.14 Further Assurances..........................................................................52
ARTICLE IX FINANCIAL COVENANTS...................................................................................53
SECTION 9.1 Leverage Ratio..............................................................................53
SECTION 9.2 Minimum Net Worth...........................................................................53
SECTION 9.3 Fixed Charges Coverage Ratio................................................................53
SECTION 9.4 Capital Expenditures........................................................................54
SECTION 9.5 Minimum Adjusted EBITDA.....................................................................54
ARTICLE X NEGATIVE COVENANTS.....................................................................................54
SECTION 10.1 Limitations on Debt.........................................................................55
SECTION 10.2 Limitations on Contingent Obligations.......................................................55
SECTION 10.3 Limitations on Liens........................................................................56
SECTION 10.4 Limitations on Loans, Advances, Investments and Acquisitions................................57
SECTION 10.5 Limitations on Mergers and Liquidation......................................................58
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 10.6 Limitations on Sale of Assets...............................................................58
SECTION 10.7 Limitations on Dividends and Distributions..................................................59
SECTION 10.8 Transactions with Affiliates................................................................59
SECTION 10.9 Certain Accounting Changes..................................................................60
SECTION 10.10 Amendments; Payments and Prepayments of Subordinated Debt...................................60
SECTION 10.11 Restrictive Agreements......................................................................60
ARTICLE XI DEFAULT AND REMEDIES..................................................................................60
SECTION 11.1 Events of Default...........................................................................60
SECTION 11.2 Remedies....................................................................................62
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc.............................................63
ARTICLE XII THE ADMINISTRATIVE AGENT.............................................................................63
SECTION 12.1 Appointment.................................................................................63
SECTION 12.2 Delegation of Duties........................................................................64
SECTION 12.3 Exculpatory Provisions......................................................................64
SECTION 12.4 Reliance by the Administrative Agent........................................................64
SECTION 12.5 Notice of Default...........................................................................65
SECTION 12.6 Non-Reliance on the Administrative Agent and Other Lenders..................................65
SECTION 12.7 Indemnification.............................................................................65
SECTION 12.8 The Administrative Agent in Its Individual Capacity.........................................66
SECTION 12.9 Resignation of the Administrative Agent; Successor Administrative Agent.....................66
ARTICLE XIII MISCELLANEOUS.......................................................................................67
SECTION 13.1 Notices.....................................................................................67
SECTION 13.2 Expenses; Indemnity.........................................................................68
SECTION 13.3 Set-off.....................................................................................69
SECTION 13.4 Governing Law...............................................................................69
SECTION 13.5 Consent to Jurisdiction.....................................................................69
SECTION 13.6 Binding Arbitration; Waiver of Jury Trial...................................................70
SECTION 13.7 Reversal of Payments........................................................................71
SECTION 13.8 Punitive Damages............................................................................71
SECTION 13.9 Accounting Matters..........................................................................71
SECTION 13.10 Successors and Assigns; Participations......................................................71
SECTION 13.11 Amendments, Waivers and Consents............................................................74
SECTION 13.12 Performance of Duties.......................................................................75
SECTION 13.13 All Powers Coupled with Interest............................................................75
SECTION 13.14 Survival of Indemnities.....................................................................75
SECTION 13.15 Titles and Captions.........................................................................75
SECTION 13.16 Severability of Provisions..................................................................75
SECTION 13.17 Counterparts................................................................................75
SECTION 13.18 Term of Agreement...........................................................................75
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C> <C>
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Swingline Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Store Performance Summary
<CAPTION>
SCHEDULES
- ---------
<S> <C> <C>
Schedule 1 - Lenders and Commitments
Schedule 1.2 - Existing Letters of Credit
Schedule 1.3 - Pledged Entities
Schedule 6.1(a) - Jurisdictions of Organization and Qualification; Subsidiaries and
Capitalization
Schedule 6.1(g) - Intellectual Property Matters
Schedule 6.1(i) - ERISA Plans
Schedule 6.1(l) - Material Contracts
Schedule 6.1(t) - Debt and Contingent Obligations
Schedule 6.1(u) - Litigation
Schedule 10.1 - Existing Debt
Schedule 10.2 - Contingent Obligations
Schedule 10.3 - Existing Liens
Schedule 10.4 - Existing Loans, Advances and Investments
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 26th day of
August, 1998, by and among RARE HOSPITALITY INTERNATIONAL, INC., a corporation
organized under the laws of Georgia (the "Borrower"), the Lenders who are or
may become a party to this Agreement, FIRST UNION NATIONAL BANK, as
Administrative Agent for the Lenders and BANKBOSTON, N.A. and FLEET NATIONAL
BANK, as Co-Agents.
STATEMENT OF PURPOSE
Pursuant to the Credit Agreement dated as of December 18, 1996 by and
among the Borrower and certain of its Subsidiaries, as borrowers, the lenders
party thereto and the Administrative Agent, as agent (as amended, the "Existing
Facility"), the lenders thereunder agreed to extend certain loans to the
borrowers thereunder.
The Borrower has requested, and the Lenders have agreed, to amend and
restate the Existing Facility in its entirety and to extend certain credit
facilities to the Borrower on the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby agree that the Existing Facility is amended and restated in its
entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Adjusted EBITDA" means, with respect to the Borrower and its
Subsidiaries for any period, EBITDA, adjusted on terms and conditions
satisfactory to the Administrative Agent, to account for any restaurants sold
by the Borrower or any of its Subsidiaries pursuant to Section 10.6 (f) during
such period.
"Adjusted Leverage Ratio" means, as of the end of any fiscal quarter,
the ratio of (a) Consolidated Funded Debt as of such date excluding therefrom
the initial $10,000,000 of obligations incurred in connection with Capital
Leases of real property associated with The Capital Grille restaurants entered
into after the Closing Date to (b) Adjusted EBITDA for the period of four (4)
consecutive fiscal quarters ending on such date.
"Adjustment Date" shall have the meaning assigned thereto in Section
4.1.
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 12.9.
<PAGE> 7
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
13.1(c).
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term "control" means (a) the
power to vote ten percent (10%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be increased, reduced or modified at
any time or from time to time pursuant to the terms hereof. On the Closing
Date, the Aggregate Commitment shall be One Hundred Million Dollars
($100,000,000).
"Agreement" means this Amended and Restated Credit Agreement, as
amended, amended and restated, modified or supplemented from time to time.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations, and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.10.
"Available Commitment" means, as to any Lender at any time, an amount
equal to (a) such Lender's Commitment less (b) such Lender's Extensions of
Credit.
"Available Amount" means the amount equal to the lesser of (a) the
Aggregate Commitment and (b) an amount equal to (i) Adjusted EBITDA for the
period of four (4) consecutive fiscal quarters most recently ended multiplied
by three (3) minus (ii) all Funded Debt of the Borrower and its Subsidiaries
excluding Subordinated Debt and Debt hereunder.
"Base Rate" means, at any time, the higher of (a) the Prime Rate and
(b) the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in
the Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Revolving Credit Loan bearing interest at a
rate based upon the Base Rate as provided in Section 4.1(a).
2
<PAGE> 8
"Borrower" means Rare Hospitality International, Inc., a Georgia
corporation, in its capacity as borrower hereunder.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York, New York, are open for
the conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"Capital Asset" means, with respect to the Borrower and its
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the
Borrower and its Subsidiaries.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries for any period, the aggregate cost of all Capital Assets acquired
by the Borrower and its Subsidiaries during such period, as determined in
accordance with GAAP.
"Capital Lease" means, with respect to the Borrower and its
Subsidiaries, any lease of any property that should, in accordance with GAAP,
be classified and accounted for as a capital lease on a Consolidated balance
sheet of the Borrower and its Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in Section
11.1(i).
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended, supplemented or otherwise modified.
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to and issue or participate in Letters of Credit issued for the
account of the Borrower hereunder in an aggregate principal or face amount at
any time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1 hereto, as the same may be increased, reduced or modified
at any time or from time to time pursuant to the terms hereof.
"Commitment Percentage" means, as to any Lender at any time, the ratio
of (a) the amount of the Commitment of such Lender to (b) the Aggregate
Commitment of all of the Lenders.
"Consolidated" means, when used with reference to financial statements
or financial statement items of the Borrower and its Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Borrower and its
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
any such
3
<PAGE> 9
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt (whether arising by virtue of partnership arrangements,
by agreement to keep well, to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement condition or otherwise) or
(b) entered into for the purpose of assuring in any other manner the obligee of
such Debt of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Contingent
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business. Contingent Obligations shall be valued at the full
amount of the underlying Debt guaranteed.
"Credit Facility" means the collective reference to the Revolving
Credit Facility and the L/C Facility.
"Debt" means, with respect to any Person and its Subsidiaries at any
date, the sum, without duplication, of the following calculated in accordance
with GAAP: (a) all liabilities, obligations and indebtedness for borrowed money
including but not limited to obligations evidenced by bonds, debentures, notes
or other similar instruments of any such Person, (b) all obligations to pay the
deferred purchase price of property or services of any such Person (including,
without limitation, all obligations under non-competition agreements), except
trade payables arising in the ordinary course of business not more than 90 days
past due, (c) all obligations of any such Person as lessee under Capital
Leases, (d) all Debt of any other Person secured by a Lien on any asset of such
Person, (e) all Contingent Obligations of any such Person, (f) all obligations,
contingent or otherwise, of any such Person relative to the face amount of
letters of credit, whether or not drawn, including without limitation any
Reimbursement Obligation, and banker's acceptances issued for the account of
any such Person, (g) all obligations to redeem, repurchase, exchange, defease
or otherwise make payments in respect of capital stock or other securities of
such Person; provided, that such obligation has vested and (h) all termination
payments which would be due and payable by any such Person pursuant to Hedging
Agreements.
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"EBITDA" means, with respect to the Borrower and its Subsidiaries for
any period, the sum of (a) Net Income for such period, plus (b) the sum of the
following to the extent deducted in the determination of Net Income: (i) income
and franchise taxes, (ii) Interest Expense, (iii) amortization, depreciation
and other non-cash charges (including amortization of goodwill, transaction
expenses, covenants not to compete and other intangible assets), (iv)
pre-opening costs required to be expensed for fiscal years beginning after
December 15, 1998 in accordance with FASB regulations (Pre-Opening Costs)
(including, without limitation, the one time write-off of previously
capitalized pre-opening costs not to exceed $2,500,000) and (v) with respect to
the fiscal quarters ending June 28, 1998 and September 27, 1998, a charge which
relates to FASB 121 equal to $18,040,776 less (c) any items of gain (or plus
any non-cash items of loss) which were included in determining Net Income and
were not realized in the ordinary course of business, all determined for such
period on a Consolidated basis in accordance with GAAP.
4
<PAGE> 10
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized under the laws of the
United States or any state thereof, having combined capital and surplus in
excess of $500,000,000, (b) a commercial bank organized under the laws of any
other country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $1,000,000,000, (d) already a Lender hereunder (whether as an
original party to this Agreement or as the assignee of another Lender), (e) the
successor (whether by transfer of assets, merger or otherwise) to all or
substantially all of the commercial lending business of the assigning Lender,
or (f) any other Person that has been approved in writing as an Eligible
Assignee by the Administrative Agent and, so long as no Default or Event of
Default has occurred and is continuing, the Borrower (such consent not to be
unreasonably withheld or delayed).
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of the environment, including, but not limited to, requirements
pertaining to the use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended, supplemented or
otherwise modified.
"ERISA Affiliate" means any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Requirements" means, for any day and with respect
to any Lender, the percentage (expressed as a decimal and rounded upwards, if
necessary, to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for determining the
actual reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for such Lender in respect of Eurocurrency
liabilities as specified in Regulation D of the Board of Governors of the
Federal Reserve System (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Rate Loans
is determined).
"Event of Default" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
5
<PAGE> 11
"Existing Facility" shall have the meaning assigned thereto in the
Statement of Purpose.
"Existing Letters of Credit" means each letter of credit described on
Schedule 1.2.
"Extensions of Credit" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding, (b) such Lender's Commitment
Percentage of the L/C Obligations then outstanding and (c) such Lender's
Commitment Percentage of the Swingline Loans then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any
reason, such rate is not available, then "Federal Funds Rate" shall mean a
daily rate which is determined, in the opinion of the Administrative Agent, to
be the rate at which federal funds are being offered for sale in the national
federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends or
holidays shall be the same as the rate for the most immediate preceding
Business Day.
"First Union" means First Union National Bank, a national banking
association, and its successors.
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries, ending on the last Sunday of December.
"Fixed Charges" means, with respect to the Borrower and its
Subsidiaries for any period, the sum of the following: (a) Interest Expense,
(b) Rental Expense and (c) scheduled principal payments with regard to Funded
Debt which matures (or the maturity of which may, at the option of the
Borrower, be extended so that it matures) more than one year after such date of
calculation, all determined for such period on a Consolidated basis in
accordance with GAAP.
"Funded Debt" means, with respect to the Borrower and its Subsidiaries
at any date, the sum, without duplication, of the following calculated in
accordance with GAAP: (a) all liabilities, obligations and indebtedness for
borrowed money including but not limited to obligations evidenced by bonds,
debentures, notes or other similar instruments of any such Person, (b) all
obligations of any such Person as lessee under Capital Leases, (c) all Funded
Debt of any other Person secured by a Lien on any asset of such Person, (d) all
Contingent Obligations of any such Person in respect of Funded Debt, (e) all
unreimbursed drawings under letters of credit, including without limitation any
Reimbursement Obligation, (f) all obligations to redeem, repurchase, exchange,
defease or otherwise make payments in respect of capital stock or other
securities of such Person; provided, that such obligation has vested and (g)
all obligations to pay the deferred purchase price of property or services of
any such Person (including, without limitation, all obligations under
non-competition agreements), except trade payables arising in the ordinary
course of business not more than 90 days past due.
6
<PAGE> 12
"GAAP" means generally accepted accounting principles, as recognized
by the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Borrower and its Subsidiaries throughout the period indicated and
consistent with the prior financial practice of the Borrower and its
Subsidiaries.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantors" means Bugaboo Creek Steak House, Inc. and any other
Person which, after the Closing Date, becomes a party to the Guaranty Agreement
by executing and delivering a joinder agreement in the form attached to the
Guaranty Agreement.
"Guaranty Agreement" means the Unconditional Guaranty Agreement of
even date executed by the Guarantors in favor of the Administrative Agent, for
the benefit of itself and the Lenders.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law, (d) the discharge or emission or release of which
requires a permit or license under any Environmental Law or other Governmental
Approval, (e) which are materials consisting of underground or aboveground
storage tanks, whether empty, filled or partially filled with any substance, or
(f) which contain asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived substances or waste,
crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection
with hedging the interest rate exposure of the Borrower, and any confirming
letter executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified.
"Interest Expense" means, with respect to the Borrower and its
Subsidiaries for any period, the gross interest expense (including without
limitation, interest expense attributable to Capital Leases and all net
obligations pursuant to Hedging Agreements) of the Borrower and its
Subsidiaries less interest income of the Borrower and its Subsidiaries, whether
paid in cash or accrued as a liability (excluding pay-in-kind interest on
junior securities), all determined for such period on a Consolidated basis in
accordance with GAAP.
7
<PAGE> 13
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Issuing Lender" means First Union, in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"L/C Commitment" means the lesser of (a) Five Million Dollars
($5,000,000) and (b) the Available Amount.
"L/C Facility" means the letter of credit facility established
pursuant to Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a)
the aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants" means the collective reference to all the Lenders
other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto (unless such Lender assigns its entire
right and interest hereunder pursuant to Section 13.10) and each Person that
hereafter becomes a party to this Agreement as a Lender pursuant to Section
13.10.
"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"Letters of Credit" shall have the meaning assigned thereto in Section
3.1.
"Leverage Ratio" means the ratio calculated pursuant to Section 9.1
hereof.
"LIBOR Rate" means the rate of interest per annum determined on the
basis of the rate for deposits in Dollars in minimum amounts of at least
$5,000,000 for a period equal to the applicable Interest Period which appears
on the Telerate Page 3750 at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of the applicable Interest Period (rounded
upward, if necessary, to the nearest one-sixteenth of one percent (1/16%)). If,
for any reason, such rate does not appear on Telerate Page 3750, then "LIBOR"
shall be determined by the Administrative Agent to be the arithmetic average
(rounded upward, if necessary, to the nearest one-sixteenth of one percent
(1/16%)) of the rate per annum at which deposits in Dollars would be offered by
first class banks in the London interbank market to the Administrative Agent
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable Interest Period for a period equal to such Interest
Period and in an amount substantially equal to the amount of the applicable
Revolving Credit Loan.
"LIBOR Rate Loan" means any Revolving Credit Loan bearing interest at
a rate based upon the LIBOR Rate as provided in Section 4.1(a).
8
<PAGE> 14
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loans" means the collective reference to the Revolving Credit Loans
and the Swingline Loans and "Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Guaranty Agreement, the Pledge Agreement, the Applications, any Hedging
Agreement between the Borrower and any Lender permitted pursuant to Section
10.1(b), and each other document, instrument and agreement executed and
delivered by the Borrower, its Subsidiaries in connection with this Agreement
or otherwise referred to herein or contemplated hereby, all as may be amended,
restated or otherwise modified.
"Material Adverse Effect" means a material adverse effect on (a) the
properties, business, prospects, operations or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a whole, or (b) the
ability of the Borrower or any Subsidiary thereof party to a Loan Document to
perform its obligations under the Loan Documents to which it is a party.
"Material Contract" means any contract or agreement, written or oral,
of the Borrower or any of its Subsidiaries the failure to comply with which
could reasonably be expected to have a Material Adverse Effect.
"Material Subsidiary" means, as of the end of any fiscal quarter, any
Wholly-Owned Subsidiary of the Borrower whose (a) Adjusted EBITDA for the
period of four (4) consecutive fiscal quarters ending on such date (the
"Measurement Period") exceeds 10% of the Adjusted EBITDA of the Borrower and
its Subsidiaries for such Measurement Period or (b) revenues for the
Measurement Period exceeds 10% of the revenues of the Borrower and its
Subsidiaries for such Measurement Period.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions within the
preceding six years.
"Net Cash Proceeds" means, as applicable, (a) with respect to any sale
or other disposition of assets, the gross cash proceeds received by the
Borrower or any of its Subsidiaries from such sale less the sum of (i) all
income taxes reasonably estimated in good faith to be payable by the Borrower
or any of its Subsidiaries in connection with such sale or disposition and
other taxes thereon to the extent such other taxes are actually paid by the
Borrower or any such Subsidiary, (ii) all legal fees, title and recording tax
expenses, commissions and other fees and expenses incurred by the Borrower or
any of its Subsidiaries in connection with such sale or disposition and (iii)
the principal amount of, premium, if any, and interest on any Debt secured by a
Lien on the asset (or a portion thereof) sold, which Debt is required to be
repaid in connection with such
9
<PAGE> 15
sale, (b) with respect to any offering of capital stock or issuance of Funded
Debt, the gross cash proceeds received by the Borrower or any of its
Subsidiaries therefrom less investment banking fees, legal fees, accountants
fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred by the Borrower or any of its Subsidiaries in
connection with such offering or issuance and (c) with respect to any payment
under an insurance policy or in connection with a condemnation proceeding, the
amount of cash proceeds received by the Borrower or its Subsidiaries from an
insurance company or Governmental Authority, as applicable less the sum of all
(i) all out-of-pocket legal fees, title and recording tax expenses incurred by
the Borrower or any of its Subsidiaries in connection with such claim or
condemnation proceeding and (ii) the principal amount of, premium, if any, and
interest on any Debt, which is required to be repaid as a result of such
condemnation proceeding.
"Net Income" means, with respect to the Borrower and its Subsidiaries
for any period, the Consolidated net income (or loss) of the Borrower and its
Subsidiaries for such period determined in accordance with GAAP; provided, that
there shall be excluded from net income (or loss) the income (or loss) of any
Person (other than a Wholly-Owned Subsidiary of such Person) in which such
Person has an ownership interest unless constructively or actually received by
such Person in a cash distribution.
"Net Worth" means, with respect to the Borrower at any date, the
stockholders' equity (including capital stock, additional paid in capital and
retained earnings, after deducting treasury stock) of the Borrower on such date
determined in accordance with GAAP.
"Non-Controlled Joint Venture" shall have the meaning assigned thereto
in Section 9.4.
"Notes" means the collective reference to the Revolving Credit Notes
and Swingline Notes and "Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning assigned
thereto in Section 2.3(b).
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.3(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 4.2.
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.4(c).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
the L/C Obligations, (c) all payment and other obligations owing by the
Borrower to any Lender or the Administrative Agent under any Hedging Agreement
permitted pursuant to Section 10.1 to which a Lender is a party and (d) all
other fees and commissions (including attorney's fees), charges, indebtedness,
loans, liabilities, financial accommodations, obligations, covenants and duties
owing by the Borrower to the Lenders or the Administrative Agent, of every
kind, nature and description, direct or indirect, absolute or contingent, due
or to become due, contractual or tortious, liquidated or unliquidated, and
whether or not evidenced by any
10
<PAGE> 16
note and whether or not for the payment of money, but only to the extent owing
under or in respect of this Agreement, any Note, any Letter of Credit or any of
the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section
4.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of the
Borrower or any ERISA Affiliates or (b) has at any time within the preceding
six years been maintained for the employees of the Borrower or any of their
current or former ERISA Affiliates.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Pledge Agreement" means the Pledge Agreement of even date executed by
the Borrower in favor of the Administrative Agent, for the benefit of itself
and the Lenders, pledging 100% of its ownership interest in the entities listed
on Schedule 1.3 hereto.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on
the day such change in the Prime Rate occurs. The parties hereto acknowledge
that the rate announced publicly by First Union as its Prime Rate is an index
or base rate and shall not necessarily be its lowest or best rate charged to
its customers or other banks.
"Register" shall have the meaning assigned thereto in Section
13.10(d).
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Rental Expense" means, with respect to the Borrower and its
Subsidiaries for any period, all rental expenses with respect to operating
leases of the Borrower and its Subsidiaries for such period, determined on a
Consolidated basis in accordance with GAAP.
"Required Lenders" means, (a)(i) at any date prior to the occurrence
and continuance of an Event of Default, any combination of holders of at least
sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid principal
amount of the Revolving Credit Notes or (ii) at any date after the occurrence
and continuance of an Event of Default, any combination of holders of at least
sixty-six and two-thirds percent (66-2/3%) of the aggregate unpaid principal
amount of the Notes, or (b) if no amounts are outstanding under the Notes, any
combination of Lenders whose Commitment Percentages aggregate at least
sixty-six and two-thirds percent (66-2/3%).
11
<PAGE> 17
"Responsible Officer" means any of the following: the chief executive
officer or chief financial officer of the Borrower or any other officer of the
Borrower reasonably acceptable to the Administrative Agent.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loans" means any revolving loan made to the Borrower
pursuant to Section 2.1, and all such revolving loans collectively as the
context requires.
"Revolving Credit Notes" means the collective reference to the
Revolving Credit Notes made by the Borrower payable to the order of each
Lender, substantially in the form of Exhibit A-1 hereto, evidencing the
Revolving Credit Facility, and any amendments and modifications thereto, any
substitutes therefor, and any replacements, restatements, renewals or extension
thereof, in whole or in part; "Revolving Credit Note" means any of such
Revolving Credit Notes.
"Revolving Credit Period" means the period commencing with the Closing
Date and continuing through but excluding the Revolving Credit Termination
Date.
"Revolving Credit Termination Date" means the earliest of the dates
referred to in Section 2.7(a).
"SEC" means the Securities and Exchange Commission.
"Solvent" means, as to the Borrower and its Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage and is able to pay its debts as they mature, (b) owns property
having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liabilities (including
contingencies), and (c) does not believe that it will incur debts or
liabilities beyond its ability to pay such debts or liabilities as they mature.
"Subordinated Debt" means the collective reference to Debt on Schedule
6.1(t) hereof designated as Subordinated Debt and any other Debt of the
Borrower or any of its Subsidiaries subordinated in right and time of payment
to the Obligations on terms satisfactory to the Required Lenders.
