SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
MAY 3, 1996
Date of Report (Date of earliest event reported)
SHONEY'S, INC.
(Exact name of Registrant as specified in its charter)
TENNESSEE 0-4377 62-0799798
(State or other jurisdiction (Commission (IRS employer
of incorporation file no.) identification no.)
1727 ELM HILL PIKE, NASHVILLE, TENNESSEE 37210
(Address of principal executive offices, including zip code)
(615) 391-5201
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On May 3, 1996, Shoney's, Inc. (the "Company") obtained a senior
secured bridge loan, in the aggregate principal amount of up to $100
million, from Canadian Imperial Bank of Commerce (the "Bridge Loan"). See
U.S. $100,000,000, Bridge Loan Credit Agreement, dated as of May 3, 1996,
among Shoney's, Inc., as the Borrower, Canadian Imperial Bank of Commerce,
and various other financial institutions now or hereafter parties hereto,
as the Lenders, and Canadian Imperial Bank of Commerce acting through its
New York Agency, as the Agent for the Lenders, attached hereto as Exhibit
4.1.
The purpose of the Bridge Loan is to provide working capital and a
source of financing for the pending transaction between the Company and TPI
Enterprises, Inc. ("Enterprises"). The Company proposes to acquire
substantially all of the assets of Enterprises, for consideration
consisting of shares of the Company's common stock and assumption by the
Company or repayment of certain designated liabilities and contractual
obligations of Enterprises (the "Reorganization"), pursuant to the terms
and conditions of that certain Plan of Tax-Free Reorganization Under
Section 368(a)(1)(C) of the Internal Revenue Code and Agreement, dated as
of March 15, 1996 (the "Reorganization Agreement"), by and among the
Company, TPI Restaurants Acquisition Corporation, a wholly-owned subsidiary
of the Company, and Enterprises.
The Reorganization required an amendment to the Company's Reducing
Revolving Credit Facility (the "Revolver") which (1) approved the
Reorganization, (2) permitted the Company to enter into the Bridge Loan,
and (3) modified certain covenants under the Revolver, including changes
to accomodate the Reorganization.
Concurrent with the execution of the Bridge Loan and the amendment of
the Revolver, the Company borrowed $20 million under the Bridge Loan, which
was used to reduce the outstanding principal balance under the Company's
Revolver. The Company may borrow up to $80 million under the Bridge Loan
in conjunction with the closing of the Reorganization for the purpose of
refinancing and/or repaying certain liabilities of Enterprises which are
required to be assumed by the Company or satisfied under the Reorganization
Agreement. If the Reorganization is not consummated, the Company will be
permitted to draw an additional amount, up to $20 million, under the Bridge
Loan for working capital.
The Bridge Loan bears interest at the London Interbank Offered Rate
(LIBOR) plus 2.50% with 0.50% increases in the interest rate effective 9,
12 and 18 months after the closing of the Reorganization. The Bridge Loan
is secured by assets acquired by the Company in the Reorganization and by a
pledge of certain other unencumbered assets of the Company. The Bridge
Loan will convert into a term loan on May 3, 1998, if not repaid in full
by that time. The term loan then has a bullet maturity on October 22,
1999. Upon conversion into a term loan, the Company will be required to
pay a fee equal to 3% of the outstanding balance of the Bridge Loan
at the conversion date. The Company presently intends to repay the
Bridge Loan within 24 months of the closing of the Reorganization with
proceeds to be derived from debt or equity issues and/or asset sales.
Item 7. Financial Statements and Exhibits
The following documents are filed as exhibits to the Form 8-K:
Exhibit No. 4.1 U.S. $100,000,000, BRIDGE LOAN CREDIT AGREEMENT, dated
as of May 3, 1996, among SHONEY'S, INC., as the
Borrower, CANADIAN IMPERIAL BANK OF COMMERCE, and
VARIOUS OTHER FINANCIAL INSTITUTIONS NOW OR HEREAFTER
PARTIES HERETO, as the Lenders, and CANADIAN IMPERIAL
BANK OF COMMERCE acting through its New York Agency, as
the Agent for the Lenders
Exhibit No. 4.2 U.S. $270,000,000 AMENDED AND RESTATED REDUCING
REVOLVING CREDIT AGREEMENT, dated as of July 21, 1993,
as amended and restated as of May 3, 1996, among
SHONEY'S, INC., as the Borrower, CIBC INC., acting
through its Atlanta Office and VARIOUS OTHER FINANCIAL
INSTITUTIONS NOW OR HEREAFTER PARTIES HERETO, as the
Lenders, and CANADIAN IMPERIAL BANK OF COMMERCE acting
through its New York Agency, as the Agent for the
Lenders
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHONEY'S, INC.
By: /s/ GREGORY A. HAYES
Gregory A. Hayes
Vice President and Controller
Dated: May 15, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. 4.1 U.S. $100,000,000, BRIDGE LOAN CREDIT AGREEMENT, dated
as of May 3, 1996, among SHONEY'S, INC., as the
Borrower, CANADIAN IMPERIAL BANK OF COMMERCE, and
VARIOUS OTHER FINANCIAL INSTITUTIONS NOW OR HEREAFTER
PARTIES HERETO, as the Lenders, and CANADIAN IMPERIAL
BANK OF COMMERCE acting through its New York Agency, as
the Agent for the Lenders
Exhibit No. 4.2 U.S. $270,000,000 AMENDED AND RESTATED REDUCING
REVOLVING CREDIT AGREEMENT, dated as of July 21, 1993,
as amended and restated as of May 3, 1996, among
SHONEY'S, INC., as the Borrower, CIBC INC., acting
through its Atlanta Office and VARIOUS OTHER FINANCIAL
INSTITUTIONS NOW OR HEREAFTER PARTIES HERETO, as the
Lenders, and CANADIAN IMPERIAL BANK OF COMMERCE acting
through its New York Agency, as the Agent for the
Lenders
EXHIBIT 4.1
[CONFORMED COPY]
U.S. $100,000,000
BRIDGE LOAN
CREDIT AGREEMENT,
dated as of May 3, 1996,
among
SHONEY'S, INC.,
as the Borrower,
CANADIAN IMPERIAL BANK OF COMMERCE,
and
VARIOUS OTHER FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO,
as the Lenders,
and
CANADIAN IMPERIAL BANK OF COMMERCE
acting through its New York Agency,
as the Agent for the Lenders.
24188050.1 <<Date>> 96249917
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.1. Defined Terms........................................... 2
1.2. Use of Defined Terms.................................... 22
1.3. Cross-References........................................ 23
1.4. Accounting and Financial Determinations................. 23
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments............................................. 23
2.2. Reduction of Total Commitment Amount.................... 23
2.3. Borrowing Procedure..................................... 24
2.4. Continuation and Conversion Elections................... 24
2.5. Funding................................................. 24
2.6. Notes................................................... 25
2.7. Extension of Maturity................................... 25
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments.............................. 25
3.1.1. Voluntary Prepayments................................... 25
3.1.2. Mandatory Prepayments................................... 26
3.1.3. Application............................................. 26
3.2. Interest Provisions..................................... 26
3.2.1. Rates................................................... 26
3.2.2. Default Rates........................................... 27
3.2.3. Payment Dates........................................... 27
3.2.4. Interest Rate Determination............................. 28
3.3. Fees.................................................... 28
3.3.1. Commitment Fee.......................................... 28
3.3.2. Agent's Fees............................................ 28
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful.............................. 28
4.2. Deposits Unavailable.................................... 28
4.3. Increased LIBO Rate Loan Costs, etc..................... 29
4.4. Funding Losses.......................................... 29
4.5. Increased Capital Costs................................. 30
4.6. Taxes................................................... 30
4.7. Payments, Computations, etc............................. 31
4.8. Sharing of Payments..................................... 32
4.9. Setoff.................................................. 32
4.10. Replacement of Affected Lenders......................... 32
4.11. Use of Proceeds......................................... 33
ARTICLE V
CONDITIONS TO BORROWINGS
5.1. Effectiveness and Initial Loans......................... 33
5.1.1. Resolutions, etc........................................ 33
5.1.2. Delivery of Notes....................................... 34
5.1.3. Borrowing Request....................................... 34
5.1.4. Compliance Certificate.................................. 34
5.1.5. Officer Solvency Certificate............................ 34
5.1.6. Consents, Approvals, etc................................ 34
5.1.7. No Materially Adverse Effect............................ 34
5.1.8. Warranties; No Default.................................. 34
5.1.9. Closing Fees and Expenses............................... 34
5.1.10. Date of Closing......................................... 35
5.1.11. Insurance Compliance.................................... 35
5.1.12. Mortgages............................................... 35
5.1.13. Title Matters........................................... 35
5.1.14. Credit Agreement........................................ 35
5.1.15. Opinions of Counsel..................................... 35
5.1.16. [Intentionally Omitted]................................. 36
5.2. Second Draw............................................. 36
5.2.1. Resolutions, etc........................................ 36
5.2.2. Consummation of Acquisition and Assumption.............. 37
5.2.3. Pro Forma Balance Sheet................................. 37
5.2.4. Subsidiary Guaranty..................................... 37
5.2.5. Pledge Agreement........................................ 37
5.2.6. No Materially Adverse Effect............................ 37
5.2.7. Date of Closing......................................... 37
5.2.8. Opinions of Counsel..................................... 37
5.2.9. [Intentionally Omitted]................................. 38
5.3. All Borrowings.......................................... 38
5.3.1. Compliance with Warranties, No Default, etc............. 38
5.3.2. Borrowing Request....................................... 38
5.3.3. Satisfactory Legal Form, etc............................ 39
ARTICLE VI
WARRANTIES, ETC.
6.1. Organization, etc....................................... 39
6.2. Due Authorization....................................... 39
6.3. Validity, etc........................................... 40
6.4. Financial Information................................... 40
6.5. Materially Adverse Effect............................... 40
6.6. Absence of Default...................................... 40
6.7. Litigation; Labor Controversies, etc.................... 40
6.8. Regulations G, U and X.................................. 41
6.9. Government Regulation................................... 41
6.10. Burdensome Agreements................................... 41
6.11. Taxes................................................... 41
6.12. Employee Benefit Plans.................................. 41
6.13. Subsidiaries............................................ 42
6.14. Ownership of Properties, Licenses and Permits; Liens.... 42
6.15. Patents, Trademarks, etc................................ 42
6.16. Accuracy of Information................................. 42
6.17. Subordinated Debt....................................... 43
6.18. The Collateral Documents................................ 44
6.19. Environmental Warranties................................ 44
ARTICLE VII
COVENANTS
7.1. Certain Affirmative Covenants Applicable to the
Obligations......................................... 45
7.1.1. Financial Information, etc.............................. 45
7.1.2. Maintenance of Corporate Existences, etc................ 47
7.1.3. Foreign Qualification................................... 47
7.1.4. Payment of Taxes, etc................................... 47
7.1.5. Maintenance of Property; Insurance...................... 48
7.1.6. Notice of Default, Litigation, etc...................... 48
7.1.7. Performance of Instruments.............................. 49
7.1.8. Books and Records....................................... 49
7.1.9. Compliance with Laws, etc............................... 50
7.1.10. Fiscal Year............................................. 50
7.1.11. Substitution and Release of Mortgaged Property.......... 50
7.1.12. Refinancing............................................. 50
7.2. Certain Negative Covenants.............................. 50
7.2.1. Business Activities..................................... 50
7.2.2. Indebtedness............................................ 50
7.2.3. Security Interests...................................... 52
7.2.4. Financial Condition..................................... 53
7.2.5. Investments............................................. 60
7.2.6. Restricted Payments, etc................................ 61
7.2.7. Consolidated Capital Expenditures, etc.................. 62
7.2.8. Guaranties.............................................. 62
7.2.9. Lease Obligations....................................... 63
7.2.10. Take or Pay Contracts................................... 63
7.2.11. Consolidation, Merger, Sale of Assets, etc.............. 63
7.2.12. Modification, etc. of Subordinated Debt................. 65
7.2.13. Transactions with Affiliates............................ 65
7.2.14. Negative Pledges; Subsidiary Payments; Modification of
Documents........................................... 66
7.2.15. Inconsistent Agreements................................. 66
7.2.16. Fiscal Year............................................. 66
7.2.17. Franchise Agreements.................................... 66
7.2.18. [Intentionally Omitted]................................. 66
7.2.19. Environmental Liabilities............................... 66
7.2.20. Amendment of Certain Agreements......................... 67
7.2.21. Sale-Leaseback Transactions............................. 67
7.2.22. Purchase of Franchisees................................. 68
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default....................................... 68
8.1.1. Non-Payment of Obligations.............................. 68
8.1.2. Non-Performance of Certain Covenants.................... 68
8.1.3. Default on Other Indebtedness........................... 69
8.1.4. Bankruptcy, Insolvency, etc............................. 69
8.1.5. Breach of Warranty...................................... 69
8.1.6. Non-Performance of Other Obligations.................... 70
8.1.7. ERISA................................................... 70
8.1.8. Judgments; Settlements.................................. 70
8.1.9. Impairment of Security, etc............................. 70
8.1.10. Change of Control....................................... 71
8.2. Action if Bankruptcy.................................... 71
8.3. Action if Other Event of Default........................ 71
ARTICLE IX
THE AGENT
9.1. Actions................................................. 71
9.2. Exculpation............................................. 72
9.3. Successor............................................... 72
9.4. Collateral Documents, etc............................... 72
9.5. Loans by CIBC Inc., etc................................. 72
9.6. Funding Reliance, etc................................... 72
9.7. Credit Decisions........................................ 73
9.8. Notices, etc. to Agent.................................. 73
ARTICLE X
MISCELLANEOUS
10.1. Waivers, Amendments, etc................................ 73
10.2. Notices................................................. 74
10.3. Costs and Expenses...................................... 74
10.4. Indemnification......................................... 75
10.5. Survival................................................ 76
10.6. Severability............................................ 76
10.7. Headings................................................ 76
10.8. Counterparts, Entire Agreement, etc..................... 76
10.9. Governing Law........................................... 76
10.10. Sale and Transfer of Loans and Note; Participations in
Loans and Note....................................... 76
10.10.1. Assignments............................................. 76
10.10.2. Participations.......................................... 78
10.10.3. Certain Other Provisions................................ 78
10.11. Other Transactions; Consent to Relationships............ 79
10.12. Further Assurances...................................... 79
10.13. Confidentiality......................................... 79
10.14. Certain Collateral Matters.............................. 80
10.15. Forum Selection and Consent to Jurisdiction............. 80
10.16. Waiver of Jury Trial.................................... 81
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Collateral Restaurants
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Compliance Certificate
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - [Intentionally Omitted]
EXHIBIT F - Form of Pledge Agreement
EXHIBIT G - Form of Mortgage
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I - Form of Officer Solvency Certificate
EXHIBIT J - Form of Lender Assignment Agreement
EXHIBIT K - Form of Corporate Opinion of Tuke, Yopp & Sweeney
EXHIBIT L - Form of New York Counsel Opinion to the Borrower
<PAGE>
BRIDGE LOAN CREDIT AGREEMENT
THIS BRIDGE LOAN CREDIT AGREEMENT, dated as of May 3, 1996, among
SHONEY'S, INC., a Tennessee corporation (the "BORROWER"), the various financial
institutions which are or may become parties hereto (collectively, the
"LENDERS" and, individually, a "LENDER"), and CANADIAN IMPERIAL BANK OF
COMMERCE, a Canadian chartered bank acting through its New York Agency, as
Agent (the "AGENT") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower is currently engaged and, after the Acquisition (as
defined below), will be engaged, directly and through various Subsidiaries
(capitalized terms used in these recitals having the meanings set forth in
SECTION 1.1 hereof unless otherwise defined) in the businesses of operating and
franchising a chain of full-service restaurants, fast seafood restaurants, and
specialty dinner house restaurants, and also maintains and operates five
manufacturing and distribution centers, a meat plant and an insurance business
which provides certain insurance services and certain other services related
thereto;
WHEREAS, the Borrower, the lenders party thereto (the "CREDIT AGREEMENT
LENDERS") and the Agent are parties to the Amended and Restated Reducing
Revolving Credit Agreement, dated as of May 3, 1996 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "CREDIT
AGREEMENT");
WHEREAS, the Borrower has requested that the Lenders extend Commitments to
make Loans in an aggregate principal amount not to exceed $100,000,000 at any
one time outstanding;
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including ARTICLE V), to extend such
Commitments and to make Loans to the Borrower;
WHEREAS, the proceeds of the Loans from the First Draw will be used by the
Borrower to provide for the ongoing general corporate purposes of the Borrower
and its Subsidiaries, and the proceeds of the Loans from the Second Draw will
be used by the Borrower, among other things, to refinance certain existing
indebtedness of TPI (as defined below) in connection with the Acquisition and
to provide for the ongoing general corporate purposes of the Borrower and its
Subsidiaries; and
WHEREAS, the Borrower has entered into the Plan of Tax-Free Reorganization
under Section 368(a)(1)(C) of the Internal Revenue Code and Agreement (the
"PLAN OF REORGANIZATION"), dated as of March 15, 1996, among the Borrower, TPI
Restaurants Acquisition Corporation, a Tennessee corporation and a wholly-owned
Subsidiary of the Borrower ("TPAC"), and TPI Enterprises, Inc., a New Jersey
corporation ("TPI"), pursuant to which TPI will transfer to the Borrower
certain of its subsidiaries (the "ACQUISITION") in exchange for the issuance of
shares of the Borrower's common stock, the refinancing of certain of TPI's
existing indebtedness and the assumption by the Borrower of TPI's obligations
under the Subordinated Debentures pursuant to the terms of the TPI Subordinated
Debt Supplemental Indenture and certain other liabilities of TPI as set forth
in the Plan of Reorganization (the "ASSUMPTION");
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"ACQUISITION" has the meaning assigned to such term in the SIXTH RECITAL.
"ACQUISITION DATE" means the date of consummation of the Acquisition in
accordance with the terms of the Plan of Reorganization.
"ADJUSTED COMMITMENT AMOUNT" means, at any time, the Commitment Amount
less the aggregate Commitments of all Defaulting Lenders.
"ADJUSTED EBITDA" means for any period,
(a) the Borrower's EBITDA for such period;
MINUS
(b) Consolidated Capital Expenditures (other than in respect of
Capitalized Leases or Franchisee Acquisitions) for such period.
"ADJUSTED INTEREST COVERAGE RATIO" means, at any date, the ratio of
(a) Adjusted EBITDA for the four Fiscal Quarter period ending on or
prior to such date
TO
(b) Consolidated Interest Expense paid or payable in cash in
respect of the four Fiscal Quarter period ending on or prior to such date.
"ADJUSTED PERCENTAGE" means, (i) at a time when no Lender Default exists,
for each Lender such Lender's Percentage and (ii) at a time when a Lender
Default exists (A) for each Lender that is a Defaulting Lender, zero and (B)
for each Lender that is a Non-Defaulting Lender, the percentage determined by
dividing an amount equal to (I) prior to date of the First Draw, such Lender's
Percentage of the Commitment Amount at such time by the Adjusted Commitment
Amount at such time, and (II) on and after the date of the First Draw, the
principal amount of all of such Lender's Loans then outstanding by the
aggregate principal amount of all Loans then outstanding of all Non-Defaulting
Lenders.
"AFFECTED LENDER" means a Lender that (a) (x) is entitled to payment by
the Borrower of increased capital costs described in SECTION 4.5 and (y) which
Lender's claim is for amounts which exceed the weighted average (based on the
respective outstanding amounts of Loans of Lenders submitting claims under
SECTION 4.5) of the amounts then being claimed by all Lenders pursuant to
SECTION 4.5, (b) makes a claim for payment by the Borrower of increased costs
described in SECTION 4.6 or (c) is a Defaulting Lender or otherwise defaults in
its obligation to make Loans.
"AFFILIATE" of any Person means
(a) any other Person which, directly or indirectly, controls or is
controlled by or is under common control with such other Person; or
(b) any Person who is a director or officer of such Person or of
any Person described in the foregoing CLAUSE (A).
For purposes of this definition, control of a Person shall mean (x) the
power, direct or indirect, (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise, or (y) the ownership, direct or indirect, of
10% or more of any class of voting stock of such Person.
"AGENT" means
(a) CIBC-NYA;
(b) any other office or agency of Canadian Imperial Bank of
Commerce within the United States of America of which the Lenders and the
Borrower are notified and
(i) to which the rights and responsibilities of the Agent
hereunder may be transferred from time to time, or
(ii) which may, from time to time on behalf of CIBC-NYA or any
such transferee, act as Agent for the Lenders under this Agreement,
any Collateral Document or any other Loan Document; or
(c) such other Lender or financial institution as shall have
subsequently been appointed as the successor Agent pursuant to SECTION
9.3.
"AGENT'S FEE LETTER" means the letter agreement, dated April 18, 1996,
between the Borrower and Canadian Imperial Bank of Commerce entitled "Fees", as
from time to time amended, supplemented, amended and restated or otherwise
modified.
"AGREEMENT" means, on any date, this bridge loan credit agreement as
originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated or otherwise modified and in effect
on such date.
"APPLICABLE MARGIN" means (a) for the period commencing on the date of the
First Draw and ending on the 270th day following the Second Draw, with respect
to the unpaid principal amount of each LIBO Rate Loan, 2.50%, and with respect
to the unpaid principal amount of each Base Rate Loan, 1.50%, and (b)
thereafter, (i) with respect to the unpaid principal amount of each LIBO Rate
Loan, the applicable percentage set forth below in the column entitled
"Applicable Margin for LIBO Rate Loans;" and (ii) with respect to the unpaid
principal amount of each Base Rate Loan, the applicable percentage set forth
below in the column entitled "Applicable Margin for Base Rate Loans":
<TABLE>
<CAPTION>
PERIOD Applicable Margin
Applicable Margin
FOR LIBO RATE LOANS
FOR BASE RATE LOANS
<S> <C> <C>
271 days from the date of the Second Draw to 3.00%
2.00%
and including the 365th day following the date
of the Second Draw
366 days from the date of the Second Draw to 3.50%
2.50%
and including the 545th day following the date
of the Second Draw
Thereafter 4.00%
3.00%.
</TABLE>
; PROVIDED, HOWEVER, that if the Second Draw has not occurred on or prior to
the Commitment Termination Date, the Second Draw for purposes of this
definition shall be deemed to have been made on the Commitment Termination
Date.
"APPROVING LENDERS" means, at any time any determination thereof is to be
made, Non-Defaulting Lenders having an aggregate Adjusted Percentage of at
least 66-2/3%.
"ASSIGNEE LENDER" has the meaning assigned to such term in SECTION
10.10.1.
"ASSUMPTION" has the meaning assigned to such term in the SIXTH RECITAL.
"AUTHORIZED OFFICERS", with respect to the Borrower, has the meaning
assigned to such term in CLAUSE (A)(II) of SECTION 5.1.1 or CLAUSE (A)(II) of
SECTION 5.2.1, and, with respect to a Transferred Subsidiary, has the meaning
assigned to such term in CLAUSE (B)(II) of SECTION 5.2.1.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the CIBC Alternate Base Rate.
"BORROWER" has the meaning assigned to such term in the PREAMBLE hereof.
"BORROWING" means Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with SECTION 2.3.
"BORROWING REQUEST" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of EXHIBIT B
hereto.
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York, or Atlanta, Georgia; and
(b) relative to the date of
(i) making or continuing any Loans as, or converting any Loans
from or into, LIBO Rate Loans,
(ii) making any payment or prepayment of principal of or
payment of interest on any portion of the principal amount of any
Loans being maintained as LIBO Rate Loans, or
(iii) the Borrower's giving any notice (or the number of
Business Days to elapse prior to the effectiveness thereof) in
connection with any matter referred to in the immediately preceding
CLAUSE (B)(I) or (B)(II),
any such banking business day which is also a day on which dealings in
Dollars are carried on in the interbank eurodollar market applicable to
such LIBO Rate Loans.
"CAPITALIZED LEASES" means leases the obligations under which have been,
or in accordance with GAAP are required to be, recorded on the books of the
Borrower or any of its Subsidiaries as capital leases.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the
date of issuance and rated A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc., issued by a Lender or any affiliate
thereof or by a corporation (except an Affiliate of the Borrower)
organized under the laws of any State of the United States or of the
District of Columbia;
(c) any certificate of deposit, eurodollar time deposit or
acceptance, maturing not more than one year after such time, issued by a
Lender, any bank providing Indebtedness permitted under CLAUSE (B) of
SECTION 7.2.2 on the date hereof or any commercial banking institution
which is a member of the Federal Reserve System and which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
or
(d) any repurchase agreement entered into with either any Lender or
any other commercial banking institution of the nature referred to in
CLAUSE (C), secured by a fully perfected Security Interest in any
obligation of the type described in any of CLAUSES (A) through (C), having
a market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation thereunder of such Lender
or other commercial banking institution.
"CD PUBLISHED MOVING RATE" means, at any time, the latest three-week
moving average of daily secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States money
market lenders, such three-week moving average (adjusted to the basis of a year
of 365 or 366 days, as the case may be) being determined weekly for the three-
week period ending on the previous Friday by the Agent on the basis of
(a) such rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York (as adjusted for
reserves and assessments in the same manner as the CD Quoted Rate); or
(b) if such publication shall be suspended or terminated, the CD
Quoted Rate determined by the Agent on the basis of quotations for such
rates by CIBC-NYA.
"CD QUOTED RATE" means, relative to any determination of the CD Published
Moving Rate in circumstances when publication of the rates referred to in
CLAUSE (A) of the definition thereof has been suspended or terminated, the rate
of interest per annum determined by the Agent to be the sum (adjusted to the
nearest 1/100 of 1%, if any) of (a) the rate obtained by dividing (i) the
average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the bid
rates quoted to CIBC-NYA, in its Domestic Office's secondary market at
approximately 10:00 a.m. New York City time (or as soon thereafter as
practicable), from time to time by three certificate of deposit dealers of
recognized standing selected by the Agent in its sole discretion for the
purchase at face value of three-month certificates of deposit in an amount
approximately equal or comparable to the amount of CIBC-Bank's portion of the
credit outstanding hereunder with respect to which the CD Quoted Rate is being
determined by (ii) a percentage equal to 100% MINUS the average of the daily
percentages specified during such period by the F.R.S. Board (or any successor)
for determining the maximum reserve requirement (including, but not limited to,
any marginal reserve requirement) for a member bank in respect of liabilities
consisting of or including (among other liabilities) three-month Dollar
nonpersonal time deposits in the United States, PLUS (b) the daily average
during such period of the net annual assessment rates estimated by the Agent
for determining the then current annual assessment payable by a member bank to
the Federal Deposit Insurance Corporation (or any successor) for insuring
Dollar deposits of a member bank in the United States.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CHANGE IN CONTROL" means (a) the acquisition after May 3, 1996 by any
Person or Persons acting in concert of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, as amended, or any successor, replacement or
analogous rule or provision of law) of 20% or more of the outstanding shares of
voting stock of the Borrower; or (b) a majority of the board of directors of
the Borrower shall consist of directors other than (i) directors holding office
as of the Closing Date or (ii) directors whose election was recommended by such
directors or subsequent directors so recommended.
"CIBC ALTERNATE BASE RATE" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the highest of
(a) the rate of interest most recently announced by CIBC-NYA at its
Domestic Office as its base rate;
(b) the CD Published Moving Rate most recently determined by the
Agent plus 1/2 of 1%; or
(c) the Overnight Funds Rate plus 1%.
The CIBC Alternate Base Rate is not necessarily intended to be the lowest rate
of interest determined by the Agent in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans shall take effect simultaneously with each change in the CIBC
Alternate Base Rate. The Agent shall give notice promptly to the Borrower and
the Lenders of changes in the CIBC Alternate Base Rate.
"CIBC-BANK" means CIBC Inc., acting through its Atlanta Office, in its
capacity as a Lender hereunder.
"CIBC-NYA" means Canadian Imperial Bank of Commerce, acting through its
New York Agency.
"CLOSING DATE" means May 3, 1996.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL DOCUMENTS" means, collectively, the Pledge Agreement, the
Subsidiary Guaranty, the Mortgages, and each other instrument or document
executed and delivered pursuant to or in connection with any thereof in
accordance with the terms thereof or of this Agreement.
"COMMITMENT AMOUNT" means, on any date, $100,000,000, as such amount may
be reduced from time to time pursuant to SECTION 2.2.
"COMMITMENT TERMINATION DATE" means the earliest to occur of
(a) November 3, 1996;
(b) the date on which the Commitment Amount is reduced to zero
pursuant to SECTION 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in CLAUSE (A), (B) or (C) the
Commitments shall terminate automatically and without further action or notice.
"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Default described in CLAUSES (A) through
(D) of SECTION 8.1.4 with respect to the Borrower or any Subsidiary; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due and payable
pursuant to SECTION 8.3, or
(ii) prior to the date of the Second Draw, in the absence of
such declaration, the giving of notice by the Agent, acting at the
direction of the Required Lenders, to the Borrower that the
Commitments have been terminated.
"COMMITMENTS" means, relative to any Lender, such Lender's obligation to
make Loans pursuant to its Commitment set forth in SECTION 2.1.
"COMPLIANCE CERTIFICATE" means a certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of EXHIBIT C
attached hereto and including therein, among other things, calculations
supporting compliance by the Borrower with SECTION 7.2.4, details regarding the
status of and the Borrower's good faith estimate of taxes payable in connection
with asset sale proceeds (with such changes thereto as may be agreed upon from
time to time by the Agent and the Borrower for purposes of monitoring the
Borrower's compliance herewith) and identifying therein each item of "Mortgage
Financing Collateral" acquired by the Borrower during the period covered by
such Compliance Certificate.
"CONCEPT" means a division or type of business of the Borrower or any of
its Subsidiaries held out to the public with a particular designation and, as
of the date hereof, shall mean and include the following: (a) "Shoney's"
restaurants, (b) "Captain D's", (c) "Commissary", (d) "Pargo's", (e) "Fifth
Quarter", and (f) "BarbWire's".
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the gross
amount of additions during such period to fixed assets, property, plant, and
equipment of the Borrower and its Subsidiaries, all as such additions would be
reflected on a consolidated balance sheet of the Borrower and its Subsidiaries
prepared in accordance with GAAP consistently applied at the end of such period
when compared to a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP consistently applied at the end
of a prior applicable period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, as of the close of any
Fiscal Quarter, the ratio computed for the four consecutive Fiscal Quarters
ending on the computation date, of:
(a) the sum for such Fiscal Quarters of (i) EBITDA plus (ii)
Consolidated Lease Expense
TO
(b) Consolidated Fixed Charges for such Fiscal Quarters.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of:
(a) Consolidated Interest Expense;
PLUS
(b) the amount of any scheduled payment of principal of any
Consolidated Funded Debt (including, without limitation, the amount of
payments of loans under the Credit Agreement due to scheduled reductions
of commitments under Section 2.2.2(a) of the Credit Agreement and the
amount of scheduled payments under Capitalized Leases, other than such as
is appropriately allocable to Consolidated Interest Expense); PROVIDED,
HOWEVER, that for purposes of this CLAUSE (B) only, Consolidated Funded
Debt shall not include any Indebtedness permitted under CLAUSE (B) of
SECTION 7.2.2 or any similar Indebtedness permitted under CLAUSE (C) of
SECTION 7.2.2 so long as such Indebtedness is, by its terms, renewable and
the provider of such Indebtedness has not declined to so renew such
Indebtedness;
PLUS
(c) all federal, state and local income taxes of the Borrower and
its Subsidiaries;
PLUS
(d) Consolidated Lease Expense
in each case for such period.
"CONSOLIDATED FUNDED DEBT" means, at any time, the sum of (a) all
Indebtedness (including accrued interest on the Subordinated LYONS Notes and
debt incurred with respect to Mortgage Financing Transactions and the
Subordinated Debt) of the Borrower and its Subsidiaries, other than any
Indebtedness described in CLAUSE (F) or (G) of the definition of Indebtedness
contained herein, at such time and (b) the amount of reserve for litigation
settlement, as shown on the Borrower's then most recent consolidated balance
sheet delivered pursuant to CLAUSE (A) or (B) of SECTION 7.1.1.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the aggregate
interest expense of the Borrower and its Subsidiaries for such period, as
determined in accordance with GAAP, and in any event including, without
duplication, all commissions, discounts and other fees and charges owed with
respect to letters of credit and banker's acceptances and net costs under Rate
Swap Agreements and the portion of any obligation under Capitalized Leases
allocable to Consolidated Interest Expense, but in any event excluding (x) any
non-cash interest charges and amortization of transaction costs with respect to
Indebtedness and (y) amortization of bond discount relating to the Subordinated
Debentures.
"CONSOLIDATED LEASE EXPENSE" means, for any period, the aggregate amount
required to be paid during such period by the Borrower and its Subsidiaries, as
lessee, net of sublease rentals accrued by the Borrower and its Subsidiaries in
accordance with GAAP, under leases to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is
bound, excluding amounts required to be paid under Capitalized Leases during
such period.
"CONSOLIDATED NET INCOME" means, for any period, all amounts which, in
conformity with GAAP consistently applied, would be included under net income
on a consolidated income statement of the Borrower and its Subsidiaries for
such period.
"CONSOLIDATED NET WORTH" means, at any time, all amounts which, in
accordance with GAAP consistently applied, would be included under
shareholders' equity on a consolidated balance sheet of the Borrower and its
Subsidiaries at such time; PROVIDED that, in any event, such amounts are to be
net of amounts carried on the books of the Borrower and the Subsidiaries for
(a) any treasury stock and (b) any write-up in the book value of any assets of
the Borrower or any of its Subsidiaries resulting from a revaluation thereof.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT D attached hereto (with such
changes thereto as may be agreed upon from time to time by the Borrower and the
Agent).
"CONVERSION DATE" means May 3, 1998.
"CREDIT AGREEMENT" has the meaning assigned to such term in the SECOND
RECITAL.
"CREDIT AGREEMENT COLLATERAL DOCUMENTS" means the Collateral Documents as
defined in the Credit Agreement.
"CREDIT AGREEMENT LENDERS" has the meaning assigned to such term in the
SECOND RECITAL.
"DEFAULT" means any Event of Default or any condition or event which,
after notice or lapse of time or both, would become an Event of Default.
"DEFAULTING LENDER" means any Lender with respect to which a Lender
Default is in effect.
"DISCLOSURE SCHEDULE" means the schedule attached hereto as SCHEDULE I, as
it may be amended, supplemented or otherwise modified from time to time by the
Borrower with the written consent of the Agent.
"DOLLAR" and the sign "$" mean lawful money of the United States of
America.
"DOMESTIC OFFICE" means, relative to the Agent or any Lender, the office
thereof designated as such below its signature hereto (or designated pursuant
to a Lender Assignment Agreement) or such other office of such Person within
the United States as may be designated from time to time by notice from such
Person to the Borrower and the Agent.
"EBITDA" means, for any period, an amount equal to the sum, computed for
such period, of
(a) Consolidated Net Income ((i) excluding extraordinary items of
gain and including extraordinary items of loss, in each case as determined
in accordance with GAAP consistently applied, (ii) excluding any non-cash
portion of restructuring charges accrued by the Borrower on its
consolidated income statements in respect of its 1995 and 1996 Fiscal
Years, (iii) excluding any ordinary gains arising from the Divestitures
(as defined in the Existing Credit Agreement described in the Credit
Agreement), (iv) excluding non-cash charges relating to the Borrower's
workers' compensation obligations, a write-down in the Borrower's
investment in ShoLodge, a write-off of remodeling expenses and a write-off
of investment incurred in the conversion of Shoney's Concept restaurants
into BarbWire's Concept restaurants in each case during Fiscal Year 1995
and (v) excluding non-cash charges relating to the Borrower's management
stock option plan) for such period;
PLUS
(b) all federal, state and local income taxes of the Borrower and
its Subsidiaries for such period (excluding the effects of any non-cash
portion of restructuring charges accrued by the Borrower on its
consolidated income statements in respect of its 1995 and 1996 Fiscal
Years);
PLUS
(c) Consolidated Interest Expense for such period;
PLUS
(d) the aggregate amount deducted, in determining Consolidated Net
Income for such period, with respect to depreciation and amortization in
accordance with GAAP consistently applied and in any event including, but
without duplication, the aggregate amount so deducted for (i) non-cash
interest charges and amortization of transaction costs with respect to
Indebtedness and (ii) amortization of bond discount relating to the
Subordinated Debentures.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"EVENT OF DEFAULT" has the meaning assigned to such term in SECTION 8.1.
"EXCLUDED EQUITY ISSUANCE" means each issuance of common stock of the
Borrower as consideration for (a) Franchisee Acquisitions permitted by
SECTION 7.2.22 or (b) the Transferred Subsidiaries.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum for each day during such period equal to
(a) the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FIRST AMERICAN" means First American National Bank of Nashville, a
national banking association.
"FIRST AMERICAN FACILITY" means the $20,000,000 revolving credit facility
provided to the Borrower by First American.
"FIRST DRAW" means the Borrowings of up to $20,000,000 made on the Closing
Date.
"FISCAL QUARTER" means any quarter of a Fiscal Year and, in the case of
the Borrower's initial Fiscal Quarter of a Fiscal Year, means a period of
sixteen consecutive weeks, in the case of each of the Borrower's second and
third Fiscal Quarters of a Fiscal Year, means a period of twelve consecutive
weeks and, in the case of the Borrower's final Fiscal Quarter of a Fiscal Year,
means a period of twelve consecutive weeks if the Fiscal Year is comprised of
fifty-two weeks and thirteen consecutive weeks if the Fiscal Year is comprised
of fifty-three weeks.
"FISCAL YEAR" means any period of fifty-two or fifty-three consecutive
calendar weeks ending on the last Sunday in October of each calendar year;
references to a Fiscal Year with a number corresponding to any calendar year
(E.G. the "1996 Fiscal Year") refer to the Fiscal Year ending on the last
Sunday in October occurring during such calendar year.
"FRANCHISEE ACQUISITIONS" means (a) any additions to property, plant or
equipment of the Borrower or any of its Subsidiaries constituting restaurant or
related properties that are acquired from Concept franchisees of the Borrower
or (b) the acquisition of capital stock or other ownership interests in such
franchisees, but does not include the Acquisition.
"F. R. S. BOARD" means the Board of Governors of the Federal Reserve
System (or any successor).
"FUNDED DEBT RATIO" means, at any date, the ratio of
(a) the Borrower's Consolidated Funded Debt at such time;
TO
(b) the Borrower's EBITDA for the four Fiscal Quarter Period ending
on or just prior to such date.
"GAAP" is defined in SECTION 1.4.
"GUARANTY" means any agreement, undertaking, or arrangement by which any
Person guarantees, endorses, or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to "keep-well" or supply funds to, or otherwise to invest
in, a debtor, or otherwise to assure a creditor against loss) the debt,
obligation, or other liability of any other Person (other than by endorsements
of instruments in the ordinary course of collection), or guarantees the payment
of dividends or other distributions upon the shares of any other Person. The
amount of the obligor's obligation under any Guaranty shall (subject to any
limitation set forth therein) be deemed to be the amount of the debt,
obligation, or other liability guaranteed or supported thereby.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in
this Agreement refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any Independent Public Accountant as to any financial
statement of the Borrower, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
the Borrower to be in default of any of its obligations under SECTION
7.2.4.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purpose of this Agreement and each
other Loan Document, the parties hereto agree that the rule of contract
interpretation to the effect that where general words are followed by a
specific listing of items, the general words shall not be given their widest
meaning, shall not be applicable to limit a general statement, which is
followed by or referable to any enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"INDEBTEDNESS" of any Person, at a particular time, means all items which,
in conformity with GAAP, would be classified as liabilities on a balance sheet
of such Person as at such time and which constitute (a) indebtedness for
borrowed money or the deferred purchase price of assets or other property
(including, without limitation, all notes payable and drafts accepted
representing extensions of credit and all obligations evidenced by bonds,
debentures, notes or other similar instruments but excluding trade payables
incurred in the ordinary course of business payable within ninety days of the
date thereof); PROVIDED, that for purposes of SECTION 7.2.4 the amount of
Indebtedness in respect of the Subordinated LYONS Notes and all other
Indebtedness issued on a zero coupon basis shall be the original issue price
thereof plus the amount of accrued interest thereon, (b) obligations with
respect to any conditional sale agreement or title retention agreement, (c)
indebtedness arising under acceptance facilities, in connection with surety or
other similar bonds, and the outstanding amount of all letters of credit issued
for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all liabilities secured by any Security Interest in any
property owned by such Person even though it has not assumed or otherwise
become liable for the payment thereof, (e) obligations under Capitalized
Leases, (f) obligations with respect to Rate Swap Agreements, and (g) any
asserted withdrawal liability of such Person or a commonly controlled entity to
a Multiemployer Plan.
"INDEPENDENT PUBLIC ACCOUNTANT" means Ernst & Young or any other public
accounting firm of recognized national standing selected by the Borrower and
consented to by the Required Lenders.
"INSTRUMENT" means any contract, agreement, indenture, mortgage or other
document or writing (whether by formal agreement, letter, or otherwise) under
which any obligation is evidenced, assumed, or undertaken, or any right to any
Security Interest is granted or perfected.
"INTEREST PERIOD" means, relative to any LIBO Rate Loans, the period which
shall begin on (and include) the date on which such LIBO Rate Loans are made
pursuant to SECTION 2.3, or continued as or converted into LIBO Rate Loans
pursuant to SECTION 2.4, and shall end on (but exclude) the day which
numerically corresponds to such date one, two, three or six months thereafter,
as the Borrower may select in its relevant notice pursuant to SECTION 2.3 or
SECTION 2.4; PROVIDED, HOWEVER, that:
(a) the Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates falling on
more than five different dates;
(b) absent the timely selection of a new Interest Period for a then
outstanding LIBO Rate Loan, such LIBO Rate Loan shall, immediately upon
the expiration of such Interest Period, automatically and without further
action be converted into a Base Rate Loan;
(c) if there exists no numerically corresponding day in such month,
such Interest Period shall end on the last Business Day of such month;
(d) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period shall
end on the Business Day next preceding such numerically corresponding
day); and
(e) the Borrower may not select, and there shall not be applicable,
any Interest Period for any Loan requested to be made or continued as, or
converted into, LIBO Rate Loans that would end later than the Commitment
Termination Date or that would require such Interest Period to be broken
by reason of a mandatory prepayment required because of a mandatory
commitment reduction provided for in CLAUSE (A) of SECTION 2.2.2.
"INVESTMENT" means, when used with reference to any investment of the
Borrower or any of its Subsidiaries,
(a) any loan, advance or other extension of credit made by it to
any other Person (excluding commission, travel, salary, relocation
expenses, and similar advances to officers and employees made in the
ordinary course of business);
(b) any Guaranty made by such Person; and
(c) any capital contribution by such Person to, or purchase of
stock or other securities or partnership interests by such Person in, any
other Person, or any other investment evidencing an ownership or similar
interest of such Person in any other Person;
and the amount of any Investment shall be the original principal or capital
amount thereof less (i) all cash returns of principal or equity thereon and
(ii) in the case of any Guaranty, any reduction in the aggregate amount of
liability under such Guaranty to the extent that such reduction is made
strictly in accordance with the terms of such Guaranty (and, in each case,
without adjustment by reason of the financial condition of such other Person).
"LENDER" and "LENDERS" have the respective meanings assigned to such terms
in the PREAMBLE hereof.
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of EXHIBIT J hereto.
"LENDER DEFAULT" shall mean (a) the refusal (which has not been retracted)
of a Lender to make available its portion of any Borrowing or (b) a Lender
having notified in writing the Borrower and/or the Agent that it does not
intend to comply with its obligations under SECTION 2.1 or SECTION 2.7, as the
case may be, in either case as a result of any takeover of such Lender by any
regulatory authority or agency.
"LENDER PARTY" or "LENDER PARTIES" has the meaning assigned to such term
in SECTION 10.4.
"LIBO RATE" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the arithmetic average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to each Reference Lender's
LIBOR Office in the interbank eurodollar market as at or about 10:00 a.m. (New
York City time) two Business Days prior to the beginning of such Interest
Period for delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of each such Reference Lender's LIBO Rate
Loan and for a period approximately equal to such Interest Period.
"LIBO RATE LOAN" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO RATE (RESERVE ADJUSTED)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
LIBO Rate = LIBO RATE
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received by
the Agent from the Reference Lenders, two Business Days before the first day of
such Interest Period.
"LIBOR OFFICE" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto (or designated pursuant to a
Lender Assignment Agreement) or such other office, whether or not outside the
United States, of such Lender as designated from time to time by notice from
such Lender to the Borrower and the Agent which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder and through which such Lender, if it
is a Reference Lender, determines the LIBO Rate.
"LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"LIMITED PARTNERSHIPS" means, collectively, Shoney's Manassas Limited
Partnership, Captain D's Manassas Limited Partnership, Pargo's Manassas Limited
Partnership, Shoney's - Captain D's-Winchester Limited Partnership and Shoney's
of Eufaula, Ltd., as to each of which the Borrower is the general partner and
each of which owns restaurant(s) which are leased to the Borrower and/or
motel(s) which are leased to ShoLodge, Inc.
"LOANS" is defined in SECTION 2.1.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Collateral Documents, the Agent's Fee Letter, any Lender Assignment Agreement
executed pursuant to this Agreement and each other instrument or document
executed and delivered pursuant to or in connection with this Agreement or any
thereof.
"LOAN TO VALUE RATIO" means the ratio, expressed as a percentage, of the
aggregate Commitments at any date of determination to the aggregate value of
then existing collateral for the Obligations.
"LYONS INDENTURE" means the indenture, dated as of April 1, 1989, by the
Borrower in favor of The Bank of New York, as Trustee, with respect to the
Subordinated LYONS Notes as in effect on the Closing Date.
"MARRIOTT" means the Marriott Corporation, a Delaware corporation, or its
Affiliates.
"MATERIALLY ADVERSE EFFECT" means, relative to any occurrence of whatever
nature (including, without limitation, any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
materially adverse effect on:
(a) the consolidated business, assets, revenues, financial
condition, operations, or prospects of the Borrower and its Subsidiaries
or the Transferred Subsidiaries; or
(b) the ability of the Borrower to perform any of its payment or
other material obligations under this Agreement, the Notes, the Collateral
Documents or any other Loan Documents.
"MATURITY" means, relative to any Loan, the date on which such Loan is
stated to be due and payable in whole or in part (in accordance with the Note
evidencing such Loan, this Agreement, or otherwise) or such earlier date when
such Loan (or any portion thereof) shall be or become due and payable in whole
or in part in accordance with the terms of this Agreement, whether by required
prepayment, reduction, declaration, acceleration or otherwise.
"MEMORANDUM" means the Confidential Information Memorandum dated March,
1996, compiled by Canadian Imperial Bank of Commerce based on information
provided by the Borrower.
"MORTGAGE FINANCING COLLATERAL" means those properties listed on ITEM 1.1
("Mortgage Financing Collateral") of the Disclosure Schedule (including
buildings placed thereon) that have been used to collateralize the debt
incurred by the Borrower in the Mortgage Financing Transactions.
"MORTGAGE FINANCING TRANSACTION" means any program of acquiring or
financing land and buildings for restaurant facilities listed on ITEM 1.1
("Mortgage Financing Collateral") of the Disclosure Schedule.
"MORTGAGE FINANCING TRANSACTION DOCUMENT" means each agreement, mortgage,
security agreement, deed of trust, indenture, note and each other document and
instrument relating to a Mortgage Financing Transaction. "MORTGAGE FINANCING
TRANSACTION DOCUMENTS" means all such agreements, mortgages, indentures, notes
and other documents and instruments.
"MORTGAGES" means those mortgages, in substantially the form of EXHIBIT G
attached hereto, executed and delivered by the Borrower in favor of the Agent
and a trustee, where necessary, for the benefit of the Lenders securing the
Obligations, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with the provisions thereof.
"MULTIEMPLOYER PLAN" has the meaning assigned to such term under section
3(37) of ERISA.
"NET DEBT OR EQUITY PROCEEDS" means, (a) with respect to the sale by the
Borrower of any stock or warrants or options issued by the Borrower or from the
exercise of any warrants or options (excluding, in each case, proceeds received
pursuant to employee stock purchase plans, director or employee option plans or
other employee benefit plans or from Excluded Equity Issuances); and (b) with
respect to the sale, issuance or incurrence of Indebtedness by the Borrower not
otherwise permitted by SECTION 7.2.2 but as to which the Borrower has received
the prior written consent of the Required Lenders, in each case, the excess of
(i) the gross proceeds received by the Borrower from such sale, exercise,
issuance or incurrence over (ii) the sum of all customary fees and expenses
with respect to underwriting commissions and related legal, investment banking
and accounting fees and disbursements paid in connection therewith.
"NET PROCEEDS" means the gross proceeds received by the Borrower or any of
its Subsidiaries from the sale or other disposition of any of their respective
assets (excluding, proceeds from an Excluded Equity Issuance, inventory sold in
the ordinary course of business and any item from which Net Debt or Equity
Proceeds are received), less customary selling expenses incurred in connection
therewith and good faith estimated taxes payable as a result thereof which are
actually paid; PROVIDED, that, if, in accordance with SECTION 7.2.11, the
Borrower shall be permitted to receive a note or other instrument as part or
all of the consideration for such sale or other disposition, the gross proceeds
shall be deemed to include the principal amount of any such note or the amount
of the obligation evidenced by any such other instrument; and PROVIDED,
FURTHER, that "Net Proceeds" shall be deemed not to include (a) an amount equal
to the first $5,000,000 in proceeds (determined by aggregating the gross
proceeds from applicable asset sales and dispositions and subtracting therefrom
customary selling expenses incurred in connection therewith and good faith
estimated taxes payable as a result thereof) realized during each Fiscal Year
and (b) any rental payments made to the Borrower under a lease or sublease of
Lee's Famous Recipe restaurants permitted under CLAUSE (L) of SECTION 7.2.11.
"NEW LENDER" has the meaning assigned to such term in SECTION 4.10.
"1989 MORTGAGE FINANCING TRANSACTION" means the Mortgage Financing
Transaction consummated by the Borrower during the 1989 Fiscal Year.
"NON-DEFAULTING LENDER" means and includes each Lender other than a
Defaulting Lender.
"NOTE" means a promissory note of the Borrower payable to any Lender, in
the form of EXHIBIT A hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate Indebtedness
of the Borrower to such Lender resulting from outstanding Loans, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the
Borrower to the Agent, the Agent and/or the Lenders arising under or in
connection with this Agreement and the Notes and all obligations (monetary or
otherwise) of the Borrower and its Subsidiaries arising under or in connection
with the Collateral Documents or the other Loan Documents.
"OVERNIGHT FUNDS RATE" means, on any date, a fluctuating interest rate per
annum equal to the interest rate (rounded upwards, if necessary, to the nearest
1/16 of 1%) offered in the interbank market to CIBC-NYA as the overnight
Federal Funds Rate at or about 10:00 a.m. New York City time on such day (or if
such day is not a Business Day, for the next preceding Business Day).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERCENTAGE" means, relative to any Lender, the percentage set forth
opposite its signature hereto as its "Percentage", as such percentage may be
adjusted from time to time pursuant to a Lender Assignment Agreement executed
by such Lender and its Assignee Lender and delivered pursuant to SECTION
10.10.1.
"PERSON" means any natural person, corporation, firm, trust, partnership,
business trust, joint venture, association, government, governmental agency or
authority, or any other entity, whether acting in an individual, fiduciary, or
other capacity.
"PLAN" means a "pension plan", as such term is defined in ERISA, which is
subject to Title IV of ERISA (other than a Multiemployer Plan) and to which the
Borrower or any corporation, trade or business that is, along with the
Borrower, a member of a controlled group of corporations or a controlled group
of trades or businesses (as described in sections 414(b) and 414(c),
respectively, of the Code or section 4001 of ERISA) may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under section
4069 of ERISA.
"PLAN OF REORGANIZATION" has the meaning assigned to such term in the
SIXTH RECITAL.
"PLEDGE AGREEMENT" means the pledge agreement, in substantially the form
of EXHIBIT F attached hereto, executed and delivered by the Borrower in favor
of the Agent for the benefit of the Lenders, securing the Obligations, as the
same may be amended, supplemented, amended and restated or otherwise modified
from time to time in accordance with the provisions thereof.
"PLEDGED NOTES" has the meaning assigned to such term in the Pledge
Agreement.
"PLEDGED SHARES" has the meaning assigned to such term in the Pledge
Agreement.
"QUARTERLY PAYMENT DATE" means the twenty-second day of each October,
January, April, and July of each year or, if any such day is not a Business
Day, the next succeeding Business Day.
"RATE SWAP AGREEMENT" means any interest rate swap, cap, interest rate
collar agreement or similar arrangement entered into, from time to time, by the
Borrower and a Swap Party.
"REALCO" means Shoney's Real Estate, Inc., a special purpose corporation
that is a wholly-owned Subsidiary of the Borrower, incorporated under the laws
of the State of Tennessee.
"REFERENCE LENDERS" means, for purposes of determining the LIBO Rate and
in connection with other matters pertaining to LIBO Rate Loans, CIBC-NYA,
together with any other Lender approved by the Agent and the Borrower and
designated in a notice to all Lenders by the Agent to be a Reference Lender.
If all Loans made by a Reference Lender hereunder are assigned, prepaid or
repaid and its Commitment assigned for any reason whatsoever, such Reference
Lender shall thereupon cease to be a Reference Lender and, if as a result of
the foregoing, there shall only be one Reference Lender remaining, then the
Agent (after consultation with the Borrower) shall, by notice to the Borrower
and the Lenders, designate another Lender as a Reference Lender so that, to the
extent possible, there shall at all times be at least two Reference Lenders.
"REGULATORY CHANGE" means, relative to any Lender, any change after the
date hereof in any (or the adoption after April 1, 1996 of any new):
(a) United States Federal or state law or foreign law applicable to
such Lender; or
(b) regulation, interpretation, directive, or request (whether or
not having the force of law) applicable to such Lender of any court or
governmental authority charged with the interpretation or administration
of any law referred to in the immediately preceding CLAUSE (A) or of any
fiscal, monetary, or other authority having jurisdiction over such Lender.
"RELATED PARTIES" is defined in SECTION 9.2.
"RELEASE" means a "release", as such term is defined in CERCLA.
"REMODELING EXPENSES" means expenses for the remodeling of restaurant
properties recorded on the books and records of the Borrower or its
Subsidiaries as additions to property, plant or equipment of the Borrower or
such Subsidiary in accordance with GAAP.
"REPORTABLE EVENT" has the meaning assigned to such term in CLAUSE (A) of
SECTION 6.12.
"REQUIRED LENDERS" means, at the time any determination thereof is to be
made, Non-Defaulting Lenders having an aggregate Adjusted Percentage of more
than 50%.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as in effect from time to
time.
"RESPONSIBLE OFFICER" means, at the time any determination thereof is to
be made, each of those persons who are the Chairman of the Board (if at the
time an officer), President, chief financial officer (regardless of the title),
Treasurer, corporate controller (regardless of the title), or Secretary of the
Borrower.
"SECOND DRAW" means the Borrowing in a single draw of up to the remaining
balance of the Commitment Amount prior to the Commitment Termination Date in
accordance with the terms of this Agreement.
"SECURITY INSTRUMENT" means any security agreement, chattel mortgage,
assignment, financing or similar statement or notice, continuation statement,
other agreement or Instrument, or amendment or supplement to any thereof,
providing for, evidencing or perfecting any Security Interest or other lien.
"SECURITY INTEREST" means any interest in any real or personal property or
fixture which secures payment or performance of any obligation and shall
include any mortgage, lien, encumbrance, charge or other security interest of
any kind, whether arising under a Security Instrument or as a matter of law,
judicial process or otherwise.
"SHOLODGE" means ShoLodge, Inc., a Tennessee corporation.
"SHONEY'S INVESTMENTS" means Shoney's Investments, Inc., a Nevada
corporation.
"STATED MATURITY DATE" means (i) May 3, 1998 or (ii) if the conditions of
SECTION 2.7 are satisfied prior to such date, October 22, 1999.
"SUBORDINATED DEBENTURES" means the $51,563,000 in aggregate principal
amount of TPI's 8.25% Convertible Subordinated Debentures due 2002 issued
pursuant to the Subordinated Indenture.
"SUBORDINATED DEBENTURES TRUSTEE" means The Bank of New York.
"SUBORDINATED DEBT" means, collectively:
(a) the Subordinated Debentures;
(b) the Subordinated LYONS Notes; and
(c) any other indebtedness (other than indebtedness arising out of
Mortgage Financing Transactions) of the Borrower for money borrowed and
permitted to be outstanding by the Required Lenders in their sole
discretion and which is subordinated in form and substance to the
Obligations, and which has subordination provisions, terms of payment,
interest rates, covenants, remedies, defaults and other material terms, in
each case satisfactory in form and substance to the Required Lenders, as
evidenced by their written approval thereof.
"SUBORDINATED INDENTURE" means the Indenture, dated as of July 15, 1992,
among TPI, as issuer, and TPIR, as guarantor, and the Borrower and the
Subordinated Debentures Trustee, as assumed by the Borrower pursuant to the TPI
Subordinated Debt Supplemental Indenture in form and substance acceptable to
the Agent, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the provisions of this Agreement.
"SUBORDINATED LYONS NOTES" means those zero coupon subordinated, liquid
yield option notes due 2004 in an aggregate face amount of $201,250,000 issued
on April 11, 1989 as in effect on the date hereof.
"SUBSIDIARY" means, when used with respect to any corporation, any other
corporation more than 50% of the outstanding shares of capital stock of which
having ordinary voting power for the election of directors is owned directly or
indirectly by such corporation, and, except as otherwise indicated herein,
references to Subsidiaries shall refer to Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTY" means the guaranty in substantially the form of
EXHIBIT H attached hereto, executed and delivered by each Transferred
Subsidiary in favor of the Agent for the benefit of the Lenders, as such
guaranty may be amended, supplemented, amended and restated or otherwise
modified from time to time.
"SWAP PARTY" means any Affiliate, unit, or agency (including CIBC-Bank) of
Canadian Imperial Bank of Commerce, or any other Lender (or Affiliate thereof)
or any other bank or financial institution acceptable to the Agent, which has
agreed to enter into a Rate Swap Agreement.
"TAXES" has the meaning assigned to such term in SECTION 4.6.
"TPI" has the meaning assigned to such term in the SIXTH RECITAL.
"TPI SUBORDINATED DEBT SUPPLEMENTAL INDENTURE" means the First
Supplemental Indenture among TPI, as issuer, TPIR, as guarantor, the Borrower
and the Subordinated Debentures Trustee, to be executed and delivered in
connection with the Assumption.
"TPIR" means TPI Restaurants, Inc., a Tennessee corporation.
"TRANSFERRED SUBSIDIARIES" means those Subsidiaries of TPI acquired by
Shoney's in connection with the Acquisition and shall include TPIR, TPI
Entertainment, Inc., a Delaware corporation, and TPI Insurance Corporation, a
Hawaii corporation.
"UNFUNDED VESTED LIABILITIES" means, relative to any Plan, at any time,
the excess (if any) of
(a) the present value of all vested nonforfeitable benefits under
such Plan
OVER
(b) the fair market value of all Plan assets allocable to such
benefits,
all determined as of the then most recent valuation date for such Plan, but
only to the extent that such excess represents a potential liability of the
Borrower or any Affiliate to the PBGC or the Plan under Title IV of ERISA.
"UNITED STATES" or "U.S." means the United States of America, its fifty
States, and the District of Columbia.
"WELFARE PLAN" means a "welfare plan", as such term is defined in ERISA.
SECTION 1.2. USE OF DEFINED TERMS. Terms for which meanings are provided
in this Agreement shall, unless otherwise defined or the context requires, have
such meanings when used in the Note, Borrowing Request, Continuation/Conversion
Notice, Compliance Certificate, Loan Document and each notice and other
communication delivered from time to time in connection with this Agreement or
any other Loan Document hereafter executed pursuant hereto.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement and in each Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such Loan Document,
as the case may be, and unless otherwise specified, references in any Article,
Section, or definition to any clause are references to such clause of such
Section, Article, or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under SECTION 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with those generally accepted accounting principles ("GAAP")
applied in the preparation of the financial statements referred to in SECTION
6.4. For purposes of Section 7.2.4, any calculation that is made with respect
to the results of operations of the Borrower and its Subsidiaries for the
Fiscal Quarter in which the Acquisition occurs shall exclude the results of
operations of the Transferred Subsidiaries and the amount of debt repaid or
assumed by the Borrower (including letters of credit and capitalized leases) in
consummation of the Acquisition and the Assumption for such Fiscal Quarter.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including ARTICLE V), each Lender severally agrees to make
loans (relative to such Lender, and of any type, its "LOANS") on the Closing
Date and on the date of the Second Draw to the Borrower in a principal amount
equal to such Lender's Percentage of the aggregate amount of the Borrowing
requested by the Borrower to be made on such day, PROVIDED that the aggregate
principal amount of Loans made on the date of the (i) First Draw shall not
exceed $20,000,000, (ii) Second Draw, if the Acquisition is not consummated,
shall not exceed $20,000,000 and (iii) Second Draw, if the Acquisition is
consummated, shall not exceed the Commitment Amount then in effect; PROVIDED,
FURTHER, HOWEVER, no Lender shall be permitted or required to make any Loan if,
after giving effect thereto, the aggregate outstanding principal amount of all
Loans made on such date (a) of all Lenders would exceed the Commitment Amount
or (b) of such Lender would exceed such Lender's Percentage of the Commitment
Amount. The commitment of each Lender described in this SECTION 2.1 is herein
referred to as its "COMMITMENT".
SECTION 2.2. REDUCTION OF TOTAL COMMITMENT AMOUNT. The Borrower may,
from time to time on any Business Day occurring after the time of the First
Draw, voluntarily reduce the Commitment Amount; PROVIDED, HOWEVER, that all
such reductions shall require at least three Business Days' prior notice to the
Agent (which shall promptly give notice thereof to the Lenders) and shall be
permanent, and any voluntary partial reduction of the Commitment Amount shall
be in a minimum amount of $1,000,000 and in an integral multiple of $100,000.
The Commitment Amount shall be reduced to zero on the date of the Second Draw,
after giving effect to any Borrowing made on such date.
SECTION 2.3. BORROWING PROCEDURE. By delivering a Borrowing Request to
the Agent (whereupon the Agent shall promptly notify the Lenders thereof) on or
before 10:00 a.m. (New York City time) on a Business Day, the Borrower may from
time to time irrevocably request on, in the case of Base Rate Loans, not less
than one nor more than five, and in the case of LIBO Rate Loans, not less than
three nor more than five, Business Days' notice, that a Borrowing be made in a
minimum amount of $5,000,000 and an integral multiple of $100,000, or, if less,
the unused portion of the Commitment Amount. On the terms and subject to the
conditions of this Agreement, each Borrowing shall be comprised of the type of
Loans, and shall be made on the Business Day, specified in such Borrowing
Request. On or before 11:00 a.m. (New York City time) on such Business Day
each Lender shall deposit with the Agent same day funds in an amount equal to
such Lender's Percentage of the requested Borrowing. Such deposit will be made
to an account which the Agent shall specify from time to time by notice to the
Lenders. To the extent funds are received from the Lenders, the Agent shall
make such funds available to the Borrower by wire transfer to the accounts the
Borrower shall have specified in its Borrowing Request. No Lender's obligation
to make any Loan shall be affected by any other Lender's failure to make any
Loan.
SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Agent (which shall promptly give notice
thereof to the Lenders), on or before 10:00 a.m. (New York City time) on a
Business Day, the Borrower may from time to time irrevocably elect, on not less
than three nor more than five Business Days' notice, that all, or any portion
in an aggregate minimum amount of $5,000,000 and an integral multiple of
$100,000, of any Loans be, in the case of Base Rate Loans, converted into LIBO
Rate Loans or, in the case of LIBO Rate Loans, be converted into Base Rate
Loans or continued as LIBO Rate Loans (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least
three Business Days before the last day of the then current Interest Period
with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); PROVIDED, HOWEVER, that (i) subject
to SECTION 4.1, each such conversion or continuation shall be pro rated among
the applicable outstanding Loans of all Lenders, and (ii) no portion of the
outstanding principal amount of any Loans may be continued as, or be converted
into, LIBO Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; PROVIDED,
HOWEVER, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of SECTION 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing, as
the case may be, Dollar certificates of deposit in the U.S. or Dollar deposits
in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. NOTES. Each Lender's Loans under its Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the Commitment Amount on the
Closing Date (or, in the case of an Assignee Lender, an amount equal to the
assigning Lender's assigned amount). The Borrower hereby irrevocably
authorizes each Lender to make (or cause to be made) appropriate notations on
the grid attached to such Lender's Note (or on any continuation of such grid),
which notations, if made, shall evidence, INTER ALIA, the date of, the
outstanding principal of, and the interest rate and Interest Period applicable
to, the Loans evidenced thereby. Such notations shall be rebuttable
presumptive evidence of the information so set forth; PROVIDED, HOWEVER, that
the failure of any Lender to make any such notations shall not limit or
otherwise affect any Obligations of the Borrower. If so requested by any
Lender in writing to the Borrower and the Agent, the Borrower agrees to execute
separate Notes evidencing the LIBO Rate Loans and the Base Rate Loans of such
Lender.
SECTION 2.7. EXTENSION OF MATURITY. If the Borrower has not repaid the
Loans and all other Obligations in full or prior to May 3, 1998, the Borrower
may, upon at least 30 days prior written notice to the Agent, extend the Stated
Maturity Date of the Loans to October 22, 1999. The Loans shall be so extended
if on May 3, 1998, the Borrower shall have complied with the terms and
conditions of SECTIONS 5.3.1 and 5.3.3 as if the Second Draw were being made
thereunder on such date.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
SECTION 3.1.1. VOLUNTARY PREPAYMENTS. Prior to the Stated Maturity Date,
the Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; PROVIDED, HOWEVER, that
(a) any such prepayment of Loans shall be made PRO RATA among Loans
of all Non-Defaulting Lenders of the same type and, if applicable, having
the same Interest Period; PROVIDED, HOWEVER, FURTHER, that at the
Borrower's election, a prepayment made pursuant to this SECTION 3.1.1 may
be applied to a Loan of a Defaulting Lender;
(b) no such prepayment of any LIBO Rate Loan may be made on any day
other than the last day of the Interest Period for such Loan;
(c) all such voluntary prepayments shall require at least two but
no more than five Business Days' prior written notice as to prepayments of
Base Rate Loans, and at least three but no more than five Business Days'
prior written notice as to prepayments of LIBO Rate Loans, in each case to
the Agent (which will promptly notify the other Lenders thereof); and
(d) all such voluntary partial prepayments shall be in an aggregate
minimum amount of $1,000,000 and an integral multiple of $100,000.
No voluntary prepayment of principal of any Loans shall in and of itself
cause a reduction in the Commitment Amount. Each prepayment of any Loans made
pursuant to this Section shall be without premium or penalty, except as may be
required by SECTION 4.4.
SECTION 3.1.2. MANDATORY PREPAYMENTS. Prior to the Stated Maturity Date,
the Borrower
(a) shall, immediately upon any acceleration of the Stated Maturity
Date of any Loans pursuant to SECTION 8.2 or SECTION 8.3, repay all (or if
only a portion of the Loans are accelerated thereunder, such portion of)
the Loans;
(b) on the day immediately following the date of the receipt by the
Borrower or any Subsidiary of Net Proceeds, the Loans shall be immediately
repaid in an amount equal to such Net Proceeds;
(c) on the day immediately following the date of the receipt by the
Borrower or any Subsidiary of Net Debt or Equity Proceeds, the Loans shall
be immediately repaid in an amount equal to such Net Debt or Equity
Proceeds; and
(d) on the day immediately following the date of sale of any of the
restaurants listed on SCHEDULE II, the Loans shall be immediately repaid
as required by Section 1.23 of the Mortgages in the respective amounts set
forth on SCHEDULE II; PROVIDED, HOWEVER, no such prepayment shall be
required if after giving effect to such sale the Loan to Value Ratio shall
not exceed 60%.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by SECTION 4.4.
SECTION 3.1.3. APPLICATION. Mandatory prepayments made pursuant to
SECTION 3.1 shall be applied PRO RATA to the outstanding Loans.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this SECTION
3.2.
SECTION 3.2.1. RATES. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as Base Rate
Loans, equal to the sum of the CIBC Alternate Base Rate from time to time
in effect plus the Applicable Margin; and
(b) on that portion maintained as LIBO Rate Loans, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin.
All LIBO Rate Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.
SECTION 3.2.2. DEFAULT RATES. After the date any principal amount of any
Loan is due and payable (whether on the Stated Maturity Date, upon acceleration
or otherwise), after the Borrower has defaulted in the payment of any other
monetary Obligation which has become due and payable, and after the date any
other Event of Default shall have occurred (and so long as such Event of
Default shall be continuing), the Borrower shall pay interest (after as well as
before judgment) on all amounts payable hereunder at a rate per annum equal to
(a) with respect to LIBO Rate Loans, for the period from the date
such Loan becomes due and payable to the end of the applicable Interest
Period, the higher of (i) the sum of the LIBO Rate (Reserve Adjusted) for
such Interest Period plus the Applicable Margin plus a margin of 2% or
(ii) the CIBC Alternate Base Rate plus the Applicable Margin plus a margin
of 2%; and
(b) in all other cases, the CIBC Alternate Base Rate plus the
Applicable Margin plus a margin of 2%.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part,
of principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, on the three month anniversary of the commencement of such
Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO Rate
Loans on a day when interest would not otherwise have been payable
pursuant to CLAUSE (C), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which
is accelerated pursuant to SECTION 8.2 or SECTION 8.3, immediately upon
such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.2.4. INTEREST RATE DETERMINATION. Each Reference Lender agrees
to furnish to the Agent timely information for the purpose of determining the
LIBO Rate. If any of the Reference Lenders shall be unable or shall otherwise
fail to provide notice of a rate to the Agent for any reason other than any
circumstance referred to in CLAUSE (A) or (B) of SECTION 4.2, the LIBO Rate
shall be determined on the basis of the rate or rates provided in notices of
the remaining Reference Lenders.
SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in this
SECTION 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. COMMITMENT FEE. The Borrower agrees to pay to the Agent
for the account of each Non-Defaulting Lender, for the period (including any
portion thereof when its Commitment is suspended by reason of the Borrower's
inability to satisfy any condition of SECTION 5.3) commencing on the Closing
Date and continuing through the Commitment Termination Date, a commitment fee
at the rate of 1/2 of 1% per annum on such Lender's Percentage of the average
daily unused portion of the Commitment Amount. Such commitment fees shall be
payable by the Borrower in arrears on each Quarterly Payment Date, commencing
with the first such Quarterly Payment Date following the Closing Date, and on
the Commitment Termination Date.
SECTION 3.3.2. AGENT'S FEES. The Borrower agrees to pay to the Agent,
for its own account, fees in the amounts, on the dates and in the manner set
forth in the Agent's Fee Letter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the
Lenders, be conclusive and binding on the Borrower) that the introduction of or
any change in or in the interpretation of any law, rule, regulation or
directive makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for such Lender to make, continue or
maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the
obligations of such Lender to make, continue, maintain or convert any such LIBO
Rate Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such suspension no
longer exist, and all LIBO Rate Loans of such Lender shall automatically
convert into Base Rate Loans at the end of the then current Interest Periods
with respect thereto or sooner, if required by such law, rule, regulation,
directive or assertion.
SECTION 4.2. DEPOSITS UNAVAILABLE. If
(a) the Agent (after consulting with the Reference Lenders) shall
have determined in good faith and after the Reference Lenders shall have
exerted reasonable commercial efforts to obtain quotes for LIBO Rate Loans
(which efforts the Reference Lenders agree to exert) that Dollar deposits
in the relevant amount and for the relevant Interest Period are not
available in the relevant interbank eurodollar market; or
(b) by reason of circumstances affecting a Reference Lender's LIBO
Office's relevant interbank eurodollar market, adequate means do not exist
for ascertaining the interest rate applicable hereunder to LIBO Rate
Loans,
then, upon telephonic or telecopy notice from the Agent (which the Agent agrees
to give promptly and to confirm in writing if telephonic) to the Borrower and
the Lenders (which determination shall be conclusive and binding on the
Borrower and the Lenders), the obligations of all Lenders under SECTION 2.3 and
SECTION 2.4 to make or continue any Loans as, or to convert any Loans into,
LIBO Rate Loans shall forthwith be suspended until the Agent shall have
notified the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 4.3. INCREASED LIBO RATE LOAN COSTS, ETC. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans, including in any case from time to time by reason
of:
(a) to the extent not included in the calculation of the LIBO Rate
(Reserve Adjusted), any reserve, special deposit, or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, such Lender, under or pursuant to any law, treaty, rule, regulation
(including any F.R.S. Board regulation), or requirement in effect on the
date hereof, or as the result of any Regulatory Change; or
(b) any Regulatory Change which shall subject such Lender to any
tax (other than taxes on net income), levy, impost, charge, fee, duty,
deduction, or withholding of any kind whatsoever or change the basis of
taxation of any Loan maintained as a LIBO Rate Loan and the interest
thereon (other than any change which (i) affects, and to the extent that
it affects, the taxation of net income or (ii) is determined by reference
to net income to the extent so determined).
In any such event, such Lender shall promptly notify the Borrower thereof (with
a copy to the Agent) stating the reasons therefor and the additional amount
required fully to compensate such Lender for such increased cost or reduced
amount. Such additional amounts shall be payable in full on the Quarterly
Payment Date occurring immediately after receipt by the Borrower of such notice
from such Lender, or, if such notice is not given to the Borrower before
payment in full of such Lender's Notes, on demand made thereafter. A statement
as to any such increased cost or reduced amount or any change therein
(including calculations thereof in reasonable detail) shall be submitted by
such Lender to the Borrower (with a copy to the Agent) and shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan) as a result of, in each case by reason of action or inaction by the
Borrower,
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last day
of the Interest Period applicable thereto, whether pursuant to SECTION 3.1
or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with
the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor or
not being prepaid in accordance with any prepayment notice given by the
Borrower,
then, upon the written notice of such Lender to the Borrower (with a copy to
the Agent), the Borrower shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.5. INCREASED CAPITAL COSTS. If any Regulatory Change affects
or would affect the amount of capital required or expected to be maintained by
any Lender or any Person controlling such Lender, and such Lender determines
(in its sole and absolute discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Commitment or any Loan
made by such Lender as a result of such Regulatory Change is reduced to a level
below that which such Lender or such controlling Person could have achieved but
for the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such Lender to the Borrower, the Borrower shall pay within
5 days of being notified thereof directly to such Lender additional amounts
sufficient to compensate such Lender or such controlling Person for such
reduction in rate of return (except to the extent, if any, that such amount or
amounts have already been included in the determination of the applicable
interest rate hereunder for the applicable period). A statement of such Lender
to the Borrower (with a copy to the Agent) as to any such additional amount or
amounts (including calculations thereof in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, such Lender may use any method of averaging and
attribution that it (in its sole and absolute discretion) shall deem
applicable.
SECTION 4.6. TAXES. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, other
than income and franchise taxes of the United States or any taxing authority
thereof or therein and of the country in which any Lender's principal executive
office or LIBOR Office is located or any political subdivision or taxing
authority thereof or therein (such non-excluded items being called "TAXES").
In the event that any withholding or deduction from any payment to be made by
the Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, as notified by the Agent to the Borrower,
then the Borrower will
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of such Lenders such
additional amount or amounts as is necessary to ensure that the net amount
actually received by each Lender will equal the full amount such Lender
would have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower upon written notice
will promptly pay such additional amounts (including any penalties, interest or
expenses) as are necessary in order that the net amount received by such Person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had not such Taxes been
asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such
failure. For purposes of this SECTION 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
Each Lender which is not a United States person for Federal income tax
purposes agrees, to the extent that (i) all income realized by such Lender in
respect of the Notes or this Agreement is, or is expected to be, effectively
connected with the conduct by such Lender of a trade or business in the United
States and is includable in gross income of such Lender for the relevant tax
year or (ii) such Lender is entitled at such time to a total or partial
exemption from withholding that is required to be evidenced by United States
Internal Revenue Service Form 1001 or 4224, to deliver to the Agent and the
Borrower, from time to time as requested by the Agent or the Borrower, such
Form 1001 or 4224 (as applicable) or any applicable successor form thereto,
completed in a manner reasonably satisfactory to the Agent and the Borrower.
SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Agent for the PRO
RATA account of the Lenders entitled to receive such payment. All such
payments required to be made to the Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m. (New York City time) on
the date due, in same day or immediately available funds, to such account as
the Agent shall specify from time to time by notice to the Borrower. Funds
received after that time shall be deemed to have been received by the Agent on
the next succeeding Business Day. All payments made to the Agent after the
occurrence and during the continuation of any Event of Default shall be applied
first to costs and expenses, then to fees, then to interest on Loans and then
to principal of Loans. The Agent shall promptly remit in same day funds to
each Lender its share, if any, of such payments received by the Agent for the
account of such Lender. All interest and fees shall be computed on the basis
of the actual number of days (including the first day but excluding the last
day) occurring during the period for which such interest or fee is payable over
a year comprised of 360 days. Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except as
otherwise required by CLAUSE (C) of the definition of the term "INTEREST
PERIOD" with respect to LIBO Rate Loans) be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of SECTIONS
4.3, 4.4, 4.5 and 4.10) in excess of its PRO RATA share of payments then or
therewith obtained by all Lenders, such Lender shall purchase from the other
Lenders such participations in Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the purchasing
Lender TO (b) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to SECTION 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of
such participation. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section to share in the benefits of
any recovery on such secured claim.
SECTION 4.9. SETOFF. Each Lender shall, upon the occurrence of any
Default described in CLAUSES (A) through (D) of SECTION 8.1.4, or with the
consent of the Required Lenders, upon the occurrence of any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing Security
Interest in any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; PROVIDED, HOWEVER,
that any such appropriation and application shall be subject to the provisions
of SECTION 4.8. Each Lender agrees promptly to notify the Borrower and the
Agent after any such setoff and application made by such Lender; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff
under applicable law or otherwise) which such Lender may have.
SECTION 4.10. REPLACEMENT OF AFFECTED LENDERS. If any Lender becomes an
Affected Lender, the Borrower shall have the right, if no Event of Default then
exists, to replace such Affected Lender with one or more Lenders, none of whom
shall constitute an Affected Lender at the time of such replacement,
(collectively, the "NEW LENDER") reasonably acceptable to the Agent, provided
that (a) at the time of any replacement pursuant to this SECTION 4.10, the New
Lender shall enter into one or more Lender Assignment Agreements, pursuant to
which the New Lender shall acquire all of the Commitments and outstanding Loans
of such Affected Lender and, in connection therewith, shall pay to such
Affected Lender in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans
of such Affected Lender, and (B) an amount equal to all accrued, but
theretofore unpaid, fees owing to such Affected Lender pursuant to SECTION 3.3
hereof and (b) all obligations of the Borrower owing to such Affected Lender
(other than those specifically described in clause (a) above in respect of
which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Affected Lender concurrently with such
replacement. Upon the execution of a Lender Assignment Agreement, the payment
of amounts referred to in clauses (a) and (b) above and, if so requested by the
New Lender, delivery to the New Lender of a Note executed by the Borrower (x)
such New Lender shall become a Lender hereunder and the Affected Lender shall
cease to be a Lender hereunder, except with respect to indemnification
provisions under this Agreement which shall survive as to such Affected Lender
and (y) the Percentages of the Lenders shall be automatically adjusted at such
time to give effect to such replacement (and to give effect to the replacement
of an Affected Lender with one or more New Lenders).
SECTION 4.11. USE OF PROCEEDS. The Borrower shall apply the proceeds of
the Loans from the First Draw for the general corporate purposes of the
Borrower and its Subsidiaries and shall apply the proceeds of the Loans from
the Second Draw for the general corporate purposes of the Borrower including,
but only if the Acquisition is consummated, debt refinancing in connection with
the Acquisition; without limiting the foregoing, no proceeds of any Loan will
be used to acquire any equity security of a class which is registered pursuant
to Section 12 of the Securities Exchange Act of 1934 or any "margin stock", as
defined in F.R.S. Board Regulation U.
ARTICLE V
CONDITIONS TO BORROWINGS
SECTION 5.1. EFFECTIVENESS AND INITIAL LOANS. This Agreement shall
become effective on the Closing Date if each of the following conditions
precedent in this SECTION 5.1 shall be fulfilled to the satisfaction of the
Agent (and the obligations of the Lenders to make the Loans comprising the
First Draw shall be subject to the prior or concurrent satisfaction of each of
such conditions):
SECTION 5.1.1. RESOLUTIONS, ETC. The Agent shall have received:
(a) from the Borrower, a certificate, dated the Closing Date, of
its Secretary or any Assistant Secretary as to
(i) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery, and performance of
this Agreement, the Notes, each Collateral Document and each other
Loan Document to be executed by it;
(ii) the incumbency and signatures of the officers of the
Borrower (the "AUTHORIZED OFFICERS") authorized to act with respect
to this Agreement, the Notes, each Collateral Document and each
other Loan Document to be executed by it (upon which certificate the
Agent and each Lender may conclusively rely until the Agent shall
have received a further certificate of the Secretary of the Borrower
canceling or amending such prior certificate, which further
certificate shall be reasonably satisfactory to the Agent);
(iii) its Charter;
(iv) its By-Laws; and
(v) that the Credit Agreement has become effective without any
waiver, amendment or other modification thereto or the forbearance
on the part of any party thereto without the prior written consent
of the Agent; and
(b) such other documents (certified if requested) as the Agent or
the Required Lenders may reasonably request with respect to any matter
relevant to this Agreement or the transactions contemplated hereby.
SECTION 5.1.2. DELIVERY OF NOTES. The Agent shall have received, for the
account of each Lender, such Lender's Note, duly executed and delivered by the
Borrower and containing appropriate insertions and conforming to the
requirements of SECTION 2.6.
SECTION 5.1.3. BORROWING REQUEST. The Agent shall have received a
Borrowing Request for the Loans to be made as part of the First Draw.
SECTION 5.1.4. COMPLIANCE CERTIFICATE. The Agent shall have received,
with a counterpart for each Lender, a duly executed and completed Compliance
Certificate (based upon the Borrower's first Fiscal Quarter of Fiscal Year 1996
financial statements), dated the Closing Date.
SECTION 5.1.5. OFFICER SOLVENCY CERTIFICATE. The Agent shall have
received for its benefit and the benefit of each Lender, a favorable
certificate of an Authorized Officer of the Borrower, dated as of the Closing
Date, substantially in the form of EXHIBIT I attached hereto.
SECTION 5.1.6. CONSENTS, APPROVALS, ETC. The Agent shall have received
copies of all consents, waivers, amendments and other approvals of each Person
necessary for the performance of the other transactions contemplated hereby.
Each such consent, waiver, amendment and other approval shall be in full force
and effect and in form and substance satisfactory to the Agent.
SECTION 5.1.7. NO MATERIALLY ADVERSE EFFECT. No events shall have
occurred which, individually or in the aggregate, comprise a Materially Adverse
Effect with respect to the Borrower.
SECTION 5.1.8. WARRANTIES; NO DEFAULT. The Agent shall have received,
with a counterpart for each Lender, from the Borrower a duly executed and
delivered certificate of an Authorized Officer, dated as of the Closing Date to
the effect provided in SECTION 6.6.
SECTION 5.1.9. CLOSING FEES AND EXPENSES. The Agent shall have received
payment in full of all of the fees required to be paid on the Closing Date in
accordance with SECTION 3.3 and the Agent's Fee Letter and shall have received
payment in full of its out-of-pocket costs and expenses (including counsel fees
and disbursements) payable in accordance with SECTION 10.3 for which invoices
have been submitted on or prior to such date.
SECTION 5.1.10. DATE OF CLOSING. The Closing Date shall have occurred on
or prior to May 3, 1996.
SECTION 5.1.11. INSURANCE COMPLIANCE. The Agent shall have received
evidence (including an insurance broker's certificate or letter) reasonably
satisfactory to the Agent of compliance with SECTION 7.1.5.
SECTION 5.1.12. MORTGAGES. The Agent shall have received from the
Borrower a Mortgage covering each property listed on ITEM 5.1.12 of the
Disclosure Schedule, dated as of the Closing Date, duly executed and delivered
by the Borrower in favor of the Agent, together with acknowledgments,
satisfactory to the Agent, that such Mortgages have been or contemporaneously
shall be duly filed and recorded in such public offices as the Agent shall have
specified.
SECTION 5.1.13. TITLE MATTERS. With respect to each parcel of real
property or interest in real property described in the Mortgages, the Agent
shall have received the following items:
(a) an ALTA form loan policy of title insurance, or, if not
available, another available form of loan policy of title insurance, in
form reasonably satisfactory to the Agent, issued in an amount
satisfactory to the Agent by a title insurance company satisfactory to the
Agent, subject to no exceptions other than those reasonably acceptable to
the Agent, and containing the following endorsements to the extent
applicable and available and reasonably required by the Agent:
comprehensive endorsement no. 1 as to the properties listed on ITEM 5.1.12
of the Disclosure Schedule, contiguity, doing business, standard form
variable rate, first loss, tie-in and last dollar and encroachment;
(b) copies of all documents referred to in the title insurance
policies as creating exceptions to title to the real property subject to
the insured mortgage; and
(c) affidavits from the Borrower satisfactory to the title
insurance company insuring the lien of the Mortgage on such property or
interest therein as to such matters as such title insurance company may
reasonably request.
SECTION 5.1.14. CREDIT AGREEMENT. The Agent shall have received, with a
copy for each Lender, a copy of the Credit Agreement (including all Exhibits
and Schedules thereto) certified by an Authorized Officer of the Borrower, as
being true and complete. The Credit Agreement shall then become effective
without any waiver, amendment or modification thereto or any forbearance by any
party thereto without the prior written consent of the Agent.
SECTION 5.1.15. OPINIONS OF COUNSEL. The Agent shall have received
opinions, dated as of the Closing Date and addressed to the Agent and all
Lenders, from the following:
(a) Tuke Yopp & Sweeney, counsel to the Borrower, substantially in
the form of EXHIBIT K attached hereto, and as to such other matters
related to the transactions contemplated hereby as the Agent may
reasonably require; and
(b) Dewey Ballantine, special New York counsel to the Borrower, or
other special New York counsel to the Borrower satisfactory to the Agent,
substantially in the form of EXHIBIT L attached hereto, and as to such
other matters related to the transactions contemplated hereby as the Agent
may reasonably require.
SECTION 5.1.16. [Intentionally Omitted].
SECTION 5.2. SECOND DRAW. The obligation of each Lender to fund any Loan
on the occasion of the Second Draw, if made in connection with the Acquisition,
shall be subject to the satisfaction of each of the conditions precedent set
forth in this SECTION 5.2:
SECTION 5.2.1. RESOLUTIONS, ETC. The Agent shall have received:
(a) from the Borrower, a certificate, dated the Acquisition Date,
of its Secretary or any Assistant Secretary as to
(i) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery, and performance of
this Agreement, the Notes, each Collateral Document and each other
Loan Document to be executed by it;
(ii) the incumbency and signatures of the officers of the
Borrower (the "AUTHORIZED OFFICERS") authorized to act with respect
to this Agreement, the Notes, each Collateral Document and each
other Loan Document to be executed by it (upon which certificate the
Agent and each Lender may conclusively rely until the Agent shall
have received a further certificate of the Secretary of the Borrower
canceling or amending such prior certificate, which further
certificate shall be reasonably satisfactory to the Agent);
(iii) its Charter; and
(iv) its By-Laws.
(b) from each Transferred Subsidiary which is or will be a party to
any Collateral Document, a certificate, dated the Acquisition Date, of its
Secretary or any Assistant Secretary as to
(i) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery, and performance of
the Subsidiary Guaranty;
(ii) the incumbency and signatures of the officers of such
Transferred Subsidiary (the "AUTHORIZED OFFICERS") authorized to act
with respect to the Subsidiary Guaranty (upon which certificate the
Agent and each Lender may conclusively rely until the Agent shall
have received a further certificate of the Secretary of such
Subsidiary canceling or amending such prior certificate, which
further certificate shall be reasonably satisfactory to the Agent);
(iii) its Charter; and
(iv) its By-Laws; and
(c) such other documents (certified if requested) as the Agent or
the Required Lenders may reasonably request with respect to any matter
relevant to this Agreement or the transactions contemplated hereby.
SECTION 5.2.2. CONSUMMATION OF ACQUISITION AND ASSUMPTION. The
Acquisition shall have been consummated in accordance with the terms of the
Plan of Reorganization without any waiver, amendment (other than any extension
of the required date of consummation of the Acquisition) or modification
thereto or the forbearance by any party thereto, in each case, without the
prior written consent of the Agent. The Agent shall have received, with a
counterpart for each Lender, a true and complete copy of the Plan of
Reorganization (and all exhibits and schedules and annexes thereto) certified
by an Authorized Officer of the Borrower. Certain opinions of counsel
delivered pursuant to the Plan of Reorganization requested by the Agent shall
be addressed to the Agent or the Agent shall otherwise be entitled to rely
thereon in a manner satisfactory to the Agent. The Assumption shall have been
consummated in a manner satisfactory to the Lenders pursuant to the TPI
Subordinated Debt Supplemental Indenture and the Lenders and the Agent shall be
satisfied with the post-Acquisition and Assumption ownership and legal
structure of the Borrower, and with the tax and accounting aspects of the
Acquisition and the Assumption.
SECTION 5.2.3. PRO FORMA BALANCE SHEET. The Agent shall have received a
pro forma consolidated balance sheet of the Borrower after giving effect to the
Acquisition and the Assumption, satisfactory in form and substance to the
Lenders and the Agent.
SECTION 5.2.4. SUBSIDIARY GUARANTY. The Agent shall have received from
each Transferred Subsidiary a counterpart of the Subsidiary Guaranty, dated as
of the Acquisition Date, duly executed and delivered by such Transferred
Subsidiary in favor of the Agent.
SECTION 5.2.5. PLEDGE AGREEMENT. The Agent shall have received
counterparts of the Pledge Agreement, dated the Acquisition Date, duly executed
and delivered by the Borrower in favor of the Agent, together with the
certificates evidencing the Pledged Shares and the promissory notes evidencing
the Pledged Notes, in each case, identified in ATTACHMENT 1 attached thereto
(accompanied by undated stock powers and note powers, as the case may be, duly
executed in blank).
SECTION 5.2.6. NO MATERIALLY ADVERSE EFFECT. No events shall have
occurred which, individually or in the aggregate, comprise a Materially
Adverse Effect (i) with respect to the Borrower since October 29, 1995 and (ii)
with respect to the Transferred Subsidiaries, since December 31, 1995.
SECTION 5.2.7. DATE OF CLOSING. The Second Draw shall have occurred on
or prior to the Commitment Termination Date.
SECTION 5.2.8. OPINIONS OF COUNSEL. The Agent shall have received
opinions, dated as of the date of the Second Draw and addressed to the Agent
and all Lenders, from the following:
(a) Tuke Yopp & Sweeney, counsel to the Borrower, or other counsel
to the Borrower satisfactory to the Agent, substantially in the form of
EXHIBIT K attached hereto, and as to such other matters related to the
transactions contemplated hereby as the Agent may reasonably require;
(b) Dewey Ballantine, special New York counsel to the Borrower, or
other special New York counsel to the Borrower satisfactory to the Agent,
substantially in the form of EXHIBIT L attached hereto, and as to such
other matters related to the transactions contemplated hereby as the Agent
may reasonably require; and
(c) additional counsel to the Borrower as to such matters related
to the transaction as the Agent may reasonably require.
SECTION 5.2.9. [Intentionally Omitted].
SECTION 5.3. ALL BORROWINGS. The obligation of each Lender to fund any
Loan on the occasion of any Borrowing (including the initial Borrowing and the
Second Draw in the event the Acquisition is not consummated) shall also be
subject to the satisfaction of each of the conditions precedent set forth in
SECTIONS 5.3.1 through 5.3.3:
SECTION 5.3.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to any Borrowing (but, if any Default of the nature
referred to in SECTION 8.1.3 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or indirectly,
of the proceeds thereof) the following statements shall be true and correct:
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in SECTION 6.7) and in each other
Loan Document shall be true and correct with the same effect as if then
made (unless stated to relate solely to an earlier date, in which case
such representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Borrower to the Agent and the
Lenders pursuant to SECTION 6.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries which might have a Materially Adverse Effect; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental investigation
or proceeding disclosed pursuant to SECTION 6.7 which might have a
Materially Adverse Effect; and
(c) no Default shall have then occurred and be continuing, and
neither the Borrower nor any of its Subsidiaries shall be in material
violation of any law or governmental regulation or court order or decree.
SECTION 5.3.2. BORROWING REQUEST. The Agent shall have received a Borrowing
Request for such Loans. The delivery of a Borrowing Request and the acceptance
by the Borrower of the proceeds of the applicable Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Loans
(both immediately before and after giving effect to such Loans and the
application of the proceeds thereof), the statements made in SECTION 5.3.1 are
true and correct.
SECTION 5.3.3. SATISFACTORY LEGAL FORM, ETC. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any Subsidiary
shall be satisfactory in form and substance to the Agent and its counsel; the
Agent and its counsel shall have received all information, and such counterpart
originals or such certified or other copies of such materials, as the Agent or
its counsel may request; and all legal matters incident to the transactions
contemplated by this Agreement shall be satisfactory to counsel to the Agent.
ARTICLE VI
WARRANTIES, ETC.
In order to induce the Lenders and the Agent to enter into this Agreement
and to make Loans hereunder, the Borrower represents and warrants unto each
Lender as set forth in SECTION 6.1 through 6.19. For purposes of this ARTICLE
VI, the Transferred Subsidiaries shall be deemed to be Subsidiaries of the
Borrower as of the time of the Second Draw (if made in connection with the
Acquisition).
SECTION 6.1. ORGANIZATION, ETC. Each of the Borrower and each Subsidiary
is a corporation validly organized and existing and in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
nature of its business makes such qualification necessary and where the failure
to so qualify might have a Materially Adverse Effect, and has full power and
authority to own or hold under lease its property and to conduct its business
substantially as currently conducted by it. The Borrower has full corporate
power and authority (a) to enter into and perform its obligations under this
Agreement, the Notes, the Collateral Documents and the other Loan Documents, in
each case, to which it is or is to be a party, (b)to obtain Loans hereunder,
and (c) to grant the Security Interests provided in the Collateral Documents to
which it is or is to be a party. Each Subsidiary which is or is to be a party
to any Collateral Document or any other Loan Document has full corporate power
and authority to enter into and perform its obligations thereunder and to grant
the Security Interests provided for therein.
SECTION 6.2. DUE AUTHORIZATION. The execution and delivery by the
Borrower of this Agreement and the Notes, the execution and delivery by each of
the Borrower and its Subsidiaries of the Collateral Documents and the other
Loan Documents, in each case, to which it is or is to be a party, the
performance by each of the Borrower and each of its Subsidiaries of its
obligations hereunder and thereunder, the granting of the Security Interests
provided for in the Collateral Documents and all Loans obtained hereunder by
the Borrower and the other Indebtedness hereunder have been duly authorized by
all necessary corporate action, do not (except for filings, recordings,
registrations, approvals and consents which have been already made or obtained)
require any filing or registration with or approval or consent of any
governmental agency or authority, any creditor or any stockholder, do not and
will not conflict with, result in any violation of, or constitute any default
under (a) any provision of the Charter or By-Laws of the Borrower or any of its
Subsidiaries, (b) any material agreement or other material Instrument binding
upon or applicable to the Borrower or any of its Subsidiaries or the property
of the Borrower or any of its Subsidiaries or (c) any present law or
governmental regulation or court decree or order applicable to the Borrower or
any of its Subsidiaries or the property of the Borrower or any of its
Subsidiaries, and will not result in or require the creation or imposition of
any Security Interest in any of their respective properties pursuant to the
provisions of any agreement (excluding, however, the Security Interests created
or to be created by the Collateral Documents) or other Instrument binding upon
or applicable to the Borrower or any of its Subsidiaries or the property of the
Borrower or any of its Subsidiaries.
SECTION 6.3. VALIDITY, ETC. This Agreement has been duly executed and
delivered by the Borrower and is, and each of the Notes and each of the
Collateral Documents and other Loan Documents to which the Borrower or any of
its Subsidiaries is or is to be a party constitutes or will constitute, on the
due execution and delivery thereof, the legal, valid, and binding obligation of
the Borrower or such Subsidiary, as the case may be, enforceable in accordance
with its terms, subject, as to enforcement, only to bankruptcy, insolvency,
reorganization, moratorium, or similar laws at the time in effect affecting the
enforceability of the rights of creditors generally.
SECTION 6.4. FINANCIAL INFORMATION. All balance sheets, all statements
of income, shareholders' equity, and cash flows (including such balance sheets
and statements for the Fiscal Year ended October 29, 1995 and for the Fiscal
Quarter ended February 18, 1996) and all other financial statements which have
been delivered hereto or shall hereafter be furnished by or on behalf of the
Borrower to any Lender and the Agent for the purposes of or in connection with
this Agreement or any transaction contemplated hereby, have been or will be
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and do or will present fairly (subject,
in the case of the interim unaudited financial statements, to the ultimate
outcome of normal recurring accruals) the consolidated financial condition of
the corporations covered thereby as at the dates thereof and the results of
their operations for the periods then ended. Neither the Borrower nor any
Subsidiary has on the date hereof any material contingent liability or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments which are not reflected in the financial statements described above
or in the notes thereto.
SECTION 6.5. MATERIALLY ADVERSE EFFECT. Since (a) October 29, 1995, with
respect to the Borrower and its Subsidiaries other than the Transferred
Subsidiaries, and (b) December 31, 1995, with respect to the Transferred
Subsidiaries, no events have occurred which, individually or in the aggregate,
comprise a Materially Adverse Effect.
SECTION 6.6. ABSENCE OF DEFAULT. Neither the Borrower nor any Subsidiary
is in default in the payment of (or in the performance of any obligation
applicable to) any Indebtedness, or in violation of any law or governmental
regulation or court decree or order, in any such case, which could result in a
Materially Adverse Effect.
SECTION 6.7. LITIGATION; LABOR CONTROVERSIES, ETC. Except as to matters
disclosed to the Lenders in ITEM 6.7 ("Litigation; Labor Controversies") of the
Disclosure Schedule, there is no pending or, to the knowledge of the Borrower,
threatened labor controversy, litigation, arbitration, or governmental
investigation or proceeding against the Borrower or any Subsidiary or to which
any of the properties of any thereof is subject which
(a) if adversely determined, might have a Materially Adverse
Effect;
(b) relates to this Agreement, the Notes, the Collateral Documents,
the other Loan Documents or the Mortgage Financing Transactions; or
(c) is pending or threatened as of the date of this Agreement and
relates to any Mortgage Financing Transaction or any transaction financed
or to be financed in whole or in part directly or indirectly with the
proceeds of any Loan.
SECTION 6.8. REGULATIONS G, U AND X. Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
"margin stock". None of the proceeds of any Loan or any Mortgage Financing
Transaction will be used for the purpose of, or be made available by the
Borrower in any manner to any other Person to enable or assist such Person in,
directly or indirectly purchasing or carrying "margin stock". Less than 25% in
value of the Borrower's consolidated assets comprise "margin stock." Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section 6.8 with such meanings.
SECTION 6.9. GOVERNMENT REGULATION. Neither the Borrower nor any
Subsidiary is an "investment company" nor a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 6.10. BURDENSOME AGREEMENTS. Neither the Borrower nor any
Subsidiary is or will be a party to any Instrument (other than the Loan
Documents, the LYONS Indenture and the Subordinated Indenture) or subject to
any charter or other corporate restriction which could have a Materially
Adverse Effect.
SECTION 6.11. TAXES. Each of the Borrower and all of its Subsidiaries
has filed all tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books. No tax liens have been filed with
respect to the Borrower or any Subsidiary and, to the knowledge of the
Borrower, no claims are being asserted with respect to any such taxes or
charges.
SECTION 6.12. EMPLOYEE BENEFIT PLANS. Each Plan and, to the best of the
Borrower's knowledge, each Multiemployer Plan, complies in all material
respects with all applicable requirements of law and regulations, and, except
as disclosed on ITEM 6.12 ("Employee Benefit Plans") of the Disclosure
Schedule,
(a) no "Reportable Event", such term being used herein with the
meaning provided for it under ERISA, has occurred with respect to any Plan
or, to the best of the Borrower's knowledge, any Multiemployer Plan;
(b) no steps have been taken to terminate any Plan or to appoint a
receiver to administer any Plan or, to the best of the Borrower's
knowledge, to terminate or appoint a receiver to administer any
Multiemployer Plan, and neither the Borrower nor any of its Subsidiaries
has withdrawn from any Multiemployer Plan or initiated steps to do so;
(c) there is no Unfunded Vested Liability with respect to any Plan
or, to the best of the Borrower's knowledge, any Multiemployer Plan, that
would result, in the event of termination of such Plan or withdrawal from
such Multiemployer Plan, in a Materially Adverse Effect; and
(d) no contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under section 302(f) of ERISA, no
condition exists or event or transaction has occurred with respect to any
Plan which could result in the incurrence by the Borrower or any of its
Subsidiaries of any material liability, fine or penalty, and neither the
Borrower nor any of its Subsidiaries has any contingent liability with
respect to any post-retirement benefit under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Title I of
ERISA.
SECTION 6.13. SUBSIDIARIES. The Borrower has no Subsidiaries, except as
set forth in ITEM 6.13 ("Existing Subsidiaries") of the Disclosure Schedule or,
after the Closing Date, as permitted pursuant to SECTION 7.2.5 or, after the
Acquisition Date, the Transferred Subsidiaries. The Borrower's ownership of
such Subsidiaries is set forth in ITEM 6.13 ("Existing Subsidiaries") of the
Disclosure Schedule.
SECTION 6.14. OWNERSHIP OF PROPERTIES, LICENSES AND PERMITS; LIENS. Each
of the Borrower and each of its Subsidiaries has valid fee or leasehold
interests in all material real property, and good and marketable title to all
of its respective material properties and assets, real and personal, of any
nature whatsoever, and none of such property is subject to any Security
Interest except as permitted pursuant to SECTION 7.2.3. Each of the Borrower
and each of its Subsidiaries owns or holds all such licenses or permits as are
necessary or desirable in the conduct of its business, except to the extent
that the failure to own or hold the same could not have a Materially Adverse
Effect.
SECTION 6.15. PATENTS, TRADEMARKS, ETC. Each of the Borrower and each of
its Subsidiaries owns (or is licensed to use) and possesses all such patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, and copyrights as the Borrower considers
necessary for the conduct of the businesses of the Borrower and its
Subsidiaries as now conducted without, individually or in the aggregate, any
infringement upon rights of, or (to the Borrower's knowledge) by, other Persons
which could have a Materially Adverse Effect. There is no individual patent or
patent license or copyright the loss of which could have a Materially Adverse
Effect.
SECTION 6.16. ACCURACY OF INFORMATION. Except as otherwise previously
disclosed to the Lenders pursuant to the Disclosure Schedule, all factual
information heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby (including, without
limitation, the Memorandum) is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agent or any Lender
will be, true and accurate in every material respect on the date as of which
such information is dated or certified and as of the date of execution and
delivery of this Agreement by the Agent or such Lender and not incomplete by
omitting to state any material fact necessary to make such information not
misleading. The projections contained in the Memorandum have been prepared in
good faith by the Borrower and represent the Borrower's best estimates, as of
the date thereof, of the Borrower's reasonably expected future performance.
The representations and warranties of the Borrower and its Subsidiaries
contained in the Plan of Reorganization (including representations and
warranties contained in any exhibits, schedules and annexes thereto) are true
and correct in all material respects.
SECTION 6.17. SUBORDINATED DEBT. (a) The Borrower has the corporate
power and authority to perform the LYONS Indenture and to perform the
Subordinated LYONS Notes, and has duly authorized the performance of the LYONS
Indenture, and the performance and issuance of the Subordinated LYONS Notes.
The Borrower has duly executed and delivered the LYONS Indenture and the
Subordinated LYONS Notes and on the Closing Date each constitutes the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms subject, as to enforcement, only to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors' rights generally. The Borrower has delivered
true and complete copies of the form of Subordinated LYONS Notes and the LYONS
Indenture to the Lenders together with all amendments, waivers and other
changes thereto. Notwithstanding any bankruptcy, insolvency, reorganization,
moratorium or similar proceeding in respect of the Borrower, at all times, (i)
the subordination provisions of the LYONS Indenture and the Subordinated LYONS
Notes will be enforceable against the holders of the Subordinated LYONS Notes
by the holder of any Senior Indebtedness (as defined in the LYONS Indenture)
which has not effectively waived the benefits thereof, (ii) all Obligations,
including the Obligations to pay principal of and interest on the Loans and
fees in connection therewith, constitute "Senior Indebtedness", as defined in
the Subordinated LYONS Notes, and all such Obligations will be entitled to the
benefits of subordination created by the Subordinated LYONS Notes and (iii) all
payments of principal of or interest on any Subordinated LYONS Notes made by
the Borrower or from the liquidation of its property will be subject to such
subordination provisions. At the time of the execution and delivery of the
Subordinated LYONS Notes, the Subordinated LYONS Notes were duly registered or
qualified under all applicable United States Federal and state securities laws
or exempt therefrom. The Borrower acknowledges that each of the Agent and each
Lender is entering into this Agreement, and has extended the commitments to
make Loans, in reliance upon the subordination provisions contained in the
LYONS Indenture and the Subordinated LYONS Notes and this Section.
(b) The Borrower has the corporate power and authority to assume and
to perform the Subordinated Indenture and to assume and to perform the
Subordinated Debentures, and has duly authorized such assumption and
performance of the Subordinated Indenture, and the performance and issuance of
the Subordinated Debentures. Upon the Acquisition Date, the Borrower will have
duly assumed the obligations of TPI under the Subordinated Indenture pursuant
to the TPI Subordinated Debt Supplemental Indenture and the Subordinated
Debentures and each will constitute the legal, valid and binding obligations of
the Borrower enforceable against the Borrower in accordance with their
respective terms subject, as to enforcement, only to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally. The Borrower has delivered true and complete
copies of the form of Subordinated Debentures and the Subordinated Indenture to
the Lenders together with all amendments, waivers and other changes thereto.
Notwithstanding any bankruptcy, insolvency, reorganization, moratorium or
similar proceeding in respect of the Borrower, at all times, (i) the
subordination provisions of the Subordinated Indenture and the Subordinated
Debentures will be enforceable against the holders of the Subordinated
Debentures by the holder of any Senior Indebtedness (as defined in the
Subordinated Indenture) which has not effectively waived the benefits thereof,
(ii) all Obligations, including the Obligations to pay principal of and
interest on the Loans and fees in connection therewith, constitute "Senior
Indebtedness", as defined in the Subordinated Debentures, and all such
Obligations will be entitled to the benefits of subordination created by the
Subordinated Debentures and (iii) all payments of principal of or interest on
any Subordinated Debentures made by the Borrower or from the liquidation of its
property will be subject to such subordination provisions. The Borrower
acknowledges that each of the Agent and each Lender is entering into this
Agreement, and has extended commitments to make Loans, in reliance upon the
subordination provisions contained in the Subordinated Indenture and the
Subordinated Debentures and this Section.
SECTION 6.18. THE COLLATERAL DOCUMENTS. The provisions of the Collateral
Documents executed by the Borrower in favor of the Agent are effective to
create, in favor of the Agent for the benefit of the Lenders, legal, valid and
enforceable Security Interests in all right, title and interest of the Borrower
in any and all of the collateral described therein, securing the Notes and all
other Obligations from time to time outstanding, and each of such Collateral
Documents, upon the due filing of UCC-1 Financing Statements and Mortgages and
the taking of possession of the Pledged Notes and Pledged Shares as provided in
ARTICLE V, constitute a fully perfected Security Interest in all right, title
and interest of the Borrower in such collateral superior in right to any liens,
existing or future, which the Borrower or any creditors of or purchasers from,
or any other Person, may have against such collateral or interests therein,
except to the extent, if any, otherwise provided therein.
SECTION 6.19. ENVIRONMENTAL WARRANTIES. Except as set forth in ITEM 6.19
("Environmental Matters") of the Disclosure Schedule:
(a) , all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
compliance with all Environmental Laws, except where noncompliance would
not reasonably be expected to have a Materially Adverse Effect;
(b) there are no pending or threatened
(i) material claims, complaints, notices or requests for
information received by the Borrower or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) material complaints, notices or inquiries to the Borrower
or any of its Subsidiaries regarding potential liability under any
Environmental Law;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or, until transferred, previously owned or leased
by the Borrower or any of its Subsidiaries that, singly or in the
aggregate, have, or may reasonably be expected to have, a Materially
Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are in
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or
desirable for their businesses, except where such failure to have any such
permit, certificate, approval, license or other authorization would not
reasonably be expected to have a Materially Adversely Effect;
(e) no property now or, until transferred, previously owned or
leased by the Borrower or any Subsidiary is or was listed or proposed for
listing (with respect to owned property only) on the National Priorities
List pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or, until
transferred, previously owned or leased by the Borrower or any Subsidiary
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Materially Adverse Effect;
(g) neither the Borrower nor any Subsidiary has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material
claims against the Borrower or such Subsidiary thereof for any remedial
work, damage to natural resources or personal injury, including claims
under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or, until transferred, previously owned or
leased by the Borrower or any Subsidiary that, singly or in the aggregate,
have, or may reasonably be expected to have, a Materially Adverse Effect;
and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower or any Subsidiary which, with
the passage of time, or the giving of notice or both, would give rise to
any material liability under any Environmental Law.
ARTICLE VII
COVENANTS
SECTION 7.1. CERTAIN AFFIRMATIVE COVENANTS APPLICABLE TO THE OBLIGATIONS.
The Borrower agrees with the Agent and each Lender that, until all Obligations
have been paid and performed in full:
SECTION 7.1.1. FINANCIAL INFORMATION, ETC. The Borrower will furnish, or
will cause to be furnished, to the Agent (in sufficient quantity for
distribution to each Lender) copies of the following financial statements,
reports and information:
(a) promptly when available and in any event within ninety days
after the close of each Fiscal Year,
(i) a copy of the Borrower's Annual Report on Form 10-K
(excluding exhibits, other than financial statement schedules,
unless specifically requested by the Agent, which requests may be
made at any time) and related Annual Report to Shareholders for such
Fiscal Year, including therein a consolidated balance sheet at the
close of such Fiscal Year then ended, and related consolidated
statements of income, shareholders' equity, and cash flows (or a
statement analogous to such a statement) for such Fiscal Year, of
the Borrower and its Subsidiaries, such statements for such Fiscal
Year to be audited and accompanied by an audit report issued without
Impermissible Qualification by an Independent Public Accountant,
(ii) a copy of the Director's Report issued by the Borrower's
management to the Borrower's Board of Directors for such Fiscal
Year, including therein a capital expenditure budget for the next
Fiscal Year broken down by Concept and otherwise substantially in
the form of, and covering in scope and detail the same matters as,
the Director's Report for the Borrower's 1992 Fiscal Year heretofore
delivered to the Lenders, accompanied by a consolidated statement of
income for the last Fiscal Quarter of such Fiscal Year, setting
forth comparative figures for the corresponding Fiscal Quarter of
the prior Fiscal Year,
(iii) a written statement of the Independent Public
Accountant, setting forth in reasonable detail a calculation of the
financial tests contained in SECTION 7.2.4 at the close of such
Fiscal Year, to the effect that it has read the provisions of this
Agreement and the Compliance Certificate then being furnished
pursuant to CLAUSE (A)(IV) immediately below at the date of such
statement and is not aware of any miscalculation in such Compliance
Certificate of such financial tests or of any default of a financial
nature in the performance by the Borrower of any obligation to be
performed by it hereunder, except such miscalculation or default, if
any, as may be disclosed in such statement, and
(iv) a Compliance Certificate calculated as of the close of
such Fiscal Year;
(b) promptly when available and in any event within forty-five days
after the close of each of the first three Fiscal Quarters of each Fiscal
Year,
(i) a copy of the Borrower's Quarterly Report on Form 10-Q
(excluding exhibits unless specifically requested by the Agent,
which requests may be made at any time) for such Fiscal Quarter,
including therein (or accompanied by) a consolidated balance sheet
at the close of such Fiscal Quarter, and related consolidated
statements of income and cash flows (or a statement analogous to
such a statement) for such Fiscal Quarter, of the Borrower and its
Subsidiaries executed by the principal accounting or financial
Authorized Officer of the Borrower,
(ii) a copy of the Director's Report issued by the Borrower's
management to the Borrower's Board of Directors for such Fiscal
Quarter, substantially in the form of, and covering in scope and
detail the same matters as, the Director's Report dated February 14,
1993 for the Fiscal Quarter of the Borrower ended on such date
heretofore delivered to the Lenders, and
(iii) a Compliance Certificate calculated as of the close of
such Fiscal Quarter;
(c) promptly upon receipt thereof, copies of all detailed financial
reports, if any, submitted to the Borrower by an Independent Public
Accountant in connection with each annual or interim audit made by such
Independent Public Accountant of the books of the Borrower or any of its
Subsidiaries;
(d) in addition to (but without duplication of) any such filings
required to be delivered above, promptly upon any filing thereof by the
Borrower with the Securities and Exchange Commission, any annual, periodic
or special report or registration statement (without exhibits) generally
available to the public;
(e) promptly upon completion or receipt thereof, a copy of all
notices, documents, or other Instruments required to be delivered by the
Borrower (other than the Subordinated Debentures, the Subordinated LYONS
Notes and the Credit Agreement), or received by the Borrower, pursuant to
the Subordinated Indenture, the LYONS Indenture, the Credit Agreement or
the Plan of Reorganization and not otherwise required to be delivered
hereunder;
(f) promptly but in no event later than ninety days after the close
of each Fiscal Year of the Borrower, a copy of updated projections of the
Borrower and its Subsidiaries for the next two Fiscal Years, all in detail
comparable to those contained in the Memorandum and reasonably
satisfactory to the Agent; and
(g) promptly, such additional financial and other information with
respect to the Borrower and its Subsidiaries as any Lender (through the
Agent) may from time to time reasonably request.
SECTION 7.1.2. MAINTENANCE OF CORPORATE EXISTENCES, ETC. Except as
permitted by SECTION 7.2.11, the Borrower will cause to be done at all times all
things necessary to maintain and preserve the corporate existences, rights
(charter and statutory, except for changes in statutory rights effected by
legislation passed or court decisions rendered after the date hereof) and
franchises of the Borrower and each of its Subsidiaries, and the Borrower will
continue to own and hold, directly or indirectly, free and clear of all Security
Interests (except such as have been created or permitted pursuant hereto or
pursuant to the Credit Agreement Collateral Documents or Mortgage Financing
Transaction Documents), all of the outstanding shares of capital stock
(excluding directors' qualifying shares, if any) of each such Subsidiary.
SECTION 7.1.3. FOREIGN QUALIFICATION. The Borrower will, and will cause
each of its Subsidiaries to, cause to be done at all times all things necessary
to be duly qualified to do business and be in good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary and where the failure to so qualify might have a
Materially Adverse Effect.
SECTION 7.1.4. PAYMENT OF TAXES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge, as the same may become due and
payable, all federal, state, and local taxes, assessments, and other
governmental charges or levies against or on any of its income, profits or
property, as well as claims of any kind which, if unpaid, might become a lien
upon any one of its properties, and will pay (before they become delinquent)
all other material obligations and liabilities; PROVIDED, HOWEVER, that the
foregoing shall not require the Borrower or any Subsidiary to pay or discharge
any such tax, assessment, charge, levy, lien, obligation or liability so long
as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves in accordance
with GAAP with respect thereto.
SECTION 7.1.5. MAINTENANCE OF PROPERTY; INSURANCE. The Borrower will, and
will cause each of its Subsidiaries to, keep all of its material property that
is useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted) and will maintain or cause to be maintained,
at the Borrower's expense, with insurance companies reasonably acceptable to
the Agent, insurance with respect to its properties and businesses against such
casualties and contingencies and of such types, including, without limitation,
replacement cost insurance on all restaurants and plant facilities owned or
leased by the Borrower or its Subsidiaries, and in such amounts as is customary
in the case of similar businesses (it being understood and agreed that the
Borrower may self-insure for workers' compensation, group medical and physical
damage to automobiles and may self-insure public liability claims to a maximum
of $250,000 per claim) and will, upon request of the Agent or the Required
Lenders (through the Agent), furnish to the Agent (in sufficient quantity for
distribution to each Lender) at reasonable intervals a certificate of an
Authorized Officer setting forth the nature and extent of all insurance
maintained by the Borrower and its Subsidiaries in accordance with this SECTION
7.1.5.
SECTION 7.1.6. NOTICE OF DEFAULT, LITIGATION, ETC. The Borrower will,
upon obtaining knowledge thereof, give notice (accompanied by a reasonably
detailed explanation with respect thereto) immediately to each Lender and the
Agent of:
(a) the occurrence of
(i) any Default, and
(ii) any "Event of Default" as defined in the Subordinated
Indenture, the LYONS Indenture or the Credit Agreement;
(b) any litigation, arbitration, labor controversy or governmental
investigation or proceeding not previously disclosed by the Borrower to
the Lenders which has been instituted or, to the knowledge of the
Borrower, is threatened against, the Borrower or any of its Subsidiaries
or to which any of their respective properties is subject which
(i) if adversely determined, would have a Materially Adverse
Effect, PROVIDED that, for purposes of this SUBCLAUSE (I), any
litigation, arbitration, or governmental investigation or proceeding
which involves a damage claim of $1,500,000 or less need not be the
subject of any such notice unless it is one of a series of claims
arising out of the same set of facts or circumstances which, in the
aggregate, exceed $10,000,000, or
(ii) relates to (A) this Agreement, any Collateral Document,
any other Loan Document or any specific transaction financed or to
be financed in whole or in part directly or indirectly with the
proceeds of any Loan, or (B) the Credit Agreement or any Mortgage
Financing Transaction which, if adversely determined, would have a
Materially Adverse Effect, PROVIDED that, for purposes of this
SUBCLAUSE (II)(B), any litigation, arbitration, or governmental
investigation or proceeding which involves a damage claim of
$1,500,000 or less need not be the subject of any such notice unless
it is one of a series of claims arising out of the same set of facts
or circumstances which, in the aggregate, exceed $10,000,000 or (C)
the Plan of Reorganization;
(c) any material adverse development which shall occur in any
litigation, labor controversy, arbitration, or governmental investigation
or proceeding previously disclosed by the Borrower to the Lenders;
(d) any development in the business, operations, financial
condition or prospects of the Borrower and its Subsidiaries (taken as a
whole) which, in the reasonable judgment of the Borrower, has a reasonable
likelihood of having a Materially Adverse Effect;
(e) the occurrence of a Reportable Event under, or the institution
of steps by the Borrower or any of its Subsidiaries to withdraw from, or
the institution of any steps to terminate, any Plan or, to the best of the
Borrower's knowledge, any Multiemployer Plan, or the failure to make a
required contribution to any Plan or, to the best of the Borrower's
knowledge, any Multiemployer Plan if such failure is sufficient to give
rise to a lien under section 302(f) of ERISA, or the taking of any action
with respect to a Plan or, to the best of the Borrower's knowledge, any
Multiemployer Plan which could result in the requirement that the Borrower
or any of its Subsidiaries furnish a bond or other security to the PBGC or
such Plan or Multiemployer Plan, or the occurrence of any event with
respect to any Plan or, to the best of the Borrower's knowledge, any
Multiemployer Plan which could result in the incurrence by the Borrower or
any of its Subsidiaries of any material liability, fine or penalty, or the
occurrence of any material increase in the contingent liability of the
Borrower or any of its Subsidiaries with respect to any post-retirement
Welfare Plan benefit, and in each case the action which the Borrower
proposes to take with respect thereto; and
(f) any material notices (including, without limitation, notices of
default or of acceleration thereunder) it receives from the Subordinated
Debentures Trustee and of any appointments of any successors to any such
Trustee.
SECTION 7.1.7. PERFORMANCE OF INSTRUMENTS. The Borrower will, and will
cause each of its Subsidiaries to, promptly and faithfully perform all of its
Obligations hereunder, under the Notes, under each Collateral Document, under
each other Loan Document and under the Plan of Reorganization.
SECTION 7.1.8. BOOKS AND RECORDS. The Borrower will, and will cause each
of its Subsidiaries to, keep proper books and records reflecting all of its
business affairs and transactions in accordance with GAAP and permit the Agent
or any Lender or any of their respective representatives, at reasonable times
and intervals during ordinary business hours, to visit all of its offices,
discuss its financial matters with its officers and independent accountants
(and hereby authorizes such independent accountants to discuss its financial
matters with any Lender or its representatives) and examine and make abstracts
or photocopies from any of its books or other corporate records, all at the
Borrower's expense for any charges imposed by such accountants or for making
such abstracts or photocopies.
SECTION 7.1.9. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries to, exercise all due diligence in order to comply
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority, noncompliance with which might have a Materially
Adverse Effect.
SECTION 7.1.10. FISCAL YEAR. On the Acquisition Date the Borrower shall
cause the Transferred Subsidiaries to change their fiscal year to become the
Fiscal Year.
SECTION 7.1.11. SUBSTITUTION AND RELEASE OF MORTGAGED PROPERTY. The
Borrower may, in any Fiscal Year, substitute operating restaurant properties of
the Borrower for properties subject to Mortgages constituting up to 20% of the
aggregate net book value of such properties, such substituted properties to be
of equal or greater value than the properties subject to such a Mortgage being
so exchanged, in each case as determined by the valuations described below;
PROVIDED, that the Agent shall have received between sixty and thirty days
prior to such substitution of such properties, for its benefit and the benefit
of the Lenders, addressed to the Agent and the Lenders, in reasonable detail
and otherwise in form and substance satisfactory to the Agent and the Required
Lenders, valuations conducted by Marshall & Stevens, or other independent
appraisers satisfactory to the Agent, of the properties to be transferred,
PROVIDED, HOWEVER, that if a property to be substituted was built within one
year of the proposed substitution, the substituted property shall be valued at
the actual cost of such property being substituted. The Agent shall from time
to time release its Security Interest in one or more of the properties subject
to Mortgages upon the prepayment of the Loans in accordance with SECTION
3.1.2(D) and Section 1.23 of the Mortgages.
SECTION 7.1.12. REFINANCING. The Borrower shall use its best efforts
(including the obtaining the consent of the Lenders under the Credit Agreement
thereto) to issue or sell debt or other securities or to consummate asset sales
to obtain funds sufficient to prepay in full the Loans, Notes and other
Obligations.
SECTION 7.2. CERTAIN NEGATIVE COVENANTS. The Borrower agrees with the
Agent and each Lender that, until the Obligations have been paid and performed
in full:
SECTION 7.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any Subsidiary (other than Realco) to, engage in any business activity,
except the businesses of operating and franchising restaurants and conducting
manufacturing operations reasonably related to the food business, distribution
centers, a meat plant, an insurance business which provides certain insurance
services and certain other services related thereto, and such activities as its
Board of Directors reasonably determines are incidental or related thereto.
SECTION 7.2.2. INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume, or suffer to exist or
otherwise become or be liable in respect of any Indebtedness other than:
(a) Indebtedness of the Borrower in respect of the Loans and the
other Obligations;
(b) Indebtedness of the Borrower in an aggregate principal amount
not to exceed $30,000,000 at any one time outstanding (inclusive of the
aggregate outstanding principal amount of Indebtedness of the Borrower
disclosed in ITEM 7.2.2 ("Existing Indebtedness") of the Disclosure
Schedule);
(c) other Indebtedness of the Borrower or any of its Subsidiaries
outstanding on the Closing Date and either (i) reflected in the financial
statements delivered to the Lenders prior to the Closing Date pursuant to
SECTION 6.4 or (ii) disclosed in ITEM 7.2.2 ("Existing Indebtedness") of
the Disclosure Schedule, so long as, except to the extent expressly
permitted in SECTION 7.2.3(B), such Indebtedness shall not be secured by
any of the collateral under the Collateral Documents;
(d) Indebtedness of the Borrower or any of its Subsidiaries which
is an Investment permitted by SECTION 7.2.5;
(e) Indebtedness in an aggregate principal amount not to exceed
$3,000,000 at any time outstanding which is incurred by the Borrower or
any of its Subsidiaries to one or more vendors in the aggregate of any
assets to finance its acquisition of such assets;
(f) obligations of the Borrower under Capitalized Leases; PROVIDED
that the aggregate capitalized amount payable under all such Capitalized
Leases shall not exceed $45,000,000;
(g) Indebtedness of the Borrower in respect of letters of credit
(other than any letter of credit issued in connection with the Mortgage
Financing Transactions to directly support Indebtedness permitted under
clause (i) below) in an aggregate amount not to exceed $40,000,000 at any
one time outstanding for all such letters of credit;
(h) Indebtedness incurred by the Borrower under and in connection
with any Rate Swap Agreement;
(i) Indebtedness incurred by the Borrower under and in connection
with the Mortgage Financing Transactions and refinancings thereof (A) made
pursuant to Mortgage Financing Transaction Documents and (B) in which the
principal amount of such Indebtedness is not increased thereby;
(j) Indebtedness of the Borrower and TPIR in respect of the
Subordinated Debentures;
(k) Indebtedness of the Borrower and the Transferred Subsidiaries
in respect of the Credit Agreement and any refinancing, in whole or in
part, thereof; and
(l) Indebtedness of the Transferred Subsidiaries existing on the
Acquisition Date (after giving effect to any refinancing thereof on such
date with the proceeds of the Loans advanced on such date) and not
incurred in contemplation of the Acquisition;
PROVIDED that no Indebtedness otherwise permitted to be incurred shall be
permitted to be incurred if, after giving effect to the incurrence thereof, any
Event or Default shall have occurred and be continuing.
SECTION 7.2.3. SECURITY INTERESTS. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, or suffer to exist
any Security Interest upon any of its revenues, property (including without
limitation fixed assets, inventory, real property, intangible rights and stock)
or other assets, whether now owned or hereafter acquired, except:
(a) Security Interests in favor of the Agent for the benefit of the
Lenders under the Collateral Documents to secure the Loans and other
Obligations;
(b) Security Interests which (i) were granted prior to July 28,
1995 to secure any Indebtedness permitted by CLAUSE (C) of SECTION 7.2.2
and which are disclosed in ITEM 7.2.3 ("Existing Liens") of the Disclosure
Schedule or in the financial statements referred to in such clause or (ii)
were created between July 28, 1995 and the Closing Date and are otherwise
permitted under this SECTION 7.2.3;
(c) Security Interests securing obligations under any purchase
money Indebtedness permitted by CLAUSE (E) of SECTION 7.2.2 in the
property subject thereto and Security Interests securing obligations in
respect of letters of credit permitted by CLAUSE (G) of SECTION 7.2.2 in
the goods financed with such letters of credit, PROVIDED that neither such
purchase money Indebtedness nor such obligations in respect of letters of
credit shall be secured by any of the collateral granted under the
Collateral Documents and any Security Interests relating thereto shall not
be spread to cover any other property;
(d) liens for taxes, assessments, or other governmental charges or
levies to the extent that payment thereof shall not at the time be
required to be made in accordance with the provisions of SECTION 7.1.4;
(e) liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith by appropriate proceedings and for which
appropriate reserves with respect thereto have been established and
maintained on the consolidated books of the Borrower in accordance with
GAAP to the extent required under such principles;
(f) liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance, or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases, and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(g) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or its Subsidiaries;
(h) judgment liens securing amounts not in excess of $1,000,000 in
existence less than thirty days after the entry thereof or with respect to
which execution has been stayed or with respect to which the appropriate
insurance carrier has agreed in writing that there is full coverage
(subject to a customary deductible not in excess of $1,000,000) by
insurance;
(i) Security Interests permitted under clause (i) of SECTION 7.2.3
of the Credit Agreement;
(j) Security Interests securing the Indebtedness incurred in the
Mortgage Financing Transactions and attaching to Mortgage Financing
Collateral;
(k) the license for the use of the "Shoney's Inn" service mark
granted to ShoLodge, Inc. by the Borrower pursuant to the License
Agreement dated October 25, 1991;
(l) Security Interests granted by the Borrower and its Subsidiaries
(other than the Transferred Subsidiaries) under the Collateral Documents
(as defined in the Credit Agreement);
(m) Security Interests in collateral valued at no greater than
$30,000,000 granted by the Borrower to secure its obligations under the
First American Facility; and
(n) Security Interests in secured indebtedness permitted under
CLAUSE (L) of SECTION 7.2.2, which Security Interests do not attach to any
other assets of the Borrower or its Subsidiaries.
SECTION 7.2.4. FINANCIAL CONDITION.
(a) Prior to and including the Fiscal Quarter in which the
Acquisition is consummated, and adjusted in accordance with SECTION 1.4, the
Borrower will not permit:
(i) Consolidated Net Worth on the last day of any Fiscal
Quarter occurring during any period set forth below to be less than
the amount set forth below:
<TABLE>
<CAPTION>
PERIOD Minimum
Consolidated
NET WORTH
<S> <C>
Second Fiscal Quarter of Fiscal Year 1996 $(120,000,000)
Third Fiscal Quarter of Fiscal Year 1996 $(100,000,000)
Fourth Fiscal Quarter of Fiscal Year 1996 $ (75,000,000)
First Three Fiscal Quarters of Fiscal Year 1997 $ (75,000,000)
Fourth Fiscal Quarter of Fiscal Year 1997 $ (25,000,000)
First Three Fiscal Quarters of Fiscal Year 1998 $ (25,000,000)
Fourth Fiscal Quarter of Fiscal Year 1998 $ 50,000,000
First Three Fiscal Quarters of Fiscal Year 1999 $ 50,000,000
Fourth Fiscal Quarter of Fiscal Year 1999 $ 140,000,000
and thereafter
</TABLE>
(ii) the Funded Debt Ratio on the last day of any Fiscal
Quarter occurring during any period set forth below to be greater
than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
PERIOD Maximum Funded
DEBT RATIO
<S> <C>
Second and Third Fiscal Quarters of
Fiscal Year 1996 4.70:1.00
Fourth Fiscal Quarter of Fiscal Year
1996 4.25:1.00
First Three Fiscal Quarters of Fiscal
Year 1997 4.25:1.00
Fourth Fiscal Quarter of Fiscal Year
1997 3.25:1.00
First Three Fiscal Quarters of Fiscal
Year 1998 3.25:1.00
Fourth Fiscal Quarter of Fiscal Year
1998 2.50:1.00
First Three Fiscal Quarters of Fiscal
Year 1999 2.50:1.00
Fourth Fiscal Quarter of Fiscal Year
1999 and thereafter 2.00:1.00
</TABLE>
(iii) Consolidated Funded Debt as of the end of any Fiscal
Quarter during any period set forth below to be more than the amount
set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum
PERIOD CONSOLIDATED DEBT
<S> <C>
Second and Third Fiscal Quarters
of Fiscal Year 1996 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1996 $520,000,000
First Three Fiscal Quarters
of Fiscal Year 1997 $520,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $495,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $495,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 $460,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $460,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and thereafter $460,000,000
</TABLE>
(iv) the Adjusted Interest Coverage Ratio to be less than the
ratio set forth below as of the end of any Fiscal Quarter during any
period set forth below opposite such ratio:
<TABLE>
<CAPTION>
Minimum Adjusted
PERIOD INTEREST COVERAGE RATIO
<S> <C>
Second and Third Fiscal Quarters
of Fiscal Year 1996 1.25:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 1.00:1.00
First Fiscal Quarter
of Fiscal Year 1997 1.20:1.00
Second Fiscal Quarter
of Fiscal Year 1997 1.40:1.00
Third Fiscal Quarter
of Fiscal Year 1997 1.60:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 2.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 2.10:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 3.20:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 3.20:1.00
Fourth Fiscal Quarter
of Fiscal Year 1999
and thereafter 4.00:1.00
</TABLE>
(v) the Consolidated Fixed Charge Coverage Ratio on the last
day of any Fiscal Quarter occurring during any period set forth
below to be less than the ratio set forth opposite such period
below:
<TABLE>
<CAPTION>
Minimum Consolidated Fixed
PERIOD CHARGE COVERAGE RATIO
<S> <C>
Last Three Fiscal Quarters
of Fiscal Year 1996 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 1.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 1.10:1.00
Fourth Fiscal Quarter of Fiscal
Year 1999 and thereafter 1.50:1.00
</TABLE>
(b) If the Acquisition is consummated, beginning with the first
Fiscal Quarter after the Fiscal Quarter in which the Acquisition is
consummated, the Borrower will not permit:
(i) Consolidated Net Worth on the last day of any Fiscal
Quarter occurring during any period set forth below to be less than
the amount set forth below:
<TABLE>
<CAPTION>
Minimum Consolidated
PERIOD NET WORTH
<S> <C>
Fourth Fiscal Quarter of Fiscal
Year 1996 $(15,000,000)
First Three Fiscal Quarters of Fiscal
Year 1997 $(15,000,000)
Fourth Fiscal Quarter of Fiscal Year 1997 $ 10,000,000
First Three Fiscal Quarters of Fiscal
Year 1998 $ 10,000,000
Fourth Fiscal Quarter of Fiscal Year 1998 $ 50,000,000
First Three Fiscal Quarters of Fiscal
Year 1999 $ 50,000,000
Fourth Fiscal Quarter of Fiscal Year
1999 and thereafter $100,000,000
</TABLE>
(ii) the Funded Debt Ratio on the last day of any Fiscal
Quarter occurring during any period set forth below to be greater
than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum Funded
PERIOD DEBT RATIO
<S> <C>
Fourth Fiscal Quarter of Fiscal Year
1996 5.05:1.00
First Three Fiscal Quarters of Fiscal
Year 1997 5.05:1.00
Fourth Fiscal Quarter of Fiscal Year
1997 3.90:1.00
First Three Fiscal Quarters of Fiscal
Year 1998 3.90:1.00
Fourth Fiscal Quarter of Fiscal Year
1998 3.10:1.00
First Three Fiscal Quarters of Fiscal
Year 1999 3.10:1.00
Fourth Fiscal Quarter of Fiscal Year
1999 and thereafter 2.51:1.00
</TABLE>
(iii) Consolidated Funded Debt as of the end of any Fiscal
Quarter during any period set forth below to be more than the amount
set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum
PERIOD CONSOLIDATED DEBT
<S> <C>
Fourth Fiscal Quarter
of Fiscal Year 1996 $640,000,000
First Three Fiscal Quarters
of Fiscal Year 1997 $640,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $633,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $633,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 $582,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $582,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and thereafter $538,000,000
</TABLE>
(iv) the Adjusted Interest Coverage Ratio to be less than the
ratio set forth below as of the end of any Fiscal Quarter during any
period set forth below opposite such ratio:
<TABLE>
<CAPTION>
Minimum Adjusted
PERIOD INTEREST COVERAGE RATIO
<S> <C>
Fourth Fiscal Quarter
of Fiscal Year 1996 2.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 2.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 2.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 2.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 2.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 2.25:1.00
Fourth Fiscal Quarter
of Fiscal Year 1999 and
thereafter 3.00:1.00
</TABLE>
(v) the Consolidated Fixed Charge Coverage Ratio on the last
day of any Fiscal Quarter occurring during any period set forth
below to be less than the ratio set forth opposite such period
below:
<TABLE>
<CAPTION>
Minimum Consolidated Fixed
PERIOD CHARGE COVERAGE RATIO
<S> <C>
Fourth Fiscal Quarter
of Fiscal Year 1996 1.05:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 1.05:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 1.05:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 1.05:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 1.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 1.25:1.00
Fourth Fiscal Quarter of Fiscal
Year 1999 1.25:1.00
</TABLE>
SECTION 7.2.5. INVESTMENTS. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume, or suffer to exist any
Investment in any other Person, except:
(a) Investments or options to make Investments in any Person
existing on the Closing Date and identified in ITEM 7.2.5 ("Existing
Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments by the Borrower and its
Subsidiaries;
(c) Investments made after the Closing Date (x) by the Borrower and
its Subsidiaries (other than Realco or any Transferred Subsidiary) in
wholly-owned Subsidiaries, or (y) by any Subsidiary of the Borrower in the
Borrower, by way of contributions to capital or loans or advances, so long
as (i) the aggregate amount of all such Investments made after the Closing
Date in all wholly-owned Subsidiaries (other than Commissary Operations,
Inc., BarbWire's of Kansas, Inc., Shoney's of Michigan, Inc. and the
Transferred Subsidiaries) shall not exceed $2,500,000 at any one time,
(ii) all such Investments in Commissary Operations, Inc. shall be made as
loans or advances in the ordinary course of business to provide for the
cash needs of Commissary Operations, Inc. and (iii) all such Investments
by any Subsidiary in the Borrower by way of loans or advances shall be
subordinated in form and substance to the Obligations, such subordination
to include subordination provisions, and all other material terms,
reasonably satisfactory in form and substance to the Agent, as evidenced
by its written approval thereof;
(d) Investments by the Borrower or any Subsidiary in accounts and
notes receivable that arise and remain outstanding from transactions with
franchisees, customers and suppliers in the normal course of business and,
in the case of notes receivable, do not exceed $15,000,000 in the
aggregate outstanding at any one time;
(e) any Guaranty permitted to be made by SECTION 7.2.8;
(f) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the purchase or acquisition by the
Borrower or any Subsidiary (other than any Transferred Subsidiary) of all
or substantially all of the capital stock of any Person if such Investment
is permitted by SECTION 7.2.22;
(g) other Investments by the Borrower or any Subsidiary in an
aggregate amount at any one time outstanding not to exceed $2,000,000;
(h) Investments in ShoLodge made pursuant to the exercise of
options or warrants currently held by the Borrower or any subsidiary, as
such options or warrants may be adjusted in accordance with their terms
for anti-dilution purposes;
(i) any Investments permitted under SECTION 7.2.22; and
(j) Investments made by the Borrower in the Transferred
Subsidiaries in connection with the Acquisition;
PROVIDED, HOWEVER, that
(i) any Investment which when made complies with the
requirements of the definition of the term "CASH EQUIVALENT
INVESTMENT" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such
requirements; and
(ii) no Investment otherwise permitted by CLAUSES (F) or (G)
of this SECTION 7.2.5 shall be permitted to be made if, immediately
before or after giving effect thereto, any Default shall have
occurred and be continuing.
SECTION 7.2.6. RESTRICTED PAYMENTS, ETC.
(a) The Borrower will not declare, pay, or make any dividend or
distribution (in cash, property, or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of the Borrower or
on any warrants, options, or other rights with respect to any shares of
any class of capital stock (now or hereafter outstanding) of the Borrower
(other than dividends or distributions payable in its stock, or warrants,
options or rights to purchase its stock, or splitups or reclassification
of its stock into additional or other shares of its stock) or apply, or
permit any of its Subsidiaries to apply, any of its funds, property, or
assets to the purchase, redemption, sinking fund, or other retirement of
any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower or of any warrants, options or other rights to acquire shares
of any class of capital stock of the Borrower;
(b) the Borrower will not, and will not permit any of its
Subsidiaries to, pay, prepay or repay any principal of, or make any
payment of interest on, or redeem, purchase, set aside any funds for or
defease, or give any notice of redemption for, or purchase or otherwise
acquire, any Subordinated Debt; and
(c) the Borrower will not, and will not permit any of its
Subsidiaries to, make any deposit for any of the foregoing purposes;
PROVIDED, HOWEVER, that
(i) the Borrower may accrue zero coupon interest on the
Subordinated LYONS Notes;
(ii) the Borrower may elect to purchase any Subordinated LYONS
Notes with cash under Section 3.08 of the LYONS Indenture only if,
at least 60 days prior to the date any payment in cash would be
desired to be made, the Borrower shall have provided written notice
to the Agent and the Lenders of its desire to purchase such
Subordinated LYONS Notes in cash and the Approving Lenders, in their
sole discretion, shall have notified the Borrower prior to such
desired purchase date that they will permit such purchase (any
failure to respond by the Approving Lenders being deemed to be a
rejection of such request to make such purchase in cash). The
Borrower may elect to purchase Subordinated LYONS Notes with shares
of its common stock in accordance with Section 3.08 of the LYONS
Indenture without the consent of any Lender;
(iii) the Borrower may, subject to the subordination
provisions applicable to the Subordinated Debt, make payments of
interest accrued thereon when due; and
(iv) the Borrower may, in accordance with the terms and
provisions of Section 11.03 of the LYONS Indenture, issue checks
with respect to the cash portion of fractional shares receivable in
connection with a conversion of the Subordinated LYONS Notes; and
(v) the Borrower may, in accordance with the terms and
provisions of the Subordinated Indenture and the Subordinated
Debentures, issue checks with respect to the cash portion receivable
by a holder in connection with a conversion (in whole or in part) of
such holder's Subordinated Debentures.
SECTION 7.2.7. CONSOLIDATED CAPITAL EXPENDITURES, ETC. The Borrower will
not, and will not permit any of its Subsidiaries to, make any Consolidated
Capital Expenditures, except the Borrower and its Subsidiaries may make
Consolidated Capital Expenditures during any Fiscal Year (including, without
duplication, in connection with expenditures made pursuant to and permitted by
CLAUSES (C) and (D) of SECTION 7.2.11) which do not exceed, in the aggregate,
the amount set forth opposite such Fiscal Year below:
<TABLE>
<CAPTION>
FISCAL YEAR MAXIMUM AMOUNT
<S> <C>
1996 Fiscal Year $ 75,000,000
1997 Fiscal Year $ 95,000,000
1998 Fiscal Year $ 95,000,000
1999 Fiscal Year $ 95,000,000
</TABLE>
PROVIDED, HOWEVER, that (i) to the extent that the maximum amount of
Consolidated Capital Expenditures permitted to be made by the Borrower and
its Subsidiaries in any Fiscal Year, without giving effect to this
PROVISO, exceeds the aggregate amount actually incurred during such Fiscal
Year, the lesser of one hundred percent of the amount of such excess or
$10,000,000 may be carried forward to the next Fiscal Year and (ii) in the
Fiscal Years (but no later than the 1997 Fiscal Year) in which the
Borrower is required to acquire restaurant properties from Marriott or
Thompson Hospitality, L.P., either directly or pursuant to the Borrower's
obligations under the Restaurant Sale and Purchase Agreement dated May 20,
1992, by and among the Borrower, Marriott Family Restaurants, Inc.,
Marriott Corporation and Thompson Hospitality, L.P., Consolidated Capital
Expenditures in respect of such Fiscal Year shall be increased by an
amount not to exceed $5,000,000 in the aggregate for all such Fiscal
Years, and PROVIDED, FURTHER, that (i) there shall be excluded from
Consolidated Capital Expenditures undeveloped real estate designated as
Mortgage Financing Collateral prior to such time that restaurants
constructed on such real estate are open and operating and (ii) the
aggregate amount of Capital Expenditures made by the Transferred
Subsidiaries shall not exceed $17,000,000 in any Fiscal Year (excluding
the value of any Concept store transferred to a Transferred Subsidiary by
the Borrower).
SECTION 7.2.8. GUARANTIES. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume, suffer to exist or otherwise be or become
liable with respect to any Guaranties (including, without limitation,
obligations arising by reason of general partnership interests), except:
(a) the Subsidiary Guaranty;
(b) (i) Guaranties existing on the Closing Date and disclosed in
ITEM 7.2.8 ("Existing Guaranties") of the Disclosure Schedule and
(ii)guaranties replacing such guaranties so long as such replacement
guaranty does not increase the amount of obligations guarantied thereby
and the other terms and conditions of such replacement guaranty are no
more onerous to the Borrower than those of the guaranty so replaced;
(c) Guaranties entered into in the ordinary course of business of
service performance by the Borrower with respect to certain franchise
obligations of Shoney's of Canada, Inc., all as more particularly
described in ITEM 7.2.8 ("Existing Guarantees") of the Disclosure
Schedule;
(d) Guaranties constituting obligations of the Borrower in its
capacity as general partner of the Limited Partnerships, which Guaranties
shall not exceed $2,000,000 in aggregate amount at any time outstanding;
(e) in the case of the Borrower and its Subsidiaries, other
Guaranties in an aggregate amount not to exceed $1,000,000 at any one time
outstanding;
(f) the Guaranty of certain reimbursement obligations of Shoney's
Inn of Baton Rouge pursuant to the Letter of Credit, Reimbursement and
Guaranty Agreement between Shoney's Inn of Baton Rouge, the Borrower and
First Union National Bank of North Carolina dated as of April 1, 1995;
(g) the Subsidiary Guaranty (as defined in the Credit Agreement);
and
(h) the Guaranty by TPIR of the Subordinated Debentures and other
obligations of the Borrower under the Subordinated Indenture.
SECTION 7.2.9. LEASE OBLIGATIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into at any time any arrangement which
involves the leasing by the Borrower or such Subsidiary from any lessor of any
real or personal property (or any interest therein), if such arrangement,
together with all other such arrangements which shall then be in effect, will
result in any Fiscal Year in Consolidated Lease Expense of the Borrower and its
Subsidiaries in excess of $20,000,000.
SECTION 7.2.10. TAKE OR PAY CONTRACTS. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other property, or services
if such arrangement by its express terms requires that payment be made by the
Borrower or such Subsidiary regardless of whether or not such materials,
supplies, other property, or services are delivered or furnished to the Borrower
or such Subsidiary.
SECTION 7.2.11. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, wind-up, liquidate or
dissolve itself (or suffer any thereof), consolidate or amalgamate with or
merge into or with any other corporation or any other Person, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) or convey, sell, transfer, lease or otherwise dispose of
all or any part of its assets (including, without limitation, any stock or
receivables), in one transaction or a series of transactions, to any Person or
Persons except:
(a) any Subsidiary (other than a Transferred Subsidiary which is
not TPI Commissary, Inc. or TPI Transportation, Inc.) may liquidate or
dissolve voluntarily into, and may merge with and into, the Borrower or
any other wholly-owned direct or indirect Subsidiary; PROVIDED, that the
surviving corporation duly assumes all obligations of each thereof and
executes any documents reasonably requested by the Agent in connection
therewith;
(b) the sale of inventory in the ordinary course of business;
(c) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the purchase or acquisition by the
Borrower of all or substantially all of the assets or stock of any Person
to the extent the same would otherwise be permitted by SECTION 7.2.22;
(d) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, any Subsidiary (other than a
Transferred Subsidiary) may merge with any other corporation permitted to
be acquired pursuant to CLAUSE (C) of this SECTION 7.2.11 and may be
created and capitalized for such purposes to the extent the same would
otherwise be permitted by SECTION 7.2.22;
(e) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the sale of assets or properties by the
Borrower or any such Subsidiary for at least 80% cash (unless the Required
Lenders otherwise agree) and for fair value (as reasonably determined by
the Board of Directors of the Borrower or Authorized Officers of the
Borrower as authorized by the Board of Directors) to Persons other than
Affiliates, PROVIDED that (i) the provisions of CLAUSE (C) of SECTION
3.1.2 are complied with, (ii) assets and properties with an aggregate book
value of no more than 10% of the Borrower's consolidated tangible assets
as determined in accordance with GAAP consistently applied are sold in any
Fiscal Year (unless the Required Lenders otherwise agree), (iii) the terms
and conditions of any non-cash proceeds of such sale are in form and
substance satisfactory to the Agent and (iv) the value of the Collateral
after giving effect to such sale is in an amount sufficient to cause the
Loan to Value Ratio to not exceed 60%.
(f) the sale of equipment which, in the Borrower's reasonable
discretion, is obsolete or no longer fit for use in the business of the
Borrower or any of its Subsidiaries;
(g) the leasing by the Borrower or its Subsidiaries of restaurant
facilities, the operations of which have been franchised or sold to one or
more franchisees of the Borrower, which franchisees shall operate such
restaurant facilities thereafter pursuant to a franchise agreement with
the Borrower;
(h) [Intentionally Omitted];
(i) the leasing by the Borrower or its Subsidiaries of real
properties (and related equipment and fixtures) to non-franchisees (i) as
set forth in ITEM 7.2.11 of the Disclosure Schedule having an aggregate
net book value not exceeding approximately $7,475,000 and (ii) with
respect to leases entered into after the Closing Date, having an aggregate
net book value not in excess of $10,000,000 at any time and, in each case,
provided such leases are subordinate to the Security Interests of the
Collateral Documents;
(j) leases of assets permitted by clause (j) of SECTION 7.2.11 of
the Credit Agreement;
(k) the disposition, leasing or subleasing by the Borrower of up to
40 restaurants (which may constitute Collateral) consisting of up to
twenty "Shoney's" Concept restaurants and up to twenty "Captain D's"
Concept restaurants which restaurants the Borrower has determined are no
longer necessary or useful for the continuing business of the Borrower;
and
(l) the leasing or subleasing by the Borrower of up to ten (10)
Lee's Famous Recipe Concept restaurants to RTM Inc. (or to a sublessee or
lessee designated by RTM Inc.).
SECTION 7.2.12. MODIFICATION, ETC. OF SUBORDINATED DEBT. The Borrower will
not consent to or enter into any amendment, supplement or other modification of
any subordination provision (including, without limitation, any provision of
Article XII of, and the definitions of Senior Indebtedness and Indebtedness
contained in, the Subordinated Indenture or the LYONS Indenture) contained in
any agreement or instrument evidencing or governing Subordinated Debt, any
sinking fund provision or terms of required repayment or redemption or
acquisition of Subordinated Debt contained in any agreement or instrument
evidencing or governing any Subordinated Debt that has the effect of shortening
the amortization thereof, or any provision relating to interest rates (if the
effect thereof is to increase such rates), remedies, defaults or contractual
restrictions on the activities or condition of the Borrower, or any other
provision which could be material to the interests or privileges of the Lenders
as holders of Senior Indebtedness, contained in any agreement or instrument
evidencing or governing Subordinated Debt, unless the same shall be consented
to by the Required Lenders.
SECTION 7.2.13. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer, or
permit to exist:
(a) any arrangement or contract with any of its Affiliates (other
than a Subsidiary which is not a Transferred Subsidiary, Limited
Partnership or franchisee of the Borrower) of a nature customarily entered
into by Persons which are Affiliates of each other (including management
or similar contracts or arrangements relating to the allocation of
revenues, taxes, and expenses or otherwise) requiring any payments to be
made by the Borrower or any of its Subsidiaries to any Affiliate (other
than a Subsidiary) unless such arrangement is fair and equitable to the
Borrower or such Subsidiary; or
(b) any other transaction, arrangement, or contract with any of its
Affiliates (other than a Subsidiary which is not a Transferred Subsidiary,
Limited Partnership or franchisee of the Borrower) which would not be
entered into by a prudent Person in the position of the Borrower or such
Subsidiary with, or which is on terms which are less favorable than are
obtainable from, any Person which is not one of its Affiliates.
SECTION 7.2.14. NEGATIVE PLEDGES; SUBSIDIARY PAYMENTS; MODIFICATION OF
DOCUMENTS. The Borrower will not, and will not permit any of its Subsidiaries
to, enter into any agreement (a) (excluding this Agreement, the other Loan
Documents, the Credit Agreement and Mortgage Financing Transaction Documents as
to collateral for the Indebtedness incurred pursuant thereto) prohibiting the
creation or assumption of any Security Interest upon its properties, revenues,
or assets, whether now owned or hereafter acquired, (b) which would restrict
the ability of any Subsidiary of the Borrower to pay or make dividends or
distributions in cash or kind, to make loans, advances or other payments of
whatsoever nature, or to make transfers or distributions of all or any part of
its assets, in each case to the Borrower or to any corporation as to which such
Subsidiary is a Subsidiary or (c) which restricts or limits the ability of the
Borrower to amend, supplement or otherwise modify any of the Loan Documents.
SECTION 7.2.15. INCONSISTENT AGREEMENTS. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any agreement containing any
provision which would be violated or breached by any Loan or by the performance
by the Borrower of its obligations hereunder or under any Note or any other
Loan Document.
SECTION 7.2.16. FISCAL YEAR. The Borrower will not change its Fiscal
Year.
SECTION 7.2.17. FRANCHISE AGREEMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, (a) terminate or alter any of the material
terms and conditions of any of the franchise agreements pursuant to which the
Borrower or any such Subsidiary is the franchisor in such a way so as to (i)
prohibit the assignment by the franchisor (by way of collateral security) of
all of its rights and benefits in the franchise agreements or (ii)
significantly reduce the aggregate royalty fees or advertising fees payable by
the franchisees and (b) enter into any franchise agreements after May 3, 1996
which would not permit the assignment by the franchisor (by way of collateral
security) of all of its rights and benefits in such franchise agreements or
which would contain fee arrangements which are materially less beneficial, in
the aggregate, to the Borrower and its Subsidiaries than the fee arrangements
contained in existing franchise agreements of the Borrower and its
Subsidiaries, except for franchise agreements entered into pursuant to area
agreements in existence on May 3, 1996; PROVIDED, HOWEVER, that the Borrower
may terminate the relevant franchise agreements in connection with Franchisee
Acquisitions.
SECTION 7.2.18. [Intentionally Omitted].
SECTION 7.2.19. ENVIRONMENTAL LIABILITIES. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) violate any requirement of law, rule, regulation or order
regarding Hazardous Material (including without limitation any such law,
rule, regulation or order regarding the generation, accumulation, storage,
transportation, treatment, recycling or disposal of any Hazardous
Material),
(b) dispose of or, except in accordance with applicable law, store
any Hazardous Material in, on or at any real property owned or operated by
the Borrower or any of its Subsidiaries,
(c) allow any lien imposed pursuant to any law, rule, regulation or
order relating to any Hazardous Material or the disposal thereof to be
imposed or to remain on such real property, except as contested in good
faith by appropriate proceedings for which adequate reserves have been
established and are being maintained on its books, or
(d) fail at any time to obtain or comply with any permit,
certificate, license, approval or other authorization relating to
environmental matters, or to file any notification or report relating to
chemical substances, air emissions, effluent discharges or Hazardous
Material waste storage, treatment or disposal required in connection with
the operation of their businesses,
if (i) such violation, disposal, storage, lien or failure relates to any
collateral securing the Obligations or (ii) with respect to property other than
that which is such collateral, such violation, disposal, storage, lien or
failure would, individually or in the aggregate with all other such violations,
disposal, storage, liens and failures which shall have occurred and at such
time be continuing, have a Materially Adverse Effect.
SECTION 7.2.20. AMENDMENT OF CERTAIN AGREEMENTS. The Borrower will not
amend, supplement, make additions to or otherwise modify, in whole or in part,
(a) any provision of any Mortgage Financing Transaction Document in any manner
which adversely affects the Agent, or the Lenders (it being understood that
amendments in form and substance satisfactory to the Agent to Mortgage
Financing Transaction Documents which would (x) permit the substitution of
Mortgage Financing Collateral described in CLAUSE (B)(II) of the definition of
Mortgage Financing Collateral for existing Mortgage Financing Collateral
subject to a Mortgage Financing Transaction having an equal value shall not be
deemed adverse to the Agent or the Lenders; PROVIDED, that, any such valuation
shall, in the case of existing Mortgage Financing Collateral, be based on the
value of such Mortgage Financing Collateral at the time such property became
Mortgage Financing Collateral and, in the case of Mortgage Financing Collateral
described in CLAUSE (B)(II) of the definition of Mortgage Financing Collateral,
be based on the valuation of such Mortgage Financing Collateral as of April 15,
1995 as set forth in the Marshall & Stevens report thereon dated May 19, 1995
or on cost, or (y) extend the maturity of the 1989 Mortgage Financing
Transaction pursuant to Section 2.1 of the Credit Agreement), (b) any provision
of the Credit Agreement, the effect of which with respect to any Loan Document
(as defined in the Credit Agreement) is to increase the interest rate or
shorten the maturity of (or move up any payment date with respect to any
payment on) the Credit Agreement, or (c) any provision of any Loan Document (as
defined in the Credit Agreement), the effect of which is to (1) modify any
covenant, event of default, or other provision thereunder, if the effect of
such modification is to make such covenants or events of default materially
more restrictive on or burdensome to the Borrower or (2) add any new covenant,
event of default or other provision, if the effect of such addition is to
impose any new material restriction or burden on the Borrower. The Borrower
will, prior to entering into any amendment, addition or other modification
deliver to the Agent with copies for each Lender any final or execution form
copy of amendments, supplements, additions or other modifications to such
documents.
SECTION 7.2.21. SALE-LEASEBACK TRANSACTIONS. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, become or
remain liable as lessee or guarantor or other surety with respect to any lease
(whether an operating or capital lease) of any property (whether real or
personal or mixed), whether now owned or hereafter acquired, (a) which the
Borrower or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person or (b) which the Borrower or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to any Person in connection with such lease, EXCEPT to the extent
that (i) any obligations of the Borrower under Capitalized Leases would be
permitted under SECTION 7.2.2(F) and (ii) any Consolidated Lease Expense
resulting therefrom would be permitted under SECTION 7.2.9.
SECTION 7.2.22. PURCHASE OF FRANCHISEES. The Borrower will not, and will
not permit its Subsidiaries to, make any Franchisee Acquisitions except
Franchisee Acquisitions by the Borrower or any Subsidiary that is not a
Transferred Subsidiary the consideration for which is common stock and/or other
consideration, (i) such common stock not having a value in excess of
$10,000,000 in the aggregate (with such common stock being valued at its market
value at the time of the relevant acquisition) and (ii) such other
consideration having an aggregate value for all such Franchisee Acquisitions
not in excess of $30,000,000 in any one Fiscal Year and not more than
$60,000,000 in the aggregate (with any consideration other than cash valued at
the fair market value thereof); PROVIDED, HOWEVER, that (x) both before and
after giving effect to any such Franchisee Acquisitions, no Default shall have
occurred or be continuing and (y) if applicable, the Borrower and/or such
Subsidiary shall have complied with CLAUSE (III) of the PROVISO to SECTION
7.2.5 (but such compliance shall not be in derogation of the Borrower's rights
under CLAUSE (A) of SECTION 7.2.11 with respect to such Subsidiary). In the
event the Borrower makes a Franchisee Acquisition designated as a "Franchise
Re-sale Acquisition" for consideration other than common stock and subsequently
re-sells the assets or ownership interests acquired in such Franchisee
Acquisition, only the excess (the "PURCHASE EXCESS") of (a) the consideration
paid by the Borrower for such assets or ownership interests in such Franchisee
Acquisition over (b) the consideration received by the Borrower for such assets
or ownership interests in such re-sale transaction, shall be included in the
calculations of the Borrower's use of the annual and aggregate limits set forth
in this SECTION 7.2.22; PROVIDED, HOWEVER, that the aggregate Purchase Excess
for all Franchise Re-sale Acquisitions may not at any time exceed $10,000,000.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" shall mean
any of the events set forth in SECTIONS 8.1.1 through 8.1.10.
SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower shall default in
the payment or prepayment when due of any principal of any Note, the Borrower
shall default (and such default shall continue unremedied for a period in excess
of five days) in the payment or prepayment when due of any interest on any Loan
or the Borrower shall default (and such default shall continue unremedied for a
period in excess of five days) in the payment when due of any commitment or
other fee or any other monetary Obligation.
SECTION 8.1.2. NON-PERFORMANCE OF CERTAIN COVENANTS. The Borrower shall
default in the due performance and observance of any of its obligations under
SECTION 7.1.6(A), or under SECTIONS 7.2.1 through 7.2.22.
SECTION 8.1.3. DEFAULT ON OTHER INDEBTEDNESS. Any default shall occur
under the terms applicable to any Indebtedness (including Indebtedness
evidenced by or incurred in connection with the Credit Agreement) or Guaranty
in an aggregate amount exceeding $2,500,000 of the Borrower or any of its
Subsidiaries representing any borrowing or financing or Guaranty or arising
under any other material agreement from, by or with any Person, and such
default shall:
(a) consist of the failure to pay monetary obligations under such
Indebtedness or Guaranty when due; or
(b) continue unremedied (and unwaived) for a period of time
sufficient to permit the acceleration of such Indebtedness; or
(c) continue unremedied (and not have been waived by the holder of
such Indebtedness or Guaranty) for more than thirty days after notice
thereof shall have been given to the Borrower by the Agent, any Lender or
the holder of any Note; or
(d) permit the termination (unless waived) of any commitment to
lend set forth in any agreement with respect to the lending of
Indebtedness exceeding $2,500,000 in principal amount.
SECTION 8.1.4. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its
Subsidiaries shall
(a) (i) become insolvent or generally fail to pay debts as they
become due, or (ii) admit in writing its inability to pay debts as they
become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for the Borrower or
any Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent, or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator, or other custodian for the Borrower or any Subsidiary or for
a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator, or other custodian shall not be discharged within
thirty days;
(d) permit or suffer to exist the commencement of, or commence, any
bankruptcy, reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law; or any dissolution, winding up, or
liquidation proceeding (except for the voluntary dissolution, not under
bankruptcy or insolvency law, of any Subsidiary), shall be commenced by or
against the Borrower or any Subsidiary, and, if not commenced by the
Borrower or such Subsidiary, such proceeding shall be consented to or
acquiesced in by the Borrower or such Subsidiary, or shall result in the
entry of an order for relief or shall remain for thirty days undismissed;
or
(e) take any corporate action authorizing, or in furtherance of,
any of the foregoing.
SECTION 8.1.5. BREACH OF WARRANTY. Any representation or warranty of the
Borrower or any of its Subsidiaries hereunder, under any Collateral Document or
other Loan Document, or under any other writing furnished by or on behalf of
the Borrower or any of its Subsidiaries to the Agent or any Lender for the
purposes of or in connection with this Agreement or any Collateral Document or
other Loan Document, is or shall be incorrect in any material respect when made
or deemed made.
SECTION 8.1.6. NON-PERFORMANCE OF OTHER OBLIGATIONS.
(a) The Borrower or any of its Subsidiaries shall default in the
due performance and observance of any other covenant or agreement
contained herein or in any Collateral Document (other than any Mortgage)
or other Loan Document and such default shall continue unremedied for a
period of thirty days after a Responsible Officer shall have knowledge
thereof; or
(b) A Default, as such term is defined in any Mortgage, shall
occur.
SECTION 8.1.7. ERISA. A contribution failure shall occur with respect to
any Plan sufficient to give rise to a lien under section 302(f) of ERISA or any
of the following events shall occur with respect to any Plan:
(a) such Plan shall be terminated or a receiver to administer such
Plan shall have been appointed (or steps shall be instituted to effect
such termination or appointment);
(b) the Borrower or any Subsidiary shall withdraw from such Plan
(or shall institute steps to effect such withdrawal); or
(c) any Reportable Event shall occur with respect to such Plan
which would present a material risk to the Borrower or any Subsidiary of
incurring a liability on account of such Plan,
and there shall exist a deficiency in the assets available to satisfy the
benefit liabilities under ERISA with respect to such Plan, and such occurrence
shall result in a liability of the Borrower or its Subsidiaries in excess of
$1,000,000.
SECTION 8.1.8. JUDGMENTS; SETTLEMENTS. After the date hereof, a final
judgment or a settlement which, with other such outstanding final judgments or
settlements against the Borrower and each Subsidiary, exceeds an aggregate of
$1,000,000 (net of actual insurance coverage with respect thereto), shall be
rendered against or agreed to by the Borrower or any of its Subsidiaries and,
in the case of a judgment, within thirty days after entry thereof, such
judgment shall not have been discharged or execution thereof stayed pending
appeal, or if, within thirty days after the expiration of any such stay, such
judgment shall not have been discharged.
SECTION 8.1.9. IMPAIRMENT OF SECURITY, ETC. Any one of the Collateral
Documents, or any Security Interest granted thereunder, shall terminate, cease
to be effective, or cease to be the legally valid, binding, and enforceable
obligation of the Borrower thereunder with respect to collateral security with
an aggregate fair market or book value in excess of $5,000,000; the Borrower
shall, directly or indirectly, contest in any manner such effectiveness,
validity, binding nature, or enforceability; or any Security Interest securing,
in whole or in part, any Obligation shall cease to have the priority purported
to be given under the Collateral Documents.
SECTION 8.1.10. CHANGE OF CONTROL. Any Change of Control shall occur.
SECTION 8.2. ACTION IF BANKRUPTCY. If any Event of Default described in
CLAUSES (A)(II) through (D) of SECTION 8.1.4 shall occur, the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable and the Commitment
shall terminate, all without notice, demand, presentment or other action of any
kind.
SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than an Event of Default described in CLAUSES (A)(II) through (D) of
SECTION 8.1.4) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Agent, upon the direction of the Required Lenders,
shall, upon notice or demand, terminate the Commitments and/or declare all or
any portion of the outstanding principal amount of the Loans to be due and
payable and any or all other Obligations to be due and payable, the full unpaid
amount of such Loans and any and all other Obligations which shall be so
declared due and payable shall be and become immediately due and payable, in
each case without further notice, demand, presentment or other action of any
kind.
ARTICLE IX
THE AGENT
SECTION 9.1. ACTIONS. Each Lender and the holder of each Note authorize
the Agent to act on behalf of such Lender or holder under this Agreement, the
Collateral Documents and the other Loan Documents and the Mortgage Financing
Transaction Documents to execute supplements or amendments thereto or
restatement thereof, and, in the absence of other written instructions from the
Required Lenders received from time to time by the Agent (with respect to which
the Agent agrees that it will, subject to the LAST THREE SENTENCES of this
SECTION 9.1, comply in good faith except as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender agrees (which
agreement shall survive any termination of this Agreement) to indemnify the
Agent, PRO RATA according to such Lender's applicable Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time be imposed on, incurred by, or asserted
("INDEMNIFIED LIABILITIES") against the Agent in any way relating to or arising
out of this Agreement, the Notes, the Collateral Documents and the other Loan
Documents and the Mortgage Financing Transaction Documents, including, without
limitation, the reimbursement of the Agent for all reasonable out-of-pocket
expenses (including attorneys' fees) incurred by the Agent hereunder or in
connection herewith or in enforcing the obligations of the Borrower under this
Agreement, the Notes, the Collateral Documents and the other Loan Documents and
the Mortgage Financing Transaction Documents, in all cases as to which the
Agent is not reimbursed by the Borrower; 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
determined by a court of competent jurisdiction in a final proceeding to have
resulted from the Agent's gross negligence or willful misconduct. The Agent
shall not be required to take any action hereunder, under the Notes, under the
Collateral Documents or under any other Loan Document or any Mortgage Financing
Transaction Document, or to prosecute or defend any suit in respect of this
Agreement, the Collateral Documents, the Notes or any other Loan Document,
unless indemnified to its satisfaction by the Lenders against loss, costs,
liability, and expense, which indemnity need not indemnify the Agent for its
gross negligence or willful misconduct. If any indemnity in favor of the Agent
shall become impaired, it may call for additional indemnity and cease to do the
acts indemnified against until such additional indemnity is given. The Agent
may delegate its duties hereunder to affiliates, agents or attorneys-in-fact
selected in good faith by the Agent.
SECTION 9.2. EXCULPATION. Neither the Agent nor any of its directors,
officers, employees, or agents (collectively, the "RELATED PARTIES") shall be
liable to any Lender for any action taken or omitted to be taken by it under
this Agreement, the Collateral Documents, the Notes or any other Loan Document
or any Mortgage Financing Transaction Document or in connection herewith or
therewith, except for its own willful misconduct or gross negligence, nor shall
the Agent nor any of the Related Parties be responsible for any recitals or
representations or warranties herein or therein, or for the effectiveness,
enforceability, validity, or due execution of this Agreement, the Collateral
Documents, the Notes or any other Loan Document or any Mortgage Financing
Transaction Document nor shall the Agent nor any of the Related Parties be
obligated to make any inquiry respecting the performance by the Borrower of its
obligations hereunder or thereunder. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement, or writing which it believes to be genuine and to have
been presented by a proper Person.
SECTION 9.3. SUCCESSOR. The Agent may resign as such at any time upon at
least thirty days' prior notice to the Borrower and all Lenders. If the Agent
at any time shall resign, the Required Lenders may appoint another Lender as a
successor Agent. If the Required Lenders do not make such appointment within
thirty days, the retiring Agent shall appoint a new Agent from among the
Lenders or, if no Lender accepts such appointment, from among commercial
banking institutions or trust institutions generally. Upon the acceptance of
any appointment as Agent by a successor Agent, such successor Agent shall
thereupon become the Agent hereunder under the applicable Loan Documents and
shall be entitled to receive from the prior Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement,
the Collateral Documents, the Notes and the other Loan Documents.
SECTION 9.4. COLLATERAL DOCUMENTS, ETC. Each Lender hereby authorizes
the Agent to enter into the applicable Collateral Documents and the Agent to
enter into any other Loan Documents and to take all action contemplated
thereby. Each Lender agrees that no Lender shall have any right individually
to seek to realize upon the security granted by or Guaranty provided by any
Collateral Document, it being understood and agreed that such rights and
remedies may be exercised by the Agent for the benefit of the Lenders and the
Agent upon the terms of the Collateral Documents.
SECTION 9.5. LOANS BY CIBC INC., ETC. CIBC Inc. and any other Affiliate
thereof which may at any time be acting as both the Agent and a Lender
hereunder, shall have the same rights and powers with respect to any Loans made
by it and any Notes held by it as any Lender and may exercise the same as if it
were not the Agent or affiliated with the Agent and the term "Lender" and, when
appropriate, "holder" shall include CIBC Inc. or such Affiliate in its
individual capacity.
SECTION 9.6. FUNDING RELIANCE, ETC. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. (New
York City time), on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such Lender
and the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, in the case of the Borrower, at the interest rate
applicable at the time to Loans comprising such Borrowing, and in the case of
such Lender, for the period from the date such funds were advanced to the
Borrower to (and including) three days thereafter, at the rate customarily
charged by the Agent for inter-bank loans, and following such third day, at the
interest rate applicable at the time to Loans comprising such Borrowing.
SECTION 9.7. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on the financial
information referred to in SECTIONS 6.4 and 6.16 and such other documents,
information, and investigations as it has deemed appropriate, made its own
credit decision to extend its Commitment from time to time. Each Lender also
acknowledges that it will, independently of the Agent and each other Lender and
based on such other documents, information, and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement, the Collateral Documents, the Notes or
the other Loan Documents.
SECTION 9.8. NOTICES, ETC. TO AGENT. The Agent shall give prompt notice
to each Lender of each notice or request given to the Agent by the Borrower
which, pursuant to the terms of this Agreement, is required to be delivered to
a Lender. The Agent will also promptly distribute to each Lender each
Instrument received by the Agent for such Lender's account and copies of all
other communications received by the Agent from the Borrower for distribution
to the Lenders by the Agent in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement
and of each Loan Document may from time to time be amended, modified, or
waived, if such amendment, modification or waiver is in writing and consented
to by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that no such
amendment, modification, or waiver:
(a) which would modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Required Lenders
or the Approving Lenders shall be effective unless consented to by each
Non-Defaulting Lender;
(b) which would modify this Section, change the definition of
"Required Lenders" or "Approving Lender", increase the Percentage of any
Lender (in each case other than as provided for in SECTION 10.10), reduce
any fees described in ARTICLE III, change the time for payment of any fees
to the Lenders described in ARTICLE III, or release all or substantially
all of the collateral security (including the Guaranties) provided under
the Collateral Documents in a manner other than as provided therein or
herein, shall be effective unless consented to by each Non-Defaulting
Lender;
(c) which would extend the due date for, or reduce the amount of,
any scheduled payment of principal of, or interest on, any Loan (or reduce
the principal amount of or rate of interest thereon) shall be made without
the consent of the holder of the Note evidencing such Loan, or which would
extend or increase the amount of any Lender's Commitment without the
consent of such Lender; or
(d) which would affect adversely the interests, rights or
obligations of the Agent in its capacity as the Agent or would amend
provisions of this Agreement relating to the transfer of funds between the
Agent and the Lenders (including the types of funds or the method of such
transfer) shall be made without the consent of the Agent.
No failure or delay on the part of the Agent, any Lender, or the holder of any
Note in exercising any power or right under this Agreement, the Collateral
Documents, the Notes or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. No notice to or demand on the Borrower in any case shall
entitle it to any notice or demand in similar or other circumstances, unless
otherwise required by the Loan Documents. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
No waiver or approval by the Agent, any Lender, or the holder of any Note
under this Agreement, the Collateral Documents, the Notes or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
SECTION 10.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement, the Collateral Documents, the Notes or
any other Loan Document shall be in writing or by facsimile transmission and
addressed or delivered to it at its address designated for notices set forth
below its signature hereto (or in a Lender Assignment Agreement) or at such
other address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given when received; any notice, if transmitted by facsimile
transmission or delivery, shall be deemed given when received.
SECTION 10.3. COSTS AND EXPENSES. The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent for the negotiation,
preparation, execution and delivery of this Agreement and each other Loan
Document and Mortgage Financing Documents and the Mortgage Financing
Transactions, including schedules and exhibits, and any amendments, consents or
waivers to this Agreement, the Loan Documents or related documents as may from
time to time hereafter be required or requested (whether or not any of the same
become effective), including without limitation the reasonable fees and other
charges of counsel (including all local and special counsel) for the Agent from
time to time incurred in connection therewith, whether or not the transactions
contemplated hereby are consummated, and to pay all reasonable expenses of the
Agent (including reasonable fees and other charges of counsel to the Agent)
incurred in connection with the preparation and review of the form of any
Instrument relevant to this Agreement (including any Lender Assignment
Agreement) and the consideration of legal questions relevant hereto and thereto
or to any restructuring or "workout" of any Obligations and the costs and
expenses of the Agent in connection with any publicity or advertising of the
foregoing. The Borrower also agrees to reimburse each Lender upon demand for
all stamp or other taxes payable in connection with the execution, delivery or
enforcement of this Agreement or any Instrument related hereto and for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
other charges) incurred by such Lender in enforcing the obligations of the
Borrower or any of its Subsidiaries under this Agreement, any Note or any other
Loan Document. The obligations of the Borrower under this SECTION 10.3 shall
survive any termination of this Agreement.
SECTION 10.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by each Lender and the making of the Loans, the
Borrower hereby indemnifies, exonerates and holds the Agent and each Lender and
each of their respective officers, directors, employees, and agents
(collectively the "LENDER PARTIES" and, individually, a "LENDER PARTY") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities, damages, and expenses actually incurred in
connection therewith (irrespective of whether such Lender Party is a party to
the action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
the Lender Parties or any of them as a result of, or arising out of, or
relating to, or as a direct or indirect result of:
(a) the transactions contemplated by the Plan of Reorganization,
the Loan Documents, the Mortgage Financing Documents and the Mortgage
Financing Transactions;
(b) except for expenses incurred in connection with the
preparation, review, execution and delivery of this Agreement and the
other Loan Documents (other than as set forth in SECTION 10.3), becoming a
party to and performance of this Agreement, the Collateral Documents, the
Notes and the other Loan Documents by any of the Lender Parties;
(c) any investigation, litigation, or proceeding related to any
acquisition or proposed acquisition by the Borrower or any Subsidiary
(including the Acquisition and the Assumption) of all or any portion of
the stock or all or substantially all the assets of any Person, whether or
not the Agent or such Lender is party thereto; and
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any of its Subsidiaries of
any Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law, or any other federal, state, local or
other statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct
concerning, any Hazardous Material), regardless of whether or not caused
by, or within the control of, the Borrower or any of its Subsidiaries;
except for any such Indemnified Liabilities arising for the account of a
particular Lender Party solely by reason of such Lender Party's gross
negligence or willful misconduct or breach by such Lender Party of its
obligations under the Loan Documents, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. SURVIVAL. The obligations of the Borrower under SECTIONS
3.11, 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 and the obligations of the Lenders
under SECTION 9.1, shall in each case survive any termination of this
Agreement. The representations and warranties made by the Borrower in this
Agreement and in each Loan Document, and in any document, certificate or
statement delivered pursuant hereto or thereto or in connection herewith or
therewith, shall survive the execution and delivery of this Agreement and each
Loan Document.
SECTION 10.6. SEVERABILITY. Any provision of this Agreement, the Notes
or any Loan Document 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
of this Agreement, the Notes or Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. HEADINGS. The various headings of this Agreement and of
each Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such Loan Document or any
provisions hereof or thereof.
SECTION 10.8. COUNTERPARTS, ENTIRE AGREEMENT, ETC. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
executed by the Borrower and the Agent and be deemed to be an original and all
of which shall constitute together but one and the same agreement. The Notes
and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and thereof and
supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.9. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
SECTION 10.10. SALE AND TRANSFER OF LOANS AND NOTE; PARTICIPATIONS IN
LOANS AND NOTE. Each Lender may assign, or sell participations in, its Loans
and Commitment to one or more other Persons in accordance with this SECTION
10.10.
SECTION 10.10.1. ASSIGNMENTS. Any Lender,
(a) with the written consents of the Borrower and the Agent (which
consents shall not be unreasonably delayed or withheld and which consent,
in the case of the Borrower, shall be deemed to have been given in the
absence of a written notice delivered by the Borrower to the Agent, on or
before the fifth Business Day after receipt by the Borrower of such
Lender's request for consent, stating, in reasonable detail, the reasons
why the Borrower proposes to withhold such consent) may at any time assign
and delegate to one or more commercial banks or other financial
institutions; and
(b) with notice to the Borrower and the Agent, but without the
consent of the Borrower, but with the prior written consent of the Agent,
may assign and delegate to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "ASSIGNEE LENDER"), all or any fraction of such Lender's
total Loans and Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender's Loans and
Commitment) in a minimum aggregate amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof; PROVIDED, HOWEVER, that any such Assignee
Lender will comply, if applicable, with the provisions contained in the first
sentence of the last paragraph of SECTION 4.6 and FURTHER PROVIDED, HOWEVER,
that the Borrower and the Agent shall be entitled to continue to deal solely
and directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until
(c) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the Agent
by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to the
Borrower and the Agent a Lender Assignment Agreement, accepted by the
Agent; and
(e) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents; PROVIDED, HOWEVER, that any such assignment or delegation by a
Lender to an Affiliate thereof shall not relieve such Lender of its obligations
hereunder. Within five Business Days after its receipt of notice that the
Agent has received an executed Lender Assignment Agreement, the Borrower shall
execute and deliver to the Agent (for delivery to the relevant Assignee Lender)
a new Note evidencing such Assignee Lender's assigned Loans and Commitment and,
if the assignor Lender has retained Loans and a Commitment hereunder, a
replacement Note in the principal amount of the Loans and Commitment retained
by the assignor Lender hereunder (such Note to be in exchange for, but not in
payment of, that Note then held by such assignor Lender). Each such Note shall
be dated the date of the predecessor Note. The assignor Lender shall mark the
predecessor Note "exchanged" and deliver it to the Borrower. Accrued interest
on that part of the predecessor Note evidenced by the new Note, and accrued
fees, shall be paid as provided in the Lender Assignment Agreement. Accrued
interest on that part of the predecessor Note evidenced by the replacement Note
shall be paid to the assignor Lender. Accrued interest and accrued fees shall
be paid at the same time or times provided in the predecessor Note and in this
Agreement. Such assignor Lender or such Assignee Lender must also pay a
processing fee to the Agent upon delivery of any Lender Assignment Agreement in
the amount of $2,500. Any attempted assignment and delegation not made in
accordance with this SECTION 10.10.1 shall be null and void.
SECTION 10.10.2. PARTICIPATIONS. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "PARTICIPANT") participating interests in
any of the Loans, its Commitment, or other interests of such Lender hereunder;
PROVIDED, HOWEVER, that
(a) no participation contemplated in this SECTION 10.10.2 shall
relieve such Lender from its Commitment or its other obligations hereunder
or under any other Loan Document;
(b) such Lender shall remain solely responsible for the performance
of its Commitment and such other obligations;
(c) the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in CLAUSE (B) or (C) of SECTION 10.1; and
(e) the Borrower shall not be required to pay any amount under
SECTION 4.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
SECTIONS 4.3, 4.4, 4.5, 4.6, 4.8 and 4.9, shall be considered a Lender.
SECTION 10.10.3. CERTAIN OTHER PROVISIONS.
(a) Nothing contained in this Agreement shall be deemed to limit or
restrict the ability of any Lender to deposit, pledge or otherwise
transfer its Note to a Federal Reserve Bank.
(b) The Borrower authorizes each Lender to disclose to any
participant, assignee or Assignee Lender (each, a "TRANSFEREE") and any
prospective Transferee any and all financial and other information in such
Lender's possession concerning the Borrower which has been delivered to
such Lender by the Borrower pursuant to this Agreement or which has been
delivered to such Lender by the Borrower in connection with such Lender's
credit evaluation of the Borrower prior to entering into this Agreement,
PROVIDED that such Transferee agrees to be bound by the provisions of
SECTION 10.13.
(c) If, pursuant to this SECTION 10.10.3 (including CLAUSE (B)),
any interest in this Agreement or any Loan or Note is transferred to any
Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall
cause such Transferee (other than any Participant), and may cause any
Participant, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor
Lender, the Agent and the Borrower) that under applicable law and treaties
no taxes will be required to be withheld by the Agent, the Borrower or the
transferor Lender with respect to any payments to be made to such
Transferee in respect of the Loans, (ii) to furnish to the transferor
Lender, the Agent and the Borrower either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein such
Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Lender, the Agent and the Borrower) to
provide the transferor Lender, the Agent and the Borrower a new Form 4224
or Form 1001 upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
SECTION 10.11. OTHER TRANSACTIONS; CONSENT TO RELATIONSHIPS. Nothing
contained herein shall preclude the Agent or any other Lender from engaging in
any transaction, in addition to those contemplated by this Agreement or any
Loan Document, with the Borrower or any of its Affiliates in which the Borrower
or such Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.12. FURTHER ASSURANCES. The Borrower hereby agrees that it
will, from time to time at its own expense, promptly execute and deliver all
further Instruments, and take all further action, that may be necessary or
appropriate, or that the Agent or the Required Lenders may reasonably request,
in order to perfect or protect any Security Interest granted under the
Collateral Documents, to enable the Lenders and the Agent to exercise and
enforce their rights under this Agreement and the other Loan Documents and
otherwise to carry out the intent of this Agreement and the other Loan
Documents.
SECTION 10.13. CONFIDENTIALITY. Each Lender shall hold all non-public
information obtained pursuant to the requirements of this Agreement, which has
been identified in writing as confidential by the Borrower, in accordance with
such Lender's customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices; PROVIDED,
that in any event it is understood and agreed that each Lender may make
disclosure to its examiners, affiliates, outside auditors, counsel, and other
professional advisors in connection with this Agreement or as reasonably
required by any bona fide prospective participant or transferee or actual
transferee or participant in connection with the contemplated transfer of any
Loan, Note or Commitment or any participation therein (it being further
understood that, insofar as bona fide prospective participants and transferees
are concerned, the information contained in the Memorandum and in the
commitment letter between the Agent and the Borrower relating thereto and/or in
the summary of terms heretofore furnished to each Lender and incidental
information directly related thereto may be furnished to bona fide prospective
participants and transferees without any requirement that a confidentiality
agreement be signed prior to their receipt of such information) or as required
or requested by any governmental agency or representative thereof or pursuant
to legal process; PROVIDED, FURTHER, that,
(a) unless specifically prohibited by applicable law or court
order, each Lender shall notify the Borrower promptly of any request by
any governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-
public information and shall exercise its reasonable efforts to permit the
Borrower, if practical, to respond to such notice prior to disclosure of
such information; and
(b) in no event shall any Lender be obligated or required to return
any materials furnished by the Borrower.
SECTION 10.14. CERTAIN COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all the Lenders, without
the necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any collateral or the
Collateral Documents which may be necessary to perfect and maintain
perfected the Security Interest in and liens upon the collateral granted
pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent at its option and
in its discretion, to release any Security Interest granted to or held by
the Agent upon any collateral (i) upon termination of the Commitments and
payment in full of all Loans and all other Obligations payable under this
Agreement and under any other Loan Document; (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Borrower owned no interest at the time the Security Interest and/or lien
was granted or at any time thereafter; (iv) constituting property leased
to the Borrower or any Subsidiary of the Borrower under a lease which has
expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by the
Borrower or such Subsidiary to be, renewed or extended; (v) consisting of
an instrument evidencing Indebtedness or other debt Instrument, if the
Indebtedness evidenced thereby has been paid in full; or (vi) if approved,
authorized or ratified in writing by the Required Lenders or, if required
by CLAUSE (B) of SECTION 10.1, each Lender. Upon request by the Agent at
any time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of collateral pursuant to this SECTION
10.14.
SECTION 10.15. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.16. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE LENDERS, OR THE
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE
LENDERS ENTERING INTO THIS AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SHONEY'S, INC.
By /S/ F. ERNIE MCDANIEL, JR.
Title: Treasurer
Address: 1727 Elm Hill Pike
Nashville, Tennessee 37210
Fax No.: (615) 231-2734
Attention: F.E. McDaniel, Jr.
with a copy of any notice to:
Tuke Yopp & Sweeney
NationsBank Plaza
Suite 1100
414 Union Street
Nashville, Tennessee 37219
Fax No.: (615) 313-3310
Attention: John Stone
CANADIAN IMPERIAL BANK OF COMMERCE, acting through
its NEW YORK AGENCY, as Agent
By /S/ KATHERINE BASS
Title: Authorized Signatory
Address: 425 Lexington Avenue
New York, New York 10017
Fax No.: (212) 856-3763
Attention: Syndications, Manager
Administration
<PAGE>
SCHEDULE I
DISCLOSURE SCHEDULE
[INTENTIONALLY OMITTED]
<PAGE>
SCHEDULE II
COLLATERAL RESTAURANTS
<TABLE>
<CAPTION>
STORE NO. LOCATION REPAYMENT AMOUNT
<S> <C> <C>
1122 Ashland, Kentucky $1,351,000
1146 Richmond, Kentucky $1,078,000
1147 Lexington, Kentucky $1,078,000
1148 Lexington, Kentucky $ 910,000
1299 Bowling Green, Kentucky $1,309,000
1301 Henderson, Kentucky $ 973,000
1303 Owensboro, Kentucky $1,421,000
1773 Louisville, Kentucky $ 784,000
1774 Saint Matthews, Kentucky $ 756,000
1776 Louisville, Kentucky $ 931,000
1777 Louisville, Kentucky $ 994,000
1778 Elizabethtown, Kentucky $1,442,000
1779 Radcliff, Kentucky $ 889,000
1208 Nashville, Tennessee $1,512,000
1219 Goodlettsville, Tennessee $ 980,000
1236 Hermitage, Tennessee $1,064,000
1237 Nashville, Tennessee $1,099,000
1243 Nashville, Tennessee $1,078,000
(Adjacent Captain D's Store No. 3535 to be
released for no consideration upon
completion of subdivision from adjacent
Shoney's)
1246 McMinnville, Tennessee $1,232,000
1248 Murfressboro, Tennessee $1,218,000
1266 Cookeville, Tennessee $ 875,000
1312 Clarksville, Tennessee $1,351,000
1209 Murfreesboro, Tennessee $1,126,404
1304 Vincennes, Indiana $1,001,712
</TABLE>
EXHIBIT A
TERM NOTE
$_____________ May __, 1996
FOR VALUE RECEIVED, the undersigned, SHONEY'S, INC., a Tennessee
corporation (the "BORROWER"), promises to pay to the order of _______________
(the "LENDER") on the Stated Maturity Date (as defined in the Loan Agreement
referred to below) for Loans (as defined in such Loan Agreement), the principal
sum of __________________________ DOLLARS ($________) or, if less, the
aggregate unpaid principal amount of all Loans made by the Lender and
outstanding pursuant to that certain Bridge Loan Credit Agreement, dated as of
May 3, 1996 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "LOAN AGREEMENT"), among the Borrower, the
various financial institutions (including the Lender) as are, or may from time
to time become, parties thereto and Canadian Imperial Bank of Commerce, New
York Agency, as Agent. Unless otherwise defined, terms used herein have the
meanings provided in the Loan Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in immediately available funds to the account
designated by the Agent pursuant to the Loan Agreement.
This Note is a Note referred to in, and evidences Indebtedness incurred
under, the Loan Agreement, to which reference is made for a description of the
security for this 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 Indebtedness evidenced by this Note and on which such
Indebtedness may be declared to be or shall automatically become immediately
due and payable.
The Borrower hereby irrevocably authorizes each Lender to make (or cause
to be made) appropriate notations on the grid attached to such Lender's Note
(or on any continuation of such grid), which notations, if made, shall
evidence, INTER ALIA, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to, the Loans evidenced hereby.
Such notations shall be rebuttable presumptive evidence of the information so
set forth; PROVIDED, HOWEVER, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK CITY, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
SHONEY'S, INC.
By:
Title:
<PAGE>
LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Date Amount of Loan Made Interest Period Amount of Principal Unpaid Principal Balance Total Notation
(if applicable) Repaid Made By
Base Rate LIBO Rate Base Rate LIBO Rate Base Rate LIBO Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
BORROWING REQUEST
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: [Name]
[Title]
SHONEY'S, INC.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.3 of the
Bridge Loan Credit Agreement, dated as of May 3, 1996 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"LOAN AGREEMENT"), among Shoney's, Inc. a Tennessee corporation (the
"BORROWER"), the various financial institutions which are, or may from time to
time become, parties thereto (the "LENDERS") and Canadian Imperial Bank of
Commerce, New York Agency, as agent (in such capacity, the "AGENT") for the
Lenders. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Loan Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $ on , 19 as a [LIBO Rate Loan
having an Interest Period of months] [Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section 5.3.2 of the
Loan Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application
of the proceeds therefrom, all statements set forth in Section 5.3.1 of the
Loan Agreement are true and correct in all material respects.
The Borrower agrees that if, prior to the time of the Borrowing requested
hereby, any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Agent. Except to
the extent, if any, that prior to the time of the Borrowing requested hereby
the Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:
Amount to be PERSON TO BE PAID Name, Address, etc.
TRANSFERRED NAME ACCOUNT NO. OF TRANSFEREE LENDER
$
Attention:
$
Attention:
Balance of The Borrower
such proceeds
Attention:
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this day of , 19 .
SHONEY'S, INC.
By:
Title:
<PAGE>
EXHIBIT C
SHONEY'S
INC.
1727 Elm Hill Pike
Nashville, TN 37210
(615) 391-5201
May 3, 1996
To each of the Financial Institutions
party to the Bridge Loan Credit Agreement
hereinafter referred to and to Canadian
Imperial Bank of Commerce, New York Agency,
as Agent
Re: Compliance Certificate
Ladies and Gentlemen:
Attached hereto is a copy of a Compliance Certificate of Shoney's, Inc.
(the "Borrower") for the Borrower's Fiscal Quarter ended February 18, 1996.
The Borrower hereby delivers the attached Compliance Certificate to you
pursuant to Section 5.1.4 of the Bridge Loan Credit Agreement (the "Bridge
Loan Credit Agreement"), dated as of May 3, 1996 among the Borrower, Canadian
Imperial Bank of Commerce, and various other financial institutions now or
hereafter parties thereto, and Canadian Imperial Bank of Commerce, New York
Agency, as Agent. You may rely on the attached Compliance Certificate as if
it were addressed directly to you and delivered to you on today's date.
Sincerely yours,
SHONEY'S INC.
By: /s/ F.E. MCDANIEL, JR.
F.E. McDaniel, Jr., Treasurer
OUR GOAL IS 100% CUSTOMER SATISFACTION WITH EACH CUSTOMER, EVERY DAY!
<PAGE>
COMPLIANCE CERTIFICATE
To each of the financial institutions party to the Credit Agreement
hereinafter referred to and to Canadian Imperial Bank of Commerce,
New York Agency, as Agent.
Re: Shoney's, Inc. -- Credit Agreement, dated as of July 21, 1993
Ladies and Gentlemen:
This Compliance Certificate is being delivered pursuant to the Reducing
Revolving Credit Agreement dated as of July 21, 1993 (together with all
amendments, supplements, amendment and restatements and other modifications, if
any, from time to time made thereto, the "CREDIT AGREEMENT"), among Shoney's,
Inc., a Tennessee corporation (the "BORROWER"), various financial institutions
now or hereafter parties thereto (the "LENDERS") and Canadian Imperial Bank of
Commerce, New York Agency, as agent for the Lenders (the "AGENT"). Capitalized
terms used herein without definition shall have the meanings assigned to such
terms in SECTION 1.1 of the Credit Agreement. All computations performed
herein shall conform to the method of computation required by the Credit
Agreement.
The Borrower hereby certifies, represents and warrants that as of
February 18, 1996 (the "COMPUTATION DATE"):
(a) Consolidated Net Worth was ($81,836,000), as computed on ATTACHMENT 1
hereto.
The minimum Consolidated Net Worth required pursuant to Clause (a) of
SECTION 7.2.4 of the Credit Agreement on the Computation Date was
($120,000,000).
(b) The Funded Debt Ratio was 4.06:1.00, as computed on ATTACHMENT 2 hereto.
The maximum Funded Debt Ratio required pursuant to CLAUSE (B) of SECTION
7 2.4 of the Credit Agreement on the Computation Date was 4.50:1.00.
(c) The Consolidated Funded Debt was $501,174,000 as computed on ATTACHMENT 3
hereto.
The maximum Consolidated Funded Debt required pursuant to CLAUSE (C) of
SECTION 7.2.4 of the Credit Agreement on the Computation Date was
$585,000,000.
(d) The Adjusted Interest Coverage Ratio was 2.38:1.00, as computed on
ATTACHMENT 4 hereto.
The minimum Adjusted Interest Coverage Ratio required pursuant to CLAUSE
(D) of SECTION 7.2.4 of the Credit Agreement on the Computation Date was
1.25:1.00.
(e) The Consolidated Fixed Charge Coverage Ratio was 0.90:1.00, as computed
on ATTACHMENT 5 hereto.
The minimum Consolidated Fixed Charge Coverage Ratio required pursuant to
CLAUSE (E) of SECTION 7.2.4 of the Credit Agreement on the Computation
Date was 0.90:1.00.
(f) Consolidated Capital Expenditures made thus far for the 1996 Fiscal Year
were $31,618,000.
The maximum amount of Consolidated Capital Expenditures permitted
pursuant to SECTION 7.2.7 of the Credit Agreement (including $10,000,000
in carry over from prior Fiscal Years) on the Computation Date was
$101,000,000.
(g) The aggregate amount of unsecured revolving Indebtedness outstanding on
the Computation Date was $18,575,000.
The maximum aggregate principal amount of unsecured revolving
Indebtedness permitted pursuant to CLAUSE (B) of SECTION 7.2.2 on the
computation Date was $30,000,000.
(h) Indebtedness of the Borrower and its Subsidiaries (other than Realco) to
one or more vendors of any assets to finance its acquisition of such
assets on the computation Date was $0.
The maximum aggregate amount outstanding in respect of indebtedness of
the Borrower and its Subsidiaries (other than Realco) to a vendor of any
assets to finance its acquisition of such assets pursuant to CLAUSE (E)
of SECTION 7.2.2 on the Computation Date was $3,000,000.
(i) The aggregate capitalized amount payable under Capitalized Leases was
$14,329,000.
The maximum aggregate capitalized amounts payable under Capitalized
Leases permitted pursuant to CLAUSE (F) of SECTION 7.2.2 of the Credit
Agreement on the Computation Date was $30,000,000.
(j) The Indebtedness of the Borrower in respect of trade or commercial
letters of credit and standby letters of credit was $16,038,000.
The maximum aggregate amount outstanding in respect of trade or
commercial letters of credit permitted pursuant to CLAUSE (G) of SECTION
7.2.2 on the Computation Date was $40,000,000.
(k) Indebtedness of the Borrower in respect of standby letters of credit
(other than any standby letters of credit issued in connection with
Mortgage Financing Transactions) was $16,038,000.
The maximum aggregate amount outstanding in respect of standby letters of
credit permitted pursuant to CLAUSE (G) of SECTION 7.2.2 on the
Computation Date was $30,000,000.
(l) Indebtedness incurred by the Borrower under and in connection with
Mortgage Financing Transactions during the 1996 Fiscal Year on the
Computation Date was $0.
The maximum amount of Indebtedness with respect to Mortgage Financing
Transactions permitted pursuant to CLAUSE (I) of SECTION 7.2.2 of the
Credit Agreement in respect of the current Fiscal Year on the Computation
Date was $77,000,000.
(m) Investments made after the Closing Date by the Borrower and its
Subsidiaries (other than Realco) in wholly-owned Subsidiaries (other than
Commissary Operations, Inc., Mike Rose Foods, Inc., Realco, Barbwire's of
Kansas, Inc. and Shoney's of Michigan, Inc.) were $(6,352,000).
The maximum amount of Investments made after the Closing Date by the
Borrower and its Subsidiaries (other than Realco) in wholly-owned
Subsidiaries (other than Commissary Operations, Inc., Mike Rose Foods,
Inc., Realco, Barbwire's of Kansas, Inc. and Shoney's of Michigan, Inc.)
permitted pursuant to CLAUSE (C) of SECTION 7.2.5 of the Credit agreement
on the Computation Date was $2,500,000.
(n) Investments by the Borrower or any of its Subsidiaries (other than
Realco) in notes receivable that arise and remain outstanding from
transactions with franchisees, customers and suppliers in the normal
course of business were $5,151,000.
Investments by the Borrower or any of its Subsidiaries (other than
Realco) in notes receivable that arise and remain outstanding from
transactions with franchisees, customers and suppliers in the normal
course of business permitted pursuant to CLAUSE (D) of SECTION 7.2.5 of
the Credit Agreement on the Computation Date was $15,000,000.
(o) Other Investments by the Borrower or any of its Subsidiaries (other than
Realco) after the Closing Date were $30,000.
Other investments by the Borrower or any of its Subsidiaries (other than
Realco) permitted pursuant to CLAUSE (D) of SECTION 7.2.5 of the Credit
Agreement on the Computation Date was $2,000,000.
(p) Other Guaranties (other than those permitted by CLAUSES (A) through (C)
of SECTION 7.2.8 of the Credit Agreement) of the Borrower and its
Subsidiaries (other than Realco) after the Closing Date were $ 0.
Other Guaranties (other than those permitted by CLAUSES (A) through (C)
of SECTION 7.2.8 of the Credit Agreement) of the Borrower and its
Subsidiaries (other than Realco) permitted pursuant to CLAUSE (E) of
SECTION 7.2.8 of the Credit Agreement on the Computation Date was
$1,000,000.
(q) Consolidated Lease Expenses thus far for the current Fiscal Year were
$2,069,000.
The maximum Consolidated Lease Expenses permitted in any Fiscal Year
pursuant to SECTION 7.2 9 of the Credit Agreement is $15,000,000.
(r) The net book value of real properties (and related equipment and
fixtures) leased by the Borrower and its subsidiaries (other than Realco)
to non-franchisees was $1,905,000.
The net book value of real properties (and related equipment and
fixtures) leased by the Borrower and its Subsidiaries (other than Realco)
to non-franchisees permitted pursuant to CLAUSE (I) of SECTION 7.2.11 of
the Credit Agreement on the Computation Date was $10,000,000.
(s) Since the Closing Date, the amount of Franchisee Acquisitions made to and
including the Computation Date was $26,338,000.
The maximum amount of Franchisee Acquisitions permitted pursuant to
SECTION 7.2.23 of the Credit Agreement was $60,000,000.
(t) Franchisee Acquisitions thus far for the current Fiscal Year were
$17,719,000.
The maximum amount of Franchisee Acquisitions permitted in any one Fiscal
Year pursuant to SECTION 7.2.23 of the Credit Agreement on the
Computation Date was $30,000,000.
(u) The amount of Excess Cash Flow remitted to the Agent for the 1996 Fiscal
Year was $N/A, as computed on ATTACHMENT 6 hereto.
(v) The amount of Mortgage Financing Collateral properties as of the
Computation Date was $16,332,000 as shown on ATTACHMENT 7.
The maximum amount of Mortgage Financing Collateral properties permitted
per the Credit Agreement is $50,000,000.
(w) No Default or Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be
executed and delivered by its duly Authorized Officer on this 2th day of
April, 1996.
SHONEY'S, INC.
By:________________________________
Vice President and Controller
<PAGE>
COMPLIANCE CERTIFICATE
Attachment 1
CONSOLIDATED NET WORTH
1. Shareholders' equity (deficit)
per Balance Sheet $(81,836,000)
2. Adjustments
(a) Treasury stock (to the extent
not included in item 1) $
(b) Write-up in book value of
assets resulting from
revaluation $
(c) Total Adjustments (item (a)
plus item (b)) $ 0
3. Consolidated Net Worth (deficit)
(item (1) minus item 2(c)) $(81,836,000)
MINIMUM AMOUNT ALLOWABLE PER COVENANT
Consolidated Net Worth as of February 18, 1996 $(120,000,000)
<PAGE>
ATTACHMENT 2
FUNDED DEBT RATIO
1. Indebtedness (as computed in
accordance with the definition
of such term in the Credit Agree-
ment) (including accrued interest
on the Subordinated LYONS Notes
and debt incurred with respect to
Mortgage Financing Transactions)
plus the amount of reserve for
litigation settlement $ 501,174,000
2. Adjustments
(a) Obligations with respect to
Rate Swap Agreements $ 0
(b) Any withdrawal liability to
a Multiemployer Plan $
(c) Total Adjustments
(item (a) plus item (b)) $ 0
3. Consolidated Funded Debt (item 1
minus item 2(c)) $ 501,174,000
4. Consolidated Net Income $ 38,315,000
5. Adjustments
(a) All income taxes $ 25,239,000
(b) Consolidated Interest
Expense $ 29,035,000
(c) Non-cash interest charges,
depreciation, amortization
and amortization of trans-
action costs with respect
to Indebtedness and amor-
tization of bond discount
relating to the Subordinated
Debentures (to the extent not
included in item 4.) $ 55,283,000
(d) Non-cash/restructuring charges $ 20,714,000
(e) Gain From Divestiture of Mike
Rose Foods & Lee's $(45,155,000)
(f) Total adjustments (item (a)
plus item (b) plus item (c)
plus item (d) less item (e) $ 85,116,000
6. EBITDA (Item 4 plus item 5(f)) $ 123,431,000
7. Item 3 divided by item 6 $ 4.06
<PAGE>
Attachment 3
CONSOLIDATED FUNDED DEBT
1. Indebtedness (as computed in
accordance with the definition of
such term in the Credit Agreement)
(including accrued interest on the
Subordinated LYONS Notes and debt
incurred with respect to Mortgage
Financing Transactions) plus the
amount of reserve for litigation
settlement $501,174,000
2. Adjustments
(a) Obligations with respect to
Rate Swap Agreements $ 0
(b) Any withdrawal liability to
a Multiemployer Plan $
(c) Total adjustments
(item (a) plus item (b)) $ 0
3. Consolidated Funded Debt (item 1
minus item 2(c)) $501,174,000
<PAGE>
ATTACHMENT 4
ADJUSTED INTEREST COVERAGE RATIO
1. Adjusted EBITDA
(EBITDA minus Consolidated
Capital Expenditures (other
than in respect Franchise
Acquisitions) $69,163,000
2. Consolidated Interest Expense
paid or payable in cash $29,035,000
3. Adjusted Interest Coverage Ratio
(item 1 divided by item 2) 2.38
<PAGE>
ATTACHMENT 5
CONSOLIDATED FIXED CHARGE COVERAGE RATIO
1. EBITDA $123,431,000
2. Consolidated Lease Expense $ 7,615,000
3. Consolidated Interest Expense $ 29,035,000
4. Scheduled payments of any Consolidated
Funded Debt (including, without
limitation, payments of Loans required
under clause (a) of Section 3.1.2 of
the Credit Agreement due to a
Commitment Amount reduction under
clause (a) of Section 2.2.2 of the
Credit Agreement and the amount of
scheduled payments under Capitalized
Leases, other than such as is
appropriately allocable to
Consolidated Interest Expense) net of
proceeds of insurance recoveries for
such period received by the Borrower
in respect of certain litigation
against the Borrower as reflected in
the Borrower's Annual Report on Form
10-K for its 1992 Fiscal Year,
provided, however, that for purposes
of this clause (b) only, Consolidated
Funded Debt shall not include any
Indebtedness permitted under clause
(b) of Section 7.2.2 or any similar
Indebtedness permitted under clause
(c) of Section 7.2.2 so long as such
Indebtedness is, by its terms,
renewable and the provider of such
Indebtedness has not declined to so
renew such Indebtedness $ 82,914,000
5. All federal, state and local income
taxes of the Borrower and its
Subsidiaries $ 25,239,000
6. Consolidated Fixture Charges (item 2
plus item 3 plus item 4 plus item 5) $144,803,000
7. Item 1 plus item 2 $131,046,000
8. Item 7 divided by item 6 0.90
<PAGE>
ATTACHMENT 6
EXCESS CASH FLOW
1. Cash per statement of cash flows $ N/A
2. Less:
(a) Good faith estimate of taxes
payable in connection with
asset sales $ 0
(b) Proceeds of borrowings under
Mortgage Financing Transactions
during fiscal year $ 0
3. Total deductions (item 2(a) plus
item 2(b)) $ 0
4. Adjusted Cash (item 1 minus item 3) $ 0
5. Cash allowed per covenant (6% of
total revenues) $ N/A
6. Excess Cash (item 4 minus item 5) $ N/A
<PAGE>
ATTACHMENT 7
TENTATIVE FUTURE MORTGAGE FINANCING COLLATERAL
Properties are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Rock Rd., Wichita KS Shoney's 331,762
Warsaw, IN Shoney's 223,554
Newton, IA Shoney's 196,557
Westheimer, Houston, TX Shoney's 464,873
Summerville, SC Shoney's 390,905
Medina, OH Shoney's 286,975
Palmer Township, PA Shoney's 287,280
1-10, Houston, TX Shoney's 684,619
Woodson Terrace, MO Shoney's 436,483
Ozark, MO Shoney's 325,468
Saginaw, MI Shoney's 357,272
Bellevue, TN Shoney's 434,220
Grayson, KY Shoney's 266,177
Nachitoches, LA Shoney's 187,568
Port Allen, LA Shoney's 289,738
Emporia, KS Shoney's 271,144
Murfreesboro, TN Shoney's 461,407
Octa, OH Shoney's 163,305
Newark, DE Shoney's 498,099
Sugar Land, TX Shoney's 356,034
Winfield, WV Shoney's 437,548
Muscle Shoales, AL Shoney's 290,497
Richlands, VA Shoney's 285,848
Lagrange, KY Shoney's 268,851
Vincennes, AL Shoney's 345,686
Cedar Rapids, IA Shoney's 315,748
Franklin, KY Shoney's 176,267
Saraland, AL Shoney's 233,042
Watumoka, AL Shoney's 247,690
Moncks Corner, SC Shoney's 227,061
Carthage, MO Shoney's 93,318
Starke, FL Shoney's 192,667
Florence, AL Shoney's 362,296
Brunswick, GA Captain D's 239,123
Almedda Geneoa, Houston, TX Captain D's 105,022
S. Broadway St., St. Louis, MO Captain D's 188,606
Nat. Bridge Rd., St. Louis, MO Captain D's 62,258
Clarksville Hwy. Nashville, TN Captain D's 107,678
Shively, KY Captain D's 46,418
Texas City, TX Captain D's 184,266
House Springs, MO Captain D's 199,835
Demopolis, AL Captain D's 108,953
Princton, KY Captain D's 161,083
Covington, GA Captain D's 205,998
Kingsland, GA Captain D's 152,985
Greenville, NC Pargo's 433,945
York, PA Pargo's 442,387
Raleigh, NC Pargo's 737,177
Winchester, VA Pargo's 574,592
Columbus, GA Pargo's 512,775
Wichita, KS Commissary 215,346
Cookeville, TN Barbwire's 534,694
Knox Abbot Dr., Columbia, SC Barbwire's 293,697
Summerville, SC Barbwire's 446,044
TOTAL $16,331,831
</TABLE>
<PAGE>
EXHIBIT D
CONTINUATION/CONVERSION NOTICE
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: [Name]
[Title]
SHONEY'S, INC.
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Bridge Loan Credit Agreement, dated as of May 3, 1996 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "LOAN AGREEMENT"), among Shoney's, Inc., a Tennessee corporation (the
"BORROWER"), the various financial institutions which are, or may from time to
time become, parties thereto (the "LENDERS") and Canadian Imperial Bank of
Commerce, New York Agency, as agent (in such capacity, the "AGENT") for the
Lenders. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Loan Agreement.
The Borrower hereby requests that on , 19 ,
(1) $ of the presently outstanding principal amount of
the Loans originally made on , 19 [and $ of the
presently outstanding principal amount of the Loans originally made on
, 19 ],
(2) and all presently being maintained as *[Base Rate Loans] [LIBO
Rate Loans],
(3) be [converted into] [continued as],
(4) **[LIBO Rate Loans having an Interest Period of months]
[Base Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is
continuing; and
(b) agrees that if, prior to the time of such continuation or
conversion, any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Agent.
Except to the extent, if any, that, prior to the time of the continuation or
conversion requested hereby, the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be
made, by its Authorized Officer this day of , 19 .
SHONEY'S, INC.
By:
Title:
**FOOTNOTES**
* Select appropriate interest rate option.
**Insert appropriate interest rate option.
<PAGE>
EXHIBIT E
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT F
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of ______ __, 1996,
made by SHONEY'S, INC., a Tennessee corporation (the "PLEDGOR"), in favor of
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY ("CIBC-NYA"), acting in its
capacity as agent (together with any successor(s) thereto in such capacity, the
"AGENT") for the Lenders (as such term is defined in the Loan Agreement
referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Bridge Loan Credit Agreement, dated as
of May 3, 1996 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "LOAN AGREEMENT"), among the Pledgor, the
Lenders and the Agent, the Lenders have extended Commitments (such capitalized
term, and all other capitalized terms used in these recitals without
definition, to have the meanings assigned to such terms in, or incorporated by
reference in, SECTIONS 1.1, 1.2 and 1.3 hereof) to make Loans to the Pledgor;
and
WHEREAS, as a condition precedent to the making of the Second Draw under
the Loan Agreement in connection with the Acquisition and Assumption, the
Pledgor is required to execute and deliver this Agreement and grant to the
Agent, for its benefit and the Ratable benefit of the Lenders, a continuing
pledge of and security interest in all issued and outstanding shares of capital
stock of each Transferred Subsidiary (whether now existing or hereafter formed
or acquired) of the Pledgor and in certain promissory notes made by each
Transferred Subsidiary (whether now existing or hereafter formed or acquired)
of the Pledgor; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Loans to the
Pledgor pursuant to the Loan Agreement, the Pledgor hereby agrees with the
Agent, for its benefit and the benefit of the Lenders, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" is defined in the PREAMBLE.
"AGREEMENT" is defined in the PREAMBLE.
"CIBC-NYA" is defined in the PREAMBLE.
"COLLATERAL" is defined in SECTION 2.1.
"DISTRIBUTIONS" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of)
stock splits, reclassifications, warrants, options, non-cash dividends,
mergers, consolidations and all other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any shares of capital
stock on or with respect to any Pledged Shares or other shares of capital
stock constituting Collateral, but shall not include Dividends.
"DIVIDENDS" means cash dividends and cash distributions with respect
to any Pledged Shares or other Pledged Property made in the ordinary
course of business and not a liquidating dividend.
"LENDERS" is defined in the PREAMBLE.
"LOAN AGREEMENT" is defined in the FIRST RECITAL.
"OBLIGATIONS" is defined in SECTION 2.2.
"PLEDGED NOTE ISSUER" means each Person identified in ITEM A of
ATTACHMENT 1 hereto as the issuer of the Pledged Note identified opposite the
name of such Person.
"PLEDGED NOTES" means all promissory notes of any Pledged Note Issuer
either (a) in the form or substantially the form of EXHIBIT A hereto or (b)
which are outstanding on the Acquisition Date, which are delivered by the
Pledgor to the Agent as Pledged Property hereunder, as such promissory notes,
in accordance with SECTION 4.6, are amended, modified or supplemented from time
to time and together with any promissory note of any Pledged Note Issuer taken
in extension or renewal thereof or substitution therefor.