"Subsidiary" means as to any Person, any corporation, partnership,
limited liability company or other entity of which more than fifty percent
(50%) of the outstanding capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation, partnership, limited liability company or other
entity is at the time, directly or indirectly, owned by or the management is
otherwise controlled by such Person (irrespective of whether, at the time,
capital stock or other ownership interests of any other class or classes of
such corporation, partnership, limited liability company or other entity shall
have or might have voting power by reason of the happening of any contingency).
Unless otherwise qualified references to "Subsidiary" or "Subsidiaries" herein
shall refer to those of the Borrower.
12
<PAGE> 18
"Swingline Commitment" means the lesser of (a) Five Million Dollars
($5,000,000) and (b) the Available Amount.
"Swingline Lender" means First Union in its capacity as swingline
lender hereunder.
"Swingline Loan" means any swingline loan made by the Swingline Lender
to the Borrower pursuant to Section 2.2, and all such swingline loans
collectively as the context requires.
"Swingline Note" means the Swingline Note made by the Borrower payable
to the order of the Swingline Lender, substantially in the form of Exhibit A-2
hereto, evidencing the Swingline Loans, and any amendments and modifications
thereto, any substitutes therefor, and any replacements, restatements, renewals
or extension thereof, in whole or in part.
"Swingline Termination Date" means the first to occur of (a) the
resignation of First Union as Administrative Agent in accordance with Section
12.9 and (b) the Revolving Credit Termination Date.
"Taxes" shall have the meaning assigned thereto in Section 4.11(a).
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of the Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of
a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041
of ERISA, or (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan, or (f) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan, or (g) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA, or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Term-Out Amount" shall have the meaning assigned thereto in Section
2.7(b).
"Term-Out Maturity Date" means September 30, 2003.
"Term-Out Period" means the period commencing on the Revolving Credit
Termination Date and continuing through and including the Term-Out Maturity
Date.
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce
Publication No. 500.
13
<PAGE> 19
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina, as amended, restated or otherwise modified.
"United States" means the United States of America.
"Wholly-Owned" means, with respect to a Subsidiary, that all of the
shares of capital stock or other ownership interests of such Subsidiary are,
directly or indirectly, owned or controlled by the Borrower and/or one or more
of its Wholly-Owned Subsidiaries.
SECTION 1.2 General. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter. Any reference herein to "Charlotte time" shall
refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT/TERM FACILITY
SECTION 2.1 Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Revolving
Credit Loans to the Borrower from time to time from the Closing Date through
the Revolving Credit Termination Date as requested by the Borrower in
accordance with the terms of Section 2.3; provided, that (a) the aggregate
principal amount of all outstanding Revolving Credit Loans (after giving effect
to any amount requested) shall not exceed the Available Amount less the sum of
all outstanding Swingline Loans and L/C Obligations and (b) the principal
amount of outstanding Revolving Credit Loans from any Lender to the Borrower
shall not at any time exceed such Lender's Available Commitment. Each Revolving
Credit Loan by a Lender shall be in a principal amount equal to such Lender's
Commitment Percentage of the aggregate principal amount of Revolving Credit
Loans requested on such occasion. Subject to the terms and conditions hereof,
the Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Termination Date.
14
<PAGE> 20
SECTION 2.2 Swingline Loans.
(a) Availability. Subject to the terms and conditions of this
Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrower
from time to time from the Closing Date through, but not including, the
Swingline Termination Date; provided, that the aggregate principal amount of
all outstanding Swingline Loans (after giving effect to any amount requested),
shall not exceed the lesser of (i) the Available Amount less the sum of all
outstanding Revolving Credit Loans and the L/C Obligations and (ii) the
Swingline Commitment.
(b) Refunding.
(i) Swingline Loans shall be refunded by the Lenders on
demand by the Swingline Lender. Such refundings shall be made by the Lenders in
accordance with their respective Commitment Percentages and shall thereafter be
reflected as Revolving Credit Loans of the Lenders on the books and records of
the Administrative Agent. Each Lender shall fund its respective Commitment
Percentage of Revolving Credit Loans as required to repay Swingline Loans
outstanding to the Swingline Lender upon demand by the Swingline Lender but in
no event later than 2:00 p.m. (Charlotte time) on the next succeeding Business
Day after such demand is made. No Lender's obligation to fund its respective
Commitment Percentage of a Swingline Loan shall be affected by any other
Lender's failure to fund its Commitment Percentage of a Swingline Loan, nor
shall any Lender's Commitment Percentage be increased as a result of any such
failure of any other Lender to fund its Commitment Percentage.
(ii) The Borrower shall pay to the Swingline Lender on
demand the amount of such Swingline Loans to the extent amounts received from
the Lenders are not sufficient to repay in full the outstanding Swingline Loans
requested or required to be refunded. In addition, the Borrower hereby
authorizes the Administrative Agent to charge any account maintained with the
Swingline Lender (up to the amount available therein) in order to immediately
pay the Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded. The
Administrative Agent shall promptly notify the Borrower of any such charge;
provided, that the failure of the Administrative Agent to so notify the
Borrower shall not result in any liability to the Administrative Agent or
affect its right to charge such account. If any portion of any such amount paid
to the Swingline Lender shall be recovered by or on behalf of the Borrower from
the Swingline Lender in bankruptcy or otherwise, the loss of the amount so
recovered shall be ratably shared among all the Lenders in accordance with
their respective Commitment Percentages.
(iii) Each Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the terms of this
Section 2.2 is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, non-satisfaction of the
conditions set forth in Article V. Further, each Lender agrees and acknowledges
that if prior to the refunding of any outstanding Swingline Loans pursuant to
this Section 2.2, one of the events described in Section 11.1(j) or (k) shall
have occurred, each Lender will, on the date the applicable Revolving Credit
Loan would have been made, purchase an undivided participating interest in the
Swingline Loan to be refunded in an amount equal to its Commitment Percentage
of the aggregate amount of such Swingline Loan. Each Lender will immediately
transfer to the Swingline Lender, in
15
<PAGE> 21
immediately available funds, the amount of its participation and upon receipt
thereof the Swingline Lender will deliver to such Lender a certificate
evidencing such participation dated the date of receipt of such funds and for
such amount. Whenever, at any time after the Swingline Lender has received from
any Lender such Lender's participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender
will distribute to such Lender its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was
outstanding and funded).
SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline
Loans.
(a) Requests for Borrowing. The Borrower shall give the Administrative
Agent irrevocable prior written notice (or telephonic notice, confirmed in
writing), such written notice or written confirmation to be in the form
attached hereto as Exhibit B (a "Notice of Borrowing") not later than 12:00
p.m. (Charlotte time) (i) on the same Business Day as each Base Rate Loan and
each Swingline Loan and (ii) at least three (3) Business Days before each LIBOR
Rate Loan, of its intention to borrow, specifying (A) the date of such
borrowing, which shall be a Business Day, (B) the amount of such borrowing,
which shall be, (x) with respect to Base Rate Loans in an aggregate principal
amount of $1,000,000 or a whole multiple of $250,000 in excess thereof, (y)
with respect to LIBOR Rate Loans in an aggregate principal amount of $5,000,000
or a whole multiple of $1,000,000 in excess thereof and (z) with respect to
Swingline Loans in an aggregate principle amount of $100,000 or a whole
multiple of $100,000 in excess thereof, (C) whether such Loan is to be a
Revolving Credit Loan, (D) in the case of a Revolving Credit Loan whether the
Loans are to be LIBOR Rate Loans or Base Rate Loans, and (E) in the case of a
LIBOR Rate Loan, the duration of the Interest Period applicable thereto.
Notices received after 12:00 p.m. (Charlotte time) shall be deemed received on
the next Business Day. The Administrative Agent shall promptly notify the
Lenders of each Notice of Borrowing.
(b) Disbursement of Revolving Credit and Swingline Loans. Not later
than 2:00 p.m. (Charlotte time) on the proposed borrowing date, (i) each Lender
will make available to the Administrative Agent, for the account of the
Borrower, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Lender's Commitment Percentage of
the Revolving Credit Loans to be made on such borrowing date and (ii) the
Swingline Lender will make available to the Administrative Agent, for the
account of the Borrower, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, the Swingline Loan to be
made on such borrowing date. The Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of each borrowing requested
pursuant to this Section 2.3 in immediately available funds by crediting or
wiring such proceeds to the deposit account of the Borrower identified in the
most recent notice substantially in the form of Exhibit C hereto (a "Notice of
Account Designation") delivered by the Borrower to the Administrative Agent or
as may be otherwise agreed upon by the Borrower and the Administrative Agent
from time to time. Subject to Section 4.7 hereof, the Administrative Agent
shall not be obligated to disburse the portion of the proceeds of any Revolving
Credit Loan requested pursuant to this Section 2.3 to the extent that any
Lender has not made available to the Administrative Agent its Commitment
Percentage of such Loan. Revolving Credit Loans to be made for the purpose of
refunding Swingline Loans shall be made by the Lenders as provided in Section
2.2(b).
16
<PAGE> 22
SECTION 2.4 Repayment of Loans.
(a) Repayment on Termination Date. The Borrower shall repay the
outstanding principal amount of (i) all Revolving Credit Loans in full on the
Revolving Credit Termination Date, or, if the election is made pursuant to
Section 2.7, on the Term-Out Maturity Date, and (ii) all Swingline Loans in
accordance with Section 2.2(b), together, in each case, with all accrued but
unpaid interest thereon.
(b) Mandatory Repayment of Excess Loans. If at any time the
outstanding principal amount of all Revolving Credit Loans plus the sum of all
outstanding Swingline Loans and L/C Obligations exceeds the Available Amount,
the Borrower shall, immediately upon notice from the Administrative Agent,
repay to the Administrative Agent for the account of the Lenders, the amount of
such excess with each such repayment applied first to the principal amount of
outstanding Swingline Loans, second to the principal amount of outstanding
Revolving Credit Loans and third, with respect to any Letters of Credit then
outstanding, a payment of cash collateral into a cash collateral account opened
by the Borrower with the Administrative Agent for the benefit of the Lenders
(such cash collateral to be applied in accordance with Section 11.2(b)). Each
such repayment shall be accompanied by any amount required to be paid pursuant
to Section 4.9 hereof.
(c) Optional Repayments. The Borrower may at any time and from time to
time repay the Loans, in whole or in part, upon at least three (3) Business
Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate
Loans and one (1) Business Day irrevocable notice with respect to Base Rate
Loans and Swingline Loans, in the form attached hereto as Exhibit D (a "Notice
of Prepayment") specifying the date and amount of repayment and whether the
repayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $1,000,000 or a whole multiple of
$250,000 in excess thereof with respect to Base Rate Loans, $5,000,000 or a
whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans
and $100,000 or a whole multiple of $100,000 in excess thereof with respect to
Swingline Loans. Each such repayment shall be accompanied by any amount
required to be paid pursuant to Section 4.9 hereof.
(d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may not
repay any LIBOR Rate Loan on any day other than on the last day of the Interest
Period applicable thereto unless such repayment is accompanied by any amount
required to be paid pursuant to Section 4.9 hereof.
SECTION 2.5 Notes.
(a) Revolving Credit Notes. Each Lender's Revolving Credit Loans and
the obligation of the Borrower to repay such Revolving Credit Loans shall be
evidenced by a separate Revolving Credit Note executed by the Borrower payable
to the order of such Lender representing the Borrower's obligation to pay such
Lender's Commitment or, if less, the aggregate unpaid principal
17
<PAGE> 23
amount of all Revolving Credit Loans made and to be made by such Lender to the
Borrower hereunder, plus interest and all other fees, charges and other amounts
due thereon. Each Revolving Credit Note shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per annum specified in
Section 4.1.
(b) Swingline Notes. The Swingline Loans and the obligation of the
Borrower to repay such Swingline Loans shall be evidenced by a Swingline Note
executed by the Borrower payable to the order of the Swingline Lender
representing the Borrower's obligation to pay the Swingline Lender's Swingline
Commitment or, if less, the aggregate unpaid principal amount of all Swingline
Loans made by the Swingline Lender to the Borrower hereunder, plus interest on
such principal amounts and all other fees, charges and other amounts due
thereon. The Swingline Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 4.1.
SECTION 2.6 Permanent Reduction of the Aggregate Commitment/Term-Out
Amount.
(a) Voluntary Reduction. The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written
notice to the Administrative Agent, to permanently reduce, without premium or
penalty, (i) the entire Aggregate Commitment or Term-Out Amount at any time or
(ii) portions of the Aggregate Commitment or Term-Out Amount, from time to
time, in an aggregate principal amount not less than $3,000,000 or any whole
multiple of $1,000,000 in excess thereof.
(b) Mandatory Permanent Reduction. The Aggregate Commitment or
Term-Out Amount shall be permanently reduced by the following amounts: (i) 100%
of the Net Cash Proceeds received by the Borrower or any of its Subsidiaries
from any issuance of Funded Debt (other than Funded Debt permitted pursuant to
Section 10.1), (ii) 100% of the Net Cash Proceeds received by the Borrower or
any of its Subsidiaries in connection with any sale of assets (including its
equity ownership in any Person) not permitted pursuant to Section 10.6 (a)
through (e) unless, so long as no Default or Event of Default has occurred and
is continuing, such Net Cash Proceeds are reinvested in similar assets (or
otherwise in a manner acceptable to the Administrative Agent, in its sole
discretion) within 180 days after receipt of such Net Cash Proceeds; provided,
that this clause (ii) shall not apply with respect to up to $5,000,000 of the
aggregate Net Cash Proceeds received by the Borrower and its Subsidiaries prior
to the Revolving Credit Termination Date, (iii) 100% of the Net Cash Proceeds
received by the Borrower or any of its Subsidiaries under any policy of
insurance of such Person or in connection with any condemnation proceeding
involving property of such Person, unless, so long as no Default or Event of
Default has occurred and is continuing, such Net Cash Proceeds are utilized by
the Borrower or such Subsidiary within one hundred eighty (180) days of receipt
of such Net Cash Proceeds to replace or repair any of its assets damaged in
connection with the related claim or proceeding and (iv) during the Term-Out
Period only, 50% of the Net Cash Proceeds received by the Borrower or any of
its Subsidiaries from any offering of equity securities.
18
<PAGE> 24
(c) Each permanent reduction permitted or required pursuant to this
Section 2.6 shall be accompanied by a payment of principal sufficient to reduce
the aggregate outstanding Extensions of Credit of the Lenders after such
reduction to the Aggregate Commitment or Term-Out Amount as so reduced and if
the Aggregate Commitment as so reduced is less than the aggregate amount of all
outstanding Letters of Credit, the Borrower shall be required to deposit in a
cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. Any
reduction of the Aggregate Commitment or Term-Out Amount to zero shall be
accompanied by payment of all outstanding Obligations (and furnishing of cash
collateral satisfactory to the Administrative Agent for all L/C Obligations)
and shall result in the termination of the Commitments and Credit Facility.
Such cash collateral shall be applied in accordance with Section 11.2(b). If
the reduction of the Aggregate Commitment or Term-Out Amount requires the
repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any
amount required to be paid pursuant to Section 4.9 hereof.
SECTION 2.7 Termination of Credit Facility; Term-Out of Loans. (a) The
Credit Facility shall terminate on the earliest of (i) October 1, 2001, (ii)
the date of permanent reduction of the Aggregate Commitment in whole pursuant
to Section 2.6 and (iii) the date of termination by the Administrative Agent on
behalf of the Lenders pursuant to Section 11.2(a).
(b) Upon the date set forth in Section 2.7(a)(i) above, so long as
each condition set forth in Section 5.3 hereof has been satisfied as of such
date, the Borrower may elect to term out the aggregate principal balance of
Revolving Credit Loans then outstanding (the "Term-Out Amount"). If the
Borrower so elects, the Term-Out Amount shall be payable in eight (8) equal
consecutive quarterly principal installments, commencing on December 31, 2001
and continuing on the last Business Day of each calendar quarter thereafter and
on the Term-Out Maturity Date. On the Term-Out Maturity Date, all outstanding
principal of the Term-Out Amount, together with all accrued but unpaid interest
thereon, shall be due and payable in full.
SECTION 2.8 Increase in Aggregate Commitment. So long as no Default or
Event of Default shall have occurred and be continuing, at any time prior to
the Revolving Credit Termination Date, the Borrower shall have the right from
time to time upon not less than thirty (30) days prior written notice to the
Administrative Agent to increase the Aggregate Commitment; provided, that (a)
no increase in the Aggregate Commitment shall be permitted hereunder unless
each of the Lenders shall have approved such increase, (b) in no event shall
the Aggregate Commitment be increased to an amount greater than $150,000,000
and (c) after giving effect to such increase in the Aggregate Commitment, no
Lender shall have a Commitment Percentage greater than 30%; provided, further,
that:
(i) Any increase in the Aggregate Commitment which is
accomplished by increasing the Commitment of any Lender or Lenders who are at
the time of such increase party to this Agreement (which Lender or Lenders
shall consent to such increase in their sole and absolute discretion) shall be
accomplished as follows: (i) this Agreement will be amended by the Borrower,
the Administrative Agent and those Lender(s) whose Commitment(s) is or are
being increased to reflect the revised Commitment amounts of each of the
Lenders, (ii) the Administrative Agent will deliver an updated Schedule 1 to
the Borrower, the Issuing Lender and each of the Lenders reflecting the revised
Commitment amount and Commitment Percentage of each of the Lenders,
19
<PAGE> 25
(iii) the outstanding Revolving Credit Loans, Commitment Percentages of
Swingline Loans and Commitment Percentages of L/C Obligations will be
reallocated on the effective date of such increase among the Lenders in
accordance with their revised Commitment Percentages (and the Lenders agree to
make all payments and adjustments necessary to effect the reallocation and the
Borrower shall pay any and all costs required pursuant to Section 4.9 in
connection with such reallocation as if such reallocation were a prepayment)
and (iv) the Borrower will deliver new Revolving Credit Note(s) to the Lender
or Lenders whose Commitment(s) is or are being increased reflecting the revised
Commitment amount of such Lender(s); and
(ii) Any increase in the Aggregate Commitment which is
accomplished by addition of a new Lender under the Agreement shall be
accomplished as follows: (i) such new Lender shall be an Eligible Assignee and
shall be subject to the consent of the Administrative Agent, which consent
shall not be unreasonably withheld, (ii) this Agreement will be amended by the
Borrower, the Administrative Agent and by the party becoming an additional
Lender hereunder to reflect the addition of such party as a Lender hereunder,
(iii) the Administrative Agent will deliver an updated Schedule 1 to the
Borrower, the Issuing Lender and each of the Lenders reflecting the revised
Commitment amounts and Commitment Percentages of each of the Lenders, (iv) the
outstanding Revolving Credit Loans, Commitment Percentages of Swingline Loans
and Commitment Percentages of L/C Obligations will be reallocated on the
effective date of such increase among the Lenders in accordance with their
revised Commitment Percentages (and the Lenders agree to make all payments and
adjustments necessary to effect the reallocation and the Borrower shall pay any
and all costs required pursuant to Section 4.9 in connection with such
reallocation as if such reallocation were a prepayment) and (v) the Borrower
will deliver a Revolving Credit Note to such party.
SECTION 2.9 Use of Proceeds. The Borrower shall use the proceeds of
the Extensions of Credit (a) to finance the acquisition of Capital Assets and
investments in joint ventures permitted hereunder and (b) for working capital
and general corporate requirements of the Borrower and its Subsidiaries,
including the payment of certain fees and expenses incurred in connection with
the transactions contemplated by this Agreement.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1 L/C Commitment. Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Lenders
set forth in Section 3.4(a), agrees to issue standby letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day from
the Closing Date through but not including the Revolving Credit Termination
Date in such form as may be approved from time to time by the Issuing Lender;
provided, that the Issuing Lender shall have no obligation to issue any Letter
of Credit if, after giving effect to such issuance, (a) the L/C Obligations
would exceed the L/C Commitment or (b) the Available Commitment of any Lender
would be less than zero. Each Letter of Credit shall (i) be denominated in
Dollars in a minimum amount of $500,000, (ii) be a standby letter of credit
issued to support obligations of the Borrower or any of its Subsidiaries,
contingent or otherwise, (iii) expire no later
20
<PAGE> 26
than one (1) year from the date of issuance thereof; provided, that in no case
shall such expiration date be later than five (5) Business Days prior to the
Revolving Credit Termination Date and (iv) be subject to the laws of the State
of North Carolina and, to the extent not inconsistent therewith, the Uniform
Customs. References herein to "issue" and derivations thereof with respect to
Letters of Credit shall also include extensions or modifications of any
existing Letters of Credit, unless the context otherwise requires.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at the Administrative Agent's Office an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
shall process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 3.1 and Article V hereof,
promptly but no later than five (5) Business Days from the date of its receipt
of the Application therefor, issue the Letter of Credit requested thereby (but
in no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three (3) Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender
and the Borrower. If requested by the Borrower, the Issuing Lender shall
furnish to the Borrower a draft of any Letter of Credit prior to its issuance.
The Issuing Lender shall furnish to the Borrower a copy of such Letter of
Credit and furnish to each Lender a copy of such Letter of Credit and the
amount of each Lender's L/C Participation therein, all promptly following the
issuance of such Letter of Credit.
SECTION 3.3 Commissions and Other Charges.
(a) The Borrower shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, a letter of credit
commission with respect to each Letter of Credit in an amount equal to the
Applicable Margin with respect to LIBOR Rate Loans during the Revolving Credit
Period (on a per annum basis) on the face amount of each such Letter of Credit.
Such commission shall be payable quarterly in arrears on the last Business Day
of each calendar quarter and on the Revolving Credit Termination Date.
(b) In addition to the foregoing commission, the Borrower shall pay to
the Administrative Agent, for the account of the Issuing Lender an issuance fee
of 0.10% on the face amount of each Letter of Credit. Such issuance fee shall
be payable quarterly in arrears on the last Business Day of each calendar
quarter after the date of issuance thereof and on the Revolving Credit
Termination Date.
(c) In addition to the foregoing commissions, the Borrower shall pay
or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit;
provided, that from time to time, as requested by the Borrower, the
Administrative Agent will provide the Borrower with information pertaining to
the amount of such costs and expenses.
21
<PAGE> 27
(d) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all
commissions received by the Administrative Agent in accordance with their
respective Commitment Percentages.
SECTION 3.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants
to each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and
purchase and hereby accepts and purchases from the Issuing Lender, on the terms
and conditions hereinafter stated, for such L/C Participant's own account and
risk an undivided interest equal to such L/C Participant's Commitment
Percentage in the Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with
the Issuing Lender that, if a draft is paid under any Letter of Credit for
which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Commitment
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
Funds Rate as determined by the Administrative Agent during the period from and
including the date such payment is due to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. A certificate of the Issuing Lender with respect
to any amounts owing under this Section 3.4(b) shall be conclusive in the
absence of manifest error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section 3.4(b), if the L/C Participants
receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte
time) on any Business Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 3.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, that in the event that any such payment received
by the Issuing Lender shall be required to be returned by the Issuing Lender,
such L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
22
<PAGE> 28
SECTION 3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft paid under any Letter
of Credit for the amount of (a) such draft so paid and (b) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Lender in connection
with such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States and
in immediately available funds. Interest shall be payable on any and all
amounts remaining unpaid by the Borrower under this Article III from the date
such amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrower fails to
timely reimburse the Issuing Lender on the date the Borrower receives the
notice referred to in this Section 3.5, the Borrower shall be deemed to have
timely given a Notice of Borrowing hereunder to the Administrative Agent
requesting the Lenders to make a Base Rate Loan on such date in an amount equal
to the amount of such drawing and, regardless of whether or not the conditions
precedent specified in Article V have been satisfied, the Lenders shall make
Base Rate Loans in such amount, the proceeds of which shall be applied to
reimburse the Issuing Lender for the amount of the related drawing and costs
and expenses.
SECTION 3.6 Obligations Absolute. The Borrower's obligations under
this Article III (including without limitation the Reimbursement Obligation)
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender or any beneficiary of
a Letter of Credit. The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligation under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among the Borrower and any beneficiary of any Letter
of Credit or any other party to which such Letter of Credit may be transferred
or any claims whatsoever of a Borrower against any beneficiary of such Letter
of Credit or any such transferee. The Issuing Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions caused by the Issuing Lender's
gross negligence or willful misconduct. The Borrower agrees that any action
taken or omitted by the Issuing Lender under or in connection with any Letter
of Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the UCC and, to the extent not inconsistent therewith, the Uniform
Customs shall be binding on the Borrower and shall not result in any liability
of the Issuing Lender to the Borrower. The responsibility of the Issuing Lender
to the Borrower in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
SECTION 3.7 Existing Letters of Credit. As of the Closing Date, the
Existing Letters of Credit shall be deemed to be Letters of Credit issued
pursuant to and subject to the terms and conditions of this Agreement and each
of the L/C Participants shall be deemed to have
23
<PAGE> 29
purchased an interest in such Existing Letters of Credit pursuant to the terms
and conditions set forth in Section 3.4 hereof.
SECTION 3.8 Effect of Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
Not in limitation of the foregoing, any provision contained in any Application
or other certificate, document or other paper provided by the Borrower in
connection with an Application (collectively, the "Application Documents")
which purports to convey to the Issuing Bank or any of its affiliates a Lien as
security for any obligations of the Borrower in connection therewith shall be
void and of no force and effect. Further, notwithstanding any provision of an
Application Document specifying events of default, an event of default shall be
deemed to have occurred under an Application Document only upon the occurrence
of an Event of Default. Accordingly, any provision contained in any of the
Application Documents providing for or specifying events of default shall be of
no force and effect.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this Section
4.1, at the election of the Borrower, the aggregate principal balance of (i)
the Revolving Credit Loans or any portion thereof shall bear interest at the
Base Rate or the LIBOR Rate plus, in each case, the Applicable Margin as set
forth in Section 4.1(c); provided that the LIBOR Rate shall not be available
until three (3) Business Days after the Closing Date and (ii) any Swingline
Loan shall bear interest at the Base Rate plus the Applicable Margin. The
Borrower shall select the rate of interest and Interest Period, if any,
applicable to any Revolving Credit Loan at the time a Notice of Borrowing is
given pursuant to Section 2.3 or at the time a Notice of
Conversion/Continuation is given pursuant to Section 4.2. Each Revolving Credit
Loan or portion thereof bearing interest based on the Base Rate shall be a
"Base Rate Loan" and each Revolving Credit Loan or portion thereof bearing
interest based on the LIBOR Rate shall be a "LIBOR Rate Loan." Any Revolving
Credit Loan or any portion thereof as to which the Borrower has not duly
specified an interest rate as provided herein shall be deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan, the
Borrower, by giving notice at the times described in Section 4.1(a), shall
elect an interest period (each, an "Interest Period") to be applicable to such
Loan, which Interest Period shall be a period of one (1), two (2), three (3),
or six (6) months with respect to each LIBOR Rate Loan; provided that:
(i) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires;
24
<PAGE> 30
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, that if any Interest Period with respect to
a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the relevant
calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving
Credit Termination Date; provided, that if the Borrower elects to term out the
Loans pursuant to Section 2.7(b), Interest Periods with respect to the Term-Out
Amount may be extended beyond the Revolving Credit Termination Date, so long as
such Interest Periods shall not extend beyond the Term-Out Maturity Date; and
(v) there shall be no more than eight (8) Interest Periods
outstanding at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section
4.1(a) with respect to the Loans (the "Applicable Margin") shall:
(i) for the period commencing on the Closing Date and
ending on the date immediately preceding the initial Adjustment Date (as
hereinafter defined), be 1.625% with respect to LIBOR Rate Loans and 0.375%
with respect to Base Rate Loans and Swingline Loans;
(ii) upon the initial Adjustment Date and at all times
thereafter, be determined by reference to the Adjusted Leverage Ratio in
accordance with the following charts:
<TABLE>
<CAPTION>
Adjusted
Leverage Applicable Margin Per Annum
Level Ratio During Revolving Credit Period
- ----- ----- LIBOR Rate Base Rate
---------------------------------
<S> <C> <C> <C>
1 Greater than or equal to 3.0 to 1.00 2.000% 0.750%
2 Less than 3.0 to 1.0 but greater than
or equal to 2.50 to 1.0 1.875% 0.625%
3 Less than 2.5 to 1.0 but greater than
or equal to 2.0 to 1.0 1.750% 0.500%
4 Less than 2.0 to 1.0 but greater than
or equal to 1.50 to 1.0 1.625% 0.375%
5 Less than 1.50 to 1.0 but greater than
or equal to 1.0 to 1.0 1.500% 0.250%
6 Less than 1.0 to 1.0 1.250% 0.000%
</TABLE>
25
<PAGE> 31
<TABLE>
<CAPTION>
Adjusted
Leverage Applicable Margin Per Annum
Level Ratio During Term-Out Period
- ----- ----- LIBOR Rate Base Rate
----------------------------------
<S> <C> <C> <C>
1 Greater than or equal to 3.0 to 1.00 2.500% 1.250%
2 Less than 3.0 to 1.0 but greater than
or equal to 2.50 to 1.0 2.375% 1.125%
3 Less than 2.5 to 1.0 but greater than
or equal to 2.0 to 1.0 2.250% 1.000%
4 Less than 2.0 to 1.0 but greater than
or equal to 1.50 to 1.0 2.125% 0.875%
5 Less than 1.50 to 1.0 but greater than
or equal to 1.0 to 1.0 2.000% 0.750%
6 Less than 1.0 to 1.0 1.750% 0.500%
</TABLE>
Adjustments, if any, in the Applicable Margin shall be made by the
Administrative Agent on the tenth (10th) Business Day (the "Adjustment Date")
after receipt by the Administrative Agent of financial statements for the
Borrower and its Subsidiaries delivered under Section 7.1(a) or (b), as
applicable, and the accompanying Officer's Compliance Certificate setting forth
the Adjusted Leverage Ratio of the Borrower and its Subsidiaries as of the most
recent fiscal quarter end. The Administrative Agent agrees to give the Borrower
and the Lenders notice of any adjustment in the Applicable Margin within two
(2) Business Days of such adjustment; provided, that the Administrative Agent's
failure to give such notice shall not result in any liability to the
Administrative Agent or in any way affect the validity of any such adjustment.
In the event the Borrower fails to deliver such financial statements and
certificate within the time required by Sections 7.1(a) and 7.2 hereof, the
Applicable Margin shall be the highest Applicable Margin set forth above until
the delivery of such financial statements and certificate unless at such time
the outstanding principal balance of the Loans are bearing interest at the
"default rate" set forth in Section 4.1(d) below in which case the Applicable
Margin shall not be increased pursuant to this sentence.
(d) Default Rate. Subject to Section 11.3, at the discretion of the
Administrative Agent and Required Lenders, upon the occurrence and during the
continuance of an Event of Default, (i) the Borrower shall no longer have the
option to request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall
bear interest at a rate per annum two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans until the end of the applicable Interest Period
and thereafter at a rate equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans, and (iii) all outstanding Base Rate Loans and
Swingline Loans shall bear interest at a rate per annum equal to two percent
(2%) in excess of the rate then applicable to Base Rate Loans and Swingline
Loans, as applicable. Interest shall continue to accrue on the Notes after the
filing by or against the Borrower
26
<PAGE> 32
of any petition seeking any relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
and Swingline Loan shall be payable in arrears on the last Business Day of each
calendar quarter commencing September 30, 1998; and interest on each LIBOR Rate
Loan shall be payable on the last day of each Interest Period applicable
thereto, and if such Interest Period extends over three (3) months, at the end
of each three (3) month interval during such Interest Period. All interest
rates, fees and commissions provided hereunder shall be computed on the basis
of a 360-day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the
maximum rate permitted by Applicable Law and the Lenders shall at the
Administrative Agent's option (i) promptly refund to the Borrower any interest
received by Lenders in excess of the maximum lawful rate or (ii) shall apply
such excess to the principal balance of the Obligations. It is the intent
hereof that the Borrower not pay or contract to pay, and that neither the
Administrative Agent nor any Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrower under Applicable Law.
SECTION 4.2 Notice and Manner of Conversion or Continuation of Loans.
Provided that no Event of Default has occurred and is then continuing, the
Borrower shall have the option to (a) convert at any time all or any portion of
its outstanding Base Rate Loans in an aggregate principal amount equal to
$5,000,000 or any whole multiple of $1,000,000 in excess thereof into one or
more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i)
convert all or any part of its outstanding LIBOR Rate Loans in an aggregate
principal amount equal to $1,000,000 or a whole multiple of $250,000 in excess
thereof into Base Rate Loans or (ii) continue such LIBOR Rate Loans as LIBOR
Rate Loans. Whenever the Borrower desires to convert or continue Loans as
provided above, the Borrower shall give the Administrative Agent irrevocable
prior written notice in the form attached as Exhibit E (a "Notice of
Conversion/ Continuation") not later than 11:00 a.m. (Charlotte time) three (3)
Business Days before the day on which a proposed conversion or continuation of
such Loan is to be effective specifying (A) the Loans to be converted or
continued, and, in the case of any LIBOR Rate Loan to be converted or
continued, the last day of the Interest Period therefor, (B) the effective date
of such conversion or continuation (which shall be a Business Day), (C) the
principal amount of such Loans to be converted or continued, and (D) the
Interest Period to be applicable to such converted or continued LIBOR Rate
Loan. The Administrative Agent shall promptly notify the Lenders of such Notice
of Conversion/Continuation.
27
<PAGE> 33
SECTION 4.3 Fees.
(a) Commitment Fee. Commencing on the Closing Date and continuing
through but excluding the Revolving Termination Date, the Borrower shall pay to
the Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee at a rate per annum equal to the rate set forth below (the
"Commitment Fee Rate") on the average daily unused portion of the Aggregate
Commitment; provided, that the amount of outstanding Swingline Loans shall not
be considered usage of the Aggregate Commitment for the purpose of calculating
such commitment fee. The commitment fee shall be payable in arrears on the last
Business Day of each calendar quarter during the Revolving Credit Period
commencing September 30, 1998, and on the Revolving Credit Termination Date.
Such commitment fee shall be distributed by the Administrative Agent to the
Lenders pro rata in accordance with the Lenders' respective Commitment
Percentages. The Commitment Fee Rate provided for above shall equal the
percentage set forth below corresponding to the Level at which the Applicable
Margin is determined in accordance with section 4.1(c). Any change in the
applicable Level at which Applicable Margin is determined shall result in a
corresponding and simultaneous change in the Commitment Fee Rate.
<TABLE>
<CAPTION>
Level Commitment Fee Rate
----- -------------------
<S> <C>
1 0.500%
2 0.425%
3 0.375%
4 0.350%
5 0.325%
6 0.300%
</TABLE>
(b) Administrative Agent's and Other Fees. In order to compensate the
Administrative Agent for structuring and syndicating the Loans and for its
obligations hereunder, the Borrower agrees to pay to the Administrative Agent,
for its account, the fees set forth in the separate fee letter agreement
executed by the Borrower and the Administrative Agent dated July 9, 1998.
SECTION 4.4 Manner of Payment. Each payment by the Borrower on account
of the principal of or interest on the Loans or of any fee, commission or other
amounts (including the Reimbursement Obligation) payable to the Lenders under
this Agreement or any Note shall be made not later than 1:00 p.m. (Charlotte
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of
the Lenders (other than as set forth below) pro rata in accordance with their
respective Commitment Percentages (except as specified below), in Dollars, in
immediately available funds and shall be made without any set-off, counterclaim
or deduction whatsoever. Any payment received after such time but before 2:00
p.m. (Charlotte time) on such day shall be deemed a payment on such date for
the purposes of Section 11.1, but for all other purposes shall be deemed to
have been made on the next succeeding Business Day. Any payment received after
2:00 p.m. (Charlotte time) shall be deemed
28
<PAGE> 34
to have been made on the next succeeding Business Day for all purposes. Upon
receipt by the Administrative Agent of each such payment, the Administrative
Agent shall distribute to each Lender at its address for notices set forth
herein its pro rata share of such payment in accordance with such Lender's
Commitment Percentage (except as specified below) and shall wire advice of the
amount of such credit to each Lender. Each payment to the Administrative Agent
of the Issuing Lender's fees or L/C Participants' commissions shall be made in
like manner, but for the account of the Issuing Lender or the L/C Participants,
as the case may be. Each payment to the Administrative Agent of Administrative
Agent's fees or expenses shall be made for the account of the Administrative
Agent and any amount payable to any Lender under Sections 4.8, 4.9, 4.10, 4.11
or 13.2 shall be paid to the Administrative Agent for the account of the
applicable Lender. Subject to Section 4.1(b)(ii) if any payment under this
Agreement, any Note or any other Loan Document shall be specified to be made
upon a day which is not a Business Day, it shall be made on the next succeeding
day which is a Business Day and such extension of time shall in such case be
included in computing any interest if payable along with such payment.
SECTION 4.5 Crediting of Payments and Proceeds. In the event that the
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrower hereunder, then to all indemnity obligations then
due and payable by the Borrower hereunder, then to all Administrative Agent's
and Issuing Lender's fees then due and payable, then to all commitment and
other fees and commissions then due and payable, then to accrued and unpaid
interest on the Swingline Note to the Swingline Lender, then to the principal
amount outstanding under the Swingline Note to the Swingline Lender, then to
accrued and unpaid interest on the Revolving Credit Notes, the Reimbursement
Obligation and any termination payments due in respect of a Hedging Agreement
with any Lender (which such Hedging Agreement is permitted or required
hereunder) (pro rata in accordance with all such amounts due), then to the
principal amount of the Revolving Credit Notes and Reimbursement Obligation and
then to the cash collateral account described in Section 11.2(b) hereof to the
extent of any L/C Obligations then outstanding, in that order.
SECTION 4.6 Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations owing to it,
or interest thereon, or if any Lender shall at any time receive any collateral
in respect to the Obligations owing to it (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
the Obligations owing to such other Lender, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders such portion
of each such other Lender's Extensions of Credit, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Extensions of Credit may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
29
<PAGE> 35
SECTION 4.7 Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Administrative Agent. The obligations of the Lenders
under this Agreement to make the Loans and issue or participate in Letters of
Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.3(b) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such amount not made available by such Lender in
accordance with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section shall
be conclusive, absent manifest error. If such Lender's Commitment Percentage of
such borrowing is not made available to the Administrative Agent by such Lender
within three (3) Business Days of such borrowing date, the Administrative Agent
shall be entitled to recover such amount made available by the Administrative
Agent with interest thereon at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrower. The failure of any Lender to make
available its Commitment Percentage of any Loan requested by the Borrower shall
not relieve it or any other Lender of its obligation, if any, hereunder to make
its Commitment Percentage of such Loan available on the borrowing date, but no
Lender shall be responsible for the failure of any other Lender to make its
Commitment Percentage of such Loan available on the borrowing date.
SECTION 4.8 Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with respect
to any Interest Period the Administrative Agent shall reasonably determine
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in eurodollars, in the applicable amounts are not
being quoted via Telerate Page 3750 or offered to the Administrative Agent or
such Lender for such Interest Period, then the Administrative Agent shall
forthwith give notice thereof to the Borrower. Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist (which the Administrative Agent agrees to do; provided, that the
Administrative Agent shall have no liability for any failure to do so), the
obligation of the Lenders to make LIBOR Rate Loans and the right of the
Borrower to convert any Loan to or continue any Revolving Credit Loan as a
LIBOR Rate Loan shall be suspended, and the Borrower shall repay in full (or
cause to be repaid in full) the then outstanding principal amount of each such
LIBOR Rate Loan together with accrued interest thereon, on the last day of the
then current Interest Period applicable to such LIBOR Rate Loan or convert the
then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate
Loan as of the last day of such Interest Period.
30
<PAGE> 36
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give
notice to the Borrower and the other Lenders. Thereafter, until the
Administrative Agent notifies the Borrower that such circumstances no longer
exist (which the Administrative Agent agrees to do; provided, that the
Administrative Agent shall have no liability for any failure to do so), (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of the
Borrower to convert any Revolving Credit Loan or continue any Revolving Credit
Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may
select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then current
Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR
Rate Loan shall immediately be converted to a Base Rate Loan for the remainder
of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of,
or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any of the Lenders (or any of their respective Lending Offices)
with any request or directive (whether or not having the force of law) of such
Governmental Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect to
any Note, Letter of Credit or Application or shall change the basis of taxation
of payments to any of the Lenders (or any of their respective Lending Offices)
of the principal of or interest on any Note, Letter of Credit or Application or
any other amounts due under this Agreement in respect thereof (except for
changes in the rate of or additional taxes imposed on or measured by the
overall net income of any of the Lenders or any of their respective Lending
Offices imposed by the jurisdiction in which such Lender is organized or is or
should be qualified to do business or such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System but excluding any such reserve included in the
definition of Eurodollar Reserve Requirements), special deposit, insurance or
capital or similar requirement against assets of, deposits with or for the
account of, or credit extended by any of the Lenders (or any of their
respective Lending Offices) or shall impose on any of the Lenders (or any of
their respective Lending Offices) or the foreign exchange and interbank markets
any other condition affecting any Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or
31
<PAGE> 37
amount of any sum received or receivable by any of the Lenders under this
Agreement or under the Notes in respect of a LIBOR Rate Loan or Letter of
Credit or Application, then such Lender shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify the
Borrower of such fact and demand compensation therefor and, within fifteen (15)
days after such notice by the Administrative Agent, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
Lenders for such increased cost or reduction. Each Lender agrees to notify the
Borrower of any event occurring after the Closing Date entitling such Lender to
compensation under any of the preceding subsections of this Section as promptly
as practicable; provided, that except as otherwise limited by the next
sentence, the failure of any Lender to give such notice shall not result in any
liability to such Lender or release the Borrower from any of its obligations
hereunder. A Lender shall only be entitled to compensation under any of the
preceding subsections of this Section for events occurring during the 120-day
period ending on the date the Borrower receives the notice described in the
immediately preceding sentence. Such Lender agrees to furnish to the Borrower a
certificate setting forth the basis and amount of each request by such Lender
for compensation under this Section, which certificate shall be prima facie
evidence of the matters stated therein. Determinations by any Lender of the
effect of any of the events described in this subsection shall be made on a
reasonable basis and in good faith, based upon the assumption that such Lender
funded its Commitment Percentage of the LIBOR Rate Loans in the London
interbank market, and using any reasonable attribution or averaging methods
which such Lender deems appropriate and practical.
(d) Eurodollar Reserve Requirements. In the event that any Lender
shall determine at any time that by reason of Regulation D, such Lender is
required to maintain Eurodollar Reserve Requirements during any period that it
has any LIBOR Rate Loans outstanding, then such Lender shall promptly notify
the Borrower by written notice (or telephonic notice promptly confirmed in
writing) specifying the additional amounts reasonably determined by the Lender
to be required to indemnify such Lender against the cost of maintaining such
Eurodollar Reserve Requirements (such written notice to provide a computation
of such additional amounts) and the Borrower shall directly pay to such Lender
such specified amounts as additional interest.
SECTION 4.9 Indemnity. The Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired
to effect, fund or maintain any Revolving Credit Loan (a) as a consequence of
any failure by the Borrower to make any payment when due of any amount due
hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the
Borrower to borrow on a date specified therefor in a Notice of Borrowing or
Notice of Continuation/Conversion or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor other than as a result of Section 4.8(c)(ii). Any
Lender requesting indemnification under this Section shall furnish to the
Borrower a certificate setting forth the basis and amount of such request,
which certificate shall be prima facie evidence of the matters stated therein.
Determinations by any Lender of the amount of any claim for indemnification
under this Section shall be made on a reasonable basis and in good faith, based
upon the assumption that such Lender funded its Commitment Percentage of the
LIBOR Rate Loans in the London interbank market, and using any reasonable
attribution or averaging methods which such Lender deems appropriate and
practical.
32
<PAGE> 38
SECTION 4.10 Capital Requirements. If either (a) the introduction of,
or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request issued after the date hereof from any
central bank or comparable agency or other Governmental Authority (whether or
not having the force of law), has or would have the effect of reducing the rate
of return on the capital of, or has affected or would affect the amount of
capital required to be maintained by, any Lender or any corporation controlling
such Lender as a consequence of, or with reference to the Commitments and other
commitments of this type, below the rate which the Lender or such other
corporation could have achieved but for such introduction, change or
compliance, then within five (5) Business Days after written demand by any such
Lender, the Borrower shall pay to such Lender from time to time as specified by
such Lender additional amounts sufficient to compensate such Lender or other
corporation for such reduction. Any Lender requesting compensation under this
Section shall furnish to the Borrower a certificate setting forth the basis and
amount of such request, which certificate shall be prima facie evidence of the
matters stated therein. Determinations by any Lender of the amount of any claim
for compensation under this Section shall be made on a reasonable basis and in
good faith.
SECTION 4.11 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
United States of America, any political subdivision thereof, the jurisdiction
of such Lender's Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note or Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 4.11) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
amount such party would have received had no such deductions been made, (B) the
Borrower shall make such deductions, (C) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law, and (D) the Borrower shall deliver to the Administrative Agent
evidence of such payment to the relevant taxing authority or other authority in
the manner provided in Section 4.11(d).
(b) Stamp and Other Taxes. In addition, the Borrower shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the
33
<PAGE> 39
Letters of Credit, the other Loan Documents, or the perfection of any rights or
security interest in respect thereto (hereinafter referred to as "Other
Taxes").
(c) Indemnity. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence
of payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
the Borrower, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any United States federal income taxes, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be, to establish an exemption from United States backup
withholding taxes. Each such Lender further agrees to deliver to the Borrower,
with a copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms or manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, certifying in the case of a Form
1001 or 4224 that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders such forms
inapplicable or the exemption to which such forms relate unavailable and such
Lender notifies the Borrower and the Administrative Agent that it is not
entitled to receive payments without deduction or withholding of United States
federal income taxes) and, in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 4.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
(g) Change of Lending Office, etc. Any Lender claiming additional
amounts payable pursuant to this Section 4.11 shall use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
file any certificate or document requested by the Borrower or to
34
<PAGE> 40
change the jurisdiction of its Lending Office if the making of such filing or
change would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue and would not, in the judgment of such
Lender, be disadvantageous to such Lender.
(h) Tax Credits. In the event that an additional payment is made under
Section 4.11(a) or (c) for the account of any Lender and such Lender receives
or is granted a credit against or release or remission for, or repayment of,
any tax paid or payable by it in respect of or calculated with reference to the
deduction or withholding giving rise to such payment, such Lender shall, to the
extent that it can do so without prejudice to the retention of the amount of
such credit, relief, remission or repayment, pay to the Borrower such amount as
is attributable to such deduction or withholding as will leave such Lender
(after such payment) in no better or worse position than it would have been in
if the Borrower had not been required to make such deduction or withholding.
SECTION 4.12 Affected Lenders. If any Lender requests compensation
pursuant to Section 4.8(c), 4.8(d), 4.10 or 4.11, or the obligation of the
Lenders to make LIBOR Rate Loans or to continue, or to convert Base Rate Loans
into, LIBOR Rate Loans shall be suspended pursuant to Section 4.8(a) or (b) due
to an event affecting any Lender, then, so long as there does not then exist
any Default or Event of Default, the Borrower may either (a) demand that such
Lender (the "Affected Lender"), and upon such demand the Affected Lender shall
promptly, assign its Commitment to another financial institution subject to and
in accordance with the provisions of Section 13.10(b) (it being understood that
such Affected Lender shall have no obligation to find a replacement lender) for
a purchase price equal to the aggregate principal balance of Loans then owing
to the Affected Lender plus any accrued but unpaid interest thereon, accrued
but unpaid fees and any other amounts owing to the Affected Lender hereunder,
or (b) pay to the Affected Lender the aggregate principal balance of Loans then
owing to the Affected Lender plus any accrued but unpaid interest thereon,
accrued but unpaid fees and any other amounts owing to the Affected Lender
hereunder, whereupon the Affected Lender shall no longer be a party hereto or
have any rights or obligations hereunder or under any of the other Loan
Documents and the Aggregate Commitment shall immediately and permanently be
reduced by an amount equal to the amount of the Affected Lender's Commitment.