"PLEDGED PROPERTY" means all Pledged Shares, all Pledged Notes and
all other pledged shares of capital stock or promissory notes, all other
securities, all assignments of any amounts due or to become due, all other
instruments which are now being delivered by the Pledgor to the Agent or
may from time to time hereafter be delivered or be required to be
delivered by the Pledgor to the Agent for the purpose of pledge under this
Agreement or any other Loan Document, and all proceeds of any of the
foregoing.
"PLEDGED SHARE ISSUER" means each Person identified on ITEM B of
ATTACHMENT 1 hereto as the issuer of the Pledged Shares identified
opposite the name of such Person.
"PLEDGED SHARES" means all shares of capital stock of any
Pledged Share Issuer.
"PLEDGOR" is defined in the PREAMBLE.
"RATABLE" means (a) with respect to all the Loans, in proportion to
the respective Lender's Percentage of the aggregate Loans outstanding
under the Loan Agreement, and (b) with respect to other Obligations, in
proportion to the respective amounts to which the Agent or such Lender is
entitled pursuant to the Loan Agreement, the Collateral Documents or the
Loan Documents when compared to the total amount which the Agent and all
Lenders are entitled to pursuant to the Loan Agreement, the Collateral
Documents and the Loan Documents.
"SECURITIES ACT" is defined in SECTION 6.2.
"U.C.C." means the Uniform Commercial Code, as in effect in the State
of New York.
SECTION 1.2. LOAN AGREEMENT DEFINITIONS. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Loan Agreement.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
PLEDGE
SECTION 2.1. GRANT OF SECURITY INTEREST. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Agent, for its benefit and the Ratable benefit of the Lenders, and hereby
grants to the Agent, for its benefit and the Ratable benefit of the Lenders, a
continuing security interest in and to, all of the following property (the
"COLLATERAL"):
A. all promissory notes of each Pledged Note Issuer identified in
ITEM A of ATTACHMENT 2 hereto;
B. all other Pledged Notes issued from time to time;
C. all issued and outstanding shares of capital stock of each
Pledged Share Issuer identified on ITEM B of ATTACHMENT 1 hereto;
D. all other Pledged Shares issued from time to time;
E. all other Pledged Property, whether now or hereafter
delivered to the Agent in connection with this Agreement;
F. all Dividends, Distributions, interest, and other payments
and rights with respect to any Pledged Property; and
G. all proceeds of any of the foregoing.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Agreement and the Collateral
secure the prompt payment in full and performance when due of all obligations
of the Pledgor to the Agent and each of the Lenders now or hereafter existing
under the Loan Agreement, the Notes, the Collateral Documents and the other
Loan Documents (including this Agreement) to which the Pledgor is a party,
whether for principal, interest, costs, fees, expenses or otherwise
(collectively, the "OBLIGATIONS").
SECTION 2.3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE,
TRANSFER, ETC. All certificates or instruments representing or evidencing any
Collateral, including all Pledged Shares and all Pledged Notes, shall be
delivered to and held by or on behalf of (and, in the case of the Pledged
Notes, endorsed to the order of) the Agent pursuant hereto, shall be in
suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank, all in
form and substance reasonably satisfactory to the Agent; all other necessary
and appropriate action and approvals shall have been taken or received to grant
to the Agent a first priority fully perfected security interest in the
Collateral. The Agent shall have the right, at any time after any Default of
the nature referred to in Section 8.1.4 of the Loan Agreement or an Event of
Default shall have occurred and be continuing, and without notice to the
Pledgor, to transfer to, or to register in the name of, the Agent or any of its
nominees, any or all of the Pledged Shares. In addition, the Agent shall have
the right at any time after a Default to exchange certificates or Instruments
representing or evidencing certificated Pledged Shares for certificates or
Instruments of smaller or larger denominations.
SECTION 2.4. DIVIDENDS ON PLEDGED SHARES AND PAYMENTS ON PLEDGED NOTES.
In the event that any Dividend is to be paid on any Pledged Share or any
payment of principal or interest is to be made on any Pledged Note at a time
when (x) no Default of the nature referred to in Section 8.1.4 of the Loan
Agreement has occurred and is continuing, and (y) no Event of Default has
occurred and is occurring, such Dividend or payment may be paid directly to
Pledgor. If any such Default or Event of Default has occurred and is
continuing, then any such Dividend or payment shall be paid directly to the
Agent.
SECTION 2.5. RELEASE OF CERTAIN COLLATERAL. Until such time as a Default
of the nature referred to in Section 8.1.4 of the Loan Agreement or an Event of
Default has occurred and is continuing, any Dividend or other cash payment with
respect to the Pledged Property shall be deemed to be released by the Agent to
the Pledgor.
SECTION 2.6. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall
A. remain in full force and effect until payment in full of all
Obligations and the termination of all Commitments,
B. be binding upon the Pledgor and its successors, transferees and
assigns (PROVIDED that the Pledgor may not assign any of its obligations
hereunder without the prior written consent of the Agent and all of the
Lenders), and
C. inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each Lender and their
respective successors, transferees, and assigns.
Without limiting the foregoing CLAUSE (C), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person
or entity to the extent permitted by the Loan Agreement, and such other Person
or entity shall thereupon become vested with all the rights and benefits in
respect thereof granted to such Lender under any Loan Document (including this
Agreement) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer and to the provisions of Section 10.10 of the Loan
Agreement. Upon the payment in full of all Obligations and the termination of
all Commitments, the security interest granted herein shall terminate and all
rights to the Collateral shall revert to the Pledgor. Upon any such
termination, the Agent will, at the Pledgor's sole expense, deliver to the
Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all certificates and instruments (if any) representing or
evidencing the Pledged Shares and all Pledged Notes previously delivered to the
Agent by the Pledgor, together with all other Collateral held by the Agent
hereunder, and execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. WARRANTIES, ETC. The Pledgor represents and warrants unto
the Agent and each Lender (a) that ITEM B of ATTACHMENT 1 attached hereto
identifying each Pledged Share Issuer represents a true and complete listing of
all Transferred Subsidiaries of the Pledgor, (b) that ITEM A of ATTACHMENT 1
attached hereto identifying each Pledged Note Issuer represents a true and
complete listing of all promissory notes from Transferred Subsidiaries of the
Pledgor payable to the Pledgor and (c) that as at the date of each pledge and
delivery hereunder (including each pledge and delivery of Pledged Shares and
each pledge and delivery of a Pledged Note) by the Pledgor to the Agent of any
Collateral,
(i) the Pledgor is the legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and
assign), the Collateral then being pledged, free and clear of all liens,
security interests, options, or other charges or encumbrances, except any
lien or security interest granted pursuant hereto in favor of the Agent;
(ii) the pledge of such Collateral and all proceeds thereof, upon
delivery to the Agent, is effective to create a valid, perfected, first
priority security interest in such Collateral and such proceeds thereof,
securing payment of the Obligations;
(iii) in the case of any Pledged Shares constituting such
Collateral, all of such Pledged Shares are duly authorized and validly
issued, fully paid, and non-assessable;
(iv) in the case of any Pledged Notes, all of such Pledged Notes
have been duly authorized, executed, endorsed, issued and delivered, and
are the legal, valid and binding obligation of the issuers thereof, and
are not in default;
(v) the Pledged Shares constitute all of the issued and outstanding
shares of the capital stock of each Pledged Share Issuer;
(vi) no authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body will be
required either
(A) for the pledge by the Pledgor of any Collateral pursuant to
this Agreement or for the execution, delivery, or performance of this
Agreement by the Pledgor, or
(B) for the exercise by the Agent of the voting or other rights
provided for in this Agreement, or, except with respect to Pledged
Shares, as may be required in connection with a disposition of such
Pledged Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Agreement; and
(vii) no filing or other action (other than possession, in the case
of certificated securities) will be necessary to perfect or protect the
security interest described in CLAUSE (II) above.
ARTICLE IV
COVENANTS
SECTION 4.1. PROTECT COLLATERAL; FURTHER ASSURANCES, ETC. The Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Agent hereunder). The Pledgor will warrant
and defend the right and title herein granted unto the Agent in and to the
Collateral (and all right, title, and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. The Pledgor will
immediately deliver to the Agent all shares of capital stock of any Transferred
Subsidiary of the Pledgor hereafter acquired, issued or created, and until
delivered such shares shall be held in trust for the Agent. The Pledgor agrees
that at any time, and from time to time, at the expense of the Pledgor, the
Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. The Pledgor will, at all times, keep pledged to the Agent
pursuant hereto all shares of capital stock of the Pledged Share Issuers.
SECTION 4.2. STOCK POWERS, ETC. The Pledgor agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral)
evidenced by certificates and delivered by the Pledgor pursuant to this
Agreement will be accompanied by duly executed undated blank stock powers, or
other equivalent instruments of transfer reasonably acceptable to the Agent.
The Pledgor will, from time to time upon the request of the Agent, promptly
deliver to the Agent such stock powers, instruments, and similar documents,
reasonably satisfactory in form and substance to the Agent, with respect to the
Collateral as the Agent may reasonably request and will, from time to time upon
the request of the Agent after the occurrence of any Default of the nature
referred to in Section 8.1.4 of the Loan Agreement or any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Agent.
SECTION 4.3. CONTINUOUS PLEDGE. Subject to SECTION 2.4, the Pledgor
will, at all times, keep pledged to the Agent pursuant hereto all Pledged
Shares and all other shares of capital stock constituting Collateral, all
Dividends and Distributions with respect thereto, all Pledged Notes, all
interest, principal and other proceeds received by the Agent with respect to
the Pledged Notes, and all other Collateral and other securities, instruments,
proceeds, and rights from time to time received by or distributable to the
Pledgor in respect of any Collateral. Without the prior written consent of the
Agent, the Pledgor agrees that it will not vote to enable any Pledged Share
Issuer to, and will not otherwise permit any Pledged Share Issuer to, issue any
stock or other securities of any nature in exchange for or in substitution for,
or in addition to, the Pledged Shares.
SECTION 4.4. [Intentionally Omitted].
SECTION 4.5. VOTING RIGHTS; DIVIDENDS, ETC. The Pledgor agrees:
(a) after any Default of the nature referred to in Section
8.1.4 of the Loan Agreement or if an Event of Default shall have occurred
and be continuing, without any request therefor by the Agent, to (i)
promptly upon receipt thereof by the Pledgor, deliver (properly endorsed
where required hereby or requested by the Agent) to the Agent and (ii)
cause each Pledged Share Issuer and any other issuer of Pledged Shares to
pay directly to the Agent, all Dividends, all Distributions, all payments
and all proceeds of the Pledged Property and other Collateral then or
thereafter receivable by the Pledgor, all of which may be held by the
Agent as additional Collateral for use in accordance with SECTION 6.4; and
(b) after any Default of the nature referred to in Section 8.1.4 of
the Loan Agreement or if an Event of Default shall have occurred and be
continuing, promptly to deliver (properly endorsed where required hereby
or requested by the Agent) to the Agent, upon request of the Agent, such
proxies and other documents as may be necessary to allow the Agent to
exercise the voting power with respect to any share of capital stock
included in the Collateral;
PROVIDED, HOWEVER, that unless a Default of the nature referred to in Section
8.1.4 of the Loan Agreement or an Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise, in its reasonable
judgment, but in a manner not inconsistent with the terms of the Loan
Agreement, this Agreement or any other Collateral Document or Loan Document,
the voting power and all other incidental rights of ownership with respect to
any Pledged Shares (subject to the Pledgor's obligation to deliver to the Agent
such Pledged Shares in pledge hereunder).
All Dividends, Distributions, all payments and all proceeds in respect of
any Pledged Property which may at any time and from time to time be held by the
Pledgor but which the Pledgor is then obligated to deliver by SECTION 4.5(A) to
the Agent, shall, until delivery to the Agent, be held by the Pledgor separate
and apart from its other property in trust for the Agent. The Agent agrees
that, unless a Default of the nature referred to in Section 8.1.4 of the Loan
Agreement or an Event of Default shall have occurred and be continuing, the
Pledgor shall have the exclusive voting power with respect to any shares of
capital stock (including any of the Pledged Shares) constituting Collateral and
the Agent shall, upon the written request of the Pledgor, promptly deliver such
proxies and other documents, if any, as shall be reasonably requested by the
Pledgor which are necessary to allow the Pledgor to exercise voting power with
respect to any such share of capital stock (including any of the Pledged
Shares) constituting Collateral; PROVIDED, HOWEVER, that no vote shall be cast,
or consent, waiver, or ratification given, or action taken by the Pledgor that
would impair any Collateral or be inconsistent with or violate any provision of
the Loan Agreement or any Collateral Document or Loan Document (including this
Agreement).
SECTION 4.6. ADDITIONAL UNDERTAKINGS. The Pledgor will not, without the
prior written consent of the Agent:
(a) enter into any agreement amending, supplementing, or waiving any
provision of any Pledged Note (including any underlying instrument
pursuant to which such Pledged Note is issued) or compromising or
releasing or extending the time for payment of any obligation of the maker
thereof; or
(b) take or omit to take any action the taking or the omission of
which would result in any impairment or alteration of any obligation of
the maker of any Pledged Note or other instrument constituting Collateral.
ARTICLE V
THE AGENT
SECTION 5.1. AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
irrevocably appoints the Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time in the Agent's discretion, after the occurrence
and continuance of a Default of the nature referred to in Section 8.1.4 of the
Loan Agreement or an Event of Default, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with CLAUSE (A)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Agent with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. AGENT MAY PERFORM; PROTECTION OF COLLATERAL. The Agent may
from time to time, at its option, perform, or cause performance of, any act
which the Pledgor agrees hereunder to perform and which the Pledgor shall fail
to perform after being requested in writing to so perform (it being understood
that no such request need be given after the occurrence and during the
continuance of any Default of the nature referred to in Section 8.1.4 of the
Loan Agreement or an Event of Default) and, subject to the foregoing, the Agent
may from time to time take any other action which the Agent reasonably deems
necessary for the maintenance, preservation, or protection of any of the
Collateral or of its security interest therein. The Pledgor hereby
acknowledges and agrees that any expenses incurred by the Agent in connection
with this SECTION 5.2 shall be payable by the Pledgor pursuant to SECTION 6.5.
SECTION 5.3. AGENT HAS NO DUTY. The powers conferred on the Agent
hereunder are solely to protect its interest (on behalf of the Agent and the
Lenders) in the Collateral and shall not impose any duty on it to exercise any
such powers. Except for the reasonable care of any Collateral in its
possession, the Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. The Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; PROVIDED, HOWEVER, the Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral, if it
takes such action for that purpose as the Pledgor reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Default of the nature referred to in Section 8.1.4 of the Loan Agreement or
any Event of Default, but failure of the Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable
care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Default of the nature referred to
in Section 8.1.4 of the Loan Agreement or any Event of Default shall have
occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) and also may, without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Agent may
deem commercially reasonable. The Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days' prior notice
to the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Agent may
(i) transfer all or any part of the Collateral into the name of
the Agent or its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Agent of any amount due or to become due
thereunder;
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature of
any party with respect thereto;
(iv) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral;
(v) take control of any proceeds of the Collateral; and
(vi) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. SECURITIES LAWS. If the Agent shall determine to exercise
its right to sell all or any of the Collateral pursuant to SECTION 6.1, the
Pledgor agrees that, upon request of the Agent, the Pledgor will, at its own
expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Agent, advisable to register such Collateral under the
provisions of the Securities Act of 1933, as from time to time amended
(the "SECURITIES ACT"), and to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all
amendments and supplements thereto and to the related prospectus which, in
the opinion of the Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Agent or the Lenders by reason of the
failure by the Pledgor to perform any of the covenants contained in this
Section and, consequently, agrees that, if the Pledgor shall fail to perform
any of such covenants, it shall pay, as liquidated damages and not as a
penalty, an amount equal to the value (as determined by the Agent) of the
Collateral on the date the Agent shall demand compliance with this Section.
SECTION 6.3. COMPLIANCE WITH RESTRICTIONS. The Pledgor agrees that in
any sale of any of the Collateral whenever a Default of the nature referred to
in Section 8.1.4 of the Loan Agreement or an Event of Default shall have
occurred and be continuing, the Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to the Pledgor
for any discount allowed by the reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction.
SECTION 6.4. APPLICATION OF PROCEEDS. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral may, in the discretion of the Agent, be held
by the Agent as additional collateral security for, or then or at any time
thereafter be applied (after payment of any amounts payable to the Agent and
each Lender under SECTION 6.5 hereof and to the Agent and each Lender pursuant
to Section 10.3 of the Loan Agreement) in whole or in part by the Agent
against, all or any part of the Obligations in such order as the Agent shall
elect.
SECTION 6.5. INDEMNITY AND EXPENSES. The Pledgor hereby indemnifies and
holds harmless the Agent and each Lender from and against any and all claims,
losses, and liabilities arising out of or resulting from this Agreement
(including enforcement of this Agreement), except claims, losses, or
liabilities arising out of or resulting from the Agent's or such Lender's gross
negligence or willful misconduct. Upon demand, the Pledgor will pay to the
Agent the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which any
Lender (with respect to CLAUSES (B) through (E) below) or the Agent may incur
in connection with:
(a) the administration of this Agreement, the Loan Agreement and
each other Collateral Document and Loan Document;
(b) the custody, preservation, use, or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights or remedies
of the Agent hereunder;
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof; or
(e) advancing any funds in connection with the matters referred
to in SECTION 5.2 hereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COLLATERAL DOCUMENT AND LOAN DOCUMENT. This Agreement is a
Collateral Document and Loan Document executed pursuant to the Loan Agreement
and shall (unless otherwise expressly indicated herein) be construed,
administered, and applied in accordance with the terms and provisions of the
Loan Agreement.
SECTION 7.2. AMENDMENTS, WAIVERS, REMEDIES, ETC. No amendment to or
waiver of any provision of this Agreement nor consent to any departure by the
Pledgor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent (subject to Section 10.1 of the Loan Agreement)
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given. No delay, act or
omission on the part of the Agent of any of its rights hereunder shall be
deemed a waiver of any rights hereunder unless also contained in an express
writing signed by the Agent, nor shall any single or partial exercise of, or
any failure to exercise, any right, power or privilege preclude any other or
further or initial exercise thereof of any other right, power or privilege.
The rights and remedies provided herein are cumulative, and not exclusive of
rights and remedies which may be granted or provided by law or equity.
SECTION 7.3. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing or by facsimile transmission, and if
to any party, addressed or delivered to it at the address set forth below its
signature hereto, or at such other address as shall be designated by such party
in a written notice to each other party. Any notice, if mailed and properly
addressed with postage prepaid, shall be deemed given when received; any
notice, if transmitted by facsimile transmission or delivery, shall be deemed
given when received.
SECTION 7.4. SUBROGATION. The Pledgor shall not be entitled to be
subrogated to any of the rights of the Agent or any Lender by reason of any
amounts received hereunder or in connection with the Collateral until all
Obligations have been indefeasibly paid in full.
SECTION 7.5. SECTION CAPTIONS. Section captions used in this Agreement
are for convenience of reference only, and shall not affect the construction of
this Agreement.
SECTION 7.6. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same Agreement.
SECTION 7.8. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.9. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE PLEDGOR SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE PLEDGOR
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE PLEDGOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE PLEDGOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.10. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE
PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS
OF THE AGENT, THE LENDERS OR THE PLEDGOR. THE PLEDGOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SHONEY'S, INC.
By:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Agent
By:
Title: Authorized Signatory
<PAGE>
ATTACHMENT 1
to
(Pledge Agreement)
Item A. PLEDGED NOTES
PLEDGED NOTE ISSUER PAYEE
Item B. PLEDGED SHARES
PLEDGED SHARES
<TABLE>
<CAPTION>
State of % of
Issuer- Incor- Authorized Outstanding Outstanding Certificate
SUBSIDIARY PORATION SHARES SHARES SHARES PLEDGED NUMBER
<S> <C> <C> <C> <C> <C>
TPI Tennessee 100%
Restaurants,
Inc.
TPI Delaware 100%
Entertainment,
Inc.
TPI Hawaii 100%
Insurance
Corporation
</TABLE>
<PAGE>
PROMISSORY NOTE
, 19__
FOR VALUE RECEIVED, the undersigned, ______________, a _______________
corporation (the "MAKER"), promises to pay to the order of SHONEY'S, INC., a
Tennessee corporation (the "PAYEE"), on demand, the aggregate principal amount
of the intercompany Indebtedness of the Maker to the Payee reflected on the
books and records of the Payee.
The unpaid principal amount of this promissory note (this "NOTE") from
time to time outstanding shall bear interest at a rate of interest equal to
____________, which the Maker represents to be a lawful and commercially
reasonable rate, payable __________, and all payments of principal of and
interest on this Note shall be payable in lawful currency of the United States
of America. All such payments shall be made by the Maker to an account
established by the Payee at _______________ and shall be recorded on the grid
attached hereto by the holder hereof (including the Agent as pledgee). Upon
notice from the Agent (hereinafter defined) that a Default (as defined in the
Loan Agreement, hereinafter defined) of the nature referred to in SECTION 8.1.4
of the Loan Agreement or an Event of Default (as defined in the Loan Agreement)
has occurred and is continuing under the Loan Agreement, the Maker shall make
such payments, in same day funds, to such other account as the Agent shall
direct in such notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to, SECTION 7.2.2 of the Bridge Loan Credit
Agreement, dated as of May 3, 1996 (together with all amendments and other
modifications, if any, from time to time hereafter made thereto, the "LOAN
AGREEMENT"), among the Payee, Canadian Imperial Bank of Commerce, New York
Agency, as the agent (the "AGENT"), and various commercial lending institutions
as are, or may from time to time become, parties thereto. Upon the occurrence
and continuance of an Event of Default under the Loan Agreement, and notice
thereof by the Agent to the Maker, the Agent shall have all rights of the Payee
to collect and accelerate, and enforce all rights with respect to, the
Indebtedness evidenced by this Note. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Loan Agreement.
Reference is made to the Loan Agreement for a description of the Pledge
Agreement pursuant to which this Note has been pledged to the Agent as security
for the Obligations outstanding from time to time under the Loan Agreement and
each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker further
agrees to pay all expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder (including the Agent as pledgee) of this Note
endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THIS NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[Name of Maker]
By _____________________________
Title: ______________________
Pay to the order of Canadian Imperial Bank
of Commerce, as Agent
SHONEY'S, INC.
By _____________________________
Title: _____________________
<PAGE>
GRID
Intercompany Loans made by Shoney's, Inc. to _________ and payments of
principal of such Loans.
<TABLE>
<CAPTION>
Amount of Amount of Outstanding Notation
Intercompany Principal Principal Made By
Date Loan Payment Balance
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT G
This Instrument Was Prepared
BY AND AFTER RECORDING SHOULD
BE RETURNED TO:
DAVID J. WHITE
NATIONSBANK PLAZA, SUITE 1100
414 UNION STREET
NASHVILLE, TENNESSEE 37219
MASTER MORTGAGE INDENTURE AND
DEED OF TRUST WITH ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
MASTER MORTGAGE INDENTURE AND DEED OF TRUST WITH ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING (the "INSTRUMENT"), dated as of
May 3, 1996, from SHONEY'S, INC., a Tennessee corporation having its principal
office and place of business in Davidson County, Tennessee, at 1727 Elm Hill
Pike, Nashville, Tennessee 37210 (the "BORROWER") (index as a grantor), to and
in favor of CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian chartered bank
acting through its New York Agency, as Agent, of New York County, New York, and
having an address at 425 Lexington Avenue, New York, New York 10017, Attn:
Syndications, Manager Administration (the "AGENT") (index as a grantee), for
the benefit and on behalf of the Lenders (as defined herein) with respect to
the Collateral (as defined herein) located in the States of Indiana and
Kentucky; and to TRUSTEE (as defined herein), for the benefit of the Agent, and
to such separate co-trustees appointed herein to act as trustees with respect
to certain of the Collateral for the benefit of the Agent, with respect to the
Collateral located in the State of Tennessee.
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS AS A
FIXTURE FILING IN ACCORDANCE WITH THE UNIFORM COMMERCIAL CODE AND CROSS-INDEXED
IN THE REAL ESTATE OR REAL ESTATE MORTGAGE RECORDS. THE NAMES OF THE DEBTOR AND
THE SECURED PARTY, THE MAILING ADDRESS OF THE SECURED PARTY FROM WHICH
INFORMATION CONCERNING THE SECURITY INSTRUMENTS MAY BE OBTAINED, THE MAILING
ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING THE TYPES, OR DESCRIBING THE
ITEMS, OF COLLATERAL, ARE AS DESCRIBED IN SECTION 1.22(C) HEREOF.
TENNESSEE LEGEND. MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX
PURPOSES IS $ ___________. THIS INSTRUMENT SECURES OBLIGATORY ADVANCES AND IS
MADE FOR COMMERCIAL PURPOSES.
<PAGE>
RECITALS:
A. The Borrower has issued its Term Notes, each dated May 3, 1996, in
the original aggregate principal amount of ONE HUNDRED MILLION DOLLARS
($100,000,000) with a final maturity date of May 3, 1998 (which the Borrower
may extend to October 22, 1999, upon compliance with certain conditions set
forth in the Loan Agreement (as defined herein)), subject to earlier prepayment
as provided in the Loan Agreement (such Term Notes, together with any and all
amendments, modifications, renewals, consolidations and extensions thereof,
collectively, the "NOTES").
B. The Bridge Loan Credit Agreement, dated as of May 3, 1996 (together
with any and all amendments, modifications, renewals, consolidations and
extensions thereof, the "LOAN AGREEMENT"), by and among the Borrower, Canadian
Imperial Bank of Commerce and various other financial institutions now or
hereafter parties thereto (individually, a "LENDER", and collectively, the
"LENDERS"), and the Agent, provides for, among other matters, the making of the
term loan evidenced by the Notes by the Lenders and the acceptance of such term
loan by the Borrower.
C. To secure the repayment of the Notes and the performance of certain
obligations, the Borrower desires to bargain, sell, convey and mortgage, and
grant and assign liens, security titles, security interests and collateral
assignments in, certain property.
D. In the State of Tennessee, the Trustee desires to serve as trustee
to hold in trust such liens, security titles, security interests and collateral
assignments for the benefit of the Agent.
E. All things necessary to make this Instrument a valid and binding
agreement securing the payment of the Borrower's obligations under the Loan
Agreement and the Notes have been done and performed and the execution and
delivery of this Instrument, subject to the terms hereof, have in all respects
been duly authorized.
F. For purposes of this Instrument, the term "COLLATERAL" means and
includes all right, title and interest of the Borrower in and to all of the
following:
(i) REAL ESTATE. All of the land described on EXHIBIT A attached
hereto (the "LAND"), together with all and singular the tenements, rights,
easements, hereditaments, rights of way or uses, privileges, liberties,
servitudes, licenses, franchises, appendages and appurtenances now or hereafter
belonging or in anywise appertaining to the Land (including, without
limitation, all rights relating to storm and sanitary sewer, water, gas,
flowers, shrubs, crops, trees, timber and other emblements now or hereafter
located on the Land; all development rights, air rights, water, water rights,
water stock, gas, oil, minerals, coal and other substances of any kind or
character underlying or relating to the Land (LESS AND EXCEPT any oil, gas and
other minerals previously reserved or conveyed of record); all estate, claim,
demand, right, title or interest in and to any street, road, highway or alley
(vacated or otherwise) adjoining the Land or any part thereof; all strips and
gores belonging, adjacent or pertaining to the Land; whether now owned or
hereafter acquired by the Borrower (the Land and all of the foregoing described
in this CLAUSE (I) are herein referred to collectively as the "REAL ESTATE");
(ii) IMPROVEMENTS AND FIXTURES. All buildings, structures and other
structural improvements of every nature whatsoever now or hereafter (A) located
or erected on the Real Estate owned in fee simple by the Borrower and (B) owned
or purported to be owned by the Borrower or in which the Borrower now or
hereafter has rights (to the full extent of such rights), including all
component parts thereof; and all fixtures of every nature whatsoever now or
hereafter located on or attached to the Real Estate owned in fee simple by the
Borrower and owned or purported to be owned by the Borrower or in which the
Borrower now or hereafter has rights (to the full extent of such rights), but
only to the extent that such fixtures are so related to the Real Estate owned
in fee simple by the Borrower that an interest in them arises under applicable
real estate law, together with all building or construction materials, fixtures
and other articles of any kind or nature whatsoever now or hereafter affixed
to, incorporated in or attached to any of the foregoing or the Real Estate
owned in fee simple by the Borrower and constituting real property under
applicable law and owned or purported to be owned by the Borrower, including
(without limitation) all motors, boilers, engines and devices for the operation
of pumps, and all heating, electrical, lighting, power, plumbing, air
conditioning, refrigeration and ventilation equipment, booths, counters and
signs and all extensions, additions, improvements, betterments, after-acquired
property, renewals, replacements and substitutions or proceeds from a sale of
any of the foregoing, and all personal property constituting proceeds hereafter
acquired with cash proceeds of any of the foregoing (all of the foregoing
described in this CLAUSE (II) is herein referred to collectively as the
"IMPROVEMENTS");
(iii) RENTS. All rents, issues, profits, royalties, avails,
reversions, remainders, income and other benefits derived or owned by the
Borrower directly or indirectly from the Real Estate or the Improvements, and
all proceeds of the conversion, voluntary or involuntary, of any of the
Premises (as hereinafter defined) into cash or liquidated claims (all of the
foregoing described in this CLAUSE (III) is herein referred to collectively as
the "RENTS");
(iv) OCCUPANCY LEASES. All rights of the Borrower under all leases,
tenant contracts, licenses, occupancy agreements, warehouse agreements,
concessions or other arrangements, whether written or oral, whether now
existing or entered into at any time hereafter, whereby any person agrees to
pay money to the Borrower or any consideration for the use, possession or
occupancy of, or any estate in, the Real Estate, the Improvements or the After
Acquired Property (as defined herein) or any part thereof, and all rents,
income, profits, benefits, avails, advantages and claims against guarantors
under any thereof (individually, an "OCCUPANCY LEASE", and all of the foregoing
described in this CLAUSE (IV) is herein referred to collectively as the
"OCCUPANCY LEASES");
(v) AFTER ACQUIRED PROPERTY. Any and all additional estates in the
Real Estate, the Rents or the Occupancy Leases and other rights and interests
hereafter acquired by the Borrower relating to the Collateral or any part
thereof, all of the property described in clauses (I) (other than the Land),
(II), (III) and (IV) and all general intangibles constituting proceeds acquired
with cash proceeds of any of the property described hereinabove being deemed,
as between the Borrower and the Agent, to be fixtures and accessions to the
Land (all of the foregoing described in this CLAUSE (V) is herein referred to
collectively as the "AFTER ACQUIRED PROPERTY"); and
(vi) OTHER PROPERTY. All other property or rights of the Borrower of
any kind or character related to the Real Estate, the Improvements, the Rents,
the Occupancy Leases, the After Acquired Property and all proceeds (including
insurance and condemnation proceeds) and products of any of the foregoing,
refunded insurance premiums and all rights under and to all payments and
deposits required by the provisions of SECTION 1.21 hereof. (The Collateral is
also sometimes herein referred to as the "PREMISES.") Whenever the terms
"COLLATERAL" and "PREMISES" are preceded by the name of a State, County or
City, such term shall mean and refer only to the Collateral or Premises, as the
case may be, located in or arising out of or from the Collateral or Premises
located in such State, County or City.
G. For purposes of this Instrument, the term "TRUSTEE" means,
collectively or separately, as the context shall require, the following
individual, together with any successor or substitute Trustee appointed as
provided pursuant to the provisions of this Instrument:
Trustee - Tennessee Premises:
Joseph B. Pitt, Jr.,
a resident of Davidson County, Tennessee
H. Capitalized terms used herein without other definition have the
respective meanings specified in the Loan Agreement.
GRANT:
NOW THEREFORE, for and in consideration of the making of all loans,
advances or other financial accommodations to or for the benefit of the
Borrower under the Loan Agreement and the Notes, and in consideration of the
various agreements contained herein, in the Notes and the Loan Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the Borrower, and in order to secure the
"LIABILITIES" (as defined herein), the Borrower hereby grants, bargains, sells,
conveys, assigns, pledges, transfers and mortgages the Premises to the Agent or
to the Trustee for the benefit of the Agent, as appropriate, as more
specifically set forth in this Grant:
SECTION A. WITH RESPECT TO THE INDIANA PREMISES, the following provisions
of this SECTION A shall apply:
"INDIANA PREMISES". The Borrower does hereby grant, assign, mortgage and
warrant unto the Agent, and the successors, successors-in-title and assigns of
the Agent, the Indiana Premises. As to the Indiana Premises, this Instrument
shall constitute and shall be enforceable as a mortgage, assignment of leases
and rents, security agreement and fixture filing.
SECTION B. WITH RESPECT TO THE KENTUCKY PREMISES, the following
provisions of this SECTION B shall apply:
"KENTUCKY PREMISES". The Borrower does hereby grant, bargain, sell,
mortgage, transfer, convey, pledge, assign, transfer and set over to the Agent,
and the successors and assigns of the Agent, the Kentucky Premises, to have and
to hold the Kentucky Premises and all parts, rights, members and appurtenances
thereof to the use, benefit and behoof of the Agent, and the successors and
assigns of the Agent, in fee simple forever. As to the Kentucky Premises, this
Instrument shall constitute and be enforceable as a mortgage, assignment of
leases and rents, security agreement and fixture filing.
SECTION C. WITH RESPECT TO THE TENNESSEE PREMISES, the following
provisions of this SECTION C shall apply:
"TENNESSEE PREMISES". The Borrower has bargained and sold, and does
hereby bargain, sell, convey and confirm unto the Trustee, his successors and
assigns, in trust for the benefit of the Agent, and the successors, successors-
in-title and assigns of the Agent, the Tennessee Premises, TO HAVE AND TO HOLD,
together with all the hereditaments and appurtenances thereunto belonging or in
any wise appertaining unto the Trustee, and his successors and assigns, in fee
simple.
As to the Tennessee Premises, this Instrument shall constitute
and shall be enforceable as a deed of trust, assignment of leases and rents,
security agreement and fixture filing.
SECTION D. AND the Borrower covenants and agrees with the Agent as
follows:
The Borrower hereby covenants with and warrants to the Agent and the
Trustee, for the benefit of the Trustee, the Agent and the purchaser at any
foreclosure sale, that: at the execution and delivery hereof it is well seized
of the Collateral, and of a good, indefeasible fee simple or easement estate,
as the case may be, therein; the Collateral is free from all encumbrances
whatsoever (and any claim of any other person thereto) other than the lien and
security interest granted to the Agent and/or the Trustee herein and the
encumbrances set forth as exceptions on the final title insurance policies (the
"TITLE POLICIES") relating to the Collateral delivered to the Agent pursuant to
the Loan Agreement (collectively, the "PERMITTED EXCEPTIONS"); it has good and
lawful right to sell, mortgage and convey the Collateral; and it and its
successors and assigns will forever warrant and defend the Collateral unto the
Agent and the Trustee, and his successors or substitutes in the trust and his
or their assigns, as the case may be, against all claims and demands whatsoever
with the exception of the Permitted Exceptions.
This Instrument is given to secure the following described indebtedness,
obligations and liabilities (collectively, the "LIABILITIES"):
(a) All of the indebtedness now or hereafter evidenced by the
Notes, with the final payment being due May 3, 1998 (which the Borrower
may extend to October 22, 1999, upon compliance with certain conditions
set forth in the Loan Agreement), subject to earlier prepayment as
provided in the Loan Agreement; TOGETHER WITH any and all amendment or
amendments, renewal or renewals and extension or extensions of the
indebtedness evidenced by the Notes;
(b) Any and all additional advances made by the Agent or any Lender
to protect or preserve the Collateral or the lien hereof on the
Collateral, or to pay taxes, to pay premiums on insurance on the
Collateral or to repair or maintain the Collateral, or to complete
improvements on the Collateral (whether or not the original Borrower
remains the owner of the Collateral at the time of such advances and
whether or not the original Agent remains in such capacity at the time of
such advances);
(c) Any and all expenses incident to the collection of the
Liabilities and the foreclosure hereof by action in any court or by
exercise of the power of sale herein contained;
(d) The full and prompt payment and performance of any and all
obligations or covenants of the Borrower under this Instrument, the Loan
Agreement and the terms of any other agreements, assignments or other
instruments now or hereafter evidencing, securing or otherwise relating
to the Liabilities; and
(e) Any and all other indebtedness now owing or which may hereafter
be owing by the Borrower to the Lenders, however and whenever incurred or
evidenced, whether direct or indirect, absolute or contingent, due or to
become due, together with any and all renewal or renewals, amendment or
amendments and extension or extensions of such other indebtedness, it
being contemplated that the Borrower may hereafter become indebted to the
Lenders in further sums.
Should the Liabilities be paid in full according to the tenor and effect
thereof, when the same shall become due and payable, and should the Borrower
perform all covenants herein contained in a timely manner, then this Instrument
and the conveyance effected hereby shall be released by the Agent or the
Trustee, as appropriate.
I. COVENANTS AND AGREEMENTS
OF THE BORROWER
To further secure the payment and performance of the Liabilities, the
Borrower hereby covenants, warrants and agrees with the Trustee, and his
substitutes and successors in the trust and his or their assigns for the use
and benefit of the Agent, and with the Agent as follows:
1.1 INTERPRETATION. In each instance where the terms and conditions of
this Instrument affect the Premises located in the State of Tennessee or the
obligations of any party conveying such Premises to secure the Liabilities, any
reference to the "Borrower" shall be deemed to refer to the "GRANTOR" and any
reference to the "Agent" shall be deemed to refer to the "BENEFICIARY" in the
State of Tennessee.
1.2. PAYMENT AND PERFORMANCE BY THE BORROWER. The Borrower agrees that
it will pay, timely and in the manner required in the appropriate documents or
instruments, all amounts due under this Instrument, the Loan Agreement and the
Notes and all other Liabilities (including attorneys' fees and other fees and
charges). All sums payable by the Borrower hereunder shall be paid without
demand, counterclaim, offset, deduction or defense and without relief from
valuation and appraisement laws. The Borrower waives, to the extent permitted
by applicable law, all rights now or hereafter conferred by statute or
otherwise to any such demand, counterclaim, offset, deduction or defense. The
Borrower further agrees that it will fully, timely and properly pay and perform
in the manner required in this Instrument or at law all of the Liabilities and
other covenants, agreements and obligations of the Borrower to be performed
under this Instrument.
1.3. PAYMENT OF TAXES. The Borrower will pay or cause to be paid before
any thereof become delinquent all taxes and assessments, general or special,
and any and all levies, claims, charges, expenses and liens, ordinary or
extraordinary, governmental or nongovernmental, statutory or otherwise, due or
to become due, that may be levied, assessed, made, imposed or charged on or
against the Collateral or any property used in connection therewith, and will
pay before due any tax or other charge on the interest or estate in the
Collateral created or represented by this Instrument, whether levied against
the Borrower or the Trustee or otherwise, and will submit to the Agent upon
written request therefor copies of all receipts showing payment of all of such
taxes, assessments and charges; PROVIDED, HOWEVER, that the Borrower shall not
(unless otherwise required by law) be required to pay any such taxes,
assessments, levies, claims, charges, expenses or liens which are being
contested by the Borrower at its expense in good faith and by appropriate
proceedings and as to which reserves are being maintained in accordance with
generally accepted accounting principles so long as forfeiture of any part of
the Collateral will not result from the failure of the Borrower to pay any such
taxes, assessments, levies, claims, charges, expenses or liens during the
period of any such contest. The Borrower's making any payments and deposits
required by the provisions of SECTION 1.21 shall not relieve the Borrower of,
or diminish in any way, its obligations as set out in this SECTION 1.3.
1.4. MAINTENANCE AND REPAIR. None of the Premises is used principally or
primarily for agricultural or farming purposes. The Borrower will: not abandon
the Premises; not do or suffer anything to be done which would depreciate or
impair the value of the Collateral or the security of this Instrument; not
permanently remove or demolish any of the Improvements; subject to SECTION
1.11, pay promptly for all labor and materials for all construction, repairs
and improvements to or on the Premises; not make any changes, additions or
alterations to the Premises or the Improvements other than remodeling in the
ordinary course of business except as required by any applicable governmental
or insurance requirements or as otherwise approved in writing by the Agent,
which approval shall not be unreasonably withheld, delayed or conditioned; at
its sole cost and expense, maintain, preserve and keep the Improvements,
including the adjoining sidewalks, curbs, vaults and vault space, if any,
streets and ways, in good, safe and insurable condition and repair and make any
needful and proper repairs, replacements, renewals, additions or substitutions,
whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen, required by wear, damage, obsolescence
or destruction, all as promptly as possible under the circumstances, but in all
cases in compliance with any time period and construction requirement provided
under applicable requirements of governmental authorities and insurance
underwriters; not commit, suffer or permit waste of any part of the Premises;
and maintain all grounds in good and neat order and repair. The Agent or its
representative is hereby authorized to enter upon and inspect the Premises at
any time during normal business hours provided that the Agent will not
unreasonably interfere with the business operations of the Borrower.
Notwithstanding any provision of this Instrument to the contrary, the Borrower
shall be entitled to convey portions of the Premises which do not exceed in
aggregate value the sum of One Hundred Thousand Dollars ($100,000.00) during
any twelve (12) month period to state or local governmental entities or
agencies at the request of such state or local governmental entities or
agencies provided that such conveyances are in lieu of condemnation. The Agent
and/or the Trustee shall provide appropriate releases of this Instrument with
respect to the property so conveyed in accordance with this SECTION 1.4.
1.5. SALES; LIENS. Except as otherwise permitted under this Instrument or
the Loan Agreement, the Borrower will not: sell, contract to sell, assign,
transfer, hypothecate or convey, or permit to be transferred or conveyed, the
Collateral or any part thereof or any interest or estate in any thereof
(including any conveyance into a trust or any conveyance of the beneficial
interest in any trust that may be holding title to the Premises) or remove any
of the Collateral from the Premises or from the state in which the Collateral
or any part thereof is located; or create, suffer or permit to be created or to
exist any mortgage, lien, claim, security interest, charge, encumbrance or
other right or claim of any kind whatsoever (a "LIEN") upon the Collateral or
any part thereof, except those of current taxes not then due and payable, the
Permitted Exceptions and mechanics' and materialmen's liens being diligently
contested in good faith and otherwise in accordance with SECTION 1.11. The
Borrower shall have no power or authority to create any lien on any Premises or
any part thereof (other than this Instrument and any extension or renewal
hereof), and any such lien created without the prior written consent of the
Agent, whether created by the affirmative act of the Borrower or otherwise, and
whether or not created by any further advance by a prior lienholder after the
date of this Instrument, shall be subject and subordinate to this Instrument.
1.6. ACCESS BY THE TRUSTEE AND THE AGENT. The Borrower will at all times:
deliver to the Agent certified copies of all documents which are, or which
evidence, govern or create, the Collateral; permit access to the Agent, its
representative and/or the Trustee (with no less than twenty-four (24) hours
prior notice if no Event of Default (as defined herein) or event which with the
giving of notice or lapse of time, or both, has occurred which would constitute
an Event of Default, in either of which cases no notice need be given) to its
books and records, construction progress reports, tenant registers, sales
records, offices, insurance policies and other papers which relate to any or
all of the Collateral for examination and the making of copies and extracts;
and prepare such schedules, summaries, reports and progress schedules as the
Agent may reasonably request.
1.7. STAMP AND OTHER TAXES. If the federal or any state, county, parish,
local, municipal or other government or any subdivision of any thereof having
jurisdiction shall now or hereafter levy, assess or charge any tax including,
without limitation, an intangibles recording tax (excepting therefrom any
income tax on the Lenders' receipt of interest payments on the principal
portion of the Notes), assessment or imposition upon this Instrument, the Loan
Agreement or the Notes, any other Liabilities, the interest of the Agent, the
Lenders and/or the Trustee in the Collateral, or any of the foregoing, or upon
the Agent, the Lenders and/or the Trustee by reason of or as holder of any of
the foregoing, or shall at any time or times require revenue stamps to be
affixed to this Instrument, the Loan Agreement or the Notes, the Borrower shall
pay all such taxes and stamps to or for the Agent, the Lenders and/or the
Trustee as they become due and payable. If any law or regulation is enacted or
adopted permitting, authorizing or requiring any tax, assessment or imposition
to be levied, assessed or charged, which law or regulation prohibits the
Borrower from paying any material tax, assessment, stamp or imposition to or
for the Agent, the Lenders and/or the Trustee, then any such sums advanced by
the Agent, the Lenders and/or the Trustee for such taxes, assessment, stamps or
impositions shall be added to the sums hereby secured and shall become
immediately due and payable at the option of the Agent. Thereafter, if the
Borrower fails to make payment of all such sums within five (5) days after the
Agent's written demand therefor, such failure shall constitute an Event of
Default hereunder. This SECTION 1.7 shall not, however, obligate or require
the Borrower to pay any tax or assessment based upon or measured by the income
of the Agent, the Lenders and/or the Trustee.
1.8. INSURANCE. The Borrower will at all times maintain, or cause to be
maintained, on the Improvements and on all other Collateral, all insurance as
required in the Loan Agreement.
1.9. EMINENT DOMAIN. In case the Collateral, or any part or interest in
any thereof, is taken by condemnation or eminent domain proceedings or a
transfer in lieu thereof, the Borrower shall immediately give written notice
thereof to the Agent. Subject to the provisions of SECTION 1.4, the Agent is
hereby empowered to collect and receive all compensation and awards of any kind
whatsoever (collectively, the "CONDEMNATION AWARDS") which may be paid for any
Collateral taken or transferred in lieu of such taking or for damages to any
Collateral not taken (all of which the Borrower hereby assigns to the Agent),
and all Condemnation Awards so received shall be forthwith applied by the
Agent, as it may elect in its sole and unreviewable discretion, to the
prepayment of the Notes or the Liabilities, or to the repair and restoration of
any Collateral not so taken or damaged, PROVIDED, HOWEVER, that no election
made by the Agent under this SECTION 1.9 shall relieve the Borrower of the duty
to repair and restore; PROVIDED, FURTHER, that any Condemnation Awards payable
by reason of the taking of less than all of the Collateral shall be made
available, if at all, to the extent required, as determined by the Agent in its
reasonable discretion, for the repair or restoration of any Collateral not so
taken. The Borrower hereby empowers the Agent, in its absolute discretion, to
settle, compromise and adjust any and all claims or rights arising under any
condemnation or eminent domain proceeding relating to the Collateral or any
portion thereof, PROVIDED, HOWEVER, that prior to the occurrence of an Event of
Default, (i) the Borrower shall have the right to settle, compromise and adjust
claims which are reasonably anticipated to result in proceeds in an amount less
than $500,000.00, and (ii) the Borrower shall have the right to settle, adjust
and compromise claims which are reasonably anticipated to result in proceeds in
an amount equal to or more than $500,000.00 jointly with the Agent.
1.10. GOVERNMENTAL REQUIREMENTS. The Borrower will at all times fully
comply with, and cause the Collateral and the use and condition thereof fully
to comply with, all federal, state, county, municipal, local and other
governmental statutes, ordinances, requirements, regulations, rules, orders,
codes and decrees of any kind whatsoever that apply or relate to the Borrower
or the Collateral, any of the adjoining sidewalks, streets or ways, vaults or
vault space, if any, or the use thereof, and will observe and comply with all
conditions and requirements necessary to preserve and extend any and all
rights, licenses, permits, privileges, governmental franchises and concessions
(including, without limitation, those relating to land use and development,
landmark preservation, construction, access, water rights and use, noise and
pollution) which are applicable to the Borrower or have been granted for the
Collateral, any of the adjoining sidewalks, streets or ways, vaults or vault
space, if any, or the use thereof. Unless required by applicable law, or unless
the Agent has otherwise first agreed in writing, the Borrower shall not make or
allow any changes to be made in the nature of the occupancy or use of the
Premises or any portion thereof for which the Premises or such portion was
intended at the time this Instrument was delivered, provided, however, that the
Agent's prior written agreement shall not be required in order for the Borrower
to change the use of any portion of the Premises from one restaurant concept to
another restaurant concept operated by the Borrower. The Borrower shall not
initiate or acquiesce in any change in any zoning or other land use
classification now or hereafter in effect and materially adversely affecting
the Premises or any part thereof without in each case obtaining the Agent's
prior written consent thereto. Notwithstanding the foregoing, the Borrower
shall have the right to diligently contest any such governmental requirement so
long as (a) the contest is conducted in good faith and by appropriate
proceedings; (b) reserves are being maintained in accordance with generally
accepted accounting principles; (c) forfeiture of any part of the Collateral
will not result from the Borrower's failure to comply with such governmental
requirement during the period of such contest; and (d) no criminal penalties
will result from the Borrower's failure to comply with such governmental
requirement during the period of such contest.
1.11. NO MECHANICS' LIENS. The Borrower will not suffer any mechanic's,
laborer's, construction or materialmen's lien to be created or remain
outstanding upon the Collateral or any part thereof. Anything herein contained
to the contrary notwithstanding, it shall not be deemed in default with respect
to the provisions of this SECTION 1.11 if the Borrower provides the Agent with
written notice of the Borrower's good faith intention to diligently contest
such claim or lien by appropriate proceedings (and the Borrower does so contest
such claim or lien) at the Borrower's sole expense and, if requested by the
Agent, the Borrower furnishes to the Agent either a bond, in form and with
sureties reasonably satisfactory to the Agent, or an updated title insurance
policy or endorsement to the Agent's existing title insurance policy acceptable
to the Agent indemnifying the Agent against any loss, cost, damage or
attorneys' fees or expenses on account of any such lien or claim. The Borrower
agrees to promptly deliver to the Agent a copy of any notices that the Borrower
receives with respect to any pending or threatened lien or the foreclosure
thereof. IT IS FURTHER EXPRESSLY MADE A COVENANT AND CONDITION HEREOF THAT THE
LIEN OF THIS INSTRUMENT SHALL EXTEND TO ALL RIGHT, TITLE AND INTEREST OF THE
BORROWER IN ANY AND ALL IMPROVEMENTS AND FIXTURES NOW OR HEREAFTER ON THE
PREMISES, PRIOR TO ANY OTHER LIEN THEREON THAT MAY BE CLAIMED BY ANY PERSON, SO
THAT SUBSEQUENTLY ACCRUING CLAIMS FOR LIENS ON THE PREMISES SHALL BE JUNIOR AND
SUBORDINATE TO THIS INSTRUMENT. ALL CONTRACTORS, SUBCONTRACTORS AND OTHER
PARTIES DEALING WITH THE PREMISES OR WITH ANY PARTIES INTERESTED THEREIN ARE
HEREBY REQUIRED TO TAKE NOTICE OF THE ABOVE PROVISIONS.
1.12. CONTINUING PRIORITY. The Borrower will: pay such fees, taxes and
charges, and execute and file immediately upon the Agent's request (at the
Borrower's expense) such financing statements and other documents (and
appropriate continuation statements with respect thereto), obtain such
acknowledgments or consents, notify such obligors or providers of services and
materials and do all such other acts and things as the Agent may from time to
time request to establish and maintain a valid and perfected first and prior
lien on and a first priority perfected security interest in, or to establish
title to, the Collateral (including, without limitation, any Collateral
acquired after the execution hereof); maintain its office and principal place
of business at all times at the address shown above except as otherwise may be
provided in the Loan Agreement; keep all of its books and records relating to
the Collateral on the Premises or at such principal place of business address;
keep all tangible Collateral on the Real Estate except as the Agent may
otherwise consent in writing, except as otherwise provided in SECTION 1.4; make
notations on its books and records sufficient to enable the Agent, as well as
third parties, to determine the interest of the Agent hereunder; and not
collect any rents or the proceeds of any of the Occupancy Leases more than
thirty (30) days before the same shall be due and payable except as the Agent
may otherwise consent in writing.
1.13. UTILITIES. The Borrower will pay or cause to be paid all public and
private utility charges incurred in connection with the Collateral promptly
when due and maintain all utility services available for use at the Premises.
1.14. CONTRACT MAINTENANCE; OTHER AGREEMENTS; LEASES. The Borrower will,
for the benefit of the Agent, fully and promptly keep, observe, perform and
satisfy each obligation, condition, covenant and restriction of the Borrower
affecting the Premises or imposed on it under any agreement between the
Borrower or a predecessor in title to the Borrower and a third party relating
to the Collateral or the Liabilities secured hereby, including, without
limitation, the Occupancy Leases (individually, a "THIRD PARTY AGREEMENT", and
collectively, the "THIRD PARTY AGREEMENTS"), so that there will be no default
thereunder which is not cured within any applicable cure period provided
therefor in such Third Party Agreement and so that the persons (other than the
Borrower) obligated thereon shall be and remain at all times obligated to
perform for the benefit of the Agent; and the Borrower will not permit to exist
any condition, event or fact which could allow or serve as a basis or
justification for any such person to avoid such performance. Without the prior
written consent of the Agent, the Borrower shall not (a) make or permit any
termination, modification or amendment of any Third Party Agreement (PROVIDED,
HOWEVER, that the Agent agrees not to unreasonably withhold, delay or condition
its consent to any termination or amendment of a Third Party Agreement); (b)
collect rents or the proceeds of any Occupancy Leases more than thirty (30)
days before the same shall be due and payable; (c) modify or amend any
Occupancy Leases (PROVIDED, HOWEVER, that the Agent agrees not to unreasonably
withhold, delay or condition its consent to any modification or amendment of
any Occupancy Leases) or, except where the lessee is in default, cancel or
terminate the same or accept a surrender of the leased premises; (d) consent to
the assignment or subletting of the whole or any portion of any lessee's
interest under any Occupancy Lease, or grant any options to renew (PROVIDED,
HOWEVER, that the consent required under this CLAUSE (D) shall not be
unreasonably withheld, conditioned or delayed with respect to the assignment,
subletting or granting of options to renew any Occupancy Leases); (e) create or
permit any lien or encumbrance which, upon foreclosure, would be superior to
any Third Party Agreement; or (f) in any other manner impair the Agent's rights
and interest with respect to the Rents. The Borrower shall promptly deliver to
the Agent copies of any demands or notices of default received by the Borrower
in connection with any Third Party Agreement and allow the Agent the right, but
not the obligation, to cure any such default. All security or other deposits,
if any, received from tenants under the Occupancy Leases shall be segregated
and maintained in an account reasonably satisfactory to the Agent and in
compliance with the laws of the state where the Premises are located and with
an institution reasonably satisfactory to the Agent. The provisions of CLAUSES
(A) and (C) of this SECTION 1.14 to the contrary notwithstanding, the Agent's
consent shall not be required for any amendment or other modification of any
Third Party Agreement, including but not limited to any Occupancy Lease, if the
amendment or modification does not substantially reduce the Rent payable
thereunder or substantially increase any risk or liability of the Borrower.
1.15. NOTIFY THE AGENT OF EVENT OF DEFAULT. The Borrower shall notify the
Agent in writing forthwith upon learning of the occurrence of an Event of
Default hereunder or other event which, upon the giving of notice or the
passage of time or both, would constitute an Event of Default hereunder, which
notice shall describe such Event of Default or other event that could mature
into an Event of Default and the steps being taken by the Borrower with respect
thereto.
1.16. NO ASSIGNMENTS; FUTURE LEASES. The Borrower will not cause or
permit any Rents, Occupancy Leases, other Third Party Agreements or other
contracts relating to the Premises to be assigned, transferred, conveyed,
pledged or disposed of to any party other than the Agent without first
obtaining the express written consent of the Agent to any such assignment or
permit any such assignment to occur by operation of law. In addition, the
Borrower shall not cause or permit all or any portion of or interest in the
Premises to be leased (that word having the same meaning for purposes hereof as
it does in the law of landlord and tenant) directly or indirectly to any
person, except with the prior written consent of the Agent and, if granted,
under Occupancy Leases approved in writing by the Agent, provided, however,
that the prior written consent and approval of the Agent shall not be required
for any Occupancy Leases in effect on the date hereof. The Agent shall not
unreasonably withhold its consent to a lease of all or any portion of the
Premises to a franchisee of the Borrower operating under the name of Shoney's,
Captain D's, Pargo's, BarbWire's or Fifth Quarter.
1.17. ASSIGNMENT OF LEASES AND RENTS AND COLLECTIONS.
(a) The Borrower shall not assign its interest in the Occupancy
Leases without the prior written consent of the Agent. All of the Borrower's
interest in and rights under the Occupancy Leases now existing or hereafter
entered into, and all of the Rents, whether now due, past due or to become due,
and including all prepaid rents and security deposits, and all other amounts
due with respect to any of the other Collateral, are hereby absolutely,
presently and unconditionally assigned and conveyed to the Agent to be applied
by the Agent in payment of the Liabilities and all other sums payable under
this Instrument, the Loan Agreement and the Notes. The foregoing is intended to
be a present and absolute assignment and not merely the passing of a security
interest or a collateral assignment. Prior to the occurrence of an Event of
Default, the Borrower shall have a license to collect and receive all Rents and
other amounts, which license shall be terminated at the sole option of the
Agent, without regard to the adequacy of its security hereunder and without
notice to or demand upon the Borrower, upon the occurrence of an Event of
Default. Further, upon the occurrence of an Event of Default, the Borrower
shall immediately turn over to the Agent, all Rents in any actual or
constructive possession of the Borrower, its affiliates, contractors or agents,
together with an accounting of such Rents. The Agent's exercise of its rights
hereunder, and/or the application of the Rents to the Liabilities, shall not
cure or waive any Event of Default or notice of a default hereunder, but such
rights shall be cumulative and in addition to all other rights and remedies of
the Agent. It is understood and agreed that neither the foregoing assignment
to the Agent nor the exercise by the Agent of any of its rights or remedies
under ARTICLE III shall be deemed to make the Agent a "mortgagee-in-possession"
or otherwise responsible or liable in any manner with respect to the Collateral
or the use, occupancy, enjoyment or operation of all or any portion thereof,
unless and until the Agent, in person or by agent, assumes actual possession
thereof, nor shall appointment of a receiver for the Collateral by any court at
the request of the Agent or by agreement with the Borrower, or the entering
into possession of any part of the Collateral by such receiver, be deemed to
make the Agent a "mortgagee-in-possession" or otherwise responsible or liable
in any manner with respect to the Collateral or the use, occupancy, enjoyment
or operation of all or any portion thereof. Upon the occurrence of an Event of
Default, this shall constitute a direction by the Borrower to, and full
authority to each lessee under any Occupancy Lease, each guarantor of any of
the Occupancy Leases and any other person obligated under any of the Collateral
to, pay all Rents and other amounts to the Agent without proof of the Event of
Default relied upon. The Borrower hereby irrevocably authorizes each such
person to rely upon and comply with any notice or demand by the Agent for the
payment to the Agent of any Rents and other amounts due or to become due.
(b) The Borrower shall apply the Rents and other amounts to the
payment of all necessary and reasonable operating costs and expenses of the
Collateral, debt service on and payment of the Liabilities secured hereby and
otherwise in compliance with the provisions of this Instrument, the Loan
Agreement and the Notes.
(c) The Borrower shall at all times fully perform the obligations
of the lessor under all Occupancy Leases. The Agent does not assume and shall
not be liable in any respect for any obligation of the lessor under any of such
Occupancy Leases. The Borrower shall at any time or from time to time, upon
request of the Agent, transfer and assign to the Agent in such form as may be
satisfactory to the Agent, the Borrower's interest in the Occupancy Leases,
subject to and upon the condition, however, that prior to the occurrence of an
Event of Default hereunder the Borrower shall have a license to collect and
receive all Rents under such Occupancy Leases upon accrual, but not prior
thereto, as set forth in SECTION 1.17(A).
(d) The Agent shall have the right to assign the Agent's right,
title and interest in any Occupancy Leases to any subsequent holder of this
Instrument or any participating interest therein or to any person acquiring
title to all or any part of the Collateral through foreclosure or otherwise.
Any subsequent assignee shall have all the rights and powers herein provided to
the Agent. Upon the occurrence of an Event of Default, the Agent shall have the
right to execute new leases of any part of the Collateral, including leases
that extend beyond the term of this Instrument. Upon the occurrence of an Event
of Default, the Agent shall have the authority, as the Borrower's attorney-in-
fact, such authority being coupled with an interest and irrevocable, to sign
the name of the Borrower and to bind the Borrower on all papers and documents
relating to the operation, leasing and maintenance of the Collateral.
(e) The Borrower shall furnish to the Agent, within twenty (20)
days after receipt of a request by the Agent to do so, such information as the
Agent from time to time may reasonably request concerning the Occupancy Leases
and other agreements pertaining to the use of the Premises.
1.18. THE AGENT'S PERFORMANCE. If the Borrower fails to fully, timely and
properly pay or perform any of its obligations or Liabilities herein contained
(including payment of attorneys' fees, expenses of foreclosure and court costs,
including costs incurred in connection with appeals), the Agent may (but need
not), as agent or attorney-in-fact of the Borrower, such authority being
coupled with an interest and irrevocable, sign the name of the Borrower and
bind the Borrower on all papers and documents relating to the Liabilities and
make any payment or perform (or cause to be performed) any obligation or
Liability of the Borrower hereunder, in any form and manner deemed expedient by
the Agent, and any amount so paid or expended (plus reasonable compensation to
the Agent, the Lenders and the Trustee for their attorneys' fees and out-of-
pocket and other expenses for each matter for which they act under this
Instrument), with interest thereon at the interest rate then charged under the
Notes, shall be added to the Liabilities hereby secured and shall be repaid to
such person upon demand. By way of illustration and not in limitation of the
foregoing, the Agent may (but need not) do all or any of the following: make
payments of principal or interest or other amounts on any lien on any of the
Collateral; complete construction; make repairs; collect the Rents and any
other rents; prosecute collection of the Collateral or proceeds thereof;
purchase, discharge, compromise or settle any tax lien or any other lien,
encumbrance, suit, proceeding, title or claim thereof; contest any tax or
assessment; purchase insurance; make payments or perform other obligations of
the Borrower under Third Party Agreements; or redeem from any tax sale or
forfeiture affecting the Premises. In making any payment or securing any
performance relating to any Liabilities hereunder, the Agent shall be the sole
judge of the legality, validity and amount of any lien or encumbrance and of
all other matters necessary to be determined in satisfaction thereof. No such
action of the Agent shall ever be considered as a waiver of any right accruing
to it on account of the occurrence of any matter which constitutes an Event of
Default.
1.19. SUBROGATION. To the extent that the Agent or any Lender, on or
after the date hereof, pays any sum under any provision of law or any
instrument or document creating any lien or other interest prior or superior to
the lien of this Instrument, or the Borrower or any other person pays any such
sum with the proceeds of any of the Collateral, the Agent shall have and be
entitled to a lien or other interest on the Collateral equal in dignity and
priority to the lien or other interest discharged and the Agent shall be
subrogated to, and receive and enjoy all rights and liens possessed, held or
enjoyed by, the holder of such lien, which shall remain in existence and
benefit the Agent in securing the Liabilities. Foreclosure hereunder shall
constitute foreclosure of all such subrogated liens.
1.20. HAZARDOUS MATERIAL.
(a) The Borrower shall comply with the provisions of the Loan
Agreement regarding Hazardous Materials.
(b) The Borrower represents and warrants to the Agent that, to the
best of the Borrower's knowledge, the Borrower is not required to deliver to
the Agent, record or file any disclosure certificates or documents under the
Indiana Responsible Property Transfer Law (IC 13-7-22.5). The Borrower hereby
agrees to indemnify, defend and hold the Agent harmless from and against any
and all liability, loss, costs, damage, liens, fines, penalties and claims
asserted against or incurred by the Agent (including, without limitation,
attorneys' fees, consultants' fees and expert witness fees, and all costs of
litigation, through and including post-judgment and appellate proceedings, if
any) as a result of the Borrower's failure to deliver, record or file any such
disclosure certificates or documents. This representation and warranty shall
survive any foreclosure, release or termination of this Instrument.
1.21. RESERVE FOR TAXES, ASSESSMENTS, INSURANCE. Except as otherwise
provided in the last paragraph of this SECTION 1.21, the Borrower covenants and
agrees to pay to the Agent monthly until the Liabilities have been paid in full
and otherwise fully performed, a sum equal to taxes and assessments next due
upon the Collateral (all as estimated by the Lender) and the premiums that will
next become due and payable on policies of fire, rental value and other
insurance covering the Collateral required under the terms of this Instrument,
divided by the number of months to elapse before one month prior to the date
when such taxes, assessments and insurance premiums will become due and
payable, such sums to be held by the Agent without interest accruing thereon,
to pay each of such items.
All payments described above in this SECTION 1.21 shall be paid by the
Borrower each month in a single payment to be applied by the Agent to the
foregoing items in such order as the Agent shall elect in its sole discretion.
Except as otherwise provided in the last paragraph of this SECTION 1.21,
the Borrower shall also pay to the Agent, at least thirty (30) days prior to
the due date of any taxes, assessments or insurance premiums levied on, against
or with respect to the Collateral, such additional amount as may be necessary
to provide the Agent with sufficient funds to pay any such tax, assessment and
insurance premiums under this SECTION 1.21 at least fifteen (15) days in
advance of the due date thereof. The Borrower's failure timely to make any
payments required under this SECTION 1.21 shall be an Event of Default under
this Instrument.
Except as otherwise provided in the last paragraph of this SECTION 1.21,
the Agent shall, within fifteen (15) days of receipt from the Borrower of a
written request therefor together with such supporting documentation as the
Agent may reasonably require (including, without limitation, official tax bills
or, as applicable, statements for insurance premiums), cause proper amounts to
be withdrawn from such account and paid directly to the appropriate tax
collecting authority or insurer, PROVIDED, HOWEVER, that the Borrower has paid
to the Agent sufficient funds to cover such payments in full. Even though the
Borrower may have made all appropriate payments to the Agent as required by
this Instrument, the Borrower shall nevertheless have full and sole
responsibility at all times to cause all taxes, assessments and insurance
premiums to be fully and timely paid, and the Agent shall have no
responsibility or obligation of any kind with respect thereto except with
respect to payments required to be made by the Borrower hereunder for which the
Agent has received funds to cover such payments in full and all statements,
invoices, reports or other materials necessary to make such payments, all not
less than fifteen (15) days prior to the deadline for any such payment. If at
any time the funds so held by the Agent shall be insufficient to cover the full
amount of all taxes, assessments and insurance premiums then accrued (as
estimated by the Agent) with respect to the then-current twelve-month period,
the Borrower shall, within ten (10) days after receipt of notice thereof from
the Agent, deposit with the Agent such additional funds as may be necessary to
remove the deficiency. Failure to do so within such ten (10) day period shall
be an Event of Default hereunder. If the Collateral described herein is sold
under foreclosure or is otherwise acquired by the Agent, accumulations under
this SECTION 1.21 may be applied to the Liabilities in such order of
applications as the Agent may elect in its sole discretion.
Anything contained in this SECTION 1.21 to the contrary notwithstanding,
the Agent hereby (by acceptance of this Instrument and without the necessity of
any written waiver, consent or acknowledgment from the Borrower) waives the
requirement of all deposits described in this SECTION 1.21; PROVIDED, HOWEVER,
that the Agent shall have the right, in its sole discretion, to rescind such
waiver from and after the occurrence of an Event of Default hereunder or the
occurrence of any event or condition which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default hereunder.
1.22 SECURITY AGREEMENT.
(a) PARTS OF THE COLLATERAL ARE OR ARE TO BECOME FIXTURES ON THE
LAND. Insofar as the Improvements, Rents, Occupancy Leases and After Acquired
Property are concerned, this Instrument is hereby made and declared to be a
security agreement, and a security interest is hereby granted by the Borrower
to the Agent encumbering each and every item of Improvements, Rents, Occupancy
Leases and After Acquired Property in compliance with the provisions of the
applicable Uniform Commercial Code. A financing statement or statements
reciting this Instrument to be a security agreement, affecting all of the
property aforementioned, if requested by the Agent, shall be executed by the
Borrower and the Agent and appropriately filed. The remedies for any violation
of the covenants, terms and conditions of the security agreement herein
contained shall be (i) as prescribed herein, (ii) as prescribed by general law,
and (iii) as prescribed by the specific statutory consequences now or hereafter
enacted and specified in the Uniform Commercial Code as enacted in the relevant
state, all at the Agent's sole election. The Borrower and the Agent agree that
the filing of such financing statement(s) in the records normally having to do
with personal property shall never be construed as in anywise derogating from
or impairing this declaration and the intention of the Borrower and the Agent
that everything which is described or reflected in this Instrument as part of
the Collateral, is, and at all times and for all purposes and in all
proceedings both legal or equitable shall be, regarded as part of the real
estate irrespective of whether (a) any such item is physically attached to the
improvements, (b) serial numbers are used for the better identification of
certain items capable of being thus identified in a recital contained herein,
or (c) any such item is referred to or reflected in any such financing
statement(s) so filed at any time. Similarly, the mention in any such financing
statement(s) of the rights in and to (aa) the proceeds of any fire and/or
hazard insurance policy, or (bb) any award in eminent domain proceedings for a
taking or for loss of value, or (cc) the Borrower's interest as lessor in any
present or future lease or rights to income growing out of the use and/or
occupancy of the Premises, whether pursuant to lease or otherwise, shall never
be construed as altering any of the rights of the Agent or the Borrower as
determined by this Instrument or impugning the priority of the Agent's lien
granted hereby or by any other recorded document, but such mention in such
financing statement(s) is declared to be for the protection of the Agent in the
event any court shall at any time hold with respect to the foregoing clauses
(aa), (bb) or (cc), that notice of the Agent's priority of interest to be
effective against a particular class of persons must be filed in the Uniform
Commercial Code records. Notwithstanding any terms and conditions of this
Instrument, this Instrument does not create, establish or grant a lien or
security interest in or upon any personal property that does not constitute a
fixture under applicable law.
(b) The Borrower warrants that (i) the Borrower's (that is, the
"Debtor's") name, identity or corporate structure, federal employer
identification number and residence or principal place of business are as set
forth in EXHIBIT B hereto; (ii) the Borrower is duly qualified to do business
in each state in which the Real Estate is located; and (iii) the location of
the Improvements is and shall be upon the Land. The Borrower covenants and
agrees that: (x) the Borrower will furnish the Agent with notice of any change
in the matters addressed by clauses (i) or (ii) of this SECTION 1.22(B) within
thirty (30) days preceding the effective date of any such change; (y) the
Borrower will promptly execute any financing statements or other instruments
deemed necessary by the Agent to prevent any filed financing statement from
becoming misleading or losing its perfected status; and (z) the Borrower will
remain qualified to do business in each state in which the Premises are
located.
(c) Upon execution by the Agent (where local practice requires or
allows the same), this Instrument shall constitute a financing statement filed
as a fixture filing under the Uniform Commercial Code in the real estate or
other appropriate records of the county in which the Premises are located with
respect to all Improvements which are a part of the Premises and with respect
to any goods or other personal property that may now be or hereafter become an
Improvement on the Premises. The information contained in this SECTION 1.22(C)
is provided in order that this Instrument shall comply with the requirements of
the applicable state Uniform Commercial Code for instruments to be filed as
financing statements to perfect the security interests with respect to
Improvements. The names of the "Debtor" and the "Secured Party", the identity
or corporate structure, federal employer identification number and residence or
principal place of business of the "Debtor" are as set forth in EXHIBIT B
attached hereto and by this reference made a part hereof; the mailing address
of the "Secured Party" from which information concerning the security interest
may be obtained, and the mailing address of the Borrower (that is, the
"Debtor"), are as set forth in EXHIBIT B attached hereto; and a statement
indicating the types, or describing the items, of collateral is set forth
hereinabove.
1.23. CHANGES IN OWNERSHIP. The Borrower hereby acknowledges to the Agent
that (i) the identity and expertise of the Borrower were and continue to be
material circumstances upon which the Agent and the Lenders have relied in
connection with, and which constitute valuable consideration for, the extending
to the Borrower of the indebtedness evidenced by the Notes and (ii) any change
in such identity or expertise could materially impair or jeopardize the
security for the payment of and performance of the Liabilities granted to the
Agent by this Instrument. The Borrower therefore covenants and agrees with the
Agent that the Borrower may not sell, transfer, exchange, assign, grant a
security interest in, pledge or encumber, without the prior written consent of
the Agent, all or any part of the Collateral or any interest therein except as
set forth in SECTIONS 1.4 AND 1.9; PROVIDED, HOWEVER, that notwithstanding the
foregoing, the Agent agrees that in the event the Borrower desires to convey
any portion of the Premises, the Agent shall, upon the payment by the Borrower
to the Agent of the total value of such Premises (or portion thereof) to be
conveyed as shown on SCHEDULE II attached to the Loan Agreement, execute
appropriate releases of this Instrument with respect to the Premises (or
portion thereof) to be conveyed. Any such amounts paid to the Agent shall be
applied to reduce the principal balance of the Notes as provided in Section
3.1.2 of the Loan Agreement and then to the remaining Liabilities as the Agent
shall choose. The Borrower makes this agreement whether or not the sale,
assignment, grant or encumbrance would or might (a) diminish the value of any
security for the Liabilities, (b) increase the risk of default under this
Instrument, (c) increase the likelihood of the Agent's having to resort to any
security for the Liabilities after an Event of Default, or (d) add or remove
the liability of any person or entity for payment of the Liabilities or
performance of any covenant or obligation under this Instrument.
II. EVENT OF DEFAULT
Each of the following shall constitute an event of default (an "EVENT OF
DEFAULT") hereunder:
2.1. LIABILITIES. Failure of the Borrower to pay any of the Liabilities
as and when due in accordance with the respective terms thereof; or
2.2. LOAN AGREEMENT. The occurrence of any "Event of Default" (as defined
in the Loan Agreement); or
2.3. PROVISIONS OF THIS INSTRUMENT. Non-compliance by the Borrower with,
or failure by the Borrower to perform, any representation, covenant, agreement
or warranty contained in this Instrument or any of the Liabilities (other than
any non-compliance or failure which constitutes an Event of Default under
SECTIONS 2.1 OR 2.2) for thirty (30) days after notice thereof to the Borrower
from the Agent with respect thereto.
III. REMEDIES
3.1. ACCELERATION. Upon the occurrence of an Event of Default, the entire
indebtedness evidenced by the Notes and all other Liabilities may be declared
to be immediately due and payable in accordance with the terms of the Loan
Agreement and the Notes. In addition, notwithstanding any provision of this
Instrument to the contrary, upon and only upon the occurrence of an Event of
Default or at any time thereafter while the Liabilities or any part thereof
remains unpaid or unperformed, the Agent and the Trustee shall have the rights
and remedies provided in this ARTICLE III.
3.2. REMEDIES CUMULATIVE. No remedy or right of the Agent hereunder or
under the Notes or the Loan Agreement, or otherwise, or available under
applicable law or in equity, shall be exclusive of any other right or remedy,
but each such remedy or right shall be in addition to every other remedy or
right now or hereafter existing under any such document or under applicable law
or in equity. No delay in the exercise of, or omission to exercise, any remedy
or right accruing upon an Event of Default shall impair any such remedy or
right or be construed to be a waiver of any Event of Default or an acquiescence
therein, nor shall it affect any subsequent Event of Default of the same or a
different nature. Every such remedy or right may be exercised concurrently or
independently, and when and as often as may be deemed expedient by the Agent.
All obligations of the Borrower, and all rights, powers and remedies of the
Agent expressed herein shall be in addition to, and not in limitation of, those
provided by law or in equity or in this Instrument, the Notes or the Loan
Agreement, or any other written agreement or instrument relating to any of the
Liabilities or any security therefor.
3.3. POSSESSION OF COLLATERAL; REMEDIES UNDER INSTRUMENT, NOTES AND LOAN
AGREEMENT. The Borrower hereby waives all right to the possession, income and
Rents of the Collateral from and after the occurrence of an Event of Default.
If an Event of Default shall have occurred and shall not have been expressly
waived in writing by the Agent, then the Borrower, upon demand of the Agent,
shall forthwith deliver to the Agent the actual possession of the Collateral,
or any portion thereof, and the Agent and/or the Trustee is hereby expressly
authorized and empowered, to the extent permitted by applicable law, but not
obligated, at and following any such occurrence, to enter into and upon and
take possession of the Collateral, or any part thereof, with or without the
appointment of a receiver, and may exclude the Borrower and its agents and
employees wholly therefrom and shall have the right to joint access with the
Borrower to the books, records and accounts of the Borrower, to complete any
construction in progress thereon at the expense of the Borrower, to lease
and/or sell the same, to collect and receive all Rents and income and proceeds
thereof and to apply the same, less the necessary or appropriate attorneys'
fees and expenses of collection thereof, either for the care, operation, sale,
lease and preservation of the Collateral and/or, at the election of the Agent
in its sole discretion, to a reduction of such of the Liabilities in such order
as the Agent may from time to time elect. The Borrower hereby waives the
posting of any bond in the event the Agent elects to take possession. The Agent
and/or the Trustee, in addition to the rights provided under the Notes and the
Loan Agreement, are also hereby granted full and complete authority to enter
upon the Premises, employ watchmen to protect the Improvements from depredation
or injury and to preserve and protect the Collateral, and to continue any and
all outstanding contracts for the erection and completion of improvements to
the Premises, to make and enter into any contracts and obligations wherever
necessary in their own names, and to pay and discharge all debts, obligations
and liabilities incurred thereby, all at the expense of the Borrower. All such
expenditures by the Agent and/or the Trustee shall be Liabilities hereunder.
Upon the occurrence of an Event of Default, the Agent and/or the Trustee also
may exercise any or all rights or remedies under the law of the state in which
the Collateral is located.
3.4. FORECLOSURE; RECEIVER. Except as specifically limited or prohibited
by applicable state law, the Agent and the Trustee, as appropriate, shall have
the rights and remedies set forth in this SECTION 3.4. Upon the occurrence of
an Event of Default, the Agent and/or the Trustee shall also have the right
immediately to foreclose this Instrument or to exercise any right or power of
sale contained in this Instrument. Upon the filing of any complaint for that
purpose, or at any other time for any reason if permitted under applicable law,
the court in which such complaint is filed may, upon application of the Agent
and/or the Trustee or at any time thereafter, either before or after
foreclosure sale, and without notice to the Borrower or to any party claiming
under the Borrower and without regard to the solvency or insolvency at the time
of such application of any person then liable for the payment of any of the
Liabilities, without regard to the then value of the Collateral or whether the
same shall then be occupied, in whole or in part, as a homestead, by the owner
of the equity of redemption, and without requiring any bond from the
complainant in such proceedings, appoint a receiver for the benefit of the
Agent, with power to take possession, charge and control of the Collateral, to
lease the same, to keep the Collateral insured and in good repair, and to
collect all Rents during the pendency of such foreclosure suit or sale pursuant
hereto, and, in case of a foreclosure sale and a deficiency, during any period
of redemption. In furtherance of the foregoing, where permitted under
applicable law, the Borrower hereby consents to the appointment of a receiver
and waives any notice required with respect thereto.
The court may, from time to time, authorize such receiver to apply the
net amounts remaining in its hands, after deducting reasonable compensation for
the receiver and its counsel as allowed by the court, in payment (in whole or
in part) of any or all of the Liabilities, including without limitation the
following, in such order of application as the Agent may elect: (i) amounts due
under the Notes and the Loan Agreement, (ii) amounts due upon any decree
entered in any suit foreclosing this Instrument, (iii) costs and expenses of
foreclosure and litigation upon the Collateral, (iv) insurance premiums,
repairs, taxes, special assessments, water and sewer charges and interest,
penalties and costs, in connection with the Collateral, (v) any other lien or
charge upon the Collateral that may be or become superior to the lien of this
Instrument, or of any decree foreclosing the same, (vi) all moneys advanced by
the Agent to cure or attempt to cure an Event of Default by the Borrower in the
performance of or payment of any Liabilities or to protect the security
therefor provided in this Instrument, the Loan Agreement or the Notes with
interest on such advances at the interest rate set forth in Section 3.2.2(b) of
the Loan Agreement and (vii) any amounts due under the Third Party Agreements.
Excess proceeds of the sale, if any, shall then be paid to the Borrower, upon
reasonable request.
This Instrument may be foreclosed once against all, or successively
against any portion or portions, to the extent permitted by applicable law, of
the Collateral, as the Agent may elect, until all of the Collateral and the
Premises have been foreclosed against and sold. In the case of any sale of the
Collateral pursuant to any judgment or decree of any court at public auction or
otherwise, the Agent and/or the Trustee, if allowed by applicable law, may
become the purchaser, and for the purpose of making settlement for or payment
of the purchase price, shall be entitled to deliver over and use the Notes and
the Loan Agreement and any claims for the Liabilities in order that there may
be credited as paid on the purchase price the amount of such Liabilities. In
case of any foreclosure of this Instrument or exercise of power of sale (or the
commencement of or preparation therefor), the Liabilities and/or all expenses
of every kind paid or incurred by the Agent, any Lender and/or the Trustee for
the enforcement, protection or collection of the Collateral, including court
costs, attorneys' fees (to the extent permitted by applicable law),
stenographers' fees, costs of advertising and costs of title insurance (to the
extent permitted by applicable law) and any other documentary evidence of
title, shall be paid by the Borrower. To the extent allowed by applicable law,
the Agent and/or the Trustee may in their discretion deem all or any portion of
the Collateral to be, and such Collateral may be foreclosed upon as, real
estate under the law of the state in which the Premises are located.
3.5. ENFORCEMENT. If an Event of Default shall have occurred and be
continuing, the Agent shall have the following rights, remedies and options in
addition to, and not in lieu of, all other rights, remedies and options set
forth in this Instrument:
3.5.A. "INDIANA PREMISES". With respect to the Indiana Premises,the
foreclosure remedy hereunder shall be exercised as follows: Upon the occurrence
of an Event of Default, the Agent, at its option, may proceed by suit or suits
at law or in equity or by other appropriate proceedings or remedy to foreclose
this Instrument and, after complying with the statutory notice requirements
applicable to such sales, to sell, as an entirety or in separate lots or
parcels, the Indiana Premises under the judgment or decree of a court or courts
of competent jurisdiction; PROVIDED, HOWEVER, that any rights, powers and
remedies provided in this Instrument may be exercised only to the extent that
the exercise thereof does not violate any applicable law.
3.5.B. "KENTUCKY PREMISES". With respect to the Kentucky Premises, the
power of sale and remedies hereunder shall be exercised as follows: Upon the
occurrence of an Event of Default, the Agent, at its option, may proceed by
suit or suits at law or in equity or by other appropriate proceedings or remedy
to foreclose this Instrument and, after complying with the statutory notice
requirements applicable to such sales, to sell, as an entirety or in separate
lots or parcels, the Kentucky Premises under the judgment or decree of a court
or courts of competent jurisdiction.
3.5.C. "TENNESSEE PREMISES". With respect to the Tennessee Premises, the
power of sale remedy hereunder shall be exercised as follows: Upon the
occurrence of an Event of Default, the Trustee hereunder, or his agent or
successors, at the request of the Agent, or the representatives or assigns of
the Agent, after giving notice of the time and place of sale by publication of
such at least three (3) different times in some newspaper published in the
county in which the Tennessee Premises to be sold are situated, the first of
which publications shall be at least twenty (20) days previous to such sale,
shall, at the date and time stated in the notice, and at the door of the county
courthouse in such county at which foreclosure sales are customarily held or,
at the election of the Agent, at the Tennessee Premises to be sold, proceed to
sell such Tennessee Premises at public auction for cash (or for credit against
the Liabilities if the Agent is the highest bidder) or upon such other terms
that are satisfactory to the Trustee and the Agent, and in bar of the equity of
redemption and all rights of redemption, statutory or otherwise (including,
without limitation, those rights of redemption contained in Tennessee Code
Annotated Sections 66-8-101, ET SEQ.), homestead, dower, elective share, rights
of appraisement or valuation, and all other rights and exemptions of every
kind, all of which are hereby waived. The foreclosure sale may be adjourned
from time to time by the Trustee, or his agent or successors, at the place of
sale on the date the sale is originally set, or on the date of any adjournment
thereof, and may be reset at a later date or dates, by announcement without any
additional publication. The Agent or a designee of the Agent may purchase the
Tennessee Premises at any sale. In the event the Agent purchases the Tennessee
Premises at the Trustee's sale, to the extent the Agent's bid price exceeds the
Liabilities, the Agent shall pay the Trustee cash equal to such excess. The
Tennessee Premises or any part thereof may be sold in one parcel, or in such
parcels, manner or order as the Agent in its sole discretion may elect, and one
or more exercises of the power herein granted shall not extinguish or exhaust
the power unless the entire Tennessee Premises are sold or the Liabilities are
paid in full. Following a Trustee's sale of the Tennessee Premises, the Trustee
shall deliver to the purchaser a Trustee's Deed conveying the property so sold
without any covenant or warranty, expressed or implied. The recitals in the
Trustee's Deed shall be prima facie evidence of the truth of the statements
made therein. The Borrower further agrees that, in case of any sale hereunder,
it will at once surrender possession of the Tennessee Premises and will from
that moment become and be the tenant at will of the purchaser, and removable by
process as upon a forcible and unlawful detainer suit, hereby agreeing to pay
such purchaser the reasonable rental value of the Tennessee Premises after such
sale plus all expenses, including legal fees, incurred by the purchaser.
3.6. REMEDIES FOR LEASES AND RENTS. If an Event of Default shall occur,
then, whether before or after institution of legal proceedings to foreclose the
lien of this Instrument or before or after the sale hereunder, the Agent shall
be entitled, to the extent permitted by applicable law, in its discretion, to
do all or any of the following: (i) enter and take actual possession of the
Premises, the Rents, the Occupancy Leases, other Third Party Agreements and
other Collateral relating thereto or any part thereof, personally or by its
agents or attorneys, with or without process of law, and exclude the Borrower
therefrom; (ii) with or without process of law, enter upon and take and
maintain possession of all of the documents, books, records, papers and
accounts of the Borrower relating to the Collateral; (iii) as attorney-in-fact
or agent of the Borrower, or in its own name as mortgagee and under the powers
herein granted, hold, operate, manage and control the Premises, the Rents, the
Occupancy Leases, other Third Party Agreements and other Collateral relating
thereto or any part thereof, and conduct the business, if any, thereof either
personally or by its agents, contractors or nominees, with full power to use
such measures, legal or equitable, as in its discretion or in the discretion of
its successors or assigns may be deemed proper or necessary to enforce the
payment of the Rents, the Occupancy Leases, other Third Party Agreements and
other Collateral (including actions for the recovery of rent, actions
enforceable detainer and actions in distress of rent); (iv) cancel or terminate
any Occupancy Lease or Third Party Agreement or sublease for any cause or on
any ground which would entitle the Borrower to cancel the same; (v) elect to
disaffirm any Third Party Agreement, Occupancy Lease or sublease made
subsequent hereto or subordinated to the lien hereof; (vi) make all necessary
or proper repairs, decorations, renewals, replacements, alterations, additions,
betterments and improvements to the Collateral that the Agent, in its
discretion, may deem appropriate; (vii) insure and reinsure the Collateral for
all risks incidental to the Lender's possession, operation and management
thereof; and (viii) receive all such Rents and proceeds, and perform such other
acts in connection with the management and operation of the Collateral, as the
Agent in its discretion may deem proper, the Borrower hereby granting the Agent
full power and authority to exercise each and every one of the rights,
privileges and powers contained in any section herein, at law or in equity, at
any and all times after an Event of Default without notice to the Borrower or
any other person; PROVIDED, HOWEVER, that, notwithstanding the foregoing, in
the event of a foreclosure, the Agent shall have no right to operate the
Collateral under the names presently used by the Borrower without the
assignment to the Agent of the appropriate trademarks and service marks by the
holder thereof. The Agent, in the exercise of the rights and powers conferred
upon it hereby, shall have full power to use and apply the Rents to the payment
of or on account of the following, in such order as it may determine: (a) to
the payment of the operating expenses of the Premises, including the cost of
management and leasing thereof (which shall include reasonable compensation to
the Agent and its agents or contractors, if management be delegated to agents
or contractors, and it shall also include lease commissions and other
compensation and expenses of seeking and procuring tenants and entering into
leases), established claims for damages, if any, and premiums on insurance
hereinabove authorized; (b) to the payment of taxes, charges and special
assessments, the costs of all repairs, decorating, renewals, replacements,
alterations, additions, betterments and improvements of the Collateral,
including the cost from time to time of installing, replacing or repairing the
Collateral, and of placing the Collateral in such condition as will, in the
judgment of the Agent, make it readily rentable; and (c) to the payment of any
Liabilities. The entering upon, and taking possession of, the Collateral or any
part thereof, and the collection of any Rents and the application thereof as
aforesaid shall not cure or waive any Event of Default theretofore or
thereafter occurring or affect any notice of default hereunder or invalidate
any act done pursuant to any such default or notice, and, notwithstanding
continuance in possession of the Collateral or any part thereof by the Agent or
a receiver, and the collection, receipt and application of the Rents, the Agent
shall be entitled to exercise every right provided for in this Instrument, the
Loan Agreement or the Notes or by law or in equity upon or after the occurrence
of an Event of Default. Any of the actions referred to in this SECTION 3.6 may
be taken by the Agent without regard to the adequacy of the security for the
Liabilities hereby secured.
3.7. PREPAYMENT CHARGE. If any of the Liabilities secured hereby provides
for any charge for prepayment of any Liabilities secured hereby, the Borrower
agrees to pay such charge if for any reason any of such Liabilities shall be
paid prior to the stated maturity date thereof, including, without limitation,
any payment resulting from acceleration of the Liabilities secured hereby as
the result of an Event of Default, and whether or not such payment is made
prior to or at any sale held under or by virtue of this ARTICLE III.
3.8. SALE A BAR AGAINST THE BORROWER. Any sale of the Collateral or any
part thereof or any interest therein, whether pursuant to foreclosure or power
of sale or otherwise hereunder, shall, to the maximum extent permitted by
applicable law, forever be a perpetual bar against the Borrower.
3.9. REMEDIES WITH RESPECT TO COLLATERAL DEEMED TO BE PERSONAL PROPERTY.
Notwithstanding the provisions of this Instrument, to the extent any of the
Collateral is deemed to be personal property under applicable law, the Agent
and/or the Trustee may proceed, upon the occurrence of an Event of Default, to
enforce and realize all remedies available to a secured party under applicable
law, including, without limitation, the Uniform Commercial Code, against such
Collateral. To the extent permitted under applicable law, the Agent and/or the
Trustee may exercise any power of sale remedy or may foreclose against such
Collateral in conjunction with or independently and separately from the
exercise of such power of sale or foreclosure against the Premises.
3.10. PROCEEDS OF SALE. Unless otherwise required by applicable law, the
proceeds of any sale of, and any Rents and other amounts generated by the
holding, leasing, operation or other use of, the Premises shall be applied by
the Agent (or the receiver, if one is appointed) to the extent that funds are
so available therefrom in the following order of priority:
(1) first, to the payment of the costs and expenses of taking
possession of the Premises and of holding, using, leasing, repairing,
improving and selling the same, including, without limitation, (i) the
Trustee's and/or receivers' fees, (ii) court costs, (iii) attorneys' and
accountants' fees, (iv) costs of advertisement, and (v) the payment of
any and all taxes, liens, security interests or other rights, titles or
interests superior to the lien and security interest of this Instrument
(except those to which the Premises have been sold subject to and without
in any way implying the Agent's prior consent to the creation thereof);
(2) second, to the payment of all amounts, other than the
principal balance and accrued but unpaid interest, which may be due under
the Notes or any documents or instruments securing payment or performance
of the Notes or any of the Liabilities, together with interest thereon as
provided therein;
(3) third, to the payment of all accrued but unpaid interest due on
the Liabilities;
(4) fourth, to the payment of the principal balance on the
Liabilities and any documents or instruments securing payment of the
Liabilities, irrespective of whether then matured;
(5) fifth, to the extent funds are available therefor out of the
sale proceeds or any Rents and, to the extent known by the Agent, to the
payment of any indebtedness or obligation secured by a subordinate deed
of trust, mortgage or security deed on or security interest in the
Premises; and
(6) sixth, to the Borrower, its legal representatives, successors
and assigns.
3.11 THE BORROWER AS TENANT HOLDING OVER. In the event of any foreclosure
sale or sale under power by the Agent or the Trustee as provided in this
ARTICLE III, the Borrower shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at such sale or be
summarily dispossessed according to provisions of law applicable to tenants
holding over.
IV. GENERAL
4.1. PERMITTED ACTS. The Borrower agrees that, without affectingor
diminishing in any way the liability of the Borrower or any other person
(except any person expressly released in writing by the Agent) for the payment
or performance of any of the Liabilities or for the performance of any
obligation contained herein or affecting the lien hereof upon the Collateral or
any part thereof, the Agent and/or the Lenders may at any time and from time to
time, without notice to or the consent of any person, release any person liable
for the payment or performance of this Instrument, the Loan Agreement or the
Notes or any other Liabilities or any guaranty given in connection therewith;
extend the time for, or agree to alter the terms of payment of, any
indebtedness under this Instrument, the Loan Agreement or the Notes or any
other Liabilities or any guaranty given in connection therewith; modify or
waive any obligation; subordinate, modify or otherwise deal with the lien
hereof; accept additional security of any kind for repayment of the Notes or
any other Liabilities or any guaranty given in connection therewith; release
any Collateral or other property securing this Instrument, the Loan Agreement
or the Notes or any other Liabilities or any guaranty given in connection
therewith; make releases of any portion of the Premises; consent to the making
of any map or plat of the Premises; consent to the creation of a condominium
regime on all or any part of the Premises or the submission of all or any part
of the Premises to the provisions of any condominium act or any similar
provisions of law of any state where the Premises are located, or to the
creation of any easements on the Premises or of any covenants restricting the
use or occupancy thereof; exercise or refrain from exercising, or waive, any
right the Agent and/or the Lenders may have; and remove any Trustee and appoint
one or more successor or substitute trustees at the Agent's discretion, without
the necessity of notice to the Borrower or the Borrower's consent.
4.2. LEGAL EXPENSES. The Borrower agrees to indemnify, defend and hold
harmless the Agent and the Trustee from all losses, damages, liabilities,
costs, demands, judgments, causes of actions, suits and expenses, including
(without limitation) reasonable attorneys' and other professionals' fees
incurred in connection with any suit or proceeding in or to which the Agent and
the Trustee or any of them, may be made or become a party in connection with
the Liabilities and/or this Instrument, the Notes or the Loan Agreement, other
than as a result of the negligence (including, without limitation, ordinary
negligence) or willful misconduct of the Agent, all of which shall be due and
payable upon demand therefor by the Agent.
4.3. RELATED DOCUMENTS. If there shall be any inconsistency between the
provisions of this Instrument and the Loan Agreement, the terms and provisions
of the Loan Agreement shall prevail.
4.4. DEFEASANCE. Upon full payment and satisfaction of all the
Liabilities in accordance with their respective terms and at the time and in
the manner provided, and when there is no further obligation to make any
advance, or extend any credit hereunder or under the Notes or the Loan
Agreement, this Instrument shall terminate, and thereafter, upon demand
therefor by the Borrower an appropriate instrument of reconveyance or release
shall promptly be made, at the expense of the Borrower, by the Agent and/or the
Trustee to the Borrower.
4.5. NOTICES. Each notice, demand or other communication in connection
with this Instrument shall be in writing. Notices forwarded by mail shall be
deemed to have been given when sent if sent by registered or certified mail,
postage paid, and:
(i) IF TO THE BORROWER, except as otherwise
expressly provided in this Instrument, addressed to it at its address
shown above with a copy to:
Tuke Yopp & Sweeney
NationsBank Plaza, Suite 1100
414 Union Street
Nashville, Tennessee 37219
Attn: David J. White, Esq.;
(ii) IF TO THE AGENT, addressed to it at the
address shown above with a copy to:
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Attn: Michael N. Sloyer, Esq.
(iii) IF TO THE TRUSTEE, addressed to him at the address
shown below:
Joseph B. Pitt, Jr., Trustee
Chicago Title Insurance Company
First American Center
315 Deaderick Street, Suite 105
Nashville, Tennessee 37238-0105
, or at such other address as such party may, by written notice received by the
other parties to this Instrument, have designated as its address for notices.
Notices given by telegraph or telex shall be deemed to have been given when
sent if addressed to the party to whom sent, at its address as aforesaid.
4.6. SUCCESSORS; THE BORROWER; GENDER. All provisions hereof shall bind
the Borrower, the Agent, the Trustee and their respective successors, vendees
and assigns and shall inure to the benefit of the Agent and the Trustee and
their successors and assigns, and the Borrower and its permitted successors and
assigns. The Borrower shall not have any right to assign any of its rights
hereunder. Except as limited by the preceding sentence, the word "Borrower"
shall include all persons claiming under or through the Borrower and all
persons liable for the payment or performance by the Borrower of any of the
Liabilities whether or not such persons shall have executed the Notes, the Loan
Agreement or this Instrument. Wherever used, the singular number shall include
the plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
4.7. CARE BY THE AGENT AND THE TRUSTEE. The Agent and the Trustee shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral assigned by the Borrower to the Agent and/or the Trustee
or in the possession of the Agent and/or the Trustee if they take such action
for that purpose as the Borrower requests in writing, but failure of the Agent
or the Trustee to comply with any such request shall not be deemed to be a
failure to exercise reasonable care, and no failure of the Agent or the Trustee
to preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by the Borrower, shall of itself be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
4.8. NO OBLIGATION ON THE AGENT OR THE TRUSTEE. This Instrument is
intended only as security for the Liabilities. Anything herein to the contrary
notwithstanding (i) the Borrower shall be and remain liable under and with
respect to the Collateral to perform all of the obligations assumed by it under
or with respect to each thereof, (ii) the Agent, the Lenders and the Trustee
shall have no obligation or liability under or with respect to the Collateral
by reason or arising out of this Instrument and (iii) the Agent, the Lenders
and the Trustee shall not be required or obligated in any manner to perform or
fulfill any of the obligations of the Borrower under, pursuant to or with
respect to any of the Collateral.
4.9. NO WAIVER; WRITING. No delay on the part of the Agent in the
exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Agent of any right or remedy shall preclude
any other or further exercise thereof or the exercise of any other right or
remedy. The granting or withholding of consent by the Agent to any transaction
as required by the terms hereof shall not be deemed a waiver of the right to
require consent to future or successive transactions.
4.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. EXCEPT AS SET FORTH
BELOW, THIS INSTRUMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. THIS INSTRUMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK AND ACCEPTED BY THE AGENT IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE
LOANS SECURED HEREBY WERE DISBURSED IN THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY. THIS INSTRUMENT, TOGETHER WITH THE
NOTES AND THE LOAN AGREEMENT, SHALL BE CONTRACTS MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WITHIN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT WITH RESPECT TO
THE PROVISIONS HEREOF WHICH RELATE TO THE CREATION, PERFECTION, PRIORITY OR
ENFORCEMENT OF LIENS ON REAL PROPERTY AND IMPROVEMENTS, THE EXERCISE OF A POWER
OF SALE REMEDY, OR THE APPOINTMENT OF A RECEIVER WITH RESPECT THERETO, THIS
INSTRUMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE WHERE THE APPLICABLE
PREMISES ARE LOCATED, IT BEING UNDERSTOOD THAT TO THE FULLEST EXTENT PERMITTED
BY THE LAWS OF SUCH STATE, THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
VALIDITY AND ENFORCEABILITY OF THIS INSTRUMENT. Whenever possible, each
provision of this Instrument shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Instrument shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Instrument. THE AGENT MAY ENFORCE ANY CLAIM ARISING OUT OF
THIS INSTRUMENT OR THE NOTES OR THE LOAN AGREEMENT IN ANY STATE OR FEDERAL
COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN DAVIDSON COUNTY,
TENNESSEE. For the purpose of any action or proceeding instituted with respect
to any such claim, the Borrower irrevocably submits to the jurisdiction of such
courts and irrevocably consents to the service of process out of such courts by
mailing a copy thereof, by registered or certified mail, postage prepaid, to
the Borrower at its address for notices as set forth in the Loan Agreement, and
agrees that such service, to the fullest extent permitted by law, (a) shall be
deemed in every respect effective service of process upon it in any such suit,
action or proceeding, and (b) shall be taken and held to be valid personal
service upon and personal delivery to it. Nothing herein contained shall affect
the right of the Agent or the Trustee to serve process in any other manner
permitted by law or preclude the Agent or the Trustee from bringing an action
or proceeding in respect hereof in any other country, state or place having
jurisdiction over such action. The Borrower irrevocably waives, to the fullest
extent permitted by law, any objection which it may have or hereafter have to
the laying of the venue of any such suit, action or proceeding brought in any
court located in Davidson County, Tennessee, and any claim that any such suit,
action or proceeding brought in such a court has been brought in an
inconvenient forum.
4.11. WAIVER. THE BORROWER, ON BEHALF OF ITSELF AND ALL PERSONS NOW OR
HEREAFTER INTERESTED IN THE COLLATERAL, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY WAIVES ALL RIGHTS UNDER ALL APPRAISEMENT, REDEMPTION,
HOMESTEAD, MORATORIUM, VALUATION, EXEMPTION, STAY OR EXTENSION LAWS OR EQUITIES
NOW OR HEREAFTER EXISTING, AND HEREBY FURTHER WAIVES THE PLEADING OF ANY
STATUTE OF LIMITATIONS AS A DEFENSE TO ANY AND ALL LIABILITIES SECURED BY THIS
INSTRUMENT, AND THE BORROWER AGREES THAT NO DEFENSE, CLAIM OR RIGHT BASED ON
ANY THEREOF WILL BE ASSERTED, OR MAY BE ENFORCED, IN ANY ACTION ENFORCING OR
RELATING TO THIS INSTRUMENT OR ANY OF THE COLLATERAL. THE BORROWER, FOR ITSELF
AND FOR ALL PERSONS HEREAFTER CLAIMING THROUGH OR UNDER IT OR WHO MAY AT ANY
TIME HEREAFTER BECOME HOLDERS OF LIENS JUNIOR TO THE LIEN OF THIS INSTRUMENT,
HEREBY EXPRESSLY WAIVES AND RELEASES ALL RIGHTS TO DIRECT THE ORDER IN WHICH
ANY OF THE COLLATERAL SHALL BE SOLD IN THE EVENT OF ANY SALE OR SALES PURSUANT
HERETO AND TO HAVE ANY OF THE COLLATERAL AND/OR ANY OTHER PROPERTY NOW OR
HEREAFTER CONSTITUTING SECURITY FOR ANY OF THE LIABILITIES OR PERFORMANCE
SECURED HEREBY MARSHALLED UPON ANY FORECLOSURE OF THIS INSTRUMENT OR OF ANY
OTHER SECURITY FOR ANY OF THE LIABILITIES OR PERFORMANCE SECURED HEREBY. THE
BORROWER'S WAIVER OF ITS RIGHT OF REDEMPTION CONTAINED HEREIN, IF ANY, SHALL BE
NULL AND VOID IF THE CONSIDERATION OF SUCH WAIVER, WHETHER OR NOT EXPRESSED BY
ITS TERMS, SHALL BE THE WAIVER AND RELEASE BY THE AGENT OF ANY DEFICIENCY
JUDGMENT AGAINST THE BORROWER. THE BORROWER HEREBY EXPRESSLY WAIVES THE
BENEFITS OF ANY OTHER RIGHTS AVAILABLE AT LAW OR IN EQUITY WHICH MIGHT
OTHERWISE PROVIDE THAT IN THE EVENT OF ANY SUCH SALE THE COLLATERAL MIGHT BE
SOLD AT THE OPTION OF THE AGENT AND/OR THE TRUSTEE EITHER AS A WHOLE OR IN SUCH
LOTS AND PARCELS AS THE AGENT AND/OR THE TRUSTEE MAY ELECT.
INITIALED BY THE BORROWER:
SHONEY'S, INC.
BY:______________________
4.12. JURY TRIAL. THE BORROWER HEREBY EXPRESSLY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS INSTRUMENT TO WHICH IT
IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS INSTRUMENT AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
4.12.A. WAIVER OF BORROWER'S RIGHTS. BY EXECUTION OF THIS INSTRUMENT AND
BY INITIALING THIS SECTION 4.12.A, THE BORROWER EXPRESSLY: (A) ACKNOWLEDGES THE
RIGHT TO ACCELERATE THE LIABILITIES AND THE POWER OF ATTORNEY GIVEN HEREIN TO
THE AGENT TO SELL THE COLLATERAL BY NON-JUDICIAL FORECLOSURE UPON AN EVENT OF
DEFAULT BY THE BORROWER WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE
(EXCEPT AS OTHERWISE PROVIDED HEREIN); (B) EXCEPT TO THE EXTENT PROVIDED
OTHERWISE HEREIN, WAIVES ANY AND ALL RIGHTS WHICH THE BORROWER MAY HAVE UNDER
THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE
SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO
JUDICIAL HEARING PRIOR TO THE EXERCISE BY THE AGENT OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO THE AGENT; (C) ACKNOWLEDGES THAT THE BORROWER HAS READ THIS
INSTRUMENT AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO THE BORROWER AND THE
BORROWER HAS CONSULTED WITH COUNSEL OF THE BORROWER'S CHOICE PRIOR TO EXECUTING
THIS INSTRUMENT; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS
OF THE BORROWER HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY THE
BORROWER AS PART OF A BARGAINED FOR TRANSACTION:
INITIALED BY THE BORROWER:
SHONEY'S, INC.
By:______________________
4.13. NO MERGER. It being the desire and intention of the parties hereto
that this Instrument and the lien hereof not merge in fee simple title to the
Collateral, it is hereby understood and agreed that should the Agent and/or the
Trustee acquire any additional or other interest in or to the Collateral or the
ownership thereof, then, unless a contrary intent is manifested by the Agent
and/or the Trustee as evidenced by an express statement to that effect in an
appropriate document duly recorded, this Instrument and the lien hereof shall
not merge in the fee simple title, toward the end that this Instrument may be
foreclosed as if owned by a stranger to the fee simple title and the Borrower
further covenants and agrees that, in case it shall acquire the fee title, or
any other estate, title or interest in the Collateral, this Instrument shall
attach to and cover and be a first lien upon such fee title or other estate so
acquired, and such fee title or other estate so acquired by the Borrower shall
be considered as mortgaged, assigned or conveyed to the Agent and/or the
Trustee and the lien hereof spread to cover such estate with the same force and
effect as though specifically herein mortgaged, assigned or conveyed and
spread. The provisions of this SECTION 4.13 shall not apply in the event the
Agent and/or the Trustee acquire the fee of the Collateral except if the Agent
and/or the Trustee shall so elect.