The Administrative Agent shall cooperate in effectuating the replacement of an
Affected Lender under this Section, but at no time shall the Administrative
Agent be obligated in any way whatsoever to initiate any such replacement. The
exercise by the Borrower of its rights under this Section shall be at the
Borrower's sole cost and expense (including with respect to the assignment fee
required pursuant to Section 13.10(b)(v)), and at no cost or expense to the
Administrative Agent, the Affected Lender or any of the other Lenders.
SECTION 4.13 Security. The Obligations of the Borrower shall be
guaranteed as provided in the Guaranty Agreement and secured as provided in the
Pledge Agreement.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street, Suite
4200, Charlotte, North
35
<PAGE> 41
Carolina 28202 at 10:00 a.m. on August 26, 1998, or on such other date as the
parties hereto shall mutually agree.
SECTION 5.2 Conditions to Closing, Initial Loans and Letters of
Credit. The obligation of the Lenders to close this Agreement and to make the
initial Loan or issue the initial Letter of Credit is subject to the
satisfaction of each of the following conditions:
(a) Executed Loan Documents. This Agreement, the Revolving Credit
Notes, the Swingline Note, the Guaranty Agreement and the Pledge Agreement
shall have been duly authorized, executed and delivered to the Administrative
Agent by the parties thereto, shall be in full force and effect and no Default
shall exist thereunder, and the Borrower shall have delivered original
counterparts thereof to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officers's Certificate of the Borrower. The
Administrative Agent shall have received a certificate from a Responsible
Officer, in form and substance satisfactory to the Administrative Agent, to the
effect that all representations and warranties of the Borrower contained in
this Agreement and the other Loan Documents are true, correct and complete in
all material respects; that the Borrower is not in violation of any of the
covenants contained in this Agreement and the other Loan Documents; that, after
giving effect to the transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing; and that the Borrower has
satisfied each of the closing conditions.
(ii) Certificate of Secretary of the Borrower and each
Guarantor. The Administrative Agent shall have received a certificate of the
secretary or assistant secretary of the Borrower and each Guarantor certifying
as to the incumbency and genuineness of the signature of each officer of the
Borrower or such Guarantor executing Loan Documents to which it is a party and
certifying that attached thereto is a true, correct and complete copy of (A)
the articles of incorporation of the Borrower or such Guarantor and all
amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation, (B) the bylaws of
the Borrower or such Guarantor as in effect on the date of such certifications,
(C) resolutions duly adopted by the Board of Directors of the Borrower or such
Guarantor authorizing the borrowings contemplated hereunder and the execution,
delivery and performance of this Agreement and the other Loan Documents to
which it is a party, and (D) each certificate required to be delivered pursuant
to Section 5.2(b)(iii).
(iii) Certificates of Good Standing. The Administrative
Agent shall have received long-form certificates as of a recent date of the
good standing of the Borrower and each Guarantor under the laws of its
jurisdiction of organization and, to the extent requested by the Administrative
Agent, each other jurisdiction where the Borrower or such Guarantor is
qualified to do business and a certificate of the relevant taxing authorities
of such jurisdictions certifying that such Person has filed required tax
returns and owes no delinquent taxes.
(iv) Opinions of Counsel. The Administrative Agent shall
have received favorable opinions of counsel to the Borrower and Guarantors
addressed to the Administrative
36
<PAGE> 42
Agent and the Lenders with respect to the Borrower, the Guarantors, the Loan
Documents and such other matters as the Lenders shall reasonably request.
(v) Tax Forms. The Administrative Agent shall have
received on behalf of the Borrower the United States Internal Revenue Service
forms required by Section 4.11(e) hereof.
(c) Collateral.
(i) Filings and Recordings. Allfilings and recordations
that are necessary to perfect the security interests of the Administrative
Agent for the benefit of the Lenders in the collateral described in the Pledge
Agreement shall have been received by the Administrative Agent and the
Administrative Agent shall have received evidence satisfactory to the
Administrative Agent that upon such filings and recordations such security
interests constitute valid and perfected first priority Liens thereon.
(ii) Pledged Collateral. The Administrative Agent shall
have received original stock certificates or other certificates evidencing the
capital stock or other ownership interests pledged pursuant to the Pledge
Agreement, together with an undated stock power for each such certificate duly
executed in blank by the registered owner thereof.
(d) Consents; Defaults.
(i) Governmental and Third Party Approvals. The Borrower
shall have obtained all necessary approvals, authorizations and consents, if
any are required, of any Person, any shareholder of the Borrower and of all
Governmental Authorities and courts having jurisdiction with respect to the
transactions contemplated by this Agreement and the other Loan Documents.
(ii) Permits and Licenses. All permits and licenses,
including permits and licenses required under Applicable Laws, necessary to the
conduct of business by the Borrower and its Subsidiaries shall have been
obtained and remain in full force and effect.
(iii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any Governmental Authority to enjoin, restrain, or prohibit,
or to obtain substantial damages in respect of, or which is related to or
arises out of this Agreement or the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby, or which, in the
Administrative Agent's discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement and such other Loan Documents.
(iv) No Material Adverse Change. Since December 28, 1997,
there shall not have occurred any event, condition or state of facts that could
reasonably be expected to have a Material Adverse Effect.
(v) No Event of Default. No Default or Event of Default
shall have occurred and be continuing.
37
<PAGE> 43
(e) Financial Matters.
(i) Financial Statements. The Administrative Agent shall
have received recent annual and interim financial statements and other
financial information with respect to the Borrower and its Subsidiaries
prepared in accordance with GAAP. Without limitation of the foregoing, the
Administrative Agent and each Lender shall have received audited financial
statements for the Fiscal Year ended December 28, 1997 and unaudited financial
statements for the six month period ending June 28, 1998.
(ii) Financial Condition Certificate. The Borrower shall
have delivered to the Administrative Agent a certificate, in form and substance
satisfactory to the Administrative Agent, and certified as accurate by a
Responsible Officer, that (A) the Borrower and each of its Subsidiaries are
Solvent, (B) the payables of the Borrower and each Guarantor are current and
not more than ninety (90) days past due the invoice date, (C) attached thereto
is a pro forma balance sheet of the Borrower and its Subsidiaries setting forth
on a pro forma basis the financial condition of the Borrower and its
Subsidiaries on a Consolidated basis as of the Closing Date, reflecting on a
pro forma basis the effect of the transactions contemplated herein, including
all fees and expenses in connection therewith, and evidencing compliance on a
pro forma basis with the covenants contained in Articles IX and X hereof, (D)
attached thereto are the financial projections previously delivered to the
Administrative Agent representing the good faith opinions of the Borrower and
senior management thereof as to the projected results contained therein and (E)
attached thereto is a calculation of the Applicable Margin pursuant to Section
4.1(c).
(iii) Payment at Closing. The Borrower shall have paid the
fees set forth or referenced in Section 4.3 and any other accrued and unpaid
fees or commissions due hereunder (including, without limitation, legal fees
and expenses) to the Administrative Agent and Lenders, and to any other Person
such amount as may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of any of the
Loan Documents.
(f) Miscellaneous.
(i) Notice of Borrowing. The Administrative Agent shall
have received a Notice of Borrowing from the Borrower in accordance with
Section 2.3(a), and a Notice of Account Designation specifying the account or
accounts to which the proceeds of any Loans made on and after the Closing Date
are to be disbursed.
(ii) Proceedings and Documents. All opinions, certificates
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Lenders. The Lenders shall have received copies of all other instruments
and other evidence as the Lenders may reasonably request, in form and substance
satisfactory to the Lenders, with respect to the transactions contemplated by
this Agreement and the taking of all actions in connection therewith.
38
<PAGE> 44
(iii) Existing Facility. On the Closing Date, all
revolving credit loans under the Existing Facility (the "Existing Revolving
Credit Loans") shall be deemed Revolving Credit Loans hereunder and such
Revolving Credit Loans shall be reallocated to each Lender according to the
Commitment Percentage of such Lender hereunder, (ii) there shall have been paid
in cash in full all accrued but unpaid interest due on the Existing Revolving
Credit Loans to but excluding the Closing Date, (iii) there shall have been
paid in cash in full all accrued but unpaid fees due under the Existing
Facility to but excluding the Closing Date and all other amounts, costs and
expenses then owing to any of the lenders and/or the agent under the Existing
Facility and (iv) all outstanding revolving credit notes issued by the
borrowers to the lenders under the Existing Facility shall be deemed canceled
and the originally executed copies thereof shall be promptly returned to the
Administrative Agent who shall forward such revolving credit notes to the
Borrower.
(iv) Due Diligence and Other Documents. The Borrower shall
have delivered to the Administrative Agent such other documents, certificates
and opinions as the Administrative Agent may reasonably request, certified by a
secretary or assistant secretary of the Borrower as a true and correct copy
thereof.
SECTION 5.3 Conditions to All Loans and Letters of Credit. The
obligations of the Lenders to make any Loan or the Issuing Lender to issue any
Letter of Credit is subject to the satisfaction of the following conditions
precedent on the relevant borrowing or issue date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI shall be true and
correct in all material respects on and as of such borrowing or issuance date
with the same effect as if made on and as of such date except to the extent
that such representations and warranties expressly relate to an earlier date
(in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date).
(b) No Existing Default. No Default or Event of Default shall have
occurred and be continuing hereunder (i) on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date or (ii)
on the issue date with respect to such Letter of Credit or after giving effect
to such Letters of Credit on such date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 6.1 Representations and Warranties. To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make Loans and the Issuing Lender to issue Letters of Credit, the
Borrower hereby represents and warrants to the Administrative Agent and Lenders
that:
(a) Organization; Power; Qualification. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its
39
<PAGE> 45
incorporation or formation, has the power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be
conducted and is duly qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification and authorization, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect. The jurisdictions in which the Borrower and its Subsidiaries
are organized and qualified to do business as of the Closing Date are described
on Schedule 6.1(a).
(b) Ownership. Each Subsidiary of the Borrower as of the Closing Date
is listed on Schedule 6.1(a). As of the Closing Date, the capitalization of the
Borrower and its Subsidiaries consists of the number of shares, authorized,
issued and outstanding, of such classes and series, with or without par value
(or in the case of Subsidiaries which are not corporations, comparable
information regarding equity interests therein) described on Schedule 6.1(a).
All outstanding shares or other equity interests have been duly authorized and
validly issued and, with respect to capital stock, are fully paid and
nonassessable. The holders of the capital stock or other equity interests of
the Subsidiaries of the Borrower as of the Closing Date, are and the amount of
capital stock or other equity interest owned by each as of the Closing Date is
described on Schedule 6.1(a). As of the Closing Date, there are no outstanding
stock purchase warrants, subscriptions, options, securities, instruments or
other rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of capital
stock or other equity interest of the Borrower or its Subsidiaries, except as
described on Schedule 6.1(a).
(c) Authorization of Agreement, Loan Documents and Borrowing. Each of
the Borrower and its Subsidiaries has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their respective terms. This
Agreement and each of the other Loan Documents have been duly executed and
delivered by the duly authorized officers of the Borrower and each of its
Subsidiaries party thereto, and each such document constitutes the legal, valid
and binding obligation of the Borrower or its Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar state
or federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of equitable
remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance by the Borrower and its
Subsidiaries of the Loan Documents to which each such Person is a party, in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) require any Governmental Approval or
violate any Applicable Law relating to the Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default under the
articles of incorporation, bylaws or other organizational documents of the
Borrower or any of its Subsidiaries or any indenture, agreement or other
instrument to which such Person is a party or by which any of its properties
may be bound or any Governmental Approval relating to such Person, or (iii)
result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by such Person other
than Liens arising under the Loan Documents.
40
<PAGE> 46
(e) Compliance with Law; Governmental Approvals. Each of the Borrower
and its Subsidiaries (i) has all Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, except for such Governmental Approvals the absence of
which could not reasonably be expected to have a Material Adverse Effect and
(ii) is in compliance with each Governmental Approval applicable to it and in
compliance with all other Applicable Laws relating to it or any of its
respective properties, except in each case where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.
(f) Tax Returns and Payments. Except as disclosed to the
Administrative Agent and the Lenders in writing on or prior to the Closing
Date, each of the Borrower and its Subsidiaries has duly filed or caused to be
filed all material federal, state, local and other tax returns required by
Applicable Law to be filed, and has paid, or made adequate provision for the
payment of, all material federal, state, local and other taxes, assessments and
governmental charges or levies upon it and its property, income, profits and
assets which are due and payable except any nonpayment permitted under Section
8.5. No Governmental Authority has asserted any Lien or other material claim
against the Borrower or Subsidiary thereof with respect to unpaid taxes which
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of federal, state, local and other taxes for all Fiscal Years and
portions thereof since the organization of the Borrower and its Subsidiaries
are in the judgment of the Borrower adequate, and the Borrower does not
anticipate any additional taxes or assessments for any of such years, the
result of which could reasonably be expected to have a Material Adverse Effect.
(g) Intellectual Property Matters. Except for matters existing on the
Closing Date and set forth on Schedule 6.1(g), each of the Borrower and its
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business, except where the failure to so own or possess such rights
could not reasonably be expected to have a Material Adverse Effect. No event
has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such rights, and, except for
matters existing on the Closing Date and set forth on Schedule 6.1(g), neither
the Borrower nor any Subsidiary thereof is liable to any Person for
infringement under Applicable Law with respect to any such rights as a result
of its business operations, the result of which could reasonably be expected to
have a Material Adverse Effect.
(h) Environmental Matters. Except for matters which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect,
(i) The properties of the Borrower and its Subsidiaries do
not contain, and to their knowledge have not previously contained, any
Hazardous Materials in amounts or concentrations which (A) constitute or
constituted a violation of applicable Environmental Laws or (B) could give rise
to liability under applicable Environmental Laws;
41
<PAGE> 47
(ii) Such properties and all operations conducted in
connection therewith are in compliance, and have been in compliance, with all
applicable Environmental Laws, and there is no contamination by Hazardous
Materials at, under or about such properties or such operations which could
interfere with the continued operation of such properties or impair the fair
saleable value thereof;
(iii) Neither the Borrower nor any Subsidiary thereof has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
applicable Environmental Laws with regard to any of their properties or the
operations conducted in connection therewith, nor does the Borrower or any
Subsidiary thereof have knowledge or reason to believe that any such notice
will be received or is being threatened;
(iv) Hazardous Materials have not been transported or
disposed of from the properties of the Borrower and its Subsidiaries in
violation of, or in a manner or to a location which could give rise to
liability under, Environmental Laws, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of such
properties in violation of, or in a manner that could give rise to liability
under, any applicable Environmental Laws;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Borrower or any
of its Subsidiaries, threatened, under any applicable Environmental Law to
which the Borrower or any Subsidiary thereof is or will be named as a party
with respect to such properties or operations conducted in connection
therewith, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any applicable Environmental Law with respect to
such properties or such operations; and
(vi) There has been no release, or to the best knowledge of
the Borrower and its Subsidiaries , the threat of release, of Hazardous
Materials at or from such properties, in violation of or in amounts or in a
manner that could give rise to liability under applicable Environmental Laws.
(i) ERISA. Except for matters which, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect:
(i) As of the Closing Date, neither the Borrower nor any
ERISA Affiliate maintains or contributes to, or has any obligation under, (A)
any Pension Plans or Multiemployer Plans or (B) any Employee Benefit Plans
intended to comply with Section 401(a) of the Code other than those identified
on Schedule 6.1(i);
(ii) the Borrower and each ERISA Affiliate is in
compliance in all material respects with all applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans except for any required amendments for which the
remedial amendment period as defined in Section 401(b) of the Code has not yet
expired. Each Employee Benefit Plan that is intended to be qualified under
Section 401(a)
42
<PAGE> 48
of the Code either (x) has been determined by the Internal Revenue Service to
be so qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer Plan
or (y) shall be submitted (within the applicable remedial amendment period, as
described in Section 401(b) of the Internal Revenue Code) to the Internal
Revenue Service for determination that it is so qualified, and each trust
related to such plan shall also be timely submitted to the Internal Revenue
Service for a determination that it is exempt under Section 501(a) of the
Internal Revenue Code, and any necessary amendments required by the Internal
Revenue Service in connection with any such submissions shall be made in a
timely manner;
(iii) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Borrower or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and owing
as required by Section 412 of the Code, Section 302 of ERISA or the terms of
any Pension Plan prior to the due dates of such contributions under Section 412
of the Code or Section 302 of ERISA, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate has, (A)
incurred any liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and unpaid,
(B) failed to make a required contribution or payment to a Multiemployer Plan,
or (C) failed to make a required installment or other required payment under
Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably
expected to occur;
(vi) No proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of the Borrower after due inquiry,
threatened concerning or involving any (A) employee welfare benefit plan (as
defined in Section 3(1) of ERISA) currently maintained or contributed to by the
Borrower or (B) Pension Plan maintained by the Borrower; and
(vii) The Borrower has not engaged in a nonexempt
prohibited transaction described in ERISA Section 406 or Code Section 4975 of
the Code.
(j) Margin Stock. Neither the Borrower nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as
each such term is defined or used in Regulation U of the Board of Governors of
the Federal Reserve System). No part of the proceeds of any of the Loans or
Letters of Credit will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulation T, U or X of such Board of Governors.
43
<PAGE> 49
(k) Government Regulation. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither the Borrower nor any Subsidiary thereof is, or
after giving effect to any Extension of Credit will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its ability to
incur or consummate the transactions contemplated hereby.
(l) Material Contracts. Schedule 6.1(l) sets forth a complete and
accurate list of all Material Contracts of the Borrower and its Subsidiaries in
effect as of the Closing Date not listed on any other Schedule hereto; other
than as set forth in Schedule 6.1(l), each such Material Contract is, and after
giving effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect in accordance with the terms
thereof. The Borrower and its Subsidiaries have delivered to the Administrative
Agent a true and complete copy of each Material Contract required to be listed
on Schedule 6.1(l) or any other Schedule hereto.
(m) Employee Relations. Each of the Borrower and its Subsidiaries has
an adequate work force in place and is not, as of the Closing Date, party to
any collective bargaining agreement nor has any labor union been recognized as
the representative of its employees. The Borrower knows of no pending,
threatened or contemplated strikes, work stoppage or other collective labor
disputes involving its employees or those of its Subsidiaries.
(n) Burdensome Provisions. Neither the Borrower nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect. The Borrower
and its Subsidiaries do not presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or regulations of
a Governmental Authority will be so burdensome as to have a Material Adverse
Effect.
(o) Financial Statements. The (i) audited Consolidated balance sheets
of the Borrower and its Subsidiaries as of December 28, 1997 and the related
statements of income and retained earnings and cash flows for the Fiscal Years
then ended and (ii) unaudited Consolidated balance sheet of the Borrower and
its Subsidiaries as of June 28, 1998 and related unaudited interim statements
of income and retained earnings, copies of which have been furnished to the
Administrative Agent and each Lender, are complete and correct and fairly
present in all material respects the assets, liabilities and financial position
of the Borrower and its Subsidiaries as at such dates, and the results of the
operations and changes of financial position for the periods then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP. The Borrower and its Subsidiaries
have no Debt, obligation or other unusual forward or long-term commitment which
is not fairly reflected in the foregoing financial statements or in the notes
thereto.
(p) No Material Adverse Change. Since December 28, 1997 (and with
reference back to such date only), there has been no material adverse change in
the properties, business, operations, prospects, or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a
44
<PAGE> 50
whole, and no event has occurred or condition arisen that could reasonably be
expected to have a Material Adverse Effect.
(q) Solvency. As of the Closing Date and after giving effect to each
Loan made or Letter of Credit issued hereunder, the Borrower and each of its
Subsidiaries will be Solvent.
(r) Titles to Properties. Each of the Borrower and its Subsidiaries
has such title to the real property owned by it as is necessary or desirable to
the conduct of its business and valid and legal title to all of its personal
property and assets, including, but not limited to, those reflected on the
balance sheets of the Borrower and its Subsidiaries referred to in Section
6.1(o), except those which have been disposed of by the Borrower or its
Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly permitted hereunder.
(s) Liens. None of the properties and assets of the Borrower or any
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
Section 10.3. No financing statement under the Uniform Commercial Code of any
state which names the Borrower or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which has not been
terminated, has been filed in any state or other jurisdiction and neither the
Borrower nor any Subsidiary thereof has signed any such financing statement or
any security agreement authorizing any secured party thereunder to file any
such financing statement, except (i) financing statements filed to perfect
those Liens permitted by Section 10.3 hereof and (ii) financing statements
which relate solely to operating leases which have been filed for precautionary
purposes.
(t) Debt and Contingent Obligations. Schedule 6.1(t) is a complete and
correct listing of all Debt and Contingent Obligations of the Borrower and its
Subsidiaries as of the Closing Date in excess of $250,000. The Borrower and its
Subsidiaries have performed and are in material compliance with all of the
terms of such Debt and Contingent Obligations and all instruments and
agreements relating thereto.
(u) Litigation. Except for matters existing as of the Closing Date and
set forth on Schedule 6.1(u), there are no actions, suits or proceedings
pending nor, to the knowledge of the Borrower, threatened against or in any
other way relating adversely to or affecting the Borrower or any Subsidiary
thereof or any of their respective properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority which, if
adversely determined, individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.
(v) Absence of Defaults. No event has occurred or is continuing which
(i) constitutes a Default or an Event of Default, or (ii) constitutes, or which
with the passage of time or giving of notice or both would constitute, a
default or event of default by the Borrower or any Subsidiary thereof under any
Material Contract or judgment, decree or order to which the Borrower or its
Subsidiaries is a party or by which the Borrower or its Subsidiaries or any of
their respective properties may be bound, which could reasonably be expected to
have a Material Adverse Effect or which would require the Borrower or any of
its Subsidiaries to make any payment thereunder in excess of $250,000 prior to
the scheduled maturity date therefor.
45
<PAGE> 51
(w) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of the Borrower or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all material respects to the extent
necessary to give the recipient a true and accurate knowledge of the subject
matter. No document furnished or written statement made to the Administrative
Agent or the Lenders by the Borrower or any Subsidiary thereof in connection
with the negotiation, preparation or execution of this Agreement or any of the
Loan Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of the Borrower or any of its Subsidiaries or omits or
will omit to state a fact necessary in order to make the statements contained
therein not materially misleading. The Borrower is not aware of any events or
circumstances which it has not disclosed in writing to the Administrative Agent
having a Material Adverse Effect, or insofar as the Borrower can now foresee,
could reasonably be expected to have a Material Adverse Effect.
(x) Minimum Adjusted EBITDA. As of the fiscal quarter ending June 28,
1998, Adjusted EBITDA for the period of four (4) consecutive fiscal quarters
ending on such date equals $28,040,000.
(y) Year 2000. (a) Each of the Borrower and its Material Subsidiaries
(i) has initiated a review and assessment of all areas of its business and
operations (including those affected by information received from suppliers and
vendors) that may be adversely affected by a Year 2000 Problem, (ii) has
developed or is in the process of developing a comprehensive and detailed
strategic plan to address its Year 2000 Problem and will, on a timely basis (but
in no event later than September 30, 1999), implement such plan and successfully
eliminate any potential Year 2000 Problem, which, if not eliminated, could
reasonably be expected to result in a Material Adverse Effect and (iii)
reasonably believes that the necessary expenditure of capital and resources to
eliminate any such Year 2000 Problem will not result in a Material Adverse
Effect.
(b) To the best knowledge of the Borrower (after due inquiry), each
material supplier, vendor and customer of each of the Borrower and its Material
Subsidiaries has eliminated, or will on a timely basis eliminate, its Year 2000
Problem.
(c) "Year 2000 Problem" shall mean, with respect to any Person, the
possibility that the computer applications and software programs used by such
Person in the operation of its business will be unable to effectively process
data including data fields requiring references to dates on and after January 1,
2000, and may experience or produce invalid or incorrect results or abnormal
operation related to or as a result of the occurrence of such dates.
SECTION 6.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VI and all
representations and warranties of the Borrower and its Subsidiaries contained in
any certificate, or any of the Loan Documents (including but not limited to any
such representation or warranty made in or in connection with any amendment
thereto) shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement shall be
made or deemed to be made at and as of the Closing Date, shall survive the
Closing Date and shall not be waived by the execution
46
<PAGE> 52
and delivery of this Agreement, any investigation made by or on behalf of the
Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 13.11 hereof, the Borrower will furnish or cause to be furnished to
the Administrative Agent and to the Lenders at their respective addresses as set
forth on Schedule 1, or such other office as may be designated by the
Administrative Agent and Lenders from time to time:
SECTION 7.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in any
event within fifty (50) days after the end of each fiscal quarter, an unaudited
Consolidated balance sheet of the Borrower and its Subsidiaries as of the close
of such fiscal quarter and unaudited Consolidated statements of income, retained
earnings and cash flows for the fiscal quarter then ended and that portion of
the Fiscal Year then ended, including the notes thereto, all in reasonable
detail setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and prepared by the Borrower in accordance with GAAP and,
if applicable, containing disclosure of the effect on the financial position or
results of operations of any change in the application of accounting principles
and practices during the period, and certified by the chief financial officer of
the Borrower to present fairly in all material respects the financial condition
of the Borrower and its Subsidiaries as of their respective dates and the
results of operations of the Borrower and its Subsidiaries for the respective
periods then ended, subject to normal year end adjustments. (Delivery by the
Borrower to the Administrative Agent and the Lenders of the Borrower's quarterly
report to the SEC on Form 10-Q with respect to any fiscal quarter within the
period specified above shall be deemed to be compliance by the Borrower with
this Section 7.1(a)).
(b) Annual Financial Statements. As soon as practicable and in any
event within ninety-five (95) days after the end of each Fiscal Year, an audited
Consolidated balance sheet filed by the Borrower and its Subsidiaries as of the
close of such Fiscal Year and audited Consolidated statements of income,
retained earnings and cash flows for the Fiscal Year then ended, including the
notes thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by an
independent certified public accounting firm acceptable to the Administrative
Agent in accordance with GAAP and, if applicable, containing disclosure of the
effect on the financial position or results of operation of any change in the
application of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public accountants that is not
qualified with respect to scope limitations imposed by the Borrower or any of
its Subsidiaries or with respect to accounting principles followed by the
Borrower or any of its Subsidiaries not in accordance with GAAP. (Delivery by
the Borrower to the Administrative Agent and the Lenders of the Borrower's
annual report to the SEC
47
<PAGE> 53
on Form 10-K with respect to any fiscal year within the period specified above
shall be deemed to be compliance by the Borrower with this Section 7.1(b)).
(c) Annual Business Plan and Financial Projections. As soon as
practicable and in any event within thirty (30) days prior to the beginning of
each Fiscal Year, a business plan of the Borrower and its Subsidiaries on a
Consolidated basis for the ensuing Fiscal Year, such plan to be prepared in a
manner consistent with GAAP and to include, on a quarterly basis, the following:
a quarterly operating and capital budget, a projected income statement,
statement of cash flows and balance sheet, accompanied by a certificate from the
chief financial officer of the Borrower to the effect that, to the best of such
officer's knowledge, such projections are good faith estimates of the financial
condition and operations of the Borrower and its Subsidiaries for such Fiscal
Year.
SECTION 7.2 Officer's Compliance Certificate. At each time reports are
delivered pursuant to Sections 7.1 (a) or (b) and at such other times as the
Administrative Agent shall reasonably request, a certificate of the chief
financial officer or the treasurer of the Borrower in the form of Exhibit F
attached hereto (an "Officer's Compliance Certificate").
SECTION 7.3 Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report;
(b) Promptly but in any event within ten (10) Business Days after the
filing thereof, a copy of (i) each report or other filing made by the Borrower
or any of its Subsidiaries with the SEC and required by the SEC to be delivered
to the shareholders of the Borrower or any of its Subsidiaries, and (ii) each
report made by the Borrower or any of its Subsidiaries to the SEC on Form 8-K
and each final registration statement of the Borrower or any of its Subsidiaries
filed with the SEC (excluding any registration statement on Form S-8 or its
equivalent);
(c) Promptly but in any event within forty-five (45) days following
each fiscal quarter end of the Borrower, a store performance summary setting
forth per unit revenues, per unit EBITDA and per unit restaurant operating
profits, substantially in the form of Exhibit H attached hereto; and
(d) Such other information regarding the operations, business affairs
and financial condition of the Borrower or any of its Subsidiaries as the
Administrative Agent or any Lender may reasonably request.
SECTION 7.4 Notice of Litigation and Other Matters. Prompt (but in no
event later than ten (10) days after the chief executive officer, chief
financial officer, Vice President of Operations or Vice President of Real Estate
and Development of the Borrower obtains knowledge thereof) telephonic and
written notice of:
(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator
48
<PAGE> 54
against or involving the Borrower or any Subsidiary thereof or any of their
respective properties, assets or businesses which if determined adversely to the
Borrower or such Subsidiary, individually or in the aggregate could reasonably
be expected to have a Material Adverse Effect;
(b) any notice of any violation received by the Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws which in any such case
could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result
in, a strike against the Borrower or any Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding $500,000
that may be assessed against the Borrower or any Subsidiary thereof;
(e) any Default or Event of Default, or any event which constitutes or
which with the passage of time or giving of notice or both would constitute a
default or event of default under any Material Contract to which the Borrower or
any of its Subsidiaries is a party or by which the Borrower or any Subsidiary
thereof or any of their respective properties may be bound;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by the
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan, (iii) all
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA; and
(g) any event which makes any of the representations set forth in
Section 6.1 inaccurate in any material respect.
SECTION 7.5 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of the Borrower
to the Administrative Agent or any Lender (other than financial forecasts)
whether pursuant to this Article VII or any other provision of this Agreement,
or any of the other Loan Documents, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Administrative Agent or any Lender complete, true and accurate
knowledge of the subject matter based on the Borrower's knowledge thereof.
49
<PAGE> 55
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 13.11, the Borrower will, and
will cause each of its Subsidiaries to:
SECTION 8.1 Preservation of Corporate Existence and Related Matters.
Except as permitted by Section 10.5, preserve and maintain its separate
existence as a corporation, partnership or other applicable form of business
entity and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation, partnership or other such entity and authorized to do business in
each jurisdiction in which the failure to so qualify could reasonably be
expected to have a Material Adverse Effect.
SECTION 8.2 Maintenance of Property. Protect and preserve all
properties useful in and material to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of its
business, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; except in each case where
the failure to take such action could not reasonably be expected to have a
Material Adverse Effect.
SECTION 8.3 Insurance. Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law, and on the Closing Date and from time to time thereafter deliver
to the Administrative Agent upon its request a detailed list of the insurance
then in effect, stating the names of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the properties
and risks covered thereby.
SECTION 8.4 Accounting Methods and Financial Records. Maintain a system
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all material taxes, assessments and other governmental charges that
may be levied or assessed upon it or any of its property, and (b) all other
material indebtedness, obligations and liabilities in accordance with customary
trade practices; provided, that the Borrower or such Subsidiary may contest any
item described in clauses (a) or (b) of this Section 8.5 in good faith so long
as adequate reserves are maintained with respect thereto in accordance with
GAAP.
50
<PAGE> 56
SECTION 8.6 Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
SECTION 8.7 Environmental Laws. In addition to and without limiting the
generality of Section 8.6, (a) comply with, and use reasonable efforts to ensure
such compliance by all tenants and subtenants with all applicable Environmental
Laws, and obtain and comply with and maintain, and use reasonable efforts to
ensure that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
Environmental Laws applicable to the Borrower and its Subsidiaries and the
conduct of their respective business, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect, (b) conduct and
complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required of the Borrower and its Subsidiaries under
applicable Environmental Laws, and promptly comply with all lawful orders and
directives of any Governmental Authority regarding Environmental Laws issued to
the Borrower and its Subsidiaries, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of the Borrower or such Subsidiary, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney's fees actually incurred, consultant's
fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing directly
result from the gross negligence or willful misconduct of the party seeking
indemnification therefor.
SECTION 8.8 Compliance with ERISA. In addition to and without limiting
the generality of Section 8.6, and to the extent any of the following,
individually or in the aggregate, results or could reasonably be expected to
result in a Material Adverse Effect, (a) comply in all material respects with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans, (b) not
take any action or fail to take action the result of which could be a liability
to the PBGC or to a Multiemployer Plan, (c) not participate in any prohibited
transaction that could result in any material civil penalty under ERISA or tax
under the Code, (d) operate each Employee Benefit Plan in such a manner that
will not incur any material tax liability under Section 4980B of the Code or any
liability to any qualified beneficiary as defined in Section 4980B of the Code
and (e) furnish to the Administrative Agent upon the Administrative Agent's
request such additional information about any Employee Benefit Plan as may be
reasonably requested by the Administrative Agent.
SECTION 8.9 Compliance With Agreements. Comply in all respects with
each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business including, without
limitation, any Material Contract, except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect; provided, that the
Borrower or such Subsidiary may contest any such lease, agreement or other
instrument in good
51
<PAGE> 57
faith through applicable proceedings so long as adequate reserves are maintained
in accordance with GAAP.
SECTION 8.10 Conduct of Business. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing Date.
SECTION 8.11 Visits and Inspections. Permit representatives of the
Administrative Agent or any Lender, from time to time, upon reasonable prior
notice, during normal business hours and, so long as no Default or Event of
Default shall have occurred and be continuing, at the sole cost of the
Administrative Agent or such Lender, to (a) visit and inspect its properties;
(b) inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and (c) discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects.
SECTION 8.12 Additional Subsidiaries. Upon the creation of any Material
Subsidiary permitted by this Agreement or upon any Subsidiary becoming a
Material Subsidiary, cause to be executed and delivered to the Administrative
Agent within ten (10) Business Days after the creation of such Material
Subsidiary or within ten (10) Business Days after the date upon which financial
statements are required to be delivered pursuant to Section 7.1 which financial
statements would evidence that a Subsidiary has become a Material Subsidiary, as
applicable, (a) the joinder agreement attached to the Guaranty Agreement
executed by such new Subsidiary, (b) a Pledge Agreement or a supplement to
Pledge Agreement, as applicable, executed by the Borrower or the applicable
Subsidiary pledging 100% of the capital stock or other ownership interests owned
by the Borrower or the applicable Subsidiary of such new Material Subsidiary,
(c) the closing documents and certificates required of each Guarantor pursuant
to Section 5.2(b) hereof with respect to such new Subsidiary and (d) such other
documents reasonably requested by the Administrative Agent in order that such
Subsidiary shall become bound by all of the terms, covenants and agreements
contained in the Guaranty Agreement and the capital stock or other ownership
interests in such new Subsidiary shall be pledged pursuant to the applicable
Pledge Agreement. Upon delivery to the Agent and the Lenders by the Borrower of
the financial statements required to be delivered pursuant to Section 7.1, which
financial statements evidence that a Subsidiary previously deemed to be a
Material Subsidiary has ceased to be a Material Subsidiary, the Administrative
Agent and the Lenders shall execute such release or cancellation documents
necessary to evidence that such Subsidiary is no longer subject to such Loan
Documents.
SECTION 8.13 Year 2000 Compatibility. Take all actions reasonably
necessary to assure that the Borrower's computer based systems are able to
operate and effectively process data which includes dates on and after January
1, 2000. At the request of the Administrative Agent, the Borrower shall provide
reasonable assurances satisfactory to the Administrative Agent of the Borrower's
Year 2000 compatibility.
SECTION 8.14 Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender through the Administrative Agent may reasonably require to
document and consummate the transactions
52
<PAGE> 58
contemplated hereby and to vest completely in and insure the Administrative
Agent and the Lenders their respective rights under this Agreement, the Notes,
the Letters of Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrower and its
Subsidiaries on a Consolidated basis will not:
SECTION 9.1 Leverage Ratio. As of the end of any fiscal quarter, permit
the ratio of (a) Consolidated Funded Debt as of such date to (b) Adjusted EBITDA
for the period of four (4) consecutive fiscal quarters ending on such date, to
exceed the following ratios during the following periods:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
From the Closing Date through
and including 12/31/99 3.50 to 1.00
From 1/1/00 through and
including 9/30/01 3.25 to 1.00
From 10/01/01 through and
including 12/31/02 3.00 to 1.00
From 1/1/03 and thereafter 2.75 to 1.00
</TABLE>
SECTION 9.2 Minimum Net Worth. Permit, at any time, Net Worth to be
less than (a) the product of (i) $117,646,000 multiplied by (ii) 90% plus (b)
50% of cumulative quarterly Consolidated Net Income of the Borrower and its
Subsidiaries commencing on June 29, 1998 (without deduction for any quarterly
losses) plus (c) 100% of the Net Cash Proceeds of any equity issuance by the
Borrower or any of its Subsidiaries subsequent to the Closing Date.
SECTION 9.3 Fixed Charges Coverage Ratio. As of the end of any fiscal
quarter, permit the ratio of (a) Adjusted EBITDA plus Rental Expense for the
period of four (4) consecutive fiscal quarters ending on such date to (b) Fixed
Charges for such period, to be less than the following ratios during the
following time periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Closing Date through
and including 9/30/01 2.00 to 1.00
From 10/1/01 and thereafter 1.10 to 1.00
</TABLE>
53
<PAGE> 59
SECTION 9.4 Capital Expenditures. Permit Capital Expenditures plus the
aggregate investments permitted by Sections 10.4(d) and (f) made by the Borrower
and its Subsidiaries after the Closing Date (excluding any investment to the
extent funded with the capital stock of the Borrower) to be greater than the
following amounts in the aggregate during the following Fiscal Years:
<TABLE>
<CAPTION>
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C>
1998 (including only the
portion thereof remaining
after the Closing Date) $ 35,000,000
1999 $ 75,000,000
2000 $ 90,000,000
2001 $100,000,000
2002 $ 80,000,000
2003 $ 80,000,000
</TABLE>
provided, that (a) investments in any single restaurant unit owned by a
Non-Controlled Joint Venture shall not exceed $1,500,000, (b) investments in
Non-Controlled Joint Ventures shall not exceed $22,500,000 in the aggregate on
any date of determination and (c) in no event shall more than forty percent
(40%) of aggregate Capital Expenditures permitted in any Fiscal Year be used for
Capital Expenditures with respect to The Capital Grille and Bugaboo Creek Steak
House restaurants, on a combined basis. For the purposes of this Section 9.4
"Non-Controlled Joint Venture" shall mean a joint venture in which the Borrower
and its Subsidiaries do not own more than fifty percent (50%) of the outstanding
capital stock or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other managers of such Person.
SECTION 9.5 Minimum Adjusted EBITDA. As of the end of any fiscal
quarter, permit Adjusted EBITDA for the period of four (4) consecutive fiscal
quarters ending on such date to be less than: the product of (i) Adjusted EBITDA
for the period of four (4) fiscal quarters ending prior to the commencement of
such fiscal quarter multiplied by (ii) 90%.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrower will not
and will not permit any of its Subsidiaries to:
54
<PAGE> 60
SECTION 10.1 Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with a Hedging Agreement with a
counterparty and upon terms and conditions reasonably satisfactory to the
Administrative Agent;
(c) Debt existing on the Closing Date and not otherwise permitted under
this Section 10.1, as set forth on Schedule 10.1 and the renewal and refinancing
(but not the increase) thereof;
(d) Debt of the Borrower and its Subsidiaries incurred in connection
with Capital Leases in an aggregate amount not to exceed $20,000,000 on any date
of determination;
(e) purchase money Debt of the Borrower and its Subsidiaries in an
aggregate amount not to exceed $500,000 on any date of determination;
(f) Debt consisting of Contingent Obligations permitted by Section
10.2;
(g) intercompany Debt permitted pursuant to Section 10.4(c);
(h) Debt of a Subsidiary outstanding at the time such Subsidiary
becomes a Subsidiary; provided, that (i) such Debt shall not have been incurred
in contemplation of such Subsidiary becoming a Subsidiary and (ii) immediately
after such Subsidiary becomes a Subsidiary no Default or Event of Default shall
exist;
(i) Debt incurred by the Borrower or one or more of its Subsidiaries in
connection with the purchase of joint venture interests in Persons in which the
Borrower and its Subsidiaries already own an equity interest in an aggregate
amount not to exceed $4,000,000 on any date of determination; and
(j) unsecured Debt not otherwise permitted hereunder in an aggregate
amount not to exceed $500,000 on any date of determination;
provided, that none of the instruments or agreements evidencing the Debt
permitted to be incurred by this Section shall, by covenant, subordination
provisions or other agreement, restrict, limit or otherwise encumber the ability
of any Subsidiary of the Borrower to make any payment to the Borrower or any of
its Subsidiaries (in the form of dividends, intercompany advances or otherwise)
for the purpose of enabling the Borrower to pay the Obligations.
SECTION 10.2 Limitations on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) Contingent Obligations in favor of the Administrative Agent for
the benefit of the Administrative Agent and the Lenders;
55
<PAGE> 61
(b) Contingent Obligations in an amount not to exceed $500,000 on
any date of determination;
(c) Contingent Obligations with respect to Debt permitted pursuant to
Section 10.1; and
(d) Contingent Obligations existing on the Closing Date and not
otherwise permitted under this Section 10.2, as set forth on Schedule 10.2.
SECTION 10.3 Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(f) any Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Borrower or any Subsidiary or its
becoming a Subsidiary, or any Lien existing on any property acquired by the
Borrower or any Subsidiary at the time such property is so acquired (so long as
the Debt secured thereby shall have been assumed and is otherwise permitted
under Section 10.1 or 10.2); provided, that (i) no such Lien shall have been
created or assumed in contemplation of such consolidation or merger or such
Person's becoming a Subsidiary or such acquisition of property, and (ii) each
such Lien shall extend solely to the item or items of property so acquired;
56
<PAGE> 62
(g) Liens not otherwise permitted by this Section 10.3 and in existence
on the Closing Date and described on Schedule 10.3; and
(h) Liens securing Debt permitted under Sections 10.1(d), (e) and (i);
provided, that (i) such Liens shall be created substantially simultaneously with
the acquisition or lease of the related asset, (ii) such Liens do not at any
time encumber any property other than the property financed by such Debt, (iii)
the amount of Debt secured thereby is not increased and (iv) the principal
amount of Debt secured by any such Lien shall at no time exceed ninety percent
(90%) of the original purchase price or lease payment amount of such property at
the time it was acquired.
SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture
(including without limitation the creation or capitalization of any Subsidiary),
evidence of Debt or other obligation or security, substantially all or a portion
of the business or assets of any other Person or any other investment or
interest whatsoever in any other Person, or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person except:
(a) investments in Subsidiaries existing on the Closing Date and the
other existing loans, advances and investments described on Schedule 10.4;
(b) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within 120 days from the date of acquisition thereof, (ii) commercial
paper maturing no more than 120 days from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody's
Investors Service, Inc., (iii) certificates of deposit maturing no more than 120
days from the date of creation thereof issued by commercial banks incorporated
under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $500,000,000 and having a rating
of "A" or better by a nationally recognized rating agency; provided, that the
aggregate amount invested in such certificates of deposit shall not at any time
exceed $5,000,000 for any one such certificate of deposit and $10,000,000 for
any one such bank, or (iv) time deposits maturing no more than 30 days from the
date of creation thereof with commercial banks or savings banks or savings and
loan associations each having membership either in the FDIC or the deposits of
which are insured by the FDIC and in amounts not exceeding the maximum amounts
of insurance thereunder;
(c) loans or advances by the Borrower or any Guarantor to any
Subsidiary of the Borrower; provided, that the Borrower controls, either
directly or indirectly, the ability of such Subsidiary to make payments to the
Borrower or such Guarantor (in the form of dividends, intercompany advances, or
otherwise);
(d) investments by the Borrower or any of its Subsidiaries in joint
ventures engaged in a business described in Section 8.10; provided, that the
Borrower shall remain in compliance with Section 9.4;
57
<PAGE> 63
(e) loans by the Borrower to any Person with which the Borrower is
diligently and in good faith negotiating a joint venture agreement in an
aggregate amount not to exceed $2,000,000;
(f) acquisitions of the capital stock or other ownership interests of
any Subsidiary or Non-Controlled Joint Venture; provided, that such acquisitions
are subject to the limitations contained in Section 9.4 and so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom. If, after giving effect to any such acquisition relating to a
Non-Controlled Joint Venture, it would become a Subsidiary, then (x) the
limitations of clauses (a) and (b) of Section 9.4 shall not apply to such
acquisition and (y) all amounts relating to acquisitions by the Borrower or any
Subsidiary of the capital stock or other ownership interests of such
Non-Controlled Joint Venture previously included when determining compliance
with the limitations of such clauses shall be disregarded; and
(g) loans and advances to employees in the ordinary course of business
in an aggregate amount not to exceed $500,000 at any time.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge, consolidate
or enter into any similar combination with any other Person or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution) except:
(a) any Wholly-Owned Subsidiary of the Borrower may merge with the
Borrower or any other Wholly-Owned Subsidiary of the Borrower; provided, that if
a Guarantor is party to such merger such Guarantor or the Borrower shall be the
surviving entity; and
(b) any Wholly-Owned Subsidiary of the Borrower may wind-up into the
Borrower or any other Wholly-Owned Subsidiary of the Borrower; provided, that no
Guarantor shall be wound-up into a Wholly-Owned Subsidiary which is not also a
Guarantor.
SECTION 10.6 Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of the Borrower or any of its Subsidiaries;
(c) the transfer of assets to the Borrower or any Wholly-Owned
Subsidiary of the Borrower pursuant to Section 10.5(b);
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof;
(e) the transfer of assets by any Subsidiary who is not a Guarantor
to any Wholly-Owned Subsidiary of the Borrower or to the Borrower;
58
<PAGE> 64
(f) (i) the sale, lease, assignment or transfer of restaurants by the
Borrower or any Subsidiary thereof to any third party or non-Wholly-Owned
Subsidiary; provided, that such sales, leases, assignments and transfers shall
not exceed ten (10) restaurants in the aggregate and, in addition, (ii) the sale
of The Capital Grille Restaurants and Bugaboo Creek Steak House restaurants so
long as, with respect to each such concept, all of the restaurants within such
concept are sold; provided, that with respect to both clauses (i) and (ii)
above, (A) the Borrower shall have demonstrated, in form and substance
satisfactory to the Administrative Agent, pro forma compliance with each of the
covenants set forth in Article IX after giving effect to such sale or transfer
and (B) the Aggregate Commitment shall be reduced in connection therewith as
required pursuant to Section 2.6(b)(ii).
SECTION 10.7 Limitations on Dividends and Distributions. Declare or pay
any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares of
its capital stock, or make any change in its capital structure that could
reasonably be expected to have a Material Adverse Effect; provided, that:
(a) the Borrower or any Subsidiary may pay dividends in shares of its
own capital stock;
(b) any Subsidiary may pay cash dividends or make cash distributions to
the Borrower or any Guarantor;
(c) the Borrower or any Subsidiary thereof may purchase joint venture
interests to the extent permitted or required pursuant to any joint venture
agreement to which such Person is a party; provided, that such acquisition would
otherwise be permitted pursuant to Section 10.4(d);
(d) the Borrower may purchase, redeem, retire or otherwise acquire
shares of its capital stock in an aggregate amount not to exceed $5,000,000
(plus, at any time during the Revolving Credit Period, up to $5,000,000 of the
Net Cash Proceeds received by the Borrower or any of its Subsidiaries from any
sale of assets permitted pursuant to Section 10.6 above); and
(e) any Subsidiary may make cash distributions of its earnings to its
equity holders; provided, that such distributions are made to each equity holder
pro rata in accordance with its equity ownership interest.
SECTION 10.8 Transactions with Affiliates. (a) make any loan or advance
to, or purchase or assume any note or other obligation to or from, any of its
officers, directors, shareholders or other Affiliates, or to or from any member
of the immediate family of any of its officers, directors, shareholders or other
Affiliates, or subcontract any operations to any of its Affiliates or (b) enter
into, or be a party to, any transaction with any of its Affiliates, except
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms that are fully disclosed to the Required Lenders and are no
less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not its Affiliate.
59
<PAGE> 65
SECTION 10.9 Certain Accounting Changes. Change its Fiscal Year end, or
make any change in its accounting treatment and reporting practices except as
required by GAAP.