4.14. THE AGENT AND THE TRUSTEE NOT JOINT VENTURERS OR PARTNERS. The
Borrower, the Agent and the Trustee acknowledge and agree that in no event
shall the Agent and the Trustee be deemed to be partners or joint venturers
with the Borrower. Without limitation of the foregoing, the Agent and the
Trustee shall not be deemed to be such partners or joint venturers on account
of their becoming a mortgagee in possession or exercising any rights pursuant
to this Instrument or pursuant to any other instrument or document evidencing
or securing any of the Liabilities secured hereby, or otherwise.
4.15. TIME OF ESSENCE. Time is declared to be of the essence in this
Instrument, the Notes and the Loan Agreement and of every part hereof and
thereof.
4.16. NO THIRD PARTY BENEFITS. This Instrument, the Notes and the Loan
Agreement are made for the sole benefit of the Borrower, the Trustee, the Agent
and the Lenders and, subject to the provisions of SECTION 4.6, their successors
and assigns, and no other party shall have any legal interest of any kind under
or by reason of any of the foregoing. Whether or not the Agent or the Trustee
elect to employ any or all the rights, powers or remedies available to them
under any of the foregoing, the Agent and the Trustee shall have no obligation
or liability of any kind to any third party by reason of any of the foregoing
or any of the Agent's or the Trustee's actions or omissions pursuant thereto or
otherwise in connection with this transaction.
4.17. FUTURE ADVANCES. This Instrument is given to secure not only
existing indebtedness, but also such future advances and obligations, whether
such advances are obligatory or are to be made at the option of the Agent or
the Lenders, or otherwise, as are made by the Agent or the Lenders or incurred
by the Borrower, to the same extent as if such future advances and obligations
were made on the date of the execution of this Instrument. The total principal
of the obligations secured at any given time may not exceed ONE HUNDRED MILLION
DOLLARS ($100,000,000) (plus interest thereon and any advances made for taxes,
liens, assessments, insurance premiums or costs and other sums due under this
Instrument and the Loan Agreement).
4.18. COUNTERPARTS. This Instrument may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
4.19. MAXIMUM INTEREST. The interest rate charged under the Notes may
vary from time to time. If any of the terms or provisions of this Instrument
or the Notes or other evidence of the Liabilities secured hereby is susceptible
of being construed as binding or obligating the Borrower or any other persons
or concerns obligated, either primarily, secondarily or conditionally, for the
payment of any debt, whether or not secured hereby, under any circumstances or
contingencies whatsoever, to pay interest in excess of the maximum rate of
interest permitted by whichever of applicable federal or state law from time to
time permits the higher maximum non-usurious rate (the "HIGHEST LAWFUL RATE"),
it is agreed that such terms or provisions are a mistake in calculation or
wording and, notwithstanding the same, it is expressly agreed that neither the
Borrower, nor any other person or concern obligated in any manner on any such
debt shall ever be required or obligated under the terms hereof, or under the
terms of the Notes or other evidence of the Liabilities or otherwise, to pay
interest in excess of the Highest Lawful Rate, and if, for any reason whatever,
the interest paid on the Notes and/or the Liabilities shall exceed the Highest
Lawful Rate, the holders of the Notes and/or the Liabilities receiving such
excess shall either (at the option of such holders) refund to the payor or
credit against the principal of the Notes and/or the Liabilities such portion
of said interest as may be necessary to cause the interest paid on the Notes
and/or the Liabilities to equal the Highest Lawful Rate, and no more. All sums
paid or agreed to be paid under this Instrument, the Loan Agreement or the
Notes for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread in
equal parts throughout the full term of the applicable Liabilities, so that the
interest rate is uniform throughout the full term of the applicable
Liabilities.
4.20. EXHIBITS.
(a) To facilitate recordation, there are omitted from certain
counterparts of this Instrument those descriptions in EXHIBIT A which contain
descriptions of the Premises located in recording jurisdictions other than the
jurisdiction in which the particular counterpart is to be recorded. There are
copies of the Loan Agreement, the Notes, a complete description of all the
Premises subject to the security interest and lien of this Instrument and all
Permitted Exceptions (when the Title Policies are delivered) on file at the
principal offices of the Borrower and the Agent set forth in SECTION 4.5. The
complete legal description of all the Premises now or hereafter subject to the
security interest and lien of this Instrument as contained in such counterparts
and the complete list of all Permitted Exceptions (when the Title Policies are
delivered) are incorporated herein by reference. Each counterpart of this
Instrument shall be deemed an original and of equal dignity, priority and
effect for all pertinent purposes. Notwithstanding the fact that the
descriptions of all of the Collateral subject to the security interest and lien
of this Instrument and all Permitted Exceptions are not included in each
counterpart of this Instrument, any reference to the "Premises", the
"Collateral" or the "Permitted Exceptions" in any counterpart of this
Instrument shall be deemed to include all of the Collateral and the Permitted
Exceptions described in all counterparts of this Instrument.
4.21 SUBSTITUTION OF THE TRUSTEE. The Agent has the power and shall be
entitled, in its sole discretion and without cause, successively to remove the
Trustee, or any successor or substitute trustee, and to appoint another trustee
or trustees in the place and stead of the Trustee or any successor or
substitute trustee, by written instrument duly recorded in the appropriate
public records of the counties in which the Tennessee Premises are located, and
any such successor or substitute shall have the same title, authority and power
as the original Trustee herein named.
4.22. INDEMNIFICATION OF THE TRUSTEE. Except for willful misconduct
REGARDLESS OF WHETHER OR NOT CAUSED IN WHOLE OR IN PART BY THE TRUSTEE'S
NEGLIGENCE, the Trustee shall not be liable for any act or omission or error in
judgment. The Trustee may rely on any document believed by him in good faith to
be genuine. All money received by the Trustee shall, until used or applied as
herein provided, be held in trust, but need not be segregated (except to the
extent required by law), and the Trustee shall not be liable for interest
thereon. The Borrower shall indemnify the Trustee against all liability and
expenses which the Trustee may incur in the performance of his duties
hereunder.
4.23 SUITS TO PROTECT THE PREMISES. The Agent shall have power to
institute and maintain such suits and proceedings as it may reasonably deem
expedient (a) to prevent any impairment of the Premises by any acts which may
be unlawful or in violation of this Instrument, (b) to preserve or protect its
interest in the Premises and in the rents, issues, profits and revenues arising
therefrom, and (c) to restrain the enforcement of or compliance with any
legislation or other governmental enactment, rule or order that the Agent, in
the Agent's reasonable judgment, believes to be unconstitutional or otherwise
invalid, if the enforcement of or compliance with such enactment, rule or order
would impair the security hereunder or be prejudicial to the interest of the
Agent. In any such suit or proceeding, the Agent may sue in the name of the
Borrower and/or may name the Borrower as a party.
4.24 SEVERABILITY. If any provision of this Instrument or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Instrument and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
4.25 NO OBLIGATION TO MARSHAL ASSETS. Notice is hereby given that no
holder of any mortgage, deed of trust, lien, security interest or other
encumbrance affecting all or any portion of the Premises, which is inferior to
the lien, security interest and security title of this Instrument, shall have
the right or privilege to require the Agent to marshal assets.
171807.12 <<Date>>
<PAGE>
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Instrument as of the date first above written.
SHONEY'S, INC., a Tennessee
corporation
By:
F.E. MCDANIEL, JR.
(Typed or Printed Name)
Title: TREASURER
Attest:
ROBERT J. AMES
(Typed or Printed Name)
Title: ASSISTANT SECRETARY
[CORPORATE SEAL]
With an address at:
1727 Elm Hill Pike
Nashville, Tennessee 37210
<PAGE>
IN WITNESS WHEREOF, the Agent has executed and delivered this Instrument
as of the date first above written.
CANADIAN IMPERIAL BANK OF COMMERCE, ACTING
THROUGH ITS NEW YORK AGENCY, AS AGENT
By:
(Typed or Printed Name)
Title:
Attest:
(Typed or Printed Name)
Title:
With an address at:
425 Lexington Avenue
New York, New York 10017
Attn: Syndications, Manager
Administration
This Instrument Was Prepared
By and After Recording Should
Be Returned To:
_____________________________
David J. White
NationsBank Plaza, Suite 1100
414 Union Street
Nashville, Tennessee 37219
<PAGE>
INDIANA
ACKNOWLEDGEMENT
STATE OF __________)
) SS.
COUNTY OF _________)
Before me, a Notary Public in and for said County and State,
personally appeared F.E. McDaniel, Jr. and Robert J. Ames, the Treasurer and
Assistant Secretary, respectively, of Shoney's, Inc., a Tennessee corporation,
who, having been duly sworn, acknowledged the execution of the foregoing
instrument for and on behalf of said corporation.
WITNESS my hand and Notarial Seal this _____ day of May, 1996.
______________________________
Notary Public
[SEAL]
______________________________
Printed
My Commission Expires:_________________
I am a resident of _____________ County, __________.
-41-
171807.12 <<Date>>
<PAGE>
INDIANA
ACKNOWLEDGEMENT
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK)
Before me, a Notary Public in and for said County and State,
personally appeared and
, the and , respectively,
of Canadian Imperial Bank of Commerce, a Canadian chartered bank acting through
its New York Agency, as Agent, who, having been duly sworn, acknowledged the
execution of the foregoing instrument for and on behalf of said bank.
WITNESS my hand and Notarial Seal this _____ day of May, 1996.
______________________________
Notary Public
[SEAL]
______________________________
Printed
My Commission Expires:_________________
I am a resident of _____________ County, __________.
This Instrument Was Prepared
By and After Recording Should
Be Returned To:
David J. White
NationsBank Plaza, Suite 1100
414 Union Street
Nashville, Tennessee 37219
-42-
171807.12 <<Date>>
<PAGE>
TENNESSEE
ACKNOWLEDGEMENT
STATE OF _________
COUNTY OF ________
Before me, the undersigned, a Notary Public of the state and county
mentioned, personally appeared F.E. McDaniel, Jr. and Robert J. Ames, with whom
I am personally acquainted (or proved to me on the basis of satisfactory
evidence), and who, upon oath, acknowledged themselves to be the Treasurer and
Assistant Secretary, respectively (or other officers authorized to execute the
instrument) of Shoney's, Inc., the within named bargainor, a corporation, and
that they as such Treasurer and Assistant Secretary, executed the foregoing
instrument for the purpose therein contained, by personally signing the name of
the corporation by themselves as Treasurer and Assistant Secretary.
Witness my hand and seal, at Office in ____________________, this _____
day of May, 1996.
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
-41-
171807.12 <<Date>>
<PAGE>
TENNESSEE
ACKNOWLEDGEMENT
STATE OF NEW YORK
COUNTY OF NEW YORK
Before me, the undersigned, a Notary Public of the state and county
mentioned, personally appeared _________________ and ___________________, with
whom I am personally acquainted (or proved to me on the basis of satisfactory
evidence), and who, upon oath, acknowledged themselves to be
________________________ and ___________________ (or other officers authorized
to execute the instrument) of Canadian Imperial Bank of Commerce, the within
named bargainor, a Canadian chartered bank acting through its New York Agency,
as Agent, and that they as such _____________________ and
_____________________, executed the foregoing instrument for the purpose
therein contained, by personally signing the name of the bank by themselves as
_______________________ and _________________________.
Witness my hand and seal, at Office in New York, New York, this ____ day
of May, 1996.
Notary Public
My Commission Expires:
[NOTARIAL SEAL]
-42-
KENTUCKY
ACKNOWLEDGEMENT
STATE OF _________
COUNTY OF ________
Before me personally appeared F.E. McDaniel, Jr. and Robert J. Ames,
known to me to be the persons described in and who executed the foregoing
instrument as Treasurer and Assistant Secretary of Shoney's, Inc., a Tennessee
corporation, and, after being duly sworn, acknowledged and subscribed before me
that they executed the same as such officers in the name of and on behalf of
said corporation.
WITNESS my hand and official seal this day of May, 1996, County and
State aforesaid.
Name:
NOTARY PUBLIC
My Commission Expires:
[NOTARIAL SEAL]
-41-
171807.12 <<Date>>
<PAGE>
KENTUCKY
ACKNOWLEDGEMENT
STATE OF NEW YORK
COUNTY OF NEW YORK
Before me personally appeared and
________________________, known to me to be the persons described in and who
executed the foregoing instrument as and
____________________ of Canadian Imperial Bank of Commerce, a Canadian
chartered bank acting through its New York Agency, as Agent, and, after being
duly sworn, acknowledged and subscribed before me that they executed the same
as such officers in the name of and on behalf of said bank.
WITNESS my hand and official seal this day of May, 1996, County and
State aforesaid.
Name:
NOTARY PUBLIC
My Commission Expires:
[NOTARIAL SEAL]
<PAGE>
EXHIBIT A
Property Description
<PAGE>
EXHIBIT B
(Description of "Debtor" and "Secured Party")
1. Name of Debtor: Shoney's, Inc.
State of Incorporation: Tennessee
Principal Place of
Business and Location
of Chief Executive Office: 1727 Elm Hill Pike
Nashville, Tennessee 37210
2. Inquiries should be addressed to Debtor at:
1727 Elm Hill Pike
Nashville, Tennessee 37210
3. Debtor has been using or operating under the above corporate structure
without change since: November 1, 1968.
4. Name and identity of Secured Party:
Canadian Imperial Bank of Commerce,
a Canadian chartered bank acting through
its New York Agency, as Agent
5. Inquiries should be addressed to Secured Party at:
425 Lexington Avenue
New York, New York 10017
Attn: Syndications, Manager Administration
6. Federal Employer Identification Number of Debtor:
62-0799798
TO BE FILED IN THE REAL PROPERTY RECORDS.
THE NAME OF THE RECORD OWNER OF THE FEE SIMPLE REAL ESTATE INTEREST DESCRIBED
ON EXHIBIT A IS SHONEY'S, INC., A TENNESSEE CORPORATION.
<PAGE>
EXHIBIT H
SUBSIDIARY GUARANTY
THIS GUARANTY, dated as of _______ __, 1996, made jointly and severally by
TPI RESTAURANTS, INC., a Tennessee corporation, TPI ENTERTAINMENT, INC., a
Delaware corporation, and TPI INSURANCE CORPORATION, a Hawaii corporation
(individually, a "GUARANTOR," and collectively, the "GUARANTORS"), in favor of
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, acting in its capacity as
agent (the "AGENT") for the various financial institutions (the "LENDERS")
which are, or may from time to time become, parties to the Loan Agreement (as
defined below).
W I T N E S S E T H:
WHEREAS, the Guarantors are direct wholly-owned Subsidiaries of Shoney's,
Inc., a Tennessee corporation (the "BORROWER");
WHEREAS, pursuant to the Bridge Loan Credit Agreement, dated as of May 3,
1996 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "LOAN AGREEMENT"), among the Borrower, the Lenders and the
Agent, the Lenders have extended Commitments (such capitalized term, and all
other capitalized terms used in these recitals without definition, to have the
meanings assigned to such terms in, or by reference in, SECTIONS 1.1 and 1.2
hereof) to the Borrower and have agreed to make Loans to the Borrower pursuant
to such Commitments;
WHEREAS, as a condition precedent to the making of the Second Draw under
the Loan Agreement in connection with the Acquisition and the Assumption, each
Guarantor is required to execute and deliver this Guaranty;
WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty and will receive direct and indirect benefits by
reason of the availability of such Loans made to the Borrower by the Lenders;
WHEREAS, each Guarantor's business is a specialized part of an integrated
and coordinated enterprise conducted by the Borrower through the Borrower and
the Guarantors for the convenience, economic advantage and greater profit of
the integrated and coordinated enterprise represented by the Borrower and the
Guarantors; and
WHEREAS, each Guarantor shall derive direct and indirect benefits by
reason of the Loan Agreement;
NOW, THEREFORE, in order to induce the Lenders to make Loans to the
Borrower pursuant to the Loan Agreement, and for other good and valuable
consideration, receipt of which is hereby acknowledged by each Guarantor, each
Guarantor hereby agrees with the Agent, for its benefit and the Ratable benefit
of each Lender, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" has the meaning assigned to that term in the PREAMBLE
hereto.
"BORROWER" has the meaning assigned to that term in the FIRST
RECITAL hereto.
"FUNDING GUARANTOR" has the meaning assigned to such term in
SECTION 4.7 hereof.
"GUARANTEED OBLIGATIONS" has the meaning assigned to that term in
SECTION 2.1 hereof.
"GUARANTOR" and "GUARANTORS" have the respective meanings assigned
to those terms in the PREAMBLE hereto.
"GUARANTY" means this Subsidiary Guaranty, as the same may be
amended, supplemented, amended and restated or otherwise modified from
time to time.
"LENDERS" has the meaning assigned to that term in the PREAMBLE
hereto.
"LOAN AGREEMENT" has the meaning assigned to that term in the
SECOND RECITAL hereto.
"RATABLE" means (a) with respect to all the Loans, in proportion to
the respective Lender's Percentage of the aggregate Loans outstanding
under the Loan Agreement, and (b) with respect to other Obligations, in
proportion to the respective amounts to which the Agent or such Lender is
entitled pursuant to the Loan Agreement, the Collateral Documents or the
Loan Documents when compared to the total amount which the Agent and all
Lenders are entitled to pursuant to the Loan Agreement, the Collateral
Documents and the Loan Documents.
SECTION 1.2. LOAN AGREEMENT DEFINITIONS. Unless otherwise defined herein
or the context otherwise requires, terms used in this Guaranty, including its
preamble and recitals, have the meanings provided in the Loan Agreement.
ARTICLE II
GUARANTY
SECTION 2.1. GUARANTY. Each Guarantor jointly and severally with each
other Guarantor hereby unconditionally and irrevocably guarantees the full and
prompt payment when due, whether at stated maturity, by acceleration or
otherwise (including, without limitation, all amounts which would have become
due but for the operation of the automatic stay under Section 362(a) of the
Federal Bankruptcy Code, 11 U.S.C. 362(a)), of the following (collectively, the
"GUARANTEED OBLIGATIONS"),
(a) all obligations of the Borrower to the Agent and each of the
Lenders now or hereafter existing under the Loan Agreement and each other
Loan Document (including this Guaranty), whether for principal, interest,
fees, expenses or otherwise;
(b) all other Obligations to the Agent and each of the Lenders now
or hereafter existing under any of the Loan Documents, whether for
principal, interest, fees, expenses or otherwise; and
(c) any and all expenses (including counsel fees and expenses)
incurred by the Agent or any Lender in enforcing any of their respective
rights under this Guaranty;
PROVIDED,
HOWEVER, that any term or provision of this Guaranty to the contrary
notwithstanding, the aggregate amount of each Guarantor's liability under this
Guaranty shall not exceed the maximum amount of such liability that can be
hereby incurred without rendering this Guaranty voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer and not for any
greater amount. This Guaranty constitutes a guaranty of payment when due and
not merely of collection, and each Guarantor specifically agrees that it shall
not be necessary or required that any Lender or any holder of any Note exercise
any right, assert any claim or demand or enforce any remedy whatsoever against
the Borrower before or as a condition to the obligations of any Guarantor
hereunder.
SECTION 2.2. ACCELERATION OF GUARANTY. Each Guarantor agrees that, in
the event of the dissolution or insolvency of the Borrower or any Guarantor, or
the inability or failure of the Borrower or any Guarantor to pay debts as they
become due, or an assignment by the Borrower or any Guarantor for the benefit
of creditors, or the commencement of any case or proceeding in respect of the
Borrower or any Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Obligations of the Borrower
may not then be due and payable, each Guarantor will pay to the Lenders
forthwith the full amount which would be payable hereunder by each Guarantor if
all such Obligations were then due and payable.
SECTION 2.3. GUARANTY ABSOLUTE. This Guaranty shall be construed as a
continuing, absolute, unconditional and irrevocable guarantee of payment and
shall remain in full force and effect until all Obligations of the Borrower
have been paid in full, all obligations of each Guarantor hereunder have been
paid in full and all Commitments shall have terminated. Each Guarantor
guarantees that the Obligations will be paid strictly in accordance with the
terms of the Loan Agreement, and that all other Guaranteed Obligations shall be
paid strictly in accordance with the terms of the Loan Documents, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or any of the Lenders
with respect thereto. The liability of each Guarantor under this Guaranty
shall be absolute and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of the Loan
Agreement, the Notes, any other Loan Document or any other agreement or
instrument relating to any thereof;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any
compromise, renewal, extension, acceleration or release with respect
thereto, or any other amendment or waiver of or any consent to departure
from the Loan Agreement, the Notes, or any other Loan Document;
(c) any addition, exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) the failure of any Lender or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Person (including any other
guarantor) under the provisions of the Loan Agreement, any Note, any
other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Loan Agreement,
any Note, or any other Loan Document;
(f) any defense, set-off or counter-claim which may at any time be
available to or be asserted by the Borrower against the Agent or any
Lender;
(g) any reduction, limitation, impairment or termination of the
Obligations of the Borrower for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to
(and each Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the
Obligations of the Borrower or otherwise; or
(h) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower
or a Guarantor.
SECTION 2.4. REINSTATEMENT, ETC. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender or any holder of any
Note, upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.
SECTION 2.5. WAIVER. Each Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Agent or any Lender
protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or take any action against the
Borrower or any other person or entity (including any other guarantor) or any
collateral.
SECTION 2.6. WAIVER OF SUBROGATION. Each Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Borrower that arise from the existence, payment, performance or enforcement
of each Guarantor's obligations under this Guaranty or any other Loan Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the Lender
against the Borrower or any collateral which the Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including the right to take or receive from
the Borrower, directly or indirectly, in cash or other property or by set-off
or in any manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Obligations shall not have been paid in cash in full and the
Commitments and any other commitments by the Lender to the Borrower have not
been terminated, such amount shall be deemed to have been paid to each
Guarantor for the benefit of, and held in trust for, the Lender, and shall
forthwith be paid to the Lender to be credited and applied upon the
Obligations, whether matured or unmatured. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by the Loan Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
SECTION 2.7. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS OF NOTES,
ETC. This Guaranty shall:
(a) be binding upon each Guarantor, and its successors, transferees
and assigns; and
(b) inure to the benefit of and be enforceable by the Agent and each
other Lender.
Without limiting the generality of CLAUSE (B), any Lender may assign or
otherwise transfer (in whole or in part) any Note or Loan held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all rights and benefits in respect thereof granted to such Lender
under any Loan Document (including this Guaranty) or otherwise, subject,
however, to the provisions of SECTION 10.10 of the Loan Agreement.
ARTICLE III
REPRESENTATIONS AND COVENANTS
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
represents and warrants to the Agent and each Lender as follows:
(a) As to representations and warranties contained in ARTICLE VI of
the Loan Agreement, in the Collateral Documents and in any other Loan
Documents insofar as the representations and warranties contained therein
by their terms are applicable to such Guarantor and its properties, each
such representation and warranty (insofar as applicable as aforesaid),
together with all related definitions and ancillary provisions, being
hereby incorporated into this Guaranty by reference as though specifically
set forth in this Section.
(b) No Guarantor has any Subsidiaries which have any material
assets, operations, revenues or liabilities.
(c) Such Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation and has
full corporate power and authority to enter into this Guaranty and the
other Collateral Documents and Loan Documents to which it is a party and
to carry out the transactions contemplated hereby and thereby.
(d) The execution and delivery by such Guarantor of this Guaranty
and the other Loan Documents to which it is a party and the consummation
by such Guarantor of the transactions contemplated hereby and thereby have
been duly authorized by such Guarantor. This Guaranty and the other Loan
Documents to which such Guarantor is a party have each been duly executed
and delivered by such Guarantor and each constitutes the legal, valid and
binding obligation of such Guarantor enforceable against such Guarantor in
accordance with its terms, subject, as to enforcement only, to bankruptcy,
insolvency, reorganization, moratorium or similar laws at the time in
effect affecting the enforceability of the rights of creditors generally.
(e) The execution and delivery of this Guaranty and the other Loan
Documents to which such Guarantor is a party and the consummation by such
Guarantor of the transactions contemplated hereby and thereby have not
resulted, and will not (with or without the lapse of time or the giving of
notice or both) result, (i) in any breach of any of the terms or
provisions of, or constitute a default under, the charter or bylaws of
such Guarantor, any agreement, license or other instrument, any law, rule
or regulation or any judgment, decree or order of any court to which such
Guarantor is a party or by which its property may be bound, or (ii) in the
creation or imposition of any claim, lien, charge or encumbrance of any
nature whatsoever upon, or give to others any claim, interest or right,
with respect to any of the properties, assets, contracts or licenses of
such Guarantor (except pursuant to the Loan Documents to which it is a
party).
SECTION 3.2. COVENANTS. Each Guarantor agrees with the Agent and each
Lender that, until all Guaranteed Obligations shall have been paid in full,
such Guarantor will perform, comply with and be bound by all of the agreements,
covenants and obligations contained in ARTICLE VII of the Loan Agreement and in
the Loan Documents which by their terms are applicable to such Guarantor or its
properties, each such agreement, covenant and obligation contained in such
Article and in the Loan Documents, together with all related definitions and
ancillary provisions, being hereby incorporated into this Guaranty by reference
as though specifically set forth in this Section and all of such agreements,
covenants and obligations shall survive the termination of the Loan Agreement,
the Collateral Documents and the Loan Documents for purposes hereof; PROVIDED,
HOWEVER, that without limiting the generality of the foregoing, each Guarantor
agrees that, until all Guaranteed Obligations shall have been paid in full, in
any event it will not create, incur, assume, or suffer to exist any Security
Interest upon any of its revenues, property or assets, whether now owned or
hereafter acquired, except as may be provided pursuant to the Collateral
Documents to which it is a party, or those permitted by SECTION 7.2.3 of the
Loan Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. LOAN DOCUMENT. This Guaranty is a Loan Document executed
pursuant to the Loan Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including, without limitation, ARTICLE X.
SECTION 4.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT.
In addition to, and not in limitation of, SECTION 2.7, this Guaranty shall be
binding upon each Guarantor and their successors, transferees and assigns and
shall inure to the benefit of and be enforceable by each Lender and each holder
of a Note and their respective successors, transferees and assigns (to the full
extent provided pursuant to SECTION 2.7); PROVIDED, HOWEVER, that each
Guarantor may not assign any of its obligations hereunder without the prior
written consent of all Lenders.
SECTION 4.3. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any of the Guarantors therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Agent and each Guarantor (subject to SECTION 10.1 of the Loan
Agreement), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 4.4. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing or by facsimile transmission and, if
to the Guarantors, mailed, given by facsimile transmission or delivered to them
in care of Shoney's, Inc. at 1727 Elm Hill Pike, Nashville, Tennessee 37210,
Attention of F.E. McDaniel, Jr. (facsimile number (615) 856-3599), and if to
the Agent, mailed, telexed, given by facsimile transmission or delivered to it,
addressed to it at 425 Lexington Avenue, New York, New York 10017, Attention:
____________ (facsimile number (212) 856-3599), or as to each party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section. Any
notice, if mailed and properly addressed with postage prepaid, shall be deemed
given when received; any notice, if transmitted by facsimile transmission or
delivery, shall be deemed given when received.
SECTION 4.5. NO WAIVER; REMEDIES. No failure on the part of the Agent or
any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or equity.
SECTION 4.6. RIGHT TO SET-OFF. Upon the occurrence and during the
continuance of any Default of the nature referred to in SECTION 8.1.4 of the
Loan Agreement or, with the consent of the Required Lenders, any Event of
Default, the Agent and each Lender are each hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to setoff and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Agent or such
Lender, as the case may be, to or for the credit or the account of any
Guarantor against any and all of the Guaranteed Obligations of the Guarantors
now or hereafter existing under this Guaranty, irrespective of whether the
Agent shall have made any demand under this Guaranty. The Agent agrees
promptly to notify the Guarantors after any such set-off and application made
by the Agent, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Agent or such
Lender, as the case may be, under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
Agent or any of the Lenders may have.
SECTION 4.7. CONTRIBUTION OBLIGATIONS AMONG GUARANTORS. In order to
provide for just and equitable contribution among the Guarantors, the
Guarantors agree, among themselves, that in the event any payment or
distribution is made by a Guarantor (a "FUNDING GUARANTOR") under this
Guaranty, such Funding Guarantor shall be entitled to a contribution from the
other Guarantors for all such payments or distributions, or damages and
expenses incurred by such Funding Guarantor in discharging any Guaranteed
Obligations. Each Guarantor which is not a Funding Guarantor shall be liable
to a Funding Guarantor with respect to any such payments or distributions, or
damages and expenses, in an aggregate amount equal to (a) the ratio of (i) the
net worth of such Guarantor, as determined in accordance with the most recent
balance sheet of such Guarantor at the time of such payment by a Funding
Guarantor, to (ii) the aggregate net worth of all Guarantors, similarly
determined, multiplied by (b) the amount which the Funding Guarantor paid on
account of the Guaranteed Obligations. In the event that at any time there
exists more than one Funding Guarantor, then payment from the other Guarantors
pursuant to this Section shall be in an aggregate amount equal in proportion to
the total amount of money paid for or on account of the Guaranteed Obligations
by the Funding Guarantors pursuant to this Guaranty. If the Funding Guarantor
is required to make any payment hereunder, such Funding Guarantor shall also be
entitled to a right of subrogation in respect of such payment from the other
Guarantors. Notwithstanding anything in this Section to the contrary, the
agreements in this Section are to establish the relative rights of contribution
of the Guarantors and shall not modify the joint and several nature of the
obligations of each Guarantor owed to the Agent for its benefit or for the
benefit of each of the Lenders or impair the rights of the Agent for its
benefit and the benefit of each of the Lenders to hold any of the Guarantors
liable for payment of the full amount of all Guaranteed Obligations.
SECTION 4.8. CONTINUING GUARANTY. This Guaranty is a continuing guaranty
and shall (a) remain in full force and effect until final payment in full of
the Guaranteed Obligations and all other amounts payable under this Guaranty,
subject to reinstatement in accordance with SECTION 2.4 hereof, (b) be jointly
and severally binding upon each of the Guarantors, their successors and
assigns, and (c) inure to the benefit of and be enforceable by the Agent for
its benefit and the benefit of the Lenders and their respective successors,
transferees and assigns.
SECTION 4.9. SEVERABILITY. Any provision of this Guaranty 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 of this Guaranty or affecting the
validity or enforceability of such provisions in any other jurisdiction.
SECTION 4.10. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.
(a) EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
IN PERSONAM JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION SITTING IN NEW YORK CITY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, AND EACH GUARANTOR
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE OR FEDERAL
COURT. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING. EACH GUARANTOR HEREBY
IRREVOCABLY APPOINTS CT CORPORATIONS SYSTEM (THE "PROCESS AGENT") WITH AN
OFFICE AT 1633 BROADWAY, NEW YORK NEW YORK 10019, AS ITS AGENT TO RECEIVE
ON BEHALF OF SUCH GUARANTOR AND ITS PROPERTY SERVICE OF COPIES OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING. EACH GUARANTOR MAY, WITH THE PRIOR WRITTEN
CONSENT OF THE AGENT, APPOINT ANY OTHER PERSON MAINTAINING AN OFFICE IN
NEW YORK CITY AS A SUCCESSOR PROCESS AGENT, AND UPON THE ACCEPTANCE OF THE
APPOINTMENT AS PROCESS AGENT BY A SUCCESSOR PROCESS AGENT, SUCH SUCCESSOR
PROCESS AGENT SHALL THEREUPON BECOME PROCESS AGENT HEREUNDER AND THE
RETIRING PROCESS AGENT SHALL BE DISCHARGED FROM ITS DUTIES AND OBLIGATIONS
HEREUNDER. SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
MADE BY MAILING (BY CERTIFIED MAIL) OR DELIVERING A COPY OF SUCH PROCESS
TO EACH OF THE GUARANTORS IN CARE OF THE PROCESS AGENT, AT THE PROCESS
AGENT'S ABOVE ADDRESS, AND EACH GUARANTOR HEREBY IRREVOCABLY AUTHORIZES
AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN
ALTERNATIVE METHOD OF SERVICE, EACH GUARANTOR ALSO IRREVOCABLY CONSENTS TO
THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING (BY CERTIFIED MAIL) OF COPIES OF SUCH PROCESS TO THE GUARANTORS AT
THEIR ADDRESSES SPECIFIED IN SECTION 4.4. EACH GUARANTOR AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN ACCORDANCE WITH APPLICABLE LAW IN OTHER JURISDICTIONS
BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE AGENT TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST EACH
GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTIONS.
(c) TO THE EXTENT THAT ANY OF THE GUARANTORS HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR TO ITS PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.
(d) BY EXECUTING THIS GUARANTY, EACH GUARANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY BROUGHT IN ANY OF THE
AFORESAID COURTS, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD ANY CLAIM THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
SECTION 4.11. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 4.12. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE LENDERS,
OR ANY OF THE GUARANTORS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT ENTERING INTO THIS GUARANTY.
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
TPI RESTAURANTS, INC.
By:
Title:
TPI ENTERTAINMENT, INC.
By:
Title:
TPI INSURANCE CORPORATION
By:
Title:
<PAGE>
EXHIBIT I
FINANCIAL CONDITION CERTIFICATE
SHONEY'S, INC.
Furnished pursuant to Section 5.1.5 of the Bridge Loan Credit Agreement,
dated as of May 3, 1996 (as amended, supplemented, amended and restated
or otherwise modified from time to time, the "LOAN AGREEMENT"), among
Shoney's, Inc., a Tennessee corporation (the "BORROWER"), Canadian
Imperial Bank of Commerce and various financial institutions which are,
or may from time to time become, parties thereto (the "LENDERS"), and
Canadian Imperial Bank of Commerce, New York Agency, as agent (in such
capacity, the "AGENT") for the Lenders.
THIS FINANCIAL CONDITION CERTIFICATE is delivered in connection with and
as a condition to the making of the First Draw under the Loan Agreement.
Capitalized terms used herein without definition have the meanings given
thereto in the Loan Agreement.
I hereby certify to the Agent and each Lender, in good faith and to the
best of my knowledge and belief, as follows:
1. Since December 17, 1992, I have been the duly qualified and acting
Treasurer of the Borrower, and at all pertinent times mentioned herein I have
been employed in positions involving responsibility for the management of
certain of the financial affairs of the Borrower and have participated in the
preparation of the Borrower's financial statements. I have, together with
other officers of the Borrower, acted on behalf of the Borrower in connection
with the Loan Agreement and the consummation of the transactions contemplated
thereby.
2. I have carefully reviewed the contents of this Certificate, and I
have conferred with counsel for the Borrower for the purpose of discussing the
meaning of its contents.
3. In connection with preparing for the consummation of the
transactions contemplated by the Loan Agreement, I have assisted in the
preparation of and I have reviewed the projections set forth in the Memorandum.
The projections set forth in the Memorandum were prepared on the basis of
information and estimates available on the date thereof, and I have no reason
to believe that, if such statements were to be prepared today, they would be
different in any materially adverse way.
4. In connection with the issuance of this Certificate and the
preparation of the projections set forth in the Memorandum, I have assisted in
the preparation of and have reviewed the financial statements described in
Section 6.4 of the Loan Agreement as having been previously delivered to the
Lenders. I have no reason to believe that the assumptions upon which the
projections set forth in the Memorandum are based are not reasonable, subject
to the recognition by the Lenders, however, that (x) projections as to future
events are not to be viewed as fact, and (y) because certain assumptions may
not materialize, either partially or wholly, and because unanticipated events
may occur and circumstances may arise subsequent to the date of such
projections, actual results during the period or periods covered by any
projections may differ from the projected results. I believe that the
projections set forth in the Memorandum provide reasonable estimations of
future performance, subject, as stated above, to the uncertainty and
approximation inherent in any projections.
5. I have made such reviews, investigations and inquiries as I have
deemed necessary or prudent therefor.
Based upon the foregoing, I have concluded, in good faith and to the best
of my knowledge and belief, that as of the Closing Date and after giving effect
to all transactions comprising and incidental to and contemplated by the Loan
Agreement and the consummation of the transactions contemplated by the Loan
Agreement:
A. the fair salable value of the Borrower's assets exceeds the
total amount of liabilities (including contingent (including full
utilization of the Commitments on the Closing Date under the Loan
Agreement), subordinated, unmatured and unliquidated liabilities, in
each case valued at the probable liability of the Borrower with
respect thereto) of the Borrower by more than $100,000,000, and,
therefore, the Borrower is not "insolvent";
B. the present fair salable value of the assets of the Borrower
is not less than the amount that will be required to pay its
probable liabilities as they become absolute and matured;
C. the Borrower will be able to realize upon its assets and will
have sufficient cash flow from operations to enable it to pay its
debts, other liabilities and contingent obligations as they mature
in the ordinary course of business;
D. the Borrower does not have an unreasonably small capital with
which to engage in its anticipated businesses; in reaching this
conclusion, I understand that "unreasonably small capital" depends
upon the nature of the particular business or businesses conducted
or to be conducted, and I have reached my conclusions based on the
needs and anticipated needs for capital of the business conducted or
anticipated to be conducted by the Borrower; and
E. the Borrower has not incurred any obligation under the Loan
Agreement or made any conveyance pursuant to or in connection with
the Loan Agreement, with actual intent to hinder, delay or defraud
either present or future creditors of the Borrower.
For purposes of this Certificate, the "fair salable value" of the
Borrower's assets and investments has been determined on the basis of the
amount which I have concluded, in good faith and to the best of my knowledge
and belief, may be realized within a reasonable time, either through collection
or sale of such investments and other assets at the regular market value,
conceiving the latter as the amount which could be obtained for the property in
question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
I understand that the Agent and the Lenders are relying on the truth and
accuracy of the foregoing in connection with their entering into the Loan
Agreement and consummating the transactions contemplated thereby.
I represent the foregoing information to be, in good faith and to the
best of my knowledge and belief, true and correct and have executed this
Certificate this 3rd day of May, 1996.
F.E. McDANIEL, JR.,
Treasurer
171807.12 <<Date>>
<PAGE>
EXHIBIT J
LENDER ASSIGNMENT AGREEMENT
To: Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
To: Canadian Imperial Bank of Commerce,
as Agent
425 Lexington Avenue
New York, New York 10017
SHONEY'S, INC.
Gentlemen and Ladies:
We refer to clause (d) of Section 10.10.1 of the Bridge Loan Credit
Agreement, dated as of May 3, 1996 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "LOAN AGREEMENT"), among
Shoney's, Inc., a Tennessee corporation (the "BORROWER"), the various financial
institutions which are, or may from time to time become, parties thereto (the
"LENDERS") and Canadian Imperial Bank of Commerce, New York Agency, as agent
(in such capacity, the "AGENT") for the Lenders. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Loan Agreement.
This agreement is delivered to you pursuant to clause (d) of Section
10.10.1 of the Loan Agreement and also constitutes notice to each of you,
pursuant to clause (c) of Section 10.10.1 of the Loan Agreement, of the
assignment and delegation to _______________ (the "ASSIGNEE") of ___% of the
Loans [and Commitment] of _____________ (the "ASSIGNOR") outstanding under the
Loan Agreement on the date hereof, and of a like percent of all of the
Assignor's rights and obligations under all of the Collateral Documents and
other Loan Documents. After giving effect to the foregoing assignment and
delegation, the Assignor's and the Assignee's Percentages for the purposes of
the Loan Agreement are set forth opposite such Person's name on the signature
pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to
Loans assigned.]
The Assignee hereby acknowledges and confirms that it has received a copy
of the Loan Agreement and the exhibits related thereto, together with copies of
the documents which were required to be delivered under the Loan Agreement as a
condition to the making of the Loans thereunder. THE ASSIGNEE FURTHER CONFIRMS
AND AGREES THAT IN BECOMING A LENDER AND IN MAKING ITS COMMITMENT AND LOANS
UNDER THE LOAN AGREEMENT, SUCH ACTIONS HAVE AND WILL BE MADE WITHOUT RECOURSE
TO, OR REPRESENTATION OR WARRANTY BY, THE AGENT OR THE ASSIGNOR.
Except as otherwise provided in the Loan Agreement, effective as of the
date of acceptance hereof by the Agent
(a) the Assignee
(i) shall be deemed automatically to have become a party to
the Loan Agreement, have all the rights and obligations of a
"Lender" under the Loan Agreement and the other Loan Documents as if
it were an original signatory thereto to the extent specified in the
second paragraph hereof, and expressly confirms and ratifies the
provisions of Article IX of the Loan Agreement;
(ii) agrees to be bound by the terms and conditions set forth
in the Loan Agreement and the other Loan Documents as if it were an
original signatory thereto; and
(b) the Assignor shall be released from its obligations under the
Loan Agreement and the other Loan Documents to the extent specified in
the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in Section 10.10.1 of the
Loan Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitment and requests the
Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
LIBOR Office:
Telephone:
Facsimile:
Telex (Answerback):
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by Section 4.6 (if
so required) of the Loan Agreement no later than the date of acceptance hereof
by the Agent.
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same agreement.
ADJUSTED PERCENTAGE [ASSIGNOR]
[Commitment
and]
Loans: __%
By:_______________________
Title:
PERCENTAGE [ASSIGNEE]
[Commitment
and]
Loans: __%
By:_______________________
Title:
171807.12 <<Date>>
<PAGE>
Accepted and Acknowledged
this __ day of _______, 19
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
By:________________________
Title:
SHONEY'S, INC.
By:_______________________
Title:
171807.12 <<Date>>
<PAGE>
EXHIBIT K
TUKE YOPP & SWEENEY
ATTORNEYS
NATIONSBANK PLAZA, SUITE 1100
414 UNION STREET
NASHVILLE, TENNESSEE 37219
TELEPHONE (615) 313-3300
FACSIMILE (615) 313-3310
May 3, 1996
Each of the Lenders that is a
party to the Credit Agreement
referenced below
Canadian Imperial Bank of Commerce,
acting through its New York Agency,
as Agent for the Lenders
425 Lexington Avenue
New York, New York 10017
Re: Shoney's, Inc.
Ladies and Gentlemen:
This opinion letter is furnished to you pursuant to SECTION 5.2.8.(C) of
the Bridge Loan Credit Agreement, dated as of the date hereof (the "CREDIT
AGREEMENT"), by and among Shoney's Inc., a Tennessee corporation (the
"Borrower"), Canadian Imperial Bank of Commerce and various other financial
institutions now or hereafter parties to the Credit Agreement as lenders
(collectively, the "Lenders"), and Canadian Imperial Bank of Commerce, a
Canadian chartered bank acting through its New York Agency, as Agent for the
Lenders (in such capacity, the "Agent"). Capitalized terms that are used herein
and are not otherwise defined herein shall have the meanings ascribed to them
in the Credit Agreement.
We have acted as special counsel to the Borrower in connection with the
preparation, execution and delivery of the Loan Documents (as hereinafter
defined) relating to the Tennessee Collateral (as hereinafter defined) located
in the State of Tennessee (the "State").
In connection with this opinion letter, we have investigated such
questions of law and examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents and records, in each case as
we have deemed necessary or appropriate for the purposes of the opinions
expressed herein. Our examination has included the following documents:
(a) an execution copy of the Credit Agreement;
<PAGE>
May 3, 1996
Page 2
(b) an execution copy of the Master Mortgage Indenture and Deed of
Trust With Assignment of Leases and Rents, Security Agreement and Fixture
Filing, dated as of the date hereof (the "Deed of Trust"), executed by
the Borrower in favor of the Trustee named therein for the benefit of the
Agent and covering only the real property interest of the Borrower in the
Real Estate, Improvements, Occupancy Leases, After Acquired Property and
Premises (each such term being used herein as it is defined in the Deed
of Trust) and in the fixtures described in the Deed of Trust (the
"FIXTURE PROPERTY") that are located in the State. For purposes of this
opinion letter, the term "TENNESSEE COLLATERAL" shall include the Fixture
Property, Real Estate, Improvements, Occupancy Leases, After Acquired
Property and Premises located in the State but only to the extent that
the properties, rights or interests included within the definitions of
such terms constitute real property under the laws of the State. We
understand that a counterpart of the Deed of Trust will be recorded in
the offices in the State listed on SCHEDULE 1 attached hereto and made a
part hereof (individually, a "RECORDING OFFICE", and collectively, the
"RECORDING OFFICES"); and
(c) execution copies of the financing statements on Form UCC-1
(individually, a "FIXTURE FILING", and collectively, the "FIXTURE
FILINGS") naming the Borrower, as debtor, and the Agent, as secured
party, covering the Fixture Property and to be filed in the Recording
Offices.
A counterpart of the Deed of Trust to be recorded in a Recording Office is
sometimes referred to herein as a "TENNESSEE DEED OF TRUST" and all such
counterparts of the Deed of Trust to be recorded in the Recording Offices are
sometimes collectively referred to herein as the "TENNESSEE DEEDS OF TRUST".
The Credit Agreement, the Tennessee Deeds of Trust and the Fixture Filings are
sometimes collectively referred to herein as the "LOAN DOCUMENTS".
In stating the opinions expressed herein, we have assumed that:
(a) Each party to the Loan Documents has full power and authority
to execute, deliver and perform such Loan Documents, and each party to
the Loan Documents has duly authorized the execution, delivery and
performance of such Loan Documents by all necessary action;
(b) The Loan Documents have been duly executed and delivered by
each party thereto;
<PAGE>
May 3, 1996
Page 3
(c) Each Loan Document has been executed and delivered, in all
material respects, in the respective forms submitted to us as the
execution forms thereof;
(d) The parties to the Loan Documents (other than the Borrower) are
corporations (or banking associations) duly incorporated (or organized)
and validly existing and in good standing under the laws of their
respective jurisdictions of incorporation (or organization) and under the
laws of the State if required to be qualified as a foreign corporation
(or banking association) in the State; and
(e) All documents submitted to us as originals are authentic, and
all documents submitted to us as certified, conformed or photostatic
copies conform to authentic original documents.
As to various questions of fact relevant to the opinions expressed
herein, we have assumed and relied upon the accuracy of the factual content of
representations and warranties contained in the Loan Documents and statements,
written information and certificates of public officials, of representatives of
the Borrower and its Subsidiaries and of others deemed by us to be appropriate.
We have made no examination of the condition of title to any of the Tennessee
Collateral or other property affected by any of the Loan Documents and,
accordingly, we express no opinion as to the condition of title of or to any
such Tennessee Collateral or other property or as to the priority of any lien
or security interest created by the Loan Documents.
Based upon the foregoing and such legal considerations as we have deemed
necessary, and subject to the limitations, assumptions and qualifications set
forth in this opinion letter, we are of the opinion that:
1. The Borrower is duly incorporated and in good standing under the
laws of the State. In accordance with T.C.A. <section> 48-11309(c), a Tennessee
Certificate of Existence "may be relied upon as conclusive evidence that the
domestic or foreign corporation is in existence or is authorized to transact
business" in the State and "is in good standing." We have relied upon this
statute in rendering this opinion.
2. The execution, delivery and performance of the Loan Documents by the
Borrower, and the recordation of the Tennessee Deeds of Trust and the filing of
the Fixture Filings (a) do not conflict with, contravene or violate any laws,
rules, regulations, ordinances and orders of any governmental authority
(collectively,
<PAGE>
May 3, 1996
Page 4
the "Requirements of Law") of the State that are applicable to, or binding
upon, the Borrower or the Tennessee Collateral, and (b) do not require any
license, permit or authorization from, exemption by, registration with, consent
or approval of, or notice to, or other action to, with or by, any governmental
authority, except for the recordation of the Tennessee Deeds of Trust and the
filing of the Fixture Filings in the appropriate Recording Offices.
3. The description of the Tennessee Collateral contained in the granting
clauses of the Tennessee Deeds of Trust, including the legal descriptions of
the Land (as defined in the Tennessee Deeds of Trust) attached to the Tennessee
Deeds of Trust to be recorded, is legally sufficient under the laws of the
State for the purpose of subjecting such Tennessee Collateral to the lien of
the Tennessee Deeds of Trust. The Tennessee Deeds of Trust are in proper form
for the creation of a deed of trust lien against all of the Borrower's real
property interest in the Tennessee Collateral and for recording in the land
records of the Recording Offices.
4. No deed or mortgage recording, conveyance, registration, stamp or
other similar tax or fee will be due upon the execution, delivery, recordation,
performance or enforcement of the Tennessee Deeds of Trust or the Fixture
Filings, except for the tax imposed by T.C.A. <section> 67-4-409(b) in the
amount of 11 1/2 <cent> per one hundred dollars or major fraction thereof of
principal indebtedness (the first $2,000 of principal indebtedness is exempt),
and a $1.00 local filing fee and per page charges imposed by the applicable
Recording Office with respect to each Tennessee Deed of Trust, and a $10.00
filing fee with respect to each Fixture Filing. We understand and assume that
the Borrower, after application of the proration formula set forth in T.C.A.
<section> 67-4-409(b)(7), is paying tax under T.C.A. <section> 67-4-409(b) on a
principal indebtedness of $44,000,000.
5. Upon the execution, delivery and due recordation of the Tennessee
Deeds of Trust in the Recording Offices and the payment of the taxes, fees and
charges described in Paragraph 4 above, the Tennessee Deeds of Trust shall
constitute and shall be effective to create, under the laws of the State, a
valid deed of trust lien of record in the principal amount referred to in the
Tennessee Deeds of Trust as security for the Liabilities (as defined in the
Tennessee Deeds of Trust), against all real property interest of the Borrower
in the Tennessee Collateral. No other recordation or filing need be made, and
no other action need be taken, in order to establish or maintain the
effectiveness of the deed of trust lien of the Tennessee Deeds of Trust as so
created against the real property interest of the Borrower in the Tennessee
Collateral.
<PAGE>
May 3, 1996
Page 5
6. The Tennessee Deeds of Trust contain the terms and provisions
necessary to enable the Trustee named therein and the Agent, on behalf of the
Lenders, following a default under the Tennessee Deeds of Trust, to exercise
those remedies which are customarily available to the holder of a real estate
lien under the laws of the State.
7. The exercise of the power of sale remedy under the Tennessee Deeds
of Trust by nonjudicial action will not, in and of itself, restrict, affect or
impair the Borrower's liability with respect to the indebtedness secured
thereby, or any other indebtedness of the Borrower under the Credit Agreement,
or the Agent's rights or remedies under the Credit Agreement, or the Agent's
rights and remedies with respect to the foreclosure or enforcement of any other
security interests or liens securing any such indebtedness existing under any
other instrument, and the laws of the State do not require a lienholder to
elect to pursue its remedies against either mortgaged real property or personal
property or directly against a debtor where such lienholder holds security
interests in and/or liens on both real property and personal property of a
debtor except where the doctrine of marshalling applies.
8. The Fixture Filings are in appropriate form for filing and, upon the
filing of the Fixture Filings in the Recording Offices and the payment of the
fees and charges required in connection with such filing, the Agent's security
interest in all right, title and interest of the Borrower in and to the Fixture
Property shall be fully perfected, subject to the qualifications set forth
below:
(a) perfection of the Agent's security interest in proceeds will be
limited to the extent provided in Section 9-306 of the Uniform Commercial
Code as adopted in the State;
(b) a Fixture Filing is effective for five (5) years and sixty (60)
days from the date of the filing thereof;
(c) the security interest of the Agent will cease to be perfected
(i) as to any collateral thereunder acquired by the Borrower more than
four (4) months after the Borrower changes its name, identity or
organizational structure so as to make the then filed Fixture Filings
seriously misleading, unless new appropriate financing statements are
filed before the expiration of such fourmonth period; and (ii) as to
collateral thereunder
<PAGE>
May 3, 1996
Page 6
otherwise disposed of by the Borrower if such disposition is authorized
by the Agent; and
(d) in the case of property that becomes Fixture Property after the
date hereof, Section 552 of the United States Bankruptcy Code limits the
extent to which property acquired by a debtor after the commencement of a
case under the United States Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor
before the commencement of such case.
9. So long as advances under the Tennessee Deeds of Trust are
obligatory advances, the priority of the Tennessee Deed of Trust in a
particular county of the State for such obligatory future advances is
determined by the date on which such Tennessee Deed of Trust is recorded in the
Recording Office for such county.
10. Under the laws of the State, except for the Tennessee Hazardous
Waste Management Act of 1983, T.C.A. <section><section> 68-212-201 ET seq.,
there is no statutory or regulatory lien in favor of any governmental entity
for (a) liability under the State environmental laws or regulations, or (b)
damages (including natural resource damages) arising from or costs incurred by
such governmental entity in response to the release of a hazardous or toxic
waste, substance, pollutant or other substance, excluding radiation and
radiation sources, into the environment which, if not of record on the date of
recording of the Tennessee Deed of Trust in a particular county would have
priority over such Tennessee Deed of Trust in such county.
11. Under the laws of the State and local jurisdictions thereunder,
there are no statutory or regulatory requirements relating to the transfer of
ownership, transfer of operational management, sale or closure of premises upon
which there are hazardous or toxic wastes, or upon which there are certain
facilities which indicate a likelihood of such wastes, which require
notification of the State or the local jurisdiction of such transfer, sale or
closure or require certification that there has been no discharge of toxic or
hazardous wastes or other substances, or which, in the event of a discharge,
impose liability on a mortgagee or beneficiary under a deed of trust for the
undertaking of remedial measures to alleviate environmental contamination
resulting from such discharge or impose liability on any other party for such
undertaking, except the Tennessee Hazardous Waste Management Act of 1977,
T.C.A. <section><section> 68-212-101, ET seq., the Tennessee Hazardous Waste
Management Act of 1983, T.C.A. <section><section> 68-212201, ET seq., the Water
Quality Control Act of 1977, T.C.A.
<PAGE>
May 3, 1996
Page 7
<section><section> 69-3-101, ET seq., the Sanitary Landfill Areas Act, T.C.A.
<section><section> 68-213-101, ET seq., the Tennessee Solid Waste Disposal Act,
T.C.A. <section><section> 68-211-101, et seq., the Solid Waste Management Act
of 1991, T.C.A. <section><section> 68-211-801, et seq., the Tennessee Petroleum
Underground Storage Tank Act, <section><section> 68-215-101, ET seq., the
Tennessee Hazardous Waste Reduction Act of 1990, T.C.A. <section><section>
68-212-301, ET seq., the Tennessee Drycleaner's Environmental Response Act,
T.C.A. <section><section> 68-217-101, et seq., and T.C.A. <section><section>
55-10-301, et seq. (relating to accidents, arrests, crimes, and penalties in
connection with motor and other vehicles). None of the foregoing statutes
expressly imposes liability on a mortgagee or beneficiary under a deed of trust
prior to acquisition of title to the contaminated property by deed in lieu of
foreclosure or exercise of the power of sale under its deed of trust, or prior
to operation of the contaminated property, but, except for the Tennessee
Hazardous Waste Management Act of 1983, T.C.A. <section> 68-212-202, none
expressly exempts mortgagees or beneficiaries under deeds of trust from
liability. We call your attention to the fact that the United States Court of
Appeals for the Eleventh Circuit has construed similar federal laws to impose
liability on a mortgagee that has the power to participate in the management of
its borrower's business or operations regardless of whether such mortgagee has
acquired title to the contaminated property.
12. The Credit Agreement and the Tennessee Deeds of Trust contain
provisions with respect to the choice of law applicable to govern the
provisions thereof. Each such provision states that New York law is wholly or
partially to govern the instrument in which such provision appears. In this
connection T.C.A. <section> 47-14-119 provides as follows:
In any transaction otherwise subject to this chapter which is not
subject to the disclosure requirements of the Federal Consumer Credit
Protection Act, where the transaction bears a reasonable relationship
to this state and also to another state or nation, the parties may
agree in the written contract evidencing such transaction that the
laws of this state or of any other such state or nation shall govern
their rights and duties with respect to interest, loan charges,
commitment fees, and brokerage commissions.
Tennessee courts have recognized that parties ordinarily are free to
contract that the law of some jurisdiction other than the law of the place of
making the contract shall govern their relationship. In previous cases, such a
stipulation has been sustained when made in good faith and when the other state
had some direct and relevant connection with the transaction. The choice of
<PAGE>
May 3, 1996
Page 8
its law must not be a sham or subterfuge and the application of its law must
not be contrary to a fundamental policy of the State. We have not been advised,
and are not otherwise aware, of any facts which indicate that any party to the
Credit Agreement or the Tennessee Deeds of Trust containing such choice of law
provision did not enter into the transactions contemplated thereby in good
faith or that any party to the Credit Agreement or the Tennessee Deeds of Trust
containing such choice of law provision engaged in fraud or chicanery, or
misled any other party to such transactions. We believe that a Tennessee court
(or federal court of the United States applying the laws of the State),
properly applying the general choice of law rules and principles applied by
such courts as a matter of Tennessee law, would uphold and enforce the choice
of law provisions in the Credit Agreement and the Tennessee Deeds of Trust.
13. Under the laws of the State, except as described below, there is no
requirement that the Agent or any of the Lenders qualify to do business in the
State, comply with the provisions of any foreign lender statute or pay any
state or local tax in the State in its capacity as beneficiary under a deed of
trust or secured party in order to carry out the transactions contemplated by,
receive the benefits provided by, or enforce the provisions of, the Tennessee
Deeds of Trust. The provisions of T.C.A. <section><section> 67-4801, ET seq.
and <section><section> 67-4-901, ET seq., extend the coverage of the Tennessee
Excise Tax Law and Franchise Tax Law to include the activities of nonresident
lenders doing business in the State or with residents of the State. Therefore,
the Agent and the Lenders may be taxed under such laws if their activities in
the State fall within the terms of such laws. Even if the Agent or the Lenders
are not taxable under such laws solely because of their involvement in the
transactions contemplated by the Loan Documents, if the Agent or the Lenders
have additional contacts in the State beyond those provided for in the Loan
Documents, the Agent and/or the Lenders (i) may be deemed to be doing business
in the State and would, in such event, be required to register under the
provisions of T.C.A. <section><section> 48-25-101, et seq., to maintain suit in
any court in the State, or (ii) may be subject to taxation.
14. Under the laws of the State, there is no prohibition on the
acquisition of title to real property or personal property situated in the
State by the Agent on account of its status as an entity organized under the
laws of the nation of Canada.
The opinions set forth above are subject to the following exceptions and
qualifications:
<PAGE>
May 3, 1996
Page 9
A. Our opinions expressed herein are limited to the laws of the State
and we express no opinion as to any other laws or regulations.
B. Our opinions expressed herein are limited by (1) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws of general application affecting the rights of creditors,
including, without limitation, fraudulent conveyance laws and judicially
developed doctrines relevant to any of the foregoing laws, and (2) applicable
laws of the State and other principles of equity which may restrict the
enforcement of certain remedies provided therein but which, in our opinion, do
not affect the validity of the Loan Documents and will not interfere with the
ultimate practical realization of the rights and benefits of the security
intended to be provided therein or thereby.
C. We express no opinion as to the validity, binding effect or
enforceability of any provision in the Loan Documents that purports to provide
for a security interest in the proceeds of any collateral subject thereto.
Furthermore, we express no opinion as to the validity, binding effect,
enforceability or perfection of any liens or security interests insofar as they
relate to interests in or claims in or under any policy of insurance or any
deposit account.
D. In rendering our opinions expressed herein, we have assumed that the
Borrower is not insolvent or unable to meet its debts as they mature as of the
date hereof and does not as of the date hereof have unreasonably small capital
with which to engage in its businesses. We understand that the Agent and the
Lenders have satisfied themselves as to the Borrower's solvency, ability to
meet its debts as they mature, and capital position as of the date hereof on
the basis of, among other things, the financial information contained in the
financial statements described in SECTION 6.4. of the Credit Agreement and the
certificate referred to in SECTION 5.1.5. of the Credit Agreement. We express
no opinion as to the Borrower's ability to repay or otherwise satisfy the
Liabilities (such term being used herein as defined in the Tennessee Deeds of
Trust).
E. We express no opinion as to the enforceability of any waiver under
the Loan Documents or any consent thereunder relating to the rights of the
Borrower or duties owing to it, existing as a matter of law, except to the
extent that the Borrower may so waive or consent as a matter of law.
<PAGE>
May 3 1996
Page 10
F. The opinions expressed herein are as of the date hereof. We assume
no obligation to update or supplement the opinions expressed herein to reflect
any facts or circumstances that may hereafter come to our attention or any
changes in law that may hereafter occur.
G. This letter is strictly limited to those matters expressly addressed
herein. We express no opinion as to any matter not specifically stated to be
and numbered as an opinion.
H. Pursuant to T.C.A. <section> 66-26-116, upon registration in a
county of the State, the assignment of leases and rents contained in the
Tennessee Deeds of Trust shall be perfected in such county as to the Borrower
and all third parties without the necessity of furnishing notice to the
Borrower or any lessee under an Occupancy Lease, obtaining possession of the
Tennessee Collateral, impounding the rents from the Tennessee Collateral,
securing the appointment of a receiver, or taking any other affirmative action.
We express no opinion as to the continuation of a lien in proceeds from rents
after collection of those proceeds by the Borrower. The law of the State is not
clear as to, and we express no opinion as to, the extent to which a lien on
rents follows the proceeds of such rents. The provisions of the Tennessee Deeds
of Trust providing for an absolute assignment of leases and rents are not
enforceable under Tennessee law. It is our opinion, however, that the Tennessee
Deeds of Trust are enforceable as a collateral assignment and not as an
absolute assignment of leases and rents.
I. The scope and enforceability of the liens and security interests in
the Tennessee Collateral granted to the Agent are subject to claims for wages,
salaries, and other compensation, and liens (including, without limitation,
mechanics', workmen's, repairmen's, materialmen's, carriers', and other like
liens) arising in favor of suppliers of material or services furnishing such
materials or services with respect to the Tennessee Collateral.
J. For purposes of the opinions expressed herein, we have assumed that
(i) the descriptions of the Tennessee Collateral in the Fixture Filings and the
Tennessee Deeds of Trust, including, without limitation, the metes and bounds
descriptions of the Land included therein, accurately describe such Tennessee
Collateral subject thereto, (ii) such Tennessee Collateral is owned by the
Borrower, (iii) the Tennessee Deeds of Trust and the Fixture Filings will be
properly filed, recorded and/or indexed, as appropriate, and (iv) the Tennessee
Deeds of Trust and the Fixture Filings will not be terminated, released and/or
amended in a manner that might jeopardize their effectiveness.
<PAGE>
May 3, 1996
Page 11
K. The opinions expressed herein are solely for the benefit of the
Agent and the Lenders now or hereafter parties to the Credit Agreement and may
not be relied on in any manner or for any purpose by any other person or
entity, without our express written consent.
L. We express no opinion as to any provision of the Credit Agreement
insofar as it provides that any person purchasing a participation from another
person pursuant thereto may exercise set-off or similar rights with respect to
such participation or that the Agent or any other person may exercise set-off
rights other than in accordance with applicable law.
M. We express no opinion as to the effect of the compliance or
noncompliance of any of the Lenders or the Agent with any state or federal laws
or regulations applicable because of the legal or regulatory status or the
nature of the business of any of them or their participation in the Loan
Documents.
N. In rendering the opinions expressed herein, we have assumed that the
Agent and the Lenders at all times will act equitably and in good faith in a
commercially reasonable manner and in compliance with all applicable laws and
regulations. We have assumed that the Loan Documents will be enforced according
to their terms.
O. We express no opinion as to the value of, or as to the right, title
and interest of the Borrower in, any property.
P. We express no opinion as to the enforceability of any provision in
the Loan Documents that purports to provide for or effect a confession of
judgment on the part of the Borrower in any amount.
Q. We express no opinion as to (i) the creation, enforceability,
perfection or non-perfection of liens on or security interests in any
equipment, chattel paper, contract rights, general intangibles, inventory or
other personal property, or (ii) the priority of the liens or security
interests created or perfected by the Loan Documents. We further have assumed
that none of the Tennessee Collateral subject to the Tennessee Deeds of Trust
or the Fixture Filings consists or will consist of consumer goods, farm
products, crops, timber, minerals, and the like (including oil and gas) or
accounts resulting from the sale thereof, beneficial interests in a trust or a
decedent's estate, letters of credit or items that are subject to (A) a statute
or treaty of the United States which provides for a national or international
registration or a national or international certificate of title for the
perfection of a security interest therein or a statute or treaty of
<PAGE>
May 3, 1996
Page 12
the United States or any other jurisdiction or (B) a certificate of title
statute of any jurisdiction.
R. With respect to the Tennessee privilege tax imposed by T.C.A.
<section> 67-4-409(b), T.C.A. <section> 67-4-409(b)(7) provides that:
Where any part of the property standing as security for the payment
of a debt is located part within and part without the state, only
such proportion of the amount covered by the instrument shall be
taxed as the value of the property within the state bears to the
whole property. "Value" means only that value which the property
would command at a fair and voluntary sale. No subsequent change in
the value of either the property inside or the property outside the
state shall result in the imposition of additional tax.
In addition, T.C.A. <section><section> 67-4-409 (b)(10), 67-4-409(b)(11)
and 67-4-409(b)(13) provide that:
(10) (A) Nonpayment or underpayment of tax on an indebtedness, or
failure timely to pay tax on an increase in indebtedness, shall not
affect or impair the effectiveness, validity, priority, or
enforceability of the security interest or lien created or evidenced
by the instrument, it being declared the legislative intent that the
effectiveness, validity, priority, and enforceability of security
interest and liens are governed solely by law applicable thereto and
not by this title.
(B) Such nonpayment, underpayment, or failure to pay, until
cured, shall result in the imposition of a tax lien, in the amount of
any tax and penalties unpaid and owing under this subsection, in
favor of the department of revenue as described in subdivision
(b)(11), shall subject the holder of the indebtedness to a penalty as
described in subdivision (b)(12), and shall subject the holder of the
indebtedness to the disability described in subdivision (b)(13).
* * *
(11) The tax lien described in subdivision (b)(10) shall arise
at the time the tax is due and shall at that time attach to any
property, either real or personal, tangible or intangible, subject to
the instrument until:
<PAGE>
May 3, 1996
Page 13
(A) The lien or security interest of the instrument is released
with respect to any property; or
(B) Any property is transferred in settlement or realization of
the lien or security interest, whereupon the tax lien shall
automatically be released from such property and attach to any
proceeds thereof. The department may not levy upon or sell any
property subject to the tax lien until notice of the tax lien has
been recorded pursuant to <section> 67-1-1403, but notwithstanding
such section, the department otherwise shall not be required to
record any notice of the tax lien. The tax lien shall be superior to
all liens and security interest under Tennessee law except:
(i) Those enumerated in <section> 67-11403(c)(2)-(4) that were
recorded, filed or perfected, respectively, prior to attachment of
the tax lien; and
(ii) County and municipal ad valorem taxes.
* * *
(13) The holder of an indebtedness evidenced or secured by an
instrument upon the recording or filing of which tax is owing
hereunder may not maintain an action on such indebtedness, other than
an action limited to the enforcement of the holder's security
interest or lien, against the debtor until such nonpayment is cured.
If such an action is commenced and a cure is not effected within a
time limit set by the court, the debtor may obtain a dismissal of
such action, without prejudice to refiling in the event of a
subsequent cure of nonpayment. Notwithstanding the terms of the
instrument, if a cure is not effected until after the filing of a
motion or pleading in which the holder's noncompliance with this
subsection is raised, the holder may not thereafter charge the debtor
with the costs of curing such noncompliance.
Insofar as opinions expressed herein relate to enforceability of:
<PAGE>
May 3, 1996
Page 14
(i) any lien or security interest created under the Tennessee
Deeds of Trust or the Fixture Filings (to the extent that,
notwithstanding the language of T.C.A. <section> 67-4-409(b)(10),
such lien or security interest is effective, valid, entitled to
priority, or enforceable only to the extent that the tax due under
T.C.A. <section> 67-4-409(b) has been paid), and
(ii) the indebtedness evidenced by the Credit Agreement or the
Notes secured by the Tennessee Deeds of Trust and the Fixture
Filings,
we have assumed that the value of the Tennessee Collateral set forth in the
Affidavit of the representative of the Agent attached to the Tennessee Deeds of
Trust was calculated in accordance with the definition of "value" contained in
T.C.A. <section> 67-4-409(b)(7).
To the extent that our assumption set forth in the preceding sentence
were held to be incorrect and an additional privilege tax were determined to be
due with respect to the liens evidenced by the Tennessee Deeds of Trust or the
Fixture Filings, the provisions of T.C.A. <section><section> 67-4-409(b)(12)
and (13) provide that, upon payment of an amount equal to the sum of (i) the
unpaid tax due and (ii) a penalty in the amount of $250.00 or double the amount
of unpaid tax due, whichever is greater, the disability effected by T.C.A.
<section> 67-4-409(b)(13) would be removed.
With respect to determining the amount of privilege tax due pursuant to
T.C.A. <section> 67-4-409(b), we call your attention to the decision of the
Tennessee Supreme Court in THE CONNECTICUT BANK AND TRUST COMPANY, N.A. V.
TENNESSEE DEPARTMENT OF REVENUE, 769 S.W.2d 205 (Teen. 1989), which interprets
the alternative tax determinations available under T.C.A. <section>
67-4-409(b). The CONNECTICUT BANK decision interpreted the provisions of T.C.A.
<section> 67-4-409(b) as they were effective prior to the addition of T.C.A.
<section> 67-4-409(b)(10) and the amendment to T.C.A. <section> 67-4-409(b)(5)
in 1987 by Ch. 275, Tennessee Public Acts (1987). The decision (quoting an
earlier Tennessee Court of Appeals decision) concludes that it is a "sound
statement of the law" that "'the effectiveness of any financing statement as an
instrument of priority is limited in that respect to the amount upon which the
privilege tax is paid.'" 769 S.W.2d at 208. The Court further held that:
[I]n a transaction involving collateral located in Tennessee and
collateral located elsewhere, the party submitting the instrument for
recordation may either (1) pay mortgage tax upon the full value of
the collateral in
<PAGE>
May 3 , 1996
Page 15
Tennessee, pursuant to T.C.A. <section> 67-4-409(b)(5), AND THUS
ESTABLISH PRIORITY AS TO THE FULL VALUE OF THAT COLLATERAL; or (2)
pay mortgage tax only upon the amount determined by the proration
formula of T.C.A. <section> 67-4-409(b)(7), AND THUS ESTABLISH
PRIORITY ONLY TO THAT EXTENT.
769 S.W.2d at 206 (emphasis added). The addition of T.C.A. <section>
67-4-409(b)(10) has negated the impairment of security interest problem
addressed in the CONNECTICUT BANK decision set forth above, at least as it
relates to an impairment occasioned by an underpayment of privilege tax due.
Thus, the precedential effect of the Court's holding in this case is uncertain.
In the absence of clarifying authority, it is our view that the most reasonable
and probable interpretation of the CONNECTICUT BANK case, as applied to T.C.A.
<section> 67-4-409(b) following the 1987 amendments thereto, is that the amount
of privilege tax in a multi-state collateral financing transaction can be
correctly determined by either (a) irrespective of the proration formula,
declaring the principal amount of indebtedness to equal the value of the
collateral "located in Tennessee" and multiplying such valuation amount by
eleven and one-half cents (11 1/2 <cent>) per $100.00 (or major fraction
thereof) of principal amount of indebtedness; or (b) applying the proration
formula of T.C.A. <section> 67-4-409(b)(7) in accordance with its terms. We
believe the proration formula approach is sound in light of the language of
T.C.A. <section> 67-4-409(b)(7), but we cannot reconcile the first option
expressed in the CONNECTICUT BANK decision with the language of T.C.A.
<section> 67-4-409(b). Nevertheless, we understand that the Borrower has
provided for the payment of the tax required by T.C.A. <section> 67-4-409(b) on
the amount provided by the proration formula, which exceeds the value of the
Tennessee Collateral, subject to the assumption with respect to the value of
the Tennessee Collateral set forth above.
S. We express no opinion as to the validity, binding effect or
enforceability of any provision in the Loan Documents that purports: (i) to
permit the Agent or any other person to sell or otherwise dispose of any
collateral subject thereto (including, without imitation, any self-help or
taking possession remedy), except in compliance with the applicable laws of the
State, the applicable laws of the United States of America, and other
applicable state and local laws; (ii) to impose on, or waive for the benefit
of, the Agent or the Lenders standards for the care of Tennessee Collateral in
the possession of the Agent or the Lenders; or (iii) to limit the ability of
the Borrower or any other person to transfer voluntarily or involuntarily (by
way of sale, creation of a security interest, attachment, levy, garnishment or
other
<PAGE>
May 3, 1996
Page 16
judicial process) its right, title or interest in or to any Tennessee
Collateral subject thereto.
T.Except as set forth in Paragraphs 10 and 11 above with respect
to environmental laws, we express no opinion as to the requirements of, effects
of, or any entity's compliance with laws or regulations unrelated to the
security aspects of the loan transactions, including, without limitation,
zoning laws, labor laws, environmental laws or regulations, and building codes.
Very truly yours,
<PAGE>
TUKE YOPP SWEENEY
SCHEDULE 1
LIST OF RECORDING OFFICES
1. Office of the Register of Deeds for Davidson County, Tennessee.
2. Office of the Register of Deeds for Montgomery County, Tennessee.
3. Office of the Register of Deeds for Putnam County, Tennessee.
4. Office of the Register of Deeds for Rutherford County, Tennessee.
5. Office of the Register of Deeds for Warren County, Tennessee.
<PAGE>
EXHIBIT L
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK 10019-6092
TELEPHONE 212 259-8000 FACSIMILE 212 259-6333
May 3, 1996
The Lenders now or hereafter parties to
the Credit Agreement hereinafter
referred to and Canadian Imperial
Bank of Commerce, New York Agency,
as Agent for the Lenders
Ladies and Gentlemen:
We have acted as special New York counsel to Shoney's, Inc., a Tennessee
corporation (the "Borrower"), in connection with the Bridge Loan Credit
Agreement dated as of May 3, 1996 (the "LOAN AGREEMENT") among the Borrower,
Canadian Imperial Bank of Commerce and the various other financial institutions
now or hereafter parties thereto (collectively, the "LENDERS") and Canadian
Imperial Bank of Commerce, New York Agency, as the agent for the Lenders (in
such capacity, the "Agent"). This opinion is delivered to you pursuant to
CLAUSE (B) of SECTION 5.1.15 of the Loan Agreement. All capitalized terms used
herein which are defined in, or by reference in, the Loan Agreement have the
meanings assigned to such terms in, or by reference in, the Loan Agreement
unless otherwise defined herein.
In connection with this opinion, we have (i) investigated such questions
of law, (ii) examined the originals or certified, confirmed or reproduction
copies of such corporate agreements, instruments, documents and records of the
Borrower and its subsidiaries, such certificates of public officials and such
other documents, (iii) received such certificates and other information from
officers and representatives of the Borrower and its Subsidiaries, as we have
deemed necessary or appropriate for the purpose of this opinion. We have
examined, among other documents, the following documents:
(a) An executed copy of the Loan Agreement (including all exhibits and
schedules thereto); and
(b) An executed copy of each of the Notes.
The documents referred to items (a) and (b) are referred to herein
collectively as the "Transaction Documents".
For purposes of this opinion, we have assumed the following:
(a) The genuineness of all signatures on original or certified,
conformed or reproduction copies of documents of all parties;
(b) The conformity to original or certified copies of all copies
submitted to us as conformed or reproduction copies;
(c) As to various questions of fact relevant to the opinions expressed
herein, the accuracy of the factual content of representations and
warranties contained in the Transaction Documents and statements,
written information and certificates of public officials, of
representatives of the Borrower and its Subsidiaries and of others
deemed by us to be appropriate;
(d) The Borrower is a corporation duly incorporated and validly existing
in good standing under the laws of its jurisdiction of
incorporation;
(e) The Borrower has full corporate power and authority to enter into
and perform its obligations under the Transaction Documents to which
it is a party and to grant the security interests provided for in
the Transaction Documents; and
(f) That the Transaction Documents have been duly authorized, executed
and delivered by all of the parties thereto and constitute the
legal, valid and binding obligations of all parties thereto other
than the Borrower.
Based on the foregoing, and subject to the limitations and assumptions
heretofore and hereinafter set forth, we are of the opinion that:
1. To the extent New York law applies thereto, the signature pages of
the Transaction Documents are in form sufficient for the due
execution thereof by the Borrower.
2. Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms.
3. The execution and delivery by the Borrower of the Transaction
Documents, the performance by the Borrower of its obligations under
each thereof and the Loans made under the Loan Agreement to the
Borrower (i) do not require any filing, registration or declaration
by the Borrower with or authorization, approval or consent of any
governmental agency or authority of the State of N<pound-sterling>w
York and (ii) do not and will not conflict with, or result in any
violation of, or constitute a default under any present material law
or governmental regulation of the State of New York applicable to
the Borrower or its property.
The opinions set forth above are subject to the following exceptions and
qualifications:
A. Our opinions herein, insofar as they relate to enforceability, are
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement or creditors' rights
generally;
B. Our opinions herein, insofar as they relate to enforceability, are
subject to the effect of general equitable principles which may be applied by a
court to the exercise of certain rights and remedies (whether such
enforceability is considered in a proceeding at law or in equity);
C. Our opinions herein, insofar as they relate to enforceability, are
subject to the effect of standards of good faith, fair dealing and
reasonableness which may be applied by a court to the exercise of certain
rights and remedies;
D. No opinion is being rendered herein as to the perfection of any
security interest.
E. We express no opinion as to any provision of the Loan Agreement
insofar as it provides that any Person purchasing a participation form another
Person pursuant thereto may exercise set-off or similar rights with respect to
such participation or that the Agent or any other Person may exercise set-off
rights other than in accordance with applicable law;
F. We express no opinion as to the effect of the compliance or
noncompliance of any of the Lenders or the Agent with any state or Federal laws
or regulations applicable because of the legal or regulatory status or the
nature of the business of any of them or their participation in the Transaction
Documents;
G. We express no opinion as to the value of, or as to the right, title
and interest of the Borrower in, and collateral; and
H. We express no opinion as to New York securities laws (including,
without limitation, as to the applicability of Sections 352-e, 352-f, 352-h or
359-e of the New York General Business Law).
The opinions expressed herein are limited to the laws of the State of New
York.
The opinions expressed herein are rendered as of the date hereof, and we
disclaim any undertaking to advise you of changes in law or fact which may
affect the continued correctness of any of our opinions as of a later date.
The opinions expressed herein are solely for the benefit of the Agent and
the Lenders now or hereafter parties to the Loan Agreement and may not be
relied on in any manner or for any purpose by any other person or entity.
Very truly yours,
EXHIBIT 4.2
[CONFORMED COPY]
U.S. $270,000,000
AMENDED AND RESTATED
REDUCING REVOLVING
CREDIT AGREEMENT,
dated as of July 21, 1993,
as amended and restated
as of May 3, 1996,
among
SHONEY'S, INC.,
as the Borrower,
CIBC INC.,
acting through its Atlanta Office
and
VARIOUS OTHER FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO,
as the Lenders,
and
CANADIAN IMPERIAL BANK OF COMMERCE
acting through its New York Agency,
as the Agent for the Lenders.
<PAGE>
TABLE OF CONTENTS
SECTION Page
ARTICLE I
DEFINITIONS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . 2
1.2. Use of Defined Terms. . . . . . . . . . . . . . . . 27
1.3. Cross-References. . . . . . . . . . . . . . . . . . 27
1.4. Accounting and Financial Determinations . . . . . . 27
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Revolving Commitments . . . . . . . . . . . . . . . 28
2.1.1. Letter of Credit Commitment . . . . . . . . . . . . 28
2.2. Reduction of Revolving Commitment Amount and Letter
of Credit Commitment Amount. . . . . . . . . . . 29
2.2.1. Optional. . . . . . . . . . . . . . . . . . . . . . 29
2.2.2. Mandatory . . . . . . . . . . . . . . . . . . . . . 29
2.2.3. Application . . . . . . . . . . . . . . . . . . . . 30
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . 30
2.4. Continuation and Conversion Elections . . . . . . . 31
2.5. Funding . . . . . . . . . . . . . . . . . . . . . . 31
2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments. . . . . . . . . . . . . 32
3.1.1. Voluntary Prepayments . . . . . . . . . . . . . . . 32
3.1.2. Mandatory Prepayments . . . . . . . . . . . . . . . 32
3.2. Interest Provisions . . . . . . . . . . . . . . . . 33
3.2.1. Rates . . . . . . . . . . . . . . . . . . . . . . . 33
3.2.2. Default Rates . . . . . . . . . . . . . . . . . . . 33
3.2.3. Payment Dates . . . . . . . . . . . . . . . . . . . 34
3.2.4. Interest Rate Determination . . . . . . . . . . . . 34
3.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . 34
3.3.1. Post-Closing Revolving Commitment Fee . . . . . . . 34
3.3.2. Upfront Fees. . . . . . . . . . . . . . . . . . . . 35
3.3.3. Agent's Fees. . . . . . . . . . . . . . . . . . . . 35
3.3.4. Letter of Credit Face Amount Fee. . . . . . . . . . 35
3.3.5. Letter of Credit Issuing Fee. . . . . . . . . . . . 35
3.4. Issuance Requests . . . . . . . . . . . . . . . . . 35
3.5. Issuances, Increases and Extensions . . . . . . . . 36
3.6. Other Lenders' Participation. . . . . . . . . . . . 36
3.7. Disbursements . . . . . . . . . . . . . . . . . . . 37
3.8. Reimbursement . . . . . . . . . . . . . . . . . . . 37
3.9. Deemed Disbursements. . . . . . . . . . . . . . . . 38
3.10. Nature of Reimbursement Obligations . . . . . . . . 38
3.11. Indemnity . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful. . . . . . . . . . . . . 39
4.2. Deposits Unavailable. . . . . . . . . . . . . . . . 40
4.3. Increased LIBO Rate Loan Costs, etc.. . . . . . . . 40
4.4. Funding Losses. . . . . . . . . . . . . . . . . . . 41
4.5. Increased Capital Costs . . . . . . . . . . . . . . 41
4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 42
4.7. Payments, Computations, etc.. . . . . . . . . . . . 43
4.8. Sharing of Payments . . . . . . . . . . . . . . . . 43
4.9. Setoff. . . . . . . . . . . . . . . . . . . . . . . 43
4.10. Replacement of Affected Lenders . . . . . . . . . . 44
4.11. Use of Proceeds . . . . . . . . . . . . . . . . . . 44
ARTICLE V
CONDITIONS TO INITIAL BORROWING
5.1. Effectiveness and Initial Credit Extension. . . . . 44
5.1.1. Resolutions, etc. . . . . . . . . . . . . . . . . . 45
5.1.2. Delivery of Notes . . . . . . . . . . . . . . . . . 45
5.1.3. Bridge Financing. . . . . . . . . . . . . . . . . . 45
5.1.4. [Intentionally Omitted] . . . . . . . . . . . . . . 46
5.1.5. Subsidiary Guaranty Acknowledgment. . . . . . . . . 46
5.1.6. Officer Solvency Certificate. . . . . . . . . . . . 46
5.1.7. [Intentionally Omitted].. . . . . . . . . . . . . . 46
5.1.8. Shareholder Approval. . . . . . . . . . . . . . . . 46
5.1.9. No Materially Adverse Effect. . . . . . . . . . . . 46
5.1.10. Warranties; No Default. . . . . . . . . . . . . . . 46
5.1.11. Closing Fees and Expenses . . . . . . . . . . . . . 46
5.1.12. Opinions of Counsel . . . . . . . . . . . . . . . . 46
5.1.13. Date of Closing . . . . . . . . . . . . . . . . . . 47
5.2. All Credit Extensions . . . . . . . . . . . . . . . 47
5.2.1. Compliance with Warranties, No Default, etc.. . . . 47
5.2.2. Credit Request. . . . . . . . . . . . . . . . . . . 47
5.2.3. Satisfactory Legal Form, etc. . . . . . . . . . . . 47
ARTICLE VI
WARRANTIES, ETC.
6.1. Organization, etc.. . . . . . . . . . . . . . . . . 48
6.2. Due Authorization . . . . . . . . . . . . . . . . . 48
6.3. Validity, etc.. . . . . . . . . . . . . . . . . . . 49
6.4. Financial Information . . . . . . . . . . . . . . . 49
6.5. Materially Adverse Effect . . . . . . . . . . . . . 49
6.6. Absence of Default. . . . . . . . . . . . . . . . . 49
6.7. Litigation; Labor Controversies, etc. . . . . . . . 49
6.8. Regulations G, U and X. . . . . . . . . . . . . . . 50
6.9. Government Regulation . . . . . . . . . . . . . . . 50
6.10. Burdensome Agreements . . . . . . . . . . . . . . . 50
6.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . 50
6.12. Employee Benefit Plans. . . . . . . . . . . . . . . 50
6.13. Subsidiaries. . . . . . . . . . . . . . . . . . . . 51
6.14. Ownership of Properties, Licenses and Permits;
Liens . . . . . . . . . . . . . . . . . . . . 51
6.15. Patents, Trademarks, etc. . . . . . . . . . . . . . 51
6.16. Accuracy of Information . . . . . . . . . . . . . . 51
6.17. Subordinated Debt . . . . . . . . . . . . . . . . . 52
6.18. The Collateral Documents. . . . . . . . . . . . . . 53
6.19. Environmental Warranties. . . . . . . . . . . . . . 53
ARTICLE VII
COVENANTS
7.1. Certain Affirmative Covenants Applicable to the
Obligations. . . . . . . . . . . . . . . . . . . 54
7.1.1. Financial Information, etc. . . . . . . . . . . . . 54
7.1.2. Maintenance of Corporate Existences, etc. . . . . . 56
7.1.3. Foreign Qualification . . . . . . . . . . . . . . . 56
7.1.4. Payment of Taxes, etc.. . . . . . . . . . . . . . . 56
7.1.5. Maintenance of Property; Insurance. . . . . . . . . 57
7.1.6. Notice of Default, Litigation, etc. . . . . . . . . 57
7.1.7. Performance of Instruments. . . . . . . . . . . . . 58
7.1.8. Books and Records . . . . . . . . . . . . . . . . . 58
7.1.9. Compliance with Laws, etc.. . . . . . . . . . . . . 59
7.1.10. [Intentionally Omitted] . . . . . . . . . . . . . . 59
7.1.11. Separate Corporate Existence of Realco. . . . . . . 59
7.1.12. Substitution of Realco Properties; Disposition of
Realco Properties. . . . . . . . . . . . . . . . 60
7.1.13. Substitution of Mortgaged Property. . . . . . . . . 61
7.1.14. Additional Collateral . . . . . . . . . . . . . . . 61
7.2. Certain Negative Covenants. . . . . . . . . . . . . 61
7.2.1. Business Activities . . . . . . . . . . . . . . . . 61
7.2.2. Indebtedness. . . . . . . . . . . . . . . . . . . . 61
7.2.3. Security Interests. . . . . . . . . . . . . . . . . 63
7.2.4. Financial Condition . . . . . . . . . . . . . . . . 65
7.2.5. Investments . . . . . . . . . . . . . . . . . . . . 72
7.2.6. Restricted Payments, etc. . . . . . . . . . . . . . 74
7.2.7. Consolidated Capital Expenditures, etc. . . . . . . 75
7.2.8. Guaranties. . . . . . . . . . . . . . . . . . . . . 75
7.2.9. Lease Obligations . . . . . . . . . . . . . . . . . 76
7.2.10. Take or Pay Contracts . . . . . . . . . . . . . . . 76
7.2.11. Consolidation, Merger, Sale of Assets, etc. . . . . 76
7.2.12. Modification, etc. of Subordinated Debt . . . . . . 78
7.2.13. Transactions with Affiliates. . . . . . . . . . . . 78
7.2.14. Negative Pledges; Subsidiary Payments;
Modification of Documents. . . . . . . . . . . . 79
7.2.15. Inconsistent Agreements . . . . . . . . . . . . . . 79
7.2.16. Fiscal Year . . . . . . . . . . . . . . . . . . . . 79
7.2.17. Franchise Agreements. . . . . . . . . . . . . . . . 79
7.2.18. Change of Location or Name. . . . . . . . . . . . . 79
7.2.19. Environmental Liabilities . . . . . . . . . . . . . 80
7.2.20. Amendment of Certain Agreements . . . . . . . . . . 80
7.2.21. Sale-Leaseback Transactions . . . . . . . . . . . . 81
7.2.22. Realco. . . . . . . . . . . . . . . . . . . . . . . 81
7.2.23. Purchase of Franchisees . . . . . . . . . . . . . . 81
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default . . . . . . . . . . . . . . . . . 82
8.1.1. Non-Payment of Obligations. . . . . . . . . . . . . 82
8.1.2. Non-Performance of Certain Covenants. . . . . . . . 82
8.1.3. Default on Other Indebtedness . . . . . . . . . . . 82
8.1.4. Bankruptcy, Insolvency, etc.. . . . . . . . . . . . 83
8.1.5. Breach of Warranty. . . . . . . . . . . . . . . . . 83
8.1.6. Non-Performance of Other Obligations. . . . . . . . 83
8.1.7. ERISA . . . . . . . . . . . . . . . . . . . . . . . 84
8.1.8. Judgments; Settlements. . . . . . . . . . . . . . . 84
8.1.9. Impairment of Security, etc.. . . . . . . . . . . . 84
8.1.10. Change of Control . . . . . . . . . . . . . . . . . 84
8.2. Action if Bankruptcy. . . . . . . . . . . . . . . . 84
8.3. Action if Other Event of Default. . . . . . . . . . 85
ARTICLE IX
THE AGENT AND THE COLLATERAL AGENT
9.1. Actions . . . . . . . . . . . . . . . . . . . . . . 85
9.2. Exculpation . . . . . . . . . . . . . . . . . . . . 86
9.3. Successor . . . . . . . . . . . . . . . . . . . . . 86
9.4. Collateral Documents, etc.. . . . . . . . . . . . . 86
9.5. Credit Extensions by CIBC Inc., etc.. . . . . . . . 86
9.6. Funding Reliance, etc.. . . . . . . . . . . . . . . 87
9.7. Credit Decisions. . . . . . . . . . . . . . . . . . 87
9.8. Notices, etc. to Agent. . . . . . . . . . . . . . . 87
ARTICLE X
MISCELLANEOUS
10.1. Waivers, Amendments, etc. . . . . . . . . . . . . . 87
10.2. Notices . . . . . . . . . . . . . . . . . . . . . . 88
10.3. Costs and Expenses. . . . . . . . . . . . . . . . . 89
10.4. Indemnification . . . . . . . . . . . . . . . . . . 89
10.5. Survival. . . . . . . . . . . . . . . . . . . . . . 90
10.6. Severability. . . . . . . . . . . . . . . . . . . . 90
10.7. Headings. . . . . . . . . . . . . . . . . . . . . . 90
10.8. Counterparts, Entire Agreement, etc.. . . . . . . . 90
10.9. Governing Law . . . . . . . . . . . . . . . . . . . 91
10.10. Sale and Transfer of Loans and Note;
Participations in Loans and Note . . . . . . . . 91
10.10.1. Assignments . . . . . . . . . . . . . . . . . . . . 91
10.10.2. Participations. . . . . . . . . . . . . . . . . . . 92
10.10.3. Certain Other Provisions. . . . . . . . . . . . . . 93
10.11. Other Transactions; Consent to Relationships. . . . 93
10.12. Further Assurances. . . . . . . . . . . . . . . . . 93
10.13. Confidentiality . . . . . . . . . . . . . . . . . . 94
10.14. Certain Collateral Matters. . . . . . . . . . . . . 94
10.15. Forum Selection and Consent to Jurisdiction . . . . 95
10.16. Waiver of Jury Trial. . . . . . . . . . . . . . . . 96
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Upfront and Pre-closing Commitment Fees
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Compliance Certificate
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Security Agreement
EXHIBIT F - Form of Issuance Request
EXHIBIT G - Form of Pledge Agreement
EXHIBIT H - Form of Subsidiary Security Agreement
EXHIBIT I - Form of Mortgage
EXHIBIT J - Form of Subsidiary Guaranty
EXHIBIT K - Form of Officer Solvency Certificate
EXHIBIT L - Form of Lender Assignment Agreement
EXHIBIT M - Form of Corporate Opinion of Tuke, Yopp & Sweeney
EXHIBIT N - Form of New York Counsel Opinion to the Borrower
EXHIBIT O - Form of Letter of Credit
<PAGE>
AMENDED AND RESTATED
REDUCING REVOLVING
CREDIT AGREEMENT
THIS AMENDED AND RESTATED REDUCING REVOLVING CREDIT AGREEMENT, dated as of
July 21, 1993, as amended and restated as of May 3, 1996, among SHONEY'S, INC.,
a Tennessee corporation (the "Borrower"), the various financial institutions
which are or may become parties hereto (collectively, the "Lenders" and,
individually, a "Lender"), and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian
chartered bank acting through its New York Agency, as Agent for the Lenders and
as the LC Issuer,
W I T N E S S E T H:
WHEREAS, the Borrower is currently engaged directly and through various
Subsidiaries (other than Realco) (capitalized terms used in these recitals
having the meanings set forth in Section 1.1 hereof unless otherwise defined)
in the businesses of operating and franchising a chain of full-service
restaurants, fast seafood restaurants, and specialty dinner house restaurants,
and also maintains and operates five manufacturing and distribution centers, a
meat plant and an insurance business which provides certain insurance services
and certain other services related thereto; Realco is only engaged in the
ownership of certain real properties, buildings and improvements thereon and
other business activities directly incidental thereto;
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Reducing Revolving Credit Agreement, dated as of July 21, 1993, as amended to
date (as so amended, the "Existing Credit Agreement"), pursuant to which the
Lenders thereunder (the "Original Lenders") extended commitments (the "Original
Commitments") to make credit extensions to the Borrower in an aggregate
principal amount not to exceed $270,000,000 (the "Original Credit Extensions")
at any time outstanding for the purposes set forth below;
WHEREAS, the proceeds of such Original Credit Extensions were used by the
Borrower
(a) on July 21, 1993, to refinance the principal amount of certain
loans made to the Borrower in the amount of $22,500,000 outstanding,
together with all accrued and unpaid interest, fees, expenses and all
other amounts owing with respect thereto and to pay related transaction
expenses in connection therewith;
(b) in July, 1994, to refinance certain subordinated debt of the
Borrower, together with all fees, expenses and other amounts owing with
respect thereto and to pay related transaction expenses in connection
therewith, and
(c) on and after July 21, 1993, for the working capital, capital
expenditures (including Franchisee Acquisitions) and debt refinancing or
repayment requirements of the Borrower and its Subsidiaries;
WHEREAS, the Borrower determined that it was in its business interests to
transfer certain of its real properties and certain improvements thereon to
Realco and the Lenders consented to such transfer in return for a pledge of all
the issued and outstanding capital stock of Realco upon which pledge the
Lenders have relied upon to make the Original Credit Extensions and are relying
upon to make the Credit Extensions hereunder;
WHEREAS, the Borrower has requested that the Lenders continue their
existing Original Commitments to make Credit Extensions in an aggregate
principal and stated amount not to exceed $214,600,000 at any one time
outstanding;
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to continue such
Original Commitments as Commitments and to make Credit Extensions to the
Borrower;
WHEREAS, the Borrower has requested that the Lenders create under the
Commitments a sublimit of up to $20,000,000 in stated amount for the issuance
of Letters of Credit to support the Borrower's obligations and to replace
certain letter of credit obligations to be assumed by the Borrower in
connection with the Acquisition (as hereinafter defined); provided that, in any
event the aggregate outstanding principal amount of all Loans, together with
the aggregate amount of all Letter of Credit Outstandings shall not exceed the
Commitments then in effect;
WHEREAS, the Borrower has entered into the Plan of Tax-Free Reorganization
under Section 368(a)(1)(C) of the Internal Revenue Code and Agreement (the
"Plan of Reorganization"), dated as of March 15, 1996, among the Borrower, TPI
Restaurants Acquisition Corporation, a Tennessee corporation and a wholly-owned
Subsidiary of the Borrower ("TPAC"), and TPI Enterprises, Inc., a New Jersey
corporation ("TPI"), pursuant to which TPI will transfer to the Borrower
certain of its operating subsidiaries (the "Acquisition") in exchange for the
issuance of shares of the Borrower's common stock, the refinancing of certain
of TPI's existing indebtedness and the assumption by the Borrower of TPI's
obligations under the Subordinated Debentures and certain other liabilities of
TPI as set forth in the Plan of Reorganization (the "Assumption");
WHEREAS, the Borrower proposes to enter into a senior secured bridge loan
financing (the "Bridge Financing") to be provided by Canadian Imperial Bank of
Commerce and certain other financial institutions in an aggregate principal
amount not to exceed $100,000,000, the proceeds of which will be used for the
general corporate purposes of the Borrower and to refinance certain outstanding
indebtedness of TPI and TPIR (as hereinafter defined) in connection with the
Acquisition;
WHEREAS, the Borrower has requested the Lenders to consent to the
Acquisition, the Assumption, and the Bridge Financing; and
WHEREAS, the Lenders are willing upon the terms and conditions set forth
herein to grant such consent;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquisition" has the meaning assigned to such term in the eighth recital.
"Acquisition Date" means the date of consummation of the Acquisition in
accordance with the terms of the Plan of Reorganization.
"Adjusted EBITDA" means for any period,
(a) the Borrower's EBITDA for such period;
minus
(b) Consolidated Capital Expenditures (other than in respect of
Capitalized Leases or Franchisee Acquisitions) for such period.
"Adjusted Interest Coverage Ratio" means, at any date, the ratio of
(a) Adjusted EBITDA for the four Fiscal Quarter period ending on or
prior to such date
to
(b) Consolidated Interest Expense paid or payable in cash in
respect of the four Fiscal Quarter period ending on or prior to such
date.
"Adjusted Percentage" means, (x) at a time when no Lender Default exists,
for each Lender such Lender's Percentage and (y) at a time when a Lender
Default exists (i) for each Lender that is a Defaulting Lender, zero and (ii)
for each Lender that is a Non-Defaulting Lender, the percentage determined by
dividing an amount equal to such Lender's Revolving Commitment Amount at such
time by the Adjusted Revolving Commitment Amount at such time, it being
understood that all references herein to Revolving Commitments and the Adjusted
Revolving Commitment Amount at a time when the Revolving Commitment Amount or
Adjusted Revolving Commitment Amount, as the case may be, has been terminated
shall be references to the Revolving Commitments or Adjusted Revolving
Commitment Amount, as the case may be, in effect immediately prior to such
termination.
"Adjusted Revolving Commitment Amount" means, at any time the Revolving
Commitment Amount less the aggregate Revolving Commitments of all Defaulting
Lenders.
"Affected Lender" means a Lender that (a) (x) is entitled to payment by
the Borrower of increased capital costs described in Section 4.5 and (y) which
Lender's claim is for amounts which exceed the weighted average (based on the
respective outstanding amounts of Loans of Lenders submitting claims under
Section 4.5) of the amounts then being claimed by all Lenders pursuant to
Section 4.5, (b) makes a claim for payment by the Borrower of increased costs
described in Section 4.6 or (c) is a Defaulting Lender or otherwise defaults in
its obligation to make Loans or fund its participations in letters of credit.
"Affiliate" of any Person means
(a) any other Person which, directly or indirectly, controls or is
controlled by or is under common control with such other Person; or
(b) any Person who is a director or officer of such Person or of
any Person described in the foregoing clause (a).
For purposes of this definition, control of a Person shall mean (x) the
power, direct or indirect, (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise, or (y) the ownership, direct or indirect, of
10% or more of any class of voting stock of such Person.
"Agent" means
(a) CIBC-NYA;
(b) any other office or agency of Canadian Imperial Bank of
Commerce within the United States of America of which the Lenders and
the Borrower are notified and
(i) to which the rights and responsibilities of the Agent
hereunder may be transferred from time to time, or
(ii) which may, from time to time on behalf of CIBC-NYA or
any such transferee, act as Agent for the Lenders under this
Agreement, any Collateral Document or any other Loan Document; or
(c) such other Lender or financial institution as shall have
subsequently been appointed as the successor Agent pursuant to Section
9.3.
"Agent's Fee Letter" means the letter agreement, dated April 26, 1994,
between the Borrower and CIBC Inc. entitled "Fees", as from time to time
amended, supplemented, amended and restated or otherwise modified.
"Agreement" means, on any date, this amended and restated reducing
revolving credit agreement as originally in effect on the Closing Date and as
thereafter from time to time amended, supplemented, amended and restated or
otherwise modified and in effect on such date.
"Applicable Margin" means (a) initially, with respect to the unpaid
principal amount of each LIBO Rate Loan, 2%, and with respect to the unpaid
principal amount of each Base Rate Loan, 1%, and (b) thereafter, during the
effective period of any Compliance Certificate demonstrating that both the
Borrower's Funded Debt Ratio and the Adjusted Interest Coverage Ratio (in each
case determined by reference to the applicable Compliance Certificate as set
forth below) are as set forth in the columns below entitled "Funded Debt Ratio"
and "Adjusted Interest Coverage Ratio", (i) with respect to the unpaid
principal amount of each LIBO Rate Loan, the applicable percentage set forth
below in the column entitled "Applicable Margin for LIBO Rate Loans;" and (ii)
with respect to the unpaid principal amount of each Base Rate Loan, the
applicable percentage set forth below in the column entitled "Applicable Margin
for Base Rate Loans":
<TABLE>
<CAPTION>
Funded Applicable Applicable
Debt Adjusted Interest Margin for LIBO Margin for Base
Radio Coverage Ratio Rate Loans Rate Loans
<S> <C> <C> <C>
Equal to or Equal to or less 2% 1%
greater than 3:1 than 3:1
Less than 3:1 Greater than 3:1 1-3/4% 3/4%
but equal to or but equal to or
greater than less than 4:1
2.5:1
Less than Greater than 4:1 1-1/2% 1/2%
2.5:1
</TABLE>
In order to be entitled to a reduction in the Applicable Margin as set
forth above, both the Borrower's Funded Debt Ratio and the Adjusted Interest
Coverage Ratio must fall within the range set forth opposite such reduced
Applicable Margin.
The Funded Debt Ratio and Adjusted Interest Coverage Ratio used to compute
the Applicable Margin shall be the Funded Debt Ratio and Adjusted Interest
Coverage Ratio set forth in the Compliance Certificate most recently delivered
by the Borrower to the Agent. Each Compliance Certificate delivered by the
Borrower shall be in effect until the earlier of (i) (x) with respect to the
first, second and fourth Fiscal Quarters of any Fiscal Year, the 45th day after
the end of the Fiscal Quarter next following the Fiscal Quarter in respect of
which such Compliance Certificate is being delivered, and (y) with respect to
the third Fiscal Quarter of any Fiscal Year, the 90th day after the end of the
Fiscal Quarter next following such third Fiscal Quarter in respect of which
such Compliance Certificate is being delivered, or (ii) the effective date of
delivery of the next delivered Compliance Certificate due pursuant to Section
7.1.1. If the Borrower shall fail to deliver a Compliance Certificate within
45 or 90 days after the end of any Fiscal Quarter as required pursuant to
clause (a) or (b) of Section 7.1.1, as the case may be, the Applicable Margin
from and including the 46th or 91st day, as the case may be, after the end of
such Fiscal Quarter to but not including the date the Borrower delivers to the
Agent a Compliance Certificate shall conclusively be presumed to equal the
highest Applicable Margin. Upon the occurrence and during the continuance of a
Default, the Applicable Margin shall be the highest Applicable Margin. Changes
in the Applicable Margin resulting from a change in the Funded Debt Ratio and
Adjusted Interest Coverage Ratio shall become effective on the second Business
Day after the date of delivery by the Borrower to the Agent of a new Compliance
Certificate pursuant to clause (a) or (b) of Section 7.1.1.
"Approving Lenders" means, at any time any determination thereof is to be
made, Non-Defaulting Lenders having an aggregate Adjusted Percentage of at
least 66-2/3%.
"Assignee Lender" has the meaning assigned to such term in Section
10.10.1.
"Assumption" has the meaning assigned to such term in the eighth recital.
"Authorized Officers", with respect to the Borrower, has the meaning
assigned to such term in clause (a)(ii) of Section 5.1.1, and, with respect to
a Subsidiary, has the meaning assigned to such term in clause (b)(ii) of
Section 5.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the CIBC Alternate Base Rate.
"Borrower" has the meaning assigned to such term in the preamble hereof.
"Borrowing" means Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.3.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of Exhibit B
hereto.
"Bridge Collateral Documents" means the pledge agreement dated as of the
Acquisition Date, executed and delivered by the Borrower in favor of the
lenders under the Bridge Loan Agreement as such pledge agreement may be from
time to time amended, supplemented, amended and restated or otherwise modified
in accordance with the terms thereof.
"Bridge Documents" means the Bridge Loan Agreement, the Bridge Guaranty
and the Bridge Collateral Documents.
"Bridge Financing" has the meaning assigned to such term in the ninth
recital.
"Bridge Guaranty" means the subsidiary guaranty dated as of the
Acquisition Date, executed and delivered by the Transferred Subsidiaries, as
such guaranty may be from time to time amended, supplemented, amended and
restated or otherwise modified in accordance with the terms thereof.
"Bridge Loan Agreement" means the bridge loan agreement, dated as of May
3, 1996, among Shoney's, Inc., the various financial institutions which are or
may become parties thereto, and CIBC-NYA as agent for such financial
institutions, as originally in effect on the Closing Date and as thereafter
from time to time amended, supplemented, amended and restated or otherwise
modified in accordance with the terms thereof.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York or Atlanta, Georgia; and
(b) relative to the date of
(i) making or continuing any Loans as, or converting any
Loans from or into, LIBO Rate Loans,
(ii) making any payment or prepayment of principal of or
payment of interest on any portion of the principal amount of any
Loans being maintained as LIBO Rate Loans, or
(iii) the Borrower's giving any notice (or the number of
Business Days to elapse prior to the effectiveness thereof) in
connection with any matter referred to in the immediately preceding
clause (b)(i) or (b)(ii),
any such banking business day which is also a day on which dealings in
Dollars are carried on in the interbank eurodollar market applicable to
such LIBO Rate Loans.
"Capitalized Leases" means leases the obligations under which have been,
or in accordance with GAAP are required to be, recorded on the books of the
Borrower or any of its Subsidiaries as capital leases.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the
date of issuance and rated A-l by Standard & Poor's Corporation or P-l by
Moody's Investors Service, Inc., issued by a Lender or any affiliate
thereof or by a corporation (except an Affiliate of the Borrower)
organized under the laws of any State of the United States or of the
District of Columbia;
(c) any certificate of deposit, eurodollar time deposit or
acceptance, maturing not more than one year after such time, issued by a
Lender, any bank providing Indebtedness permitted under clause (b) of
Section 7.2.2 on the date hereof or any commercial banking institution
which is a member of the Federal Reserve System and which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
or
(d) any repurchase agreement entered into with either any Lender or
any other commercial banking institution of the nature referred to in
clause (c), secured by a fully perfected Security Interest in any
obligation of the type described in any of clauses (a) through (c), having
a market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation thereunder of such Lender
or other commercial banking institution.
"CD Published Moving Rate" means, at any time, the latest three-week
moving average of daily secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States money
market lenders, such three-week moving average (adjusted to the basis of a year
of 365 or 366 days, as the case may be) being determined weekly for the three-
week period ending on the previous Friday by the Agent on the basis of
(a) such rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York (as adjusted for
reserves and assessments in the same manner as the CD Quoted Rate); or
(b) if such publication shall be suspended or terminated, the CD
Quoted Rate determined by the Agent on the basis of quotations for such
rates by CIBC-NYA.
"CD Quoted Rate" means, relative to any determination of the CD Published
Moving Rate in circumstances when publication of the rates referred to in
clause (a) of the definition thereof has been suspended or terminated, the rate
of interest per annum determined by the Agent to be the sum (adjusted to the
nearest 1/100 of 1%, if any) of (a) the rate obtained by dividing (i) the
average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the bid
rates quoted to CIBC-NYA, in its Domestic Office's secondary market at
approximately 10:00 a.m. New York City time (or as soon thereafter as
practicable), from time to time by three certificate of deposit dealers of
recognized standing selected by the Agent in its sole discretion for the
purchase at face value of three-month certificates of deposit in an amount
approximately equal or comparable to the amount of CIBC-Bank's portion of the
credit outstanding hereunder with respect to which the CD Quoted Rate is being
determined by (ii) a percentage equal to 100% minus the average of the daily
percentages specified during such period by the F.R.S. Board (or any successor)
for determining the maximum reserve requirement (including, but not limited to,
any marginal reserve requirement) for a member bank in respect of liabilities
consisting of or including (among other liabilities) three-month Dollar
nonpersonal time deposits in the United States, plus (b) the daily average
during such period of the net annual assessment rates estimated by the Agent
for determining the then current annual assessment payable by a member bank to
the Federal Deposit Insurance Corporation (or any successor) for insuring
Dollar deposits of a member bank in the United States.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means (a) the acquisition after July 23, 1993 by any
Person or Persons acting in concert of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, as amended, or any successor, replacement or
analogous rule or provision of law) of 20% or more of the outstanding shares of
voting stock of the Borrower; or (b) a majority of the board of directors of
the Borrower shall consist of directors other than (i) directors holding office
as of the Closing Date or (ii) directors whose election was recommended by such
directors or subsequent directors so recommended.
"CIBC Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the highest of
(a) the rate of interest most recently announced by CIBC-NYA at its
Domestic Office as its base rate;
(b) the CD Published Moving Rate most recently determined by the
Agent plus 1/2 of 1%; or
(c) the Overnight Funds Rate plus 1%.
The CIBC Alternate Base Rate is not necessarily intended to be the lowest rate
of interest determined by the Agent in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans shall take effect simultaneously with each change in the CIBC
Alternate Base Rate. The Agent shall give notice promptly to the Borrower and
the Lenders of changes in the CIBC Alternate Base Rate.
"CIBC-Bank" means CIBC Inc., acting through its Atlanta Office, in its
capacity as a Lender hereunder.
"CIBC-NYA" means Canadian Imperial Bank of Commerce, acting through its
New York Agency.
"Closing Date" means May 3, 1996.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Agent" means Canadian Imperial Bank of Commerce, New York
Agency, in its capacity as collateral agent under the Collateral Documents or
any Affiliate thereof to which the rights and responsibilities thereof may be
transferred or any successor thereto duly appointed in accordance with Section
9.3.
"Collateral Documents" means, collectively, the Security Agreement, the
Pledge Agreement, the Trademark Security Agreement, the Subsidiary Guaranty,
the Subsidiary Security Agreements, the Mortgages, the Subsidiary Mortgages,
and each other instrument or document executed and delivered pursuant to or in
connection with any thereof in accordance with the terms thereof or of this
Agreement.
"Commitment Termination Date" means the earliest to occur of
(a) October 22, 1999;
(b) the date on which the Revolving Commitment Amount is reduced to
zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (a), (b) or (c) the
Commitments shall terminate automatically and without further action or notice.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a) through
(d) of Section 8.1.4 with respect to the Borrower or any Subsidiary; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or
(ii) in the absence of such declaration, the giving of notice
by the Agent, acting at the direction of the Required Lenders, to
the Borrower that the Commitments have been terminated.
"Commitments" means, as the context may require, the Revolving Commitment
or the Letter of Credit Commitment.
"Compliance Certificate" means a certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of Exhibit C
attached hereto and including therein, among other things, calculations
supporting compliance by the Borrower with Section 7.2.4, details regarding the
status of and the Borrower's good faith estimate of taxes payable in connection
with asset sale proceeds (with such changes thereto as may be agreed upon from
time to time by the Agent and the Borrower for purposes of monitoring the
Borrower's compliance herewith) and identifying therein each item of "Mortgage
Financing Collateral" acquired by the Borrower during the period covered by
such Compliance Certificate.
"Concept" means a division or type of business of the Borrower or any of
its Subsidiaries held out to the public with a particular designation and, as
of the date hereof, shall mean and include the following: (a) "Shoney's"
restaurants, (b) "Captain D's", (c) "Commissary", (d) "Pargo's", (e) "Fifth
Quarter", and (f) "BarbWire's".
"Consolidated Capital Expenditures" means, for any period, the gross
amount of additions during such period to fixed assets, property, plant, and
equipment of the Borrower and its Subsidiaries, all as such additions would be
reflected on a consolidated balance sheet of the Borrower and its Subsidiaries
prepared in accordance with GAAP consistently applied at the end of such period
when compared to a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP consistently applied at the end
of a prior applicable period.
"Consolidated Fixed Charge Coverage Ratio" means, as of the close of any
Fiscal Quarter, the ratio computed for the four consecutive Fiscal Quarters
ending on the computation date, of:
(a) the sum for such Fiscal Quarters of (i) EBITDA plus (ii)
Consolidated Lease Expense
to
(b) Consolidated Fixed Charges for such Fiscal Quarters.
"Consolidated Fixed Charges" means, for any period, the sum of:
(a) Consolidated Interest Expense;
plus
(b) the amount of any scheduled payment of principal of any
Consolidated Funded Debt (including, without limitation, payments of Loans
required under clause (a) of Section 3.1.2 due to a Commitment Amount
reduction under clause (a) of Section 2.2.2 and the amount of scheduled
payments under Capitalized Leases, other than such as is appropriately
allocable to Consolidated Interest Expense); provided, however, that for
purposes of this clause (b) only, Consolidated Funded Debt shall not
include any Indebtedness permitted under clause (b) of Section 7.2.2 or
any similar Indebtedness permitted under clause (c) of Section 7.2.2 so
long as such Indebtedness is, by its terms, renewable and the provider of
such Indebtedness has not declined to so renew such Indebtedness;
plus
(c) all federal, state and local income taxes of the Borrower and
its Subsidiaries;
plus
(d) Consolidated Lease Expense
in each case for such period.
"Consolidated Funded Debt" means, at any time, the sum of (a) all
Indebtedness (including accrued interest on the Subordinated LYONS Notes and
debt incurred with respect to Mortgage Financing Transactions and the
Subordinated Debt) of the Borrower and its Subsidiaries, other than any
Indebtedness described in clause (f) or (g) of the definition of Indebtedness
contained herein, at such time and (b) the amount of reserve for litigation
settlement, as shown on the Borrower's then most recent consolidated balance
sheet delivered pursuant to clause (a) or (b) of Section 7.1.1.
"Consolidated Interest Expense" means, for any period, the aggregate
interest expense of the Borrower and its Subsidiaries for such period, as
determined in accordance with GAAP, and in any event including, without
duplication, all commissions, discounts and other fees and charges owed with
respect to letters of credit and banker's acceptances and net costs under Rate
Swap Agreements and the portion of any obligation under Capitalized Leases
allocable to Consolidated Interest Expense, but in any event excluding (x) any
non-cash interest charges and amortization of transaction costs with respect to
Indebtedness and (y) amortization of bond discount relating to the Subordinated
Debentures.
"Consolidated Lease Expense" means, for any period, the aggregate amount
required to be paid during such period by the Borrower and its Subsidiaries, as
lessee, net of sublease rentals accrued by the Borrower and its Subsidiaries in
accordance with GAAP, under leases to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is
bound, excluding amounts required to be paid under Capitalized Leases during
such period.
"Consolidated Net Income" means, for any period, all amounts which, in
conformity with GAAP consistently applied, would be included under net income
on a consolidated income statement of the Borrower and its Subsidiaries for
such period.
"Consolidated Net Worth" means, at any time, all amounts which, in
accordance with GAAP consistently applied, would be included under
shareholders' equity on a consolidated balance sheet of the Borrower and its
Subsidiaries at such time; provided that, in any event, such amounts are to be
net of amounts carried on the books of the Borrower and the Subsidiaries for
(a) any treasury stock and (b) any write-up in the book value of any assets of
the Borrower or any of its Subsidiaries resulting from a revaluation thereof.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit D attached hereto (with such
changes thereto as may be agreed upon from time to time by the Borrower and the
Agent).
"Credit Extension" means and includes
(a) the advancing of any Loan by the Lenders in connection with a
Borrowing, and
(b) any issuance by an LC Issuer of a Letter of Credit or the
extension of any Stated Expiry Date or the increase in the Stated Amount
of any then existing Letter of Credit by an LC Issuer.
"Default" means any Event of Default or any condition or event which,
after notice or lapse of time or both, would become an Event of Default.
"Defaulting Lender" means any Lender with respect to which a Lender
Default is in effect.
"Disbursement" has the meaning assigned to such term in Section 3.7.
"Disbursement Date" has the meaning assigned to such term in Section 3.7.
"Disclosure Schedule" means the schedule attached hereto as Schedule I, as
it may be amended, supplemented or otherwise modified from time to time by the
Borrower with the written consent of the Agent and the Required Lenders, which
consent will not be unreasonably withheld.
"Dollar" and the sign "$" mean lawful money of the United States of
America.
"Domestic Office" means, relative to the Agent or any Lender, the office
thereof designated as such below its signature hereto (or designated pursuant
to a Lender Assignment Agreement) or such other office of such Person within
the United States as may be designated from time to time by notice from such
Person to the Borrower and the Agent.
"EBITDA" means, for any period, an amount equal to the sum, computed for
such period, of
(a) Consolidated Net Income ((i) excluding extraordinary items of
gain and including extraordinary items of loss, in each case as determined
in accordance with GAAP consistently applied, (ii) excluding any non-cash
portion of restructuring charges accrued by the Borrower on its
consolidated income statements in respect of its 1995 and 1996 Fiscal
Years, (iii) excluding any ordinary gains arising from the Divestitures
(as defined in the Existing Credit Agreement), (iv) excluding non-cash
charges relating to the Borrower's workers' compensation obligations, a
write-down in the Borrower's investment in ShoLodge, a write-off of
remodeling expenses and a write-off of investment incurred in the
conversion of Shoney's Concept restaurants into BarbWire's Concept
restaurants in each case during Fiscal Year 1995 and (v) excluding non-
cash charges relating to the Borrower's employee stock option plan) for
such period;
plus
(b) all federal, state and local income taxes of the Borrower and
its Subsidiaries for such period (excluding the effects of any non-cash
portion of restructuring charges accrued by the Borrower on its
consolidated income statements in respect of its 1995 and 1996 Fiscal
Years);
plus
(c) Consolidated Interest Expense for such period;
plus
(d) the aggregate amount deducted, in determining Consolidated Net
Income for such period, with respect to depreciation and amortization in
accordance with GAAP consistently applied and in any event including, but
without duplication, the aggregate amount so deducted for (i) non-cash
interest charges and amortization of transaction costs with respect to
Indebtedness and (ii) amortization of bond discount relating to the
Subordinated Debentures.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"Event of Default" has the meaning assigned to such term in Section 8.1.
"Excess Cash Flow" means, for any Fiscal Year, an amount equal to the
excess of (a) the amount shown as "cash and cash equivalents at end of year" or
shown in a similar category on the audited consolidated statement of cash flows
(or a statement analogous to such a statement) prepared in accordance with GAAP
for the Borrower and its Subsidiaries for such Fiscal Year, minus an amount
equal to the Borrower's good faith estimate of taxes payable in connection with
asset sales made during such Fiscal Year, as reflected in Compliance
Certificates delivered under this Agreement during such Fiscal Year, minus, an
amount equal to the proceeds of borrowings under the Mortgage Financing
Transactions during such Fiscal Year over (b) an amount equal to .6 of 1% of
"total revenues" of the Borrower and its Subsidiaries for such Fiscal Year, as
shown on a consolidated income statement prepared in accordance with GAAP for
the Borrower and its Subsidiaries for such Fiscal Year.
"Existing Credit Agreement" has the meaning assigned to such term in the
second recital.
"Excluded Equity Issuance" means (a) either (i) an issuance of the common
stock of the Borrower; or (ii) an issuance of preferred stock of the Borrower
having terms and conditions (including dividend rate, redemption, voting and
other rights and preferences) and in form and substance satisfactory to the
Required Lenders, in each case the proceeds of which are used solely to
refinance the Bridge Financing, in each case, with related transaction costs;
and (b) each issuance of common stock of the Borrower as consideration for (i)
Franchisee Acquisitions permitted by Section 7.2.23 or (ii) the Transferred
Subsidiaries.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum for each day during such period equal to
(a) the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"First American" means First American National Bank of Nashville, a
national banking association.
"First American Facility" means the $20,000,000 revolving credit facility
provided to the Borrower by First American.
"Fiscal Quarter" means any quarter of a Fiscal Year and, in the case of
the Borrower's initial Fiscal Quarter of a Fiscal Year, means a period of
sixteen consecutive weeks, in the case of each of the Borrower's second and
third Fiscal Quarters of a Fiscal Year, means a period of twelve consecutive
weeks and, in the case of the Borrower's final Fiscal Quarter of a Fiscal Year,
means a period of twelve consecutive weeks if the Fiscal Year is comprised of
fifty-two weeks and thirteen consecutive weeks if the Fiscal Year is comprised
of fifty-three weeks.
"Fiscal Year" means any period of fifty-two or fifty-three consecutive
calendar weeks ending on the last Sunday in October of each calendar year;
references to a Fiscal Year with a number corresponding to any calendar year
(e.g. the "1996 Fiscal Year") refer to the Fiscal Year ending on the last
Sunday in October occurring during such calendar year.
"Franchisee Acquisitions" means (a) any additions to property, plant or
equipment of the Borrower or any of its Subsidiaries constituting restaurant or
related properties that are acquired from Concept franchisees of the Borrower
or (b) the acquisition of capital stock or other ownership interests in such
franchisees; but does not include the Acquisition.
"F. R. S. Board" means the Board of Governors of the Federal Reserve
System (or any successor).
"Funded Debt Ratio" means, at any date, the ratio of
(a) the Borrower's Consolidated Funded Debt at such time;
to
(b) the Borrower's EBITDA for the four Fiscal Quarter Period ending
on or just prior to such date.
"GAAP" is defined in Section 1.4.
"Guaranty" means any agreement, undertaking, or arrangement by which any
Person guarantees, endorses, or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to "keep-well" or supply funds to, or otherwise to invest
in, a debtor, or otherwise to assure a creditor against loss) the debt,
obligation, or other liability of any other Person (other than by endorsements
of instruments in the ordinary course of collection), or guarantees the payment
of dividends or other distributions upon the shares of any other Person. The
amount of the obligor's obligation under any Guaranty shall (subject to any
limitation set forth therein) be deemed to be the amount of the debt,
obligation, or other liability guaranteed or supported thereby.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement.
"Impermissible Qualification" means, relative to the opinion or
certification of any Independent Public Accountant as to any financial
statement of the Borrower, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be to
cause the Borrower to be in default of any of its obligations under
Section 7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purpose of this Agreement and each
other Loan Document, the parties hereto agree that the rule of contract
interpretation to the effect that where general words are followed by a
specific listing of items, the general words shall not be given their widest
meaning, shall not be applicable to limit a general statement, which is
followed by or referable to any enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"Indebtedness" of any Person, at a particular time, means all items which,
in conformity with GAAP, would be classified as liabilities on a balance sheet
of such Person as at such time and which constitute (a) indebtedness for
borrowed money or the deferred purchase price of assets or other property
(including, without limitation, all notes payable and drafts accepted
representing extensions of credit and all obligations evidenced by bonds,
debentures, notes or other similar instruments but excluding trade payables
incurred in the ordinary course of business payable within ninety days of the
date thereof); provided, that for purposes of Section 7.2.4 the amount of
Indebtedness in respect of the Subordinated LYONS Notes and all other
Indebtedness issued on a zero coupon basis shall be the original issue price
thereof plus the amount of accrued interest thereon, (b) obligations with
respect to any conditional sale agreement or title retention agreement, (c)
indebtedness arising under acceptance facilities, in connection with surety or
other similar bonds, and the outstanding amount of all letters of credit issued
for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all liabilities secured by any Security Interest in any
property owned by such Person even though it has not assumed or otherwise
become liable for the payment thereof, (e) obligations under Capitalized
Leases, (f) obligations with respect to Rate Swap Agreements, and (g) any
asserted withdrawal liability of such Person or a commonly controlled entity to
a Multiemployer Plan.
"Independent Public Accountant" means Ernst & Young or any other public
accounting firm of recognized national standing selected by the Borrower and
consented to by the Required Lenders.
"Instrument" means any contract, agreement, indenture, mortgage or other
document or writing (whether by formal agreement, letter, or otherwise) under
which any obligation is evidenced, assumed, or undertaken, or any right to any
Security Interest is granted or perfected.
"Interest Period" means, relative to any LIBO Rate Loans, the period which
shall begin on (and include) the date on which such LIBO Rate Loans are made
pursuant to Section 2.3, or continued as or converted into LIBO Rate Loans
pursuant to Section 2.4, and shall end on (but exclude) the day which
numerically corresponds to such date one, two, three or six months thereafter,
as the Borrower may select in its relevant notice pursuant to Section 2.3 or
Section 2.4; provided, however, that:
(a) the Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates falling on
more than five different dates;
(b) absent the timely selection of a new Interest Period for a then
outstanding LIBO Rate Loan, such LIBO Rate Loan shall, immediately upon
the expiration of such Interest Period, automatically and without further
action be converted into a Base Rate Loan;
(c) if there exists no numerically corresponding day in such month,
such Interest Period shall end on the last Business Day of such month;
(d) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period shall
end on the Business Day next preceding such numerically corresponding
day); and
(e) the Borrower may not select, and there shall not be applicable,
any Interest Period for any Loan requested to be made or continued as, or
converted into, LIBO Rate Loans that would end later than the Commitment
Termination Date or that would require such Interest Period to be broken
by reason of a mandatory prepayment required because of a mandatory
commitment reduction provided for in clause (a) of Section 2.2.2.
"Investment" means, when used with reference to any investment of the
Borrower or any of its Subsidiaries,
(a) any loan, advance or other extension of credit made by it to
any other Person (excluding commission, travel, salary, relocation
expenses, and similar advances to officers and employees made in the
ordinary course of business);
(b) any Guaranty made by such Person; and
(c) any capital contribution by such Person to, or purchase of
stock or other securities or partnership interests by such Person in,
any other Person, or any other investment evidencing an ownership or
similar interest of such Person in any other Person;
and the amount of any Investment shall be the original principal or capital
amount thereof less (i) all cash returns of principal or equity thereon and
(ii) in the case of any Guaranty, any reduction in the aggregate amount of
liability under such Guaranty to the extent that such reduction is made
strictly in accordance with the terms of such Guaranty (and, in each case,
without adjustment by reason of the financial condition of such other Person).
"Issuance Request" means a request and certificate duly executed by an
Authorized Officer of the Borrower, in substantially the form of Exhibit F
attached hereto (with such changes thereto as may be agreed upon from time to
time by the Agent, the applicable LC Issuer and the Borrower).
"LC Issuer" means any affiliate, unit or agency of Canadian Imperial Bank
of Commerce, or any other Lender which has agreed to issue one or more Letters
of Credit at the request of the Agent.
"Lender" and "Lenders" have the respective meanings assigned to such terms
in the preamble hereof.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit L hereto.
"Lender Default" shall mean (a) the refusal (which has not been retracted)
of a Lender to make available its portion of any Borrowing or (b) a Lender
having notified in writing the Borrower and/or the Agent that it does not
intend to comply with its obligations under Section 2.1 or Section 2.1.1, in
either case as a result of any takeover of such Lender by any regulatory
authority or agency.
"Lender Party" or "Lender Parties" has the meaning assigned to such term
in Section 10.4.
"Letter of Credit" has the meaning assigned to such term in Section 3.4.
"Letter of Credit Commitment" means, with respect to an LC Issuer, such
LC Issuer's obligation to issue Letters of Credit pursuant to Section 3.4 and,
with respect to each of the other Lenders, the obligations of each such Lender
to participate in such Letters of Credit pursuant to Section 3.6.
"Letter of Credit Commitment Amount" means, on any date, $20,000,000, as
such amount may be permanently reduced from time to time pursuant to Section
2.2.
"Letter of Credit Outstandings" means, at any time, an amount equal to the
sum of
(a) the aggregate Stated Amount at such time of all Letters of
Credit then outstanding and undrawn (as such aggregate Stated Amount shall
be adjusted, from time to time, as a result of drawings, the issuance of
Letters of Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the arithmetic average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar
deposits in immediately available funds are offered to each Reference Lender's
LIBOR Office in the interbank eurodollar market as at or about 10:00 a.m. (New
York City time) two Business Days prior to the beginning of such Interest
Period for delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of each such Reference Lender's LIBO Rate
Loan and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received by
the Agent from the Reference Lenders, two Business Days before the first day of
such Interest Period.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto (or designated pursuant to a
Lender Assignment Agreement) or such other office, whether or not outside the
United States, of such Lender as designated from time to time by notice from
such Lender to the Borrower and the Agent which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder and through which such Lender, if it
is a Reference Lender, determines the LIBO Rate.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"Limited Partnerships" means, collectively, Shoney's Manassas Limited
Partnership, Captain D's Manassas Limited Partnership, Pargo's Manassas Limited
Partnership, Shoney's - Captain D's-Winchester Limited Partnership and Shoney's
of Eufaula, Ltd., as to each of which the Borrower is the general partner and
each of which owns restaurant(s) which are leased to the Borrower and/or
motel(s) which are leased to ShoLodge, Inc.
"Loan to Value Ratio" means the ratio, expressed as a percentage, of the
Revolving Commitment Amount at any date of determination to the aggregate value
of then existing collateral for the Obligations and the assets of Realco.
"Loans" is defined in Section 2.1.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Letters of Credit, the Collateral Documents, the Agent's Fee Letter, any Lender
Assignment Agreement executed pursuant to this Agreement and each other
instrument or document executed and delivered pursuant to or in connection with
this Agreement or any thereof.
"LYONS Indenture" means the indenture, dated as of April 1, 1989, by the
Borrower in favor of The Bank of New York, as Trustee, with respect to the
Subordinated LYONS Notes as in effect on the Closing Date.
"Marriott" means the Marriott Corporation, a Delaware corporation, or its
Affiliates.
"Materially Adverse Effect" means, relative to any occurrence of whatever
nature (including, without limitation, any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
materially adverse effect on:
(a) the consolidated business, assets, revenues, financial
condition, operations, or prospects of the Borrower and its Subsidiaries;
or
(b) the ability of the Borrower to perform any of its payment or
other material obligations under this Agreement, the Notes, the Collateral
Documents or any other Loan Documents.
"Maturity" means, relative to any Loan, the date on which such Loan is
stated to be due and payable in whole or in part (in accordance with the Note
evidencing such Loan, this Agreement, or otherwise) or such earlier date when
such Loan (or any portion thereof) shall be or become due and payable in whole
or in part in accordance with the terms of this Agreement, whether by required
prepayment, reduction, declaration, acceleration or otherwise.
"Memorandum" means the Confidential Information Memorandum dated March,
1996, compiled by Canadian Imperial Bank of Commerce based on information
provided by the Borrower, (and the attachments and enclosures thereto).
"Mortgage Financing Collateral" means (a) those properties listed on Item
1.1 ("Mortgage Financing Collateral") of the Disclosure Schedule (including
buildings placed thereon) that have been or may be used to collateralize the
debt incurred by the Borrower in the Mortgage Financing Transactions; and (b)
properties which are acquired by the Borrower or its Subsidiaries (other than
Realco) and which are identified as "Mortgage Financing Collateral Property" in
a written notice to be provided to the Agent (which written notice may be
provided pursuant to a Compliance Certificate) and may be used to collateralize
the debt incurred by the Borrower in the Mortgage Financing Transactions.
Mortgage Financing Collateral includes properties to be used for the purpose of
engaging in new Mortgage Financing Transactions or to be used in substitution
for existing Mortgage Financing Collateral subject to Mortgage Financing
Transactions, in each case, as permitted by clause (a) of Section 7.2.20.
"Mortgage Financing Transaction" means any program of acquiring or
financing
(a) land and buildings for restaurant facilities listed on Item 1.1
("Mortgage Financing Collateral") of the Disclosure Schedule or opened or
acquired after the date hereof, to be owned and operated by the Borrower or its
Subsidiaries; and
(b) land, buildings and/or equipment for manufacturing and distribution
facilities to be owned and operated by the Borrower or its Subsidiaries,
in each case in which the lenders granting such financing will be granted
Security Interests in the land and/or buildings and/or fixtures acquired or
financed on terms and conditions (which may include, without limitation,
through the issuance and guarantee by the Borrower or its Subsidiaries of
industrial revenue bonds) satisfactory to the Agent and evidenced by Mortgage
Financing Transaction Documents.
"Mortgage Financing Transaction Document" means each agreement, mortgage,
security agreement, deed of trust, indenture, note and each other document and
instrument relating to a Mortgage Financing Transaction, in each case, in form
and substance satisfactory to the Required Lenders; provided, that, if the
covenants contained therein are not more restrictive on the Borrower in all
material respects than those contained in the Mortgage Financing Transaction
Documents relating to Mortgage Financing Transaction Indebtedness permitted
under clause (c) of Section 7.2.2 and which Indebtedness has a term of at least
three years, such items need only be in form and substance satisfactory to the
Agent. "Mortgage Financing Transaction Documents" means all such agreements,
mortgages, indentures, notes and other documents and instruments.
"Mortgages" means those mortgages, in substantially the form of Exhibit I
attached hereto, executed and delivered by the Borrower in favor of the
Collateral Agent and a trustee, where necessary, for the benefit of the Lenders
securing the Obligations, as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time in accordance with the
provisions thereof.
"Multiemployer Plan" has the meaning assigned to such term under section
3(37) of ERISA.
"Net Debt or Equity Proceeds" means, (a) with respect to the sale by the
Borrower of any stock or warrants or options issued by the Borrower or from the
exercise of any warrants or options (excluding, in each case, proceeds received
pursuant to employee stock purchase plans, director or employee option plans or
other employee benefit plans or from Excluded Equity Issuances); and (b) with
respect to the sale, issuance or incurrence of Indebtedness by the Borrower not
otherwise permitted by Section 7.2.2 but as to which the Borrower has received
the prior written consent of the Required Lenders, in each case, the excess of
(i) the gross proceeds received by the Borrower from such sale, exercise,
issuance or incurrence over (ii) the sum of all customary fees and expenses
with respect to underwriting commissions and related legal, investment banking
and accounting fees and disbursements paid in connection therewith.
Notwithstanding the foregoing, there shall be excluded from Net Debt or Equity
Proceeds amounts described in clauses (a) and (b) above used to refinance the
Bridge Financing or, after the Bridge Financing has been repaid, Mortgage
Financing Transaction Indebtedness.
"Net Proceeds" means the gross proceeds received by the Borrower or any of
its Subsidiaries from the sale or other disposition of any of their respective
assets (excluding, proceeds from an Excluded Equity Issuance, inventory sold in
the ordinary course of business and any item from which Net Debt or Equity
Proceeds are received), less customary selling expenses incurred in connection
therewith and good faith estimated taxes payable as a result thereof which are
actually paid; provided, that, if, in accordance with Section 7.2.11, the
Borrower shall be permitted to receive a note or other instrument as part or
all of the consideration for such sale or other disposition, the gross proceeds
shall be deemed to include the principal amount of any such note or the amount
of the obligation evidenced by any such other instrument; and provided,
further, that "Net Proceeds" shall be deemed not to include (a) an amount equal
to the first $5,000,000 in proceeds (determined by aggregating the gross
proceeds from applicable asset sales and dispositions and subtracting therefrom
customary selling expenses incurred in connection therewith and good faith
estimated taxes payable as a result thereof) realized during each Fiscal Year
and (b) any rental payments made to the Borrower or Realco under a lease or
sublease of Lee's Famous Recipe restaurants permitted under clause (l) of
Section 7.2.11.
"New Lender" has the meaning assigned to such term in Section 4.10.
"1989 Mortgage Financing Transaction" means the Mortgage Financing
Transaction consummated by the Borrower during the 1989 Fiscal Year.
"Non-Defaulting Lender" means and includes each Lender other than a
Defaulting Lender.
"Note" means a promissory note of the Borrower payable to any Lender, in
the form of Exhibit A hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate Indebtedness
of the Borrower to such Lender resulting from outstanding Loans, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower to the Agent, the Collateral Agent and/or the Lenders arising under or
in connection with this Agreement and the Notes and all obligations (monetary
or otherwise) of the Borrower and its Subsidiaries arising under or in
connection with the Collateral Documents or the other Loan Documents.
"Original Commitments" has the meaning assigned to such term in the second
recital.
"Original Credit Extensions" has the meaning assigned to such term in the
second recital.
"Original Lenders" has the meaning assigned to such term in the second
recital.
"Overnight Funds Rate" means, on any date, a fluctuating interest rate per
annum equal to the interest rate (rounded upwards, if necessary, to the nearest
1/16 of 1%) offered in the interbank market to CIBC-NYA as the overnight
Federal Funds Rate at or about 10:00 a.m. New York City time on such day (or if
such day is not a Business Day, for the next preceding Business Day).
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto as its "Percentage", as such percentage may be
adjusted from time to time pursuant to a Lender Assignment Agreement executed
by such Lender and its Assignee Lender and delivered pursuant to Section
10.10.1.
"Permitted Subleases" means the subleases by the Borrower of real
properties (and related equipment and fixtures) owned by Realco pursuant to
clauses (j) or (l) of Section 7.2.11.
"Person" means any natural person, corporation, firm, trust, partnership,
business trust, joint venture, association, government, governmental agency or
authority, or any other entity, whether acting in an individual, fiduciary, or
other capacity.
"Plan" means a "pension plan", as such term is defined in ERISA, which is
subject to Title IV of ERISA (other than a Multiemployer Plan) and to which the
Borrower or any corporation, trade or business that is, along with the
Borrower, a member of a controlled group of corporations or a controlled group
of trades or businesses (as described in sections 414(b) and 414(c),
respectively, of the Code or section 4001 of ERISA) may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under section
4069 of ERISA.
"Plan of Reorganization" has the meaning assigned to such term in the
eighth recital.
"Pledge Agreement" means the pledge agreement, in substantially the form
of Exhibit G attached hereto, executed and delivered by the Borrower in favor
of the Collateral Agent for the benefit of the Lenders, securing the
Obligations, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with the provisions thereof.
"Pledged Notes" has the meaning assigned to such term in the Pledge
Agreement.
"Pledged Shares" has the meaning assigned to such term in the Pledge
Agreement.
"Quarterly Payment Date" means the twenty-second day of each October,
January, April, and July of each year or, if any such day is not a Business
Day, the next succeeding Business Day.
"Rate Swap Agreement" means any interest rate swap, cap, interest rate
collar agreement or similar arrangement entered into, from time to time, by the
Borrower and a Swap Party.
"Realco" means Shoney's Real Estate, Inc., a special purpose corporation
that is a wholly-owned Subsidiary of the Borrower, incorporated under the laws
of the State of Tennessee.
"Realco Documents" means the Realco Lease and the Transfer Documents.
"Realco Lease" means the Master Lease Agreement, dated as of July 21,
1993, between the Borrower and Realco providing for the lease by Realco to the
Borrower of Realco's property on a market value basis, as amended or otherwise
modified from time to time subject to the provisions of Section 7.2.20.
"Reference Lenders" means, for purposes of determining the LIBO Rate and
in connection with other matters pertaining to LIBO Rate Loans, CIBC-NYA, The
Bank of New York and NationsBank of Tennessee, N.A., together with any other
Lender approved by the Agent and the Borrower and designated in a notice to all
Lenders by the Agent to be a Reference Lender. If all Loans made by a
Reference Lender hereunder are assigned, prepaid or repaid and its Revolving
Commitment assigned for any reason whatsoever, such Reference Lender shall
thereupon cease to be a Reference Lender and, if as a result of the foregoing,
there shall only be one Reference Lender remaining, then the Agent (after
consultation with the Borrower) shall, by notice to the Borrower and the
Lenders, designate another Lender as a Reference Lender so that, to the extent
possible, there shall at all times be at least two Reference Lenders.
"Regulatory Change" means, relative to any Lender, any change after the
date hereof in any (or the adoption after May 9, 1993 of any new):
(a) United States Federal or state law or foreign law applicable to
such Lender; or
(b) regulation, interpretation, directive, or request (whether or
not having the force of law) applicable to such Lender of any court or
governmental authority charged with the interpretation or administration
of any law referred to in the immediately preceding clause (a) or of any
fiscal, monetary, or other authority having jurisdiction over such Lender.
"Reimbursement Obligation" is defined in Section 3.8.
"Related Parties" is defined in Section 9.2.
"Release" means a "release", as such term is defined in CERCLA.
"Remodeling Expenses" means expenses for the remodeling of restaurant
properties recorded on the books and records of the Borrower or its
Subsidiaries as additions to property, plant or equipment of the Borrower or
such Subsidiary in accordance with GAAP.
"Reportable Event" has the meaning assigned to such term in clause (a) of
Section 6.12.
"Required Lenders" means, at the time any determination thereof is to be
made, Non-Defaulting Lenders having an aggregate Adjusted Percentage of more
than 50%.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect from time to
time.
"Responsible Officer" means, at the time any determination thereof is to
be made, each of those persons who are the Chairman of the Board (if at the
time an officer), President, chief financial officer (regardless of the title),
Treasurer, corporate controller (regardless of the title), or Secretary of the
Borrower.
"Revolving Commitment" means, relative to any Lender, such Lender's
obligation to make Loans pursuant to Section 2.1 and to issue (in the case of
an LC Issuer) or participate in (in the case of all Lenders) Letters of Credit
pursuant to Section 2.1.1.
"Revolving Commitment Amount" means the amount of $270,000,000 as such
amount was in effect under the Existing Credit Agreement, which amount has been
reduced to $214,600,000 as of the Closing Date, as such amount may be further
reduced from time to time pursuant to Section 2.2.
"Security Agreement" means the security agreement, in substantially the
form of Exhibit E hereto, executed and delivered by the Borrower in favor of
the Collateral Agent for the benefit of the Lenders, securing the Obligations,
as the same may be amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with the terms thereof.
"Security Instrument" means any security agreement, chattel mortgage,
assignment, financing or similar statement or notice, continuation statement,
other agreement or Instrument, or amendment or supplement to any thereof,
providing for, evidencing or perfecting any Security Interest or other lien.
"Security Interest" means any interest in any real or personal property or
fixture which secures payment or performance of any obligation and shall
include any mortgage, lien, encumbrance, charge or other security interest of
any kind, whether arising under a Security Instrument or as a matter of law,
judicial process or otherwise.
"ShoLodge" means ShoLodge, Inc., a Tennessee corporation.
"Shoney's Investments" means Shoney's Investments, Inc., a Nevada
corporation.
"Stated Amount" of each Letter of Credit means the "Stated Amount" as
defined therein.
"Stated Expiry Date" has the meaning assigned to such term in clause (b)
of Section 3.4.
"Stated Maturity Date" means October 22, 1999.
"Subordinated Debentures" means the $51,563,000 in aggregate principal
amount of TPI's 8.25% Convertible Subordinated Debentures due 2002 issued
pursuant to the Subordinated Indenture.
"Subordinated Debentures Trustee" means The Bank of New York.
"Subordinated Debt" means, collectively:
(a) the Subordinated Debentures;
(b) the Subordinated LYONS Notes; and
(c) any other indebtedness (other than indebtedness arising out of
Mortgage Financing Transactions) of the Borrower for money borrowed and
permitted to be outstanding by the Required Lenders in their sole
discretion and which is subordinated in form and substance to the
Obligations, and which has subordination provisions, terms of payment,
interest rates, covenants, remedies, defaults and other material terms, in
each case satisfactory in form and substance to the Required Lenders, as
evidenced by their written approval thereof.
"Subordinated Indenture" means the Indenture, dated as of July 15, 1992,
among TPI, as issuer, and TPIR, as guarantor, and the Borrower and the
Subordinated Debentures Trustee, as assumed by the Borrower pursuant to a
supplemental indenture in form and substance acceptable to the Agent, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the provisions of this Agreement.
"Subordinated LYONS Notes" means those zero coupon subordinated, liquid
yield option notes due 2004 in an aggregate face amount of $201,250,000 issued
on April 11, 1989 as in effect on the date hereof.
"Subsidiary" means, when used with respect to any corporation, any other
corporation more than 50% of the outstanding shares of capital stock of which
having ordinary voting power for the election of directors is owned directly or
indirectly by such corporation, and, except as otherwise indicated herein,
references to Subsidiaries shall refer to Subsidiaries of the Borrower.
"Subsidiary Acknowledgment" means the subsidiary acknowledgment dated the
Closing Date executed and delivered by the Subsidiaries party to the Subsidiary
Guaranty.
"Subsidiary Guaranty" means the guaranty in substantially the form of
Exhibit J attached hereto, executed and delivered by each Subsidiary (other
than the Transferred Subsidiaries) in favor of the Collateral Agent for the
benefit of the Lenders, as such guaranty may be amended, supplemented, amended
and restated or otherwise modified from time to time.
"Subsidiary Mortgages" means each of the mortgages, in substantially the
form of Exhibit I attached hereto, executed and delivered by Commissary
Operations, Inc. in favor of the Collateral Agent and a trustee, where
necessary, for the benefit of the Lenders, securing the Subsidiary Guaranty, as
such mortgages may be amended, supplemented, amended and restated or otherwise
modified from time to time.
"Subsidiary Security Agreements" means each of the security agreements, in
substantially the form of Exhibit H attached hereto, executed and delivered by
each Subsidiary of the Borrower (other than the Transferred Subsidiaries) in
favor of the Collateral Agent for the benefit of the Lenders, securing the
Subsidiary Guaranty, as such security agreements may be amended, supplemented,
amended and restated or otherwise modified from time to time.
"Swap Party" means any Affiliate, unit, or agency (including CIBC-Bank) of
Canadian Imperial Bank of Commerce, or any other Lender (or Affiliate thereof)
or any other bank or financial institution acceptable to the Agent, which has
agreed to enter into a Rate Swap Agreement.
"Taxes" has the meaning assigned to such term in Section 4.6.
"TPI" has the meaning assigned to such term in the eighth recital.
"TPIR" means TPI Restaurants, Inc., a Tennessee corporation.
"Trademark Security Agreement" means the security agreement in
substantially the form of Exhibit A attached to the Security Agreement executed
and delivered by the Borrower and Shoney's Investments in favor of the
Collateral Agent for the benefit of the Lenders, as the same may be amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with the provisions thereof.
"Transfer Documents" means deeds, deeds of transfer and other documents
and filings necessary to transfer restaurants owned by the Borrower to Realco
in accordance with the terms hereof.
"Transferred Subsidiaries" means those Subsidiaries of TPI acquired by the
Borrower in connection with the Acquisition and shall include TPIR, TPI
Entertainment, Inc., a Delaware corporation, and TPI Insurance Corporation, a
Hawaii corporation.
"Unfunded Vested Liabilities" means, relative to any Plan, at any time,
the excess (if any) of
(a) the present value of all vested nonforfeitable benefits under
such Plan
over
(b) the fair market value of all Plan assets allocable to such
benefits,
all determined as of the then most recent valuation date for such Plan, but
only to the extent that such excess represents a potential liability of the
Borrower or any Affiliate to the PBGC or the Plan under Title IV of ERISA.
"United States" or "U.S." means the United States of America, its fifty
States, and the District of Columbia.
"Welfare Plan" means a "welfare plan", as such term is defined in ERISA.
SECTION 1.2. Use of Defined Terms. Terms for which meanings are provided
in this Agreement shall, unless otherwise defined or the context requires, have
such meanings when used in the Note, Borrowing Request, Issuance Request,
Continuation/Conversion Notice, Compliance Certificate, Loan Document and each
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document hereafter executed pursuant hereto.
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such Loan Document,
as the case may be, and unless otherwise specified, references in any Article,
Section, or definition to any clause are references to such clause of such
Section, Article, or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with those generally accepted accounting principles ("GAAP")
applied in the preparation of the financial statements referred to in Section
6.4. For purposes of Section 7.2.4, any calculation that is made with respect
to the results of operations of the Borrower and its Subsidiaries for the
Fiscal Quarter in which the Acquisition occurs shall exclude the results of
operations of the Transferred Subsidiaries and the amount of debt repaid or
assumed by the Borrower (including letters of credit and capitalized leases) in
consummation of the Acquisition and the Assumption for such Fiscal Quarter.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Revolving Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally
agrees to make reducing revolving loans (relative to such Lender, and of any
type, its "Loans") from time to time on any Business Day occurring prior to the
Commitment Termination Date to the Borrower in a principal amount equal to such
Lender's Percentage of the aggregate amount of the Borrowing requested by the
Borrower to be made on such day, provided that no Lender shall be permitted or
required to make any Loan if, after giving effect thereto, (a) the aggregate
outstanding principal amount of all Loans and Letter of Credit Outstandings
would exceed the Revolving Commitment Amount or (b) the aggregate outstanding
principal amount of all of such Lender's Loans and such Lender's Percentage of
Letter of Credit Outstandings would exceed such Lender's Percentage of the
Revolving Commitment Amount. Notwithstanding the foregoing, beginning on August
26, 1996 and ending on the earlier to occur of (i) delivery by the lender under
the 1989 Mortgage Financing Transaction to the Borrower of binding commitments
in form and substance satisfactory to the Agent to extend the maturity of such
1989 Mortgage Financing Transaction on terms and conditions acceptable to the
Agent or (ii) the date such 1989 Mortgage Financing Transaction is paid in
full, the aggregate amount of Loans and Letter of Credit Outstandings shall not
exceed the Revolving Commitment Amount then in effect less $9,500,000. The
commitment of each Lender described in this Section 2.1 (including Section
2.1.1) is herein referred to as its "Revolving Commitment". On the terms and
subject to the conditions hereof, the Borrower may from time to time borrow,
prepay and reborrow Loans.
SECTION 2.1.1. Letter of Credit Commitment. From time to time on any
Business Day occurring prior to the Commitment Termination Date, each LC Issuer
(a) agrees to issue one or more Letters of Credit as requested by
the Borrower in accordance with the terms of this Agreement; and
(b) agrees that, upon request of the Borrower in accordance with
the terms of this Agreement, such LC Issuer will increase the Stated
Amount of outstanding Letters of Credit (subject to the limits and other
provisions of this Agreement) and extend the Stated Expiry Date of an
existing Letter of Credit previously issued hereunder to a date not later
than the earlier of (x) the Commitment Termination Date and (y) one year
from the date of such extension;
provided, that, no LC Issuer shall be permitted or required to issue or
increase the Stated Amount or extend the Stated Expiry Date of any Letter of
Credit if, after giving effect thereto,
(c) the aggregate amount of all Letter of Credit Outstandings would
exceed the Letter of Credit Commitment Amount; or
(d) the sum of all Letter of Credit Outstandings plus the aggregate
unpaid principal amount of all Loans then outstanding would exceed the
Revolving Commitment Amount.
SECTION 2.2. Reduction of Revolving Commitment Amount and Letter of
Credit Commitment Amount. The Revolving Commitment Amount and the Letter of
Credit Commitment Amount are subject to reduction from time to time pursuant to
this Section 2.2.
SECTION 2.2.1. Optional. The Borrower may, from time to time on any
Business Day occurring after the time of the initial Borrowing hereunder,
voluntarily reduce the Revolving Commitment Amount or the Letter of Credit
Commitment Amount; provided, however, that (a) all such reductions shall
require at least three Business Days' prior notice to the Agent (which shall
promptly give notice thereof to the Lenders) and shall be permanent, and any
voluntary partial reduction of (i) the Revolving Commitment Amount shall be in
a minimum amount of $1,000,000 and in an integral multiple of $100,000 and
(ii) the Letter of Credit Commitment Amount shall be in a minimum amount of
$1,000,000 and in an integral multiple of $100,000, (b) except as provided
below, the Revolving Commitment Amount may not be so reduced to an amount less
than the then Letter of Credit Commitment Amount and (c) except as provided
below, the Borrower may not reduce the Letter of Credit Commitment Amount to an
amount less than the then Letter of Credit Outstandings; and provided, further,
that the Borrower may terminate the Revolving Commitments in whole if, at the
time of and as a condition of such termination, (y) the Borrower shall have
repaid in full the aggregate outstanding principal amount of all Loans and
Reimbursement Obligations, together with all accrued interest and fees thereon
and all other amounts payable under the Loan Documents to the date of
termination, and (z)(I) all unexpired Letters of Credit shall have been
returned to the LC Issuer for cancellation or (II) the Borrower shall deposit
cash in an amount equal to the Stated Amount of each Letter of Credit
(including all fees and expenses related thereto), into an account specified by
the relevant LC Issuer to be held as collateral security for the repayment of
the Borrower's Obligations in connection with the Letters of Credit issued by
such LC Issuer or (III) each LC Issuer receives a letter of credit in form and
substance acceptable to such LC Issuer in support of all outstanding Letters of
Credit issued by such LC Issuer from a financial institution acceptable to such
LC Issuer.
SECTION 2.2.2. Mandatory. (a) On each date set forth below, the
Revolving Commitment Amount shall, without any further action, automatically
and permanently be reduced by the amount set forth opposite such date:
<TABLE>
<CAPTION>
Date Reduction Amount
<S> <C>
October 22, 1996 $25,000,000
April 22, 1997 $30,000,000
October 22, 1997 $30,000,000
April 22, 1998 $37,500,000
October 22, 1998 $37,500,000
April 22, 1999 $37,500,000
October 22, 1999 $17,100,000
</TABLE>
provided, however, that in any event on the Commitment Termination Date the
Revolving Commitment Amount shall be zero; provided, further, however, that in
the event that the Revolving Commitment Amount shall be reduced to an amount
less than the Letter of Credit Commitment Amount, then the Letter of Credit
Commitment Amount shall be automatically and permanently reduced by an amount
equal to the excess of such Letter of Credit Commitment Amount over the
Revolving Commitment Amount as so reduced.
(b) After the repayment in full of the Bridge Financing, on the day
immediately following the date of the receipt by the Borrower or any Subsidiary
of Net Proceeds, the Revolving Commitment Amount shall be immediately and
permanently reduced by an amount equal to such Net Proceeds.
(c) On the earlier of (i) the ninetieth day after the close of each
Fiscal Year commencing with Fiscal Year 1995 or (ii) the date of delivery of
the financial statements required pursuant to clause (a) of Section 7.1.1 in
respect of such Fiscal Year, the Revolving Commitment Amount shall be
immediately and permanently reduced by an amount equal to 75% of Excess Cash
Flow, if any, for such Fiscal Year; provided, however, that if in any such
Fiscal Year the Borrower was entitled to a reduction in the Applicable Margin
for each Fiscal Quarter of such Fiscal Year, then the Commitment Amount shall
be immediately and permanently reduced by an amount equal to only 50% of Excess
Cash Flow, if any, for such Fiscal Year.
(d) After the repayment in full of the Bridge Financing, on the day
immediately following the date of the receipt by the Borrower or any Subsidiary
of Net Debt or Equity Proceeds, the Revolving Commitment Amount shall be
immediately and permanently reduced by an amount equal to such Net Debt or
Equity Proceeds.
SECTION 2.2.3. Application. Voluntary reductions of the Revolving
Commitment Amount made pursuant to Section 2.2.1 shall be applied (a) first, to
reduce to zero the next occurring (and only the next occurring) "Reduction
Amount" set forth in the table contained in clause (a) of Section 2.2.2 and (b)
second, to diminish the "Reduction Amounts" set forth in the table contained in
clause (a) of Section 2.2.2 in the inverse order thereof. The mandatory
reductions of the Revolving Commitment Amount under clauses (b), (c) and (d) of
Section 2.2.2 shall be used to diminish the "Reduction Amounts" set forth in
the table contained in clause (a) of Section 2.2.2 in the inverse order
thereof.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to
the Agent (whereupon the Agent shall promptly notify the Lenders thereof) on or
before 10:00 a.m. (New York City time) on a Business Day, the Borrower may from
time to time irrevocably request on, in the case of Base Rate Loans, not less
than one nor more than five, and in the case of LIBO Rate Loans, not less than
three nor more than five, Business Days' notice, that a Borrowing be made in a
minimum amount of $5,000,000 and an integral multiple of $100,000, or, if less,
the unused portion of the Revolving Commitment Amount. On the terms and
subject to the conditions of this Agreement, each Borrowing shall be comprised
of the type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 11:00 a.m. (New York City time) on such
Business Day each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Agent shall specify from time to
time by notice to the Lenders. To the extent funds are received from the
Lenders, the Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any
other Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent (which shall promptly give notice
thereof to the Lenders) on or before 10:00 a.m. (New York City time) on a
Business Day, the Borrower may from time to time irrevocably elect, on not less
than three nor more than five Business Days' notice that all, or any portion in
an aggregate minimum amount of $5,000,000 and an integral multiple of $100,000,
of any Loans be, in the case of Base Rate Loans, converted into LIBO Rate Loans
or, in the case of LIBO Rate Loans, be converted into Base Rate Loans or
continued as LIBO Rate Loans (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least
three Business Days before the last day of the then current Interest Period
with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); provided, however, that (i) subject
to Section 4.1, each such conversion or continuation shall be pro rated among
the applicable outstanding Loans of all Lenders, and (ii) no portion of the
outstanding principal amount of any Loans may be continued as, or be converted
into, LIBO Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing, as
the case may be, Dollar certificates of deposit in the U.S. or Dollar deposits
in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. Notes. Each Lender's Loans under its Revolving Commitment
shall be evidenced by a Note payable to the order of such Lender in a maximum
principal amount equal to such Lender's Original Commitment (or, in the case of
an Assignee Lender, an amount equal to the assigning Lender's assigned amount).
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on the grid attached to such Lender's Note (or on
any continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to, the Loans evidenced thereby. Such notations
shall be rebuttable presumptive evidence of the information so set forth;
provided, however, that the failure of any Lender to make any such notations
shall not limit or otherwise affect any Obligations of the Borrower. If so
requested by any Lender in writing to the Borrower and the Agent, the Borrower
agrees to execute separate Notes evidencing the LIBO Rate Loans and the Base
Rate Loans of such Lender.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
SECTION 3.1.1. Voluntary Prepayments. Prior to the Stated Maturity Date,
the Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided, however, that
(a) any such prepayment of Loans shall be made pro rata among Loans
of all Non-Defaulting Lenders of the same type and, if applicable, having
the same Interest Period; provided, however, further, that at the
Borrower's election, a prepayment made pursuant to this Section 3.1.1 may
be applied to a Loan of a Defaulting Lender;
(b) no such prepayment of any LIBO Rate Loan may be made on any day
other than the last day of the Interest Period for such Loan;
(c) all such voluntary prepayments shall require at least two but
no more than five Business Days' prior written notice as to prepayments of
Base Rate Loans, and at least three but no more than five Business Days'
prior written notice as to prepayments of LIBO Rate Loans, in each case to
the Agent (which will promptly notify the other Lenders thereof); and
(d) all such voluntary partial prepayments shall be in an aggregate
minimum amount of $1,000,000 and an integral multiple of $100,000.
No voluntary prepayment of principal of any Loans shall in and of itself
cause a reduction in the Revolving Commitment Amount. Each prepayment of any
Loans made pursuant to this Section shall be without premium or penalty, except
as may be required by Section 4.4.
SECTION 3.1.2. Mandatory Prepayments. Prior to the Stated Maturity Date,
the Borrower
(a) shall, on each date when any reduction in the Revolving
Commitment Amount shall become effective, make a mandatory prepayment of
the Loans of Non-Defaulting Lenders equal to the excess, if any, of the
aggregate, outstanding principal amount of all Loans of such Non-
Defaulting Lenders plus all Letter of Credit Outstandings over the
Adjusted Revolving Commitment Amount as so reduced;
(b) shall, on each date that for any reason the aggregate
outstanding principal amount of all Loans plus all Letter of Credit
Outstandings exceeds the Revolving Commitment Amount then in effect, make
a mandatory prepayment of the Loans equal to such excess;
(c) shall, on each date that for any reason the aggregate amount of
all Letter of Credit Outstandings exceeds the Letter of Credit Commitment
Amount then in effect, make a payment of all outstanding Reimbursement
Obligations equal to such excess and, to the extent that the Letter of
Credit Outstandings still exceed the Letter of Credit Commitment Amount,
deposit cash with the Agent in an amount equal to such excess to be held
as collateral security for the reimbursement of the Borrower's Obligations
in connection with the Letters of Credit;
(d) shall, on each date on which the aggregate principal amount of
all Loans made by a Defaulting Lender exceeds an amount equal to such
Defaulting Lender's Percentage of the Revolving Commitment Amount, prepay
principal of Loans of such Defaulting Lender in an amount equal to such
excess; and
(e) shall, immediately upon any acceleration of the Stated Maturity
Date of any Loans, pursuant to Section 8.2 or Section 8.3, repay all (or
if only a portion of the Loans are accelerated thereunder, such portion
of) the Loans.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section
3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as Base Rate
Loans, equal to the sum of the CIBC Alternate Base Rate from time to time
in effect plus the Applicable Margin; and
(b) on that portion maintained as LIBO Rate Loans, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin.
All LIBO Rate Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.
SECTION 3.2.2. Default Rates. After the date any principal amount of any
Loan is due and payable (whether on the Stated Maturity Date, upon acceleration
or otherwise), after the Borrower has defaulted in the payment of any other
monetary Obligation which has become due and payable, and after the date any
other Event of Default shall have occurred (and so long as such Event of
Default shall be continuing), the Borrower shall pay interest (after as well as
before judgment) on all amounts payable hereunder at a rate per annum equal to
(a) with respect to LIBO Rate Loans, for the period from the date
such Loan becomes due and payable to the end of the applicable Interest
Period, the higher of (i) the sum of the LIBO Rate (Reserve Adjusted) for
such Interest Period plus a margin of 4% or (ii) the CIBC Alternate Base
Rate plus a margin of 3%; and
(b) in all other cases, the CIBC Alternate Base Rate plus a margin
of 3%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part,
of principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, on the three month anniversary of the commencement of such
Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO Rate
Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which
is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.2.4. Interest Rate Determination. Each Reference Lender agrees
to furnish to the Agent timely information for the purpose of determining the
LIBO Rate. If any of the Reference Lenders shall be unable or shall otherwise
fail to provide notice of a rate to the Agent for any reason other than any
circumstance referred to in clause (a) or (b) of Section 4.2, the LIBO Rate
shall be determined on the basis of the rate or rates provided in notices of
the remaining Reference Lenders.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in this
Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Post-Closing Revolving Commitment Fee. The Borrower
agrees to pay to the Agent for the account of each Non-Defaulting Lender, for
the period (including any portion thereof when its Commitment is suspended by
reason of the Borrower's inability to satisfy any condition of Section 5.2)
commencing on the Closing Date and continuing through the Commitment
Termination Date, a commitment fee at the rate of 3/8 of 1% per annum on such
Lender's Percentage of the average daily unused portion of the Revolving
Commitment Amount. Such commitment fees shall be payable by the Borrower in
arrears on each Quarterly Payment Date, commencing with the first such
Quarterly Payment Date following the Closing Date, and on the Commitment
Termination Date. The issuance of the Letters of Credit shall, for purposes of
this Section, be deemed to be usage of the Revolving Commitment Amount.
SECTION 3.3.2. Upfront Fees. The Borrower agrees to pay to each Lender
an upfront fee equal to 1/2 of 1% of such Lender's Percentage of the Revolving
Commitment Amount on the Closing Date, payable on the Closing Date.
SECTION 3.3.3. Agent's Fees. The Borrower agrees to pay to the Agent,
for its own account, fees in the amounts, on the dates and in the manner set
forth in the Agent's Fee Letter.
SECTION 3.3.4. Letter of Credit Face Amount Fee. The Borrower agrees to
pay to the Agent, for the pro rata account of the Lenders, for each Letter of
Credit for the period from and including the date of the issuance of such
Letter of Credit to (but not including) the date upon which such Letter of
Credit expires or is cancelled, a fee equal to 1.875% per annum of the average
daily Stated Amount of such Letter of Credit. Such fee shall be payable by the
Borrower in arrears on each Quarterly Payment Date, and on the Commitment
Termination Date for any period then ending for which such fee shall not
theretofore have been paid, commencing on the first such date after the
issuance of such Letter of Credit.
SECTION 3.3.5. Letter of Credit Issuing Fee. The Borrower agrees to pay
to the Agent, for the account of the applicable LC Issuer, an issuing or
extension fee equal to .125% of the Stated Amount (or increase in such Stated
Amount) of each Letter of Credit and all reasonable costs and expenses incurred
by such LC Issuer in connection with such Letter of Credit. Such fee shall be
payable by the Borrower upon the date of such issuance, extension or increase,
as the case may be.
SECTION 3.4. Issuance Requests. By delivering to the Agent an Issuance
Request on or before 10:00 a.m., New York City time, the Borrower may request,
from time to time prior to the Commitment Termination Date and on not less than
three nor more than ten Business Days' notice, that an LC Issuer issue an
irrevocable letter of credit in substantially the form of Exhibit O hereto, or
in such other form as may be requested by the Borrower and reasonably approved
by such LC Issuer (each a "Letter of Credit"), in support of financial
obligations of the Borrower incurred in connection with obligations of the
Borrower and to replace outstanding letters of credit issued for the account of
TPI. Each Letter of Credit shall by its terms:
(a) be issued in a Stated Amount which does not exceed (or would
not exceed) the unused Letter of Credit Commitment Amount and, when
combined with the then outstanding principal amount of all Loans and
the other Letter of Credit Outstandings, would not exceed the Revolving
Commitment Amount;
(b) be stated to expire on a date (its "Stated Expiry Date") no
later than the earlier of one year from its date of issuance and the
Commitment Termination Date; provided, however, that such Letter of Credit
may be stated to expire on a date later than one year from its date of
issuance, so long as such expiration date occurs prior to the Commitment
Termination Date and such date is consented to by the applicable LC Issuer
and the Agent; and
(c) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the LC Issuer
thereof from the beneficiary thereunder that all obligations
covered thereby have been terminated, paid, or otherwise satisfied
in full,
(ii) reduce in part immediately and to the extent the
beneficiary thereunder has notified the LC Issuer thereof that the
obligations covered thereby have been paid or otherwise satisfied in
part, or
(iii) terminate 30 Business Days after notice to the
beneficiary thereunder and the Borrower from the LC Issuer thereof
that an Event of Default has occurred and is continuing, unless such
LC Issuer shall otherwise agree; provided, however, that the
beneficiary shall have an unrestricted right to draw the Stated
Amount of such Letter of Credit prior to its termination.
So long as no Default has occurred and is continuing, by delivery to the
applicable LC Issuer and the Agent of an Issuance Request at least three but
not more than ten Business Days prior to the Stated Expiry Date of any Letter
of Credit, the Borrower may request such LC Issuer to extend the Stated Expiry
Date of such Letter of Credit for an additional period not to exceed the
earlier of one year from its date of extension and the Commitment Termination
Date; provided, however, that such Letter of Credit may be stated to expire on
a date later than one year from its date of issuance, so long as such
expiration date occurs prior to the Commitment Termination Date and such date
is consented to by the applicable LC Issuer and the Agent.
SECTION 3.5. Issuances, Increases and Extensions. On the terms and
subject to the conditions of this Agreement (including Article V), each LC
Issuer shall issue Letters of Credit, and extend the Stated Expiry Dates or
increase the Stated Amounts of outstanding Letters of Credit, in accordance
with the Issuance Requests made therefor. Each LC Issuer will make available
the original of each Letter of Credit which it issues in accordance with the
Issuance Request therefor to the beneficiary thereof (and will promptly provide
each of the Lenders with a copy of such Letter of Credit) and will notify the
Agent, the beneficiary under any Letter of Credit and each Lender of any
extension of the Stated Expiry Date or increase in the Stated Amount thereof.
SECTION 3.6. Other Lenders' Participation. Each Letter of Credit issued
pursuant to Section 3.4 shall be effective upon its issuance. Each Lender
shall (except for the LC Issuer), to the extent of its Percentage, be deemed
irrevocably to have participated in the issuance of such Letter of Credit and
shall be responsible to reimburse promptly the LC Issuer thereof for
Reimbursement Obligations which have not been reimbursed by the Borrower in
accordance with Section 3.7, or which have been reimbursed by the Borrower but
must be returned, restored or disgorged by such LC Issuer for any reason, and
each Lender shall, to the extent of its Percentage, be entitled to receive from
the Agent a ratable portion of the letter of credit fees received by the Agent
pursuant to Section 3.3.4 with respect to each Letter of Credit. In the event
that the Borrower shall fail to reimburse any LC Issuer, or if for any reason
Loans shall not be made to fund any Reimbursement Obligation, all as provided
in Section 3.7 and in an amount equal to the amount of any drawing honored by
such LC Issuer under a Letter of Credit issued by it, or in the event such LC
Issuer must for any reason return or disgorge such reimbursement, such LC
Issuer shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender
shall make available to such LC Issuer, whether or not any Default shall have
occurred and be continuing, an amount equal to its respective participation in
same day or immediately available funds at the office of such LC Issuer
specified in such notice not later than 11:00 a.m., New York City time, on the
Business Day (under the laws of the jurisdiction of such LC Issuer) after the
date notified by such LC Issuer. In the event that any Lender fails to make
available to such LC Issuer the amount of such Lender's participation in such
Letter of Credit as provided herein, such LC Issuer shall be entitled to
recover such amount on demand from such Lender together with interest at the
daily average Federal Funds Rate for three Business Days (together with such
other compensatory amounts as may be required to be paid by such Lender to the
LC Issuer pursuant to the Rules for Interbank Compensation of the Council on
International Banking or the Clearinghouse Compensation Committee, as the case
may be, as in effect from time to time) and thereafter at the CIBC Alternate
Base Rate. Nothing in this Section shall be deemed to prejudice the right of
any Lender to recover from any LC Issuer any amounts made available by such
Lender to such LC Issuer pursuant to this Section in the event that it is
determined by a court of competent jurisdiction that the payment with respect
to a Letter of Credit by such LC Issuer in respect of which payment was made by
such Lender constituted gross negligence or wilful misconduct on the part of
such LC Issuer. Each LC Issuer shall distribute to each other Lender which has
paid all amounts payable by it under this Section with respect to any Letter of
Credit issued by such LC Issuer such other Lender's Percentage of all payments
received by such LC Issuer from the Borrower in reimbursement of drawings
honored by such LC Issuer under such Letter of Credit when such payments are
received.
SECTION 3.7. Disbursements. Each LC Issuer will notify the Borrower and
the Agent promptly of the presentment for payment of any Letter of Credit,
together with notice of the date (a "Disbursement Date") such payment shall be
made (each such payment, a "Disbursement"). Subject to the terms and
provisions of such Letter of Credit, the applicable LC Issuer shall make such
payment to the beneficiary (or its designee) of such Letter of Credit. Prior
to 11:00 a.m., New York City time, on the Disbursement Date, the Borrower will
reimburse the applicable LC Issuer for all amounts which it has disbursed under
such Letter of Credit. To the extent the applicable LC Issuer is not
reimbursed in full in accordance with the third sentence of this Section, the
Borrower's Reimbursement Obligation shall accrue interest at the CIBC Alternate
Base Rate per annum plus a margin of 3%, payable on demand. In the event the
applicable LC Issuer is not reimbursed by the Borrower on the Disbursement
Date, or if such LC Issuer must for any reason return or disgorge such
reimbursement, the Lenders (including such LC Issuer) shall, on the terms and
subject to the conditions of this Agreement, fund the Reimbursement Obligation
therefor by making, on the next Business Day, Loans which are Base Rate Loans
as provided in Section 2.1.1 (the Borrower being deemed to have given a timely
Borrowing Request therefor for such amount); provided, however, for the purpose
of determining the availability of the Revolving Commitments to make Loans
immediately prior to giving effect to the application of the proceeds of such
Loans, such Reimbursement Obligation shall be deemed not to be outstanding at
such time.
SECTION 3.8. Reimbursement. The Borrower's obligation (a "Reimbursement
Obligation") under Section 3.7 to reimburse an LC Issuer with respect to each
Disbursement (including interest thereon), and each Lender's obligation to make
participation payments in each drawing which has not been reimbursed by the
Borrower, shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim, or defense to payment which the
Borrower may have or have had against any Lender or any beneficiary of a Letter
of Credit, including any defense based upon the occurrence of any Default, any
draft, demand or certificate or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient, the failure
of any Disbursement to conform to the terms of the applicable Letter of Credit
(if, in the applicable LC Issuer's good faith opinion, such Disbursement is
determined to be appropriate) or any non-application or misapplication by the
beneficiary of the proceeds of such Disbursement, or the legality, validity,
form, regularity, or enforceability of such Letter of Credit; provided,
however, that nothing herein shall adversely affect the right of the Borrower
or any Lender to commence any proceeding against the applicable LC Issuer for
any wrongful Disbursement made by such LC Issuer under a Letter of Credit as a
result of acts or omissions constituting gross negligence or wilful misconduct
on the part of such LC Issuer.
SECTION 3.9. Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default or the occurrence of the Commitment
Termination Date, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall,
at the election of the applicable LC Issuer acting on instructions from the
Required Lenders, and without demand upon or notice to the Borrower, be deemed
to have been paid or disbursed by such LC Issuer under such Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed), and, upon notification by such LC Issuer to the Agent and the
Borrower of its obligations under this Section, the Borrower shall be
immediately and automatically obligated to reimburse such LC Issuer the amount
deemed to have been so paid or disbursed by such LC Issuer. Any amounts so
received by such LC Issuer from the Borrower pursuant to this Section shall be
held as collateral security for the repayment of the Borrower's obligations in
connection with the Letters of Credit issued by such LC Issuer. At any time
when such Letters of Credit shall terminate and all obligations of each LC
Issuer are either terminated or paid or reimbursed to such LC Issuer in full,
the Reimbursement Obligations of the Borrower under this Section shall be
reduced accordingly (subject, however, to reinstatement in the event any
payment in respect of such Letters of Credit is recovered in any manner from
such LC Issuer), and such LC Issuer will return to the Borrower the excess, if
any, of
(a) the aggregate amount deposited by the Borrower with such LC
Issuer and not theretofore applied by such LC Issuer to any Reimbursement
Obligation
over
(b) the aggregate amount of all Reimbursement Obligations to such
LC Issuer pursuant to this Section, as so adjusted.
At such time when all Events of Default shall have been cured or waived, each
LC Issuer shall return to the Borrower all amounts then on deposit with such LC
Issuer pursuant to this Section.
SECTION 3.10. Nature of Reimbursement Obligations. The Borrower shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither any LC Issuer nor any Lender (except to the
extent of its own gross negligence or wilful misconduct) shall be responsible
for:
(a) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any Letter of Credit or any document submitted by any
party in connection with the application for and issuance of a Letter
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason;
(c) failure of the beneficiary thereof to comply fully with
conditions required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, or otherwise;
or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a Letter
of Credit.
None of the foregoing shall affect, impair, or prevent the vesting of any of
the rights or powers granted any LC Issuer or any Lender hereunder. In
furtherance and extension, and not in limitation or derogation, of any of the
foregoing, any action taken or omitted to be taken by any LC Issuer in good
faith (except to the extent such action or inaction constitutes gross
negligence or willful misconduct by such Lender) shall be binding upon the
Borrower and shall not put such LC Issuer or any Lender under any resulting
liability to the Borrower.
SECTION 3.11. Indemnity. The Borrower hereby agrees to pay, and to
protect, indemnify and save harmless each LC Issuer and each Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which such LC
Issuer or such Lender may incur or be subject to as a consequence, direct or
indirect, of
(a) the issuance of the Letters of Credit, other than, in respect
of such LC Issuer, as a result of the gross negligence or wilful
misconduct of such LC Issuer as determined by a court of competent
jurisdiction, or
(b) the failure of such LC Issuer to honor a drawing under any
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the
Lenders, be conclusive and binding on the Borrower) that the introduction of or
any change in or in the interpretation of any law, rule, regulation or
directive makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for such Lender to make, continue or
maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the
obligations of such Lender to make, continue, maintain or convert any such LIBO
Rate Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such suspension no
longer exist, and all LIBO Rate Loans of such Lender shall automatically
convert into Base Rate Loans at the end of the then current Interest Periods
with respect thereto or sooner, if required by such law, rule, regulation,
directive or assertion.
SECTION 4.2. Deposits Unavailable. If
(a) the Agent (after consulting with the Reference Lenders) shall
have determined in good faith and after the Reference Lenders shall have
exerted reasonable commercial efforts to obtain quotes for LIBO Rate Loans
(which efforts the Reference Lenders agree to exert) that Dollar deposits
in the relevant amount and for the relevant Interest Period are not
available in the relevant interbank eurodollar market; or
(b) by reason of circumstances affecting a Reference Lender's LIBO
Office's relevant interbank eurodollar market, adequate means do not exist
for ascertaining the interest rate applicable hereunder to LIBO Rate
Loans,
then, upon telephonic or telecopy notice from the Agent (which the Agent agrees
to give promptly and to confirm in writing if telephonic) to the Borrower and
the Lenders (which determination shall be conclusive and binding on the
Borrower and the Lenders), the obligations of all Lenders under Section 2.3 and
Section 2.4 to make or continue any Loans as, or to convert any Loans into,
LIBO Rate Loans shall forthwith be suspended until the Agent shall have
notified the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans, including in any case from time to time by reason
of:
(a) to the extent not included in the calculation of the LIBO Rate
(Reserve Adjusted), any reserve, special deposit, or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, such Lender, under or pursuant to any law, treaty, rule, regulation
(including any F.R.S. Board regulation), or requirement in effect on the
date hereof, or as the result of any Regulatory Change; or
(b) any Regulatory Change which shall subject such Lender to any
tax (other than taxes on net income), levy, impost, charge, fee, duty,
deduction, or withholding of any kind whatsoever or change the basis of
taxation of any Loan maintained as a LIBO Rate Loan and the interest
thereon (other than any change which (i) affects, and to the extent that
it affects, the taxation of net income or (ii) is determined by reference
to net income to the extent so determined).
In any such event, such Lender shall promptly notify the Borrower thereof (with
a copy to the Agent) stating the reasons therefor and the additional amount
required fully to compensate such Lender for such increased cost or reduced
amount. Such additional amounts shall be payable in full on the Quarterly
Payment Date occurring immediately after receipt by the Borrower of such notice
from such Lender, or, if such notice is not given to the Borrower before
payment in full of such Lender's Notes, on demand made thereafter. A statement
as to any such increased cost or reduced amount or any change therein
(including calculations thereof in reasonable detail) shall be submitted by
such Lender to the Borrower (with a copy to the Agent) and shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan) as a result of, in each case by reason of action or inaction by the
Borrower,
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last day
of the Interest Period applicable thereto, whether pursuant to Section 3.1
or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with
the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/ Conversion Notice therefor or
not being prepaid in accordance with any prepayment notice given by the
Borrower,
then, upon the written notice of such Lender to the Borrower (with a copy to
the Agent), the Borrower shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.5. Increased Capital Costs. If any Regulatory Change affects
or would affect the amount of capital required or expected to be maintained by
any Lender or any Person controlling such Lender, and such Lender determines
(in its sole and absolute discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Revolving Commitment or
any Credit Extension made by such Lender or the issuance by an LC Issuer or the
participation therein by a Lender of a Letter of Credit as a result of such
Regulatory Change is reduced to a level below that which such LC Issuer or
Lender, as the case may be, or such controlling Person could have achieved but
for the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such LC Issuer or Lender to the Borrower, the Borrower
shall pay within 5 days of being notified thereof directly to such LC Issuer or
Lender additional amounts sufficient to compensate such LC Issuer or Lender or
such controlling Person for such reduction in rate of return (except to the
extent, if any, that such amount or amounts have already been included in the
determination of the applicable interest rate hereunder for the applicable
period). A statement of such LC Issuer or Lender to the Borrower (with a copy
to the Agent) as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the Borrower. In determining such amount,
such LC Issuer or Lender, as the case may be, may use any method of averaging
and attribution that it (in its sole and absolute discretion) shall deem
applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Credit Extensions and all other amounts payable hereunder
shall be made free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, other than income and franchise taxes of the United States or any
taxing authority thereof or therein and of the country in which any Lender's
principal executive office or LIBOR Office is located or any political
subdivision or taxing authority thereof or therein (such non-excluded items
being called "Taxes"). In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, as notified by the
Agent to the Borrower, then the Borrower will
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of such Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower upon written notice
will promptly pay such additional amounts (including any penalties, interest or
expenses) as are necessary in order that the net amount received by such Person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had not such Taxes been
asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such
failure. For purposes of this Section 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
Each Lender which is not a United States person for Federal income tax
purposes agrees, to the extent that (i) all income realized by such Lender in
respect of the Notes or this Agreement is, or is expected to be, effectively
connected with the conduct by such Lender of a trade or business in the United
States and is includable in gross income of such Lender for the relevant tax
year or (ii) such Lender is entitled at such time to a total or partial
exemption from withholding that is required to be evidenced by United States
Internal Revenue Service Form 1001 or 4224, to deliver to the Agent and the
Borrower, from time to time as requested by the Agent or the Borrower, such
Form 1001 or 4224 (as applicable) or any applicable successor form thereto,
completed in a manner reasonably satisfactory to the Agent and the Borrower.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Agent for the pro
rata account of the Lenders entitled to receive such payment. All such
payments required to be made to the Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m. (New York City time) on
the date due, in same day or immediately available funds, to such account as
the Agent shall specify from time to time by notice to the Borrower. Funds
received after that time shall be deemed to have been received by the Agent on
the next succeeding Business Day. All payments made to the Agent after the
occurrence and during the continuation of any Event of Default shall be applied
first to costs and expenses, then to fees, then to interest on Loans, and then
to principal of Loans. The Agent shall promptly remit in same day funds to
each Lender its share, if any, of such payments received by the Agent for the
account of such Lender. All interest and fees shall be computed on the basis
of the actual number of days (including the first day but excluding the last
day) occurring during the period for which such interest or fee is payable over
a year comprised of 360 days. Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except as
otherwise required by clause (c) of the definition of the term "Interest
Period" with respect to LIBO Rate Loans) be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) or Reimbursement Obligation on account of any Loan (other than
pursuant to the terms of Sections 4.3, 4.4, 4.5 and 4.10) in excess of its pro
rata share of payments then or therewith obtained by all Lenders, such Lender
shall purchase from the other Lenders such participations in Loans made by them
or Reimbursement Obligation as shall be necessary to cause such purchasing
Lender to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and each Lender which has sold a participation to the
purchasing Lender shall repay to the purchasing Lender the purchase price to
the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount
of such selling Lender's required repayment to the purchasing Lender to (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to Section 4.9) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders
entitled under this Section to share in the benefits of any recovery on such
secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 8.1.4, or with the
consent of the Required Lenders, upon the occurrence of any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing Security
Interest in any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; provided, however,
that any such appropriation and application shall be subject to the provisions
of Section 4.8. Each Lender agrees promptly to notify the Borrower and the
Agent after any such setoff and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff
under applicable law or otherwise) which such Lender may have.
SECTION 4.10. Replacement of Affected Lenders. If any Lender becomes an
Affected Lender, the Borrower shall have the right, if no Event of Default then
exists, to replace such Affected Lender with one or more Lenders, none of whom
shall constitute an Affected Lender at the time of such replacement,
(collectively, the "New Lender") reasonably acceptable to the Agent, provided
that (a) at the time of any replacement pursuant to this Section 4.10, the New
Lender shall enter into one or more Lender Assignment Agreements, pursuant to
which the New Lender shall acquire all of the Commitments and outstanding
Credit Extensions of such Affected Lender and, in connection therewith, shall
pay to such Affected Lender in respect thereof an amount equal to the sum of
(A) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of such Affected Lender, and (B) an amount equal to all
accrued, but theretofore unpaid, fees owing to such Affected Lender pursuant to
Section 3.3 hereof and (b) all obligations of the Borrower owing to such
Affected Lender (other than those specifically described in clause (a) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Affected Lender concurrently with
such replacement. Upon the execution of a Lender Assignment Agreement, the
payment of amounts referred to in clauses (a) and (b) above and, if so
requested by the New Lender, delivery to the New Lender of a Note executed by
the Borrower (x) such New Lender shall become a Lender hereunder and the
Affected Lender shall cease to be a Lender hereunder, except with respect to
indemnification provisions under this Agreement which shall survive as to such
Affected Lender and (y) the Percentages of the Lenders shall be automatically
adjusted at such time to give effect to such replacement (and to give effect to
the replacement of an Affected Lender with one or more New Lenders).
SECTION 4.11. Use of Proceeds. The Borrower shall apply the proceeds of
each Borrowing for the general corporate purposes of the Borrower and its
Subsidiaries; without limiting the foregoing, no proceeds of any Credit
Extension will be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of 1934 or any
"margin stock", as defined in F.R.S. Board Regulation U.
ARTICLE V
CONDITIONS TO INITIAL BORROWING
SECTION 5.1. Effectiveness and Initial Credit Extension. This Agreement
shall become effective on the Closing Date if each of the following conditions
precedent in this Section 5.1 shall be fulfilled to the satisfaction of the
Agent and the Required Lenders:
SECTION 5.1.1. Resolutions, etc. The Agent shall have received:
(a) from the Borrower, a certificate, dated the Closing Date, of
its Secretary or any Assistant Secretary as to
(i) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery, and performance of
this Agreement, the Notes, each Collateral Document and each other
Loan Document and each Realco Document to be executed by it;
(ii) the incumbency and signatures of the officers of the
Borrower (the "Authorized Officers") authorized to act with respect
to this Agreement, the Notes, each Collateral Document, each other
Loan Document and each Realco Document to be executed by it (upon
which certificate the Agent and each Lender may conclusively rely
until the Agent shall have received a further certificate of the
Secretary of the Borrower canceling or amending such prior
certificate, which further certificate shall be reasonably
satisfactory to the Agent);
(iii) its Charter; and
(iv) its By-Laws.
(b) from each Subsidiary which is or will be a party to the
Subsidiary Acknowledgment, a certificate, dated the Closing Date, of its
Secretary or any Assistant Secretary as to
(i) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery, and performance of
the Subsidiary Acknowledgment described in Section 5.1.5;
(ii) the incumbency and signatures of the officers of the
Subsidiary (the "Authorized Officers") authorized to act with
respect to the Subsidiary Acknowledgment (upon which certificate
the Agent and each Lender may conclusively rely until the Agent
shall have received a further certificate of the Secretary of such
Subsidiary canceling or amending such prior certificate, which
further certificate shall be reasonably satisfactory to the Agent);
and
(c) such other documents (certified if requested) as the Agent or
the Required Lenders may reasonably request with respect to any matter
relevant to this Agreement or the transactions contemplated hereby.
SECTION 5.1.2. Delivery of Notes. The Agent shall have received, for the
account of each Lender, such Lender's Note, duly executed and delivered by the
Borrower and containing appropriate insertions and conforming to the
requirements of Section 2.6.
SECTION 5.1.3. Bridge Financing. The Agent shall have received, (i) with
a counterpart for each Lender, a true and complete copy of the Bridge Loan
Agreement and (ii) a true and complete copy of each Bridge Collateral Document
executed and delivered on the Closing Date. All of the conditions precedent to
the first draw under the Bridge Loan Agreement shall have been satisfied or
waived in accordance with the terms thereof and the Borrower shall have
received gross proceeds of a draw thereunder in an amount at least equal to
$20,000,000.
SECTION 5.1.4. [Intentionally Omitted].
SECTION 5.1.5. Subsidiary Guaranty Acknowledgment. The Agent shall have
received from each Subsidiary of the Borrower an acknowledgment of the
Subsidiary Guaranty, dated as of the Closing Date, duly executed and delivered
by such Subsidiary in favor of the Collateral Agent.
SECTION 5.1.6. Officer Solvency Certificate. The Agent shall have
received for its benefit and the benefit of each Lender, a favorable
certificate of an Authorized Officer of the Borrower, dated as of the Closing
Date, substantially in the form of Exhibit K attached hereto.
SECTION 5.1.7. [Intentionally Omitted].
SECTION 5.1.8. Shareholder Approval. The Agent shall have received, with
a counterpart for each Lender, from the Borrower in its capacity as shareholder
of each of its Subsidiaries, a certificate of an Authorized Officer dated as of
the Closing Date consenting to and approving the execution, delivery and
performance of the Subsidiary Acknowledgement to which any of such Subsidiaries
is a party as well as the transactions contemplated thereby.
SECTION 5.1.9. No Materially Adverse Effect. No events shall have
occurred which, individually or in the aggregate, comprise a Materially Adverse
Effect since October 29, 1995.
SECTION 5.1.10. Warranties; No Default. The Agent shall have received,
with a counterpart for each Lender, from the Borrower a duly executed and
delivered certificate of an Authorized Officer, dated as of the Closing Date to
the effect provided in Section 6.6.
SECTION 5.1.11. Closing Fees and Expenses. The Agent shall have received
payment in full of all of the fees required to be paid on the Closing Date in
accordance with Section 3.3 and the Agent's Fee Letter and shall have received
payment in full of its out-of-pocket costs and expenses (including counsel fees
and disbursements) payable in accordance with Section 10.3 for which invoices
have been submitted on or prior to such date.
SECTION 5.1.12. Opinions of Counsel. The Agent shall have received
opinions, dated as of the Closing Date and addressed to the Agent and all
Lenders, from the following:
(a) Tuke Yopp & Sweeney, counsel to the Borrower, substantially in
the form of Exhibit M-1 attached hereto, and as to such other matters
related to the transactions contemplated hereby as the Agent may
reasonably require; and
(b) Dewey Ballantine, special New York counsel to the Borrower, or
other special New York counsel to the Borrower satisfactory to the Agent,
substantially in the form of Exhibit N attached hereto, and as to such
other matters related to the transactions contemplated hereby as the Agent
may reasonably require.
SECTION 5.1.13. Date of Closing. The Closing Date shall have occurred on
or prior to May 3, 1996.
SECTION 5.2. All Credit Extensions. The obligation of each Lender and
each LC Issuer to make any Credit Extensions shall also be subject to the
satisfaction of each of the conditions precedent set forth in Sections 5.2.1
through 5.2.3:
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Borrowing (but, if any Default of the nature
referred to in Section 8.1.3 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or indirectly,
of the proceeds thereof) the following statements shall be true and correct:
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7) and in each other
Loan Document shall be true and correct with the same effect as if then
made (unless stated to relate solely to an earlier date, in which case
such representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries which might have a Materially Adverse Effect; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental investigation
or proceeding disclosed pursuant to Section 6.7 which might have a
Materially Adverse Effect; and
(c) no Default shall have then occurred and be continuing, and
neither the Borrower nor any of its Subsidiaries shall be in material
violation of any law or governmental regulation or court order or decree.
SECTION 5.2.2. Credit Request. The Agent shall have received a Borrowing
Request or Issuance Request, as the case may be, for such Credit Extension.
Each of the delivery of a Borrowing Request or an Issuance Request and the
acceptance by the Borrower of the proceeds of the applicable Borrowing or the
issuance of the applicable Letter of Credit shall constitute a representation
and warranty by the Borrower that on the date of such Credit Extension (both
immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof or the issuance of such Letter of Credit,
as applicable), the statements made in Section 5.2.1 are true and correct.
SECTION 5.2.3. Satisfactory Legal Form, etc. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any Subsidiary
shall be satisfactory in form and substance to the Agent and its counsel; the
Agent and its counsel shall have received all information, and such counterpart
originals or such certified or other copies of such materials, as the Agent or
its counsel may request; and all legal matters incident to the transactions
contemplated by this Agreement shall be satisfactory to counsel to the Agent.
ARTICLE VI
WARRANTIES, ETC.
In order to induce the Lenders and the Agent to enter into this Agreement
and to make Loans and the LC Issuers to issue the Letters of Credit hereunder
and the Lenders to participate therein, the Borrower represents and warrants
unto each Lender and each LC Issuer as set forth in Section 6.1 through 6.19.
SECTION 6.1. Organization, etc. Each of the Borrower and each Subsidiary
is a corporation validly organized and existing and in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
nature of its business makes such qualification necessary and where the failure
to so qualify might have a Materially Adverse Effect, and has full power and
authority to own or hold under lease its property and to conduct its business
substantially as currently conducted by it. The Borrower has full corporate
power and authority (a) to enter into and perform its obligations under this
Agreement, the Notes, the Collateral Documents, the other Loan Documents and
the Realco Documents, in each case, to which it is or is to be a party, (b) to
obtain Credit Extensions hereunder, and (c) to grant the Security Interests
provided in the Collateral Documents to which it is or is to be a party. Each
Subsidiary which is or is to be a party to any Collateral Document, any other
Loan Document or a Realco Document has full corporate power and authority to
enter into and perform its obligations thereunder and to grant the Security
Interests provided for therein.
SECTION 6.2. Due Authorization. The execution and delivery by the
Borrower of this Agreement and the Notes, the execution and delivery by each of
the Borrower and its Subsidiaries of the Collateral Documents, the other Loan
Documents and the Realco Documents, in each case, to which it is or is to be a
party, the performance by each of the Borrower and each of its Subsidiaries of
its obligations hereunder and thereunder, the granting of the Security
Interests provided for in the Collateral Documents and all Credit Extensions
obtained hereunder by the Borrower and the other Indebtedness hereunder have
been duly authorized by all necessary corporate action, do not (except for
filings, recordings, registrations, approvals and consents which have been
already made or obtained) require any filing or registration with or approval
or consent of any governmental agency or authority, any creditor or any
stockholder, do not and will not conflict with, result in any violation of, or
constitute any default under (a) any provision of the Charter or By-Laws of the
Borrower or any of its Subsidiaries, (b) any material agreement or other
material Instrument binding upon or applicable to the Borrower or any of its
Subsidiaries or the property of the Borrower or any of its Subsidiaries or (c)
any present law or governmental regulation or court decree or order applicable
to the Borrower or any of its Subsidiaries or the property of the Borrower or
any of its Subsidiaries, and will not result in or require the creation or
imposition of any Security Interest in any of their respective properties
pursuant to the provisions of any agreement (excluding, however, the Security
Interests created or to be created by the Collateral Documents) or other
Instrument binding upon or applicable to the Borrower or any of its
Subsidiaries or the property of the Borrower or any of its Subsidiaries.
SECTION 6.3. Validity, etc. This Agreement has been duly executed and
delivered by the Borrower and is, and each of the Notes and each of the
Collateral Documents and other Loan Documents and each Realco Document to which
the Borrower or any of its Subsidiaries is or is to be a party constitutes or
will constitute, on the due execution and delivery thereof, the legal, valid,
and binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable in accordance with its terms, subject, as to enforcement, only to
bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time
in effect affecting the enforceability of the rights of creditors generally.
SECTION 6.4. Financial Information. All balance sheets, all statements
of income, shareholders' equity, and cash flows (including such balance sheets
and statements for the Fiscal Year ended October 29, 1995 and for the Fiscal
Quarter ended February 18, 1996) and all other financial statements which have
been delivered hereto or shall hereafter be furnished by or on behalf of the
Borrower to any Lender, any LC Issuer and the Agent for the purposes of or in
connection with this Agreement or any transaction contemplated hereby, have
been or will be prepared in accordance with GAAP consistently applied
throughout the periods involved (except as disclosed therein) and do or will
present fairly (subject, in the case of the interim unaudited financial
statements, to the ultimate outcome of normal recurring accruals) the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
Neither the Borrower nor any Subsidiary has on the date hereof any material
contingent liability or liabilities for taxes, long-term leases or unusual
forward or long-term commitments which are not reflected in the financial
statements described above or in the notes thereto.
SECTION 6.5. Materially Adverse Effect. Since (a) October 29, 1995 with
respect to the Borrower and its Subsidiaries other than the Transferred
Subsidiaries and (b) December 31, 1995 with respect to the Transferred
Subsidiaries, no events have occurred which, individually or in the aggregate,
comprise a Materially Adverse Effect.
SECTION 6.6. Absence of Default. Neither the Borrower nor any Subsidiary
is in default in the payment of (or in the performance of any obligation
applicable to) any Indebtedness, or in violation of any law or governmental
regulation or court decree or order, in any such case, which could result in a
Materially Adverse Effect.
SECTION 6.7. Litigation; Labor Controversies, etc. Except as to matters
disclosed to the Lenders in Item 6.7 ("Litigation; Labor Controversies") of the
Disclosure Schedule, there is no pending or, to the knowledge of the Borrower,
threatened labor controversy, litigation, arbitration, or governmental
investigation or proceeding against the Borrower or any Subsidiary or to which
any of the properties of any thereof is subject which
(a) if adversely determined, might have a Materially Adverse
Effect;
(b) relates to this Agreement, the Notes, the Collateral Documents,
the other Loan Documents, the Mortgage Financing Transactions or any
Realco Document; or
(c) is pending or threatened as of the date of this Agreement and
relates to any Mortgage Financing Transaction or any transaction financed
or to be financed in whole or in part directly or indirectly with the
proceeds of any Credit Extension.
SECTION 6.8. Regulations G, U and X. Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
"margin stock". None of the proceeds of any Credit Extension or any Mortgage
Financing Transaction will be used for the purpose of, or be made available by
the Borrower in any manner to any other Person to enable or assist such Person
in, directly or indirectly purchasing or carrying "margin stock". Less than
25% in value of the Borrower's consolidated assets comprise "margin stock."
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section 6.8 with such meanings.
SECTION 6.9. Government Regulation. Neither the Borrower nor any
Subsidiary is an "investment company" nor a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 6.10. Burdensome Agreements. Neither the Borrower nor any
Subsidiary is or will be a party to any Instrument (other than the Loan
Documents, the LYONS Indenture and the Subordinated Indenture) or subject to
any charter or other corporate restriction which could have a Materially
Adverse Effect.
SECTION 6.11. Taxes. Each of the Borrower and all of its Subsidiaries
has filed all tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books. No tax liens have been filed with
respect to the Borrower or any Subsidiary and, to the knowledge of the
Borrower, no claims are being asserted with respect to any such taxes or
charges.
SECTION 6.12. Employee Benefit Plans. Each Plan and, to the best of the
Borrower's knowledge, each Multiemployer Plan, complies in all material
respects with all applicable requirements of law and regulations, and, except
as disclosed on Item 6.12 ("Employee Benefit Plans") of the Disclosure
Schedule,
(a) no "Reportable Event", such term being used herein with the
meaning provided for it under ERISA, has occurred with respect to any Plan
or, to the best of the Borrower's knowledge, any Multiemployer Plan;
(b) no steps have been taken to terminate any Plan or to appoint a
receiver to administer any Plan or, to the best of the Borrower's
knowledge, to terminate or appoint a receiver to administer any
Multiemployer Plan, and neither the Borrower nor any of its Subsidiaries
has withdrawn from any Multiemployer Plan or initiated steps to do so;
(c) there is no Unfunded Vested Liability with respect to any Plan
or, to the best of the Borrower's knowledge, any Multiemployer Plan, that
would result, in the event of termination of such Plan or withdrawal from
such Multiemployer Plan, in a Materially Adverse Effect; and
(d) no contribution failure has occurred with respect to any Plan
sufficient to give rise to a lien under section 302(f) of ERISA, no
condition exists or event or transaction has occurred with respect to any
Plan which could result in the incurrence by the Borrower or any of its
Subsidiaries of any material liability, fine or penalty, and neither the
Borrower nor any of its Subsidiaries has any contingent liability with
respect to any post-retirement benefit under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Title I of
ERISA.
SECTION 6.13. Subsidiaries. The Borrower has no Subsidiaries, except as
set forth in Item 6.13 ("Existing Subsidiaries") of the Disclosure Schedule or,
after the Closing Date, as permitted pursuant to Section 7.2.5, or, after the
Acquisition Date, the Transferred Subsidiaries. The Borrower's ownership of
such Subsidiaries is set forth in Item 6.13 ("Existing Subsidiaries") of the
Disclosure Schedule.
SECTION 6.14. Ownership of Properties, Licenses and Permits; Liens. Each
of the Borrower and each of its Subsidiaries has valid fee or leasehold
interests in all material real property, and good and marketable title to all
of its respective material properties and assets, real and personal, of any
nature whatsoever, and none of such property is subject to any Security
Interest except as permitted pursuant to Section 7.2.3. Realco owns valid fee
interests in each of the real properties, buildings and other improvements
thereon not constituting fixtures listed on the Borrower's certificate
delivered to the Agent on the Closing Date. Each of the Borrower and each of
its Subsidiaries owns or holds all such licenses or permits as are necessary or
desirable in the conduct of its business, except to the extent that the failure
to own or hold the same could not have a Materially Adverse Effect.
SECTION 6.15. Patents, Trademarks, etc. Each of the Borrower and each of
its Subsidiaries owns (or is licensed to use) and possesses all such patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, and copyrights as the Borrower considers
necessary for the conduct of the businesses of the Borrower and its
Subsidiaries as now conducted without, individually or in the aggregate, any
infringement upon rights of, or (to the Borrower's knowledge) by, other Persons
which could have a Materially Adverse Effect. There is no individual patent or
patent license or copyright the loss of which could have a Materially Adverse
Effect.
SECTION 6.16. Accuracy of Information. Except as otherwise previously
disclosed to the Lenders pursuant to the Disclosure Schedule, all factual
information heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby (including, without
limitation, the Memorandum) is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agent, any Lender or
any LC Issuer will be, true and accurate in every material respect on the date
as of which such information is dated or certified and as of the date of
execution and delivery of this Agreement by the Agent or such Lender and not
incomplete by omitting to state any material fact necessary to make such
information not misleading. The projections contained in the Memorandum have
been prepared in good faith by the Borrower and represent the Borrower's best
estimates, as of the date thereof, of the Borrower's reasonably expected future
performance. Each of the representations and warranties of the Borrower
contained in the Bridge Loan Agreement are, as of the Closing Date, true and
correct in all material respects.
SECTION 6.17. Subordinated Debt. (a) The Borrower has the corporate
power and authority to perform the LYONS Indenture and to perform the
Subordinated LYONS Notes, and has duly authorized the performance of the LYONS
Indenture, and the performance and issuance of the Subordinated LYONS Notes.
The Borrower has duly executed and delivered the LYONS Indenture and the
Subordinated LYONS Notes and on the Closing Date each constitutes the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms subject, as to enforcement, only to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors' rights generally. The Borrower has delivered
true and complete copies of the form of Subordinated LYONS Notes and the LYONS
Indenture to the Lenders together with all amendments, waivers and other
changes thereto. Notwithstanding any bankruptcy, insolvency, reorganization,
moratorium or similar proceeding in respect of the Borrower, at all times, (i)
the subordination provisions of the LYONS Indenture and the Subordinated LYONS
Notes will be enforceable against the holders of the Subordinated LYONS Notes
by the holder of any Senior Indebtedness (as defined in the LYONS Indenture)
which has not effectively waived the benefits thereof, (ii) all Obligations,
including the Obligations to pay principal of and interest on the Credit
Extensions and fees in connection therewith, constitute "Senior Indebtedness",
as defined in the Subordinated LYONS Notes, and all such Obligations will be
entitled to the benefits of subordination created by the Subordinated LYONS
Notes and (iii) all payments of principal of or interest on any Subordinated
LYONS Notes made by the Borrower or from the liquidation of its property will
be subject to such subordination provisions. At the time of the execution and
delivery of the Subordinated LYONS Notes, the Subordinated LYONS Notes were
duly registered or qualified under all applicable United States Federal and
state securities laws or exempt therefrom. The Borrower acknowledges that each
of the Agent and each Lender is entering into this Agreement, and has extended
the Credit Extensions, in reliance upon the subordination provisions contained
in the LYONS Indenture and the Subordinated LYONS Notes and this Section.
(b) The Borrower has the corporate power and authority to assume
and to perform the Subordinated Indenture and to assume and to perform the
Subordinated Debentures, and has duly authorized such assumption and
performance of the Subordinated Indenture, and the performance and issuance of
the Subordinated Debentures. Upon the Acquisition Date, the Borrower will have
duly assumed the obligations of TPI under the Subordinated Indenture and the
Subordinated Debentures and each will constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms subject, as to enforcement, only to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally. The Borrower has delivered true
and complete copies of the form of Subordinated Debentures and the Subordinated
Indenture to the Lenders together with all amendments, waivers and other
changes thereto. Notwithstanding any bankruptcy, insolvency, reorganization,
moratorium or similar proceeding in respect of the Borrower, at all times, (i)
the subordination provisions of the Subordinated Indenture and the Subordinated
Debentures will be enforceable against the holders of the Subordinated
Debentures by the holder of any Senior Indebtedness (as defined in the
Subordinated Indenture) which has not effectively waived the benefits thereof,
(ii) all Obligations, including the Obligations to pay principal of and
interest on the Credit Extensions and fees in connection therewith, constitute
"Senior Indebtedness", as defined in the Subordinated Debentures, and all such
Obligations will be entitled to the benefits of subordination created by the
Subordinated Debentures and (iii) all payments of principal of or interest on
any Subordinated Debentures made by the Borrower or from the liquidation of its
property will be subject to such subordination provisions. The Borrower
acknowledges that each of the Agent and each Lender is entering into this
Agreement, and has extended the Credit Extensions, in reliance upon the
subordination provisions contained in the Subordinated Indenture and the
Subordinated Debentures and this Section.
SECTION 6.18. The Collateral Documents. The provisions of the Collateral
Documents executed by the Borrower or any of its Subsidiaries in favor of the
Collateral Agent are effective to create, in favor of the Collateral Agent for
the benefit of the Lenders, legal, valid and enforceable Security Interests in
all right, title and interest of the Borrower and such Subsidiaries in any and
all of the collateral described therein, securing the Notes and all other
Obligations from time to time outstanding, and each of such Collateral
Documents, upon the due filing of UCC-1 Financing Statements, Mortgages and
Subsidiary Mortgages and the taking of possession of the Pledged Notes and
Pledged Shares as provided in Article V, constitute a fully perfected Security
Interest in all right, title and interest of the Borrower and such Subsidiaries
in such collateral superior in right to any liens, existing or future, which
the Borrower or any such Subsidiary or any creditors of or purchasers from, or
any other Person, may have against such collateral or interests therein, except
to the extent, if any, otherwise provided therein.
SECTION 6.19. Environmental Warranties. Except as set forth in Item 6.19
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
compliance with all Environmental Laws, except where noncompliance would
not reasonably be expected to have a Materially Adverse Effect;
(b) there are no pending or threatened
(i) material claims, complaints, notices or requests for
information received by the Borrower or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) material complaints, notices or inquiries to the
Borrower or any of its Subsidiaries regarding potential liability
under any Environmental Law;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or, until transferred, previously owned or leased
by the Borrower or any of its Subsidiaries that, singly or in the
aggregate, have, or may reasonably be expected to have, a Materially
Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are in
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or
desirable for their businesses, except where such failure to have any such
permit, certificate, approval, license or other authorization would not
reasonably be expected to have a Materially Adversely Effect;
(e) no property now or, until transferred, previously owned or
leased by the Borrower or any Subsidiary is or was listed or proposed for
listing (with respect to owned property only) on the National Priorities
List pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or, until
transferred, previously owned or leased by the Borrower or any Subsidiary
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Materially Adverse Effect;
(g) neither the Borrower nor any Subsidiary has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material
claims against the Borrower or such Subsidiary thereof for any remedial
work, damage to natural resources or personal injury, including claims
under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or, until transferred, previously owned or
leased by the Borrower or any Subsidiary that, singly or in the aggregate,
have, or may reasonably be expected to have, a Materially Adverse Effect;
and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower or any Subsidiary which, with
the passage of time, or the giving of notice or both, would give rise to
any material liability under any Environmental Law.
ARTICLE VII
COVENANTS
SECTION 7.1. Certain Affirmative Covenants Applicable to the
Obligations. The Borrower agrees with the Agent, each Lender and each LC
Issuer that, until all Obligations have been paid and performed in full and
the Commitments are terminated:
SECTION 7.1.1. Financial Information, etc. The Borrower will furnish, or
will cause to be furnished, to the Agent (in sufficient quantity for
distribution to each Lender) copies of the following financial statements,
reports and information:
(a) promptly when available and in any event within ninety days
after the close of each Fiscal Year,
(i) a copy of the Borrower's Annual Report on Form 10-K
(excluding exhibits, other than financial statement schedules,
unless specifically requested by the Agent, which requests may be
made at any time) and related Annual Report to Shareholders for
such Fiscal Year, including therein a consolidated balance sheet
at the close of such Fiscal Year then ended, and related
consolidated statements of income, shareholders' equity, and
cash flows (or a statement analogous to such a statement) for
such Fiscal Year, of the Borrower and its Subsidiaries, such
statements for such Fiscal Year to be audited and accompanied
by an audit report issued without Impermissible Qualification
by an Independent Public Accountant,
(ii) a copy of the Director's Report issued by the Borrower's
management to the Borrower's Board of Directors for such Fiscal
Year, including therein a capital expenditure budget for the next
Fiscal Year broken down by Concept and otherwise substantially in
the form of, and covering in scope and detail the same matters
as, the Director's Report for the Borrower's 1992 Fiscal Year
heretofore delivered to the Lenders, accompanied by a consolidated
statement of income for the last Fiscal Quarter of such Fiscal
Year, setting forth comparative figures for the corresponding
Fiscal Quarter of the prior Fiscal Year,
(iii) a written statement of the Independent Public
Accountant, setting forth in reasonable detail a calculation of
the financial tests contained in Section 7.2.4 at the close of such
Fiscal Year, to the effect that it has read the provisions of this
Agreement and the Compliance Certificate then being furnished
pursuant to clause (a)(iv) immediately below at the date of such
statement and is not aware of any miscalculation in such
Compliance Certificate of such financial tests or of any default
of a financial nature in the performance by the Borrower of any
obligation to be performed by it hereunder, except such
miscalculation or default, if any, as may be disclosed in such
statement, and
(iv) a Compliance Certificate calculated as of the close of
such Fiscal Year;
(b) promptly when available and in any event within forty-five days
after the close of each of the first three Fiscal Quarters of each Fiscal
Year,
(i) a copy of the Borrower's Quarterly Report on Form 10-Q
(excluding exhibits unless specifically requested by the Agent,
which requests may be made at any time) for such Fiscal Quarter,
including therein (or accompanied by) a consolidated balance
sheet at the close of such Fiscal Quarter, and related
consolidated statements of income and cash flows (or a statement
analogous to such a statement) for such Fiscal Quarter, of the
Borrower and its Subsidiaries executed by the principal
accounting or financial Authorized Officer of the Borrower,
(ii) a copy of the Director's Report issued by the Borrower's
management to the Borrower's Board of Directors for such Fiscal
Quarter, substantially in the form of, and covering in scope and
detail the same matters as, the Director's Report dated February 14,
1993 for the Fiscal Quarter of the Borrower ended on such date
heretofore delivered to the Lenders, and
(iii) a Compliance Certificate calculated as of the close of
such Fiscal Quarter;
(c) promptly upon receipt thereof, copies of all detailed financial
reports, if any, submitted to the Borrower by an Independent Public
Accountant in connection with each annual or interim audit made by such
Independent Public Accountant of the books of the Borrower or any of its
Subsidiaries;
(d) in addition to (but without duplication of) any such filings
required to be delivered above, promptly upon any filing thereof by the
Borrower with the Securities and Exchange Commission, any annual, periodic
or special report or registration statement (without exhibits) generally
available to the public;
(e) promptly upon completion or receipt thereof, a copy of all
notices, documents, or other Instruments required to be delivered by the
Borrower (other than the Subordinated Debentures, Subordinated LYONS
Notes, and the Bridge Loan Agreement), or received by the Borrower,
pursuant to the Subordinated Indenture or the LYONS Indenture or the
Bridge Loan Agreement and not otherwise required to be delivered
hereunder;
(f) promptly but in no event later than ninety days after the close
of each Fiscal Year of the Borrower, a copy of updated projections of the
Borrower and its Subsidiaries for the next two Fiscal Years, all in detail
comparable to those contained in the Memorandum and reasonably
satisfactory to the Agent; and
(g) promptly, such additional financial and other information with
respect to the Borrower and its Subsidiaries as any Lender (through the
Agent) may from time to time reasonably request.