SECTION 10.10 Amendments; Payments and Prepayments of Subordinated
Debt. Amend or modify (or permit the modification or amendment of) any of the
terms or provisions of any Subordinated Debt, or cancel or forgive, make any
voluntary or optional payment or prepayment on, or redeem or acquire for value
(including without limitation by way of depositing with any trustee with respect
thereto money or securities before due for the purpose of paying when due) any
Subordinated Debt.
SECTION 10.11 Restrictive Agreements. Enter into any Debt which
contains any negative pledge on assets or any covenants more restrictive than
the provisions of Articles VIII, IX and X hereof, or which restricts, limits or
otherwise encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such Debt.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligations. The Borrower shall default in any payment of principal of any Loan,
Note or Reimbursement Obligation when and as due (whether at maturity, by reason
of acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for three (3)
Business Days.
(c) Misrepresentation. Any representation or warranty made or deemed to
be made by the Borrower or any of its Subsidiaries under this Agreement, any
Loan Document or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made or deemed
made.
(d) Default in Performance of Certain Covenants. The Borrower shall
default in the performance or observance of any covenant or agreement contained
in Sections 7.2 or 7.4(e) or Articles IX or X (excluding Sections 10.8 and 10.9)
of this Agreement .
(e) Default in Performance of Other Covenants and Conditions. The
Borrower or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this
60
<PAGE> 66
Section 11.1) or any other Loan Document and such default shall continue for a
period of thirty (30) days after written notice thereof has been given to the
Borrower by the Administrative Agent.
(f) Hedging Agreement. Any termination payment shall be due by the
Borrower under any Hedging Agreement and such amount is not paid within ten (10)
Business Days of the due date thereof.
(g) Debt Cross-Default. The Borrower or any of its Subsidiaries shall
(i) default in the payment of any Debt (other than the Notes or any
Reimbursement Obligation) the aggregate outstanding amount of which Debt is in
excess of $500,000 beyond the period of grace if any, provided in the instrument
or agreement under which such Debt was created, or (ii) default in the
observance or performance of any other agreement or condition relating to any
Debt (other than the Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $500,000 or contained in any
instrument or agreement evidencing, securing or relating thereto or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having expired).
(h) Other Cross-Defaults. The Borrower or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance, of any
obligation or condition of any Material Contract unless, but only as long as,
the existence of any such default is being contested by the Borrower or such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of the Borrower or such
Subsidiary to the extent required by GAAP.
(i) Change in Control. Any person or group of persons shall obtain
"beneficial ownership" (within the meaning of Section 13 (d) of the Securities
Exchange Act of 1934, as amended) in one or more series of transactions of more
than thirty percent (30%) of the voting power of the Borrower entitled to vote
in the election of members of the board of directors of the Borrower or there
shall have occurred under any indenture or other instrument evidencing any Debt
in excess of $500,000 any "change in control" (as defined in such indenture or
other evidence of Debt) obligating the Borrower to repurchase, redeem or repay
all or any part of the Debt or capital stock provided for therein (any such
event, a "Change in Control").
(j) Voluntary Bankruptcy Proceeding. The Borrower or any Material
Subsidiary shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
61
<PAGE> 67
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against the Borrower or any Material Subsidiary in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for the Borrower or Material Subsidiary or for all or any substantial
part of their respective assets, domestic or foreign, and such case or
proceeding shall continue without dismissal or stay for a period of sixty (60)
consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) Termination Event. The occurrence of any of the following events
that, individually or in the aggregate, results in or could reasonably be
expected to result in a Material Adverse Effect: (i) the Borrower or any ERISA
Affiliate fails to make full payment when due of all amounts which, under the
provisions of any Pension Plan or Section 412 of the Code, the Borrower or any
ERISA Affiliate is required to pay as contributions thereto, (ii) an accumulated
funding deficiency in excess of $500,000 occurs or exists, whether or not
waived, with respect to any Pension Plan, (iii) a Termination Event or (iv) the
Borrower or any ERISA Affiliate as employer under one or more Multiemployer
Plans makes a complete or partial withdrawal from any such Multiemployer Plan
and the plan sponsor of such Multiemployer Plan notifies such withdrawing
employer that such employer has incurred a withdrawal liability requiring
payments in an amount exceeding $500,000.
(m) Judgment. A judgment or order for the payment of money which causes
the aggregate amount of all such judgments to exceed $500,000 in any Fiscal Year
(excluding any amounts which the Borrower's insurance carrier has affirmatively
agreed in writing are covered by insurance) shall be entered against the
Borrower or any of its Subsidiaries by any court and such judgment or order
shall continue without discharge or stay for a period of thirty (30) days.
SECTION 11.2 Remedies. Upon the occurrence of an Event of Default, with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower:
(a) Acceleration; Termination of Facilities. Declare the principal of
and interest on the Loans, the Notes and the Reimbursement Obligations at the
time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the other Loan Documents
(other than any Hedging Agreement) (including, without limitation, all L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and all other
Obligations (other than obligations owing under any Hedging Agreement), to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived, anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, and terminate the Credit Facility and
any right of the Borrower to request borrowings or Letters of Credit thereunder;
provided, that upon the occurrence of an Event of Default specified in Section
11.1(j) or (k), the Credit Facility shall be automatically terminated and
62
<PAGE> 68
all Obligations (other than obligations owing under any Hedging Agreement) shall
automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit for which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, require the Borrower at such time to
deposit in a cash collateral account opened by the Administrative Agent an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, the Reimbursement Obligation shall have been satisfied and all
other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrower.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrower's Obligations.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between the Borrower, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
ARTICLE XII
THE ADMINISTRATIVE AGENT
SECTION 12.1 Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this Agreement and the other Loan Documents for the term hereof and each such
Lender irrevocably authorizes First Union as Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and such other Loan Documents, together with such other powers as are
reasonably incidental thereto.
63
<PAGE> 69
Notwithstanding any provision to the contrary elsewhere in this Agreement or
such other Loan Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the
Administrative Agent. Any reference to the Administrative Agent in this Article
XII shall be deemed to refer to the Administrative Agent solely in its capacity
as Administrative Agent and not in its capacity as a Lender.
SECTION 12.2 Delegation of Duties. The Administrative Agent may execute
any of its respective duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care.
SECTION 12.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any of its Subsidiaries or
any officer thereof contained in this Agreement or the other Loan Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection with,
this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or for any failure of the Borrower or any of its
Subsidiaries to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any of its Subsidiaries.
SECTION 12.4 Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 13.10 hereof. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement and the other Loan Documents unless it shall first receive such advice
or concurrence of the Required Lenders (or, when expressly required hereby or by
the relevant other Loan Document, all the Lenders) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action except for its own gross negligence or
willful misconduct. The Administrative Agent
64
<PAGE> 70
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the Notes in accordance with a request of the Required
Lenders (or, when expressly required hereby, all the Lenders), and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.
SECTION 12.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders, except to the extent that other provisions of
this Agreement expressly require that any such action be taken or not be taken
only with the consent and authorization or the request of the Lenders or
Required Lenders, as applicable.
SECTION 12.6 Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of the Borrower or any of its Subsidiaries,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans and issue or participate in Letters of Credit hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent 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 analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder or by the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Borrower or
any of its Subsidiaries which may come into the possession of the Administrative
Agent or any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 12.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrower and
65
<PAGE> 71
without limiting the obligation of the Borrower to do so), ratably according to
the respective amounts of their Commitment Percentages, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Notes or any Reimbursement Obligation) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of this
Agreement or the other Loan Documents, or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided, that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Administrative Agent's bad faith, gross negligence or
willful misconduct. The agreements in this Section 12.7 shall survive the
payment of the Notes, any Reimbursement Obligation and all other amounts payable
hereunder and the termination of this Agreement.
SECTION 12.8 The Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrower as though the Administrative Agent were not an Administrative Agent
hereunder. With respect to any Loans made or renewed by it and any Note issued
to it and with respect to any Letter of Credit issued by it or participated in
by it, the Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not an Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
SECTION 12.9 Resignation of the Administrative Agent; Successor
Administrative Agent. Subject to the appointment and acceptance of a successor
as provided below, the Administrative Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative
Agent, which successor shall have minimum capital and surplus of at least
$500,000,000. If no successor Administrative Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
(30) days after the Administrative Agent's giving of notice of resignation, then
the Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Section 12.9 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 Administrative Agent.
66
<PAGE> 72
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to the Borrower: Rare Hospitality International, Inc.
8215 Roswell Road
Bldg. #200
Atlanta, Georgia 30350
Attention: W. Douglas Benn
Telephone No.: (770) 551-5445
Telecopy No.: (770) 551-6685
With copies to: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Paul Cushing
Telephone No.: (404) 881-7578
Telecopy No.: (404) 881-4777
67
<PAGE> 73
If to First Union as First Union National Bank
Administrative Agent: One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
and
First Union National Bank
999 Peachtree Street, N.E.
9th Floor
Atlanta, Georgia 30309
Attention: Portfolio Management
Telecopy No.: (404) 827-7199
If to any Lender: To the Address set forth on Schedule 1 hereto
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Administrative Agent's Office referred to herein,
to which payments due are to be made and at which Loans will be disbursed and
Letters of Credit issued.
SECTION 13.2 Expenses; Indemnity. The Borrower will (a) pay all
out-of-pocket expenses of the Administrative Agent actually incurred in
connection with: (i) the preparation, execution and delivery of this Agreement
and each other Loan Document, whenever the same shall be executed and delivered,
including without limitation all out-of-pocket syndication and due diligence
expenses and reasonable fees and disbursements of counsel for the Administrative
Agent and (ii) the preparation, execution and delivery of any waiver, amendment
or consent by the Administrative Agent or the Lenders relating to this Agreement
or any other Loan Document, including without limitation reasonable fees and
disbursements of counsel for the Administrative Agent, (b) pay all reasonable
out-of-pocket expenses of the Administrative Agent and each Lender actually
incurred in connection with the administration and enforcement of any rights and
remedies of the Administrative Agent and Lenders under the Credit Facility,
including consulting with appraisers, accountants, engineers, attorneys and
other Persons concerning the nature, scope or value of any right or remedy of
the Administrative Agent or any Lender hereunder or under any other Loan
Document or any factual matters in connection therewith, which expenses shall
include without limitation the reasonable fees and disbursements of such
Persons, and (c) defend, indemnify and hold harmless the Administrative Agent
and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, Administrative Agents, officers and directors, from and against any
losses, penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or
68
<PAGE> 74
not the Administrative Agent or any Lender is a party thereto) and the
prosecution and defense thereof, arising out of or in any way connected with the
Agreement, any other Loan Document or the Loans, including without limitation
reasonable attorney's and consultant's fees, except to the extent that any of
the foregoing directly result from the gross negligence or willful misconduct of
the party seeking indemnification therefor.
SECTION 13.3 Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and during the continuance of any Event of Default, the Lenders and any
assignee or participant of a Lender in accordance with Section 13.10 are hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, time or demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by the Lenders, or any such
assignee or participant to or for the credit or the account of the Borrower
against and on account of the Obligations irrespective of whether or not (a) the
Lenders shall have made any demand under this Agreement or any of the other Loan
Documents or (b) the Administrative Agent shall have declared any or all of the
Obligations to be due and payable as permitted by Section 11.2 and although such
Obligations shall be contingent or unmatured.
If any Lender (or assignee or participant) shall exercise any of the
rights referred to in this Section, such Lender (or assignee) shall promptly
notify the Borrower, all other Lenders and the Administrative Agent thereof;
provided, that the failure to give such notice shall not result in any liability
to such Lender or in any way affect the validity of the exercise of such right.
SECTION 13.4 Governing Law. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.
SECTION 13.5 Consent to Jurisdiction. The Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. The Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of itself or its property, in the manner specified in
Section 13.1. Nothing in this Section 13.5 shall affect the right of the
Administrative Agent or any Lender to serve legal process in any other manner
permitted by Applicable Law or affect the right of the Administrative Agent or
any Lender to bring any action or proceeding against the Borrower or its
properties in the courts of any other jurisdictions.
69
<PAGE> 75
SECTION 13.6 Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any other
Loan Documents ("Disputes"), between or among parties to the Notes or any other
Loan Document shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising from
Loan Documents executed in the future, or claims concerning any aspect of the
past, present or future relationships arising out of or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures set
forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding anything foregoing to the contrary, any
arbitration proceeding demanded hereunder shall begin within ninety (90) days
after such demand thereof and shall be concluded within one-hundred and twenty
(120) days after such demand. These time limitations may not be extended unless
a party hereto shows cause for extension and then such extension shall not
exceed a total of sixty (60) days. The panel from which all arbitrators are
selected shall be comprised of licensed attorneys. The single arbitrator
selected for expedited procedure shall be a retired judge from the highest court
of general jurisdiction, state or federal, of the state where the hearing will
be conducted. The parties hereto do not waive any applicable Federal or state
substantive law except as provided herein. Notwithstanding the foregoing, this
paragraph shall not apply to any Hedging Agreement that is a Loan Document.
(b) Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWER HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a
70
<PAGE> 76
judgment by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute.
SECTION 13.7 Reversal of Payments. To the extent the Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 13.8 Punitive Damages. The Administrative Agent, Lenders and
Borrower (on behalf of itself and its Subsidiaries) hereby agree that no such
Person shall have a remedy of punitive or exemplary damages against any other
party to a Loan Document and each such Person hereby waives any right or claim
to punitive or exemplary damages that they may now have or may arise in the
future in connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
SECTION 13.9 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by the Borrower, be performed in accordance with GAAP as in
effect on the Closing Date. In the event that changes in GAAP shall be mandated
by the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrower and the
Lenders shall have amended this Agreement to the extent necessary to reflect any
such changes in the financial covenants and other terms and conditions of this
Agreement.
SECTION 13.10 Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that the Borrower shall not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Assignment by Lenders. Each Lender may, with the consent of the
Borrower (so long as no Default or Event of Default has occurred and is
continuing) and the consent of the Administrative Agent, which consents shall
not be unreasonably withheld, assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Notes held by it); provided that:
71
<PAGE> 77
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and obligations under
this Agreement;
(ii) if less than all of the assigning Lender's Commitment is to
be assigned, neither the Commitment so assigned nor the Commitment retained
shall be less than $5,000,000;
(iii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance in the form of Exhibit F attached hereto (an
"Assignment and Acceptance"), together with any Note or Notes subject to such
assignment;
(iv) such assignment shall not, without the consent of the
Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state; and
(v) the assigning Lender shall pay to the Administrative Agent an
assignment fee of $2,500 upon the execution by such Lender of the Assignment and
Acceptance; provided that no such fee shall be payable upon any assignment by a
Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain 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 amount of the Extensions of
Credit with respect to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent and the Lenders may treat each person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower
or Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of Exhibit G:
72
<PAGE> 78
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the
Register;
(iii) give prompt notice thereof to the Lenders and the
Borrower; and
(iv) promptly deliver a copy of such Assignment and
Acceptance to the Borrower.
Within five (5) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes delivered to the assigning Lender. Each surrendered Note
or Notes shall be canceled and returned to the Borrower.
(f) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less
than $5,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes
held by it for all purposes
of this Agreement;
(v) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the
right to approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate on any
Loan or Reimbursement Obligation, extend the term or increase the amount of the
Commitment, reduce the amount of any fees to which such participant is entitled,
extend any scheduled payment date for principal of any Loan or, except as
expressly contemplated hereby or thereby, release substantially all of the
Collateral; and
73
<PAGE> 79
(vii) any such disposition shall not, without the consent
of the Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or the Notes
under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. The Administrative
Agent and the Lenders shall hold all non-public information with respect to the
Borrower obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information; provided, that the
Administrative Agent may disclose information relating to this Agreement to Gold
Sheets and other similar bank trade publications, such information to consist of
deal terms and other information customarily found in such publications and
provided further, that the Administrative Agent and Lenders may disclose any
such information to the extent such disclosure is required by law or requested
by any regulatory authority or to its auditors, attorneys or other professional
advisors or representatives in connection with the transactions contemplated by
the Loan Documents. Any Lender may, in connection with any assignment, proposed
assignment, participation or proposed participation pursuant to this Section
13.10, disclose to the assignee, participant, proposed assignee or proposed
participant, any information relating to the Borrower or any of its Subsidiaries
or Affiliates furnished to such Lender by or on behalf of the Borrower or any of
its Subsidiaries or Affiliates; provided, that prior to any such disclosure,
each such assignee, proposed assignee, participant or proposed participant shall
agree in writing with the Borrower or such Lender to preserve the
confidentiality of any confidential information relating to the Borrower and any
of its Subsidiaries and Affiliates received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.11 Amendments, Waivers and Consents. Except as set forth
below and in Section 2.8, any term, covenant, agreement or condition of this
Agreement or any of the other Loan Documents (other than any Hedging Agreement,
the terms and conditions of which may be amended, modified or waived by the
parties thereto) may be amended or waived by the Lenders, and any consent given
by the Lenders, if, but only if, such amendment, waiver or consent is in writing
signed by the Required Lenders (or by the Administrative Agent with the consent
of the Required Lenders) and delivered to the Administrative Agent and, in the
case of an amendment, signed by the Borrower and any Subsidiary party thereto;
provided, that no amendment, waiver or consent shall (a) increase the amount or
extend the time of the obligation of the Lenders to make Loans or issue or
participate in Letters of Credit (including without limitation pursuant to
Section 2.7), (b) extend the originally scheduled time or times of payment of
the principal of any Loan or Reimbursement Obligation or the time or times of
payment of interest on any Loan or Reimbursement Obligation or any other amounts
payable hereunder or under any other Loan Document, (c) reduce the rate or
amount of interest or fees payable on any Loan or Reimbursement Obligation, (d)
reduce the principal amount of any Loan or Reimbursement Obligation, (e) waive
or amend the provisions of Section 9.1, (f) permit any subordination of the
principal or interest on any Loan or Reimbursement Obligation, (g) release or
permit the Borrower to assign any Guaranty Agreement or any material portion of
the collateral (other than as specifically permitted or contemplated in this
Agreement, the Guaranty Agreement or the applicable Pledge Agreement) or (h)
amend the provisions of this Section 13.11 or the definition of Required
Lenders, without the
74
<PAGE> 80
prior written consent of each Lender. In addition, no amendment, waiver or
consent to the provisions of (a) Article XII shall be made without the written
consent of the Administrative Agent and (b) Article III without the written
consent of the Issuing Lender.
SECTION 13.12 Performance of Duties. The Borrower's obligations under
this Agreement and each of the Loan Documents shall be performed by the Borrower
at its sole cost and expense.
SECTION 13.13 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.
SECTION 13.14 Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
SECTION 13.15 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 13.16 Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.17 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 13.18 Term of Agreement. This Agreement shall remain in effect
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full. [The
Administrative Agent is hereby permitted to release all Liens on the Collateral
in favor of the Administrative Agent, for the ratable benefit of itself and the
Lenders, upon repayment of the outstanding principal of and all accrued interest
on the Loans, payment of all outstanding fees and expenses hereunder and the
termination of the Lender's Commitments.] No termination of this Agreement shall
affect the rights and obligations of the parties hereto arising prior to such
termination.
[Signature pages to follow]
75
<PAGE> 81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
[CORPORATE SEAL] RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 82
FIRST UNION NATIONAL BANK,
as Administrative Agent, Lender, Swingline
Lender and Issuing Lender
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 83
BANKBOSTON, N.A., as Co-Agent and as Lender
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 84
FLEET NATIONAL BANK, as Co-Agent and as
Lender
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 85
SOUTHTRUST BANK, N.A., as Lender
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 86
THE FUJI BANK, LIMITED, as Lender
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 87
AMSOUTH BANK, as Lender
By: /s/
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 88
EXHIBIT A-1
-----------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF REVOLVING CREDIT NOTE
-----------------------------
<PAGE> 89
This is one of a series of notes that replaces but does not extinguish the
obligations under those certain notes executed in connection with the Credit
Agreement dated as December 18, 1996 by and among the Borrower and certain of
its Subsidiaries, as borrowers, the lenders party thereto and the Administrative
Agent, as agent.
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$___________ August __, 1998
FOR VALUE RECEIVED, the undersigned, RARE HOSPITALITY INTERNATIONAL,
INC., a corporation organized under the laws of Georgia (the "Borrower"),
hereby, promises to pay to the order of _______________________________ (the
"Lender"), at the times, at the place and in the manner provided in the Credit
Agreement hereinafter referred to, the principal sum of up to
[______________________] Dollars ($[___________]), or, if less, the aggregate
unpaid principal amount of all Revolving Credit Loans (as defined herein)
disbursed by the Lender under the Credit Agreement referred to below, together
with interest at the rates as in effect from time to time with respect to each
portion of the principal amount hereof, determined and payable as provided in
Article IV of the Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit Notes
referred to in, and is entitled to the benefits of, the Amended and Restated
Credit Agreement dated as of August __, 1998 (as amended, restated or otherwise
modified, the "Credit Agreement"; capitalized terms used herein and not defined
herein shall have the meanings ascribed to them in the Credit Agreement) by and
among the Borrower, the financial institutions (the "Lenders") as are, or may
from time to time become, party thereto, First Union National Bank, as
Administrative Agent and BankBoston, N.A. and Fleet National Bank, as Co-Agents.
The Credit Agreement contains, among other things, provisions for the time,
place and manner of payment of this Revolving Credit Note, the determination of
the interest rate borne by and fees payable in respect of this Revolving Credit
Note, acceleration of the payment of this Revolving Credit Note upon the
happening of certain stated events and the mandatory repayment of this Revolving
Credit Note under certain circumstances.
The Borrower agrees to pay on demand all actual costs of collection,
including reasonable attorneys' fees, if any part of this Revolving Credit Note,
principal or interest, is collected after maturity with the aid of an attorney.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
THIS REVOLVING CREDIT NOTE IS MADE AND DELIVERED IN THE STATE OF NORTH
CAROLINA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NORTH CAROLINA.
The Debt evidenced by this Revolving Credit Note is senior in right of
payment to all Subordinated Debt referred to in the Credit Agreement.
<PAGE> 90
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note
to be executed under seal by a duly authorized officer as of the day and year
first above written.
RARE HOSPITALITY INTERNATIONAL, INC.
[CORPORATE SEAL]
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
2
<PAGE> 91
EXHIBIT A-2
-----------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF SWINGLINE NOTE
----------------------
<PAGE> 92
SWINGLINE NOTE
$5,000,000 August __, 1998
FOR VALUE RECEIVED, the undersigned, RARE HOSPITALITY INTERNATIONAL,
INC., a corporation organized under the laws of Georgia (the "Borrower"),
promises to pay to the order of FIRST UNION NATIONAL BANK (the "Lender"), at the
place and times provided in the Credit Agreement referred to below, the
principal sum of FIVE MILLION DOLLARS ($5,000,000) or, if less, the principal
amount of all Swingline Loans made by the Lender from time to time pursuant to
that certain Amended and Restated Credit Agreement, dated as of even date
herewith (as amended, restated or otherwise modified, the "Credit Agreement")
among the Borrower, the Lenders who are or may become a party thereto
(collectively, the "Lenders"), First Union National Bank, as Administrative
Agent and BankBoston, N.A. and Fleet National Bank, as Co-Agents. Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
The unpaid principal amount of this Swingline Note from time to time
outstanding is subject to mandatory repayment from time to time as provided in
the Credit Agreement and shall bear interest as provided in Section 4.1 of the
Credit Agreement. Swingline Loans refunded as Revolving Credit Loans in
accordance with Section 2.2(b) of the Credit Agreement shall be payable by the
Borrower as Revolving Credit Loans pursuant to the Revolving Credit Notes, and
shall not be payable under this Swingline Note as Swingline Loans. All payments
of principal and interest on this Swingline Note shall be payable in lawful
currency of the United States of America in immediately available funds to the
account designated in the Credit Agreement.
This Swingline Note is entitled to the benefits of, and evidences
Obligations incurred under, the Credit Agreement, to which reference is made for
a description of the security for this Swingline Note and for a statement of the
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Obligations evidenced by this
Swingline Note and on which such Obligations may be declared to be immediately
due and payable.
THIS SWINGLINE NOTE SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF NORTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS
OR CHOICE OF LAW PRINCIPLES THEREOF.