SECTION 7.1.2. Maintenance of Corporate Existences, etc. Except as
permitted by Section 7.2.11, the Borrower will cause to be done at all times
all things necessary to maintain and preserve the corporate existences, rights
(charter and statutory, except for changes in statutory rights effected by
legislation passed or court decisions rendered after the date hereof) and
franchises of the Borrower and each of its Subsidiaries, and the Borrower will
continue to own and hold, directly or indirectly, free and clear of all
Security Interests (except such as have been created or permitted pursuant
hereto or pursuant to the Bridge Collateral Documents or Mortgage Financing
Transaction Documents), all of the outstanding shares of capital stock
(excluding directors' qualifying shares, if any) of each such Subsidiary.
SECTION 7.1.3. Foreign Qualification. The Borrower will, and will cause
each of its Subsidiaries to, cause to be done at all times all things necessary
to be duly qualified to do business and be in good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary and where the failure to so qualify might have a
Materially Adverse Effect.
SECTION 7.1.4. Payment of Taxes, etc. The Borrower will, and will cause
each of its Subsidiaries to, pay and discharge, as the same may become due and
payable, all federal, state, and local taxes, assessments, and other
governmental charges or levies against or on any of its income, profits or
property, as well as claims of any kind which, if unpaid, might become a lien
upon any one of its properties, and will pay (before they become delinquent)
all other material obligations and liabilities; provided, however, that the
foregoing shall not require the Borrower or any Subsidiary to pay or discharge
any such tax, assessment, charge, levy, lien, obligation or liability so long
as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves in accordance
with GAAP with respect thereto.
SECTION 7.1.5. Maintenance of Property; Insurance. The Borrower will,
and will cause Realco and each of its other Subsidiaries to, keep all of its
material property that is useful and necessary in its business in good working
order and condition (ordinary wear and tear excepted) and will maintain or
cause to be maintained, at the Borrower's expense, with insurance companies
reasonably acceptable to the Agent, insurance with respect to its properties
and businesses against such casualties and contingencies and of such types,
including, without limitation, replacement cost insurance on all restaurants
and plant facilities owned or leased by the Borrower or its Subsidiaries, and
in such amounts as is customary in the case of similar businesses (it being
understood and agreed that the Borrower may self-insure for workers'
compensation, group medical and physical damage to automobiles and may self-
insure public liability claims to a maximum of $250,000 per claim) and will,
upon request of the Agent or the Required Lenders (through the Agent), furnish
to the Agent (in sufficient quantity for distribution to each Lender) at
reasonable intervals a certificate of an Authorized Officer setting forth the
nature and extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section 7.1.5.
SECTION 7.1.6. Notice of Default, Litigation, etc. The Borrower will,
upon obtaining knowledge thereof, give notice (accompanied by a reasonably
detailed explanation with respect thereto) immediately to each Lender and the
Agent of:
(a) the occurrence of
(i) any Default, and
(ii) any "Event of Default" as defined in the Subordinated
Indenture or the LYONS Indenture or the Bridge Loan Agreement;
(b) any litigation, arbitration, labor controversy or governmental
investigation or proceeding not previously disclosed by the Borrower to
the Lenders which has been instituted or, to the knowledge of the
Borrower, is threatened against, the Borrower or any of its Subsidiaries
or to which any of their respective properties is subject which
(i) if adversely determined, would have a Materially Adverse
Effect, provided that, for purposes of this subclause (i), any
litigation, arbitration, or governmental investigation or proceeding
which involves a damage claim of $1,500,000 or less need not be the
subject of any such notice unless it is one of a series of claims
arising out of the same set of facts or circumstances which, in the
aggregate, exceed $10,000,000, or
(ii) relates to (A) this Agreement, any Collateral Document,
any other Loan Document or any specific transaction financed or to
be financed in whole or in part directly or indirectly with the
proceeds of any Loan, or (B) the Bridge Loan Agreement and Bridge
Collateral Documents or any Mortgage Financing Transaction which,
if adversely determined, would have a Materially Adverse Effect,
provided that, for purposes of this subclause (ii)(B), any
litigation, arbitration, or governmental investigation or
proceeding which involves a damage claim of $1,500,000 or less
need not be the subject of any such notice unless it is one of a
series of claims arising out of the same set of facts or
circumstances which, in the aggregate, exceed $10,000,000;
(c) any material adverse development which shall occur in any
litigation, labor controversy, arbitration, or governmental investigation
or proceeding previously disclosed by the Borrower to the Lenders;
(d) any development in the business, operations, financial
condition or prospects of the Borrower and its Subsidiaries (taken as a
whole) which, in the reasonable judgment of the Borrower, has a reasonable
likelihood of having a Materially Adverse Effect;
(e) the occurrence of a Reportable Event under, or the institution
of steps by the Borrower or any of its Subsidiaries to withdraw from, or
the institution of any steps to terminate, any Plan or, to the best of the
Borrower's knowledge, any Multiemployer Plan, or the failure to make a
required contribution to any Plan or, to the best of the Borrower's
knowledge, any Multiemployer Plan if such failure is sufficient to give
rise to a lien under section 302(f) of ERISA, or the taking of any action
with respect to a Plan or, to the best of the Borrower's knowledge, any
Multiemployer Plan which could result in the requirement that the Borrower
or any of its Subsidiaries furnish a bond or other security to the PBGC or
such Plan or Multiemployer Plan, or the occurrence of any event with
respect to any Plan or, to the best of the Borrower's knowledge, any
Multiemployer Plan which could result in the incurrence by the Borrower or
any of its Subsidiaries of any material liability, fine or penalty, or the
occurrence of any material increase in the contingent liability of the
Borrower or any of its Subsidiaries with respect to any post-retirement
Welfare Plan benefit, and in each case the action which the Borrower
proposes to take with respect thereto;
(f) any material notices (including, without limitation, notices of
default or of acceleration thereunder) it receives from the Subordinated
Debentures Trustee and of any appointments of any successors to any such
Trustee; and
(g) any material damage to, loss of or other change in the
composition of the collateral or properties owned by Realco or any other
event that would have a Materially Adverse Effect on the aggregate value
of the collateral or such Realco properties or the Security Interests
created by the Collateral Documents with respect thereto.
SECTION 7.1.7. Performance of Instruments. The Borrower will, and will
cause each of its Subsidiaries to, promptly and faithfully perform all of its
Obligations hereunder, under the Notes, under each Collateral Document and
other Loan Document and under each Realco Document.
SECTION 7.1.8. Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep proper books and records reflecting all of its
business affairs and transactions in accordance with GAAP and permit the Agent
or any Lender or any of their respective representatives, at reasonable times
and intervals during ordinary business hours, to visit all of its offices,
discuss its financial matters with its officers and independent accountants
(and hereby authorizes such independent accountants to discuss its financial
matters with any Lender or its representatives) and examine and make abstracts
or photocopies from any of its books or other corporate records, all at the
Borrower's expense for any charges imposed by such accountants or for making
such abstracts or photocopies.
SECTION 7.1.9. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, exercise all due diligence in order to
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which might have a
Materially Adverse Effect.
SECTION 7.1.10. [Intentionally Omitted].
SECTION 7.1.11. Separate Corporate Existence of Realco. The Borrower
shall do, and shall cause Realco to do, all things necessary to maintain the
corporate existence of Realco separate and apart from itself, any division
thereof and any Affiliate thereof. Without limiting the foregoing, the
Borrower shall cause Realco to:
(a) hold regular meetings of its board of directors and its
shareholders as required by Realco's Charter and By-Laws and maintain a
current minute book;
(b) not suffer any limitation on the authority of its directors and
officers to conduct its business and affairs in accordance with their
independent business judgment, or authorize or suffer any person other
than its officers and directors to act on Realco's behalf with respect to
matters (other than matters customarily delegated to others under powers
of attorney) for which a corporation's own officers and directors would
customarily be responsible;
(c) maintain a separate telephone number from those of the
Borrower, or any Affiliate of the Borrower;
(d) allocate all overhead expense (including, without limitation,
telephone and other utility charges and legal, auditing and other
professional services) for items shared between it and the Borrower, any
other Affiliate of the Borrower, or any other Person on the basis of
actual use to the extent practicable and, to the extent such allocation is
not practicable, on a basis reasonably related to actual use;
(e) the Borrower shall maintain on its books and records separate
accounts for Realco, separate and apart from those of the Borrower and
each other Affiliate of the Borrower or of any other Person to reflect
Realco's financial statements separate and apart from the financial
statements of the Borrower, any other Affiliate of the Borrower or any
other Person (other than as they may be presented or consolidated on a
consolidated basis), and Realco shall have its own letterhead;
(f) prepare financial statements for Realco and insure that any
audited consolidated financial statements of the Borrower or any of their
other Affiliates that include Realco have notes clearly stating that
Realco is a corporate entity (operated as a subsidiary and not as a
division) and that its assets will be available first and foremost to
satisfy the claims of its own creditors;
(g) except as provided in the Realco Lease or the Permitted
Subleases, not commingle funds or other assets of Realco with those of the
Borrower, any other Affiliate of the Borrower or any other Person;
(h) maintain its assets in such a manner that it will not be
difficult or costly to segregate, ascertain or otherwise identify the
individual assets of Realco, separate from those of the Borrower, any
other Affiliate of the Borrower or any other Person;
(i) except pursuant to the Realco Lease or the Permitted Subleases,
not permit the Borrower, any other Affiliate of the Borrower or any other
Person to pay any of the operating expenses of Realco except for payments
to be reimbursed in the ordinary course of business;
(j) not permit itself to be named as a beneficiary on any insurance
policy covering the property of the Borrower, any other Affiliate of the
Borrower or any other Person such that Realco will receive any recoveries
under any policy for any loss occurring other than to its own property, or
enter into an agreement with the holder of such policy whereby in the
event of a loss in connection with property of such other Person, proceeds
are paid to Realco;
(k) maintain an arm's length relationship with the Borrower and
each other Affiliate of the Borrower and not hold itself out, and will
use its best efforts to prevent the Borrower or any other Affiliate of the
Borrower from holding itself out, as ultimately responsible for the debts
of Realco or the decisions or actions respecting the daily business and
affairs of Realco; and
(l) require that all of its full-time employees, if any, identify
themselves as such and not as employees of the Borrower, any other
Affiliate of the Borrower or any other Person (including, without
limitation, by means of providing appropriate employees with business or
identification cards identifying such employees as its employees).
SECTION 7.1.12. Substitution of Realco Properties; Disposition of Realco
Properties. The Borrower may, and may permit Realco to, in any Fiscal Year:
(a) substitute operating restaurant properties of the Borrower for
properties of Realco constituting up to 20% of the aggregate net book
value of Realco's assets, such substituted properties to be of equal or
greater value than the properties of Realco being so exchanged, in each
case as determined by the valuations described below; provided, that the
Agent shall have received between sixty and thirty days prior to such
substitution of such properties, for its benefit and the benefit of the
Lenders, addressed to the Agent and the Lenders, in reasonable detail and
otherwise in form and substance satisfactory to the Agent and the Required
Lenders, valuations conducted by Marshall & Stevens, or other independent
appraisers satisfactory to the Agent, of the properties to be transferred
to Realco and the properties of Realco to be transferred to the Borrower,
provided, however, that if a property of the Borrower to be substituted
was built within one year of the proposed substitution for a Realco
property, the substituted property shall be valued at the actual cost of
such property to be so substituted;
(b) dispose of assets owned by Realco having an aggregate net book
value not in excess of $100,000; and
(c) dispose of or, with the prior written consent of the Agent,
lease or sublease restaurants owned by Realco as permitted pursuant to
clause (k) of Section 7.2.11.
SECTION 7.1.13. Substitution of Mortgaged Property. The Borrower may, in
any Fiscal Year, substitute operating restaurant properties of the Borrower for
properties subject to Mortgages constituting up to 20% of the aggregate net
book value of such properties, such substituted properties to be of equal or
greater value than the properties subject to such a Mortgage being so
exchanged, in each case as determined by the valuations described below;
provided, that the Agent shall have received between sixty and thirty days
prior to such substitution of such properties, for its benefit and the benefit
of the Lenders, addressed to the Agent and the Lenders, in reasonable detail
and otherwise in form and substance satisfactory to the Agent and the Required
Lenders, valuations conducted by Marshall & Stevens, or other independent
appraisers satisfactory to the Agent, of the properties to be transferred,
provided, however, that if a property to be substituted was built within one
year of the proposed substitution, the substituted property shall be valued at
the actual cost of such property being substituted.
SECTION 7.1.14. Additional Collateral. Within 20 Business Days of the
consummation of the Acquisition, the Borrower shall transfer to Realco
properties having an aggregate value of at least $13,000,000 as established by
appraisals of Marshall & Stevens or by cost. The Agent shall have received
each Realco Document evidencing such transfers, certified by an Authorized
Officer of the Borrower as being true and complete and in full force and
effect, and the Realco Documents shall be satisfactory in form and substance to
the Agent.
SECTION 7.2. Certain Negative Covenants. The Borrower agrees with the
Agent, each Lender and each LC Issuer that, until the Obligations have been
paid and performed in full and the Commitments are terminated:
SECTION 7.2.1. Business Activities. The Borrower will not, and will not
permit any Subsidiary (other than Realco) to, engage in any business activity,
except the businesses of operating and franchising restaurants and conducting
manufacturing operations reasonably related to the food business, distribution
centers, a meat plant, an insurance business which provides certain insurance
services and certain other services related thereto, and such activities as its
Board of Directors reasonably determines are incidental or related thereto.
The Borrower will not permit Realco to engage in any business activity other
than the ownership and leasing (pursuant to the Realco Lease) of certain real
properties, buildings and other improvements thereon (other than fixtures) and
such business activities directly incidental or related thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume, or suffer to exist or
otherwise become or be liable in respect of any Indebtedness other than:
(a) Indebtedness of the Borrower in respect of the Loans and the
other Obligations;
(b) revolving Indebtedness of the Borrower in an aggregate
principal amount not to exceed $30,000,000 at any one time outstanding
(inclusive of the aggregate outstanding principal amount of revolving
Indebtedness of the Borrower disclosed in Item 7.2.2 ("Existing
Indebtedness") of the Disclosure Schedule);
(c) other Indebtedness of the Borrower or any of its Subsidiaries
outstanding on the Closing Date and either (i) reflected in the financial
statements delivered to the Lenders prior to the Closing Date pursuant to
Section 6.4 or (ii) disclosed in Item 7.2.2 ("Existing Indebtedness") of
the Disclosure Schedule, so long as, except to the extent expressly
permitted in Section 7.2.3(b), such Indebtedness shall not be secured by
any of the collateral under the Collateral Documents;
(d) Indebtedness of the Borrower or any of its Subsidiaries (other
than Realco) which is an Investment permitted by Section 7.2.5;
(e) Indebtedness in an aggregate principal amount not to exceed
$3,000,000 at any time outstanding which is incurred by the Borrower or
any of its Subsidiaries (other than Realco) to one or more vendors in the
aggregate of any assets to finance its acquisition of such assets;
(f) obligations of the Borrower under Capitalized Leases; provided
that the aggregate capitalized amount payable under all such Capitalized
Leases shall not exceed $45,000,000;
(g) Indebtedness of the Borrower in respect of letters of credit
(other than any letter of credit issued in connection with the Mortgage
Financing Transactions to directly support Indebtedness permitted under
clause (i) below) in an aggregate amount not to exceed $40,000,000 at any
one time outstanding for all such letters of credit;
(h) Indebtedness incurred by the Borrower under and in connection
with any Rate Swap Agreement;
(i) Indebtedness incurred by the Borrower under and in connection
with the Mortgage Financing Transactions and refinancings thereof (A) made
pursuant to Mortgage Financing Transaction Documents and (B) in which the
principal amount of such Indebtedness is not increased thereby; provided,
however, that the Borrower may not incur any such new, non-refinanced
Indebtedness in connection with Mortgage Financing Transactions in any
Fiscal Year in excess of the amount of Indebtedness set forth opposite
such Fiscal Year below:
Fiscal Year Principal Amount
1995 $30,000,000
1996 $30,000,000
1997 $30,000,000
1998 $50,000,000
1999 $24,000,000
; provided, however, to the extent that the maximum amount of
Indebtedness in connection with Mortgage Financing Transactions permitted
to be incurred by the Borrower, without giving effect to this proviso,
exceeds the aggregate amount actually incurred during such Fiscal Year,
one hundred percent of the amount of such excess may be carried over to
succeeding Fiscal Years; provided, further, however, that on and after
the Acquisition Date and until the Bridge Financing has been repaid in
full no Indebtedness under any Mortgage Financing Transaction may be
incurred. After the Bridge Financing has been repaid in full,
Indebtedness under Mortgage Financing Transactions must mature on or
after November 22, 1999;
(j) Indebtedness of the Borrower and TPIR in respect of the
Subordinated Debentures;
(k) Indebtedness of the Borrower and the Transferred Subsidiaries
in respect of the Bridge Financing; and
(l) Indebtedness of the Transferred Subsidiaries existing on the
Acquisition Date (after giving effect to any refinancing thereof on such
date with the proceeds of the Bridge Financing advanced on such date) and
not incurred in contemplation of the Acquisition;
provided that no Indebtedness otherwise permitted to be incurred shall be
permitted to be incurred if, after giving effect to the incurrence thereof, any
Event or Default shall have occurred and be continuing.
SECTION 7.2.3. Security Interests. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, or suffer to exist
any Security Interest upon any of its revenues, property (including without
limitation fixed assets, inventory, real property, intangible rights and stock)
or other assets, whether now owned or hereafter acquired, except:
(a) Security Interests in favor of the Collateral Agent for the
benefit of the Lenders under the Collateral Documents to secure the Loans
and other Obligations;
(b) Security Interests which (i) were granted prior to July 28,
1995 to secure any Indebtedness permitted by clause (c) of Section 7.2.2
and which are disclosed in Item 7.2.3. ("Existing Liens") of the
Disclosure Schedule or in the financial statements referred to in such
clause or (ii) were created between July 28, 1995 and the Closing Date
and are otherwise permitted under this Section 7.2.3;
(c) Security Interests securing obligations under any purchase
money Indebtedness permitted by clause (e) of Section 7.2.2 in the
property subject thereto and Security Interests securing obligations in
respect of letters of credit permitted by clause (g) of Section 7.2.2 in
the goods financed with such letters of credit, provided that neither
such purchase money Indebtedness nor such obligations in respect of
letters of credit shall be secured by any of the collateral granted under
the Collateral Documents and any Security Interests relating thereto
shall not be spread to cover any other property;
(d) liens for taxes, assessments, or other governmental charges or
levies to the extent that payment thereof shall not at the time be
required to be made in accordance with the provisions of Section 7.1.4;
(e) liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate proceedings and
for which appropriate reserves with respect thereto have been established
and maintained on the consolidated books of the Borrower in accordance
with GAAP to the extent required under such principles;
(f) liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance, or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases, and contracts (other than for borrowed
money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds;
(g) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or its Subsidiaries;
(h) judgment liens securing amounts not in excess of $1,000,000 in
existence less than thirty days after the entry thereof or with respect to
which execution has been stayed or with respect to which the appropriate
insurance carrier has agreed in writing that there is full coverage
(subject to a customary deductible not in excess of $1,000,000) by
insurance;
(i) Security Interests securing Rate Swap Agreements, provided that
such Rate Swap Agreements have been provided solely by one or more Lenders
and are secured pursuant to the Collateral Documents in a manner
satisfactory to the Agent and the Collateral Agent;
(j) Security Interests securing the Indebtedness incurred or to be
incurred in the Mortgage Financing Transactions and attaching to Mortgage
Financing Collateral;
(k) the license for the use of the "Shoney's Inn" service mark
granted to ShoLodge, Inc. by the Borrower pursuant to the License
Agreement dated October 25, 1991;
(l) Security Interests granted by the Borrower and the Transferred
Subsidiaries under the Bridge Collateral Documents;
(m) Security Interests in collateral valued at no greater than
$30,000,000 granted by the Borrower to secure its obligations under the
First American Facility; and
(n) Security Interests in secured Indebtedness permitted under
clause (l) of Section 7.2.2, which Security Interests do not attach to any
other assets of the Borrower or its Subsidiaries.
SECTION 7.2.4. Financial Condition.
(a) Prior to and including the Fiscal Quarter in which the
Acquisition is consummated, and adjusted in accordance with Section 1.4, the
Borrower will not permit:
(i) Consolidated Net Worth on the last day of any Fiscal
Quarter occurring during any period set forth below to be less than
the amount set forth below:
<TABLE>
<CAPTION>
Minimum Consolidated
Period Net Worth
<S> <C>
First Three Fiscal Quarters of Fiscal Year 1995 $(145,000,000)
Fourth Fiscal Quarter of Fiscal Year 1995 $(120,000,000)
First Two Fiscal Quarters of Fiscal Year 1996 $(120,000,000)
Third Fiscal Quarter of Fiscal Year 1996 $(100,000,000)
Fourth Fiscal Quarter of Fiscal Year 1996 $ (75,000,000)
First Three Fiscal Quarters of Fiscal Year 1997 $ (75,000,000)
Fourth Fiscal Quarter of Fiscal Year 1997 $ (25,000,000)
First Three Fiscal Quarters of Fiscal Year 1998 $ (25,000,000)
Fourth Fiscal Quarter of Fiscal Year 1998 $ 50,000,000
First Three Fiscal Quarters of Fiscal Year 1999 $ 50,000,000
Fourth Fiscal Quarter of Fiscal Year 1999
and thereafter $ 140,000,000
</TABLE>
(ii) the Funded Debt Ratio on the last day of any Fiscal
Quarter occurring during any period set forth below to be greater
than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum Funded
Period Debt Ratio
<S> <C>
Third Fiscal Quarter
of Fiscal Year 1995 4.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1995 4.50:1.00
First Fiscal Quarter of
Fiscal Year 1996 4.50:1.00
Second and Third Fiscal
Quarters of Fiscal Year 1996 4.70:1.00
Fourth Fiscal Quarter of
Fiscal Year 1996 4.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 4.25:1.00
Fourth Fiscal Quarter of
Fiscal Year 1997 3.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 3.25:1.00
Fourth Fiscal Quarter of
Fiscal Year 1998 2.50:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 2.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1999 and thereafter 2.00:1.00
</TABLE>
(iii) Consolidated Funded Debt as of the end of any Fiscal
Quarter during any period set forth below to be more than the amount
set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum
Period Consolidated Debt
<S> <C>
Third Fiscal Quarter
of Fiscal Year 1995 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1995 $585,000,000
First Three Fiscal Quarters
of Fiscal Year 1996 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1996 $520,000,000
First Three Fiscal Quarters
of Fiscal Year 1997 $520,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $495,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $495,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 $460,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $460,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and thereafter $460,000,000
</TABLE>
(iv) the Adjusted Interest Coverage Ratio to be less than
the ratio set forth below as of the end of any Fiscal Quarter
during any period set forth below set forth opposite such ratio:
<TABLE>
<CAPTION>
Minimum Adjusted
Period Interest Coverage Ratio
<S> <C>
Third Fiscal Quarter
of Fiscal Year 1995 1.50:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 1.50:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 1.25:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 1.00:1.00
First Fiscal Quarter
of Fiscal Year 1997 1.20:1.00
Second Fiscal Quarter
of Fiscal Year 1997 1.40:1.00
Third Fiscal Quarter
of Fiscal Year 1997 1.60:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 2.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 2.10:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 3.20:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 3.20:1.00
Fourth Fiscal Quarter
of Fiscal Year 1999
and thereafter 4.00:1.00
</TABLE>
(v) the Consolidated Fixed Charge Coverage Ratio on the last
day of any Fiscal Quarter occurring during any period set forth
below to be less than the ratio set forth opposite such period
below:
<TABLE>
<CAPTION>
Minimum Consolidated Fixed
Period Charge Coverage Ratio
<S> <C>
Second Fiscal Quarter
of Fiscal Year 1995 .80:1.00
Third Fiscal Quarter
of Fiscal Year 1995 .75:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 .90:1.00
First Fiscal Quarter
of Fiscal Year 1996 .90:1.00
Second, Third and Fourth
Fiscal Quarter of Fiscal Year 1996 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 1.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 1.10:1.00
Fourth Fiscal Quarter of Fiscal
Year 1999 and thereafter 1.50:1.00
</TABLE>
(b) If the Acquisition is consummated, beginning with the First
Fiscal Quarter after the Fiscal Quarter in which the Acquisition is
consummated, the Borrower will not permit:
(i) Consolidated Net Worth on the last day of any Fiscal
Quarter occurring during any period set forth below to be less than
the amount set forth below:
<TABLE>
<CAPTION>
Minimum Consolidated
Period Net Worth
<S> <C>
Fourth Fiscal Quarter of Fiscal Year 1996 $(15,000,000)
First Three Fiscal Quarters of Fiscal Year 1997 $(15,000,000)
Fourth Fiscal Quarter of Fiscal Year 1997 $ 10,000,000
First Three Fiscal Quarters of Fiscal Year 1998 $ 10,000,000
Fourth Fiscal Quarter of Fiscal Year 1998 $ 50,000,000
First Three Fiscal Quarters of Fiscal Year 1999 $ 50,000,000
Fourth Fiscal Quarter of Fiscal Year 1999
and thereafter $100,000,000
</TABLE>
(ii) the Funded Debt Ratio on the last day of any Fiscal
Quarter occurring during any period set forth below to be greater
than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum Funded
Period Debt Ratio
<S> <C>
Fourth Fiscal Quarter of
Fiscal Year 1996 5.05:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 5.05:1.00
Fourth Fiscal Quarter of
Fiscal Year 1997 3.90:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 3.90:1.00
Fourth Fiscal Quarter of
Fiscal Year 1998 3.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 3.10:1.00
Fourth Fiscal Quarter of
Fiscal Year 1999 and thereafter 2.51:1.00
</TABLE>
(iii) Consolidated Funded Debt as of the end of any Fiscal
Quarter during any period set forth below to be more than the amount
set forth below opposite such period:
<TABLE>
<CAPTION>
Maximum
Period Consolidated Debt
<S> <C>
Fourth Fiscal Quarter
of Fiscal Year 1996 $640,000,000
First Three Fiscal Quarters
of Fiscal Year 1997 $640,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $633,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $633,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 $582,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $582,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and thereafter $538,000,000
</TABLE>
(iv) the Adjusted Interest Coverage Ratio to be less than the
ratio set forth below as of the end of any Fiscal Quarter during any
period set forth below opposite such ratio:
<TABLE>
<CAPTION>
Minimum Adjusted
Period Interest Coverage Ratio
<S> <C>
Fourth Fiscal Quarter
of Fiscal Year 1996 2.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 2.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 2.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 2.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 2.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 2.25:1.00
Fourth Fiscal Quarter
of Fiscal Year 1999 and thereafter 3.00:1.00
</TABLE>
(vi) the Consolidated Fixed Charge Coverage Ratio on the last
day of any Fiscal Quarter occurring during any period set forth
below to be less than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Minimum Consolidated Fixed
Period Charge Coverage Ratio
<S> <C>
Fourth Fiscal Quarter
of Fiscal Year 1996 1.05:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 1.05:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 1.05:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 1.05:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 1.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 1.25:1.00
Fourth Fiscal Quarter of Fiscal
Year 1999 1.25:1.00
</TABLE>
SECTION 7.2.5. Investments. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume, or suffer to exist any
Investment in any other Person, except:
(a) Investments or options to make Investments in any Person
existing on the Closing Date and identified in Item 7.2.5 ("Existing
Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments by the Borrower and its
Subsidiaries;
(c) Investments made after the Closing Date by the Borrower and its
Subsidiaries (other than Realco) in wholly-owned Subsidiaries (other than
Realco except in the case of capital contributions by the Borrower to the
common equity of Realco or as provided in clause (iii)(y) below), or by
any Subsidiary of the Borrower in the Borrower, by way of contributions to
capital or loans or advances, so long as (i) the aggregate amount of all
such Investments made after the Closing Date in all wholly-owned
Subsidiaries (other than Commissary Operations, Inc., Realco, BarbWire's
of Kansas, Inc., Shoney's of Michigan, Inc. and the Transferred
Subsidiaries) shall not exceed $2,500,000 at any one time, (ii) all such
Investments in Commissary Operations, Inc. shall be made as loans or
advances in the ordinary course of business to provide for the cash needs
of Commissary Operations, Inc. and shall be represented by Pledged Notes,
(iii) in the case of Realco, such Investments shall either be (x)
contributions to the common equity of Realco of restaurants or funds used
to acquire or build restaurants or (y) made as loans or advances in the
ordinary course of business to provide for the cash needs of Realco and
shall be represented by Pledged Notes and (iv) all such Investments by any
Subsidiary in the Borrower by way of loans or advances shall be
subordinated in form and substance to the Obligations, such subordination
to include subordination provisions, and all other material terms,
reasonably satisfactory in form and substance to the Agent, as evidenced
by its written approval thereof;
(d) Investments by the Borrower or any Subsidiary (other than
Realco) in accounts and notes receivable that arise and remain outstanding
from transactions with franchisees, customers and suppliers in the normal
course of business and, in the case of notes receivable, do not exceed
$15,000,000 in the aggregate outstanding at any one time;
(e) any Guaranty permitted to be made by Section 7.2.8;
(f) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the purchase or acquisition by the
Borrower or any Subsidiary (other than Realco) of all or substantially all
of the capital stock of any Person if such Investment is permitted by
Section 7.2.23;
(g) other Investments by the Borrower or any Subsidiary (other than
Realco) in an aggregate amount at any one time outstanding not to exceed
$2,000,000;
(h) Investments in ShoLodge made pursuant to the exercise of options
or warrants currently held by the Borrower or any subsidiary, as such
options or warrants may be adjusted in accordance with their terms for
anti-dilution purposes;
(i) any Investments permitted under Section 7.2.23; and
(j) Investments made by the Borrower in the Transferred Subsidiaries
in connection with the Acquisition;
provided, however, that
(i) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such
requirements; and
(ii) no Investment otherwise permitted by clauses (f) or (g)
of this Section 7.2.5 shall be permitted to be made if, immediately
before or after giving effect thereto, any Default shall have
occurred and be continuing; and
(iii) no Investment may be made in any Subsidiary (other than
the Transferred Subsidiaries) unless promptly following the date of
the making of such Investment (A) all the capital stock thereof
owned by the Borrower and its Subsidiaries shall have been duly
pledged on a first priority perfected basis to the Collateral Agent
for the benefit of the Lenders, (B) such Subsidiary shall enter
into the Subsidiary Guaranty and (C) such Subsidiary shall enter
into a Subsidiary Security Agreement.
SECTION 7.2.6. Restricted Payments, etc.
(a) The Borrower will not declare, pay, or make any dividend or
distribution (in cash, property, or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of the Borrower or
on any warrants, options, or other rights with respect to any shares of
any class of capital stock (now or hereafter outstanding) of the Borrower
(other than dividends or distributions payable in its stock, or warrants,
options or rights to purchase its stock, or splitups or reclassification
of its stock into additional or other shares of its stock) or apply, or
permit any of its Subsidiaries to apply, any of its funds, property, or
assets to the purchase, redemption, sinking fund, or other retirement of
any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower or of any warrants, options or other rights to acquire shares
of any class of capital stock of the Borrower;
(b) the Borrower will not, and will not permit any of its
Subsidiaries to, pay, prepay or repay any principal of, or make any
payment of interest on, or redeem, purchase, set aside any funds for or
defease, or give any notice of redemption for, or purchase or otherwise
acquire, any Subordinated Debt; and
(c) the Borrower will not, and will not permit any of its
Subsidiaries to, make any deposit for any of the foregoing purposes;
provided, however, that
(i) the Borrower may accrue zero coupon interest on the
Subordinated LYONS Notes;
(ii) the Borrower may elect to purchase any Subordinated
LYONS Notes with cash under Section 3.08 of the LYONS Indenture
only if, at least 60 days prior to the date any payment in cash
would be desired to be made, the Borrower shall have provided
written notice to the Agent and the Lenders of its desire to
purchase such Subordinated LYONS Notes in cash and the Approving
Lenders, in their sole discretion, shall have notified the Borrower
prior to such desired purchase date that they will permit such
purchase (any failure to respond by the Approving Lenders being
deemed to be a rejection of such request to make such purchase in
cash). The Borrower may elect to purchase Subordinated LYONS Notes
with shares of its common stock in accordance with Section 3.08 of
the LYONS Indenture without the consent of any Lender;
(iii) the Borrower may, subject to the subordination
provisions applicable to the Subordinated Debt, make payments of
interest accrued thereon when due; and
(iv) the Borrower may, in accordance with the terms and
provisions of Section 11.03 of the LYONS Indenture, issue checks
with respect to the cash portion of fractional shares receivable in
connection with a conversion of the Subordinated LYONS Notes; and
(v) the Borrower may, in accordance with the terms and
provisions of the Subordinated Indenture and the Subordinated
Debentures, issue checks with respect to the cash portion receivable
by a holder in connection with a conversion (in whole or in part) of
such holder's Subordinated Debentures.
SECTION 7.2.7. Consolidated Capital Expenditures, etc. The Borrower will
not, and will not permit any of its Subsidiaries to, make any Consolidated
Capital Expenditures, except the Borrower and its Subsidiaries may make
Consolidated Capital Expenditures during any Fiscal Year (including, without
duplication, in connection with expenditures made pursuant to and permitted by
clauses (c) and (d) of Section 7.2.11) which do not exceed, in the aggregate,
the amount set forth opposite such Fiscal Year below:
<TABLE>
<CAPTION>
Fiscal Year Maximum Amount
<S> <C>
1996 Fiscal Year $ 75,000,000
1997 Fiscal Year $ 95,000,000
1998 Fiscal Year $ 95,000,000
1999 Fiscal Year $ 95,000,000
</TABLE>
provided, however, that (i) to the extent that the maximum amount of
Consolidated Capital Expenditures permitted to be made by the Borrower and
its Subsidiaries in any Fiscal Year, without giving effect to this
proviso, exceeds the aggregate amount actually incurred during such Fiscal
Year, the lesser of one hundred percent of the amount of such excess or
$10,000,000 may be carried forward to the next Fiscal Year and (ii) in the
Fiscal Years (but no later than the 1997 Fiscal Year) in which the
Borrower is required to acquire restaurant properties from Marriott or
Thompson Hospitality, L.P., either directly or pursuant to the Borrower's
obligations under the Restaurant Sale and Purchase Agreement dated May 20,
1992, by and among the Borrower, Marriott Family Restaurants, Inc.,
Marriott Corporation and Thompson Hospitality, L.P., Consolidated Capital
Expenditures in respect of such Fiscal Year shall be increased by an
amount not to exceed $5,000,000 in the aggregate for all such Fiscal
Years, and provided, further, that there shall be excluded from
Consolidated Capital Expenditures undeveloped real estate designated as
Mortgage Financing Collateral prior to such time that restaurants
constructed on such real estate are open and operating.
SECTION 7.2.8. Guaranties. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume, suffer to exist or otherwise be or
become liable with respect to any Guaranties (including, without limitation,
obligations arising by reason of general partnership interests), except:
(a) the Subsidiary Guaranty;
(b) (i) Guaranties existing on the Closing Date and disclosed in
Item 7.2.8 ("Existing Guaranties") of the Disclosure Schedule and
(ii) guaranties replacing such guaranties so long as such replacement
guaranty does not increase the amount of obligations guarantied thereby
and the other terms and conditions of such replacement guaranty are no
more onerous to the Borrower than those of the guaranty so replaced;
(c) Guaranties entered into in the ordinary course of business of
service performance by the Borrower with respect to certain franchise
obligations of Shoney's of Canada, Inc., all as more particularly
described in Item 7.2.8 ("Existing Guarantees") of the Disclosure
Schedule;
(d) Guaranties constituting obligations of the Borrower in its
capacity as general partner of the Limited Partnerships, which Guaranties
shall not exceed $2,000,000 in aggregate amount at any time outstanding;
(e) in the case of the Borrower and its Subsidiaries (other than
Realco), other Guaranties in an aggregate amount not to exceed $1,000,000
at any one time outstanding;
(f) the Guaranty of certain reimbursement obligations of Shoney's
Inn of Baton Rouge pursuant to the Letter of Credit, Reimbursement and
Guaranty Agreement between Shoney's Inn of Baton Rouge, the Borrower and
First Union National Bank of North Carolina dated as of April 1, 1995;
(g) the Bridge Guaranty; and
(h) the Guaranty by TPIR of the Subordinated Debentures and other
obligations of the Borrower under the Subordinated Indenture.
SECTION 7.2.9. Lease Obligations. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into at any time any arrangement
except the Realco Lease which involves the leasing by the Borrower or such
Subsidiary from any lessor of any real or personal property (or any interest
therein), if such arrangement, together with all other such arrangements which
shall then be in effect, will result in any Fiscal Year in Consolidated Lease
Expense of the Borrower and its Subsidiaries (other than Realco) in excess of
$20,000,000.
SECTION 7.2.10. Take or Pay Contracts. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other property, or
services if such arrangement by its express terms requires that payment be made
by the Borrower or such Subsidiary regardless of whether or not such materials,
supplies, other property, or services are delivered or furnished to the
Borrower or such Subsidiary.
SECTION 7.2.11. Consolidation, Merger, Sale of Assets, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, wind-up, liquidate or
dissolve itself (or suffer any thereof), consolidate or amalgamate with or
merge into or with any other corporation or any other Person, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) or convey, sell, transfer, lease or otherwise dispose of
all or any part of its assets (including, without limitation, any stock or
receivables), in one transaction or a series of transactions, to any Person or
Persons except:
(a) any Subsidiary (other than Realco) may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any other
wholly-owned direct or indirect Subsidiary (other than Realco); provided,
that the surviving corporation duly assumes all obligations of each
thereof and executes any documents reasonably requested by the Agent in
connection therewith;
(b) the sale of inventory in the ordinary course of business;
(c) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the purchase or acquisition by the
Borrower of all or substantially all of the assets or stock of any Person
to the extent the same would otherwise be permitted by Section 7.2.23;
(d) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, any Subsidiary (other than Realco) may
merge with any other corporation permitted to be acquired pursuant to
clause (c) of this Section 7.2.11 and may be created and capitalized for
such purposes to the extent the same would otherwise be permitted by
Section 7.2.23;
(e) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the sale of assets or properties by the
Borrower or any such Subsidiary (other than Realco) for at least 80% cash
(unless the Required Lenders otherwise agree) and for fair value (as
reasonably determined by the Board of Directors of the Borrower or
Authorized Officers of the Borrower as authorized by the Board of
Directors) to Persons other than Affiliates, provided that (i) the
provisions of clause (c) of Section 3.1.2 are complied with (ii) assets
and properties with an aggregate book value of no more than 10% of the
Borrower's consolidated tangible assets as determined in accordance with
GAAP consistently applied are sold in any Fiscal Year (unless the Required
Lenders otherwise agree), (iii) the terms and conditions of any non-cash
proceeds of such sale are in form and substance satisfactory to the Agent
and (iv) the value of the Collateral and assets of Realco after giving
effect to such sale is in an amount sufficient to cause the Loan to Value
Ratio to not exceed 50%.
(f) the sale of equipment which, in the Borrower's reasonable
discretion, is obsolete or no longer fit for use in the business of the
Borrower or any of its Subsidiaries;
(g) the leasing by the Borrower or its Subsidiaries (other than
Realco) of restaurant facilities, the operations of which have been
franchised or sold to one or more franchisees of the Borrower, which
franchisees shall operate such restaurant facilities thereafter pursuant
to a franchise agreement with the Borrower;
(h) [Intentionally Omitted];
(i) the leasing by the Borrower or its Subsidiaries (other than
Realco) of real properties (and related equipment and fixtures) to non-
franchisees (i) as set forth in Item 7.2.11 of the Disclosure Schedule
having an aggregate net book value not exceeding approximately $7,475,000
and (ii) with respect to leases entered into after the Closing Date,
having an aggregate net book value not in excess of $10,000,000 at any
time and, in each case, provided such leases are subordinate to the
Security Interests of the Collateral Documents;
(j) the subleasing by the Borrower of real properties owned by
Realco having an aggregate net book value not in excess of $10,000,000 at
any time, provided such subleases are subordinate to the Security
Interests of the Collateral Documents;
(k) the disposition, leasing or subleasing by the Borrower of up to
40 restaurants (which may constitute Collateral or be owned by Realco)
consisting of up to twenty "Shoney's" Concept restaurants and up to twenty
"Captain D's" Concept restaurants which restaurants the Borrower has
determined are no longer necessary or useful for the continuing business
of the Borrower; and
(l) the leasing or subleasing by the Borrower or the leasing by
Realco of up to ten (10) Lee's Famous Recipe Concept restaurants to RTM
Inc. (or to a sublessee or lessee designated by RTM Inc.).
SECTION 7.2.12. Modification, etc. of Subordinated Debt. The Borrower
will not consent to or enter into any amendment, supplement or other
modification of any subordination provision (including, without limitation, any
provision of Article XII of, and the definitions of Senior Indebtedness and
Indebtedness contained in, the Subordinated Indenture or the LYONS Indenture)
contained in any agreement or instrument evidencing or governing Subordinated
Debt, any sinking fund provision or terms of required repayment or redemption
or acquisition of Subordinated Debt contained in any agreement or instrument
evidencing or governing any Subordinated Debt that has the effect of shortening
the amortization thereof, or any provision relating to interest rates (if the
effect thereof is to increase such rates), remedies, defaults or contractual
restrictions on the activities or condition of the Borrower, or any other
provision which could be material to the interests or privileges of the Lenders
as holders of Senior Indebtedness, contained in any agreement or instrument
evidencing or governing Subordinated Debt, unless the same shall be consented
to by the Required Lenders.
SECTION 7.2.13. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer, or
permit to exist:
(a) any arrangement or contract with any of its Affiliates (other
than a Subsidiary, Limited Partnership or franchisee of the Borrower) of a
nature customarily entered into by Persons which are Affiliates of each
other (including management or similar contracts or arrangements relating
to the allocation of revenues, taxes, and expenses or otherwise) requiring
any payments to be made by the Borrower or any of its Subsidiaries to any
Affiliate (other than a Subsidiary) unless such arrangement is fair and
equitable to the Borrower or such Subsidiary; or
(b) any other transaction, arrangement, or contract with any of its
Affiliates (other than a Subsidiary, Limited Partnership or franchisee of
the Borrower) which would not be entered into by a prudent Person in the
position of the Borrower or such Subsidiary with, or which is on terms
which are less favorable than are obtainable from, any Person which is not
one of its Affiliates.
SECTION 7.2.14. Negative Pledges; Subsidiary Payments; Modification of
Documents. The Borrower will not, and will not permit any of its Subsidiaries
to, enter into any agreement (a) (excluding this Agreement, the other Loan
Documents, the Bridge Loan Agreement and Mortgage Financing Transaction
Documents as to collateral for the Indebtedness incurred pursuant thereto)
prohibiting the creation or assumption of any Security Interest upon its
properties, revenues, or assets, whether now owned or hereafter acquired, (b)
which would restrict the ability of any Subsidiary of the Borrower to pay or
make dividends or distributions in cash or kind, to make loans, advances or
other payments of whatsoever nature, or to make transfers or distributions of
all or any part of its assets, in each case to the Borrower or to any
corporation as to which such Subsidiary is a Subsidiary or (c) which restricts
or limits the ability of the Borrower to amend, supplement or otherwise modify
any of the Loan Documents.
SECTION 7.2.15. Inconsistent Agreements. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any agreement containing any
provision which would be violated or breached by any Loan or by the performance
by the Borrower of its obligations hereunder or under any Note, any other Loan
Document or any Realco Document.
SECTION 7.2.16. Fiscal Year. The Borrower will not change its Fiscal
Year.
SECTION 7.2.17. Franchise Agreements. The Borrower will not, and will
not permit any of its Subsidiaries to, (a) terminate or alter any of the
material terms and conditions of any of the franchise agreements pursuant to
which the Borrower or any such Subsidiary is the franchisor in such a way so as
to (i) prohibit the assignment by the franchisor (by way of collateral
security) of all of its rights and benefits in the franchise agreements or (ii)
significantly reduce the aggregate royalty fees or advertising fees payable by
the franchisees and (b) enter into any franchise agreements after May 9, 1993
which would not permit the assignment by the franchisor (by way of collateral
security) of all of its rights and benefits in such franchise agreements or
which would contain fee arrangements which are materially less beneficial, in
the aggregate, to the Borrower and its Subsidiaries than the fee arrangements
contained in existing franchise agreements of the Borrower and its
Subsidiaries, except for franchise agreements entered into pursuant to area
agreements in existence on May 9, 1993; provided, however, that the Borrower
may terminate the relevant franchise agreements in connection with Franchisee
Acquisitions.
SECTION 7.2.18. Change of Location or Name. The Borrower will not, and
will not permit any of its Subsidiaries which has executed a Subsidiary
Security Agreement to, change (a) the location of its principal place of
business, chief executive office, major executive office, chief place of
business or its records concerning its business and financial affairs, or (b)
its name or the name under or by which it conducts its business, in each case
without first giving the Agent and the Collateral Agent written notice thereof
and having taken any and all action required or desirable to maintain and
preserve the first priority perfected lien and Security Interest in favor of
the Collateral Agent on all property of the Borrower and its Subsidiaries free
and clear of any lien, Security Interest or encumbrance whatsoever except for
liens permitted hereunder; provided, however, that notwithstanding the
foregoing, the Borrower shall not, and shall not permit any of its Subsidiaries
to, change the location of its principal place of business, chief executive
office, major executive office, chief place of business or its records
concerning its business and financial affairs to (i) Louisiana or (ii) any
place outside the contiguous continental United States of America.
SECTION 7.2.19. Environmental Liabilities. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) violate any requirement of law, rule, regulation or order
regarding Hazardous Material (including without limitation any such law,
rule, regulation or order regarding the generation, accumulation, storage,
transportation, treatment, recycling or disposal of any Hazardous
Material),
(b) dispose of or, except in accordance with applicable law, store
any Hazardous Material in, on or at any real property owned or operated by
the Borrower or any of its Subsidiaries,
(c) allow any lien imposed pursuant to any law, rule, regulation or
order relating to any Hazardous Material or the disposal thereof to be
imposed or to remain on such real property, except as contested in good
faith by appropriate proceedings for which adequate reserves have been
established and are being maintained on its books, or
(d) fail at any time to obtain or comply with any permit,
certificate, license, approval or other authorization relating to
environmental matters, or to file any notification or report relating to
chemical substances, air emissions, effluent discharges or Hazardous
Material waste storage, treatment or disposal required in connection with
the operation of their businesses,
if (i) such violation, disposal, storage, lien or failure relates to any
collateral securing the Obligations or (ii) with respect to property other than
that which is such collateral, such violation, disposal, storage, lien or
failure would, individually or in the aggregate with all other such violations,
disposal, storage, liens and failures which shall have occurred and at such
time be continuing, have a Materially Adverse Effect.
SECTION 7.2.20. Amendment of Certain Agreements. The Borrower will not
amend, supplement, make additions to or otherwise modify, in whole or in part,
(a) any provision of any Mortgage Financing Transaction Document in any manner
which adversely affects the Agent, the Collateral Agent or the Lenders (it
being understood that amendments in form and substance satisfactory to the
Agent to Mortgage Financing Transaction Documents which would (x) permit the
substitution of Mortgage Financing Collateral described in clause (b) of the
definition of Mortgage Financing Collateral for existing Mortgage Financing
Collateral subject to a Mortgage Financing Transaction having an equal value
shall not be deemed adverse to the Agent, the Collateral Agent or the Lenders;
provided, that, any such valuation shall, in the case of existing Mortgage
Financing Collateral, be based on the value of such Mortgage Financing
Collateral at the time such property became Mortgage Financing Collateral and,
in the case of Mortgage Financing Collateral described in clause (b) of the
definition of Mortgage Financing Collateral, be based on the valuation of such
Mortgage Financing Collateral as of April 15, 1995 as set forth in the Marshall
& Stevens report thereon dated May 19, 1995 or on cost, or (y) extend the
maturity of the 1989 Mortgage Financing Transaction pursuant to Section 2.1),
(b) except with the prior written consent of the Required Lenders, the Realco
Lease; provided, however, that the Realco Lease may be amended from time to
time (with the prior written consent of the Agent) to release from the terms of
the Realco Lease restaurants being sold pursuant to clause (k) of Section
7.2.11 or to permit the lease or sublease of restaurants pursuant to clause (k)
of Section 7.2.11, (c) except with the prior written consent of the Agent, any
Realco Document (other than the Realco Lease), (d) any provision of any Bridge
Document, the effect of which with respect to any Bridge Document is to
increase the interest rate or shorten the maturity of (or move up any payment
date with respect to any payment on) the Bridge Financing, or (e) any provision
of any Bridge Document, the effect of which is to (1) modify any covenant,
event of default, or other provision thereunder, if the effect of such
modification is to make such covenants or events of default materially more
restrictive on or burdensome to the Borrower or (2) add any new covenant, event
of default or other provision, if the effect of such addition is to impose any
new material restriction or burden on the Borrower. The Borrower will, prior
to entering into any amendment, addition or other modification deliver to the
Agent with copies for each Lender any final or execution form copy of
amendments, supplements, additions or other modifications to such documents.
SECTION 7.2.21. Sale-Leaseback Transactions. Except with respect to the
Realco Lease, the Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or
guarantor or other surety with respect to any lease (whether an operating or
capital lease) of any property (whether real or personal or mixed), whether now
owned or hereafter acquired, (a) which the Borrower or any of its Subsidiaries
has sold or transferred or is to sell or transfer to any other Person or (b)
which the Borrower or any of its Subsidiaries intends to use for substantially
the same purpose as any other property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to any Person in connection with
such lease, except to the extent that (i) any obligations of the Borrower under
Capitalized Leases would be permitted under Section 7.2.2(f) and (ii) any
Consolidated Lease Expense resulting therefrom would be permitted under Section
7.2.9.
SECTION 7.2.22. Realco. The Borrower shall not permit Realco to (a)
create, incur, assume or suffer to exist any Consolidated Funded Debt (other
than the Subsidiary Guaranty), (b) create, assume, or suffer to exist any
Security Interest upon any of its revenues, property (including without
limitation fixed assets, inventory, real property, intangible rights and stock)
or other assets, whether now owned or hereafter acquired (except as permitted
by clauses (d), (e), (f) and (g) of Section 7.2.3), (c) make any Investment in
any other Person (other than in Cash Equivalent Investments or pursuant to the
Subsidiary Guaranty), (d) become liable with respect to any Guaranties (except
the Subsidiary Guaranty), (e) except in the ordinary course of business, enter
into or be a party to any arrangement for the purchase of materials, supplies,
other property, or services, other than with respect to Consolidated Capital
Expenditures, (f) wind-up, liquidate or dissolve itself (or suffer any
thereof), consolidate or amalgamate with or merge into or with any other
corporation or any other Person, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division thereof) or,
except pursuant to Section 7.1.12, convey, sell, transfer, lease or otherwise
dispose of all or any part of its assets (including, without limitation, any
stock or receivables), in one transaction or a series of transactions, to any
Person or Persons, or (g) other than the Realco Lease or the Permitted
Subleases, enter into at any time any arrangement which involves the leasing
from any lessor of any real or personal property (or any interest therein).
The Borrower agrees not to commence or cause the commencement of any of the
actions described in clauses (b) or (c) of Section 8.1.4 with respect to
Realco.
SECTION 7.2.23. Purchase of Franchisees. The Borrower will not, and will
not permit its Subsidiaries to, make any Franchisee Acquisitions except
Franchisee Acquisitions the consideration for which is common stock and/or
other consideration, (i) such common stock not having a value in excess of
$10,000,000 in the aggregate (with such common stock being valued at its market
value at the time of the relevant acquisition) and (ii) such other
consideration having an aggregate value for all such Franchisee Acquisitions
not in excess of $30,000,000 in any one Fiscal Year and not more than
$60,000,000 in the aggregate (with any consideration other than cash valued at
the fair market value thereof); provided, however, that (x) both before and
after giving effect to any such Franchisee Acquisitions, no Default shall have
occurred or be continuing and (y) if applicable, the Borrower and/or such
Subsidiary shall have complied with clause (iii) of the proviso to Section
7.2.5 (but such compliance shall not be in derogation of the Borrower's rights
under clause (a) of Section 7.2.11 with respect to such Subsidiary). In the
event the Borrower makes a Franchisee Acquisition designated as a "Franchise
Re-sale Acquisition" for consideration other than common stock and subsequently
re-sells the assets or ownership interests acquired in such Franchisee
Acquisition, only the excess (the "Purchase Excess") of (a) the consideration
paid by the Borrower for such assets or ownership interests in such Franchisee
Acquisition over (b) the consideration received by the Borrower for such assets
or ownership interests in such re-sale transaction, shall be included in the
calculations of the Borrower's use of the annual and aggregate limits set forth
in this Section 7.2.23; provided, however, that the aggregate Purchase Excess
for all Franchise Re-sale Acquisitions may not at any time exceed $10,000,000.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Events of Default. The term "Event of Default" shall mean
any of the events set forth in Sections 8.1.1 through 8.1.10.
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall default in
the payment or prepayment when due of any principal of any Note, or any
Reimbursement Obligation, the Borrower shall default (and such default shall
continue unremedied for a period in excess of five days) in the payment or
prepayment when due of any interest on any Loan or Reimbursement Obligation, or
the Borrower shall default (and such default shall continue unremedied for a
period in excess of five days) in the payment when due of any commitment or
other fee or any other monetary Obligation.
SECTION 8.1.2. Non-Performance of Certain Covenants. The Borrower shall
default in the due performance and observance of any of its obligations under
Section 7.1.6(a), or under Sections 7.2.1 through 7.2.23.
SECTION 8.1.3. Default on Other Indebtedness. Any default shall occur
under the terms applicable to any Indebtedness (including Indebtedness
evidenced by or incurred in connection with the Bridge Financing) or Guaranty
in an aggregate amount exceeding $2,500,000 of the Borrower or any of its
Subsidiaries representing any borrowing or financing or Guaranty or arising
under any other material agreement from, by or with any Person, and such
default shall:
(a) consist of the failure to pay monetary obligations under such
Indebtedness or Guaranty when due; or
(b) continue unremedied (and unwaived) for a period of time
sufficient to permit the acceleration of such Indebtedness; or
(c) continue unremedied (and not have been waived by the holder of
such Indebtedness or Guaranty) for more than thirty days after notice
thereof shall have been given to the Borrower by the Agent, any Lender or
the holder of any Note; or
(d) permit the termination (unless waived) of any commitment to
lend set forth in any agreement with respect to the lending of
Indebtedness exceeding $2,500,000 in principal amount.
SECTION 8.1.4. Bankruptcy, Insolvency, etc. The Borrower or any of its
Subsidiaries shall
(a) (i) become insolvent or generally fail to pay debts as they
become due, or (ii) admit in writing its inability to pay debts as they
become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for the Borrower or
any Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent, or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator, or other custodian for the Borrower or any Subsidiary or for
a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator, or other custodian shall not be discharged within
thirty days;
(d) permit or suffer to exist the commencement of, or commence, any
bankruptcy, reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law; or any dissolution, winding up, or
liquidation proceeding (except for the voluntary dissolution, not under
bankruptcy or insolvency law, of any Subsidiary), shall be commenced by or
against the Borrower or any Subsidiary, and, if not commenced by the
Borrower or such Subsidiary, such proceeding shall be consented to or
acquiesced in by the Borrower or such Subsidiary, or shall result in the
entry of an order for relief or shall remain for thirty days undismissed;
or
(e) take any corporate action authorizing, or in furtherance of,
any of the foregoing.
SECTION 8.1.5. Breach of Warranty. Any representation or warranty of the
Borrower or any of its Subsidiaries hereunder, under any Collateral Document,
other Loan Document or Realco Document, or under any other writing furnished by
or on behalf of the Borrower or any of its Subsidiaries to the Agent or any
Lender for the purposes of or in connection with this Agreement or any
Collateral Document, other Loan Document or Realco Document, is or shall be
incorrect in any material respect when made or deemed made.
SECTION 8.1.6. Non-Performance of Other Obligations.
(a) The Borrower or any of its Subsidiaries shall default in the
due performance and observance of any other covenant or agreement
contained herein or in any Collateral Document (other than any Mortgage)
or other Loan Document and such default shall continue unremedied for a
period of thirty days after a Responsible Officer shall have knowledge
thereof; or
(b) A Default, as such term is defined in any Mortgage, shall
occur.
SECTION 8.1.7. ERISA. A contribution failure shall occur with respect to
any Plan sufficient to give rise to a lien under section 302(f) of ERISA or any
of the following events shall occur with respect to any Plan:
(a) such Plan shall be terminated or a receiver to administer such
Plan shall have been appointed (or steps shall be instituted to effect
such termination or appointment);
(b) the Borrower or any Subsidiary shall withdraw from such Plan
(or shall institute steps to effect such withdrawal); or
(c) any Reportable Event shall occur with respect to such Plan
which would present a material risk to the Borrower or any Subsidiary of
incurring a liability on account of such Plan,
and there shall exist a deficiency in the assets available to satisfy the
benefit liabilities under ERISA with respect to such Plan, and such occurrence
shall result in a liability of the Borrower or its Subsidiaries in excess of
$1,000,000.
SECTION 8.1.8. Judgments; Settlements. After the date hereof, a final
judgment or a settlement which, with other such outstanding final judgments or
settlements against the Borrower and each Subsidiary, exceeds an aggregate of
$1,000,000 (net of actual insurance coverage with respect thereto), shall be
rendered against or agreed to by the Borrower or any of its Subsidiaries and,
in the case of a judgment, within thirty days after entry thereof, such
judgment shall not have been discharged or execution thereof stayed pending
appeal, or if, within thirty days after the expiration of any such stay, such
judgment shall not have been discharged.
SECTION 8.1.9. Impairment of Security, etc. Any one of the Collateral
Documents, or any Security Interest granted thereunder, shall terminate, cease
to be effective, or cease to be the legally valid, binding, and enforceable
obligation of the Borrower or any of its Subsidiaries thereunder with respect
to collateral security with an aggregate fair market or book value in excess of
$5,000,000; the Borrower or any of its Subsidiaries shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature,
or enforceability; or any Security Interest securing, in whole or in part, any
Obligation shall cease to have the priority purported to be given under the
Collateral Documents.
SECTION 8.1.10. Change of Control. Any Change of Control shall occur.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a)(ii) through (d) of Section 8.1.4 shall occur, the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable and the Commitment
shall terminate, all without notice, demand, presentment or other action of any
kind.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than an Event of Default described in clauses (a)(ii) through (d) of
Section 8.1.4) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Agent, upon the direction of the Required Lenders,
shall, upon notice or demand, terminate the Revolving Commitments and/or
declare all or any portion of the outstanding principal amount of the Loans to
be due and payable and any or all other Obligations to be due and payable, the
full unpaid amount of such Loans and any and all other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
in each case without further notice, demand, presentment or other action of any
kind.
ARTICLE IX
THE AGENT AND THE COLLATERAL AGENT
SECTION 9.1. Actions. Each Lender, each LC Issuer and the holder of each
Note authorize the Agent and the Collateral Agent to act on behalf of such
Lender or holder under this Agreement, the Collateral Documents and the other
Loan Documents and the Mortgage Financing Transaction Documents to execute
supplements or amendments thereto or restatement thereof, and, in the absence
of other written instructions from the Required Lenders received from time to
time by the Agent or, as the case may be, the Collateral Agent (with respect to
which the Agent or the Collateral Agent, as the case may be, agrees that it
will, subject to the last three sentences of this Section 9.1, comply in good
faith except as otherwise advised by counsel), to exercise such powers
hereunder and thereunder as are specifically delegated to or required of the
Agent or the Collateral Agent by the terms hereof and thereof, together with
such powers as may be reasonably incidental thereto. Each Lender agrees (which
agreement shall survive any termination of this Agreement) to indemnify the
Agent and the Collateral Agent, pro rata according to such Lender's applicable
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted ("Indemnified Liabilities") against the Agent or the Collateral
Agent, as the case may be, in any way relating to or arising out of this
Agreement, the Notes, the Collateral Documents and the other Loan Documents and
the Mortgage Financing Transaction Documents, including, without limitation,
the reimbursement of the Agent and the Collateral Agent for all reasonable out-
of-pocket expenses (including attorneys' fees) incurred by the Agent and the
Collateral Agent hereunder or in connection herewith or in enforcing the
obligations of the Borrower under this Agreement, the Notes, the Collateral
Documents and the other Loan Documents and the Mortgage Financing Transaction
Documents, in all cases as to which the Agent or the Collateral Agent is not
reimbursed by the Borrower; 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
determined by a court of competent jurisdiction in a final proceeding to have
resulted from the Agent's or the Collateral Agent's gross negligence or willful
misconduct. Neither the Agent nor the Collateral Agent shall be required to
take any action hereunder, under the Notes, under the Collateral Documents or
under any other Loan Document or any Mortgage Financing Transaction Document,
or to prosecute or defend any suit in respect of this Agreement, the Collateral
Documents, the Notes or any other Loan Document, unless indemnified to its
satisfaction by the Lenders against loss, costs, liability, and expense, which
indemnity need not indemnify the Agent or the Collateral Agent for its gross
negligence or willful misconduct. If any indemnity in favor of the Agent or
the Collateral Agent, as the case may be, shall become impaired, it may call
for additional indemnity and cease to do the acts indemnified against until
such additional indemnity is given. The Agent and the Collateral Agent may
delegate its duties hereunder to affiliates, agents or attorneys-in-fact
selected in good faith by the Agent or the Collateral Agent, as the case may
be.
SECTION 9.2. Exculpation. Neither the Agent nor the Collateral Agent nor
any of their respective directors, officers, employees, or agents
(collectively, the "Related Parties") shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement, the Collateral
Documents, the Notes or any other Loan Document or any Mortgage Financing
Transaction Document or in connection herewith or therewith, except for its own
willful misconduct or gross negligence, nor shall the Agent nor the Collateral
Agent nor any of the Related Parties be responsible for any recitals or
representations or warranties herein or therein, or for the effectiveness,
enforceability, validity, or due execution of this Agreement, the Collateral
Documents, the Notes or any other Loan Document or any Mortgage Financing
Transaction Document nor shall the Agent nor the Collateral Agent nor any of
the Related Parties be obligated to make any inquiry respecting the performance
by the Borrower of its obligations hereunder or thereunder. The Agent and the
Collateral Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement, or writing
which it believes to be genuine and to have been presented by a proper Person.
SECTION 9.3. Successor. The Agent and the Collateral Agent may resign as
such at any time upon at least thirty days' prior notice to the Borrower and
all Lenders and LC Issuers. If the Agent or the Collateral Agent at any time
shall resign, the Required Lenders may appoint another Lender as a successor
Agent or Collateral Agent, as the case may be. If the Required Lenders do not
make such appointment within thirty days, the retiring Agent or Collateral
Agent, as the case may be, shall appoint a new Agent or Collateral Agent, as
the case may be, from among the Lenders or, if no Lender accepts such
appointment, from among commercial banking institutions or trust institutions
generally. Upon the acceptance of any appointment as Agent or Collateral
Agent, as the case may be, by a successor Agent or Collateral Agent, such
successor Agent or Collateral Agent shall thereupon become the Agent hereunder
or Collateral Agent under the applicable Loan Documents and shall be entitled
to receive from the prior Agent or Collateral Agent, as the case may be, such
documents of transfer and assignment as such successor Agent or Collateral
Agent may reasonably request, and the retiring Agent or Collateral Agent shall
be discharged from its duties and obligations under this Agreement, the
Collateral Documents, the Notes and the other Loan Documents.
SECTION 9.4. Collateral Documents, etc. Each Lender and each LC Issuer
hereby authorizes the Collateral Agent to enter into the applicable Collateral
Documents and the Agent to enter into any other Loan Documents and each thereof
to take all action contemplated thereby. Each Lender and each LC Issuer agrees
that no Lender or LC Issuer shall have any right individually to seek to
realize upon the security granted by or Guaranty provided by any Collateral
Document, it being understood and agreed that such rights and remedies may be
exercised by the Collateral Agent for the benefit of the Lenders, the LC
Issuers, the Collateral Agent and the Agent upon the terms of the Collateral
Documents. The Agent shall instruct the Collateral Agent (after consultation
with the Required Lenders) on the manner in which proceeds of Collateral will
be applied to the Obligations (after the payment of fees and expenses as set
forth in the Collateral Documents).
SECTION 9.5. Credit Extensions by CIBC Inc., etc. CIBC Inc. and any
other Affiliate thereof which may at any time be acting as both the Agent or
the Collateral Agent and a Lender hereunder, shall have the same rights and
powers with respect to any Credit Extensions made by it and any Notes held by
it as any Lender and may exercise the same as if it were not the Agent or the
Collateral Agent or affiliated with the Agent or the Collateral Agent, and the
term "Lender" and, when appropriate, "holder" shall include CIBC Inc. or such
Affiliate in its individual capacity.
SECTION 9.6. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. (New
York City time), on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made
such amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such Lender
and the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, in the case of the Borrower, at the interest rate
applicable at the time to Loans comprising such Borrowing, and in the case of
such Lender, for the period from the date such funds were advanced to the
Borrower to (and including) three days thereafter, at the rate customarily
charged by the Agent for inter-bank loans, and following such third day, at the
interest rate applicable at the time to Loans comprising such Borrowing.
SECTION 9.7. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent, the Collateral Agent and each other Lender and each
LC Issuer, and based on the financial information referred to in Sections 6.4
and 6.16 and such other documents, information, and investigations as it has
deemed appropriate, made its own credit decision to extend its Revolving
Commitment from time to time. Each Lender also acknowledges that it will,
independently of the Agent, the Collateral Agent and each other Lender and LC
Issuer and based on such other documents, information, and investigations as it
shall deem appropriate at any time, continue to make its own credit decisions
as to exercising or not exercising from time to time any rights and privileges
available to it under this Agreement, the Collateral Documents, the Notes or
the other Loan Documents.
SECTION 9.8. Notices, etc. to Agent. The Agent shall give prompt notice
to each Lender of each notice or request given to the Agent by the Borrower
which, pursuant to the terms of this Agreement, is required to be delivered to
a Lender. The Agent will also promptly distribute to each Lender each
Instrument received by the Agent for such Lender's account and copies of all
other communications received by the Agent from the Borrower for distribution
to the Lenders by the Agent in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each Loan Document may from time to time be amended, modified, or
waived, if such amendment, modification or waiver is in writing and consented
to by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification, or waiver:
(a) which would modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Required Lenders
or the Approving Lenders shall be effective unless consented to by each
Non-Defaulting Lender;
(b) which would modify this Section, change the definition of
"Required Lenders" or "Approving Lender", increase the Percentage of any
Lender (in each case other than as provided for in Section 10.10), reduce
any fees described in Article III, change the time for payment of any fees
to the Lenders described in Article III, or release all or substantially
all of the collateral security (including the Guaranties) provided under
the Collateral Documents in a manner other than as provided therein or
herein, shall be effective unless consented to by each Non-Defaulting
Lender;
(c) which would extend the due date for, or reduce the amount of,
any scheduled payment of principal of, or interest on, any Loan (or reduce
the principal amount of or rate of interest thereon) shall be made without
the consent of the holder of the Note evidencing such Loan or which would
extend or increase the amount of any Lender's Revolving Commitment without
the consent of such Lender;
(d) which would affect adversely the interests, rights or
obligations of the Agent or the Collateral Agent in its capacity as the
Agent or the Collateral Agent or would amend provisions of this Agreement
relating to the transfer of funds between the Agent and the Lenders
(including the types of funds or the method of such transfer) shall be
made without the consent of the Agent or the Collateral Agent; or
(e) which would affect adversely the interests, rights or
obligations of an LC Issuer in its capacity as an LC Issuer shall be made
without the consent of such LC Issuer.
No failure or delay on the part of the Agent, the Collateral Agent, any Lender,
or the holder of any Note in exercising any power or right under this
Agreement, the Collateral Documents, the Notes or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Borrower
in any case shall entitle it to any notice or demand in similar or other
circumstances, unless otherwise required by the Loan Documents. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
No waiver or approval by the Agent, the Collateral Agent, any Lender, or
the holder of any Note under this Agreement, the Collateral Documents, the
Notes or any other Loan Document shall, except as may be otherwise stated in
such waiver or approval, be applicable to subsequent transactions. No waiver
or approval hereunder shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement, the Collateral Documents, the Notes or
any other Loan Document shall be in writing or by facsimile transmission and
addressed or delivered to it at its address designated for notices set forth
below its signature hereto (or in a Lender Assignment Agreement) or at such
other address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given when received; any notice, if transmitted by facsimile
transmission or delivery, shall be deemed given when received.
SECTION 10.3. Costs and Expenses. The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Agent or the Collateral Agent
for the negotiation, preparation, execution and delivery of this Agreement,
each other Loan Document and each Realco Document and Mortgage Financing
Documents and the Mortgage Financing Transactions, including schedules and
exhibits, and any amendments, consents or waivers to this Agreement, the Loan
Documents or related documents as may from time to time hereafter be required
or requested (whether or not any of the same become effective), including
without limitation the reasonable fees and other charges of counsel (including
all local and special counsel) for the Agent or the Collateral Agent from time
to time incurred in connection therewith, whether or not the transactions
contemplated hereby are consummated, and to pay all reasonable expenses of the
Agent or the Collateral Agent (including reasonable fees and other charges of
counsel to the Agent or the Collateral Agent) incurred in connection with the
preparation and review of the form of any Instrument relevant to this Agreement
(including any Lender Assignment Agreement) and the consideration of legal
questions relevant hereto and thereto or to any restructuring or "workout" of
any Obligations and the costs and expenses of the Agent in connection with any
publicity or advertising of the foregoing. The Borrower also agrees to
reimburse each Lender upon demand for all stamp or other taxes payable in
connection with the execution, delivery or enforcement of this Agreement or any
Instrument related hereto and for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and other charges) incurred by such
Lender in enforcing the obligations of the Borrower or any of its Subsidiaries
under this Agreement, any Note or any other Loan Document. The obligations of
the Borrower under this Section 10.3 shall survive any termination of this
Agreement.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the making of the Loans, the
Borrower hereby indemnifies, exonerates and holds the Agent, the Collateral
Agent and each Lender and each LC Issuer and each of their respective officers,
directors, employees, and agents (collectively the "Lender Parties" and,
individually, a "Lender Party") free and harmless from and against any and all
actions, causes of action, suits, losses, costs, liabilities, damages, and
expenses actually incurred in connection therewith (irrespective of whether
such Lender Party is a party to the action for which indemnification hereunder
is sought), including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Lender Parties or any of them as a
result of, or arising out of, or relating to, or as a direct or indirect result
of:
(a) the transactions contemplated by the Mortgage Financing
Documents, the Mortgage Financing Transactions and the Realco Documents;
(b) except for expenses incurred in connection with the
preparation, review, execution and delivery of this Agreement and the
other Loan Documents (other than as set forth in Section 10.3), becoming
a party to and performance of this Agreement, the Collateral Documents,
the Notes and the other Loan Documents by any of the Lender Parties;
(c) any investigation, litigation, or proceeding related to any
acquisition or proposed acquisition by the Borrower or any Subsidiary
(including the Acquisition and the Assumption) of all or any portion of
the stock or all or substantially all the assets of any Person, whether or
not the Agent, the Collateral Agent or such Lender is party thereto; and
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any of its Subsidiaries of
any Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law, or any other federal, state, local or
other statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct
concerning, any Hazardous Material), regardless of whether or not caused
by, or within the control of, the Borrower or any of its Subsidiaries;
except for any such Indemnified Liabilities arising for the account of a
particular Lender Party solely by reason of such Lender Party's gross
negligence or willful misconduct or breach by such Lender Party of its
obligations under the Loan Documents, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
3.11, 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 and the obligations of the Lenders
under Section 9.1, shall in each case survive any termination of this
Agreement. The Borrower and the Lenders agree that the Borrower's obligations
under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 of the Existing Credit
Agreement and the obligations of the Lenders under Section 9.1 of the Existing
Credit Agreement (including all continuing obligations therein with respect to
the Tranche B Credit Agreement (as defined in the Existing Credit Agreement)),
shall in each case survive the execution and delivery of this Agreement. The
representations and warranties made by the Borrower in this Agreement and in
each Loan Document, and in any document, certificate or statement delivered
pursuant hereto or thereto or in connection herewith or therewith, shall
survive the execution and delivery of this Agreement and each Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement, the Notes
or any Loan Document 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
of this Agreement, the Notes or Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of
each Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such Loan Document or any
provisions hereof or thereof.
SECTION 10.8. Counterparts, Entire Agreement, etc. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
executed by the Borrower and the Agent and be deemed to be an original and all
of which shall constitute together but one and the same agreement. The Notes
and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and thereof and
supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.9. Governing Law. THIS AGREEMENT AND THE NOTES SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
SECTION 10.10. Sale and Transfer of Loans and Note; Participations in
Loans and Note. Each Lender may assign, or sell participations in, its Loans
and Revolving Commitment to one or more other Persons in accordance with this
Section 10.10.
SECTION 10.10.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the Agent (which
consents shall not be unreasonably delayed or withheld and which consent,
in the case of the Borrower, shall be deemed to have been given in the
absence of a written notice delivered by the Borrower to the Agent, on or
before the fifth Business Day after receipt by the Borrower of such
Lender's request for consent, stating, in reasonable detail, the reasons
why the Borrower proposes to withhold such consent) may at any time assign
and delegate to one or more commercial banks or other financial
institutions; and
(b) with notice to the Borrower and the Agent, but without the
consent of the Borrower, but with the prior written consent of the Agent,
may assign and delegate to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's
total Loans, Revolving Commitment and Letter of Credit Commitment (which
assignment and delegation shall be of a constant, and not a varying, percentage
of all the assigning Lender's Loans, Revolving Commitment and Letter of Credit
Commitment) in a minimum aggregate amount of $5,000,000 (such amount to be
reduced pro rata by any permanent reductions in the Revolving Commitment
Amount) or an integral multiple of $1,000,000 in excess thereof; provided,
however, that any such Assignee Lender will comply, if applicable, with the
provisions contained in the first sentence of the last paragraph of Section 4.6
and further provided, however, that the Borrower and the Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the Agent
by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to the
Borrower and the Agent a Lender Assignment Agreement, accepted by the
Agent; and
(e) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents; provided, however, that any such assignment or delegation by a
Lender to an Affiliate thereof shall not relieve such Lender of its obligations
hereunder. Within five Business Days after its receipt of notice that the
Agent has received an executed Lender Assignment Agreement, the Borrower shall
execute and deliver to the Agent (for delivery to the relevant Assignee Lender)
a new Note evidencing such Assignee Lender's assigned Loans and Revolving
Commitment and, if the assignor Lender has retained Loans and a Revolving
Commitment hereunder, a replacement Note, in the principal amount of the
Revolving Commitment retained by the assignor Lender hereunder (such Note to be
in exchange for, but not in payment of, that Note then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Note. The
assignor Lender shall mark the predecessor Note "exchanged" and deliver it to
the Borrower. Accrued interest on that part of the predecessor Note evidenced
by the new Note, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the predecessor Note
evidenced by the replacement Note shall be paid to the assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Such assignor Lender
or such Assignee Lender must also pay a processing fee to the Agent upon
delivery of any Lender Assignment Agreement in the amount of $2,500. Any
attempted assignment and delegation not made in accordance with this Section
10.10.1 shall be null and void.
SECTION 10.10.2. Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
any of the Loans, its Revolving Commitment, its Letter of Credit Commitment or
other interests of such Lender hereunder; provided, however, that
(a) no participation contemplated in this Section 10.10.2 shall
relieve such Lender from its Revolving Commitment, its Letter of Credit
Commitment or its other obligations hereunder or under any other Loan
Document;
(b) such Lender shall remain solely responsible for the performance
of its Revolving Commitment, its Letter of Credit Commitment and such
other obligations;
(c) the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in clause (b) or (c) of Section 10.1; and
(e) the Borrower shall not be required to pay any amount under
Section 4.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8 and 4.9, shall be considered a Lender.
SECTION 10.10.3. Certain Other Provisions.
(a) Nothing contained in this Agreement shall be deemed to limit or
restrict the ability of any Lender to deposit, pledge or otherwise
transfer its Note to a Federal Reserve Bank.
(b) The Borrower authorizes each Lender to disclose to any
participant, assignee or Assignee Lender (each, a "Transferee") and any
prospective Transferee any and all financial and other information in such
Lender's possession concerning the Borrower which has been delivered to
such Lender by the Borrower pursuant to this Agreement or which has been
delivered to such Lender by the Borrower in connection with such Lender's
credit evaluation of the Borrower prior to entering into this Agreement,
provided that such Transferee agrees to be bound by the provisions of
Section 10.13.
(c) If, pursuant to this Section 10.10.3 (including clause (b)),
any interest in this Agreement or any Loan or Note is transferred to any
Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall
cause such Transferee (other than any Participant), and may cause any
Participant, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor
Lender, the Agent and the Borrower) that under applicable law and treaties
no taxes will be required to be withheld by the Agent, the Borrower or the
transferor Lender with respect to any payments to be made to such
Transferee in respect of the Loans, (ii) to furnish to the transferor
Lender, the Agent and the Borrower either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein such
Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Lender, the Agent and the Borrower) to
provide the transferor Lender, the Agent and the Borrower a new Form 4224
or Form 1001 upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
SECTION 10.11. Other Transactions; Consent to Relationships. Nothing
contained herein shall preclude the Agent, any Collateral Agent or any other
Lender from engaging in any transaction, in addition to those contemplated by
this Agreement or any Loan Document, with the Borrower or any of its Affiliates
in which the Borrower or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 10.12. Further Assurances. The Borrower hereby agrees that it
will, from time to time at its own expense, promptly execute and deliver all
further Instruments, and take all further action, that may be necessary or
appropriate, or that the Agent or the Collateral Agent or the Required Lenders
may reasonably request, in order to perfect or protect any Security Interest
granted under the Collateral Documents, to enable the Lenders, the LC Issuers,
the Agent and the Collateral Agent to exercise and enforce their rights under
this Agreement and the other Loan Documents and otherwise to carry out the
intent of this Agreement and the other Loan Documents.
SECTION 10.13. Confidentiality. Each Lender shall hold all non-public
information obtained pursuant to the requirements of this Agreement, which has
been identified in writing as confidential by the Borrower, in accordance with
such Lender's customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices; provided,
that in any event it is understood and agreed that each Lender may make
disclosure to its examiners, affiliates, outside auditors, counsel, and other
professional advisors in connection with this Agreement or as reasonably
required by any bona fide prospective participant or transferee or actual
transferee or participant in connection with the contemplated transfer of any
Loan, Note or Commitment or any participation therein (it being further
understood that, insofar as bona fide prospective participants and transferees
are concerned, the information contained in the Memorandum and in the
commitment letter between the Agent and the Borrower relating thereto and/or in
the summary of terms heretofore furnished to each Lender and incidental
information directly related thereto may be furnished to bona fide prospective
participants and transferees without any requirement that a confidentiality
agreement be signed prior to their receipt of such information) or as required
or requested by any governmental agency or representative thereof or pursuant
to legal process; provided, further, that,
(a) unless specifically prohibited by applicable law or court
order, each Lender shall notify the Borrower promptly of any request by
any governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such
non-public Information and shall exercise its reasonable efforts to
permit the Borrower, if practical, to respond to such notice prior to
disclosure of such information; and
(b) in no event shall any Lender be obligated or required to return
any materials furnished by the Borrower.
SECTION 10.14. Certain Collateral Matters.
(a) The Agent and the Collateral Agent, as the case may be, is
authorized on behalf of all the Lenders and the LC Issuers, without the
necessity of any notice to or further consent from the Lenders, from time
to time to take any action with respect to any collateral or the
Collateral Documents which may be necessary to perfect and maintain
perfected the Security Interest in and liens upon the collateral granted
pursuant to the Collateral Documents.
(b) The Lenders and the LC Issuers irrevocably authorize the Agent
and the Collateral Agent, as the case may be, at its option and in its
discretion, to release any Security Interest granted to or held by the
Agent or the Collateral Agent, as the case may be, upon any collateral (i)
upon termination of the Revolving Commitments and payment in full of all
Loans and all other Obligations payable under this Agreement and under any
other Loan Document; (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property subject to a Mortgage or Subsidiary
Mortgage or held by Realco to the extent that the value (determined as of
the last available Marshall & Stevens appraisal for such property) of the
remaining Collateral and assets of Realco (after giving effect to such
release) is in an amount sufficient to cause the Loan to Value Ratio to
not exceed 50%; provided, however, that the aggregate value of all such
assets so released shall not exceed $15,000,000; (iv) constituting
property in which the Borrower or any Subsidiary of the Borrower owned no
interest at the time the Security Interest and/or lien was granted or at
any time thereafter; (v) constituting property leased to the Borrower or
any Subsidiary of the Borrower under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to
expire and which has not been, and is not intended by the Borrower or such
Subsidiary to be, renewed or extended; (vi) consisting of an instrument
evidencing Indebtedness or other debt Instrument, if the Indebtedness
evidenced thereby has been paid in full; or (vii) if approved, authorized
or ratified in writing by the Required Lenders or, if required by clause
(b) of Section 10.1, each Lender. Upon request by the Agent or the
Collateral Agent, as the case may be, at any time, the Lenders will
confirm in writing the Agent's or Collateral Agent's, as the case may be,
authority to release particular types or items of collateral pursuant to
this Section 10.14.
SECTION 10.15. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.16. Waiver of Jury Trial. THE AGENT, THE LENDERS, THE LC
ISSUERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE
NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE LENDERS,
THE LC ISSUERS OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE AGENT AND THE LENDERS AND THE LC ISSUERS ENTERING INTO THIS AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SHONEY'S, INC.
By /S/ F. ERNIE MCDANIEL, JR.
Title: Treasurer
Address: 1727 Elm Hill Pike
Nashville, Tennessee 37210
Fax No.: (615) 231-2734
Attention: F.E. McDaniel, Jr.
with a copy of any notice to:
Tuke Yopp & Sweeney
NationsBank Plaza
Suite 1100
414 Union Street
Nashville, Tennessee 37219
Fax No.: (615) 313-3310
Attention: John Stone
CANADIAN IMPERIAL BANK OF COMMERCE, acting through
its NEW YORK AGENCY, as Agent
By /S/ KATHERINE W. SAX
Title: Authorized Signatory
Address: 425 Lexington Avenue
New York, New York 10017
Fax No.: (212) 856-3763
Attention: Syndications, Manager
Administration
<PAGE>
PERCENTAGE
8.703703704% CIBC INC., acting through its Atlanta
Office
By /S/ KATHRYN W. SAX
Title: Director
Domestic Office,
LIBOR Office
and
Notice Address:
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Fax No: (404) 319-4954
Attention: Kathryn W. Sax
<PAGE>
PERCENTAGE
7.037037037% NATIONSBANK OF TENNESSEE, N.A.
By /S/ JOHN E. BALL
Title: Senior Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
One NationsBank Plaza
Nashville, Tennessee 37239
Fax No: (615) 749-4640
Attention: John E. Ball
<PAGE>
PERCENTAGE
7.037037037% THE BANK OF NEW YORK
By /S/ GREGORY L. BATSON
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
One Wall Street, 22nd Floor
New York, New York 10286
Fax No: (212) 635-6434
Attention: Gregory Batson
<PAGE>
PERCENTAGE LTCB TRUST COMPANY
7.037037037%
By /S/ S. OTSUBO
Title: Executive Vice President
Domestic Office,
Ms. Kathleen Dorsch Santiago
165 Broadway - 49th Floor
New York, New York 10006
Fax (212) 608-2371
With Notices To:
Atlanta Representative Office
Suite 2801
Marquis One Tower
245 Peachtree Center Avenue, NE
Atlanta, Georgia 30303
Fax No: (404) 658-9751
Attention: Rebecca J. Silbert
<PAGE>
PERCENTAGE
7.037037037% THE BANK OF NOVA SCOTIA
By
Title: Representative
Domestic Office,
LIBOR Office
and
Notice Address:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Fax No: (404) 888-8998
Attention: Patrick M. Brown
<PAGE>
PERCENTAGE
7.037037037% THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /S/ PATRICIA LORET DE MOLA
Title: Senior Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
520 Madison Avenue
New York, New York 10022
Fax No: (212) 755-2349
Attention: Patricia Loret De Mola
<PAGE>
PERCENTAGE
7.037037037% FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By /S/ HENRY R. BIEDRYZCKI
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
One First Union Center, 18th Floor
Charlotte, North Carolina 28288-0732
Fax No: (704) 374-3300
Attention: John Burlingame
<PAGE>
PERCENTAGE
7.037037037% THE INDUSTRIAL BANK OF JAPAN, LIMITED
By /S/ JUNYA FUJIWARA
Title: Senior VP & Deputy GeneralManager
Domestic Office,
LIBOR Office
and
Notice Address:
Suite 3600
One Ninety One Peachtree Tower,
191 Peachtree Street, NE
Atlanta, Georgia 30303-1757
Notices for Business Operations:
Fax No: (404) 577-6818
Attention: Business Operations Dept.
Notices for Credit:
Fax No: (404) 524-8509
Attention: Jackie K. Brunetto
<PAGE>
PERCENTAGE
7.037037037% BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By /S/ SHARON FOUNTAIN
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
1251 Avenue of the Americas
12th Floor
New York, New York 10016-3138
Fax No: (212) 782-6440
Attention: Sharon Fountain
<PAGE>
PERCENTAGE
6.296296296% THE FUJI BANK, LIMITED
By
Title: Vice President & Manager
Domestic Office,
LIBOR Office
and
Notice Address:
Marguis One Tower, Suite 2100
245 Peachtree Center Avenue, NE
Atlanta, Georgia 30303-1208
Fax No: (404) 653-2119
Attention: T. Mitsui
<PAGE>
PERCENTAGE
4.444444444% KREDIETBANK, N.V.
By
Title: Vice President
By
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
125 West 55th Street
10th Floor
New York, New York 10019
Fax No: (212) 956-5580
Attention: Dianne Grimmig
<PAGE>
PERCENTAGE
4.444444444% ALLIED IRISH BANK
By /S/ CHARLIE RYDON
Title: Vice President
/S/ W.P. MURRAY
Title: Senior Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
405 Park Avenue
New York, New York 10022
Fax No: (212) 339-8007
Attention: William P. Murray
<PAGE>
PERCENTAGE
4.444444444% MERCANTILE BANK OF ST. LOUIS, N.A.
By /S/ DON ADAM
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
One Mercantile Center
7th & Washington, Tram 12-3
St. Louis, MO 63101
Fax No: (314) 425-3859
Attention: Don Adam
<PAGE>
PERCENTAGE
4.444444444% PNC BANK, KENTUCKY, INC.
By /S/
Title: Assistant Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
Citizens Plaza
Louisville, Kentucky 40296
Fax No: (502) 581-2302
Attention: Ben Willingham
<PAGE>
PERCENTAGE
4.444444444% THE ROYAL BANK OF SCOTLAND
By /S/ RUSSELL M. GIBSON
Title: Vice President & Deputy
Manager
Domestic Office,
LIBOR Office
and
Notice Address:
88 Pine Street
New York, New York 10005-1801
Fax No: (212) 480-0791
Attention: Russell Gibson
<PAGE>
PERCENTAGE
3.703703704% GIROCREDIT BANK
By /S/ RICHARD STONE
Title: Vice President
By /S/ JOHN REDDING
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
65 East 55th Street
New York, New York 10022
Fax No: (212) 644-0644
Attention: John Redding
<PAGE>
PERCENTAGE
2.777777778% FIRST AMERICAN NATIONAL BANK
By /S/ COREY NAPIER
Title: Vice President
Domestic Office,
LIBOR Office
and
Notice Address:
First American Center
Nashville, Tennessee 37237-0310
Fax No: (615) 748-2485
Attention: Corey Napier
<PAGE>
THE SUMITOMO BANK, LIMITED
Atlanta Agency
By
Title:
Domestic Office,
LIBOR Office
and
Notice Address:
Georgia Pacific Center
Suite 3210
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Fax No: (404) 521-1187
Attention:
<PAGE>
SCHEDULE I
DISCLOSURE SCHEDULE
[INTENTIONALLY OMITTED]
<PAGE>
SCHEDULE II
UPFRONT AND PRE-CLOSING COMMITMENT FEES
[INTENTIONALLY OMITTED]
EXHIBIT A
NOTE
$ July 21, 1993
FOR VALUE RECEIVED, the undersigned, SHONEY'S, INC., a Tennessee
corporation (the "BORROWER"), promises to pay to the order of
_______________________ (the "LENDER") on October 22, 1997 the principal sum of
__________________ DOLLARS ($___________) or, if less, the aggregate unpaid
principal amount of all Loans made by the Lender and outstanding pursuant to
that certain Reducing Revolving Credit Agreement, dated as of July 21, 1993
(together with all amendments, restatements, amendments and restatements and
other modifications, from time to time thereafter made thereto, the "CREDIT
AGREEMENT"), among the Borrower, CANADIAN IMPERIAL BANK OF COMMERCE, as Agent,
and the various financial institutions (including the Lender) as are, or may
from time to time become, parties thereto.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.
This Note is a Note referred to in, and evidences Indebtedness incurred
under, the Credit Agreement, to which reference is made for a description of
the security for this 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 Indebtedness evidenced by this Note and on which such
Indebtedness may be declared to be or shall automatically become immediately
due and payable. Unless otherwise defined, terms used herein have the meanings
provided in the Credit Agreement.
The Borrower hereby irrevocably authorizes each Lender to make (or cause
to be made) appropriate notations on the grid attached to such Lender's Note
(or on any continuation of such grid), which notations, if made, shall
evidence, INTER ALIA, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to, the Loans evidenced hereby.
Such notations shall be rebuttable presumptive evidence of the information so
set forth; PROVIDED, HOWEVER, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any Obligations of the Borrower.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK CITY, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
SHONEY'S, INC.
By:
Title:
<PAGE>
<TABLE>
<CAPTION>
LOANS AND PRINCIPAL PAYMENTS
Date Amount of Loan Made Interest Period Amount of Principal Unpaid Principal Balance Total Notation
(if applicable) Repaid Made By
Base Rate LIBO Rate Base Rate LIBO Rate Base Rate LIBO Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
BORROWING REQUEST
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: [Name]
[Title]
SHONEY'S, INC.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to SECTION 2.3 of the
Reducing Revolving Credit Agreement, dated as of July 21, 1993 (together with
all amendments, restatements, amendments and restatements and other
modifications from time to time made thereto, the "CREDIT AGREEMENT"), among
SHONEY'S, INC., a Tennessee corporation (the "BORROWER"), certain financial
institutions and CANADIAN IMPERIAL BANK OF COMMERCE (the "AGENT"). Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $ on , 19 as a [LIBO Rate Loan
having an Interest Period of months] [Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to SECTION 5.2.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application
of the proceeds therefrom, all statements set forth in SECTION 5.2.1 of the
Credit Agreement are true and correct in all material respects.
The Borrower agrees that if, prior to the time of the Borrowing requested
hereby, any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Agent. Except to
the extent, if any, that prior to the time of the Borrowing requested hereby
the Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:
Amount to be PERSON TO BE PAID Name, Address, etc.
TRANSFERRED NAME ACCOUNT NO. OF TRANSFEREE LENDER
$
Attention:
$
Attention:
Balance of The Borrower
such proceeds
Attention:
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this day of , 19 .
SHONEY'S, INC.
By:
Title:
<PAGE>
EXHIBIT C
COMPLIANCE CERTIFICATE
To each of the financial institutions party to the Credit Agreement
hereinafter referred to and to Canadian Imperial Bank of Commerce,
New York Agency, as Agent.
Re: Shoney's, Inc. -- Credit Agreement, dated as of July 21, 1993
Ladies and Gentlemen:
This Compliance Certificate is being delivered pursuant to the Reducing
Revolving Credit Agreement dated as of July 21, 1993 (together with all
amendments, supplements, amendment and restatements and other modifications, if
any, from time to time made thereto, the "CREDIT AGREEMENT"), among Shoney's,
Inc., a Tennessee corporation (the "BORROWER"), various financial institutions
now or hereafter parties thereto (the "LENDERS") and Canadian Imperial Bank of
Commerce, New York Agency, as agent for the Lenders (the "AGENT"). Capitalized
terms used herein without definition shall have the meanings assigned to such
terms in SECTION 1.1 of the Credit Agreement. All computations performed
herein shall conform to the method of computation required by the Credit
Agreement.
The Borrower hereby certifies, represents and warrants that as of
February 18, 1996 (the "COMPUTATION DATE"):
(a) Consolidated Net Worth was ($81,836,000), as computed on ATTACHMENT 1
hereto.
The minimum Consolidated Net Worth required pursuant to Clause (a) of
SECTION 7.2.4 of the Credit Agreement on the Computation Date was
($120,000,000).
(b) The Funded Debt Ratio was 4.06:1.00, as computed on ATTACHMENT 2 hereto.
The maximum Funded Debt Ratio required pursuant to CLAUSE (B) of SECTION
7 2.4 of the Credit Agreement on the Computation Date was 4.50:1.00.
(c) The Consolidated Funded Debt was $501,174,000 as computed on ATTACHMENT 3
hereto.
The maximum Consolidated Funded Debt required pursuant to CLAUSE (C) of
SECTION 7.2.4 of the Credit Agreement on the Computation Date was
$585,000,000.
(d) The Adjusted Interest Coverage Ratio was 2.38:1.00, as computed on
ATTACHMENT 4 hereto.
The minimum Adjusted Interest Coverage Ratio required pursuant to CLAUSE
(D) of SECTION 7.2.4 of the Credit Agreement on the Computation Date was
1.25:1.00.
(e) The Consolidated Fixed Charge Coverage Ratio was 0.90:1.00, as computed
on ATTACHMENT 5 hereto.
The minimum Consolidated Fixed Charge Coverage Ratio required pursuant to
CLAUSE (E) of SECTION 7.2.4 of the Credit Agreement on the Computation
Date was 0.90:1.00.
(f) Consolidated Capital Expenditures made thus far for the 1996 Fiscal Year
were $31,618,000.
The maximum amount of Consolidated Capital Expenditures permitted
pursuant to SECTION 7.2.7 of the Credit Agreement (including $10,000,000
in carry over from prior Fiscal Years) on the Computation Date was
$101,000,000.
(g) The aggregate amount of unsecured revolving Indebtedness outstanding on
the Computation Date was $18,575,000.
The maximum aggregate principal amount of unsecured revolving
Indebtedness permitted pursuant to CLAUSE (B) of SECTION 7.2.2 on the
computation Date was $30,000,000.
(h) Indebtedness of the Borrower and its Subsidiaries (other than Realco) to
one or more vendors of any assets to finance its acquisition of such
assets on the computation Date was $0.
The maximum aggregate amount outstanding in respect of indebtedness of
the Borrower and its Subsidiaries (other than Realco) to a vendor of any
assets to finance its acquisition of such assets pursuant to CLAUSE (E)
of SECTION 7.2.2 on the Computation Date was $3,000,000.
(i) The aggregate capitalized amount payable under Capitalized Leases was
$14,329,000.
The maximum aggregate capitalized amounts payable under Capitalized
Leases permitted pursuant to CLAUSE (F) of SECTION 7.2.2 of the Credit
Agreement on the Computation Date was $30,000,000.
(j) The Indebtedness of the Borrower in respect of trade or commercial
letters of credit and standby letters of credit was $16,038,000.
The maximum aggregate amount outstanding in respect of trade or
commercial letters of credit permitted pursuant to CLAUSE (G) of SECTION
7.2.2 on the Computation Date was $40,000,000.
(k) Indebtedness of the Borrower in respect of standby letters of credit
(other than any standby letters of credit issued in connection with
Mortgage Financing Transactions) was $16,038,000.
The maximum aggregate amount outstanding in respect of standby letters of
credit permitted pursuant to CLAUSE (G) of SECTION 7.2.2 on the
Computation Date was $30,000,000.
(l) Indebtedness incurred by the Borrower under and in connection with
Mortgage Financing Transactions during the 1996 Fiscal Year on the
Computation Date was $0.
The maximum amount of Indebtedness with respect to Mortgage Financing
Transactions permitted pursuant to CLAUSE (I) of SECTION 7.2.2 of the
Credit Agreement in respect of the current Fiscal Year on the Computation
Date was $77,000,000.
(m) Investments made after the Closing Date by the Borrower and its
Subsidiaries (other than Realco) in wholly-owned Subsidiaries (other than
Commissary Operations, Inc., Mike Rose Foods, Inc., Realco, Barbwire's of
Kansas, Inc. and Shoney's of Michigan, Inc.) were $(6,352,000).
The maximum amount of Investments made after the Closing Date by the
Borrower and its Subsidiaries (other than Realco) in wholly-owned
Subsidiaries (other than Commissary Operations, Inc., Mike Rose Foods,
Inc., Realco, Barbwire's of Kansas, Inc. and Shoney's of Michigan, Inc.)
permitted pursuant to CLAUSE (C) of SECTION 7.2.5 of the Credit agreement
on the Computation Date was $2,500,000.
(n) Investments by the Borrower or any of its Subsidiaries (other than
Realco) in notes receivable that arise and remain outstanding from
transactions with franchisees, customers and suppliers in the normal
course of business were $5,151,000.
Investments by the Borrower or any of its Subsidiaries (other than
Realco) in notes receivable that arise and remain outstanding from
transactions with franchisees, customers and suppliers in the normal
course of business permitted pursuant to CLAUSE (D) of SECTION 7.2.5 of
the Credit Agreement on the Computation Date was $15,000,000.
(o) Other Investments by the Borrower or any of its Subsidiaries (other than
Realco) after the Closing Date were $30,000.
Other investments by the Borrower or any of its Subsidiaries (other than
Realco) permitted pursuant to CLAUSE (D) of SECTION 7.2.5 of the Credit
Agreement on the Computation Date was $2,000,000.
(p) Other Guaranties (other than those permitted by CLAUSES (A) through (C)
of SECTION 7.2.8 of the Credit Agreement) of the Borrower and its
Subsidiaries (other than Realco) after the Closing Date were $ 0.
Other Guaranties (other than those permitted by CLAUSES (A) through (C)
of SECTION 7.2.8 of the Credit Agreement) of the Borrower and its
Subsidiaries (other than Realco) permitted pursuant to CLAUSE (E) of
SECTION 7.2.8 of the Credit Agreement on the Computation Date was
$1,000,000.
(q) Consolidated Lease Expenses thus far for the current Fiscal Year were
$2,069,000.
The maximum Consolidated Lease Expenses permitted in any Fiscal Year
pursuant to SECTION 7.2 9 of the Credit Agreement is $15,000,000.
(r) The net book value of real properties (and related equipment and
fixtures) leased by the Borrower and its subsidiaries (other than Realco)
to non-franchisees was $1,905,000.
The net book value of real properties (and related equipment and
fixtures) leased by the Borrower and its Subsidiaries (other than Realco)
to non-franchisees permitted pursuant to CLAUSE (I) of SECTION 7.2.11 of
the Credit Agreement on the Computation Date was $10,000,000.
(s) Since the Closing Date, the amount of Franchisee Acquisitions made to and
including the Computation Date was $26,338,000.
The maximum amount of Franchisee Acquisitions permitted pursuant to
SECTION 7.2.23 of the Credit Agreement was $60,000,000.
(t) Franchisee Acquisitions thus far for the current Fiscal Year were
$17,719,000.
The maximum amount of Franchisee Acquisitions permitted in any one Fiscal
Year pursuant to SECTION 7.2.23 of the Credit Agreement on the
Computation Date was $30,000,000.
(u) The amount of Excess Cash Flow remitted to the Agent for the 1996 Fiscal
Year was $N/A, as computed on ATTACHMENT 6 hereto.
(v) The amount of Mortgage Financing Collateral properties as of the
Computation Date was $16,332,000 as shown on ATTACHMENT 7.
The maximum amount of Mortgage Financing Collateral properties permitted
per the Credit Agreement is $50,000,000.
(w) No Default or Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be
executed and delivered by its duly Authorized Officer on this 2th day of
April, 1996.
SHONEY'S, INC.
By:________________________________
Vice President and Controller
<PAGE>
COMPLIANCE CERTIFICATE
Attachment 1
CONSOLIDATED NET WORTH
1. Shareholders' equity (deficit)
per Balance Sheet $(81,836,000)
2. Adjustments
(a) Treasury stock (to the extent
not included in item 1) $
(b) Write-up in book value of
assets resulting from
revaluation $
(c) Total Adjustments (item (a)
plus item (b)) $ 0
3. Consolidated Net Worth (deficit)
(item (1) minus item 2(c)) $(81,836,000)
MINIMUM AMOUNT ALLOWABLE PER COVENANT
Consolidated Net Worth as of February 18, 1996 $(120,000,000)
<PAGE>
ATTACHMENT 2
FUNDED DEBT RATIO
1. Indebtedness (as computed in
accordance with the definition
of such term in the Credit Agree-
ment) (including accrued interest
on the Subordinated LYONS Notes
and debt incurred with respect to
Mortgage Financing Transactions)
plus the amount of reserve for
litigation settlement $ 501,174,000
2. Adjustments
(a) Obligations with respect to
Rate Swap Agreements $ 0
(b) Any withdrawal liability to
a Multiemployer Plan $
(c) Total Adjustments
(item (a) plus item (b)) $ 0
3. Consolidated Funded Debt (item 1
minus item 2(c)) $ 501,174,000
4. Consolidated Net Income $ 38,315,000
5. Adjustments
(a) All income taxes $ 25,239,000
(b) Consolidated Interest
Expense $ 29,035,000
(c) Non-cash interest charges,
depreciation, amortization
and amortization of trans-
action costs with respect
to Indebtedness and amor-
tization of bond discount
relating to the Subordinated
Debentures (to the extent not
included in item 4.) $ 55,283,000
(d) Non-cash/restructuring charges $ 20,714,000
(e) Gain From Divestiture of Mike
Rose Foods & Lee's $(45,155,000)
(f) Total adjustments (item (a)
plus item (b) plus item (c)
plus item (d) less item (e) $ 85,116,000
6. EBITDA (Item 4 plus item 5(f)) $ 123,431,000
7. Item 3 divided by item 6 $ 4.06
<PAGE>
Attachment 3
CONSOLIDATED FUNDED DEBT
1. Indebtedness (as computed in
accordance with the definition of
such term in the Credit Agreement)
(including accrued interest on the
Subordinated LYONS Notes and debt
incurred with respect to Mortgage
Financing Transactions) plus the
amount of reserve for litigation
settlement $501,174,000
2. Adjustments
(a) Obligations with respect to
Rate Swap Agreements $ 0
(b) Any withdrawal liability to
a Multiemployer Plan $
(c) Total adjustments
(item (a) plus item (b)) $ 0
3. Consolidated Funded Debt (item 1
minus item 2(c)) $501,174,000
<PAGE>
ATTACHMENT 4
ADJUSTED INTEREST COVERAGE RATIO
1. Adjusted EBITDA
(EBITDA minus Consolidated
Capital Expenditures (other
than in respect Franchise
Acquisitions) $69,163,000
2. Consolidated Interest Expense
paid or payable in cash $29,035,000
3. Adjusted Interest Coverage Ratio
(item 1 divided by item 2) 2.38
<PAGE>
ATTACHMENT 5
CONSOLIDATED FIXED CHARGE COVERAGE RATIO
1. EBITDA $123,431,000
2. Consolidated Lease Expense $ 7,615,000
3. Consolidated Interest Expense $ 29,035,000
4. Scheduled payments of any Consolidated
Funded Debt (including, without
limitation, payments of Loans required
under clause (a) of Section 3.1.2 of
the Credit Agreement due to a
Commitment Amount reduction under
clause (a) of Section 2.2.2 of the
Credit Agreement and the amount of
scheduled payments under Capitalized
Leases, other than such as is
appropriately allocable to
Consolidated Interest Expense) net of
proceeds of insurance recoveries for
such period received by the Borrower
in respect of certain litigation
against the Borrower as reflected in
the Borrower's Annual Report on Form
10-K for its 1992 Fiscal Year,
provided, however, that for purposes
of this clause (b) only, Consolidated
Funded Debt shall not include any
Indebtedness permitted under clause
(b) of Section 7.2.2 or any similar
Indebtedness permitted under clause
(c) of Section 7.2.2 so long as such
Indebtedness is, by its terms,
renewable and the provider of such
Indebtedness has not declined to so
renew such Indebtedness $ 82,914,000
5. All federal, state and local income
taxes of the Borrower and its
Subsidiaries $ 25,239,000
6. Consolidated Fixture Charges (item 2
plus item 3 plus item 4 plus item 5) $144,803,000
7. Item 1 plus item 2 $131,046,000
8. Item 7 divided by item 6 0.90
<PAGE>
ATTACHMENT 6
EXCESS CASH FLOW
1. Cash per statement of cash flows $ N/A
2. Less:
(a) Good faith estimate of taxes
payable in connection with
asset sales $ 0
(b) Proceeds of borrowings under
Mortgage Financing Transactions
during fiscal year $ 0
3. Total deductions (item 2(a) plus
item 2(b)) $ 0
4. Adjusted Cash (item 1 minus item 3) $ 0
5. Cash allowed per covenant (6% of
total revenues) $ N/A
6. Excess Cash (item 4 minus item 5) $ N/A
<PAGE>
ATTACHMENT 7
TENTATIVE FUTURE MORTGAGE FINANCING COLLATERAL
Properties are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Rock Rd., Wichita KS Shoney's 331,762
Warsaw, IN Shoney's 223,554
Newton, IA Shoney's 196,557
Westheimer, Houston, TX Shoney's 464,873
Summerville, SC Shoney's 390,905
Medina, OH Shoney's 286,975
Palmer Township, PA Shoney's 287,280
1-10, Houston, TX Shoney's 684,619
Woodson Terrace, MO Shoney's 436,483
Ozark, MO Shoney's 325,468
Saginaw, MI Shoney's 357,272
Bellevue, TN Shoney's 434,220
Grayson, KY Shoney's 266,177
Nachitoches, LA Shoney's 187,568
Port Allen, LA Shoney's 289,738
Emporia, KS Shoney's 271,144
Murfreesboro, TN Shoney's 461,407
Octa, OH Shoney's 163,305
Newark, DE Shoney's 498,099
Sugar Land, TX Shoney's 356,034
Winfield, WV Shoney's 437,548
Muscle Shoales, AL Shoney's 290,497
Richlands, VA Shoney's 285,848
Lagrange, KY Shoney's 268,851
Vincennes, AL Shoney's 345,686
Cedar Rapids, IA Shoney's 315,748
Franklin, KY Shoney's 176,267
Saraland, AL Shoney's 233,042
Watumoka, AL Shoney's 247,690
Moncks Corner, SC Shoney's 227,061
Carthage, MO Shoney's 93,318
Starke, FL Shoney's 192,667
Florence, AL Shoney's 362,296
Brunswick, GA Captain D's 239,123
Almedda Geneoa, Houston, TX Captain D's 105,022
S. Broadway St., St. Louis, MO Captain D's 188,606
Nat. Bridge Rd., St. Louis, MO Captain D's 62,258
Clarksville Hwy. Nashville, TN Captain D's 107,678
Shively, KY Captain D's 46,418
Texas City, TX Captain D's 184,266
House Springs, MO Captain D's 199,835
Demopolis, AL Captain D's 108,953
Princton, KY Captain D's 161,083
Covington, GA Captain D's 205,998
Kingsland, GA Captain D's 152,985
Greenville, NC Pargo's 433,945
York, PA Pargo's 442,387
Raleigh, NC Pargo's 737,177
Winchester, VA Pargo's 574,592
Columbus, GA Pargo's 512,775
Wichita, KS Commissary 215,346
Cookeville, TN Barbwire's 534,694
Knox Abbot Dr., Columbia, SC Barbwire's 293,697
Summerville, SC Barbwire's 446,044
TOTAL $16,331,831
</TABLE>
<PAGE>
EXHIBIT D
CONTINUATION/CONVERSION NOTICE
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: [Name]
[Title]
SHONEY'S, INC.