The Debt evidenced by this Swingline Note is senior in right of payment
to all Subordinated Debt referred to in the Credit Agreement.
<PAGE> 93
The Borrower hereby waives all requirements as to diligence,
presentment, demand of payment, protest and (except as required by the Credit
Agreement) notice of any kind with respect to this Swingline Note.
IN WITNESS WHEREOF, the undersigned has executed this Swingline Note
under seal as of the day and year first above written.
RARE HOSPITALITY INTERNATIONAL, INC.
[CORPORATE SEAL]
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
2
<PAGE> 94
EXHIBIT B
---------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF NOTICE OF BORROWING
---------------------------
<PAGE> 95
NOTICE OF BORROWING
First Union National Bank,
as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you under Section
2.3(a) of the Amended and Restated Credit Agreement dated as of August __, 1998
(as amended, restated or otherwise modified, the "Credit Agreement"), by and
among Rare Hospitality International, Inc., a Georgia corporation (the
"Borrower") the lenders party thereto (the "Lenders"), First Union National
Bank, as Administrative Agent and BankBoston, N.A. and Fleet National Bank, as
Co-Agents.
1. The Borrower, hereby requests that the Lenders make a [Revolving
Credit Loan] [Swingline Loan] in the aggregate principal amount of $___________
(the "Loan").(1)
2. The Borrower, hereby requests that such Loan be made on the
following Business Day: _____________________.(2)
3. In the case of a Revolving Credit Loan, the Borrower, hereby
requests that such Revolving Credit Loan bear interest at the following interest
rate, plus the Applicable Margin, as set forth below:
<TABLE>
<CAPTION>
Termination Date for
Interest Period Interest Period
Component of Loan Interest Rate (if applicable) (if applicable)
- ----------------- ------------- --------------- --------------------
<S> <C> <C> <C>
[Base Rate or LIBOR Rate]
</TABLE>
- -----------------------
(1) Complete with an amount in accordance with Section 2.3(a) of the Credit
Agreement.
(2) Complete with a Business Day in Accordance with Section 2.3(a) of the
Credit Agreement.
<PAGE> 96
4. The Available Amount equals the lesser of:
(a) the Aggregate Commitment; and
(b) (i) Adjusted EBITDA for the period of four (4) consecutive
fiscal quarters then most recently ended: ________________
multiplied by three (3); minus
(ii) all Funded Debt of the Borrower and its Subsidiaries
excluding Subordinated Debt and Debt under the Credit
Agreement: ______________.
(iii) 4(i) minus 4(ii): __________.
(c) Available Amount: The lesser of: 4(a) and 4(b)(iii)
______________.
(d) Extensions of Credit permitted to be requested pursuant to this
Notice of Borrowing:
(i) the Available Amount: __________; minus
(ii) the current outstanding Extensions of Credit which will
not be repaid with the requested Extensions of Credit
hereunder: _____________
(iii) Amount permitted to be requested pursuant to this Notice
of Borrowing ((d)(i) minus (d)(ii)): ___________.
5. The principal amount of all Loans and L/C Obligations outstanding as
of the date hereof (including the requested Loan) does not exceed the maximum
amount permitted to be outstanding pursuant to the terms of the Credit
Agreement.
6. All of the conditions applicable to the Loan requested herein as set
forth in the Credit Agreement have been satisfied as of the date hereof and will
remain satisfied to the date of such Loan.
7. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
2
<PAGE> 97
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Borrowing this ____ day of _______, ____.
RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 98
EXHIBIT C
---------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF NOTICE OF ACCOUNT DESIGNATION
-------------------------------------
<PAGE> 99
NOTICE OF ACCOUNT DESIGNATION
Dated as of:
------------
First Union National Bank,
as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you under Section
2.3(b) of the Amended and Restated Credit Agreement dated as of August __, 1998
(as amended, restated or otherwise modified, the "Credit Agreement") by and
among Rare Hospitality International, Inc., a corporation organized under the
laws of Georgia (the "Borrower"), the Lenders party thereto (the "Lenders"),
First Union National Bank, as Administrative Agent and BankBoston, N.A. and
Fleet National Bank, as Co-Agents.
1. The Administrative Agent is hereby authorized to disburse all Loan
proceeds into the following account(s):
-------------------------------
ABA Routing Number
-------------
Account Number
-----------------
2. This authorization shall remain in effect until revoked or until a
subsequent Notice of Account Designation is provided to the Administrative
Agent.
3. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
<PAGE> 100
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation this _____ day of ____________, ____.
RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 101
EXHIBIT D
---------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF NOTICE OF PREPAYMENT
----------------------------
<PAGE> 102
NOTICE OF PREPAYMENT
First Union National Bank,
as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you by Rare
Hospitality International, Inc. (the "Borrower") under Section 2.4(c) of the
Amended and Restated Credit Agreement dated as of August __, 1998, as amended,
restated or otherwise modified, (the "Credit Agreement"), by and among the
Borrower, the Lenders party thereto, First Union National Bank, as
Administrative Agent and BankBoston, N.A. and Fleet National Bank, as Co-Agents.
1. The Borrower hereby provides notice to the Administrative Agent that
it shall repay the following [Base Rate Loans] and/or [LIBOR Rate Loans]:
____________________.(1)
2. The Loan to be prepaid is a [check each applicable box]
- Swingline Loan
- Revolving Credit Loan
3. The Borrower shall repay the above-referenced Loans on the following
Business Day: _______________. (2)
4. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
- --------------------
(1) Complete with an amount in accordance with Section 2.4 of the Credit
Agreement.
(2) Complete with a Business Day in accordance with Section 2.4 of the
Credit Agreement.
<PAGE> 103
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Prepayment this ____ day of _______, ____.
RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 104
EXHIBIT E
---------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF NOTICE OF CONVERSION/CONTINUATION
-----------------------------------------
<PAGE> 105
NOTICE OF CONVERSION/CONTINUATION
Dated as of:
--------------
First Union National Bank,
as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 4.2 of the Amended and Restated Credit Agreement
dated as of August __, 1998 (as amended, restated or otherwise modified, the
"Credit Agreement"), by and among Rare Hospitality International, Inc., a
Georgia corporation (the "Borrower"), the lenders party thereto (the "Lenders"),
First Union National Bank, as Administrative Agent and BankBoston, N.A. and
Fleet National Bank, as Co-Agents.
1. This Notice is submitted for the purpose of: (Check one and complete
applicable information in accordance with the Credit Agreement.)
- Converting all or a portion of a Base Rate Loan into a LIBOR
Rate Loan
(a) The aggregate outstanding principal balance of such
Loan is $_______________.
(b) The principal amount of such Loan to be converted is
$________________.
(c) The requested effective date of the conversion of
such Loan is _______________.
(d) The requested Interest Period applicable to the
converted Loan is _______________.
- Converting a portion of LIBOR Rate Loan into a Base Rate
Loan
(a) The aggregate outstanding principal balance of such
Loan is $_______________.
<PAGE> 106
(b) The last day of the current Interest Period for such
Loan is _______________.
(c) The principal amount of such Loan to be converted is
$_________________.
(d) The requested effective date of the conversion of
such Loan is _______________.
- Continuing all or a portion of a LIBOR Rate Loan as a LIBOR
Rate Loan
(a) The aggregate outstanding principal balance of such
Loan is $_______________.
(b) The last day of the current Interest Period for such
Loan is _______________.
(c) The principal amount of such Loan to be continued is
$________________.
(d) The requested effective date of the continuation of
such Loan is _______________.
(e) The requested Interest Period applicable to the
continued Loan is _______________.
2. The principal amount of all Loans and L/C Obligations outstanding as
of the date hereof does not exceed the maximum amount permitted to be
outstanding pursuant to the terms of the Credit Agreement.
3. All of the conditions applicable to the conversion or continuation
of the Loan requested herein as set forth in the Credit Agreement have been
satisfied or waived as of the date hereof and will remain satisfied or waived to
the date of such Loan.
4. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
[Signature Page Follows]
2
<PAGE> 107
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation this ____ day of __________, ____.
RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower
By:
--------------------------------
Name:
----------------------------
Title:
--------------------------
3
<PAGE> 108
EXHIBIT F
---------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
----------------------------------------
<PAGE> 109
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of Rare Hospitality International, Inc., a
corporation organized under the laws of Georgia (the "Borrower"), hereby
certifies to First Union National Bank, as Administrative Agent (the
"Administrative Agent"), as follows:
1. This Certificate is delivered to you pursuant to Section 7.2 of the
Amended and Restated Credit Agreement dated as of August __, 1998 (as amended,
restated or otherwise modified, the "Credit Agreement"), by and among the
Borrower, the lenders party thereto (the "Lenders"), the Administrative Agent
and BankBoston, N.A. and Fleet National Bank, as Co-Agents. Capitalized terms
used herein and not defined herein shall have the meanings assigned thereto in
the Credit Agreement.
2. I have reviewed the financial statements of the Borrower and its
Subsidiaries dated as of _______________ and for the _______________ period[s]
then ended and such statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries as of the dates
indicated and the results of its operations and cash flows for the period[s]
indicated.
3. I have reviewed the terms of the Credit Agreement, the Notes and the
related Loan Documents and have made, or caused to be made under my supervision,
a review in reasonable detail of the transactions and the condition of the
Borrower and its Subsidiaries during the accounting period covered by the
financial statements referred to in Paragraph 2 above. Such review has not
disclosed the existence during or at the end of such accounting period of any
condition or event that constitutes a Default or an Event of Default, nor do I
have any knowledge of the existence of any such condition or event as at the
date of this Certificate [except, [if such condition or event existed or exists,
describe the nature and period of existence thereof and what action the Borrower
and its Subsidiaries have taken, are taking and propose to take with respect
thereto]].
4. The Applicable Margin and calculations determining such figure are
set forth on the attached Schedule 1 and the Borrower and its Subsidiaries are
in compliance with the covenants contained in Article IX of the Credit Agreement
as shown on such Schedule 1 and the Borrower and its Subsidiaries are in
compliance with the other covenants and restrictions contained in the Credit
Agreement.
[Signature Page Follows]
<PAGE> 110
WITNESS the following signature as of the _____ day of _________, ____.
RARE HOSPITALITY INTERNATIONAL, INC.,
as Borrower
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
2
<PAGE> 111
Schedule 1
----------
to
Officer's Compliance Certificate
<TABLE>
<S> <C>
A. Leverage Ratio (Section 9.1)
1. Consolidated Funded Debt of the Borrower and its Subsidiaries
as of the immediately preceding fiscal quarter end 1
------------------------
2. Adjusted EBITDA of the Borrower and its Subsidiaries for the
period of four (4) consecutive fiscal quarters ending on such
fiscal quarter end
(a) Net Income for such period 2(a)
------------------------
(b) Plus: The sum of the following for such period to the
extent deducted in the determination of such Net
Income: (i) income and franchise taxes, (ii) Interest
Expense, (iii) amortization, depreciation and other
non-cash charges (including amortization of goodwill,
transaction expenses, covenants not to compete and
other intangible assets), (iv) pre-opening costs
required to be expensed for fiscal years beginning
after December 15, 1998, in accordance with FASB
regulations (Pre-Opening Costs) (including, without
limitation, the one time write-off of previously
capitalized pre-opening costs not to exceed
$2,500,000) and (v) with respect to the fiscal
quarters ending June 28, 1998 and September 29, 1998,
a charge which relates to FASB 121 equal to
$18,040.776 2(b)
------------------------
</TABLE>
<PAGE> 112
<TABLE>
<S> <C> <C> <C> <C>
(c) Less: any items of gain (or plus any non-cash items
of loss) which were included in determining Net
Income and were not realized in the ordinary course
of business 2(c)
------------------------
(d) Add lines 2(a) and 2(b) and subtract (or add) line
2(c) 2(d)
------------------------
3. Leverage Ratio: Divide line 1 by line 2(d) 3
------------------------
4. Maximum Leverage Ratio permitted by Section 9.1 as of the date
hereof 4
------------------------
B. Minimum Net Worth (Section 9.2)
1. Actual Net Worth as of 6/28/98 as reflected on the Borrower's
financial statements delivered pursuant to Section 6.1(o)
multiplied by 90% 1
------------------------
2. Minimum Consolidated Net Worth: The sum of the following as of
such fiscal quarter end
(a) 50% of cumulative quarterly Consolidated Net Income
of the Borrower and its Subsidiaries as of such
fiscal quarter end commencing June 29, 1998 (without
deduction for any quarterly losses) 2(a)
------------------------
(b) 100% of the aggregate Net Cash Proceeds of any equity
issuance of the Borrower or any of its Subsidiaries
as of such fiscal quarter end received after the
Closing Date 2(b)
------------------------
</TABLE>
2
<PAGE> 113
<TABLE>
<S> <C> <C> <C>
(c) Add lines 2(a) and 2(b) 2(c)
-----------------------
3. Minimum Net Worth: Add line 1 plus Line 2(c) 3
-----------------------
4. Net Worth 4
-----------------------
C. Fixed Charges Coverage Ratio (Section 9.3)
1. Adjusted EBITDA of the Borrower and its Subsidiaries for the
period of four (4) consecutive fiscal quarters ending on such
fiscal quarter end (see Leverage ratio line 2(d)) plus Rental
Expense for the period of four (4) consecutive fiscal quarters
ending on such fiscal quarter end 1
-----------------------
2. Fixed Charges of the Borrower and its Subsidiaries for the
period of four (4) consecutive fiscal quarters ending on such
fiscal quarter end:
(a) Interest Expense 2(a)
------------------------
(b) Rental Expense 2(b)
------------------------
(c) Scheduled principal payments with regard to Funded
Debt which matures (or the maturity of which may, at
the option of the Borrower, be extended so that it
matures) more than one year after the date of such
calculation 2(c)
------------------------
(d) Fixed Charges: Add Line 2(a) plus 2(b) plus 2(c) 2(d)
------------------------
</TABLE>
3
<PAGE> 114
<TABLE>
<S> <C> <C> <C>
3. Fixed Charges Coverage Ratio (Divide Line 1 by Line 2(d)) 3
------------------------
4. Minimum Fixed Charge Coverage Ratio permitted by Section 9.3
as of the date hereof 4
------------------------
D. Capital Expenditures (Section 9.4)
1. (a) Capital Expenditures for the previous Fiscal Year (or,
with respect to Fiscal Year 1998, the portion thereof
remaining after the Closing Date) 1(a)
------------------------
(b) plus the aggregate investments permitted by Sections
10.4(d) and (f) made by the Borrower and its
Subsidiaries after the Closing Date (excluding any
investment to the extent funded with the capital
stock of the Borrower) 1(b)
------------------------
(c) Total of 1(a) and 1(b) 1(c)
------------------------
(d) Maximum investment in any single restaurant unit
owned by a Non-Controlled Joint Venture 1(d)
------------------------
(e) Aggregate investments in Non-Controlled Joint
Ventures 1(e)
------------------------
(f) Capital Expenditures with respect to The Capital
Grille and Bugaboo Creek Steak House restaurants for
the previous Fiscal Year 1(f)
(Fiscal Year calculation only) ------------------------
(g) Compute 1(f) as a percentage of 1(c) 1(g)
------------------------
</TABLE>
4
<PAGE> 115
2. (a) Maximum Capital Expenditures permitted pursuant to
Section 9.4 (see Line 1(c)):
<TABLE>
<CAPTION>
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C>
1998 $ 35,000,000
1999 $ 75,000,000
2000 $ 90,000,000
2001 $100,000,000
2002 $ 80,000,000
2003 $ 80,000,000
</TABLE>
(b) Investments in any single restaurant unit owned by a
Non-Controlled Joint Venture shall not exceed
$1,500,000 (see Line 1(d))
(c) Investments in Non-Controlled Joint Ventures shall
not exceed $22,500,000 in the aggregate on any date
of determination (See Line 1(e))
(d) No more than 40% of aggregate Capital Expenditures
permitted in any Fiscal Year shall be used for
Capital Expenditures with respect to The Capital
Grille and Bugaboo Creek Steak House restaurants on
a combined basis (See Line 1(g))
E. Minimum Adjusted EBITDA:
<TABLE>
<S> <C>
1. Adjusted EBITDA of the Borrower and its Subsidiaries for the
period of four (4) consecutive fiscal quarter ending on such
fiscal quarter end (see Leverage Ratio line 2(d)) 1 __________________
</TABLE>
5
<PAGE> 116
<TABLE>
<S> <C> <C> <C>
2. Minimum Adjusted EBITDA:
(a) As of the end of any fiscal quarter, the product of
(i) Adjusted EBITDA for the period of four (4)
consecutive fiscal quarters ending prior to the
commencement of such fiscal quarter multiplied by
(ii) 90% 2(a)
------------------------
F. Applicable Margin
1. Adjusted Leverage Ratio (from line G3) 1
------------------------
2. Applicable Margin per Section 4.1(c) 2
------------------------
G. Adjusted Leverage Ratio
1. Consolidated Funded Debt of the Borrower and its Subsidiaries
as of the immediately preceding fiscal quarter end excluding
the initial $10,000,000 of obligations incurred in connection
with Capital Leases of real property associated with The
Capital Grille restaurants entered into after the Closing Date 1
------------------------
2. Adjusted EBITDA for the period of four (4) consecutive fiscal
quarters ending on such date (from Line A2.d.) 2
------------------------
3. Adjusted Leverage Ratio (divide line 1 by line 2) 3
------------------------
</TABLE>
6
<PAGE> 117
EXHIBIT G
---------
to
Amended and Restated Credit Agreement
dated as of August __, 1998,
by and among
Rare Hospitality International, Inc.,
as Borrower,
the Lenders party thereto,
First Union National Bank,
as Administrative Agent,
and
BankBoston, N.A. and Fleet National Bank,
as Co-Agents
FORM OF ASSIGNMENT AND ACCEPTANCE
---------------------------------
<PAGE> 118
ASSIGNMENT AND ACCEPTANCE
Dated as of:
---------
Reference is made to the Amended and Restated Credit Agreement dated as of
August __, 1998 as amended, restated or otherwise modified (the "Credit
Agreement") by and among Rare Hospitality International, Inc., a Georgia
corporation (the "Borrower"), the lenders party thereto (the "Lenders"), First
Union National Bank, as Administrative Agent and BankBoston, N.A. and Fleet
National Bank, as Co-Agents. Capitalized terms used herein which are not defined
herein shall have the meanings assigned thereto in the Credit Agreement.
(the "Assignor") and (the "Assignee") agree as follows:
---------- --------
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, as of the Effective Date (as
defined below), a ____% interest in and to all of the Assignor's interest,
rights and obligations with respect to its Commitment and Revolving Credit Loans
(including such percentage of the outstanding Swingline Loans and outstanding
L/C Obligations) and the Assignor thereby retains ____% of its interest therein.
This Assignment and Acceptance is entered pursuant to, and authorized by,
Section 13.10 of the Credit Agreement.
2. The Assignor (i) represents that, as of the date hereof, its Commitment
Percentage (without giving effect to assignments thereof which have not yet
become effective) under the Credit Agreement is ____%, the outstanding balances
of its Revolving Credit Loans (including its Commitment Percentage of the
outstanding Swingline Loans and outstanding L/C Obligations) (unreduced by any
assignments thereof which have not yet become effective) under the Credit
Agreement is $__________; (ii) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that the Assignor is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of its Subsidiaries of any of their obligations under the Credit
Agreement or any other instrument or document furnished or executed pursuant
thereto; and (iv) attaches the Revolving Credit Note delivered to it under the
Credit Agreement and requests that the Borrower exchange such Revolving Credit
Note for new Revolving Credit Notes payable to each of the Assignor and the
Assignee as follows:
<PAGE> 119
<TABLE>
<CAPTION>
Revolving Credit Note
Payable to the Order of: Principal Amount of Note:
------------------------ -------------------------
<S> <C>
$
----------- ---------
$
----------- ---------
</TABLE>
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 7.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will, independently and without reliance upon the Assignor or any other
Lender or Administrative Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) confirms that it is
an Eligible Assignee; (v) appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (vi) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Lender;
(vii) agrees to hold all confidential information in a manner consistent with
the provisions of Section 13.10(g) of the Credit Agreement; and (viii) includes
herewith for the Administrative Agent the two forms required by Section 4.11(e)
of the Credit Agreement (if not previously delivered).
4. The effective date for this Assignment and Acceptance shall be as set
forth in Section 1 of Schedule 1 hereto (the "Effective Date"). Following the
execution of this Assignment and Acceptance, it will be delivered to the
Administrative Agent for, to the extent required by the Credit Agreement,
consent by the Borrower and the Administrative Agent and acceptance and
recording in the Register.
5. Upon such consents, acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and
the other Loan Documents to which Lenders are parties and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender under each such agreement, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement and the other Loan
Documents.
6. Upon such consents, acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to the Assignee. The Assignor and
2
<PAGE> 120
Assignee shall make all appropriate adjustments in payments for periods prior to
the Effective Date or with respect to the making of this assignment directly
between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT UNDER
SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
ASSIGNOR:
-------------------------------------------
By:
----------------------------------------
Title:
-------------------------------------
ASSIGNEE:
-------------------------------------------
By:
----------------------------------------
Title:
-------------------------------------
3
<PAGE> 121
Acknowledged and Consented to on behalf of the Borrower:(1)
RARE HOSPITALITY INTERNATIONAL, INC.,
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
Consented to and Accepted:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
- ---------------------------------
(1) If applicable pursuant to Section 13.10.
4
<PAGE> 122
Schedule I
to
Assignment and Acceptance
<TABLE>
<S> <C> <C>
1. Effective Date
------------, ----
2. Assignor's Interest
Prior to Assignment
(a) Commitment Percentage %
-------
(b) Outstanding balance of Revolving Credit Loans $
-----------------
(c) Outstanding balance of
(i) Assignor's Commitment
Percentage of the L/C Obligations $
(ii) Assignor's Commitment -----------------
Percentage of the Swingline Loans $
-----------------
3. Assigned Interest (from Section 1) of Revolving Credit Loans %
-------
4. Assignee's Extensions of Credit
After Effective Date
(a) Total Outstanding balance of
Assignee's Revolving Credit Loans
(line 2(b) times line 3) $
----------------
(b) Total Outstanding balance of
Assignee's Revolving Credit
Commitment Percentage
of the L/C Obligations
(line 2(c)(i) times line 3) $
----------------
(c) Total Outstanding balance of
Assignee's Revolving Credit
Commitment Percentage of the
Swingline Loans
(line 2(c)(ii) times line 3) $
-----------------
</TABLE>
<PAGE> 123
<TABLE>
<S> <C> <C>
5. Retained Interest of Assignor after
Effective Date
(a) Retained Interest (from Section 1) of
Commitment Percentage %
-------
(b) Outstanding balance of Assignor's Revolving
Credit Loans
(line 2(b) times line 5(a)) $
----------------
(c) Outstanding balance of Assignor's
Commitment Percentage of L/C Obligations
(line 2(c)(i) times line 5(a)) $
----------------
(d) Outstanding balance of Assignor's
Commitment Percentage
of Swingline Loans
(line 2(c)(ii) times line 5(a)) $
----------------
6. Payment Instructions
(a) If payable to Assignor,
to the account of Assignor to:
-----------------------------------------------------
-----------------------------------------------------
ABA No.:
---------------------------------------------
Account Name:
-----------------------------------------
Acct. No.:
------------------------------------------
Attn:
------------------------------------------------
Ref:
-------------------------------------------------
(b) If payable to Assignee, to the account of Assignee to:
-----------------------------------------------------
ABA No.:
---------------------------------------------
Account Name:
----------------------------------------
Account No.:
----------------------------------------
Ref:
-------------------------------------------------
</TABLE>
3
<PAGE> 124
Schedule 1
(Lenders and Commitments)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
LENDER COMMITMENT COMMITMENT
PERCENTAGE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
First Union National Bank
One First Union Center, TW-10
301 South College Street 25% $25,000,000
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
- ----------------------------------------------------------------------------------------------------------------------
BankBoston, N.A.