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Reducing Revolving Credit Agreement, dated as of July 21,
1993 (together with all amendments, restatements, amendments and restatements
from time to time made thereto, the "CREDIT AGREEMENT"), among Shoney's, Inc.,
a Tennessee corporation (the "BORROWER"), certain financial institutions and
Canadian Imperial Bank of Commerce, (the "AGENT"). Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
The Borrower hereby requests that on , 19 ,
(1) $ of the presently outstanding principal amount of
the Loans originally made on , 19 [and $ of the
presently outstanding principal amount of the Loans originally made on
, 19 ],
(2) and all presently being maintained as {1}[Base Rate Loans]
[LIBO Rate Loans],
(3) be [converted into] [continued as],
(4) {2}[LIBO Rate Loans having an Interest Period of
months] [Base Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is
continuing; and
(b) agrees that if, prior to the time of such continuation or
conversion, any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Agent.
Except to the extent, if any, that, prior to the time of the continuation or
conversion requested hereby, the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to be
executed and delivered, and the certification and warranties contained herein
to be made, by its Authorized Officer this day of , 19 .
SHONEY'S, INC.
By:
Title:
<PAGE>
[CONFORMED COPY]
AGREEMENT
(Trademark)
THIS AGREEMENT (Trademark) (this "AGREEMENT"), dated as of July 21, 1993
(this "AGREEMENT"), between SHONEY'S, INC., a Tennessee corporation (the
"BORROWER"), and CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY ("CIBC-
NYA"), acting in its capacity as collateral agent (the "COLLATERAL AGENT") for
the various financial institutions (the "LENDERS") which are, or may from time
to time hereafter become, parties to the Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of July 21, 1993 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, the Lenders, and CIBC-NYA as
the Agent for the Lenders (in such capacity, the "AGENT"), the Lenders have
extended Commitments (such capitalized term, and all other capitalized terms
used in these recitals without definition, to have the meanings assigned to
such terms by reference in SECTION 1 hereof) to make Loans to the Borrower; and
WHEREAS, in connection with the Credit Agreement, the Borrower and the
Collateral Agent have executed and delivered the Security Agreement, dated as
of the date hereof (together with all amendments and other modifications, if
any, from time to time thereafter made thereto, the "SECURITY AGREEMENT"); and
WHEREAS, as a condition precedent to the making of the initial Loans
under the Credit Agreement, the Borrower is required to execute and deliver
this Agreement and to grant to the Collateral Agent a continuing security
interest in all of the Trademark Collateral to secure all Obligations; and
WHEREAS, the Borrower has duly authorized the execution, delivery, and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Borrower pursuant to the Credit Agreement,
the Borrower agrees, for the benefit of the Collateral Agent and for the
Ratable benefit of the Agent and the Lenders, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and
valuable consideration, receipt of which is hereby acknowledged, to secure all
of the Obligations, the Borrower does hereby mortgage, pledge and hypothecate
to the Collateral Agent, for its benefit and the Ratable benefit of the Agent
and the Lenders, and does hereby grant to the Collateral Agent, for its benefit
and the Ratable benefit of the Agent and the Lenders, a security interest in,
all of the following property (the "TRADEMARK COLLATERAL"), whether now owned
or hereafter acquired or existing:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of a like nature (all
of the foregoing items in this CLAUSE (A) being collectively called a
"TRADEMARK"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether
pending or in preparation for filing, including registrations, recordings
and applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State thereof
or any foreign country, including those referred to in ITEM A of
ATTACHMENT 1 hereto;
(b) all Trademark licenses;
(c) all reissues, extensions or renewals, if applicable, of any of
the items described in CLAUSES (A) and (B);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, CLAUSES (A) and (B); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Borrower against third parties for past,
present, or future infringement or dilution of any Trademark, Trademark
registration, or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to in ITEM A of ATTACHMENT 1
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Borrower for the purpose of registering the security interest
of the Collateral Agent in the Trademark Collateral with the United States
Patent and Trademark Office. The security interest granted hereby has been
granted as a supplement to, and not in limitation of, the security interest
granted to the Collateral Agent for its benefit and the Ratable benefit of the
Agent and the Lenders under the Security Agreement. The Security Agreement
(and all rights and remedies of the Collateral Agent, the Agent and the Lenders
thereunder) shall remain in full force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations and the termination of all Commitments, the Collateral Agent shall,
at the Borrower's expense, execute and deliver to the Borrower all instruments
and other documents as may be necessary or appropriate to release the lien on
and security interest in the Trademark Collateral which has been granted
hereunder.
SECTION 5. ACKNOWLEDGMENT. The Borrower does hereby
further acknowledge and affirm that the rights and remedies of the Collateral
Agent with respect to the security interest in the Trademark Collateral granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which (including the remedies provided for therein) are
incorporated by reference herein as if fully set forth herein.
SECTION 6. COLLATERAL DOCUMENT AND LOAN DOCUMENT. This Agreement is a
Collateral Document and a Loan Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions of the
Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
SHONEY'S, INC.
By /S/ W. CRAIG BARBER
Title: Vice President and Chief
Financial Officer
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY,
as Collateral Agent
By /S/ ROGER COLDEN
Title: Authorized Signatory
<PAGE>
ATTACHMENT 1
to
Agreement
(Trademark)
ITEM A. TRADEMARKS.
<TABLE>
<CAPTION>
United States Trademark and
SERVICE MARK REGISTRATIONS AND APPLICATIONS
SHONEY'S MARKS
Registration Registration
MARK DATE NO.
<S> <C> <C>
Shoney's 03/28/78 1,088,370
America's Dinner Table 10/07/86 1,412,692
Shoney Bear 04/25/89 1,536,333
Shoney's 11/06/90 1,620,734
Best Breakfast in 04/13/93 1,765,417
Town (Supplemental)
Register
</TABLE>
<TABLE>
<CAPTION>
CAPTAIN D'S MARKS
Registration Registration
MARK DATE NO.
<S> <C> <C>
Design of Captain 01/06/76 1,029,628
Captain D's 01/06/76 1,029,629
Fish and Anchor 01/06/76 1,029,630
Captain's Head 01/29/80 1,130,154
Captain D's and
building design 02/03/81 1,146,718
A Great Little
Seafood Place 04/14/81 1,151,309
Lighten Up 06/11/85 1,341,166
Little Mate's Meal 06/14/88 1,492,731
Captain D's (graphic 02/02/90 1,575,841
art building design
Captain D's (building 10/30/90 1,620,567
design)
Captain D's (building 06/25/91 1,649,084
design)
The Great Little 08/20/91 1,654,602
Seafood Place
Captain D's 10/15/91 1,661,241
(oval design)
Willy Walrus 02/11/92 1,675,568
The Captain's Grille 06/23/92 1,696,289
</TABLE>
<TABLE>
<CAPTION>
FAMOUS RECIPE MARKS
Registration Registration
MARK DATE NO.
<S> <C> <C>
Building Design 06/25/85 1,345,232
Lee's Famous Recipe 12/25/84 1,311,285
Famous Recipe 06/10/75 1,013,215
Famous Recipe 12/11/73 974,710
Crispy Plus 06/02/92 1,690,361
</TABLE>
<TABLE>
<CAPTION>
SPECIALTY MARKS
Registration Registration
MARK DATE NO.
<S> <C> <C>
Fifth Quarter 02/15/77 1,059,669
Sailmaker 06/22/82 1,199,133
Pargo's Spirited Foods 02/25/86 1,384,792
Pargo's 10/17/89 1,561,615
Mike Rose 12/26/89 1,573,628
</TABLE>
<TABLE>
<CAPTION>
PENDING UNITED STATES TRADEMARK/SERVICE MARK APPLICATIONS
COUNTRY TRADEMARK SERIAL NO. FILING DATE
<S> <C> <C> <C>
USA Captain's Class 74/345,485 01/04/93
USA Longneck's 74/347,703 01/12/93
USA Long Necks 74/360,147 02/18/93
USA Shoney Bear Cub Club 74/388,129 05/10/93
USA Tag-A-Longs 74/352,197 01/25/93
USA Real Seafood. 74/341,685 12/21/92
Real Quick.
USA Wingettes 74/245,000 02/10/92
USA The Great Little App. Pending 06/18/93
Seafood House
</TABLE>
<TABLE>
<CAPTION>
UNITED STATES TRADEMARK APPLICATIONS IN PREPARATION
Expected Products/
COUNTRY TRADEMARK DOCKET NO. FILING DATE SERVICES
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
<TABLE>
<CAPTION>
FOREIGN TRADEMARK/SERVICE MARK REGISTRATIONS
COUNTRY MARK REGISTRATION NO. REGISTRATION DATE
<S> <C> <C> <C>
Canada Shoney's 362,462 11/03/89
Canada Captain D's 362,413 11/03/89
Canada Lee's Famous Recipe 365,050 02/02/90
Canada Lee's 391,000 11/29/91
Japan Captain D's 2,496,125 01/29/93
Korea Shoney's 12,423 10/11/90
Korea Captain D's 12,424 10/11/90
Mexico Shoney's 424,840 __/__/93
Mexico Captain D's 426,624 __/__/93
Mexico Lee's Famous Recipe 424,836 __/__/93
Puerto Rico Shoney's 7,417 05/12/89
Puerto Rico Captain D's 7,418 05/12/89
Puerto Rico Lee's Famous Recipe 7,419 10/24/89
Taiwan Shoney's 44,355 04/16/90
Taiwan Captain D's 44,356 04/16/90
Taiwan Shoney's 482,786 05/01/90
Taiwan Captain D's 482,787 05/01/90
</TABLE>
<TABLE>
<CAPTION>
PENDING FOREIGN TRADEMARK/SERVICE MARK APPLICATIONS
COUNTRY MARK SERIAL NO. FILING DATE
<S> <C> <C> <C>
Bahamas Shoney's 15,542 11/16/92
Bahamas Captain D's 15,541 11/16/92
Bahamas Lee's Famous Recipe 15,464 09/18/92
Canada Wingettes 704,897 05/15/92
Canada Crispy Plus 704,898 05/15/92
Canada Famous Recipe 704,901 05/15/92
Canada Shoney's Inn 668,656 10/19/90
</TABLE>
Lee's Drive Inn, Inc. of Bellingham, Washington, has asserted superior common
law rights to the use of the name "Lee's" for restaurant services in the
Bellingham, Washington area. The Borrower does not agree with the assertion
and has expressly reserved all of its rights with respect to its use of the
name "Lee's Famous Recipe" in the Bellingham, Washington area.
<PAGE>
[CONFORMED COPY]
AGREEMENT
(Copyright)
THIS AGREEMENT (COPYRIGHT) (this "AGREEMENT"), dated as of July 21, 1993,
between SHONEY'S, INC., a Tennessee corporation (the "BORROWER"), and CANADIAN
IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY ("CIBC-NYA"), acting in its capacity
as collateral agent (the "COLLATERAL AGENT") for the various financial
institutions (the "LENDERS") which are, or may from time to time hereafter
become, parties to the Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of July 21, 1993 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, the Lenders, and CIBC-NYA as
the Agent for the Lenders (in such capacity, the "AGENT"), the Lenders have
extended Commitments (such capitalized term, and all other capitalized terms
used in these recitals without definition, to have the meanings assigned to
such terms by reference in SECTION 1 hereof) to make Loans to the Borrower; and
WHEREAS, in connection with the Credit Agreement, the Borrower has
executed and delivered a Security Agreement, dated as of July 21, 1993
(together with all amendments and other modifications, if any, from time to
time thereafter made thereto, the "SECURITY AGREEMENT"); and
WHEREAS, pursuant to a covenant under the Security Agreement, the
Borrower has agreed to, upon the request of the Collateral Agent, execute and
deliver this Agreement and grant to the Collateral Agent a continuing security
interest in all of the Copyright Collateral to secure all Obligations; and
WHEREAS, the Borrower has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders to continue to make
Loans to the Borrower pursuant to the Credit Agreement, the Borrower agrees,
for the benefit of the Collateral Agent and the Ratable benefit of the Agent
and the Lenders, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to secure all of the Obligations, the Borrower does hereby
mortgage, pledge and hypothecate to the Collateral Agent, for its benefit and
the Ratable benefit of the Agent and the Lenders, and does hereby grant to the
Collateral Agent, for its benefit and the Ratable benefit of the Agent and the
Lenders, a security interest in, all of the following property (the "COPYRIGHT
COLLATERAL"), whether now owned or hereafter acquired or existing, being all
copyrights of the Borrower, whether statutory or common law, registered or
unregistered, now or hereafter in force throughout the world including, without
limitation, all of the Borrower's right, title and interest in and to all
copyrights of the Borrower, whether statutory or common law, registered or
unregistered now or hereafter in force throughout the world including, without
limitation, all of the Borrower's right, title and interest in and to all
copyrights registered in the United States Copyright Office or anywhere else in
the world and also including, without limitation, the copyrights referred to in
ITEM A of ATTACHMENT 1 attached hereto, and all applications for registration
thereof, whether pending or in preparation, all copyright licenses, including
each copyright license referred to in ITEM B of ATTACHMENT 1 attached hereto,
the right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages and proceeds
of suit.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Borrower for the purpose of registering the security interest
of the Collateral Agent in the Copyright Collateral with the United States
Copyright Office and corresponding offices in other countries of the world.
The security interest granted hereby has been granted as a supplement to, and
not in limitation of, the security interest granted to the Collateral Agent for
its benefit and the Ratable benefit of the Agent and the Lenders under the
Security Agreement. The Security Agreement (and all rights and remedies of the
Collateral Agent, the Agent and the Lenders thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations and the termination of all Commitments, the Collateral Agent shall,
at the Borrower's expense, execute and deliver to the Borrower all instruments
and other documents as may be necessary or proper to release the lien on and
security interest in the Copyright Collateral which has been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. The Borrower does hereby
further acknowledge and affirm that the rights and remedies of the Collateral
Agent with respect to the security interest in the Copyright Collateral granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which (including the remedies provided for therein) are
incorporated by reference herein as if fully set forth herein.
SECTION 6. COLLATERAL DOCUMENT AND LOAN DOCUMENT. This Agreement is a
Collateral Document and a Loan Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions of the
Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
SHONEY'S, INC.
By /S/ W. CRAIG BARBER
Title: Vice President Finance &
Chief Financial Officer
CANADIAN IMPERIAL BANK OF
COMMERCE NEW YORK AGENCY,
as Collateral Agent
By /S/ ROGER COLDEN
Title: Authorized Signatory
<PAGE>
ATTACHMENT 1
to
Agreement
(Copyright)
Item A. COPYRIGHTS
<TABLE>
<CAPTION>
REGISTERED COPYRIGHTS
COUNTRY REGISTRATION NO. REGISTRATION AUTHOR(S) TITLE
DATE
<S> <C> <C> <C> <C>
USA VA286923 11/16/87 Shoney's, Shoney's Presents
Inc. Shoney Bear and
His Friends
Christmas Song
Book
USA VA244845 11/12/86 Shoney's, Shoney's Bear
Inc.
USA TX1976558 01/12/87 Shoney's, Shoney's Presents
Inc. Shoney Bear and
His Friends: Fun,
Activities,
Comics, Games
USA PAu401844 05/17/82 Spinozza; Shoney's: 60 Sec./
Shoney's, Arr. Spinozza
Inc.
USA TX2688952 09/05/89 Shoney's, Pargo's
Spirited Inc. Foods
</TABLE>
<TABLE>
<CAPTION>
COPYRIGHT PENDING REGISTRATION APPLICATIONS
COUNTRY SERIAL NO. FILING DATE AUTHOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
<TABLE>
<CAPTION>
COPYRIGHT REGISTRATION APPLICATIONS IN PREPARATION
Expected
COUNTRY DOCKET NO. FILING DATE AUTHOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
Item B. COPYRIGHT LICENSES
<TABLE>
<CAPTION>
Country or Effective Expiration Subject
TERRITORY LICENSOR LICENSEE DATE DATE MATTER
<S> <C> <C> <C> <C> <C>
Computer and software licenses which are included in the Collateral
as Computer Hardware and Software Collateral
</TABLE>
<PAGE>
EXHIBIT E
[CONFORMED COPY]
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of July 21, 1993,
made by SHONEY'S, INC., a Tennessee corporation (the "Borrower"), in favor of
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY ("CIBC-NYA"), acting in
its capacity as collateral agent (in such capacity, the "Collateral Agent")
for the Lenders (as such term is defined in the Credit Agreement referred to
below);
W I T N E S S E T H:
WHEREAS, pursuant to that certain Reducing Revolving Credit Agreement,
dated as of July 21, 1993 (together with all amendments, restatements,
amendment and restatements, and other modifications, if any, from time to
time thereafter made thereto, the "Credit Agreement"), among the Borrower,
the Lenders, and CIBC-NYA as the Agent (in such capacity, the "Agent") and
Collateral Agent for the Lenders, the Lenders have extended Commitments (such
capitalized term, and all other capitalized terms used in these recitals
without definition, to have the meanings assigned to such terms in, or
incorporated by reference in, Sections 1.1, 1.2 and 1.3 hereof) to make Loans
to the Borrower; and
WHEREAS, the Borrower has made the Tranche C Security Agreement in favor
of CIBC-NYA as the collateral agent (in such capacity, the "Tranche C
Collateral Agent") for each purchaser of a Tranche C Note pursuant to the
Note Transfer Agreements (each such purchaser, together with subsequent
holders of such Tranche C Notes, being collectively referred to herein as the
"Tranche C Lenders"), pursuant to which the Borrower has granted to the
Tranche C Collateral Agent (for its benefit and the ratable benefit of the
Tranche C Lenders) a security interest in the Tranche C Collateral (as
defined hereinbelow in the last paragraph of Section 2.1); and
WHEREAS, as a condition precedent to the making of the initial Loans
under the Credit Agreement, the Borrower is required to execute and deliver
this Agreement and grant to the Collateral Agent, for its benefit and the
Ratable benefit of the Agent and the Lenders, a security interest in the
Collateral; and
WHEREAS, the Borrower has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders to make Loans (including the initial Loans) to the Borrower pursuant
to the Credit Agreement, the Borrower agrees with the Collateral Agent, for
its benefit and the benefit of the Agent and the Lenders, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Agent" is defined in the first recital.
"Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"CIBC-NYA" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Agent" is defined in the preamble.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers,
accessories and all peripheral devices and other related computer
hardware;
(b) all software programs (including both source code, object
code and all related applications and data files), whether now
owned, licensed or leased or hereafter acquired by the Borrower,
designed for use on the computers and electronic data processing
hardware described in clause (a) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a)
through (c); and
(e) all rights with respect to all of the foregoing,
including, without limitation, any and all copyrights, licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the
foregoing.
"Copyright Collateral" means all copyrights of the Borrower,
whether statutory or common law, registered or unregistered, now or
hereafter in force throughout the world including, without limitation,
all of the Borrower's right, title and interest in and to all copyrights
registered in the United States Copyright Office or anywhere else in the
world and also including, without limitation, the copyrights referred to
in Item A of Schedule IV attached hereto, and all applications for
registration thereof, whether pending or in preparation, all copyright
licenses, including each copyright license referred to in Item B of
Schedule IV attached hereto, the right to sue for past, present and
future infringements of any thereof, all rights corresponding thereto
throughout the world, all extensions and renewals of any thereof and all
proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Equipment" has the meaning assigned to that term in clause (a) of
Section 2.1 hereof, but shall, in any event, exclude therefrom any
Equipment constituting Tranche C Collateral.
"Franchise Agreements" means, collectively, each of the agreements
entered into from time to time by the Borrower or any of its
Subsidiaries and any of its franchisees, pursuant to which the Borrower
or any of its Subsidiaries, as franchisor, grants to a franchisee a
franchise for any restaurants, food products, lodging establishments or
related rights.
"Intellectual Property Collateral" means, collectively, the
Computer Hardware and Software Collateral, the Copyright Collateral, the
Patent Collateral, the Trademark Collateral and the Trade Secrets
Collateral.
"Lenders" is defined in the preamble.
"Limited Partnerships" means, collectively, Shoney's Manassas
Limited Partnership, Captain D's Manassas Limited Partnership, Pargo's
Manassas Limited Partnership, Shoney's Captain D's-Winchester Limited
Partnership and Shoney's of Eufaula Ltd., as to each of which the
Borrower is the general partner and each of which owns restaurant(s)
which are leased to the Borrower and/or motel(s) which are leased to a
franchisee of ShoLodge Franchise Systems, Inc.
"Note Transfer Agreements" means, collectively, those certain
Transfer Agreements, each dated as of May 15, 1990, as amended, between
the Borrower and a purchaser of a Tranche C Note, as in effect on the
date hereof and as amended, supplemented, amended and restated or
otherwise modified from time to time after the date hereof.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation
for filing anywhere in the world and including each patent and patent
application referred to in Item A of Schedule II attached hereto;
(b) all patent licenses, including each patent license referred to
in Item B of Schedule II attached hereto;
(c) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clauses (a) and (b); and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Schedule II attached hereto, and
for breach or enforcement of any patent license, including any patent
license referred to in Item B of Schedule II attached hereto, and all
rights corresponding thereto throughout the world.
"Ratable" means (a) with respect to all the Loans, in proportion to
the respective Lender's Percentage of the aggregate Loans outstanding
under the Credit Agreement, and (b) with respect to other Obligations,
in proportion to the respective amounts to which the Collateral Agent,
the Agent or such Lender is entitled pursuant to the Credit Agreement,
the Collateral Documents, the Loan Documents and any Rate Swap Agreement
to which such Lender is a party when compared to the total amount which
the Collateral Agent, the Agent and all Lenders are entitled to pursuant
to the Credit Agreement, the Collateral Documents, the Loan Documents
and any Rate Swap Agreements to which a Lender is a party.
"Receivables" is defined in clause (b) of Section 2.1.
"Related Contracts" is defined in clause (b) of Section 2.1.
"Sub-Collateral Agent" means NationsBank of Tennessee, N.A. or any
other commercial institution that enters into a sub-collateral agreement
with the Agent.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of a like nature
(all of the foregoing items in this clause (a) being collectively called
a "Trademark"), now existing anywhere in the world or hereafter adopted
or acquired, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether
pending or in preparation for filing, including registrations,
recordings and applications in the United States Patent and Trademark
Office or in any office or agency of the United States of America or any
State thereof or any foreign country, including those referred to on
Schedule III attached hereto;
(b) all Trademark licenses;
(c) all reissues, extensions or renewals, if applicable, of any of
the items described in clauses (a) and (b);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Borrower against third parties for past,
present or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to on Schedule III attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license.
"Trade Secrets Collateral" means common law and statutory trade
secrets and all other confidential or proprietary or useful information
and all know-how obtained by or used in or contemplated at any time for
use in the business of the Borrower (all of the foregoing being
collectively called a "Trade Secret"), whether or not such Trade Secret
has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating or referring in any way to
such Trade Secret, all Trade Secret licenses, if any, and including the
right to sue for and to enjoin and to collect damages for the actual or
threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
"Tranche C Collateral" means the assets described in the last
paragraph of Section 2.1.
"Tranche C Collateral Agent" is defined in the second recital.
"Tranche C Lenders" is defined in the second recital.
"Tranche C Note" means those Notes issued pursuant to, and as
defined in, the Note Transfer Agreements.
"Tranche C Security Agreement" means that certain Amended, Restated
and Continuing Security Agreement, dated as of June 25, 1990, between
the Borrower and the Tranche C Collateral Agent, as in effect on the
date hereof and as amended, supplemented, amended and restated or
otherwise modified from time to time after the date hereof.
"U.C.C." means the Uniform Commercial Code, as in effect in the
State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. that are used in this Agreement, including its preamble and recitals,
have such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security Interest. The Borrower hereby pledges
and assigns to the Collateral Agent for its benefit and the Ratable benefit
of the Agent and the Lenders, and hereby grants to the Collateral Agent, for
its benefit and the Ratable benefit of the Agent and the Lenders, a security
interest in, all of the following property, whether now or hereafter existing
or acquired (subject to the last paragraph of this Section 2.1, the
"Collateral"):
(a) all items of the Borrower's equipment in all of its forms
(other than any of the same described in clause (1) of the last
paragraph of this Section 2.1 and moving vehicles), including, without
limitation, all machinery, components, parts and accessories installed
thereon or affixed thereto and all parts thereof and all accessions,
additions, attachments, improvements, substitutions and replacements
thereto and therefor, in each case wherever located, including, without
limitation, in the jurisdiction(s) ("Jurisdictions") set forth on
Schedule I hereto (the "Equipment");
(b) all of the Borrower's accounts, contracts (other than leases
of real property which expressly prohibit the granting of a security
interest therein by the Borrower), contract rights, chattel paper,
documents, instruments and general intangibles, and any and all other
obligations of any kind owed to the Borrower, in each case whether or
not arising out of or in connection with the sale or lease of goods or
the rendering of services, and all rights of the Borrower now or
hereafter existing in and to all security agreements, guaranties, leases
and other contracts securing or otherwise relating to any such accounts,
contracts, contract rights, chattel paper, documents, instruments and
general intangibles (any and all such accounts, contracts, contract
rights, chattel paper, documents, instruments and general intangibles
being the "Receivables," and any and all such security agreements,
guaranties, leases and other contracts being the "Related Contracts"),
including, without limitation, the following:
(i) all tax refunds and all rights thereto;
(ii) each Franchise Agreement, including all rights and
remedies of the Borrower therein;
(iii) all money and property now or at any time in the
possession of or under the control of, or in transit to, the
Collateral Agent, the Agent, any Lender, the Borrower or any of its
Subsidiaries;
(c) all Computer Hardware and Software Collateral (except to the
extent prohibited by applicable license agreements), Copyright
Collateral, Trademark Collateral and Trade Secrets Collateral of the
Borrower;
(d) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(e) any and all interest of the Borrower in and to all buildings,
structures, replacements, furnishings, fixtures, fittings and other
improvements and property of every kind and character now or hereafter
located or erected on the property described in Schedule VI attached
hereto and owned or purported to be owned by the Borrower, together with
all building or construction materials, equipment, appliances,
machinery, plant equipment, fittings, apparatus, fixtures and other
articles of any kind or nature whatsoever now or hereafter found on,
affixed to or attached to the property described in Schedule VI attached
hereto and owned or purported to be owned by the Borrower, including
(without limitation) all motors, boilers, engines and devices for the
operation of pumps, and all heating, electrical, lighting, power,
plumbing, air conditioning, refrigeration and ventilation equipment,
booths, counters and signs.
(f) all other property and rights of every kind and description
and interests therein, now held or hereafter acquired by the Borrower,
including, without limitation, its general partnership interest in each
Limited Partnership (including, without limitation, all of its right,
title and interest as general partner to operate each Limited
Partnership and all of its rights to receive any and all distributions
under any partnership agreement relating to any of the Limited
Partnerships); and
(g) all products, rents, issues, profits, returns, income and
proceeds of and from any and all of the foregoing Collateral (including
proceeds which constitute property of the types described in the
foregoing clauses (a), (b), (c), (d), (e) and (f) and, to the extent not
otherwise included, all payments under insurance policies (whether or
not the Collateral Agent is the loss payee thereof), or any indemnity,
warranty, or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
Notwithstanding the foregoing, "Collateral" shall not include the
following property, whether now or hereafter existing or acquired (the
"Tranche C Collateral"):
(1) all items of the Borrower's equipment in all of its
forms (including, without limitation, all machinery), and all
substitutions therefor, replacements thereof and additions
thereto and all additions, attachments, components, parts,
equipment and accessories installed thereon or affixed
thereto, to the extent of the Borrower's interest therein,
that are located now or at any time hereafter at any of the
premises specified on Schedule V hereto and any other real
properties that hereafter may, pursuant to Section 8 of the
Note Transfer Agreements, become collateral for the performance
of the Obligations (as defined in the Note Transfer Agreements)
and is not collateral for the Obligations; and
(2) all proceeds and products of items referred to in
clause (1) above and, to the extent not otherwise included,
all payments under insurance policies (whether or not the
secured party is the loss payee thereof), or any indemnity,
warranty, or guaranty, payable by reason of such loss or
damage to or otherwise with respect to any of such item.
SECTION 2.2. Security for Obligations. This Agreement and the
Collateral secure the prompt payment in full and performance when due of (a)
all obligations of the Borrower to the Collateral Agent, the Agent and each
of the Lenders now or hereafter existing under the Credit Agreement, the
Notes, the Collateral Documents and each other Loan Document to which the
Borrower is or may become a party, whether for principal, interest, costs,
fees, expenses or otherwise and (b) all obligations of the Borrower to any
Lender under any Rate Swap Agreement provided by such Lender (collectively,
the "Obligations").
SECTION 2.3. Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Obligations and the termination of all Commitments;
(b) be binding upon the Borrower, its successors, transferees and
assigns; and
(c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent, the Agent and
each other Lender.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by
it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights and benefits in respect thereof
granted to such Lender under any Loan Document (including this Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 10.10 of the Credit Agreement.
Upon the payment in full of all Obligations and the termination of all
Commitments, the security interest granted herein shall terminate and all
rights to the Collateral shall revert to the Borrower. Upon any such
termination, the Collateral Agent will, at the Borrower's sole expense,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence such termination.
SECTION 2.4. Borrower Remains Liable. Anything herein to the contrary
notwithstanding
(a) the Borrower shall remain liable under all contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such contracts
and agreements to the same extent as if this Agreement had not been
executed;
(b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Borrower from any of its duties or
obligations under any such contracts or agreements included in the
Collateral; and
(c) none of the Collateral Agent, the Agent or any Lender shall
have any obligation or liability under any such contracts or agreements
included in the Collateral by reason of this Agreement, nor shall the
Collateral Agent, the Agent or any Lender be obligated to perform any of
the obligations or duties of the Borrower thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants unto each of the Collateral Agent,
the Agent and each Lender as follows
SECTION 3.1. Locations. The chief place of business and chief
executive office of the Borrower and the office where the Borrower keeps its
records concerning the Collateral are located at the following locations:
1717 Elm Hill Pike, Nashville, Tennessee, 1727 Elm Hill Pike, Nashville,
Tennessee and 1800 Elm Hill Pike, Nashville, Tennessee. The Borrower has
exclusive possession and control of substantially all of the Collateral and
all of the Collateral is located in the jurisdictions listed on Schedules I
and VI hereto.
SECTION 3.2. Ownership, No Liens, etc. The Borrower owns the
Collateral free and clear of any Security Interest except for the security
interest created by this Agreement or as permitted pursuant to Section 7.2.3
of the Credit Agreement. No effective financing statement or other
Instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of
the Collateral Agent relating to this Agreement.
SECTION 3.3. Negotiable Documents, Instruments and Chattel Paper. The
Borrower has, contemporaneously herewith, delivered to the Collateral Agent
(other than with respect to Franchise Agreements entered into prior to May 1,
1993 which have been delivered to the Sub-Collateral Agent) possession of all
originals of all negotiable documents, instruments and chattel paper
currently owned or held by the Borrower (duly endorsed in blank, if requested
by the Collateral Agent).
SECTION 3.4. Contracts, etc.
(a) Each Franchise Agreement, the Borrower Management Agreement
and each other material contract (and all agreements and contract rights
embodied therein) which constitutes Collateral has been duly authorized,
executed, and delivered by the parties thereto, has not been amended or
otherwise modified in any manner which would have a materially adverse
effect on the Borrower's obligations or interests thereunder, is in full
force and effect, and is binding upon and enforceable against the
parties thereto in accordance with its terms, subject, as to
enforcement, only to bankruptcy, insolvency, reorganization, moratorium,
or similar laws at the time in effect affecting the enforceability of
the rights of creditors generally. There exists no default under any
such Franchise Agreement, Borrower Management Agreement or any other
material contract which would materially adversely affect the Borrower's
obligations or interests thereunder. As to all such Franchise
Agreements, the Borrower Management Agreement and all other material
contracts, if any, pursuant to which any governmental agency,
department, or instrumentality is an obligor, the Borrower will, or will
cause any applicable Subsidiary to, promptly and strictly comply with
all requirements of the Assignment of Claims Act of 1940 (or any similar
law), and appropriately completed notices of assignment (in favor of the
Collateral Agent for its benefit and the Ratable benefit of the Agent
and the Lenders) for all such agreements and contracts shall be
delivered to the Collateral Agent.
(b) The amount represented by the Borrower to the Collateral Agent
from time to time as owing by each account debtor or by all account
debtors in respect of the Receivables will at such time be the correct
amount actually and unconditionally owing by such account debtors
thereunder. Without limiting the generality of the foregoing, each
Receivable is or will be, to the best of the Borrower's knowledge, a
true and correct statement in all material respects of actual
indebtedness incurred by each account debtor and arises or will arise
out of or in connection with the sale or lease of goods or performance
of labor or services, or both, by the Borrower or its Subsidiaries; the
goods, services or labor were or will be, to the best of the Borrower's
knowledge, ordered in good faith by each account debtor and were or will
be sold, leased or rented to, and delivered or shipped to or at the
direction of, each account debtor; the labor or services performed or to
be performed by the Borrower were or will be actually performed; each
Receivable is a bona fide, valid and legally enforceable obligation of
the parties thereto or the account debtor in respect thereof; the right,
title and interest of the Borrower in any Receivable or in any material
amount of any Receivable is not subject to any defense, offset,
counterclaim or claim, nor have any of the foregoing been asserted or
alleged against the Borrower or any Receivable, except for claims with
respect to damaged goods shipped in the ordinary course of business and
claims arising under warranties made by the Borrower or its Subsidiaries
in respect of any related good or service.
SECTION 3.5. Perfection, etc. This Agreement, together with the filing
of the UCC-1 Financing Statements and other filings identified in Item B
("UCC Filings") and Item C ("Intellectual Property Collateral Filings") of
Schedule I hereto (each of which filings is in proper form and has been duly
filed in all appropriate filing offices), create a valid security interest in
all the Collateral and are effective to create a fully perfected security
interest in all of the Collateral as to which perfection may be achieved by
filing, securing the Obligations, which security interest is a first priority
security interest (except where disclosed in the Disclosure Schedule). All
filings and other actions necessary or appropriate to perfect and protect a
security interest in the Collateral have been duly taken; provided that in
the case of the Intellectual Property Collateral, the Collateral Agent
records the Agreement (Trademark) and Agreement (Copyright) with the U.S.
Patent and Trademark Office and U.S. Copyright Office within three months of
the date hereof; provided, further that the Borrower is not required to make
federal or state filings (other than UCC filings) with respect to the
Intellectual Property Collateral which is not Trademark Collateral or
Copyright Collateral. No authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either for the grant by the Borrower of the security interest
created hereby or for the execution, delivery, or performance of this
Agreement by the Borrower, or for the perfection of, or the exercise by, the
Collateral Agent of its rights and remedies hereunder, except for
(a) the UCC Filings and Intellectual Property Collateral Filings,
which filings have been made;
(b) with respect to the exercise by the Collateral Agent of its
rights and remedies with respect to contracts pursuant to which the
United States government (or any of its agencies, departments, or
instrumentalities) is the obligor, compliance with the notice provisions
of the Assignment of Claims Act of 1940;
(c) in respect of goods covered by a certificate of title, to the
extent that the Collateral Agent is requested by the Required Lenders to
obtain the same, receipt by the Collateral Agent of such certificate of
title indicating the security interest of the Collateral Agent on such
certificate; and
(d) with respect to the exercise by the Collateral Agent of its
rights and remedies with respect to any securities, compliance with the
federal and state laws affecting the offering and sale of securities.
SECTION 3.6. Intellectual Property Collateral. With respect to the
Intellectual Property Collateral, the Borrower represents and warrants
(a) the Trademarks identified on Schedule III hereto as being
registered with the U.S. Patent and Trademark Office (the "U.S.
Registered Marks") constitute all of the material trademarks and service
marks owned by the Borrower and the Borrower has no other material
Intellectual Property;
(b) except for computer software licenses, there is no material
Intellectual Property Collateral of which the Borrower is a licensee;
(c) each of the U.S. Registered Marks is subsisting and has not
been judged invalid or unenforceable, in whole or in part;
(d) each of those Copyrights identified on Schedule IV hereto as
being registered with the U.S. Copyright Office (the "Registered
Copyrights") is subsisting and has not been judged invalid or
unenforceable, in whole or in part;
(e) except as noted on Schedule III hereto, each of the U.S.
Registered Marks and each of the Registered Copyrights is valid and
enforceable;
(f) the Borrower has made all necessary filings and recordations
to protect its interest in the U.S. Registered Marks in the United
States, including, without limitation, recordations of all its interest
in the U.S. Registered Marks with the U.S. Patent and Trademark Office
and with the Registrar of Trade Marks in Canada;
(g) the Borrower has made all necessary filings and recordations
to protect its interest in the marks "Shoney's," "Lee's Famous Recipe,"
"Lee's" and "Captain D's" (the "Canadian Registered Marks") in Canada,
including, without limitation, recordations of all its interest in the
Canadian Registered Marks with the Registrar of Trade Marks in Canada;
(h) the Borrower is the true, lawful and exclusive owner of the
entire unencumbered right, title and interest in and to each of the U.S.
Registered Marks and no claim has been made (except as set forth on
Schedule III hereto) that the use of the U.S. Registered Marks does or
may violate the asserted rights of any third party;
(i) the Borrower is the true, lawful and exclusive owner of the
entire and unencumbered right, title and interest in and to each of the
Canadian Registered Marks and no claim has been made (except as forth on
Schedule III hereto) that the use of the Canadian Registered Marks does
or may violate the asserted rights of any third party;
(j) the Borrower has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes
to maintain each and every U.S. Registered Mark and Canadian Registered
Mark in full force and effect in the United States and Canada, as
applicable;
(k) the Borrower has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes
to maintain each and every Registered Copyright in full force and effect
in the United States; and
(l) the Borrower owns directly or is entitled to use by license or
otherwise all material Intellectual Property Collateral necessary for or
of importance to the conduct of the Borrower's business.
SECTION 3.7. Authorization, Approval, etc. No authorization, approval
or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either
(a) for the grant by the Borrower of the security interest granted
hereby or for the execution, delivery and performance of this Agreement
by the Borrower, or
(b) for the perfection of or the exercise by the Collateral Agent
of its rights and remedies hereunder.
SECTION 3.8. Compliance with Laws. The Borrower is in compliance with
the requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which might materially
adversely affect the business, properties, assets, operations, condition
(financial or otherwise) or prospects of the Borrower, the value of the
Collateral or the worth of the Collateral as collateral security.
ARTICLE IV
COVENANTS
The Borrower covenants and agrees that, so long as any portion of the
Obligations shall remain unpaid or any Lender shall have any outstanding
Commitment, the Borrower will, unless the Required Lenders shall otherwise
consent in writing, perform the obligations set forth in this Article IV.
SECTION 4.1. Further Assurances Generally. The Borrower agrees that it
will, from time to time at its own expense, promptly execute and deliver all
further instruments, and take all further action, that may be necessary or
appropriate, or that the Collateral Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limitation of
the foregoing, the Borrower will
(a) at the request of the Collateral Agent at any time when a
Default of the nature referred to in Section 8.1.4 of the Credit
Agreement or any Event of Default shall have occurred and be continuing,
immediately mark conspicuously each document and each chattel paper
included in the Receivables and each Related Contract and each account
and each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Collateral Agent, indicating that
such account, document, chattel paper, Related Contract or Collateral is
subject to the security interest granted hereby;
(b) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, immediately
deliver and pledge to the Collateral Agent hereunder such promissory
note, instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all
in form and substance reasonably satisfactory to the Collateral Agent;
(c) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, any assignment of claim form under or pursuant to
the federal assignment of claims statute, 31 U.S.C. Section 3726, any
successor or amended version thereof or any regulation promulgated under
or pursuant to any version thereof), as may be necessary or desirable,
or as the Collateral Agent may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted
hereby; and
(d) furnish to the Collateral Agent, from time to time at the
Collateral Agent's request, statements and schedules further identifying
and describing the Collateral and such other reports in connection with
the Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
The Borrower hereby further authorizes the Collateral Agent to file one or
more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of the Borrower
where permitted by law. A carbon, photographic, or other reproduction of
this Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
SECTION 4.2. As to Equipment. The Borrower shall
(a) keep all Equipment (other than Equipment which, in the
Borrower's reasonable discretion, is obsolete or no longer fit for use
in the Borrower's Business) in the jurisdiction(s) set forth in Item A
("Jurisdictions") of Schedule I hereto or, upon 30 days' prior written
notice to the Collateral Agent, at such other places in jurisdictions
where all representations and warranties set forth in Article III
(including Section 3.5) shall be true and correct, and all action
required pursuant to the first sentence of Section 4.1 shall have been
taken with respect to the Equipment;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair, and working order as when new, ordinary wear and tear
and worn-out and obsolete Equipment excepted; and shall forthwith, or in
the case of any loss or damage to any of the Equipment (of which notice
shall be given to the Collateral Agent promptly, if such loss or damage
is material) as quickly as practicable after the occurrence thereof,
make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary or desirable to
such end;
(c) pay promptly when due and in any event prior to the date they
become delinquent all property and other taxes, assessments and
governmental charges or levies in excess of $5,000 in the aggregate
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment, except to the extent the validity
thereof is being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP have been set aside;
and
(d) permit representatives of the Collateral Agent at any time
during normal business hours to enter on the premises where the
Collateral is located for the purpose of inspecting the Borrower's books
and records and the Collateral, observing its use or otherwise
protecting the Collateral Agent's interests therein.
SECTION 4.3. As to Receivables. The Borrower shall keep its chief
place of business and chief executive office and the office or offices where
it keeps its records concerning the Receivables, and all originals of all
chattel paper which evidenced Receivables, at the location therefor specified
in Section 3.1 or with the Sub-Collateral Agent or, subject to Section 7.2.18
of the Credit Agreement, upon 30 days' prior written notice to the Collateral
Agent, at such other locations in a jurisdiction where all statements set
forth in Section 3.5 shall be true and correct and all action required by
Section 4.1 shall have been taken with respect to the Receivables. The
Borrower will hold and preserve such records and will permit representatives
of the Collateral Agent or any Lender at any time during normal business
hours to inspect and make abstracts from such records. The Borrower has
delivered and shall deliver to the Collateral Agent or the Sub-Collateral
Agent, within one Business Day after receipt thereof by the Borrower, all
originals of all chattel paper which evidence Receivables, including, without
limitation, all Franchise Agreements entered into prior to May 1, 1993.
Until such time as the Collateral Agent shall notify the Borrower that a
Default of the nature referred to in Section 8.1.4 of the Credit Agreement or
an Event of Default has occurred and is continuing the Borrower shall
continue to collect, at its own expense, all amounts due or to become due
under the Receivables. In connection with such collections, the Borrower may
take (and, at the Collateral Agent's direction, shall take) such action as
the Borrower or the Collateral Agent may deem necessary or advisable to
enforce collection of the Receivables; provided, however, that (a) the
Borrower will not (i) amend, modify, terminate or waive any provision of any
Franchise Agreement, the Borrower Management Agreement or any other material
contract in any manner which might materially adversely affect the aggregate
value of the Franchise Agreements, the Borrower Management Agreement or other
material contracts as Collateral, (ii) fail to exercise promptly and
diligently each and every material right which it may have under each
Franchise Agreement, the Borrower Management Agreement and each other
material contract (other than any right of termination) or (iii) fail to
deliver to the Collateral Agent, after the occurrence and during the
continuance of a Default of the nature referred to in Section 8.1.4 of the
Credit Agreement or an Event of Default, a copy of each material demand,
notice or document received by it relating in any way to any Franchise
Agreement, the Borrower Management Agreement or any other material contract,
(b) upon the occurrence and during the continuance of any Default, the
Borrower will not, without the Collateral Agent's prior written consent,
grant any extension of the time of payment of any Franchise Agreement, the
Borrower Management Agreement or any other material contract, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the payment thereof, or allow any
credit or discount whatsoever thereon, (c) the Borrower will not amend or
modify any of the provisions of any Franchise Agreement or any partnership
agreement relating to the Limited Partnerships relating to the amount and
timing of the payment of monies thereunder without the prior written consent
of the Collateral Agent, and (d) the Collateral Agent shall have the right,
at any time after notice to the Borrower from the Collateral Agent that a
Default of the nature referred to in Section 8.1.4 of the Credit Agreement or
while an Event of Default has occurred and is continuing, to notify the
account debtors or obligors under any Receivables of the assignment of such
Receivables to the Collateral Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the Borrower
thereunder directly to the Collateral Agent, or to such Person as the
Collateral Agent may direct, and, upon such notification and at the expense
of the Borrower, to enforce collection of any such Receivables, and to
adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Borrower might have done. After receipt
by the Borrower of the notice from the Collateral Agent referred to in the
fourth sentence of this paragraph
(a) all amounts and proceeds (including Instruments) received by
the Borrower in respect of any Receivables shall be received in trust
for the benefit of the Collateral Agent hereunder, shall be segregated
from other funds of the Borrower, and shall be forthwith paid over to
the Collateral Agent in the same form as so received (with any necessary
endorsements) to be held as cash collateral and
(b) the Borrower shall not, without the consent of the Collateral
Agent, adjust, settle, or compromise the amount or payment of any
Receivable, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
After the occurrence and during the continuance of any Default of the
nature referred to in Section 8.1.4 of the Credit Agreement or an Event of
Default, and at other times with the consent of the Borrower (which consent
shall not be unreasonably withheld), (a) the Collateral Agent may in its own
name or in the name of others communicate with account debtors in order to
verify with them to the Collateral Agent's satisfaction the existence, amount
and terms of any Receivables, (b) the Collateral Agent shall have the right,
at the Borrower's expense, to make test verifications of the Receivables in
any manner and through any medium that it considers advisable, and the
Borrower agrees to furnish all such assistance and information as the
Collateral Agent may reasonably require in connection therewith, (c) the
Borrower at its expense will cause the Independent Public Accountants
reasonably satisfactory to the Collateral Agent to furnish to the Collateral
Agent promptly upon the Collateral Agent's request, or shall permit and
cooperate with independent public accountants selected by the Collateral
Agent to furnish to the Collateral Agent at the Borrower's expense, the
following reports (i) reconciliation of all Receivables, (ii) an aging of all
Receivables, (iii) trial balances, (iv) a test verification of such
Receivables as the Collateral Agent may reasonably request and (v) valuations
of the inventory held by the Borrower.
SECTION 4.4. As to Intellectual Property Collateral.
(a) The Borrower shall not, and the Borrower shall not permit any
of its licensees to, unless the Borrower shall either (i) reasonably and
in good faith determine (and notice of such determination shall have
been delivered to the Collateral Agent) that any of the Trademark
Collateral is of negligible economic value to the Borrower, or (ii) have
a valid business purpose to do otherwise,
(i) fail to continue to use any of the Trademark Collateral
in order to maintain all of the Trademark Collateral in full force
free from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of products
and services offered under all of the Trademark Collateral,
(iii) fail to employ all of the Trademark
Collateral registered with any federal or state or foreign
authority with an appropriate notice of such registration,
(iv) use any of the Trademark Collateral registered with any
federal or state or foreign authority except for the uses for which
registration or application for registration of all of the
Trademark Collateral has been made in any manner that would
adversely affect the value thereof, and
(v) do or permit any act or knowingly omit to do any act
whereby any of the Trademark Collateral may lapse or become invalid
or unenforceable.
(b) The Borrower shall not, unless the Borrower shall either
(i) reasonably and in good faith determine (and notice of
such determination shall have been delivered to the Collateral
Agent) that any of the Copyright Collateral or any of the Trade
Secrets Collateral is of negligible economic value to the Borrower,
or
(ii) have a valid business purpose to do otherwise, do or
permit any act or knowingly omit to do any act whereby any of the
Copyright Collateral or any of the Trade Secrets Collateral may
lapse or become invalid or unenforceable or placed in the public
domain except upon expiration of the end of an unrenewable term of
a registration thereof.
(c) The Borrower shall notify the Collateral Agent immediately if
it knows, or has reason to know, that any application or registration
relating to any material item of the Intellectual Property Collateral
may become abandoned or dedicated to the public or placed in the public
domain or invalid or unenforceable, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding the Borrower's ownership of any material
item of the Intellectual Property Collateral, its right to register the
same or to keep and maintain and enforce the same.
(d) In no event shall the Borrower or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Collateral Agent
upon its registration, and upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and
papers as the Collateral Agent may reasonably request to evidence the
Collateral Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of the Borrower
relating thereto or represented thereby.
(e) The Borrower shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, to maintain and
pursue any application (and to obtain the relevant registration) filed
with respect to, and to maintain any registration of, the Intellectual
Property Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and
taxes (except to the extent that dedication, abandonment or invalidation
is permitted under the foregoing clauses (a), (b) and (c)).
(f) The Borrower shall, contemporaneously herewith, execute and
deliver to the Collateral Agent an Agreement (Trademark) and an
Agreement (Copyright) in the forms of Exhibit A and B hereto,
respectively, and shall execute and deliver to the Collateral Agent any
other document required to acknowledge or register or perfect the
Collateral Agent's interest in any part of the Intellectual Property
Collateral.
SECTION 4.5. Insurance. The Borrower will maintain insurance with
respect to the Equipment, in such amounts, against such casualties and risks,
of such types and in such form, and with such financially sound and reputable
insurers, as shall be customary in the case of similar businesses and
reasonably satisfactory to the Collateral Agent from time to time (and, in
any event, shall insure the Equipment against loss by fire, explosion and
theft and shall insure the Borrower and the Collateral Agent (as an
additional insured) against liability for personal injury and property damage
relating to such Equipment, which insurance can be contained in the
Borrower's general liability policy). Each policy providing such insurance
(a) shall, in the case of (i) liability insurance, provide for all
losses to be paid on behalf of the Collateral Agent and the Borrower as
their respective interests may appear, and (ii) property damage
insurance, provide for all losses (except for losses of less than
$750,000 per occurrence) to be paid directly to the Collateral Agent to
be applied in accordance with Section 6.2;
(b) shall name the Borrower and the Collateral Agent as insured
parties thereunder (without any representation or warranty by or
obligation upon the Collateral Agent) as their interests may appear;
(c) shall contain the agreement by the insurer that any loss
thereunder shall be payable to the Collateral Agent notwithstanding any
action, inaction or breach of representation or warranty by the
Borrower;
(d) shall provide that there shall be no recourse against the
Collateral Agent, the Agent or any Lender for payment of premiums or
other amounts with respect thereto but shall permit the Collateral
Agent, at its discretion, to pay premiums thereon; and
(e) shall provide that at least 30 days' prior written notice of
cancellation or of lapse shall be given to the Collateral Agent by the
insurer.
The Borrower shall, if so requested by the Collateral Agent, deliver to
the Collateral Agent original or duplicate policies of such insurance and, as
often as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to the adequacy of such insurance. Further,
the Borrower shall, after any Default, at the request of the Collateral
Agent, duly execute and deliver instruments of assignment of such insurance
policies to comply with Section 3.4 and cause the respective insurers to
acknowledge notice of such assignment. Reimbursement under any liability
insurance maintained by the Borrower pursuant to this Section may be paid
directly to the Person who shall have incurred liability covered by such
insurance. In case of any loss involving damage to Equipment when the last
sentence of this Section is not applicable, the Borrower shall make or cause
to be made all repairs to or replacements of such Equipment as the Borrower
reasonably determines to be necessary and appropriate, and any proceeds of
insurance maintained by the Borrower pursuant to this Section shall be paid
to the Borrower as reimbursement for the costs of such repairs or
replacements. Upon the happening of both (x) the occurrence and during the
continuance of any Default of the nature referred to in Section 8.1.4 of the
Credit Agreement or any Event of Default and (y) the actual or constructive
total loss (in excess of $750,000 per occurrence) of any Equipment, all
insurance payments in respect of such Equipment shall be paid to and held or
applied by the Collateral Agent as specified in Section 6.2.
SECTION 4.6. Transfers and Other Liens.
(a) The Borrower shall not
(i) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except for dispositions
of assets permitted by Section 7.2.11 of the Credit Agreement; or
(ii) create or suffer to exist any Security Interest upon or
with respect to any of the Collateral to secure any obligation of
any Person, except for (A) the security interest created by this
Agreement, and (B) any other Security Interest permitted pursuant
to Section 7.2.3 of the Credit Agreement.
(b) The Borrower will defend the right, title and interest of the
Collateral Agent in and to any of the Borrower's rights under the
Related Contracts and to the Equipment and all other Collateral and in
and to the proceeds and products thereof against the claims and demands
of all persons whomsoever.
SECTION 4.7. Notices. The Borrower will, upon obtaining knowledge
thereof, advise the Collateral Agent promptly, in reasonable detail, (a) of
any material lien, security interest, encumbrance or claims made or asserted
against any of the Collateral, (b) of any material change in the composition
of the Collateral, and (c) of the occurrence of any other event which would
have a materially adverse effect on the aggregate value of the Collateral or
on the security interests created hereunder.
SECTION 4.8. Continuous Perfection. The Borrower will not change its
name, identity or corporate structure in any manner which might make any
financing or continuation statement filed hereunder seriously misleading
within the meaning of Section 9-402(7) of the U.C.C. (or any other then
applicable provision of the U.C.C.) unless the Borrower shall have given the
Collateral Agent at least 90 days' prior written notice thereof or shall have
delivered to the Collateral Agent acknowledgment copies of UCC-1 and UCC-3
financing statements duly executed and duly filed in each jurisdiction in
which UCC-1 filings were required in order to perfect the security interest
granted by this Agreement in the Collateral and shall have taken all action
(or made arrangements to take such action substantially simultaneously with
such change if it is impossible to take such action in advance) necessary or
reasonably requested by the Collateral Agent to amend such financing
statement or continuation statement so that it is not seriously misleading.
SECTION 4.9. Additional Intellectual Property Collateral. The Borrower
will notify the Collateral Agent, from time to time at its own expense,
promptly of all Intellectual Property Collateral acquired or created after
the date hereof (including, but not limited to, all semi-conductor chip
product mask works, mask work licenses and Patent Collateral), and at the
Collateral Agent's request, take such action, that may be necessary or
appropriate, in order to perfect any Security Interests granted pursuant to
this Agreement in such Intellectual Property Collateral.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. The Borrower
hereby irrevocably appoints the Collateral Agent the Borrower's attorney-in-
fact, with full power and authority in the place and stead of the Borrower
and in the name of the Borrower, the Agent, the Lenders or otherwise, from
time to time upon the occurrence and continuance of an Event of Default in
the Collateral Agent's discretion, to take any action and to execute any
Instrument which the Collateral Agent may deem necessary or appropriate to
accomplish the purposes of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
the Borrower pursuant to Section 4.5;
(b) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
or (b) above;
(d) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral;
and
(e) to perform the affirmative obligations of the Borrower
hereunder (including all obligations of the Borrower pursuant to Section
4.1).
The Borrower hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
SECTION 5.2. Collateral Agent May Perform. The Collateral Agent may
from time to time, at its option, perform, or cause performance of, any act
which the Borrower agrees hereunder to perform and which the Borrower shall
fail to perform after being requested in writing to so perform (it being
understood that no such request need be given after the occurrence and during
the continuance of any Default of the nature referred to in Section 8.1.4 of
the Credit Agreement or an Event of Default) and, subject to the foregoing,
the Collateral Agent may from time to time take any other action which the
Collateral Agent reasonably deems necessary for the maintenance,
preservation, or protection of any of the Collateral or of its security
interest therein. The Borrower hereby acknowledges and agrees that any
expenses incurred by the Collateral Agent in connection with this Section
5.2 shall be payable by the Borrower pursuant to Section 6.3.
SECTION 5.3. Collateral Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Collateral Agent
hereunder are solely to protect its interest (and the Ratable interest of the
Agent and the Lenders) in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the reasonable care of any
Collateral in its possession, the Collateral Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation
of any of the Collateral, if it takes such action for that purpose as the
Borrower reasonably requests in writing at times other than upon the
occurrence and during the continuance of any Event of Default, but failure of
the Collateral Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Default of the nature referred
to in Section 8.1.4 of the Credit Agreement or any Event of Default shall
have occurred and be continuing, the Collateral Agent may exercise in respect
of the Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party upon default under the U.C.C. (whether or not the U.C.C. applies to the
affected Collateral) or other applicable law. Without limitation of the
above, the Collateral Agent may, whenever any Default of the nature referred
to in Section 8.1.4 of the Credit Agreement or any Event of Default shall
have occurred and be continuing, take all or any of the following actions:
(a) require the Borrower to, and the Borrower hereby agrees that
it will, at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a
place to be designated by the Collateral Agent;
(b) transfer all or any part of the Collateral into the name of
the Collateral Agent or its nominee, with or without disclosing that
such Collateral is subject to the lien and security interest hereunder;
(c) notify the parties obligated on any of the Collateral to make
payment to the Collateral Agent of any amount due or to become due
thereunder;
(d) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release, or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect thereto;
(e) endorse any checks, drafts, or other writings in the
Borrower's name to allow collection of the Collateral;
(f) take control of any proceeds of the Collateral;
(g) execute (in the name, place, and stead of the Borrower)
endorsements, assignments, stock powers, and other instruments of
conveyance or transfer with respect to all or any of the Collateral; and
(h) enter upon any premises where the Collateral or any part
thereof may be, and take possession of all or any part thereof, without
being responsible for loss or damage.
In furtherance, and not in limitation, of the foregoing, the Collateral
Agent, without demand of performance or other demand, advertisements or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Borrower or any other Person (all and
each of which demands, advertisements and/or notices are hereby expressly
waived), may, whenever a Default of the nature referred to in Section 8.1.4
of the Credit Agreement or an Event of Default shall have occurred and be
continuing, in a commercially reasonable manner, 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, contract to sell
or otherwise dispose of and deliver said Collateral, or any part thereof, in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Collateral Agent's offices 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, with the right to the Collateral Agent upon
any such sale or sales, public or private, to purchase the whole or any part
of said Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby expressly waived or released. The
Collateral Agent shall apply the proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral or in any way
relating to the rights of the Collateral Agent hereunder, including
reasonable attorneys' fees and legal expenses, to the payment in whole or in
part of the Obligations as set forth in Section 6.2 of this Agreement, the
Borrower remaining liable for any deficiency remaining unpaid after such
application and all reasonable fees and expenses incurred by the Collateral
Agent in collecting such deficiency, and only after so paying over such
proceeds and after the payment by the Collateral Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the U.C.C., need the Collateral Agent account for the surplus,
if any, to the Borrower. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, in which event no notification is required, the Borrower agrees that
the Collateral Agent need not give more than ten days' notice of the time and
place of any public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is reasonable
notification of such matters. No notification need be given to the Borrower
if it has signed after default a statement renouncing or modifying any right
to notification of sale or other intended disposition. The Borrower further
agrees to waive and agrees not to assert any rights or privileges which it
may acquire under Section 9-112 of the U.C.C.
SECTION 6.2. Application of Proceeds. All cash proceeds received by
the Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
the Collateral Agent, be held by the Collateral Agent as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Collateral Agent, the Agent and each Lender under Section 6.3
hereof and to the Collateral Agent, the Agent and each Lender pursuant to
Section 10.3 of the Credit Agreement) in whole or in part by the Collateral
Agent against, all or any part of the Obligations in such order as the
Collateral Agent shall elect.
SECTION 6.3. Indemnity and Expenses.
(a) The Borrower hereby indemnifies and holds harmless the
Collateral Agent, the Agent and each Lender from and against any and all
claims, losses and liabilities arising out of or resulting from this
Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from the
Collateral Agent's, the Agent's or such Lender's gross negligence or
wilful misconduct.
(b) The Borrower will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which
any Lender (with respect to clauses (ii) through (v) below) or the
Collateral Agent may incur in connection with
(i) the administration of this Agreement or the other Loan
Documents;
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(iii) the exercise or enforcement of any of the rights or
remedies of the Collateral Agent hereunder;
(iv) the failure by the Borrower to perform or observe any of
the provisions hereof; or
(v) advancing any funds in connection with the matters
referred to in Section 7.4 hereof.
SECTION 6.4. Grant of License to Use Intellectual Property Collateral.
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under Section 6.1 hereof at such time as the Collateral Agent,
without regard to this Section 6.4, shall be lawfully entitled to exercise
such rights and remedies, and for no other purpose, upon and subject to the
occurrence and during the continuance of a Default of the nature referred to
in Section 8.1.4 of the Credit Agreement or an Event of Default, the Borrower
grants, to the extent not prohibited by applicable law or the terms of the
Franchise Agreements or the Shoney's Inn License Agreement, to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Borrower, provided that, any proceeds
shall be applied to the Borrower's Obligations in accordance with Section
6.2) to use, license or sublicense any Intellectual Property Collateral, now
owned or hereafter acquired by the Borrower, and wherever the same may be
located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
and automatic machinery software and programs used for the compilation or
printout thereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Collateral Document and Loan Document. This Agreement is
a Collateral Document and Loan Document executed pursuant to the Credit
Agreement, and shall (unless otherwise expressly indicated herein) be
construed, administered, and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7.2. Amendments, Waivers, Remedies, etc. No amendment to or
waiver of any provision of this Agreement nor consent to any departure by the
Borrower herefrom shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent (subject to Section 10.1 of the
Credit Agreement), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No
delay, act or omission on the part of the Collateral Agent of any of its
rights hereunder shall be deemed a waiver of any rights hereunder unless also
contained in an express writing signed by the Collateral Agent, nor shall any
single or partial exercise of, or any failure to exercise, any right, power
or privilege preclude any other or further or initial exercise thereof of any
other right, power or privilege. The rights and remedies provided herein are
cumulative, and not exclusive of right and remedies which may be granted or
provided by law or equity.
SECTION 7.3. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing or by facsimile
transmission, and if to any party, addressed or delivered to it at the
address set forth below its signature hereto or at such other address as
shall be designated by such party in a written notice to each other party.
Any notice, if mailed and properly addressed with postage prepaid, shall be
deemed given when received; any notice, if transmitted by facsimile
transmission or delivery, shall be deemed given when received.
SECTION 7.4. Subrogation. The Borrower shall not be entitled to be
subrogated to any of the rights of the Collateral Agent, the Agent or any
Lender by reason of any amounts received hereunder or in connection with the
Collateral until all Obligations have been indefeasibly paid in full.
SECTION 7.5. Section Captions. Section captions used in this Agreement
are for convenience of reference only, and shall not affect the construction
of this Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
SECTION 7.7. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
Agreement.
SECTION 7.8. Governing Law; Entire Agreement, etc. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION
OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR
ORAL, WITH RESPECT THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
SHONEY'S, INC.
By /s/ W. Craig Barber
Title: Vice President-Finance and
Chief Financial Officer
Address:
1727 Elm Hill Pike
Nashville, Tennessee 37210
Fax No.: (615) 231-2428
Attention: F. E. McDaniel, Jr.
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, as Collateral
Agent
By /s/ Roger Colden
Title: Authorized Signatory
Address: 425 Lexington Avenue
New York, New York 10017
Fax No.: (212) 856-3763
Attention: V.P. Syndications
Administration
<PAGE>
SCHEDULE I
to
Security Agreement
ITEM A. Jurisdictions.
Alabama
Arkansas
Florida
Georgia
Illinois
Indiana
Kansas
Kentucky
Louisiana
Maryland
Mississippi
Missouri
Nebraska
Nevada
North Carolina
Ohio
Oklahoma
South Carolina
Tennessee
Texas
Virginia
West Virginia
ITEM B. UCC-1 Filings.
Locations of Filing
(1) Alabama
(a) Secretary of State
(2) Arkansas
(a) Secretary of State
(3) Florida
(a) Secretary of State
(b) Clerk of Circuit Court of Alachua
(c) Clerk of Circuit Court of Bay
(d) Clerk of Circuit Court of Bradford
(e) Clerk of Circuit Court of Clay
(f) Clerk of Circuit Court of Columbia
(g) Clerk of Circuit Court of Duval
(h) Clerk of Circuit Court of Escambia
(i) Clerk of Circuit Court of Leon
(j) Clerk of Circuit Court of Orange
(k) Clerk of Circuit Court of Seminole
(l) Clerk of Circuit Court of St. John's
(m) Clerk of Circuit Court of Volusia
(4) Georgia
(a) Clerk of the Superior Court of Bulloch
(b) Clerk of the Superior Court of DeKalb
(c) Clerk of the Superior Court of Muscogee
(d) Clerk of the Superior Court of Bibb
(e) Clerk of the Superior Court of Gwinett
(f) Clerk of the Superior Court of Chatham
(g) Clerk of the Superior Court of Whitfield
(5) Illinois
(a) Secretary of State
(6) Indiana
(a) Secretary of State
(7) Kansas
(a) Secretary of State
(8) Kentucky
(a) Secretary of State
(b) County Clerk of Barren County
(c) County Clerk of Boone County
(d) County Clerk of Boyd County
(e) County Clerk of Christian County
(f) County Clerk of Daviess County
(g) County Clerk of Fayette County
(h) County Clerk of Franklin County
(i) County Clerk of Hardin County
(j) County Clerk of Henderson County
(k) County Clerk of Hopkins County
(l) County Clerk of Jefferson County
(m) County Clerk of Madison County
(n) County Clerk of Simpson County
(o) County Clerk of Warren County
(9) Louisiana
(a) Parish Clerk of Orleans
(10) Maryland
(a) Department of Assessments and Taxation
(11) Mississippi
(a) Secretary of State
(12) Missouri
(a) Secretary of State
(13) Nebraska
(a) Secretary of State
(14) Nevada
(a) Secretary of State
(15) North Carolina
(a) Secretary of State
(16) Ohio
(a) Secretary of State
(17) Oklahoma
(a) County Clerk of Oklahoma County
(18) Pennsylvania
(a) Secretary of the Commonwealth
(19) South Carolina
(a) Secretary of State
(20) Tennessee
(a) Secretary of State
(21) Texas
(a) Secretary of State
(22) Virginia
(a) State Corporation Commission
(23) West Virginia
(a) Secretary of State
ITEM C. Intellectual Property Collateral Filings.
All locations set forth in Items A and B of this Schedule I, the United
States Patent and Trademark Office and the United States Copyright Office.
<PAGE>
SCHEDULE II
to
Security Agreement
Item A. Patents
<TABLE>
<CAPTION>
Issued Patents
Country Patent No. Issue Date Inventor(s) Title
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
<TABLE>
<CAPTION>
Pending Patent Applications
Country Serial No. Filing Date Inventor(s) Title
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
<TABLE>
<CAPTION>
Patent Applications in Preparation
Expected
Country Docket No. Filing Date Inventor(s) Title
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
Item B. Patent Licenses
<TABLE>
<CAPTION>
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
<S> <C> <C> <C> <C> <C>
[NONE]
</TABLE>
<PAGE>
SCHEDULE III
to
Security Agreement
<TABLE>
<CAPTION>
United States Trademark/Service Mark Registrations and
Applications.
SHONEY'S MARKS
Date
Mark Registered No.
<S> <C> <C>
Shoney's 03/28/78 1,088,370
America's Dinner Table 10/07/86 1,412,692
Shoney Bear 04/25/89 1,536,333
Shoney's 11/06/90 1,620,734
Best Breakfast in Town
(Supplemental Register) 04/13/93 1,765,417
</TABLE>
<TABLE>
<CAPTION>
CAPTAIN D's MARKS
Date
Mark Registered No.
<S> <C> <C>
Design of Captain 01/06/76 1,029,628
Captain D's 01/06/76 1,029,629
Fish and Anchor 01/06/76 1,029,630
Captain's Head 01/29/80 1,130,154
Captain D's and
building design 02/03/81 1,146,718
A Great Little
Seafood Place 04/14/81 1,151,309
Lighten Up 06/11/85 1,341,166
Little Mate's Meal 06/14/88 1,492,731
Captain D's (graphic
art building design) 02/02/90 1,575,841
Captain D's
(building design) 10/30/90 1,620,567
Captain D's
(building design) 06/25/91 1,649,084
The Great Little Seafood
Place 08/20/91 1,654,602
Captain D's (oval design) 10/15/91 1,661,241
Willy Walrus 02/11/92 1,675,568
The Captain's Grille 06/23/92 1,696,289
</TABLE>
<TABLE>
<CAPTION>
FAMOUS RECIPE MARKS
Date
Mark Registered No.
<S> <C> <C>
Building Design 06/25/85 1,345,232
Lee's Famous Recipe 12/25/84 1,311,285
Famous Recipe 06/10/75 1,013,215
Famous Recipe 12/11/73 974,710
Crispy Plus 06/02/92 1,690,361
</TABLE>
<TABLE>
<CAPTION>
SPECIALTY MARKS
Date
Mark Registered No.
<S> <C> <C>
Fifth Quarter 02/15/77 1,059,669
Sailmaker 06/22/82 1,199,133
Pargo's Spirited Foods 02/25/86 1,384,792
Pargo's 10/17/89 1,561,615
Mike Rose 12/26/89 1,573,628
</TABLE>
<TABLE>
<CAPTION>
PENDING UNITED STATES TRADEMARK/SERVICE MARK APPLICATIONS
Country Mark Serial No. Filing Date
<S> <C> <C> <C>
USA Captain's Class 74/345,485 01/04/93
USA Long Necks 74/360,147 02/18/93
USA Longneck's 74/347,703 01/12/93
USA Shoney Bear 74/388,129 05/10/93
Cub Club
USA Tag-A-Longs 74/352,197 01/25/93
USA Real Seafood. 74/341,685 12/21/92
Real Quick.
USA Wingettes 74/245,000 02/10/92
USA The Great Little App. Pending 06/18/93
Seafood House
</TABLE>
<TABLE>
<CAPTION>
FOREIGN TRADEMARK/SERVICE MARK REGISTRATIONS
Country Mark Registration No. Registration Date
<S> <C> <C> <C>
Canada Shoney 362,462 11/03/89
Canada Captain D's 362,413 11/03/89
Canada Lee's Famous 365,050 02/02/90
Recipe
Canada Lee's 391,000 11/29/91
Japan Captain D's 2,496,125 01/29/93
Korea Shoney's 12,423 10/11/90
Korea Captain D's 12,424 10/11/90
Mexico Shoney's 424,840 __/__/93
Mexico Captain D's 426,624 __/__/93
Mexico Lee's Famous 424,836 __/__/93
Recipe
Puerto Rico Shoney's 7,417 05/12/89
Puerto Rico Captain D's 7,418 05/12/89
Puerto Rico Lee's Famous 7,419 10/24/89
Recipe
Taiwan Shoney's 44,355 04/16/90
Taiwan Captain D's 44,356 04/16/90
Taiwan Shoney's 482,786 05/01/90
Taiwan Captain D's 482,787 05/01/90
</TABLE>
<TABLE>
<CAPTION>
PENDING FOREIGN TRADEMARK/SERVICE MARK APPLICATIONS
Country Mark Serial No. Filing Date
<S> <C> <C> <C>
Bahamas Shoney's 15,542 11/16/92
Bahamas Captain D's 15,541 11/16/92
Bahamas Lee's Famous 15,464 09/18/92
Recipe
Canada Wingettes 704,897 05/15/92
Canada Crispy Plus 704,898 05/15/92
Canada Famous Recipe 704,901 05/15/92
Canada Shoney's Inn 668,656 10/19/90
</TABLE>
Lee's Drive Inn, Inc. of Bellingham, Washington, has asserted
superior common law rights to use of the name "Lee's" for
restaurant services in the Bellingham, Washington area. The
Borrower does not agree with this assertion and has expressly
reserved all of its rights with respect to its use of the name of
"Lee's Famous Recipe" in the Bellingham, Washington area.
<PAGE>
SCHEDULE IV
to
Security Agreement
Item A. Copyrights
<TABLE>
<CAPTION>
Registered Copyrights
Country Registration No. Registration Date Author(s) Title
<S> <C> <C> <C> <C>
USA VA286923 11/16/87 Shoney's Inc. Shoney's Presents
Shoney Bear and His
Friends Christmas Song
Book
USA VA244845 11/12/86 Shoney's Inc. Shoney's Bear
USA TX1976558 01/12/87 Shoney's Inc. Shoney's Presents
Shoney Bear and His
Friends: Fun,
Activities, Comics,
Games
USA PAu401844 05/17/82 Spinozza; Shoney's Inc.
Shoney's: 60
Sec./Arr. Spinozza
USA TX2688952 09/05/89 Shoney's Inc. Pargo's
Spirited Foods
</TABLE>
<TABLE>
<CAPTION>
Copyright Pending Registration Applications
Country Serial No. Filing Date Author(s) Title
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
<TABLE>
<CAPTION>
Copyright Registration Applications in Preparation
Expected
Country Docket No. Filing Date Author(s) Title
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
Item B. Copyright Licenses
<TABLE>
<CAPTION>
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
<S> <C> <C> <C> <C> <C>
</TABLE>
Computer and software licenses which are included in the Collateral
as Computer Hardware and Software Collateral.
<PAGE>
SCHEDULE V
to
Security Agreement
Tranche C Collateral Locations
<PAGE>
SCHEDULE VI
TO
Security Agreement
Fixture Filing Locations
By State, County and Store Number
A. ALABAMA
1. Store No. 3627 (Barbour County)
2. Store No. 1573 (Coffee County)
3. Store No. 3630 (Coffee County)
4. Store No. 3555 (Houston County)
5. Store No. 3370 (Marshall County)
6. Store No. 5703 (Montgomery County)
7. Store No. 1233 (Montgomery County)
8. Store No. 1270 (Montgomery County)
9. Store No. 1225 (Montgomery County)
10. Store No. 5737 (Shelby County)
11. Store No. 3701 (Shelby County)
B. ARKANSAS
1. Store No. 3727 (Pope County)
2. Store No. 3604 (Pulaski County)
3. Store No. 3625 (Pulaski County)
4. Store No. 3603 (Pulaski County)
5. Store No. 3602 (Pulaski County)
6. Store No. 3631 (Pulaski County)
7. Store No. 3655 (Saline County)
8. Store No. 3669 (White County)
C. FLORIDA
1. Store No. 1440 (Alachua County)
2. Store No. 1562 (Bay County)
3. Store No. 1563 (Bay County)
4. Store No. 3376 (Bradford County)
5. Store No. 5735 (Clay County)
6. Store No. 1162 (Columbia County)
7. Store No. 1164 (Duval County)
8. Store No. 5729 (Duval County)
9. Store No. 1166 (Duval County)
10. Store No. 1167 (Duval County)
11. Store No. 3377 (Duval County)
12. Store No. 5713 (Duval County)
13. Store No. 3380 (Duval County)
14. Store No. 1165 (Duval County)
15. Store No. 1168 (Duval County)
16. Store No. 5741 (Duval County)
17. Store No. 3481 (Duval County)
18. Store No. 5725 (Duval County)
19. Store No. 3378 (Duval County)
20. Store No. 1163 (Duval County)
21. Store No. 5727 (Duval County)
22. Store No. 3374 (Duval County)
23. Store No. 1564 (Escambia County)
24. Store No. 1172 (Escambia County)
25. Store No. 1189 (Leon County)
26. Store No. 1198 (Leon County)
27. Store No. 1561 (Leon County)
28. Store No. 3395 (Orange County)
29. Store No. 3396 (Orange County)
30. Store No. 3394 (Orange County)
31. Store No. 3390 (Orange County)
32. Store No. 3397 (Seminole County)
33. Store No. 3398 (Seminole County)
34. Store No. 1442 (St. John's County)
35. Store No. 3399 (Volusia County)
36. Store No. 3373 (Clay County)
37. Store No. 1169 (Duval County)
38. Store No. 3379 (Duval County)
D. GEORGIA
1. Store No. 3611 (Chatham County)
2. Store No. 3328 (DeKalb County)
3. Store No. 3562 (Gwinnett County)
4. Store No. 3595 (Muscogee County)
5. Store No. 1249 (Whitfield County)
E. ILLINOIS
1. Store No. 5733 (Madison County)
2. Store No. 3309 (Madison County)
3. Store No. 1524 (Madison County)
4. Store No. 1526 (Madison County)
5. Store No. 3306 (St. Clair County)
6. Store No. 3308 (St. Clair County)
7. Store No. 1525 (St. Clair County)
F. INDIANA
1. Store No. 1317 (Kosciusko County)
2. Store No. 3649 (Lawrence County)
3. Store No. 1300 (Vanderburgh County)
4. Store No. 3665 (Vanderburgh County)
G. KENTUCKY
1. Store No. 1310 (Christian County)
2. Store No. 1149 (Franklin County)
3. Store No. 1771 (Jefferson County)
4. Store No. 7807 (Jefferson County)
5. Store No. 3311 (Jefferson County)
6. Store No. 1775 (Jefferson County)
7. Store No. 3609 (Warren County)
H. LOUISIANA
1. Store No. 1480 (Bossier County)
2. Store No. 1294 (East Baton Rouge County)
3. Store No. 1197 (East Baton Rouge County)
4. Store No. 1516 (East Baton Rouge County)
5. Store No. 1200 (Jefferson County)
6. Store No. 1253 (Jefferson County)
7. Store No. 1186 (Jefferson County)
8. Store No. 1501 (Jefferson County)
9. Store No. 1195 (Ouachita County)
10. Store No. 1481 (Rapides County)
11. Store No. 1503 (St. Tammany)
12. Store No. 1180 (Tangipahoa County)
13. Store No. 1502 (Terrebone County)
I. MISSISSIPPI
1. Store No. 3728 (Forrest County)
2. Store No. 1264 (Jones County)
3. Store No. 1263 (Warren County)
J. MISSOURI
1. Store No. 1296 (Boone County)
2. Store No. 3652 (Boone County)
3. Store No. 3563 (Buchanan County)
4. Store No. 1445 (Buchanan County)
5. Store No. 3651 (Cole County)
6. Store No. 1191 (Cole County)
7. Store No. 1254 (Jackson County)
8. Store No. 3307 (Jasper County)
9. Store No. 1284 (Jasper County)
10. Store No. 5738 (Jefferson County)
11. Store No. 3310 (Jefferson County)
12. Store No. 1271 (Jefferson County)
13. Store No. 3330 (Jefferson County)
14. Store No. 3678 (Johnson County)
15. Store No. 1537 (Laclede County)
16. Store No. 1536 (Pettis County)
17. Store No. 3333 (St. Charles County)
18. Store No. 1177 (St. Charles County)
19. Store No. 1298 (St. Charles County)
20. Store No. 1283 (St. Louis City)
21. Store No. 5718 (St. Louis City)
22. Store No. 3305 (St. Louis City)
23. Store No. 3304 (St. Louis City)
24. Store No. 1522 (St. Louis City)
25. Store No. 1521 (St. Louis County)
26. Store No. 1290 (St. Louis County)
27. Store No. 5723 (St. Louis County)
28. Store No. 5739 (St. Louis County)
29. Store No. 1194 (St. Louis County)
30. Store No. 1184 (St. Louis County)
K. OHIO
1. Store No. 1457 (Fairfield County)
2. Store No. 3344 (Franklin County)
3. Store No. 3341A (Franklin County)
4. Store No. 3340 (Franklin County)
5. Store No. 3339 (Franklin County)
6. Store No. 3599 (Gallia County)
7. Store No. 3351 (Hamilton County)
8. Store No. 3357 (Hamilton County)
9. Store No. 3358 (Hamilton County)
10. Store No. 3363 (Montgomery County)
11. Store No. 3365 (Montgomery County)
12. Store No. 3364 (Montgomery County)
13. Store No. 3360 (Muskingum County)
14. Store No. 1455 (Muskingum County)
15. Store No. 3706 (Scioto County)
16. Store No. 1456 (Washington County)
17. Store No. 3608 (Washington County)
L. OKLAHOMA
1. Store No. 3412 (Oklahoma County)
2. Store No. 3411 (Oklahoma County)
3. Store No. 3350 (Tulsa County)
M. SOUTH CAROLINA
1. Store No. 3705 (Berkeley County)
2. Store No. 1137 (Charleston County)
3. Store No. 3576 (Charleston County)
4. Store No. 1143 (Richland County)
N. TENNESSEE
1. Store No. 3408 (Anderson County)
2. Store No. 7806 (Hamilton County)
3. Store No. 1213 (Maury County)
4. Store No. 1257 (Coffee County)
5. Store No. 3543 (Davidson County)
6. Store No. 5756 (Davidson County)
7. Store No. 5716 (Davidson County)
8. Store No. 5709 (Davidson County)
9. Store No. 5701 (Davidson County)
10. Store No. 3501 (Davidson County)
11. Store No. 3511 (Davidson County)
12. Store No. 3525 (Davidson County)
13. Store No. 3506 (Davidson County)
14. Store No. 3504 (Davidson County)
15. Store No. 1269 (Davidson County)
16. Store No. 3589 (Davidson County)
17. Store No. 1227 (Davidson County)
18. Store No. 1240 (Davidson County)
19. Store No. 1212 (Davidson County)
20. Store No. 1211 (Davidson County)
21. Store No. 1210 (Davidson County)
22. Store No. 1207 (Davidson County)
23. Store No. 1202 (Davidson County)
24. Store No. 1205 (Davidson County)
25. Store No. 1311 (Davidson County)
26. Store No. 3205 (Knox County)
27. Store No. 3203 (Knox County)
28. Store No. 3204 (Knox County)
29. Store No. 1206 (Montgomery County)
30. Store No. 1313 (Rutherford County)
31. Store No. 3550 (Sumner County)
32. Store No. 1274 (Sumner County)
33. Store No. 1232 (Sumner County)
34. Store No. 3569 (Williamson County)
O. TEXAS
1. Store No. 1487 (Angelina County)
2. Store No. 3596 (Brazoria County)
3. Store No. 3729 (Brazoria County)
4. Store No. 3688 (Brazoria County)
5. Store No. 3653 (Dallas County)
6. Store No. 3677 (Dallas County)
7. Store No. 3590 (Dallas County)
8. Store No. 3584 (Dallas County)
9. Store No. 3618 (Denton County)
10. Store No. 3539 (Fort Bend County)
11. Store No. 3622 (Galveston County)
12. Store No. 1482 (Gregg County)
13. Store No. 3722 (Harris County)
14. Store No. 3718 (Harris County)
15. Store No. 3714 (Harris County)
16. Store No. 3700 (Harris County)
17. Store No. 3659 (Harris County)
18. Store No. 3664 (Harris County)
19. Store No. 3683 (Harris County)
20. Store No. 3534 (Harris County)
21. Store No. 3538 (Harris County)
22. Store No. 3633 (Harris County)
23. Store No. 3674 (Harris County)
24. Store No. 3680 (Hunt County)
25. Store No. 3712 (Montgomery County)
26. Store No. 1483 (Smith County)
27. Store No. 3656 (Tarrant County)
28. Store No. 3724 (Tarrant County)
29. Store No. 3707 (Tarrant County)
30. Store No. 3730 (Wharton County)
31. Store No. 3632 (Dallas County)
P. VIRGINIA
1. Store No. 1581 (Augusta County)
2. Store No. 1421 (Botetourt County)
3. Store No. 1124 (City of Lynchburg)
4. Store No. 1171 (City of Lynchburg)
5. Store No. 1150 (Montgomery County)
6. Store No. 1586 (Prince William County)
7. Store No. 3101 (Prince William County)
8. Store No. 7701 (Prince William County)
9. Store No. 1583 (Prince William County)
10. Store No. 1119 (Roanoke County)
11. Store No. 1116 (City of Roanoke)
12. Store No. 1582 (Rockingham County)
13. Store No. 7704 (Rockingham County)
14. Store No. 3104 (Rockingham County)
15. Store No. 1420 (City of Salem)
16. Store No. 3103 (City of Staunton)
17. Store No. 1585 (City of Winchester)
18. Store No. 3102 (City of Winchester)
Q. WEST VIRGINIA
1. Store No. 1115 (Monongalia County)
2. Store No. 1107 (Cabell County)
3. Store No. 1450 (Kanawha County)
4. Store No. 3723 (Kanawha County)
5. Store No. 3531 (Kanawha County)
6. Store No. 3614 (Raleigh County)
7. Store No. 1109 (Raleigh County)
<PAGE>
EXHIBIT F
ISSUANCE REQUEST
Canadian Imperial Bank of Commerce,
as Agent
425 Lexington Avenue
New York, New York 10017
Attention:
Re: Amended and Restated Reducing Revolving Credit Agreement, dated as
of May 3, 1996 (as amended, supplemented, amended and restated or
otherwise modified from time to time, the "CREDIT AGREEMENT"),
among Shoney's, Inc., (the "BORROWER"), CIBC Inc., acting through
its Atlanta office, as lender, the various other financial
institutions which are, or may from time to time become, parties
thereto (the "LENDERS") and Canadian Imperial Bank of Commerce, New
York Agency, as agent (in such capacity, the "AGENT") for the
Lenders.
Gentlemen/Ladies:
This Isusance Request is delivered to you prusuant to Section 3.4 of the
Credit Agreement. Unless otherwise defined herein or the context otherwise
requires, terms used herein shall have the meanings provided in the Credit
Agreement.
The Borrower hereby requests that on __________, 19__ (the "DATE OF
ISSUANCE") CIBC Inc. (or such other LC Issuer as the Agent shall determine)
(the "ISSUER") *[issue a Letter of Credit on ___________, 19__ in the initial
Stated Amount of $________________ with a Stated Expirty Date (as defined
therein) of ________________ 19__] [extend the Stated Expiry Date (as defined
under Irrevocable Letter of Credit No.__, issued on ____________________ 19__,
in the initial Stated Amount of $_____________) to a revised Stated Expiry Date
(as defined therein) of __________________, 19__].
_______________________
* Insert as appropriate.
<PAGE>
The beneficiary of the requested Letter of Credit will be
*__________________________________, and such Letter of Credit will be in
support of **___________________________.
The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the
Credit Agreement, each of the delivery of this Issuance Request and the
[issuance][extension] of the Letter of Credit requested hereby constitutes a
representation and warranty by the Borrower that, on such date of [issuance]
[extension] all statements set forth in Section 5.2.1 are true and correct in
all material respects.
The Borrower agrees that if, prior to the time of the ***[issuance]
[extension] of the Letter of Credit requested hereby, any matter certified to
herein by it will not be true and correct at such time as if then made, it will
immediately so notify the Agent. Except to the extent, if any, that prior to
the time of the issuance or extension requested hereby the Agent and the Issuer
shall receive written notice to the contrary from the Borrower, each matter
certified to herein shall be deemed to be certified at the date of such
issuance or extension.
IN WITNESS WHEREOF, the Borrower has caused this request to be executed
and delivered by its duly Authorized Officer this _____ day of ________, _____.
SHONEY'S, INC.
By:
Title:
______________________
* Insert name and address of beneficiary.
** Insert description of supported Indebtedness or other obligations and
name of agreement to which it relates.
*** Complete as appropriate.
<PAGE>
EXHIBIT G
[CONFORMED COPY]
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of July 21, 1993,
made by SHONEY'S, INC., a Tennessee corporation (the "PLEDGOR"), in favor of
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY ("CIBC-NYA"), acting in its
capacity as collateral agent (together with any successor(s) thereto in such
capacity, the "COLLATERAL AGENT") for the Lenders (as such term is defined in
the Credit Agreement referred to below);
W I T N E S S E T H:
WHEREAS, pursuant to that certain Reducing Revolving Credit Agreement,
dated as of July 21, 1993 (together with all amendments, restatements,
amendments and restatements and other modifications, if any, from time to time
thereafter made therefor, the "CREDIT AGREEMENT"), among the Pledgor, the
Lenders, and CIBC-NYA as the Agent (in such capacity, the "AGENT") and
Collateral Agent for the Lenders, the Lenders have extended Commitments (such
capitalized term, and all other capitalized terms used in these recitals
without definition, to have the meanings assigned to such terms in, or
incorporated by reference in, SECTIONS 1.1, 1.2 and 1.3 hereof) to make Loans
to the Pledgor; and
WHEREAS, as a condition precedent to the making of any Loan (including
the initial Loans) under the Credit Agreement, the Pledgor is required to
execute and deliver this Agreement and grant to the Collateral Agent, for its
benefit and the Ratable benefit of the Agent and the Lenders, a continuing
pledge of and security interest in all issued and outstanding shares of capital
stock of each Subsidiary (whether now existing or hereafter formed or acquired)
of the Pledgor and in certain promissory notes made by each Subsidiary (whether
now existing or hereafter formed or acquired) of the Pledgor; and
WHEREAS, the Borrower has determined that it is in its business
interests to transfer certain of its real properties and certain improvements
thereon to Realco and the Lenders are willing to consent to such transfer in
return for a pledge of all the issued and outstanding capital stock of Realco
upon which pledge the Lenders are relying to make Loans under the Credit
Agreement; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Pledgor pursuant to the Credit Agreement,
the Pledgor hereby agrees with the Collateral Agent, for its benefit and the
benefit of the Agent and the Lenders, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" is defined in the FIRST RECITAL.
"AGREEMENT" is defined in the PREAMBLE.
"CIBC-NYA" is defined in the PREAMBLE.
"COLLATERAL" is defined in SECTION 2.1.
"COLLATERAL AGENT" is defined in the PREAMBLE.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"DISTRIBUTIONS" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of)
stock splits, reclassifications, warrants, options, non-cash dividends,
mergers, consolidations and all other distributions (whether similar or
dissimilar to the foregoing) on or with respect to any shares of capital
stock on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"DIVIDENDS" means cash dividends and cash distributions with
respect to any Pledged Shares or other Pledged Property made in the
ordinary course of business and not a liquidating dividend.
"LENDERS" is defined in the PREAMBLE.
"OBLIGATIONS" is defined in SECTION 2.2.
"PLEDGED NOTE ISSUER" means each Person identified in ITEM A of
ATTACHMENT 1 hereto as the issuer of the Pledged Note identified opposite the
name of such Person.
"PLEDGED NOTES" means all promissory notes of any Pledged Note
Issuer in the form or substantially the form of EXHIBIT A hereto which are
delivered by the Pledgor to the Agent as Pledged Property hereunder, as such
promissory notes, in accordance with SECTION 4.6, are amended, modified or
supplemented from time to time and together with any promissory note of any
Pledged Note Issuer taken in extension or renewal thereof or substitution
therefor.
"PLEDGED PROPERTY" means all Pledged Shares, all Pledged Notes and
all other pledged shares of capital stock or promissory notes, all other
securities, all assignments of any amounts due or to become due, all
other instruments which are now being delivered by the Pledgor to the
Collateral Agent or may from time to time hereafter be delivered by the
Pledgor to the Collateral Agent for the purpose of pledge under this
Agreement or any other Loan Document, and all proceeds of any of the
foregoing.
"PLEDGED SHARE ISSUER" means each Person identified on ITEM B of
ATTACHMENT 1 hereto as the issuer of the Pledged Shares identified
opposite the name of such Person, together with any other Subsidiary of
the Pledgor (whether now or hereafter existing or formed or acquired).
"PLEDGED SHARES" means all shares of capital stock of any
Pledged Share Issuer.
"PLEDGOR" is defined in the PREAMBLE.
"RATABLE" has the meaning assigned to that term in the Security
Agreement.
"SECURITIES ACT" is defined in SECTION 6.2.
"U.C.C." means the Uniform Commercial Code, as in effect in the
State of New York.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. GRANT OF SECURITY INTEREST. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Collateral Agent, for its benefit and the Ratable benefit of the Agent and the
Lenders, and hereby grants to the Collateral Agent, for its benefit and the
Ratable benefit of the Agent and the Lenders, a continuing security interest in
and to, all of the following property (the "COLLATERAL"):
(i) all promissory notes of each Pledged Note Issuer identified in
ITEM A of ATTACHMENT 2 hereto;
(ii) all other Pledged Notes issued from time to time;
(iii) all issued and outstanding shares of capital
stock of each Pledged Share Issuer identified on ITEM B of ATTACHMENT 1
hereto;
(iv) all other Pledged Shares issued from time to time;
(v) all other Pledged Property, whether now or hereafter
delivered to the Collateral Agent in connection with this Agreement;
(vi) all Dividends, Distributions, interest, and other payments
and rights with respect to any Pledged Property; and
(vii) all proceeds of any of the foregoing.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Agreement and the
Collateral secure the prompt payment in full and performance when due of (a)
all obligations of the Pledgor to the Collateral Agent, the Agent and each of
the Lenders now or hereafter existing under the Credit Agreement, the Notes,
the Collateral Documents and the other Loan Documents (including this
Agreement) to which the Pledgor is a party, whether for principal, interest,
costs, fees, expenses or otherwise and (b) all obligations of the Pledgor to
any Lender under any Rate Swap Agreement provided by such Lender (collectively,
the "OBLIGATIONS").
SECTION 2.3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE,
TRANSFER, ETC. All certificates or instruments representing or evidencing any
Collateral, including all Pledged Shares and all Pledged Notes, shall be
delivered to and held by or on behalf of (and, in the case of the Pledged
Notes, endorsed to the order of) the Collateral Agent pursuant hereto, shall be
in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank, all in
form and substance reasonably satisfactory to the Collateral Agent; all other
necessary and appropriate action and approvals shall have been taken or
received to grant to the Collateral Agent a first priority fully perfected
security interest in the Collateral. The Collateral Agent shall have the
right, at any time after any Default of the nature referred to in Section 8.1.4
of the Credit Agreement or an Event of Default shall have occurred and be
continuing, and without notice to the Pledgor, to transfer to, or to register
in the name of, the Collateral Agent or any of its nominees, any or all of the
Pledged Shares. In addition, the Collateral Agent shall have the right at any
time after a Default to exchange certificates or Instruments representing or
evidencing certificated Pledged Shares for certificates or Instruments of
smaller or larger denominations.
SECTION 2.4. DIVIDENDS ON PLEDGED SHARES AND PAYMENTS ON PLEDGED NOTES.
In the event that any Dividend is to be paid on any Pledged Share or any
payment of principal or interest is to be made on any Pledged Note at a time
when (x) no Default of the nature referred to in Section 8.1.4 of the Credit
Agreement has occurred and is continuing, and (y) no Event of Default has
occurred and is occurring, such Dividend or payment may be paid directly to
Pledgor. If any such Default or Event of Default has occurred and is
continuing, then any such Dividend or payment shall be paid directly to the
Collateral Agent.
SECTION 2.5. RELEASE OF CERTAIN COLLATERAL. Until such time as a
Default of the nature referred to in Section 8.1.4 of the Credit Agreement or
an Event of Default has occurred and is continuing, any Dividend or other cash
payment with respect to the Pledged Property shall be deemed to be released by
the Collateral Agent to the Pledgor.
SECTION 2.6. CONTINUING SECURITY INTEREST. This Agreement shall create
a continuing security interest in the Collateral and shall
(i) remain in full force and effect until payment in full of all
Obligations and the termination of all Commitments,
(ii) be binding upon the Pledgor and its successors, transferees
and assigns (PROVIDED that the Pledgor may not assign any of its
obligations hereunder without the prior written consent of the
Collateral Agent and all of the Lenders), and
(iii) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent, the
Agent and each Lender and their respective successors, transferees, and
assigns.
Without limiting the foregoing CLAUSE (C), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person
or entity to the extent permitted by the Credit Agreement, and such other
Person or entity shall thereupon become vested with all the rights and benefits
in respect thereof granted to such Lender under any Loan Document (including
this Agreement) or otherwise, subject, however, to any contrary provisions in
such assignment or transfer and to the provisions of Section 10.10 of the
Credit Agreement. Upon the payment in full of all Obligations and the
termination of all Commitments, the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Pledgor. Upon
any such termination, the Collateral Agent will, at the Pledgor's sole expense,
deliver to the Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments (if any) representing or
evidencing the Pledged Shares and all Pledged Notes previously delivered to the
Collateral Agent by the Pledgor, together with all other Collateral held by the
Collateral Agent hereunder, and execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. WARRANTIES, ETC. The Pledgor represents and warrants unto
the Collateral Agent, the Agent and each Lender (a) that ITEM B of ATTACHMENT 1
attached hereto identifying each Pledged Share Issuer represents a true and
complete listing of all Subsidiaries of the Pledgor, (b) that ITEM A of
ATTACHMENT 1 attached hereto identifying each Pledged Note Issuer represents a
true and complete listing of all Subsidiaries of the Pledgor and (c) that as at
the date of each pledge and delivery hereunder (including each pledge and
delivery of Pledged Shares and each pledge and delivery of a Pledged Note) by
the Pledgor to the Collateral Agent of any Collateral,
(i) the Pledgor is the legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and
assign), the Collateral then being pledged, free and clear of all liens,
security interests, options, or other charges or encumbrances, except
any lien or security interest granted pursuant hereto in favor of the
Collateral Agent;
(ii) the pledge of such Collateral and all proceeds thereof, upon
delivery to the Collateral Agent, is effective to create a valid,
perfected, first priority security interest in such Collateral and such
proceeds thereof, securing payment of the Obligations;
(iii) in the case of any Pledged Shares constituting such
Collateral, all of such Pledged Shares are duly authorized and validly
issued, fully paid, and non-assessable;
(iv) in the case of any Pledged Notes, all of such Pledged Notes
have been duly authorized, executed, endorsed, issued and delivered, and
are the legal, valid and binding obligation of the issuers thereof, and
are not in default;
(v) the Pledged Shares constitute all of the issued and
outstanding shares of the capital stock of each Pledged Share Issuer;
(vi) no authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body will be
required either
(A) for the pledge by the Pledgor of any Collateral pursuant
to this Agreement or for the execution, delivery, or performance of
this Agreement by the Pledgor, or
(B) for the exercise by the Collateral Agent of the voting
or other rights provided for in this Agreement, or, except with
respect to Pledged Shares, as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering
and sale of securities generally, the remedies in respect of the
Collateral pursuant to this Agreement; and
(vi) no filing or other action (other than possession, in the case
of certificated securities) will be necessary to perfect or protect the
security interest described in CLAUSE (II) above.
ARTICLE IV
COVENANTS
SECTION 4.1. PROTECT COLLATERAL; FURTHER ASSURANCES, ETC. The Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Collateral Agent hereunder). The Pledgor
will warrant and defend the right and title herein granted unto the Collateral
Agent in and to the Collateral (and all right, title, and interest represented
by the Collateral) against the claims and demands of all Persons whomsoever.
The Pledgor will immediately deliver to the Collateral Agent all shares of
capital stock of any Subsidiary of the Pledgor hereafter acquired, issued or
created, and until delivered such shares shall be held in trust for the
Collateral Agent. The Pledgor agrees that at any time, and from time to time,
at the expense of the Pledgor, the Pledgor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. The Pledgor
will, at all times, keep pledged to the Collateral Agent pursuant hereto all
shares of capital stock of the Pledged Share Issuers.
SECTION 4.2. STOCK POWERS, ETC. The Pledgor agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral)
evidenced by certificates and delivered by the Pledgor pursuant to this
Agreement will be accompanied by duly executed undated blank stock powers, or
other equivalent instruments of transfer reasonably acceptable to the
Collateral Agent. The Pledgor will, from time to time upon the request of the
Collateral Agent, promptly deliver to the Collateral Agent such stock powers,
instruments, and similar documents, reasonably satisfactory in form and
substance to the Collateral Agent, with respect to the Collateral as the
Collateral Agent may reasonably request and will, from time to time upon the
request of the Collateral Agent after the occurrence of any Default of the
nature referred to in Section 8.1.4 of the Credit Agreement or any Event of
Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Collateral Agent.
SECTION 4.3. CONTINUOUS PLEDGE. Subject to SECTION 2.4, the Pledgor
will, at all times, keep pledged to the Collateral Agent pursuant hereto all
Pledged Shares and all other shares of capital stock constituting Collateral,
all Dividends and Distributions with respect thereto, all Pledged Notes, all
interest, principal and other proceeds received by the Agent with respect to
the Pledged Notes, and all other Collateral and other securities, instruments,
proceeds, and rights from time to time received by or distributable to the
Pledgor in respect of any Collateral. Without the prior written consent of the
Collateral Agent, the Pledgor agrees that it will not vote to enable any
Pledged Share Issuer to, and will not otherwise permit any Pledged Share Issuer
to, issue any stock or other securities of any nature in exchange for or in
substitution for, or in addition to, the Pledged Shares.
SECTION 4.4. FUTURE SUBSIDIARIES; DELIVERY OF ADDITIONAL PLEDGED
SHARES. Upon any Person becoming, after the Closing Date, a Subsidiary of the
Pledgor, or upon the Pledgor's acquiring additional capital stock of any
Pledged Share Issuer, the Pledgor shall promptly notify the Collateral Agent of
such new Subsidiary or acquisition, as the case may be, and shall immediately
deliver to the Collateral Agent all of the outstanding shares of capital stock
of such Person constituting Pledged Shares, together with undated stock powers
for such certificates, executed in blank, all in a manner satisfactory to the
Collateral Agent.
SECTION 4.5. VOTING RIGHTS; DIVIDENDS, ETC. The Pledgor agrees:
(i) after any Default of the nature referred to in Section 8.1.4
of the Credit Agreement or if an Event of Default shall have occurred
and be continuing, without any request therefor by the Collateral Agent,
to (i) promptly upon receipt thereof by the Pledgor, deliver (properly
endorsed where required hereby or requested by the Collateral Agent) to
the Collateral Agent and (ii) cause each Pledged Share Issuer and any
other issuer of Pledged Shares to pay directly to the Collateral Agent,
all Dividends, all Distributions, all payments and all proceeds of the
Pledged Property and other Collateral then or thereafter receivable by
the Pledgor, all of which may be held by the Collateral Agent as
additional Collateral for use in accordance with SECTION 6.4; and
(ii) after any Default of the nature referred to in Section 8.1.4
of the Credit Agreement or if an Event of Default shall have occurred
and be continuing, promptly to deliver (properly endorsed where required
hereby or requested by the Collateral Agent) to the Collateral Agent,
upon request of the Collateral Agent, such proxies and other documents
as may be necessary to allow the Collateral Agent to exercise the voting
power with respect to any share of capital stock included in the
Collateral;
PROVIDED, HOWEVER, that unless a Default of the nature referred to in Section
8.1.4 of the Credit Agreement or an Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise, in its reasonable
judgment, but in a manner not inconsistent with the terms of the Credit
Agreement, this Agreement or any other Collateral Document or Loan Document,
the voting power and all other incidental rights of ownership with respect to
any Pledged Shares (subject to the Pledgor's obligation to deliver to the
Collateral Agent such Pledged Shares in pledge hereunder).
All Dividends, Distributions, all payments and all proceeds in respect
of any Pledged Property which may at any time and from time to time be held by
the Pledgor but which the Pledgor is then obligated to deliver by SECTION
4.5(A) to the Collateral Agent, shall, until delivery to the Collateral Agent,
be held by the Pledgor separate and apart from its other property in trust for
the Collateral Agent. The Collateral Agent agrees that, unless a Default of
the nature referred to in Section 8.1.4 of the Credit Agreement or an Event of
Default shall have occurred and be continuing, the Pledgor shall have the
exclusive voting power with respect to any shares of capital stock (including
any of the Pledged Shares) constituting Collateral and the Collateral Agent
shall, upon the written request of the Pledgor, promptly deliver such proxies
and other documents, if any, as shall be reasonably requested by the Pledgor
which are necessary to allow the Pledgor to exercise voting power with respect
to any such share of capital stock (including any of the Pledged Shares)
constituting Collateral; PROVIDED, HOWEVER, that no vote shall be cast, or
consent, waiver, or ratification given, or action taken by the Pledgor that
would impair any Collateral or be inconsistent with or violate any provision of
the Credit Agreement or any Collateral Document or Loan Document (including
this Agreement).
SECTION 4.6. ADDITIONAL UNDERTAKINGS. The Pledgor will not, without
the prior written consent of the Collateral Agent:
(i) enter into any agreement amending, supplementing, or waiving
any provision of any Pledged Note (including any underlying instrument
pursuant to which such Pledged Note is issued) or compromising or
releasing or extending the time for payment of any obligation of the
maker thereof; or
(ii) take or omit to take any action the taking or the omission of
which would result in any impairment or alteration of any obligation of
the maker of any Pledged Note or other instrument constituting
Collateral.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby irrevocably appoints the Collateral Agent the Pledgor's attorney-in-
fact, with full authority in the place and stead of the Pledgor and in the name
of the Pledgor or otherwise, from time to time in the Collateral Agent's
discretion, after the occurrence and continuance of a Default of the nature
referred to in Section 8.1.4 of the Credit Agreement or an Event of Default, to
take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including without limitation:
(i) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(ii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with CLAUSE (A)
above; and
(iii) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. COLLATERAL AGENT MAY PERFORM; PROTECTION OF COLLATERAL.