100 Federal Street, 01-09-05
Boston, MA 02110 20% $20,000,000
Attention: Michele Kapinos
Telephone No.: (617) 434-4039
Telecopy No.: (617) 434-9933
- ----------------------------------------------------------------------------------------------------------------------
Fleet National Bank
111 Westminster Street
Providence, RI 02903 20% $20,000,000
Attention: Grace Bento
Telephone No.: (401) 278-3447
Telecopy No.: (401) 278-3431
- ----------------------------------------------------------------------------------------------------------------------
SouthTrust Bank, N.A.
One Georgia Center, PT007
600 West Peachtree Street, NW 15% $15,000,000
Atlanta, GA 30308
Telephone No.: (404) 853-5757
Telecopy No.: (404) 853-5766
- ----------------------------------------------------------------------------------------------------------------------
The Fuji Bank, Limited
Two World Trade Center
New York, NY 10048 10% $10,000,000
Attention: Tina Catapano
Telephone No.: (212) 898-2099
Telecopy No.: (212) 488-8216
- ---------------------------------------------------------------------------------------------------------------------
South Bank
1900 5th Avenue, North, AST-7
Birmingham, AL 35203 10% $10,000,000
Attention: Mashika Myhand
Telephone No.: (205) 581-7015
Telecopy No.: (205) 583-4435
- ---------------------------------------------------- -------------------------- --------------------------------------
</TABLE>
<PAGE> 125
SCHEDULE 1.2
LETTERS OF CREDIT
1. Irrevocable Standby Letter of Credit No. S136740 in favor of Saul Subsidiary
II Limited Partnership issued November 12, 1997, expiring on December 1, 1999
for the account of Capital Grille of Washington, Inc. in the aggregate maximum
amount of $450,000.00.
2. Irrevocable Standby Letter of Credit No. S136741 in favor of Hartford Fire
Insurance Company issued November 12, 1997, expiring on December 1, 1999 for the
account of Rare Hospitality International, Inc. in the aggregate maximum amount
of $350,000.00.
3. Irrevocable Standby Letter of Credit No. S108861 in favor of Fireman's Fund
Insurance Company, Novato, California, issued December 11, 1996, expiring on
August 1, 1999 for the account of Rare Hospitality International, Inc. in the
aggregate maximum amount of $652,704.00.
<PAGE> 126
SCHEDULE 1.3
PLEDGED ENTITIES
Bugaboo Creek Steak House, Inc.
<PAGE> 1
EXHIBIT 10.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, restated, supplemented, or otherwise
modified, the "Pledge Agreement"), dated as of August 26, 1998, is made by RARE
HOSPITALITY INTERNATIONAL, INC., a corporation organized under the laws of the
state of Georgia (the "Pledgor"), in favor of FIRST UNION NATIONAL BANK, a
national banking association, as Administrative Agent (the "Administrative
Agent"), for the ratable benefit of itself and the financial institutions (the
"Lenders") that are, or may from time to time become, parties to the Credit
Agreement referred to below.
STATEMENT OF PURPOSE
Pursuant to the terms of the Amended and Restated Credit Agreement
dated the date hereof (as amended, restated, supplemented or otherwise modified,
the "Credit Agreement") by and among the Pledgor, as borrower, the Lenders who
are or may become party thereto, the Administrative Agent and BankBoston, N.A.
and Fleet National Bank, as Co-Agents, the Lenders have agreed to make certain
Extensions of Credit to the Pledgor as more particularly described therein.
The Pledgor is the legal and beneficial owner of (a) the shares of
Pledged Stock (as hereinafter defined) issued by certain corporations as
specified on Schedule I attached hereto and incorporated herein by reference
(collectively, the "Issuers") and (b) the Partnership/LLC Interests (as
hereinafter defined) in the partnerships and limited liability companies listed
on Schedule I hereto (collectively, the "Partnerships/LLCs").
In connection with the transactions contemplated by the Credit
Agreement and as a condition precedent thereto, the Lenders have requested, and
the Pledgor has agreed to execute and deliver this Pledge Agreement together
with the Pledged Stock to the Administrative Agent, for the ratable benefit of
itself and the Lenders.
NOW, THEREFORE, in consideration of the foregoing premises and to
induce the Administrative Agent and the Lenders to enter into and make available
Extensions of Credit pursuant to the Credit Agreement, the Pledgor hereby agrees
with the Administrative Agent, for the ratable benefit of itself and the
Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein are so used as so defined, and
the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code as in effect in the
State of North Carolina; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or
non-perfection of the security interests in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other
than North Carolina, "Code" means the Uniform Commercial Code as in
effect
<PAGE> 2
in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Collateral" means the Stock Collateral and the
Partnership/LLC Collateral.
"Obligations" means the Pledgor's obligations under the Credit
Agreement, and each Loan Document to which such Pledgor is a party.
"Partnership/LLC Collateral" means all of the Partnership/LLC
Interests of the Pledgor in the Partnerships/LLCs and all Proceeds
therefrom.
"Partnership/LLC Interests" means the entire partnership or
membership interest of the Pledgor in each Partnership/LLC listed on
Schedule I hereto, including, without limitation, the Pledgor's capital
account, its interest as a partner or member in the net cash flow, net
profit and net loss, and items of income, gain, loss, deduction and
credit of the Partnerships/LLCs, its interest in all distributions made
or to be made by the Partnerships/LLCs to the Pledgor and all of the
other economic rights, titles and interests of the Pledgor as a partner
or member of the Partnerships/LLCs, whether set forth in the
partnership agreement or membership agreement of the Partnerships/LLCs,
by separate agreement or otherwise.
"Pledge Agreement" means this Pledge Agreement, as amended,
restated, supplemented or otherwise modified from time to time.
"Pledged Stock" means the shares of capital stock of each
Issuer listed on Schedule I hereto, together with all stock
certificates, options or rights of any nature whatsoever that may be
issued or granted by such Issuer to the Pledgor while this Pledge
Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Stock and the Partnership/LLC Interests, collections
thereon, proceeds of sale thereof or distributions with respect
thereto.
"Stock Collateral" means the Pledged Stock and all Proceeds
therefrom.
2. Pledge and Grant of Security Interest. The Pledgor hereby delivers
to the Administrative Agent, for the ratable benefit of itself and the Lenders,
all the Pledged Stock and hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a first priority security interest in
the Pledged Stock and all other Collateral, as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
2
<PAGE> 3
3. Stock Powers; Register of Pledge. Concurrently with the delivery to
the Administrative Agent of each certificate representing one or more shares of
Pledged Stock, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor with, if the Administrative
Agent so requests, signature guaranteed.
4. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Pledgor shall remain liable to perform all of its
duties and obligations as a partner or member of the Partnerships/LLCs to the
same extent as if this Pledge Agreement had not been executed, (b) the exercise
by the Administrative Agent or any Lender of any of its rights hereunder shall
not release the Pledgor from any of its duties or obligations as a partner or
member of the Partnerships/LLCs, and (c) neither the Administrative Agent nor
any Lender shall have any obligation or liability as a partner or member of the
Partnerships/LLCs by reason of this Pledge Agreement.
5. Representations and Warranties. To induce the Administrative Agent
and the Lenders to execute the Credit Agreement and make any Extensions of
Credit and to accept the security contemplated hereby, the Pledgor hereby makes
to the Administrative Agent and the Lenders all of the representations and
warranties made by the Pledgor in the Credit Agreement and the other Loan
Documents, as if the same was set forth herein in full and additionally
represents and warrants that:
(a) as of the Closing Date, the shares of Pledged Stock listed
on Schedule I constitute all of the issued and outstanding shares of
all classes of the capital stock of each Issuer;
(b) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(c) as of the Closing Date, the Pledgor is the record and
beneficial owner of, and has good and marketable title to, the Pledged
Stock listed on Schedule I, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien created by
this Pledge Agreement and the Liens permitted under Section 10.3 of the
Credit Agreement; and
(d) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock, the Lien granted pursuant to
this Pledge Agreement will constitute a valid, perfected first priority
Lien on the Collateral, enforceable as such against all creditors of
the Pledgor and any Persons purporting to purchase any of the
Collateral from the Pledgor.
6. Certain Covenants. The Pledgor covenants and agrees with the
Administrative Agent, for the ratable benefit of itself and the Lenders, that,
from and after the date of this Pledge Agreement until the Obligations are paid
in full and the Commitments are terminated:
(a) The Pledgor agrees that as a partner or member in the
Partnerships/LLCs it will abide by, perform and discharge each and
every obligation, covenant and agreement to be abided by, performed or
discharged by the Pledgor under the terms of the partnership
3
<PAGE> 4
agreements and operating agreements, as applicable, of the
Partnerships/LLCs, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, at no cost or
expense to the Administrative Agent and the Lenders.
(b) If the Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), whether in addition to,
in substitution of, as a conversion of, or in exchange for any of the
Collateral, or otherwise in respect thereof, the Pledgor shall accept
the same as the agent of the Administrative Agent, hold the same in
trust for the Administrative Agent and deliver the same forthwith to
the Administrative Agent in the exact form received, duly indorsed by
the Pledgor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by
the Pledgor, to be held by the Administrative Agent, subject to the
terms hereof, as additional collateral security for the Obligations.
Further, if the Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any options or
rights, whether in addition to, in substitution of, as a conversion of,
or in exchange for any of the Collateral, or otherwise in respect
thereof, the Pledgor shall assign such options or rights as the case
may be to the Administrative Agent, to be held by the Administrative
Agent, subject to the terms hereof, as additional collateral security
for the Obligations. In addition, any sums paid upon or in respect of
the Collateral upon the liquidation or dissolution of any Issuer or
Partnership/LLC shall be held by the Administrative Agent as additional
collateral security for the Obligations.
(c) Without the prior written consent of the Administrative
Agent, the Pledgor will not (i) vote to enable, or take any other
action to permit, any Issuer or Partnership/LLC to issue any stock,
partnership interests, limited liability company interests or other
equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any
stock, partnership interests, limited liability company interests or
other equity securities of any nature of such Issuer or Partnership/LLC
except stock, partnership interests, limited liability company
interests or other securities issued to the Pledgor and pledged to the
Administrative Agent pursuant to the terms of this Pledge Agreement,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Collateral, or (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim
of any Person with respect to, any of the Collateral, or any interest
therein, except for the Lien provided for by this Pledge Agreement and
Liens permitted under Section 10.3 of the Credit Agreement. The Pledgor
will defend the right, title and interest of the Administrative Agent
in and to the Collateral against the claims and demands of all Persons
whomsoever.
(d) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute and deliver such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purposes of
obtaining or
4
<PAGE> 5
preserving the full benefits of this Pledge Agreement and of the rights
and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to the
Administrative Agent, duly endorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(e) The Pledgor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other similar taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Pledge Agreement.
(f) Within ten (10) Business Days following the formation or
acquisition of any Material Subsidiary of the Pledgor, the Pledgor
agrees to execute a new pledge agreement or a supplement to this Pledge
Agreement, as applicable, and such other documents and instruments as
required pursuant to Section 8.12 of the Credit Agreement.
7. Cash Dividends and Distributions; Voting Rights. Unless an Event of
Default shall have occurred and be continuing and the Administrative Agent shall
have given notice to the Pledgor of the Administrative Agent's intent to
exercise its rights pursuant to Paragraph 8 below, the Pledgor shall be
permitted to receive all cash dividends and shareholder, partnership and
membership distributions paid in accordance with the terms of the Credit
Agreement in respect of the Collateral and to exercise all voting and corporate,
partnership or membership rights, as applicable, with respect to the Collateral;
provided, that no vote shall be cast or corporate, partnership or membership
right exercised or other action taken which would impair in any material respect
the Collateral or which would result in any violation of any provision of the
Credit Agreement, the Notes, this Pledge Agreement or any other Loan Document.
8. Rights of the Administrative Agent.
(a) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the Pledgor, (i) the Administrative Agent shall have the right to receive any
and all cash dividends paid in respect of the Pledged Stock and partnership and
membership distributions in respect of the Partnership/LLC Interests and make
application thereof to the Obligations in the order set forth in Section 4.5 of
the Credit Agreement and (ii) all shares of the Pledged Stock and the
Partnership/LLC Interests shall be registered in the name of the Administrative
Agent or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (A) all voting, corporate, partnership, membership and other rights
pertaining to such shares of the Pledged Stock or Partnership/LLC Interests at
any meeting of shareholders, partners or members of the applicable Issuer or
Partnership/LLC or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock or Partnership/LLC Interests as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock or Partnership/LLC Interests
upon the merger, consolidation, reorganization,
5
<PAGE> 6
recapitalization or other fundamental change in the corporate structure of the
applicable Issuer or Partnership/LLC, or upon the exercise by the Pledgor or the
Administrative Agent of any right, privilege or option pertaining to such shares
of the Pledged Stock or the Partnership/LLC Interests, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock or
the Partnership/LLC Interests with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine), all without liability except to account for property actually
received by it, but the Administrative Agent shall have no duty to the Pledgor
to exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Administrative
Agent or any Lender of any right or remedy against the Pledgor or against any
other Person which may be or become liable in respect of all or any part of the
Obligations or against any collateral security therefor, guarantee thereof or
right of offset with respect thereto. Neither the Administrative Agent nor any
Lender shall be liable for any failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so, nor shall the
Administrative Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof.
9. Remedies. If an Event of Default shall occur and be continuing, upon
the request of the Required Lenders, the Administrative Agent shall exercise, on
behalf of itself and the Lenders, all rights and remedies granted in this Pledge
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, and in addition thereto, all rights and remedies of
a secured party under the Code. Without limiting the generality of the foregoing
with regard to the scope of the Administrative Agent's remedies, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by Applicable Law referred to below) to or upon the Pledgor, any
Issuer, any Partnership/LLC or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
Applicable Law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
the Pledgor, which right or equity is hereby waived or released. The
Administrative Agent shall apply any Proceeds from time to time held by it and
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel thereto, to the
6
<PAGE> 7
payment in whole or in part of the Obligations, in the order set forth in
Section 4.5 of the Credit Agreement, and only after such application and after
the payment by the Administrative Agent of any other amount required by any
provision of Applicable Law, including, without limitation, Section 9-504(1)(c)
of the Code, need the Administrative Agent account for the surplus, if any, to
the Pledgor. To the extent permitted by Applicable Law, the Pledgor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by Applicable Law, such notice shall be deemed reasonable and proper if given at
least five (5) Business Days before such sale or other disposition. The Pledgor
further waives and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Code. Nothing in this Section 9 or otherwise
in this Pledge Agreement shall be construed to require the Administrative Agent
to give any notice of an action not otherwise required by Applicable Law and the
express provision of the Pledge Agreement, the Credit Agreement or any other
Loan Document.
10. Private Sales.
(a) The Pledgor recognizes that the Administrative Agent may be unable
to effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the applicable Issuer to register
such securities for public sale under the Securities Act, or under applicable
state securities laws, even if the applicable Issuer would agree to do so.
(b) The Pledgor further agrees to use commercially reasonable efforts
to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this Paragraph
10 valid and binding and in compliance with any and all other Applicable Laws.
The Pledgor further agrees that a breach of any of the covenants contained in
this Paragraph 10 will cause irreparable injury to the Administrative Agent and
the Lenders not compensable in damages, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Paragraph 10 shall
be specifically enforceable against the Pledgor, and the Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement.
11. Amendments, etc. With Respect to the Obligations. The Pledgor shall
remain obligated hereunder, and the Collateral shall remain subject to the Lien
granted hereby, notwithstanding that, without any reservation of rights against
the Pledgor, and without notice to or further assent by the Pledgor, any demand
for payment of any of the Obligations made by the
7
<PAGE> 8
Administrative Agent or any Lender may be rescinded by the Administrative Agent
or such Lender, and any of the Obligations continued, and the Obligations, or
the liability of the Pledgor or any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered, or released by
the Administrative Agent or any Lender, and the Credit Agreement, the Notes, any
other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or part, as the Lenders (or the Required Lenders, as the case may be) may
deem advisable from time to time, and any guarantee, right of offset or other
collateral security at any time held by the Administrative Agent or any Lender
for the payment of the Obligations may be sold, exchanged, waived, surrendered
or released. Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any other Lien at any time held
by it as security for the Obligations or any property subject thereto. The
Pledgor waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Pledge Agreement; the Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred in reliance upon this Pledge Agreement; and all dealings between the
Pledgor, on the one hand, and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Pledge Agreement. The Pledgor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Pledgor with respect to the Obligations.
12. Limitation on Duties Regarding Collateral. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. Neither the Administrative Agent, any Lender nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
13. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral constitute irrevocable powers
coupled with an interest.
14. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. Paragraph Headings. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
8
<PAGE> 9
16. No Waiver; Cumulative Remedies. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
Paragraph 17 hereof) be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
17. Waivers and Amendments; Successors and Assigns; Governing Law. None
of the terms or provisions of this Pledge Agreement may be amended, supplemented
or otherwise modified except by a written instrument executed by the Pledgor and
the Administrative Agent; provided that any consent by the Administrative Agent
to any waiver, amendment, supplement or modification hereto shall be subject to
approval thereof by the Lenders or Required Lenders, as applicable, in
accordance with Section 13.11 of the Credit Agreement. This Pledge Agreement
shall be binding upon the successors and assigns of the Pledgor and shall inure
to the benefit of the Administrative Agent, the Lenders and their respective
successors and assigns. This Pledge Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of North
Carolina.
18. Notices. All notices and communications hereunder shall be given to
the addresses and otherwise in accordance with Section 13.1 of the Credit
Agreement.
19. Control Agreement; Acknowledgement by Issuers and Partnership/LLC.
(a) The Pledgor hereby authorizes and instructs each Issuer and Partnership/LLC
to comply, and each Issuer and Partnership LLC hereby agrees to so comply, with
any instruction received thereby from the Administrative Agent in accordance
with the terms of this Pledge Agreement with respect to the Collateral, without
any consent or further instructions from the Pledgor (or other registered
owner), and the Pledgor agrees that such Issuer and Partnership/LLC shall be
fully protected in so complying. Each Issuer and Partnership/LLC agrees that its
agreement set forth in the preceding sentence shall be sufficient to create in
favor of the Administrative Agent, for the benefit of the Lenders, "control" of
the Partnership/LLC Interests within the meaning of such term under Section
8-106(c) of the Code. (Notwithstanding the foregoing, nothing in this Pledge
Agreement is intended or shall be construed to mean or imply that the
Partnership/LLC Interests constitute "securities" within the meaning of such
term under Section 8-102(a)(15) of the Code or otherwise to limit or modify the
application of Section 8-103(c) of the Code. Rather, the Administrative Agent
has requested that this provision be included in this Pledge Agreement solely
out of an abundance of caution in the event the Partnership/LLC Interests are,
nevertheless, deemed to constitute "securities" under the Code.)
9
<PAGE> 10
(b) Each Issuer and Partnership/LLC acknowledges receipt of a copy of
this Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. Each Issuer and
Partnership/LLC agrees to notify the Administrative Agent promptly in writing of
the occurrence of any of the events described in Section 6(c) of this Pledge
Agreement. Each Issuer and Partnership/LLC further agrees that the terms of
Section 10 of this Pledge Agreement shall apply to it with respect to all
actions that may be required of it under or pursuant to or arising out of
Section 10 of this Pledge Agreement.
20. Authority of Administrative Agent. The Pledgor acknowledges that
the rights and responsibilities of the Administrative Agent under this Pledge
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Pledgor, the
Administrative Agent shall be conclusively presumed to be acting as agent for
itself and the Lenders with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor any Issuer or Partnership/LLC shall be under
any obligation, or entitlement, to make any inquiry respecting such authority.
21. Consent to Jurisdiction. The Pledgor hereby irrevocably consents to
the personal jurisdiction of the state and federal courts located in Mecklenburg
County, North Carolina, in any action, claim or other proceeding arising out of
or any dispute in connection with this Pledge Agreement, any rights or
obligations hereunder, or the performance of such rights and obligations. The
Pledgor hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the
Administrative Agent or any Lender in connection with this Pledge Agreement, any
rights or obligations hereunder, or the performance of such rights and
obligations, on behalf of itself or its property, in the manner provided in
Section 13.1 of the Credit Agreement. Nothing in this Paragraph 21 shall affect
the right of the Administrative Agent or any Lender to serve legal process in
any other manner permitted by Applicable Law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against the
Pledgor or its properties in the courts of any other jurisdictions.
22. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Pledge Agreement
or any other Loan Document ("Disputes"), between or among parties to this Pledge
Agreement or any other Loan Document shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does not waive
the right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions,
claims arising from Loan Documents executed in the future, or claims concerning
any aspect of the past, present or future relationships arising out of or
connected with the Loan Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the
10
<PAGE> 11
American Arbitration Association and Title 9 of the U.S. Code. All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. Notwithstanding anything foregoing to the
contrary, any arbitration proceeding demanded hereunder shall begin within
ninety (90) days after such demand thereof and shall be concluded within
one-hundred and twenty (120) days after such demand. These time limitations may
not be extended unless a party hereto shows cause for extension and then such
extension shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys. The single
arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where the
hearing will be conducted. The parties hereto do not waive any applicable
Federal or state substantive law except as provided herein. Notwithstanding the
foregoing, this paragraph shall not apply to any Hedging Agreement that is a
Loan Document.
(b) Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND THE PLEDGOR HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
23. Entire Agreement; Term of Agreement. This Pledge Agreement,
together with the other Loan Documents, constitutes the entire agreement with
respect to the subject matter hereof and supersedes all prior agreements with
respect to the subject matter hereof. This Pledge Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied in
full and the Commitments terminated.
[Signature Pages Follow]
11
<PAGE> 12
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
[CORPORATE SEAL] RARE HOSPITALITY INTERNATIONAL, INC.
By: /s/
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
[CORPORATE SEAL] BUGABOO CREEK STEAK HOUSE, INC.
By: /s/
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 13
SCHEDULE I
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Subsidiaries
<TABLE>
<CAPTION>
===================================================================================================================================
Percentage of
all Outstanding
No. of Shares issued
Issuer Class of Stock Certificate No. Capital Stock
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bugaboo Creek Steak House, Common 2 1,000 100%
Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF PARTNERSHIP/LLC INTEREST
Partnerships/LLCs
-----------------
Partnership/LLC Partnership/LLC Interest
- --------------- ------------------------
None
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q OF
RARE HOSPITALITY INTERNATIONAL, INC. FOR THE QUARTER ENDED SEPTEMBER 27, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> SEP-27-1998
<CASH> 4,124
<SECURITIES> 648
<RECEIVABLES> 2,832
<ALLOWANCES> 0
<INVENTORY> 9,012
<CURRENT-ASSETS> 23,575
<PP&E> 168,452<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 204,196
<CURRENT-LIABILITIES> 28,165
<BONDS> 51,728
0
0
<COMMON> 105,049
<OTHER-SE> 14,907
<TOTAL-LIABILITY-AND-EQUITY> 204,196
<SALES> 234,210
<TOTAL-REVENUES> 234,210
<CGS> 86,019
<TOTAL-COSTS> 86,019
<OTHER-EXPENSES> 117,874
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,092
<INCOME-PRETAX> 10,798
<INCOME-TAX> 3,350
<INCOME-CONTINUING> 7,448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,448
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.61
<FN>
<F1>ASSET VALUES REPRESENT NET AMOUNTS.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q OF
RARE HOSPITALITY INTERNATIONAL, INC. FOR THE QUARTER ENDED SEPTEMBER 28, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> SEP-28-1997
<CASH> 2,912
<SECURITIES> 609
<RECEIVABLES> 4,907
<ALLOWANCES> 0
<INVENTORY> 9,634
<CURRENT-ASSETS> 23,008
<PP&E> 148,118<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 185,299
<CURRENT-LIABILITIES> 15,402
<BONDS> 36,000
0
0
<COMMON> 102,723
<OTHER-SE> 27,271
<TOTAL-LIABILITY-AND-EQUITY> 185,299
<SALES> 191,898
<TOTAL-REVENUES> 191,925
<CGS> 70,710
<TOTAL-COSTS> 70,710
<OTHER-EXPENSES> 97,590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 524
<INCOME-PRETAX> 8,746
<INCOME-TAX> 2,625
<INCOME-CONTINUING> 6,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,121
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0.52
<FN>
<F1>ASSET VALUES REPRESENT NET AMOUNTS.
</FN>
</TABLE>