The Collateral Agent may from time to time, at its option, perform, or cause
performance of, any act which the Pledgor agrees hereunder to perform and which
the Pledgor shall fail to perform after being requested in writing to so
perform (it being understood that no such request need be given after the
occurrence and during the continuance of any Default of the nature referred to
in Section 8.1.4 of the Credit Agreement or an Event of Default) and, subject
to the foregoing, the Collateral Agent may from time to time take any other
action which the Collateral Agent reasonably deems necessary for the
maintenance, preservation, or protection of any of the Collateral or of its
security interest therein. The Pledgor hereby acknowledges and agrees that any
expenses incurred by the Collateral Agent in connection with this SECTION
5.2 shall be payable by the Pledgor pursuant to SECTION 6.5.
SECTION 5.3. COLLATERAL AGENT HAS NO DUTY. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Agent and the Lenders) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for the reasonable care of any Collateral in
its possession, the Collateral Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; PROVIDED, HOWEVER, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Default of the nature referred to in Section
8.1.4 of the Credit Agreement or any Event of Default, but failure of the
Collateral Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Default of the nature referred to
in Section 8.1.4 of the Credit Agreement or any Event of Default shall have
occurred and be continuing:
(i) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Collateral Agent may deem commercially
reasonable. The Pledgor agrees that, to the extent notice of sale shall
be required by law, at least ten days' prior notice to the Pledgor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned.
(ii) The Collateral Agent may
(A) transfer all or any part of the Collateral into the name
of the Collateral Agent or its nominee, with or without disclosing
that such Collateral is subject to the lien and security interest
hereunder,
(B) notify the parties obligated on any of the Collateral to
make payment to the Collateral Agent of any amount due or to become
due thereunder;
(C) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether
or not longer than the original period) any obligations of any
nature of any party with respect thereto;
(D) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral;
(E) take control of any proceeds of the Collateral; and
(F) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral.
SECTION 6.2. SECURITIES LAWS. If the Collateral Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to SECTION
6.1, the Pledgor agrees that, upon request of the Collateral Agent, the Pledgor
will, at its own expense:
(i) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary or, in
the opinion of the Collateral Agent, advisable to register such
Collateral under the provisions of the Securities Act of 1933, as from
time to time amended (the "SECURITIES ACT"), and to cause the
registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Collateral Agent,
are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Collateral Agent;
(iii) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Collateral Agent, the Agent or the
Lenders by reason of the failure by the Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees that, if the Pledgor shall
fail to perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value (as determined by the Collateral
Agent) of the Collateral on the date the Collateral Agent shall demand
compliance with this Section.
SECTION 6.3. COMPLIANCE WITH RESTRICTIONS. The Pledgor agrees that in
any sale of any of the Collateral whenever a Default of the nature referred to
in Section 8.1.4 of the Credit Agreement or an Event of Default shall have
occurred and be continuing, the Collateral Agent is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Collateral Agent be liable nor accountable to
the Pledgor for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.
SECTION 6.4. APPLICATION OF PROCEEDS. All cash proceeds received by
the Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Collateral Agent, be held by the Collateral Agent as additional collateral
security for, or then or at any time thereafter be applied (after payment of
any amounts payable to the Collateral Agent, the Agent and each Lender under
SECTION 6.5 hereof and to the Collateral Agent, the Agent and each Lender
pursuant to Section 10.3 of the Credit Agreement) in whole or in part by the
Collateral Agent against, all or any part of the Obligations in such order as
the Collateral Agent shall elect.
SECTION 6.5. INDEMNITY AND EXPENSES. The Pledgor hereby indemnifies
and holds harmless the Collateral Agent, the Agent and each Lender from and
against any and all claims, losses, and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses, or liabilities arising out of or resulting from the Collateral Agent's,
the Agent's or such Lender's gross negligence or willful misconduct. Upon
demand, the Pledgor will pay to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which any Lender (with respect to
CLAUSES (B) through (E) below) or the Collateral Agent may incur in connection
with:
(i) the administration of this Agreement, the Credit Agreement and
each other Collateral Document and Loan Document;
(ii) the custody, preservation, use, or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral;
(iii) the exercise or enforcement of any of the rights or remedies
of the Collateral Agent hereunder;
(iv) the failure by the Pledgor to perform or observe any of the
provisions hereof; or
(v) advancing any funds in connection with the matters referred to
in SECTION 5.2 hereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COLLATERAL DOCUMENT AND LOAN DOCUMENT. This Agreement is
a Collateral Document and Loan Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered, and applied in accordance with the terms and provisions of the
Credit Agreement.
SECTION 7.2. AMENDMENTS, WAIVERS, REMEDIES, ETC. No amendment to or
waiver of any provision of this Agreement nor consent to any departure by the
Pledgor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent (subject to Section 10.1 of the
Credit Agreement) and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it is given. No
delay, act or omission on the part of the Collateral Agent of any of its rights
hereunder shall be deemed a waiver of any rights hereunder unless also
contained in an express writing signed by the Collateral Agent, nor shall any
single or partial exercise of, or any failure to exercise, any right, power or
privilege preclude any other or further or initial exercise thereof of any
other right, power or privilege. The rights and remedies provided herein are
cumulative, and not exclusive of rights and remedies which may be granted or
provided by law or equity.
SECTION 7.3. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing or by facsimile
transmission, and if to any party, addressed or delivered to it at the address
set forth below its signature hereto, or at such other address as shall be
designated by such party in a written notice to each other party. Any notice,
if mailed and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by facsimile transmission or
delivery, shall be deemed given when received.
SECTION 7.4. SUBROGATION. The Pledgor shall not be entitled to be
subrogated to any of the rights of the Collateral Agent, the Agent or any
Lender by reason of any amounts received hereunder or in connection with the
Collateral until all Obligations have been indefeasibly paid in full.
SECTION 7.5. SECTION CAPTIONS. Section captions used in this Agreement
are for convenience of reference only, and shall not affect the construction of
this Agreement.
SECTION 7.6. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
Agreement.
SECTION 7.8. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.9. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT, THE AGENT, THE LENDERS
OR THE PLEDGOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE
STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK. THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE PLEDGOR HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT.
SECTION 7.10. WAIVER OF JURY TRIAL. THE COLLATERAL AGENT, THE AGENT,
THE LENDERS AND THE PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF THE COLLATERAL AGENT, THE AGENT, THE LENDERS, OR THE
PLEDGOR. THE PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE COLLATERAL AGENT, THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SHONEY'S, INC.
By /S/ W. CRAIG BARBER
Title: Vice President - Finance
and Chief Financial Officer
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Collateral Agent
By /S/ ROGER COLDEN
Title: Authorized Signatory
<PAGE>
ATTACHMENT 1
to
(Pledge Agreement)
Item A. PLEDGED NOTES
<TABLE>
<CAPTION>
PLEDGED NOTE ISSUER PAYEE
<S> <C>
Mike Rose Foods, Inc. Shoney's, Inc.
Commissary Operations, Inc. Shoney's, Inc.
R.J.R. Investments, Inc. Shoney's, Inc.
Evadon Corporation Shoney's, Inc.
Shoney's Real Estate, Inc. Shoney's, Inc.
Corporate Benefit Services,
Incorporated, of Nashville Shoney's, Inc.
Pargo's of Frederick, Inc. Shoney's, Inc.
Shoney's Investments, Inc. Shoney's, Inc.
Shoney's Funding Corp. Shoney's, Inc.
Shoney's of Canada, Inc. Shoney's, Inc.
Shoney's Equipment Corporation Shoney's, Inc.
Pargo's of York, Inc. Shoney's, Inc.
</TABLE>
<PAGE>
Item B. PLEDGED SHARES
PLEDGED SHARES
<TABLE>
<CAPTION>
State of % of
Issuer- Incor- Authorized Outstanding Outstanding Certificate
SUBSIDIARY PORATION SHARES SHARES SHARES PLEDGED NUMBER
<S> <C> <C> <C> <C> <C>
Mike Rose Tennessee 300 300 100% 10
Foods, Inc.
Commissary Tennessee 2000 1000 100% 1
Operations,
Inc.
R.J.R. Nevada 1000 100 100% 1
Investments,
Inc.
Evadon, Tennessee 100,000 1000 100% 1
Corporation
Shoney's Tennessee 1000 1000 100% 1
Real Estate,
Inc.
Corporate Tennessee 1000 1000 100% 2
Benefit
Services,
Incorporated, of
Nashville
Pargo's of Tennessee 1000 1000 100% 2
Frederick,
Inc.
Shoney's Nevada 1000 1000 100% 1
Investments,
Inc.
Shoney's Tennessee 1000 1000 100% 1
Funding
Corp.
Shoney's of Canada unlimited 100 100% C-1
Canada, Inc.
Shoney's Tennessee 1000 1000 100% 1
Equipment
Corporation
Pargo's of Tennessee 1000 1000 100% 1
York, Inc.
</TABLE>
<PAGE>
PROMISSORY NOTE
, 19__
FOR VALUE RECEIVED, the undersigned, ______________, a _______________
corporation (the "MAKER"), promises to pay to the order of SHONEY'S, INC., a
Tennessee corporation (the "PAYEE"), on demand, the aggregate principal amount
of the intercompany Indebtedness of the Maker to the Payee reflected on the
books and records of the Payee.
The unpaid principal amount of this promissory note (this "NOTE") from
time to time outstanding shall bear interest at a rate of interest equal to
____________, which the Maker represents to be a lawful and commercially
reasonable rate, payable __________, and all payments of principal of and
interest on this Note shall be payable in lawful currency of the United States
of America. All such payments shall be made by the Maker to an account
established by the Payee at _______________ and shall be recorded on the grid
attached hereto by the holder hereof (including the Agent as pledgee). Upon
notice from the Agent (hereinafter defined) that a Default (as defined in the
Credit Agreement, hereinafter defined) of the nature referred to in SECTION
8.1.4 of the Credit Agreement or an Event of Default (as defined in the Credit
Agreement) has occurred and is continuing under the Credit Agreement, the Maker
shall make such payments, in same day funds, to such other account as the Agent
shall direct in such notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to, SECTION 7.2.2 of the Reducing Revolving
Credit Agreement, dated as of July 21, 1993 (together with all amendments and
other modifications, if any, from time to time hereafter made thereto, the
"CREDIT AGREEMENT"), among the Payee, Canadian Imperial Bank of Commerce, New
York Agency, as the agent (the "AGENT"), and various commercial lending
institutions as are, or may from time to time become, parties thereto. Upon
the occurrence and continuance of an Event of Default under the Credit
Agreement, and notice thereof by the Agent to the Maker, the Agent shall have
all rights of the Payee to collect and accelerate, and enforce all rights with
respect to, the Indebtedness evidenced by this Note. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the
Pledge Agreement pursuant to which this Note has been pledged to the Agent as
security for the Obligations outstanding from time to time under the Credit
Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Agent as pledgee) of this
Note endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THIS NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[Name of Maker]
By _____________________________
Title: ______________________
Pay to the order of Canadian Imperial
Bank of Commerce, as Agent
SHONEY'S, INC.
By _____________________________
Title: _____________________
<PAGE>
GRID
Intercompany Loans made by Shoney's, Inc. to _________ and payments of
principal of such Loans.
<TABLE>
<CAPTION>
Amount of Amount of Outstanding Principal Notation
Intercompany Principal Balance Made By
Date Loan Payment
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT H
[EXECUTION COPY]
SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (this "AGREEMENT"), dated as of
July 21, 1993, made by [NAME OF SUBSIDIARY], a corporation (the
"GRANTOR"), in favor of CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
("CIBC-NYA"), acting in its capacity as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Lenders (as such term is defined in the Credit
Agreement referred to below);
W I T N E S S E T H:
WHEREAS, pursuant to that certain Reducing Revolving Credit Agreement,
dated as of July 21, 1993 (together with all amendments, restatements,
amendment and restatements, and other modifications, if any, from time to time
thereafter made thereto, the "CREDIT AGREEMENT"), among Shoney's Inc., a
Tennessee corporation (the "BORROWER"), the Lenders, and CIBC-NYA as the Agent
(in such capacity, the "AGENT") and Collateral Agent for the Lenders, the
Lenders have extended Commitments (such capitalized term, and all other
capitalized terms used in these recitals without definition, to have the
meanings assigned to such terms in, or incorporated by reference in, SECTIONS
1.1, 1.2 and 1.3 hereof) to make Loans to the Grantor; and
WHEREAS, the Grantor is a Subsidiary of the Borrower and, in its capacity
as a guarantor, has guaranteed, among other things, all obligations of the
Borrower to the Agent and the Lenders under the Credit Agreement, the
Collateral Documents and Loan Documents, in accordance with the terms and
provisions of the Subsidiary Guaranty; and
WHEREAS, as a condition precedent to the making of the initial Loans
under the Credit Agreement, the Grantor is required to execute and deliver this
Agreement and grant to the Collateral Agent, for its benefit and the Ratable
benefit of the Agent and the Lenders, a security interest in the Collateral;
and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of the Grantor to execute this
Agreement inasmuch as the Grantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower by the Lenders
pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the
Lenders to make Loans (including the initial Loans) to the Borrower pursuant to
the Credit Agreement, the Grantor agrees with the Collateral Agent, for its
benefit and the benefit of the Agent and the Lenders, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" is defined in the FIRST RECITAL.
"AGREEMENT" is defined in the PREAMBLE.
"BORROWER" is defined in the FIRST RECITAL.
"CIBC-NYA" is defined in the PREAMBLE.
"COLLATERAL" is defined in SECTION 2.1.
"COLLATERAL AGENT" is defined in the PREAMBLE.
"COMPUTER HARDWARE AND SOFTWARE COLLATERAL" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units,
memory units, display terminals, printers, features, computer
elements, card readers, tape drives, hard and soft disk drives,
cables, electrical supply hardware, generators, power equalizers,
accessories and all peripheral devices and other related computer
hardware;
(b) all software programs (including both source code,
object code and all related applications and data files), whether
now owned, licensed or leased or hereafter acquired by the Grantor,
designed for use on the computers and electronic data processing
hardware described in CLAUSE (A) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic
diagrams, manuals, guides and specifications) with respect to such
hardware, software and firmware described in the preceding CLAUSES
(A) through (C); and
(e) all rights with respect to all of the foregoing,
including, without limitation, any and all copyrights, licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the
foregoing.
"COPYRIGHT COLLATERAL" means all copyrights of the Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in
force throughout the world including, without limitation, all of the
Grantor's right, title and interest in and to all copyrights registered
in the United States Copyright Office or anywhere else in the world and
also including, without limitation, the copyrights referred to in ITEM A
of SCHEDULE IV attached hereto, and all applications for registration
thereof, whether pending or in preparation, all copyright licenses,
including each copyright license referred to in ITEM B of SCHEDULE IV
attached hereto, the right to sue for past, present and future
infringements of any thereof, all rights corresponding thereto throughout
the world, all extensions and renewals of any thereof and all proceeds of
the foregoing, including, without limitation, licenses, royalties,
income, payments, claims, damages and proceeds of suit.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"EQUIPMENT" is defined in CLAUSE (A) of SECTION 2.1 hereof.
"FRANCHISE AGREEMENTS" means, collectively, each of the agreements
entered into from time to time by the Grantor any of its franchisees,
pursuant to which the Grantor as franchisor, grants to a franchisee a
franchise for any restaurants, food products, lodging establishments or
related rights.
"GRANTOR" is defined in the PREAMBLE.
"INTELLECTUAL PROPERTY COLLATERAL" means, collectively, the
Computer Hardware and Software Collateral, the Copyright Collateral, the
Patent Collateral, the Trademark Collateral and the Trade Secrets
Collateral.
"LENDERS" is defined in the PREAMBLE.
"OBLIGOR" means any Subsidiary party to the Subsidiary Guaranty.
"RATABLE" means (a) with respect to all the Loans, in proportion to
the respective Lender's Percentage of the aggregate Loans outstanding
under the Credit Agreement, and (b) with respect to other Obligations or
Secured Obligations, in proportion to the respective amounts to which the
Collateral Agent, the Agent or such Lender is entitled pursuant to the
Credit Agreement, the Collateral Documents, the Loan Documents and any
Rate Swap Agreement to which such Lender is a party when compared to the
total amount which the Collateral Agent, the Agent and all Lenders are
entitled to pursuant to the Credit Agreement, the Collateral Documents,
the Loan Documents and any Rate Swap Agreements to which a Lender is a
party.
"RECEIVABLES" is defined in CLAUSE (B) of SECTION 2.1.
"RELATED CONTRACTS" is defined in CLAUSE (B) of SECTION 2.1.
"SECURED OBLIGATIONS" is defined in SECTION 2.2.
"SUB-COLLATERAL AGENT" mens NationsBank of Tennessee, N.A. or any
other commercial institution that enters into a sub-collateral agreement
with the Agent.
"SUBSIDIARY GUARANTOR" means each other Subsidiary of the Borrower
party to a Subsidiary Guaranty.
"TRADEMARK COLLATERAL" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of a like nature (all
of the foregoing items in this CLAUSE (A) being collectively called a
"TRADEMARK"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether
pending or in preparation for filing, including registrations, recordings
and applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State thereof
or any foreign country, including those referred to on SCHEDULE III
attached hereto;
(b) all Trademark licenses;
(c) all reissues, extensions or renewals, if applicable, of any of
the items described in CLAUSES (A) and (B);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, CLAUSES (A) and (B); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past,
present or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to on SCHEDULE III attached
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license.
"TRADE SECRETS COLLATERAL" means common law and statutory trade
secrets and all other confidential or proprietary or useful information
and all know-how obtained by or used in or contemplated at any time for
use in the business of the Grantor (all of the foregoing being
collectively called a "TRADE SECRET"), whether or not such Trade Secret
has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating or referring in any way to
such Trade Secret, all Trade Secret licenses, if any, and including the
right to sue for and to enjoin and to collect damages for the actual or
threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect in the
State of New York.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. GRANT OF SECURITY INTEREST. The Grantor hereby pledges and
assigns to the Collateral Agent for its benefit and the Ratable benefit of the
Agent and the Lenders, and hereby grants to the Collateral Agent, for its
benefit and the Ratable benefit of the Agent and the Lenders, a security
interest in, all of the following property, whether now or hereafter existing
or acquired (the "COLLATERAL"):
(a) all items of the Grantor's equipment (other than motor
vehicles) in all of its forms, including, without limitation, all
machinery, components, parts and accessories installed thereon or affixed
thereto and all parts thereof and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefor, in
each case wherever located, including, without limitation, in the
jurisdiction(s) ("Jurisdictions") set forth on SCHEDULE I hereto (the
"EQUIPMENT");
(b) all of the Grantor's accounts, contracts (other than leases of
real property which expressly prohibit the granting of a security
interest therein by the Grantor), contract rights, chattel paper,
documents, instruments and general intangibles, and any and all other
obligations of any kind owed to the Grantor, whether or not arising out
of or in connection with the sale or lease of goods or the rendering of
services, and all rights of the Grantor now or hereafter existing in and
to all security agreements, guaranties, leases and other contracts
securing or otherwise relating to any such accounts, contracts, contract
rights, chattel paper, documents, instruments and general intangibles
(any and all such accounts, contracts, contract rights, chattel paper,
documents, instruments and general intangibles being the "RECEIVABLES,"
and any and all such security agreements, guaranties, leases and other
contracts being the "RELATED CONTRACTS"), including, without limitation,
the following:
(i) all tax refunds and all rights thereto;
(ii) each Franchise Agreement, including all rights and
remedies of the Grantor therein;
(iii) all money and property now or at any time in the
possession of or under the control of, or in transit to, the
Collateral Agent, the Agent, any Lender, or the Grantor;
(c) all Computer Hardware and Software Collateral (except to the
extent prohibited by applicable license agreements), Copyright
Collateral, Trademark Collateral and Trade Secrets Collateral of the
Grantor;
(d) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this SECTION 2.1; and
(e) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
the foregoing CLAUSES (A), (B), (C) and (D), and, to the extent not
otherwise included, all payments under insurance policies (whether or not
the Collateral Agent is the loss payee thereof), or any indemnity,
warranty, or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights arising under contracts as to which the grant of a
security interest would constitute a violation of a valid and enforceable
restriction on such grant, unless and until any required consents shall have
been obtained. The Grantor agrees to use its best efforts to obtain any such
required consent.
SECTION 2.2. SECURITY FOR OBLIGATIONS. This Agreement and the
Collateral secure the prompt payment in full and performance when due of (a)
all obligations (including all Obligations) of the Borrower to the Collateral
Agent, the Agent and each of the Lenders now or hereafter existing under the
Credit Agreement, the Notes, the Collateral Documents and each other Loan
Document to which the Grantor is or may become a party, whether for principal,
interest, costs, fees, expenses or otherwise (including, without limitation,
all obligations of the Borrower to any Lender under any Rate Swap Agreement
provided by such Lender), (b) all obligations of the Grantor now or hereafter
existing under this Agreement, the Subsidiary Guaranty and each other
Collateral Document and Loan Document to which it is or may become a party and
(c) all obligations of each other Obligor now or hereafter existing under a
Subsidiary Security Agreement, Subsidiary Guaranty and each other Collateral
Document and Loan Document to which such Obligor is or may become a party (all
such obligations (and Obligations) of the Borrower, the Grantor and such
Obligors being the "SECURED OBLIGATIONS").
SECTION 2.3. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Secured Obligations and the termination of all Commitments;
(b) be binding upon the Grantor, its successors, transferees and
assigns; and
(c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent, the Agent and
each other Lender.
Without limiting the generality of the foregoing CLAUSE (C), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Agreement) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer,
and to the provisions of Section 10.10 of the Credit Agreement. Upon the
payment in full of all Secured Obligations and the termination of all
Commitments, the security interest granted herein shall terminate and all
rights to the Collateral shall revert to the Grantor. Upon any such
termination, the Collateral Agent will, at the Grantor's sole expense, execute
and deliver to the Grantor such documents as the Grantor shall reasonably
request to evidence such termination.
SECTION 2.4. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under all contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such contracts
and agreements to the same extent as if this Agreement had not been
executed;
(b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral; and
(c) none of the Collateral Agent, the Agent or any Lender shall
have any obligation or liability under any such contracts or agreements
included in the Collateral by reason of this Agreement, nor shall the
Collateral Agent, the Agent or any Lender be obligated to perform any of
the obligations or duties of the Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
SECTION 2.5. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Agent and the Lenders hereunder and the security interests granted
hereunder to the Collateral Agent for its benefit and the Ratable benefit of
the Agent and the Lenders, and all obligations of the Grantor hereunder, shall
be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit
Agreement, any Note, any Collateral Document or any other Loan Document;
(b) the failure of the Collateral Agent, the Agent, any Lender or
any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any
Collateral Document, any other Loan Document or otherwise; or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligations of the Borrower or any other
Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and the Grantor hereby waives
any right to or claim of) any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Obligations of the Borrower, any
other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Collateral Document or Loan Document;
(f) any addition, exchange, release, surrender or non-perfection
of any collateral (including the Collateral), or any amendment to or
waiver or release of or addition to or consent to departure from any
guaranty, for any of the Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.6. WAIVER OF SUBROGATION. The Grantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Borrower or any other Obligor that arise from the existence, payment,
performance or enforcement of the Grantor's obligations under this Security
Agreement or any other Collateral Document or Loan Document, including any
right of subrogation, reimbursement, exoneration, or indemnification, any right
to participate in any claim or remedy of the Collateral Agent, the Agent or any
Lender against the Borrower or any other Obligor or any collateral which the
Collateral Agent now has or hereafter acquires, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including the right to take or receive from the Borrower or any other Obligor,
directly or indirectly, in cash or other property or by set-off or in any
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Grantor in violation of the preceding sentence and
the Secured Obligations shall not have been paid in cash in full and the
Commitments have not been terminated, such amount shall be deemed to have been
paid to the Grantor for the benefit of, and held in trust for, the Collateral
Agent (for its benefit and the Ratable benefit of the Agent and the Lenders),
and shall forthwith be paid to the Collateral Agent to be credited and applied
upon the Secured Obligations, whether matured or unmatured. The Grantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the waiver
set forth in this Section is knowingly made in contemplation of such benefits.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants unto each of the Collateral Agent,
the Agent and each Lender as follows
SECTION 3.1. LOCATIONS. The chief place of business and chief executive
office of the Grantor and the office where the Grantor keeps its records
concerning the Collateral are located at the following locations:
___________________________________. The Grantor has exclusive possession and
control of substantially all of the Collateral and all of the Collateral is
located in the jurisdictions listed in the name of the Grantor on ITEM A of
SCHEDULE I hereto.
SECTION 3.2. OWNERSHIP, NO LIENS, ETC. The Grantor owns the Collateral
free and clear of any Security Interest except for the security interest
created by this Agreement or as permitted pursuant to Section 7.2.3 of the
Credit Agreement. No effective financing statement or other Instrument similar
in effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the Collateral
Agent relating to this Agreement.
SECTION 3.3. NEGOTIABLE DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER. The
Grantor has, contemporaneously herewith, delivered to the Collateral Agent
(other than with respect to the Franchise Agreements entered into prior to May
1, 1993 which shall have been delivered to the Sub-Collateral Agent) possession
of all originals of all negotiable documents, instruments and chattel paper
currently owned or held by the Grantor (duly endorsed in blank, if requested by
the Collateral Agent).
SECTION 3.4. CONTRACTS, ETC.
(a) Each Franchise Agreement, the Borrower Management Agreement and each
other material contract (and all agreements and contract rights embodied
therein) which constitutes Collateral has been duly authorized, executed, and
delivered by the parties thereto, has not been amended or otherwise modified in
any manner which would have a materially adverse effect on the Grantor's
obligations or interests thereunder, is in full force and effect, and is
binding upon and enforceable against the parties thereto in accordance with its
terms, subject, as to enforcement, only to bankruptcy, insolvency,
reorganization, moratorium, or similar laws at the time in effect affecting the
enforceability of the rights of creditors generally. There exists no default
under any such Franchise Agreement, Borrower Management Agreement or any other
material contract which would materially adversely affect the Grantor's
obligations or interests thereunder. As to all such Franchise Agreements, the
Borrower Management Agreement and all other material contracts, if any,
pursuant to which any governmental agency, department, or instrumentality is an
obligor, the Grantor will promptly and strictly comply with all requirements of
the Assignment of Claims Act of 1940 (or any similar law), and appropriately
completed notices of assignment (in favor of the Collateral Agent for its
benefit and the Ratable benefit of the Agent and the Lenders) for all such
agreements and contracts shall be delivered to the Collateral Agent.
(b) The amount represented by the Grantor to the Collateral Agent from
time to time as owing by each account debtor or by all account debtors in
respect of the Receivables will at such time be the correct amount actually and
unconditionally owing by such account debtors thereunder. Without limiting the
generality of the foregoing, each Receivable is or will be, to the best of the
Grantor's knowledge, a true and correct statement in all material respects of
actual indebtedness incurred by each account debtor and arises or will arise
out of or in connection with the sale or lease of goods or performance of labor
or services, or both, by the Grantor; the goods, services or labor were or will
be, to the best of the Grantor's knowledge, ordered in good faith by each
account debtor and were or will be sold, leased or rented to, and delivered or
shipped to or at the direction of, each account debtor; the labor or services
performed or to be performed by the Grantor were or will be actually performed;
each Receivable is a bona fide, valid and legally enforceable obligation of the
parties thereto or the account debtor in respect thereof; the right, title and
interest of the Grantor in any Receivable or in any material amount of any
Receivable is not subject to any defense, offset, counterclaim or claim, nor
have any of the foregoing been asserted or alleged against the Grantor or any
Receivable, except for claims with respect to damaged goods shipped in the
ordinary course of business and claims arising under warranties made by the
Grantor or its Subsidiaries in respect of any related good or service.
SECTION 3.5. PERFECTION, ETC. This Agreement, together with the filing
of the UCC-1 Financing Statements and other filings identified in ITEM B ("UCC
Filings") and ITEM C ("Intellectual Property Collateral Filings") of SCHEDULE I
hereto (each of which filings is in proper form and has been duly filed in all
appropriate filing offices), create a valid security interest in all the
Collateral and are effective to create a fully perfected security interest in
all of the Collateral as to which perfection may be achieved by filing,
securing the Secured Obligations, which security interest is a first priority
security interest (except where disclosed in the Disclosure Schedule). All
filings and other actions necessary or appropriate to perfect and protect a
security interest in the Collateral have been duly taken; PROVIDED, that, in
the case of the Intellectual Property Collateral, the Collateral Agent records
the Agreement (Trademark) and the Agreement (Copyright) with the U.S. Patent
and Trademark Office and the U.S. Copyright Office within three months of the
date hereof; PROVIDED, FURTHER that the Grantor is not required to make federal
or state filings (other than UCC filings) with respect to the Intellectual
Property Collateral which is not Trademark Collateral. No authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either for the grant by the Grantor of
the security interest created hereby or for the execution, delivery, or
performance of this Agreement by the Grantor, or for the perfection of, or the
exercise by, the Collateral Agent of its rights and remedies hereunder, except
for
(a) the UCC Filings and Intellectual Property Collateral Filings
(if requested by the Collateral Agent), which filings have been made;
(b) with respect to the exercise by the Collateral Agent of its
rights and remedies with respect to contracts pursuant to which the
United States government (or any of its agencies, departments, or
instrumentalities) is the obligor, compliance with the notice provisions
of the Assignment of Claims Act of 1940; and
(c) with respect to the exercise by the Collateral Agent of its
rights and remedies with respect to any securities, compliance with the
federal and state laws affecting the offering and sale of securities.
SECTION 3.6. INTELLECTUAL PROPERTY COLLATERAL. With respect to the
Intellectual Property Collateral, the Grantor represents and warrants
(a) the Trademarks identified on Schedule III hereto as being
registered with the U.S. Patent and Trademark Office (the "U.S.
REGISTERED MARKS") constitute all of the material trademarks and service
marks owned by the Grantor and the Grantor has no other material
Intellectual Property;
(b) except for computer software licenses, there is no material
Intellectual Property Collateral of which the Grantor is a licensee;
(c) each of the U.S. Registered Marks is subsisting and has not
been judged invalid or unenforceable, in whole or in part;
(d) each of those Copyrights identified on Schedule IV hereto as
being registered with the U.S. Copyright Office (the "REGISTERED
COPYRIGHTS") is subsisting and has not been judged invalid or
unenforceable, in whole or in part;
(e) except as noted on Schedule III hereto, each of the U.S.
Registered Marks and each of the Registered Copyrights is valid and
enforceable;
(f) the Grantor has made all necessary filings and recordations to
protect its interest in the U.S. Registered Marks in the United States,
including, without limitation, recordations of all its interest in the
U.S. Registered Marks with the U.S. Patent and Trademark Office and with
the Registrar of Trade Marks in Canada;
(g) the Grantor has made all necessary filings and recordations to
protect its interest in the marks "Shoney's," "Lee's Famous Recipe,"
"Lee's" and "Captain D's" (the "Canadian Registered Marks") in Canada,
including, without limitation, recordations of all its interest in the
Canadian Registered Marks with the Registrar of Trade Marks in Canada;
(h) the Grantor is the true, lawful and exclusive owner of the
entire unencumbered right, title and interest in and to each of the U.S.
Registered Marks and no claim has been made (except as set forth on
Schedule III hereto) that the use of the U.S. Registered Marks does or
may violate the asserted rights of any third party;
(i) the Grantor is the true, lawful and exclusive owner of the
entire and unencumbered right, title and interest in and to each of the
Canadian Registered Marks and no claim has been made (except as set forth
on Schedule III hereto) that the use of the Canadian Registered Marks
does or may violate the asserted rights of any third party;
(j) the Grantor has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes to
maintain each and every U.S. Registered Mark and Canadian Registered Mark
in full force and effect in the United States and Canada, as applicable;
(k) the Grantor has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes to
maintain each and every Registered Copyright in full force and effect in
the United States; and
(l) the Grantor owns directly or is entitled to use by license or
otherwise of all material Intellectual Property Collateral necessary for
or of importance to the conduct of the Grantor's business.
SECTION 3.7. AUTHORIZATION, APPROVAL, ETC. No authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required either
(a) for the grant by the Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Agreement
by the Grantor; or
(b) for the perfection of or the exercise by the Collateral Agent
of its rights and remedies hereunder.
SECTION 3.8. CREDIT AGREEMENT REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Article VI of the Credit Agreement
applicable to the Grantor are true and correct.
SECTION 3.9. COMPLIANCE WITH LAWS. The Grantor is in compliance with
the requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which might materially
adversely affect the business, properties, assets, operations, condition
(financial or otherwise) or prospects of the Grantor, the value of the
Collateral or the worth of the Collateral as collateral security.
ARTICLE IV
COVENANTS
The Grantor covenants and agrees that, so long as any portion of the
Secured Obligations shall remain unpaid or any Lender shall have any
outstanding Commitment, the Grantor will, unless the Required Lenders shall
otherwise consent in writing, perform the obligations set forth in this
ARTICLE IV.
SECTION 4.1. FURTHER ASSURANCES GENERALLY. The Grantor agrees that it
will, from time to time at its own expense, promptly execute and deliver all
further instruments, and take all further action, that may be necessary or
appropriate, or that the Collateral Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limitation of the
foregoing, the Grantor will
(a) at the request of the Collateral Agent at any time when a
Default of the nature referred to in Section 8.1.4 of the Credit
Agreement or any Event of Default shall have occurred and be continuing,
immediately mark conspicuously each document and each chattel paper
included in the Receivables and each Related Contract and each account
and each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Collateral Agent, indicating that
such account, document, chattel paper, Related Contract or Collateral is
subject to the security interest granted hereby;
(b) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, immediately
deliver and pledge to the Collateral Agent hereunder such promissory
note, instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all
in form and substance reasonably satisfactory to the Collateral Agent;
(c) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, any assignment of claim form under or pursuant to the
federal assignment of claims statute, 31 U.S.C. <section> 3726, any
successor or amended version thereof or any regulation promulgated under
or pursuant to any version thereof), as may be necessary or desirable, or
as the Collateral Agent may reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted
hereby; and
(d) furnish to the Collateral Agent, from time to time at the
Collateral Agent's request, statements and schedules further identifying
and describing the Collateral and such other reports in connection with
the Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
The Grantor hereby further authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of the Grantor where
permitted by law. A carbon, photographic, or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
SECTION 4.2. AS TO EQUIPMENT AND INVENTORY. The Grantor shall
(a) keep all the Equipment (other than Equipment which, in the
Borrower's reasonable discretion, is obsolete or no longer fit for use in
the Borrower's Business) and Inventory (other than Inventory sold in the
ordinary course of business) in the jurisdiction(s) set forth in ITEM A
("Jurisdictions") of SCHEDULE I hereto or, upon 30 days' prior written
notice to the Collateral Agent, at such other places in jurisdictions
where all representations and warranties set forth in ARTICLE III
(including SECTION 3.5) shall be true and correct, and all action
required pursuant to the FIRST SENTENCE of SECTION 4.1 shall have been
taken with respect to the Equipment and Inventory;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair, and working order as when new, ordinary wear and tear
and worn-out and obsolete Equipment excepted; and shall forthwith, or in
the case of any loss or damage to any of the Equipment (of which notice
shall be given to the Collateral Agent promptly, if such loss or damage
is material) as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable to such end;
(c) pay promptly when due and in any event prior to the date they
become delinquent all property and other taxes, assessments and
governmental charges or levies in excess of $5,000 in the aggregate
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment and Inventory, except to the extent the
validity thereof is being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have
been set aside; and
(d) permit representatives of the Collateral Agent at any time
during normal business hours to enter on the premises where the
Collateral is located for the purpose of inspecting the Grantor's books
and records and the Collateral, observing its use or otherwise protecting
the Collateral Agent's interests therein.
SECTION 4.3. AS TO RECEIVABLES. The Grantor shall keep its chief place
of business and chief executive office and the office or offices where it keeps
its records concerning the Receivables, and all originals of all chattel paper
which evidenced Receivables, at the location therefor specified in SECTION 3.1
or with the Sub-Collateral Agent or, subject to Section 7.2.18 of the Credit
Agreement, upon 30 days' prior written notice to the Collateral Agent, at such
other locations in a jurisdiction where all statements set forth in SECTION 3.5
shall be true and correct and all action required by SECTION 4.1 shall have
been taken with respect to the Receivables. The Grantor will hold and preserve
such records and will permit representatives of the Collateral Agent or any
Lender at any time during normal business hours to inspect and make abstracts
from such records. The Grantor has delivered and shall deliver to the
Collateral Agent or the Sub-Collateral Agent, within one Business Day after
receipt thereof by the Grantor, all originals of all chattel paper which
evidence Receivables, including, without limitation, all Franchise Agreements
entered into prior to May 1, 1993. Until such time as the Collateral Agent
shall notify the Grantor that a Default of the nature referred to in
Section 8.1.4 of the Credit Agreement or an Event of Default has occurred and
is continuing, the Grantor shall continue to collect, at its own expense, all
amounts due or to become due under the Receivables. In connection with such
collections, the Grantor may take (and, at the Collateral Agent's direction,
shall take) such action as the Grantor or the Collateral Agent may deem
necessary or advisable to enforce collection of the Receivables; PROVIDED,
HOWEVER, that (a) the Grantor will not (i) amend, modify, terminate or waive
any provision of any Franchise Agreement, the Borrower Management Agreement or
any other material contract in any manner which might materially adversely
affect the aggregate value of the Franchise Agreements, the Borrower Management
Agreement or other material contracts as Collateral, (ii) fail to exercise
promptly and diligently each and every material right which it may have under
each Franchise Agreement, the Borrower Management Agreement and each other
material contract (other than any right of termination) or (iii) fail to
deliver to the Collateral Agent, after the occurrence and during the
continuance of a Default of the nature referred to in Section 8.1.4 of the
Credit Agreement or an Event of Default, a copy of each material demand, notice
or document received by it relating in any way to any Franchise Agreement, the
Borrower Management Agreement or any other material contract, (b) upon the
occurrence and during the continuance of any Default, the Grantor will not,
without the Collateral Agent's prior written consent, grant any extension of
the time of payment of any Franchise Agreement, the Borrower Management
Agreement or any other material contract, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof, or allow any credit or discount
whatsoever thereon, (c) the Grantor will not amend or modify any of the
provisions of any Franchise Agreement relating to the amount and timing of the
payment of monies thereunder without the prior written consent of the
Collateral Agent, and (d) the Collateral Agent shall have the right, at any
time after notice to the Grantor from the Collateral Agent that a Default of
the nature referred to in Section 8.1.4 of the Credit Agreement or while an
Event of Default has occurred and is continuing, to notify the account debtors
or obligors under any Receivables of the assignment of such Receivables to the
Collateral Agent and to direct such account debtors or obligors to make payment
of all amounts due or to become due to the Grantor thereunder directly to the
Collateral Agent, or to such Person as the Collateral Agent may direct, and,
upon such notification and at the expense of the Grantor, to enforce collection
of any such Receivables, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as the Grantor might
have done. After receipt by the Grantor of the notice from the Collateral
Agent referred to in the FOURTH SENTENCE of this paragraph
(a) all amounts and proceeds (including Instruments) received by
the Grantor in respect of any Receivables shall be received in trust for
the benefit of the Collateral Agent hereunder, shall be segregated from
other funds of the Grantor, and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary
endorsements) to be held as cash collateral; and
(b) the Grantor shall not, without the consent of the Collateral
Agent, adjust, settle, or compromise the amount or payment of any
Receivable, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
After the occurrence and during the continuance of any Default of the
nature referred to in Section 8.1.4 of the Credit Agreement or an Event of
Default, and at other times with the consent of the Grantor (which consent
shall not be unreasonably withheld), (a) the Collateral Agent may in its own
name or in the name of others communicate with account debtors in order to
verify with them to the Collateral Agent's satisfaction the existence, amount
and terms of any Receivables, (b) the Grantor at its expense will cause the
Independent Public Accountants reasonably satisfactory to the Collateral Agent
to furnish to the Collateral Agent promptly upon the Collateral Agent's
request, or shall permit and cooperate with independent public accountants
selected by the Collateral Agent to furnish to the Collateral Agent at the
Grantor's expense, the following reports (i) reconciliation of all Receivables,
(ii) an aging of all Receivables, (iii) trial balances, (iv) a test
verification of such Receivables as the Collateral Agent may reasonably request
and (v) valuations of the inventory held by the Grantor.
SECTION 4.4. AS TO INTELLECTUAL PROPERTY COLLATERAL.
(a) The Grantor shall not, and the Grantor shall not permit any of its
licensees to, unless the Grantor shall either (i) reasonably and in good faith
determine (and notice of such determination shall have been delivered to the
Collateral Agent) that any of the Trademark Collateral is of negligible
economic value to the Grantor, or (ii) have a valid business purpose to do
otherwise,
(i) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free from
any claim of abandonment for non-use;
(ii) fail to maintain as in the past the quality of products and
services offered under all of the Trademark Collateral;
(iii) fail to employ all of the Trademark Collateral registered
with any Federal or state or foreign authority with an appropriate notice
of such registration;
(iv) use any of the Trademark Collateral registered with any
federal or state or foreign authority except for the uses for which
registration or application for registration of all of the Trademark
Collateral has been made in any manner that would adversely affect the
value thereof; and
(v) do or permit any act or knowingly omit to do any act whereby
any of the Trademark Collateral may lapse or become invalid or
unenforceable.
(b) The Grantor shall not, unless the Grantor shall either
(i) reasonably and in good faith determine (and notice of such
determination shall have been delivered to the Collateral Agent) that any
of the Copyright Collateral or any of the Trade Secrets Collateral is of
negligible economic value to the Grantor; or
(ii) have a valid business purpose to do otherwise, do or permit
any act or knowingly omit to do any act whereby any of the Copyright
Collateral or any of the Trade Secrets Collateral may lapse or become
invalid or unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term of a registration thereof.
(c) The Grantor shall notify the Collateral Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any material item of the Intellectual Property Collateral may become abandoned
or dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any foreign counterpart thereof or any court) regarding the Grantor's
ownership of any of the Intellectual Property Collateral, its right to register
the same or to keep and maintain and enforce the same.
(d) In no event shall the Grantor or any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, unless it promptly
informs the Collateral Agent upon its registration, and upon request of the
Collateral Agent, executes and delivers any and all agreements, instruments,
documents and papers as the Collateral Agent may reasonably request to evidence
the Collateral Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of the Grantor relating
thereto or represented thereby.
(e) The Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to maintain any
registration of, the Intellectual Property Collateral, including the filing of
applications for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment of fees
and taxes (except to the extent that dedication, abandonment or invalidation is
permitted under the foregoing CLAUSES (A), (B) and (C)).
(f) The Grantor shall, upon the request of the Collateral Agent, execute
and deliver to the Collateral Agent an Agreement (Trademark) and an Agreement
(Copyright) in the forms of EXHIBIT A and EXHIBIT B hereto, respectively, and
shall execute and deliver to the Collateral Agent any other document required
to acknowledge or register or perfect the Collateral Agent's interest in any
part of the Intellectual Property Collateral.
SECTION 4.5. INSURANCE. The Grantor will, at the Grantor's expense,
maintain insurance with respect to the Equipment and Inventory, in such
amounts, against such casualties and risks, of such types and in such form, and
with such financially sound and reputable insurers, as shall be customary in
the case of similar businesses and reasonably satisfactory to the Collateral
Agent from time to time (and, in any event, shall insure the Equipment and the
Inventory against loss by fire, explosion and theft and shall insure the
Grantor and the Collateral Agent (as an additional insured) against liability
for personal injury and property damage relating to such Equipment and
Inventory, which insurance can be contained in the Grantor's general liability
policy). Each policy providing such insurance
(a) shall, in the case of (i) liability insurance, provide for all
losses to be paid on behalf of the Collateral Agent and the Grantor as
their respective interests may appear, and (ii) property damage
insurance, provide for all losses (except for losses of less than
$750,000 per occurrence) to be paid directly to the Collateral Agent to
be applied in accordance with SECTION 6.2;
(b) shall name the Grantor and the Collateral Agent as insured
parties thereunder (without any representation or warranty by or
obligation upon the Collateral Agent) as their interests may appear;
(c) shall contain the agreement by the insurer that any loss
thereunder shall be payable to the Collateral Agent notwithstanding any
action, inaction or breach of representation or warranty by the Grantor;
(d) shall provide that there shall be no recourse against the
Collateral Agent, the Agent or any Lender for payment of premiums or
other amounts with respect thereto but shall permit the Collateral Agent,
at its discretion, to pay premiums thereon; and
(e) shall provide that at least 30 days' prior written notice of
cancellation or of lapse shall be given to the Collateral Agent by the
insurer.
The Grantor shall, if so requested by the Collateral Agent, deliver to
the Collateral Agent original or duplicate policies of such insurance and, as
often as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to the adequacy of such insurance. Further, the
Grantor shall, after any Default, at the request of the Collateral Agent, duly
execute and deliver instruments of assignment of such insurance policies to
comply with SECTION 3.4 and cause the respective insurers to acknowledge notice
of such assignment. Reimbursement under any liability insurance maintained by
the Grantor pursuant to this Section may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when the LAST SENTENCE of this
Section is not applicable, the Grantor shall make or cause to be made all
repairs to or replacements of such Equipment or Inventory as the Grantor
reasonably determines to be necessary and appropriate, and any proceeds of
insurance maintained by the Grantor pursuant to this Section shall be paid to
the Grantor as reimbursement for the costs of such repairs or replacements.
Upon the happening of both (x) the occurrence and during the continuance of any
Default of the nature referred to in Section 8.1.4 of the Credit Agreement or
any Event of Default and (y) the actual or constructive total loss (in excess
of $750,000 per occurrence) of any Equipment or Inventory, all insurance
payments in respect of such Equipment or Inventory shall be paid to and held or
applied by the Collateral Agent as specified in SECTION 6.2.
SECTION 4.6. TRANSFERS AND OTHER LIENS.
(a) The Grantor shall not
(i) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except for Inventory in the ordinary
course of business and dispositions of assets permitted by Section 7.2.11
of the Credit Agreement; or
(ii) create or suffer to exist any Security Interest upon or with
respect to any of the Collateral to secure any obligation of any Person,
except for (A) the security interest created by this Agreement, and (B)
any other Security Interest permitted pursuant to Section 7.2.3 of the
Credit Agreement.
(b) The Grantor will defend the right, title and interest of the
Collateral Agent in and to any of the Grantor's rights under the Related
Contracts and to the Equipment, Inventory and all other Collateral and in and
to the proceeds and products thereof against the claims and demands of all
persons whomsoever.
SECTION 4.7. NOTICES. The Grantor will, upon obtaining knowledge
thereof, advise the Collateral Agent promptly, in reasonable detail, (a) of any
material lien, security interest, encumbrance or claims made or asserted
against any of the Collateral, (b) of any material change in the composition of
the Collateral, and (c) of the occurrence of any other event which would have a
materially adverse effect on the aggregate value of the Collateral or on the
security interests created hereunder.
SECTION 4.8. CONTINUOUS PERFECTION. The Grantor will not change its
name, identity or corporate structure in any manner which might make any
financing or continuation statement filed hereunder seriously misleading within
the meaning of Section 9-402(7) of the U.C.C. (or any other then applicable
provision of the U.C.C.) unless the Grantor shall have given the Collateral
Agent at least 90 days' prior written notice thereof or shall have delivered to
the Collateral Agent acknowledgment copies of UCC-1 and UCC-3 financing
statements duly executed and duly filed in each jurisdiction in which UCC-1
filings were required in order to perfect the security interest granted by this
Agreement in the Collateral and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by the Collateral Agent to amend such financing statement or
continuation statement so that it is not seriously misleading.
SECTION 4.9. CREDIT AGREEMENT COVENANTS. The Grantor shall comply with
the covenants set forth in Article VII of the Credit Agreement applicable to
it.
SECTION 4.10. ADDITIONAL INTELLECTUAL PROPERTY. The Borrower will
notify the Collateral Agent, from time to time at its own expense, promptly of
all Intellectual Property Collateral acquired or created after the date thereof
(including, but not limited to, all semi-conductor chip product mask works,
mask work licenses and Patent Collateral) and at the Collateral Agent's
request, take such action that may be necessary or appropriate, in order to
perfect any Security Interests granted pursuant to this Agreement in such
Intellectual Property.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Grantor
hereby irrevocably appoints the Collateral Agent the Grantor's attorney-in-
fact, with full power and authority in the place and stead of the Grantor and
in the name of the Grantor, the Agent, the Lenders or otherwise, from time to
time upon the occurrence and continuance of an Event of Default in the
Collateral Agent's discretion, to take any action and to execute any Instrument
which the Collateral Agent may deem necessary or appropriate to accomplish the
purposes of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
the Grantor pursuant to SECTION 4.5;
(b) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with CLAUSE (A)
or (B) above;
(d) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral; and
(e) to perform the affirmative obligations of the Grantor
hereunder (including all obligations of the Grantor pursuant to SECTION
4.1).
The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. COLLATERAL AGENT MAY PERFORM. The Collateral Agent may
from time to time, at its option, perform, or cause performance of, any act
which the Grantor agrees hereunder to perform and which the Grantor shall fail
to perform after being requested in writing to so perform (it being understood
that no such request need be given after the occurrence and during the
continuance of any Default of the nature referred to in Section 8.1.4 of the
Credit Agreement or an Event of Default) and, subject to the foregoing, the
Collateral Agent may from time to time take any other action which the
Collateral Agent reasonably deems necessary for the maintenance, preservation,
or protection of any of the Collateral or of its security interest therein.
The Grantor hereby acknowledges and agrees that any expenses incurred by the
Collateral Agent in connection with this SECTION 5.2 shall be payable by the
Grantor pursuant to SECTION 6.3.
SECTION 5.3. COLLATERAL AGENT HAS NO DUTY. In addition to, and not in
limitation of, SECTION 2.4, the powers conferred on the Collateral Agent
hereunder are solely to protect its interest (and the Ratable interest of the
Agent and the Lenders) in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the reasonable care of any Collateral
in its possession, the Collateral Agent shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.4. REASONABLE CARE. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; PROVIDED, HOWEVER, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as the Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. CERTAIN REMEDIES. If any Default of the nature referred to
in Section 8.1.4 of the Credit Agreement or any Event of Default shall have
occurred and be continuing, the Collateral Agent may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party upon
default under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) or other applicable law. Without limitation of the above, the
Collateral Agent may, whenever any Default of the nature referred to in Section
8.1.4 of the Credit Agreement or any Event of Default shall have occurred and
be continuing, take all or any of the following actions:
(a) require the Grantor to, and the Grantor hereby agrees that it
will, at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place to be
designated by the Collateral Agent;
(b) transfer all or any part of the Collateral into the name of
the Collateral Agent or its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest hereunder;
(c) notify the parties obligated on any of the Collateral to make
payment to the Collateral Agent of any amount due or to become due
thereunder;
(d) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release, or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party with
respect thereto;
(e) endorse any checks, drafts, or other writings in the Grantor's
name to allow collection of the Collateral;
(f) take control of any proceeds of the Collateral;
(g) execute (in the name, place, and stead of the Grantor)
endorsements, assignments, stock powers, and other instruments of
conveyance or transfer with respect to all or any of the Collateral; and
(h) enter upon any premises where the Collateral or any part
thereof may be, and take possession of all or any part thereof, without
being responsible for loss or damage.
In furtherance, and not in limitation, of the foregoing, the Collateral
Agent, without demand of performance or other demand, advertisements or notice
of any kind (except the notice specified below of time and place of public or
private sale) to or upon the Grantor or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived), may,
whenever a Default of the nature referred to in Section 8.1.4 of the Credit
Agreement or an Event of Default shall have occurred and be continuing, in a
commercially reasonable manner, 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, contract to sell or otherwise
dispose of and deliver said Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange, broker's board or
at any of the Collateral Agent's offices 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,
with the right to the Collateral Agent upon any such sale or sales, public or
private, to purchase the whole or any part of said Collateral so sold, free of
any right or equity of redemption in the Grantor, which right or equity is
hereby expressly waived or released. The Collateral Agent shall apply the
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safekeeping or otherwise of any and
all of the Collateral or in any way relating to the rights of the Collateral
Agent hereunder, including reasonable attorneys' fees and legal expenses, to
the payment in whole or in part of the Secured Obligations as set forth in
SECTION 6.2 of this Agreement, the Grantor remaining liable for any deficiency
remaining unpaid after such application and all reasonable fees and expenses
incurred by the Collateral Agent in collecting such deficiency, and only after
so paying over such proceeds and after the payment by the Collateral Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the U.C.C., need the Collateral Agent
account for the surplus, if any, to the Grantor. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, in which event no notification is
required, the Grantor agrees that the Collateral Agent need not give more than
ten days' notice of the time and place of any public sale or of the time after
which a private sale or other intended disposition is to take place and that
such notice is reasonable notification of such matters. No notification need
be given to the Grantor if it has signed after default a statement renouncing
or modifying any right to notification of sale or other intended disposition.
The Grantor further agrees to waive and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the U.C.C.
SECTION 6.2. APPLICATION OF PROCEEDS. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
the Collateral Agent, be held by the Collateral Agent as collateral for, and/or
then or at any time thereafter applied (after payment of any amounts payable to
the Collateral Agent, the Agent and each Lender under SECTION 6.3 hereof and to
the Collateral Agent, the Agent and each Lender pursuant to Section 10.3 of the
Credit Agreement) in whole or in part by the Collateral Agent against, all or
any part of the Secured Obligations in such order as the Collateral Agent shall
elect.
SECTION 6.3. INDEMNITY AND EXPENSES.
(a) The Grantor hereby indemnifies and holds harmless the Collateral
Agent, the Agent and each Lender from and against any and all claims, losses
and liabilities arising out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from the Collateral Agent's, the Agent's or such Lender's
gross negligence or wilful misconduct.
(b) The Grantor will upon demand pay to the Collateral Agent the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which any Lender
(with respect to CLAUSES (II) through (V) below) or the Collateral Agent may
incur in connection with
(i) the administration of this Agreement or the other Loan
Documents;
(ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral;
(iii) the exercise or enforcement of any of the rights or remedies
of the Collateral Agent hereunder;
(iv) the failure by the Grantor to perform or observe any of the
provisions hereof; or
(v) advancing any funds in connection with the matters referred to
in SECTION 7.4 hereof.
SECTION 6.4. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL.
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under SECTION 6.1 hereof at such time as the Collateral Agent, without
regard to this SECTION 6.4, shall be lawfully entitled to exercise such rights
and remedies, and for no other purpose, upon and subject to the occurrence and
during the continuance of a Default of the nature referred to in Section 8.1.4
of the Credit Agreement or an Event of Default, the Grantor grants, to the
extent not prohibited by applicable law or the terms of the Franchise
Agreements or the Shoney's Inn License Agreement, to the Collateral Agent an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Grantor, PROVIDED that, any proceeds shall be applied
to the Grantor's obligations in accordance with SECTION 6.2) to use, license or
sublicense any Intellectual Property Collateral, now owned or hereafter
acquired by the Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer and automatic machinery software
and programs used for the compilation or printout thereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COLLATERAL DOCUMENT AND LOAN DOCUMENT. This Agreement is a
Collateral Document and Loan Document executed pursuant to the Credit
Agreement, and shall (unless otherwise expressly indicated herein) be
construed, administered, and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7.2. AMENDMENTS, WAIVERS, REMEDIES, ETC. No amendment to or
waiver of any provision of this Agreement nor consent to any departure by the
Grantor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent (subject to Section 10.1 of the
Credit Agreement), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No delay,
act or omission on the part of the Collateral Agent of any of its rights
hereunder shall be deemed a waiver of any rights hereunder unless also
contained in an express writing signed by the Collateral Agent, nor shall any
single or partial exercise of, or any failure to exercise, any right, power or
privilege preclude any other or further or initial exercise thereof of any
other right, power or privilege. The rights and remedies provided herein are
cumulative, and not exclusive of right and remedies which may be granted or
provided by law or equity.
SECTION 7.3. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing or by facsimile
transmission, and if to any party, addressed or delivered to it at the address
set forth below its signature hereto or at such other address as shall be
designated by such party in a written notice to each other party. Any notice,
if mailed and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by facsimile transmission or
delivery, shall be deemed given when received.
SECTION 7.4. SECTION CAPTIONS. Section captions used in this Agreement
are for convenience of reference only, and shall not affect the construction of
this Agreement.
SECTION 7.5. SEVERABILITY. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
SECTION 7.6. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
Agreement.
SECTION 7.7. GOVERNING LAW; ENTIRE AGREEMENT, ETC. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.8. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT, THE AGENT, ANY
LENDER OR THE GRANTOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GRANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE GRANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS SECURITY AGREEMENT.
SECTION 7.9. WAIVER OF JURY TRIAL. THE COLLATERAL AGENT, THE AGENT, THE
LENDERS AND THE GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SECURITY
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT, THE AGENT, THE LENDERS
OR THE GRANTOR. THE GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER COLLATERAL DOCUMENT AND LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE
CREDIT AGREEMENT AND EACH SUCH OTHER COLLATERAL DOCUMENT AND LOAN DOCUMENT.
**FOOTNOTES**
{1} Select appropriate interest rate option.
{2}Insert appropriate interest rate option.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
[NAME OF SUBSIDIARY]
By
Title:
Address:
___________________________
___________________________
Fax No.: ______________
Attention: ___________________
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, as Collateral Agent
By
Title: Authorized Signatory
Address: 425 Lexington Avenue
New York, New York 10017
Fax No.:
Attention: V.P. Syndications
Administration
<PAGE>
SCHEDULE I
to
Security Agreement
ITEM A. JURISDICTIONS.
Shoney's Real Estate, Inc. Corporate Benefit Services,
Alabama Incorporated, of Nashville
Arkansas Tennessee
Georgia
Illinois
Indiana Shoney's of Canada, Inc.
Iowa Alberta
Kentucky British Columbia
Louisiana Manitoba
Maryland
Mississippi
Missouri Shoney's Equipment Corporation
Nebraska Tennessee
Ohio
South Carolina
Texas Evadon Corporation
Virginia Tennessee
West Virginia
Commissary Operations, Inc. Pargo's of Frederick, Inc.
Georgia Maryland
Texas Tennessee
West Virginia
Pargo's of York, Inc.
Shoney's Investments, Inc. Pennsylvania
Nevada Tennessee
RJR Investments, Inc.
Nevada
Shoney's Funding Corp.
Louisiana
Missouri
Tennessee
Mike Rose Foods, Inc.
Louisiana
South Carolina
Tennessee
<PAGE>
ITEM B. UCC-1 FILINGS.
<PAGE>
ITEM C. INTELLECTUAL PROPERTY COLLATERAL FILINGS.
All locations set forth in ITEMS A and B of this SCHEDULE I, the United
States Patent and Trademark Office and the United States Copyright Office.
<PAGE>
SCHEDULE II
to
Security Agreement
Item A. PATENTS
ISSUED PATENTS
<TABLE>
<CAPTION>
COUNTRY PATENT NO. ISSUE DATE INVENTOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
PENDING PATENT APPLICATIONS
<TABLE>
<CAPTION>
COUNTRY SERIAL NO. FILING DATE INVENTOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
PATENT APPLICATIONS IN PREPARATION
<TABLE>
<CAPTION>
Expected
COUNTRY DOCKET NO. FILING DATE INVENTOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
Item B. PATENT LICENSES
<TABLE>
<CAPTION>
Country or Effective Expiration Subject
TERRITORY LICENSOR LICENSEE DATE DATE MATTER
<S> <C> <C> <C> <C> <C>
[NONE]
</TABLE>
<PAGE>
SCHEDULE III
to
Security Agreement
UNITED STATES TRADEMARK/SERVICE MARK REGISTRATIONS AND APPLICATIONS.
<TABLE>
<CAPTION>
MARK DATE REGISTERED NO.
<S> <C> <C>
Shoney's Inn 02/16/82 1,190,289
Shoney's Inn 08/04/92 1,705,676
</TABLE>
Shoney's of Canada, Inc. has a license to use the trademarks and service marks
of Shoney's, Inc. in Canada and to conduct franchising activities in Canada
pursuant to a License Agreement, dated September 13, 1990 and the Amended and
Restated License Agreement, dated June 10, 1993.
<PAGE>
SCHEDULE IV
to
Security Agreement
Item A. COPYRIGHTS
REGISTERED COPYRIGHTS
<TABLE>
<CAPTION>
COUNTRY REGISTRATION NO. REGISTRATION DATE AUTHOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
COPYRIGHT PENDING REGISTRATION APPLICATIONS
<TABLE>
<CAPTION>
COUNTRY SERIAL NO. FILING DATE AUTHOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
COPYRIGHT REGISTRATION APPLICATIONS IN PREPARATION
<TABLE>
<CAPTION>
Expected
COUNTRY DOCKET NO. FILING DATE AUTHOR(S) TITLE
<S> <C> <C> <C> <C>
[NONE]
</TABLE>
Item B. COPYRIGHT LICENSES
<TABLE>
<CAPTION>
Country or Effective Expiration Subject
TERRITORY LICENSOR LICENSEE DATE DATE MATTER
<S> <C> <C> <C> <C> <C>
[NONE]
</TABLE>
<PAGE>
EXHIBIT I
THIS INSTRUMENT WAS PREPARED BY, AND WHEN RECORDED RETURN
TO:
Michael N. Sloyer
Mayer, Brown & Platt
787 Seventh Avenue
New York, New York 10019
SHONEY'S, INC.
TO
CANADIAN IMPERIAL BANK OF COMMERCE,
New York Agency,
as the Collateral Agent for the Lenders
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF LEASES AND RENTS
AND FINANCING STATEMENT
Dated as of July __, 1993
This instrument is a Uniform Commercial Code Financing Statement for fixture
filing. Collateral is or includes fixtures. This instrument is also to be
indexed in the index of financing statements as a fixture filing in accordance
with the Uniform Commercial Code and cross-indexed in the real estate or real
estate mortgage records.
The names of the Debtor and the Secured Party, the mailing address of the
Secured Party from which information concerning the security instruments may be
obtained, the mailing address of the Debtor and a statement concerning the
types, or describing the items, of Collateral, are as described in EXHIBIT B
hereof.
THE RECOVERY BY THE LENDERS FROM THE PREMISES LOCATED IN _____________ COUNTY,
FLORIDA, FOR APPLICATION AGAINST THE NOTES AND THE NOTE OBLIGATIONS SHALL NOT
EXCEED $_____________.
<PAGE>
TABLE OF CONTENTS
Page
A. Credit Agreement; Notes and Note Obligations . . . . . . . 1
B. Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . 2
C. Related Documents. . . . . . . . . . . . . . . . . . . . . 2
D. The Liabilities. . . . . . . . . . . . . . . . . . . . . . 2
E. The Collateral . . . . . . . . . . . . . . . . . . . . . . 3
I. COVENANTS AND AGREEMENTS OF THE MORTGAGOR. . . . . . . . . 6
1.1. Payment of Liabilities. . . . . . . . . . . . . . . 6
1.2. Payment of Taxes. . . . . . . . . . . . . . . . . . 6
1.3. Maintenance and Repair. . . . . . . . . . . . . . . 7
1.4. Sales; Liens. . . . . . . . . . . . . . . . . . . . 8
1.5. Access by Mortgagee . . . . . . . . . . . . . . . . 9
1.6. Stamp and Other Taxes . . . . . . . . . . . . . . . 9
1.7. Insurance . . . . . . . . . . . . . . . . . . . . . 10
1.8. Eminent Domain. . . . . . . . . . . . . . . . . . . 15
1.9. Governmental Requirements . . . . . . . . . . . . . 16
1.10. No Mechanics' Liens . . . . . . . . . . . . . . . . 16
1.11. Continuing Priority . . . . . . . . . . . . . . . . 17
1.12. Utilities . . . . . . . . . . . . . . . . . . . . . 18
1.13. Contract Maintenance; Other Agreements; Leases. . . 18
1.14. Notify the Mortgagee of Default . . . . . . . . . . 19
1.15. No Assignments; Future Leases . . . . . . . . . . . 19
1.16. Assignment of Leases and Rents and Collections. . . 19
1.17. The Mortgagee's Performance . . . . . . . . . . . . 21
1.18. Subrogation . . . . . . . . . . . . . . . . . . . . 21
1.19. Hazardous Material. . . . . . . . . . . . . . . . . 21
1.20. Reserve for Taxes, Assessments and Insurance. . . . 22
1.21. Lien Absolute . . . . . . . . . . . . . . . . . . . 23
1.22. Further Assurances. . . . . . . . . . . . . . . . . 24
1.23. Security Agreement. . . . . . . . . . . . . . . . . 24
1.24. Changes in Ownership. . . . . . . . . . . . . . . . 26
II. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1. Liabilities . . . . . . . . . . . . . . . . . . . . 26
2.2. The Credit Agreement. . . . . . . . . . . . . . . . 26
2.3. Provisions of this Mortgage.. . . . . . . . . . . . 26
2.4. Default under Third Party Agreements. . . . . . . . 27
III. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 27
3.1. Acceleration. . . . . . . . . . . . . . . . . . . . 27
3.2. Remedies Cumulative . . . . . . . . . . . . . . . . 27
3.3. Possession of Premises; Remedies under Mortgage,
Notes and Related Documents. . . . . . . . . . . . 27
3.4. Foreclosure; Receiver . . . . . . . . . . . . . . . 28
3.5. Power of Sale; Enforcement. . . . . . . . . . . . . 29
3.6. Remedies for Leases and Rents . . . . . . . . . . . 32
3.7. Personal Property . . . . . . . . . . . . . . . . . 33
3.8. Performance of Third Party Agreements . . . . . . . 35
3.9. No Liability on Mortgagee or Lenders. . . . . . . 35
3.10. Prepayment Charge . . . . . . . . . . . . . . . . . 36
3.11. Sale a Bar Against the Mortgagor. . . . . . . . . . 36
3.12. Proceeds of Sale. . . . . . . . . . . . . . . . . . 36
IV. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.1. Permitted Acts. . . . . . . . . . . . . . . . . . . 37
4.2. Legal Expenses. . . . . . . . . . . . . . . . . . . 37
4.3. Related Documents . . . . . . . . . . . . . . . . . 38
4.4. Security Agreement; Fixture Filing. . . . . . . . . 38
4.5. Defeasance. . . . . . . . . . . . . . . . . . . . . 38
4.6. Notices . . . . . . . . . . . . . . . . . . . . . . 38
4.7. Successors; The Mortgagor; Gender . . . . . . . . . 39
4.8. Care by the Mortgagee and Lenders. . . . . . . . . 39
4.9. No Obligation on Mortgagee or the Lenders . . . . . 39
4.10. No Waiver; Writing. . . . . . . . . . . . . . . . . 40
4.11. Governing Law; Submission to Jurisdiction . . . . . 40
4.12. Waiver. . . . . . . . . . . . . . . . . . . . . . . 41
4.13. Jury Trial. . . . . . . . . . . . . . . . . . . . . 42
4.14. No Merger . . . . . . . . . . . . . . . . . . . . . 42
4.15. Mortgagee and Lenders Not Joint Venturers or
Partners . . . . . . . . . . . . . . . . . . . . . 42
4.16. Time of Essence . . . . . . . . . . . . . . . . . . 43
4.17. No Third Party Benefits . . . . . . . . . . . . . . 43
4.18. Future Advances . . . . . . . . . . . . . . . . . . 43
4.19. Interest Rates Before or After Judgment . . . . . . 44
EXECUTION PAGE
ACKNOWLEDGEMENT
Exhibit A - Legal Description of the Land
Exhibit B - Description of Debtor and Secured Party
<PAGE>
INDEX OF DEFINITIONS
DEFINITION SECTION
Collateral Recital E
Condemnation Awards Section 1.8
Contracts for Construction Recital E
Contracts for Sale Recital E
Credit Agreement Recital A
Default Section II
Default Rate Section 1.7
Goods Recital E
Highest Lawful Rate Section 4.19
Improvements Recital E
Intangibles Recital E
Land Recital E
Lenders Preamble
Liabilities Recital D
Lien Section 1.4
Loan Amounts Recital B
Mortgage Preamble
Mortgagee Preamble
Mortgagor Preamble
Notes Recital C
Occupancy Leases Recital E
Occupant's Equipment Recital E
Permitted Exceptions Grant
Plans Recital E
Premises Recital E
Real Estate Recital E
Related Documents Recital C
Rents Recital E
Third Party Agreements Section 1.13
<PAGE>
MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF
LEASES AND RENTS AND FINANCING STATEMENT
MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF LEASES AND RENTS AND
FINANCING STATEMENT (the "MORTGAGE"), dated as of July 20, 1993, from SHONEY'S,
INC., a Tennessee corporation having its principal office and place of business
in the County of Davidson at 1727 Elm Hill Pike, Nashville, Tennessee 37210
(the "MORTGAGOR"), to the CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian
chartered bank, acting through its New York Agency, in its capacity as
collateral agent for the various financial institutions which are, or may from
time to time hereafter be, parties to the Credit Agreement (as hereinafter
defined; such financial institutions are hereinafter referred to collectively
as the "LENDERS"), having its principal office and place of business in the
County of New York at 425 Lexington Avenue, New York, New York 10017 (together
with any successor or assign at any time acting as such collateral agent, the
"MORTGAGEE"). Capitalized terms used hereinafter without other definition have
the respective meanings specified in the Credit Agreement (as hereinafter
defined).
R E C I T A L S
A. CREDIT AGREEMENT; NOTES AND NOTE OBLIGATIONS. Pursuant to a certain
Reducing Revolving Credit Agreement, dated as of July __, 1993 (herein, as the
same may be amended, supplemented, revised, extended, consolidated, restated,
amended and restated or otherwise modified from time to time and in effect, the
"CREDIT AGREEMENT"), among the Mortgagor, the Lenders and the Canadian Imperial
Bank of Commerce, New York Agency, in its capacity as agent for the Lenders
(herein, together with any successor or assign at any time acting as such
agent, the "AGENT"), the Lenders have made available to the Mortgagor a
reducing revolving credit facility (the "FACILITY") pursuant to which the
Lenders may make loans (collectively, the "LOANS") to the Mortgagor in the
maximum aggregate original principal amount at any one time outstanding
(subject to reduction in accordance with the mandatory provisions of the Credit
Agreement) of $125,000,000.00, which Loans are to be evidenced by the
Mortgagor's promissory notes, dated the date hereof, in such maximum aggregate
principal amount, and due, if not sooner repaid in full, on October 22, 1997
(such promissory notes, as the same may hereafter be amended, modified,
renewed, extended or otherwise changed from time to time, together with any
note or notes or other obligations from time to time executed and delivered in
renewal, extension or replacement thereof, or in substitution or exchange
therefor, are hereinafter collectively called the "NOTES", and the indebtedness
evidenced by the Notes is sometimes hereinafter referred to as the "NOTE
OBLIGATIONS").
B. MORTGAGE. Pursuant to Section 5.1.9 of the Credit Agreement, as a
material inducement to the Lenders and the Agent to enter into the Credit
Agreement and make the initial Loans pursuant to the Facility, and to secure
the Obligations (as defined in the Credit Agreement) of the Mortgagor under the
Credit Agreement, including, without limitation, the Note Obligations,
Mortgagor has agreed to execute and deliver this Mortgage to the Mortgagee.
C. RELATED DOCUMENTS. Any and all loan agreements (including, without
limitation, the Credit Agreement), the Notes, the Collateral Documents, the
Loan Documents and any other documents and instruments executed and delivered
by or for the benefit of the Mortgagor or its Subsidiaries, whether pursuant to
the terms of the Credit Agreement or otherwise, in connection with the Notes or
security therefor, or for the purpose of supplementing or amending all or any
of the foregoing, as the same may be amended, restated, amended and restated,
supplemented or otherwise modified from time to time, are hereinafter referred
to as the "RELATED DOCUMENTS."
D. THE LIABILITIES. As used in this Mortgage, the term "LIABILITIES"
means and includes all of the following: (i) all obligations of the Mortgagor
to the Lenders and their successors and assigns arising under or in respect
of the Notes, (ii) all obligations of the Mortgagor to any Lender under any
Rate Swap Agreement provided by such Lender, and (iii) all other obligations
and indebtedness of the Mortgagor or its Subsidiaries, to the Lenders, the
Agent, the Mortgagee or any other Lender Party, in each case howsoever
created, arising or evidenced, whether direct or indirect, joint or several,
absolute or contingent, or now or hereafter existing, or due or to
become due, and arising out of or in connection with the Credit Agreement or
the Related Documents, including, without limitation, all indebtedness of any
kind arising under, and all amounts of any kind which at any time become due or
owing to the Lenders, the Agent, the Mortgagee or any other Lender Party under
or with respect to, the Credit Agreement, this Mortgage or the other Related
Documents, all of the covenants, obligations and agreements (and the truth of
all representations and warranties) in, under or pursuant to the Notes, this
Mortgage, and the other Related Documents, any and all advances, costs or
expenses paid or incurred by the Lenders, the Mortgagee, the Agent or any other
Lender Party to protect any or all of the Collateral and other collateral under
the Related Documents, to perform any obligation of the Mortgagor hereunder and
any obligation of the Mortgagor or its Subsidiaries under the Related Documents
or collect any amount owing to the Lenders, the Agent, the Mortgagee or any
other Lender Party which is secured hereby or under the other Related
Documents; interest on all of the foregoing; and all costs of enforcement of
and collection of amounts owing under this Mortgage, the Notes, the other
Related Documents and all of the foregoing.
E. THE COLLATERAL. For purposes of this Mortgage, the term "COLLATERAL"
means and includes all of the following:
(i) REAL ESTATE. All of the land described in EXHIBIT A attached
hereto (the "LAND"), together with all and singular the tenements, rights,
easements, hereditaments, rights of way or uses, privileges, liberties,
servitudes, licenses, franchises, appendages and appurtenances now or hereafter
belonging or in anywise appertaining to the Land (including, without
limitation, all rights relating to storm and sanitary sewer, water, gas,
electric, railway and telephone services); all development rights, air rights,
water, water rights, water stock, gas, oil, minerals, coal and other substances
of any kind or character underlying or relating to the Land; all estate, claim,
demand, right, title or interest in and to any street, road, highway, or alley
(vacated or otherwise) adjoining the Land or any part thereof; all strips and
gores belonging, adjacent or pertaining to the Land; and any after-acquired
title to any of the foregoing (all of the foregoing is hereinafter referred to
collectively as the "REAL ESTATE");
(ii) IMPROVEMENTS AND FIXTURES. All buildings, structures,
replacements, furnishings, fixtures, fittings and other improvements and
property of every kind and character now or hereafter located or erected on the
Real Estate, together with all building or construction materials, equipment,
appliances, machinery, plant equipment, fittings, apparati, fixtures and other
articles of any kind or nature whatsoever now or hereafter found on, affixed to
or attached to the Real Estate, and constituting real property under applicable
law, including (without limitation) all motors, boilers, engines and devices
for the operation of pumps, and all heating, electrical, lighting, power,
plumbing, air conditioning, refrigeration and ventilation equipment, booths,
counters and signs (all of the foregoing is hereinafter referred to
collectively as the "IMPROVEMENTS"; all of the Real Estate and the Improvements
and any other property which is real estate under applicable law, is sometimes
hereinafter referred to collectively as the "PREMISES");
(iii) PERSONAL PROPERTY. All furniture, furnishings, equipment
(including, without limitation, telephone and other communications equipment,
window cleaning, building cleaning, monitoring, garbage, air conditioning,
cooking, pest control and other equipment) and all other tangible property of
any kind or character (but excluding personal property of tenants or
independent contractors of the Mortgagor (the "OCCUPANT'S EQUIPMENT")) now or
hereafter owned or purported to be owned by the Mortgagor and used or useful in
connection with the Real Estate, regardless of whether located on or in the
Premises or located elsewhere, including, without limitation, all rights of the
Mortgagor under any lease of furniture, furnishings, fixtures and other items
of personal property at any time during the term of such lease, and all rights
under and to all payments and deposits required by the provisions of SECTION
1.20 of ARTICLE I below (all of the foregoing is hereinafter referred to
collectively as the "GOODS");
(iv) INTANGIBLES. All option rights, purchase contracts, books and
records and general intangibles of the Mortgagor relating to the Real Estate or
the Improvements and all accounts, contract rights, instruments, chattel paper
and other rights of the Mortgagor for payment of money to it for property sold
or lent by it, for services rendered by it, for money lent by it, or for
advances or deposits made by it, and any other intangible property of the
Mortgagor related to the Real Estate or the Improvements (all of the foregoing
is hereinafter referred to collectively as the "INTANGIBLES");{1/}
(v) RENTS. All rents, issues, profits, royalties, avails, reversions,
remainders, income and other benefits derived or owned by the Mortgagor
directly or indirectly from the Real Estate or the Improvements, and all
proceeds of the conversion, voluntary or involuntary, of any of the Premises
into cash or liquidated claims (all of the foregoing is hereinafter referred to
collectively as the "RENTS");
(vi) OCCUPANCY LEASES. All rights of the Mortgagor under all leases,
tenant contracts, licenses, occupancy agreements, warehouse agreements,
concessions or other arrangements, whether written or oral, whether now
existing or entered into at any time hereafter, whereby any Person agrees to
pay money to the Mortgagor or any other consideration for the use, possession
or occupancy of, or any estate in, the Real Estate or the Improvements or any
part thereof, and all rents, income, profits, benefits, avails, advantages and
claims against guarantors under any thereof (all of the foregoing is
hereinafter referred to collectively as the "OCCUPANCY LEASES");
(vii) PLANS. All rights of the Mortgagor, if any, to plans and
specifications, designs, drawings and other matters prepared in connection with
the Real Estate, the Improvements and the Goods (all of the foregoing is
hereinafter called the "PLANS");
(viii) CONTRACTS FOR CONSTRUCTION OR SERVICES. All rights of the
Mortgagor, if any, under any contracts executed by the Mortgagor with any
provider of goods or services for or in connection with any construction
undertaken on, or services performed or to be performed in connection with, the
Real Estate or the Improvements, including any architect's contract (all of the
foregoing is hereinafter referred to collectively as the "CONTRACTS FOR
CONSTRUCTION");
(ix) CONTRACTS FOR SALE OR FINANCING. All rights of the Mortgagor, if
any, as seller or borrower under any agreement, contract, understanding or
arrangement pursuant to which the Mortgagor has obtained the agreement of any
Person to pay or disburse any money for the Mortgagor's sale (or borrowing on
the security) by the Mortgagor of the Collateral or any part thereof (all of
the foregoing is hereinafter referred to collectively as the "CONTRACTS FOR
SALE");
(x) AFTER-ACQUIRED PROPERTY. Any and all additional estates in the
Premises, the Rents or the Occupancy Leases and other rights and interests
hereafter acquired by the Mortgagor relating to the Collateral or any part
thereof and all general intangibles constituting proceeds acquired with cash
proceeds of any of the property described hereinabove (all of the foregoing is
herein referred to as the "AFTER-ACQUIRED PROPERTY"); and
(xi) OTHER PROPERTY. All other property or rights of the Mortgagor of
any kind or character related to the Real Estate, the Improvements, the Rents,
the Occupancy Leases, the After-Acquired Property and all proceeds (including
insurance and condemnation proceeds) and products of any of the foregoing.
G R A N T
NOW THEREFORE, for and in consideration of the Lenders making any loan,
advance or other financial accommodation to or for the benefit of the
Mortgagor, including sums advanced under the Notes, and in consideration of the
various agreements contained herein, in the Notes, the Credit Agreement and any
other Related Documents, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Mortgagor, and
in order to secure the full, timely and proper payment and performance of each
and every one of the Liabilities,
THE MORTGAGOR HEREBY GRANTS, MORTGAGES, WARRANTS, CONVEYS, BARGAINS,
SELLS, ALIENS, DEMISES, HYPOTHECATES, PLEDGES, RELEASES, TRANSFERS AND ASSIGNS
TO THE MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS FOREVER, AND GRANTS TO THE
MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS FOREVER A CONTINUING SECURITY INTEREST
IN AND TO, ALL OF THE COLLATERAL.
TO HAVE AND TO HOLD the Collateral unto the Mortgagee, its successors and
assigns, forever, the Mortgagor hereby expressly waiving and releasing any and
all right, benefit, privilege, advantage or exemption under and by virtue of
any and all statutes and laws of the State in which the Real Estate is located
providing for the exemption of homesteads from sale on execution or otherwise.
The Mortgagor hereby covenants with and warrants to the Mortgagee for the
benefit of the Mortgagee, the Lenders and the purchaser at any foreclosure sale
that: at the execution and delivery hereof it is well seized of the Premises,
and of a good, indefeasible estate therein, in fee simple; the Collateral is
free from all encumbrances whatsoever (and any claim of any other Person
thereto) other than the security interest granted herein and pursuant to the
other Related Documents and the encumbrances set forth as exceptions to title
in the final title insurance policy or policies (the "TITLE POLICIES") relating
to the lien of this Mortgage on the Premises and delivered to the Agent
pursuant to Section 5.1.11 of the Credit Agreement (the "PERMITTED
EXCEPTIONS"); it has good and lawful right to sell, mortgage, encumber and
convey the Collateral; and it and its successors and assigns will forever
warrant and defend the Collateral unto the Mortgagee, the Lenders, any
purchaser at a foreclosure sale and their successors and assigns against all
claims and demands whatsoever with the exception of the Permitted Exceptions.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, EXPRESSED OR
IMPLIED, THE RECOVERY BY THE LENDERS FROM THE PREMISES LOCATED IN THE COUNTY OF
_______________, FLORIDA, FOR APPLICATION AGAINST THE NOTES AND NOTE
OBLIGATIONS SHALL NOT EXCEED $__________________.
I. COVENANTS AND AGREEMENTS OF THE MORTGAGOR
Further to secure the payment and performance of the Liabilities, the
Mortgagor hereby covenants, warrants and agrees with the Mortgagee, for the
benefit of the Mortgagee and the Lenders, as follows:
1.1. PAYMENT OF LIABILITIES. The Mortgagor agrees that it will pay,
timely and in the manner required in the appropriate documents or instruments,
all amounts due under this Mortgage, the Credit Agreement, the Notes and all
other Liabilities (including attorneys' fees and other fees and charges). All
sums payable by the Mortgagor hereunder shall be paid without demand,
counterclaim, offset, deduction or defense, and without relief from valuation
or appraisement laws. The Mortgagor waives all rights now or hereafter
conferred by statute or otherwise to any such demand, counterclaim, offset,
deduction or defense.
1.2. PAYMENT OF TAXES. The Mortgagor will pay or cause to be paid before
delinquent all taxes and assessments, general or special, and any and all
levies, claims, charges, expenses and Liens (as hereinafter defined), ordinary
or extraordinary, governmental or non-governmental, statutory or otherwise, due
or to become due, that may be levied, assessed, made, imposed or charged on or
against the Collateral or any property used in connection therewith, and will
pay before due any tax or other charge on the interest or estate in the
Collateral or property created or represented by this Mortgage or by any of the
other Related Documents, whether levied against the Mortgagor, the Lenders or
otherwise, and will submit, upon request therefor from the Mortgagee, to the
Mortgagee copies of all receipts showing payment of all of such taxes,
assessments and charges; PROVIDED, HOWEVER, that the Mortgagor shall not
(unless otherwise required by law) be required to pay any such taxes,
assessments, levies, claims, charges, expenses or Liens (as hereinafter
defined) which are being contested in good faith and by appropriate proceedings
and as to which reserves are being maintained in accordance with generally
accepted accounting principles so long as (i) neither the Mortgagee nor any
Lender shall be subject to any civil or criminal liability as a result of the
failure of the Mortgagor to pay any such taxes, assessments, levies, claims,
charges, expenses or liens during the period of any such contest and (ii)
forfeiture of any part of the Collateral will not result from the failure of
the Mortgagor to pay any such taxes, assessments, levies, claims, charges,
expenses or Liens (as hereinafter defined) during the period of any such
contest. The Mortgagor's making any payments and deposits required by the
provisions of SECTION 1.20 of this ARTICLE I shall not relieve the Mortgagor
of, or diminish in any way, its obligations as set out in this SECTION 1.2.
1.3. MAINTENANCE AND REPAIR. None of the Premises is used principally or
primarily for agricultural or farming purposes. The Mortgagor will: not
abandon the Premises; not do or suffer anything to be done which would
depreciate or impair the value of the Collateral or the security of this
Mortgage; not remove or demolish any of the Improvements; subject to SECTION
1.10, pay promptly for all labor and materials for all construction, repairs
and improvements to or on the Premises; not make any changes, additions or
alterations to the Premises or the Improvements other than remodeling in the
ordinary course of business except as required by any applicable governmental
requirement or as otherwise approved in writing by the Mortgagee, which
approval shall not be unreasonably withheld, delayed or conditioned; at its
sole cost and expense, maintain, preserve and keep the Goods and the
Improvements, including the adjoining sidewalks, curbs, vaults and vault space,
if any, streets and ways, in good, safe and insurable condition and repair and
make any needful and proper repairs, replacements, renewals, additions or
substitutions, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen, required by wear, damage,
obsolescence or destruction, all as promptly as possible under the
circumstances, but in all cases in compliance with any time period and
construction requirement provided under applicable requirements of governmental
authorities and insurance underwriters; not commit, suffer, or permit waste of
any part of the Premises; and maintain all grounds in good and neat order and
repair. Anything to the contrary contained herein notwithstanding: (a) the
Mortgagor may sell, transfer or otherwise dispose of equipment, furnishings and
similar personal property used in connection with the Premises if, in the
Mortgagor's reasonable judgment, the same become damaged, destroyed or
obsolete, PROVIDED that all such equipment, furnishings and other personal
property is, prior to or concurrently with such sale, transfer or other
disposition, replaced with equipment, furnishings and similar personal property
that is at least of comparable quality, value and utility and, (i) if such
replacement equipment, furnishings or personal property is owned by Mortgagor,
is free and clear of all security interests and other Liens except for the
security interest granted by this Mortgage, or, (ii) if such replacement
equipment, furnishings or personal property is leased by Mortgagor, the leasing
of such property shall be pursuant to a general policy of Mortgagor and on
commercially-reasonable lease terms; PROVIDED, FURTHER, that no such equipment,
furnishings and other personal property need be so replaced if the Mortgagor
determines in the exercise of good business judgment that the same is no longer
required for the continued operation of the Premises or the operation of the
business conducted therefrom; and (b) the Mortgagor may sell its property and
interests therein as permitted by and subject to the conditions set forth in
clause (e) of Section 7.2.11 of the Credit Agreement.
1.4. SALES; LIENS. Except as permitted under Section 7.2.11 of the Credit
Agreement and Section 1.3 hereof, the Mortgagor will not: sell, contract to
sell, assign, transfer or convey, or permit to be transferred or conveyed, the
Collateral or any part thereof or any interest or estate in any thereof
(including any conveyance into a trust or any conveyance of the beneficial
interest in any trust that may be holding title to the Premises) or remove any
of the Collateral from the Premises or from the State in which the Real Estate
is located; or create, suffer or permit to be created or to exist any mortgage,
lien, claim, security interest, charge, encumbrance or other right or claim of
any kind whatsoever (a "LIEN") upon the Collateral or any part thereof, except
(a) those of current taxes not then delinquent, (b) the Permitted Exceptions
(c) easements, rights-of way, zoning and similar restrictions and other similar
encumbrances or title defects which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the
Property or interfere with the ordinary conduct of the business of the
Mortgagor, entered into in the ordinary course and permitted by clause (g) of
Section 7.2.3 of the Credit Agreement, and (d) mechanics' and materialmen's
Liens being diligently contested in good faith and otherwise in accordance with
SECTION 1.10. The Mortgagor shall have no power or authority to create any
Lien on the Premises or any part thereof (other than this Mortgage and any
extension or renewal thereof and any exception referred to in CLAUSE (A), (B),
(C) or (D) of the immediately-preceding sentence), and any such Lien created
without the prior written consent of the Mortgagee, whether created by the
affirmative act of the Mortgagor or otherwise, and whether or not created by
any further advance by a prior lienholder after the date of this Mortgage,
shall be subject and subordinate to this Mortgage. Notwithstanding any other
provision of this Mortgage to the contrary, the Mortgagor shall be entitled to
convey portions of the Premises which do not exceed in aggregate the cumulative
sum of One Hundred Thousand Dollars ($100,000.00), during any twelve-month
period to state or local entities or agencies PROVIDED THAT such conveyances
are in lieu of condemnation and the net proceeds from such conveyances are
applied to the prepayment of the Liabilities when, as and if required by the
terms of the Credit Agreement. The Mortgagee shall provide appropriate
releases from the lien of this Mortgage with respect to any property conveyed
or otherwise disposed of in accordance with this SECTION 1.4.
1.5. ACCESS BY MORTGAGEE. The Mortgagor will at all times: promptly upon
request of the Mortgagee, deliver to the Mortgagee either all of its executed
originals (in the case of chattel paper or instruments) or certified copies (in
all other cases) of all Occupancy Leases, agreements creating or evidencing
Intangibles, Plans, Contracts for Construction, Contracts for Sale, all
amendments and supplements thereto, and any other document which is, or which
evidences, governs, or creates, Collateral; permit access by the Mortgagee and
any Lender upon not fewer than 24 hours prior notice if no Default (as
hereinafter defined) or event which, with the giving of notice or lapse of
time, or both, has occurred which would constitute a Default (in either of
which cases no notice need be given) to its books and records, construction
progress reports, tenant registers, sales records, offices, insurance policies
and other papers for examination and the making of copies and extracts; prepare
such schedules, summaries, reports and progress schedules as the Mortgagee or
any Lender may reasonably request; and permit the Mortgagee, any Lender and
their agents and designees, at all times, to enter on and inspect the Premises.
1.6. STAMP AND OTHER TAXES. If the federal, or any state, county, local,
municipal or other, government or any subdivision of any thereof having
jurisdiction, shall levy, assess or charge any tax (excepting therefrom any
income tax on the Lenders' receipt of interest payments on the principal
portion of the Loan Amounts), assessment or imposition upon this Mortgage, the
Notes, any of the other Liabilities, or any of the other Related Documents, the
interest of the Mortgagee or the Lenders in the Collateral, or any of the
foregoing, or upon the Mortgagee or the Lenders by reason of or as holder of
any of the foregoing, or shall at any time or times require revenue or
documentary stamps to be affixed to this Mortgage, the Notes, or any of the
other Related Documents, the Mortgagor shall pay all such taxes and stamps to
or for the Mortgagee and the Lenders as they become due and payable.
If any law or regulation is enacted or adopted permitting, authorizing or
requiring any tax, assessment or imposition to be levied, assessed or charged,
which law or regulation prohibits the Mortgagor from paying any material tax,
assessment, stamp, or imposition to or for the Mortgagee or the Lenders, then
all or any portion of the sums hereby secured shall become immediately due and
payable at the option of the Required Lenders (as hereinafter defined). For
the purpose of the immediately-preceding sentence of this SECTION 1.6, the
"sums hereby secured" will be considered to be that portion of the principal
amount of the Liabilities which bears the same relation to the aggregate amount
of all Liabilities as the value of the Collateral located in the County of
_____________, Florida, subject to this Mortgage bears to all collateral for
the Liabilities under the Loan Documents, as determined by the Mortgagee in its
sole discretion. Thereafter, if the Mortgagor fails to make payment of all
such sums within 5 days of the Mortgagee's demand therefor, such failure shall
constitute a Default hereunder.
1.7. INSURANCE. The Mortgagor will at all times maintain or cause to be
maintained on the Goods, the Improvements and on all other Collateral, all
insurance reasonably required at any time or from time to time by the Mortgagee
or any Lender, and in any event: (a) all-risk property insurance covering
fire, extended coverage, vandalism and malicious mischief and such other
insurance coverage customarily obtained from time to time by prudent owners of
properties of similar character and use as the Premises, in an amount which is
not less than (or such greater amount if required to avoid the effects of any
co-insurance provisions contained in the policy) the full replacement cost from
time to time (which replacement cost shall be subject to the Mortgagee's
reasonable approval) of the Improvements and Goods without consideration for
depreciation; (b) insurance against flood if required by the Federal Flood
Disaster Protection Act of 1973 and regulations issued thereunder; (c)
comprehensive general public liability insurance, protecting the Mortgagor in
an amount reasonably acceptable to the Mortgagee, but in any event with a
single limit of not less than $1,000,000, in respect of personal injury or
death to any one person, of not less than $1,000,000 in respect of any one
occurrence, of not less than $2,000,000 in respect of any one location for
personal injury and property damage, and an umbrella policy or policies in an
amount not less than $20,000,000, each such coverage to be subject to a
deductible, if any, not to exceed $250,000 per occurrence, PROVIDED Mortgagor
shall maintain adequate reserves therefor, and, PROVIDED, FURTHER that
Mortgagor may self insure with respect to workers compensation in each state
where Mortgagor is qualified to do so and if Mortgagor maintains adequate
reserves therefor; (d) during construction, builder's completed value risk
insurance against "all risks of physical loss" (including collapse and transit
coverage); and (e) all other insurance commonly or, in the reasonable judgment
of the Mortgagee or any Lender, prudently maintained by those whose business,
improvement to, and use of real estate is similar to that of the Mortgagor,
including (without limitation), if applicable, boiler explosion, sprinkler
leakage and dram shop liability insurance, all in amounts satisfactory to the
Mortgagee. All of such insurance shall be maintained in such form and with
such companies as shall be approved by the Mortgagee, and Mortgagor shall
deliver to and keep deposited with the Mortgagee original certificates and
certified copies of all policies of such insurance and renewals thereof,
indexed to the Premises in the order established on EXHIBIT A, with premiums
paid prior to the deadline for payment thereof and with clauses attached
thereto in favor of the Lenders and the Mortgagee, and their successors and
assigns, that (1) name the Mortgagee and each Lender as additional insured
parties thereunder, as their interests may appear; (2) any losses shall be
payable notwithstanding (i) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such policy by
any person other than the person claiming, (ii) the occupation or use of the
Premises for purposes more hazardous than permitted by the terms of the policy,
or (iii) any foreclosure or other proceedings or notice of sale relating to the
Premises, or any change in title to or ownership of any of the Premises; (3)
include effective waivers by the insurer of all claims for insurance premiums
and rights of subrogation against the Mortgagee and each Lender; (4) provide
that each policy shall be primary without right of contribution from any other
insurance that may be carried; and (5) not less than 30 days' prior written
notice to the Mortgagee shall be given of cancellation (including, without
limitation, cancellation for non-payment or expiration of the term of such
policy) or material modification of such policies or any portion thereof. The
Mortgagor's making any payments and deposits required by the provisions of
SECTION 1.20 of this ARTICLE I shall not relieve the Mortgagor of, or diminish
in any way, its obligations as set out in this SECTION 1.7. All of the above-
mentioned original insurance policies or certified copies of such policies and
certificates of such insurance reasonably satisfactory to the Mortgagee,
together with receipts for the payment of premiums thereon, shall be delivered
to and held by the Mortgagee, which delivery shall constitute assignment to the
Mortgagee of all return premiums to be held as additional security hereunder;
PROVIDED, HOWEVER, that, prior to any Default, any such premiums may be
retained by the Mortgagor, subject to the provisions of the Credit Agreement.
Certificates (or binders covering the time periods and with the renewal and
cancellation provisions set forth in the following sentence) evidencing all
renewal and replacement policies indexed to the Premises in the order
established on EXHIBIT A, shall be delivered to the Mortgagee prior to the
expiration of the expiring policies followed by certified copies of all such
replacement policies promptly after the issuance thereof. All binders provided
in accordance with the provisions of the preceding sentence shall be for a term
of not less than 90 days which term shall be deemed extended until written
notice of cancellation thereof is given to the Mortgagee not fewer than 30 days
prior to the effective date of such cancellation or expiration; PROVIDED,
HOWEVER, that in no event shall any insurance binder expire fewer than 90 days
after the issuance thereof. If the Mortgagor is unable to deliver to the
Mortgagee the evidence described herein of renewal or replacement insurance
policies not fewer than 15 days prior to the expiration date of the expiring
policies, the Mortgagor shall, not fewer than 15 days nor more than 30 days
prior to such expiration date, deliver to the Mortgagee a certificate from an
officer of the Mortgagor, stating (a) the Mortgagor's progress in obtaining
renewal or replacement policies and the anticipated date of issuance thereof;
(b) that the Mortgagor has received no notice of non-renewal or cancellation of
any existing policy of insurance; and (c) that the Mortgagor has no knowledge
of the cancellation or non-renewal of such policies of insurance or of any
facts or circumstances which, if known to an insurer, would cause it to cancel
or refuse renewal or issuance of any policy of insurance. Nothing contained in
the preceding sentence or elsewhere in this Mortgage shall excuse the Mortgagor
from continuously maintaining in full force and effect during the term of this
Mortgage all insurance required under the provisions hereof. The Mortgagor
shall not obtain nor permit the lessee under any Occupancy Lease to obtain or
carry policies of insurance concurrent in form or contributing in the event of
loss with those required to be maintained under this SECTION 1.7 unless the
Mortgagee and each Lender are included therein as named insureds and otherwise
in accordance with this Section.
The Mortgagor will promptly give the Mortgagee written notice of any
casualty to the Premises reasonably anticipated to result in damage over
$250,000. The Mortgagor agrees that any loss paid to the Mortgagee under any
of such policies shall be applied, at the option of the Required Lenders,
toward pre-payment of the Notes or any of the other Liabilities, or to the
rebuilding or repairing of the damaged or destroyed Improvements or other
Collateral, as the Required Lenders in their sole and unreviewable discretion
may elect (which election shall not relieve the Mortgagor of the duty to
rebuild or repair); PROVIDED, HOWEVER, that any proceeds of insurance shall be
made available to the extent required, as determined by the Mortgagee in its
reasonable discretion, for the rebuilding or repairing of the damaged or
destroyed Improvements or other Collateral under the following conditions:
(i) no Default or event which, with the lapse of time, the giving
of notice, or both, would constitute a Default under this Mortgage or the
other Related Documents shall have occurred and be continuing (and if
such an event shall occur during restoration, the Mortgagee may, at its
election, apply any insurance proceeds then remaining in its hands to the
reduction of the indebtedness evidenced by the Notes and the other
Liabilities);
(ii) the Mortgagor shall have submitted to the Mortgagee plans and
specifications for the restoration which shall be reasonably satisfactory
to the Mortgagee, which plans and specifications shall not be
substantially modified, changed or revised without the Mortgagee's prior
written consent, which consent shall not be unreasonably withheld,
delayed or conditioned, and shall be in conformity with all governmental
regulations, including, without limitation, building, zoning, land use
and environmental regulations; PROVIDED, HOWEVER, that so long as no
Default has occurred and is continuing, the provisions of this clause
shall not apply if the value of the Premises which has suffered a
casualty is less than $1,000,000;
(iii) the Mortgagor, if so requested by the Mortgagee, shall have
submitted to the Mortgagee fixed price contracts with good and
responsible contractors and materialmen covering all work and materials
necessary to complete restoration and providing for a total completion
price not in excess of the amount of insurance proceeds available for
restoration, or, if a deficiency shall exist, the Mortgagor shall have
deposited the amount of such deficiency with the Mortgagee unless the
Mortgagor has furnished other evidence which is satisfactory to the
Mortgagee of the Mortgagor's ability to pay such deficiency in full;
PROVIDED, HOWEVER, that, so long as no Default has occurred and is
continuing, the provisions of this clause shall not apply if the value of
the Premises which has suffered a casualty is less than $1,000,000;
(iv) any insurance proceeds in excess of $250,000 to be released
pursuant to the foregoing provisions may, at the option of the Mortgagee,
be disbursed from time to time as restoration progresses to pay for
restoration work completed and in place and such disbursements may, at
the Mortgagee's option, be made directly to the Mortgagor or to or
through any contractor or materialman to whom payment is due or to or
through a construction escrow to be maintained by a title insurer
reasonably acceptable to the Mortgagee;
(v) the Mortgagee may impose such further conditions upon the
release of insurance proceeds (including current reports of examination
of the title to the Premises and endorsements to the loan policy of title
insurance insuring the lien of this Mortgage) as are customarily imposed
by prudent construction lenders to insure the completion of the
restoration work free and clear of all Liens or claims for Lien;
(vi) all title insurance charges and other costs and expenses paid
to or for the account of the Mortgagor in connection with the release of
such insurance proceeds shall constitute so much additional indebtedness
and Liabilities hereby secured to be payable upon demand with interest
thereafter at the rate per annum equal to the CIBC Alternate Base Rate
plus 2% per annum (or such lower maximum rate as shall be legal under
applicable law) (the "DEFAULT RATE"), and any such costs and expenses may
be deducted by the Mortgagee from insurance proceeds at any time standing
in its hands; and
(vii) if the Mortgagor fails to complete restoration as promptly
as possible under the circumstances, but in all cases in compliance with
any time period provided under applicable requirements of governmental
authorities and insurance underwriters, the Mortgagee shall have the
right, but not the obligation, to restore or rebuild the Improvements and
the other Collateral, or any part thereof, for or on behalf of the
Mortgagor in lieu of applying said proceeds to the indebtedness and
Liabilities hereby secured and for such purpose may do all necessary
acts, including using funds deposited by the Mortgagor as aforesaid and
advancing additional funds for the purpose of restoration, all such
additional funds to constitute part of the indebtedness hereby secured
payable upon demand with interest at the Default Rate.
The Mortgagor hereby empowers the Mortgagee, in its discretion, to settle,
compromise and adjust any and all claims or rights under any insurance policy
maintained by the Mortgagor relating to the Collateral; PROVIDED, HOWEVER,
that, prior to the occurrence of any Default, (i) the Mortgagor shall have the
right to settle, adjust and compromise claims which are reasonably anticipated
to result in proceeds in an amount less than $500,000, and (ii) the Mortgagor
shall have the right to settle, adjust and compromise claims which are
reasonably anticipated to result in proceeds in an amount equal to or more than
$500,000, jointly with the Mortgagee. In the event of foreclosure of this
Mortgage or other transfer of title to the Premises, all right, title and
interest of the Mortgagor in and to any insurance policies then in force shall
pass to the purchaser or grantee. Nothing contained in this Mortgage shall
create any responsibility or obligation on the Mortgagee to collect any amounts
owing on any insurance policy or resulting from any condemnation, to rebuild or
replace any damaged or destroyed Improvements or other Collateral or to perform
any other act hereunder. The Mortgagee shall not, by the fact of approving,
disapproving, accepting, preventing, obtaining or failing to obtain any
insurance, incur any liability for or with respect to the amount of insurance
carried, the form or legal sufficiency of insurance contracts, solvency of
insurance companies, or payment or defense of lawsuits, and the Mortgagor
hereby expressly assumes full responsibility therefor and all liability, if
any, with respect thereto.
1.8. EMINENT DOMAIN. In case the Collateral, or any part or interest in
any thereof, is taken by condemnation or eminent domain proceedings, the
Mortgagor shall promptly give written notice thereof to the Mortgagee. The
Mortgagee is hereby empowered to collect and receive all compensation and
awards of any kind whatsoever (collectively, "CONDEMNATION AWARDS") which may
be paid for any property taken or for damages to any property not taken (all of
which the Mortgagor hereby assigns to the Mortgagee), and all Condemnation
Awards so received shall be forthwith applied by the Mortgagee, as it may elect
in its sole and unreviewable discretion, to the prepayment of the Notes or any
of the other Liabilities, or to the repair and restoration of any property not
so taken or damaged, or to the replacement of property taken; PROVIDED,
HOWEVER, that no election made by the Mortgagee under this Section shall
relieve the Mortgagor of the duty to repair and restore; PROVIDED, FURTHER,
that any Condemnation Awards payable by reason of the taking of less than all
of the Collateral shall be made available to the extent required, as determined
by the Mortgagee in its reasonable discretion, for the repair or restoration of
any Collateral not so taken under the conditions set forth in SECTION 1.7
hereof. The Mortgagor hereby empowers the Mortgagee, in the Mortgagee's
absolute discretion, to settle, compromise and adjust any and all claims or
rights arising under any condemnation or eminent domain proceeding relating to
the Collateral or any portion thereof; PROVIDED, HOWEVER, that, prior to the
occurrence of any Default, (i) the Mortgagor shall have the right to settle,
compromise and adjust claims which are reasonably anticipated to result in
proceeds in an amount less than $500,000, and (ii) the Mortgagor shall have the
right to settle, adjust and compromise claims which are reasonably anticipated
to result in proceeds in an amount equal to or more than $500,000, jointly with
the Mortgagee.
1.9. GOVERNMENTAL REQUIREMENTS. The Mortgagor will at all times fully
comply with, and cause the Collateral and the use and condition thereof fully
to comply with, all federal, state, county, municipal, local and other
governmental statutes, ordinances, requirements, regulations, rules, orders,
codes and decrees of any kind whatsoever that apply or relate to the Mortgagor
or the Collateral, any of the adjoining sidewalks, streets or ways, vaults or
vault space, if any, or the use thereof, and will observe and comply with all
conditions and requirements necessary to preserve and extend any and all
rights, licenses, permits, privileges, franchises and concessions (including,
without limitation, those relating to land use and development, landmark
preservation, construction, access, water rights and use, noise and pollution)
which are applicable to the Mortgagor or have been granted for the Collateral,
any of the adjoining sidewalks, streets or ways, vaults or vault space, if any,
or the use thereof. Notwithstanding the foregoing, the Mortgagor shall have
the right to diligently contest any such governmental requirement so long as
(a) the contest is conducted in good faith and by appropriate proceedings; (b)
reserves are being maintained in accordance with generally accepted accounting
principles; (c) forfeiture of any part of the Collateral will not result from
the Mortgagor's failure to comply with such governmental requirement during the
period of such contest; and (d) no criminal or civil penalties will result from
the Mortgagor's failure to comply with such governmental requirement during the
period of such contest. Unless required by applicable law, or unless the
Mortgagee has otherwise first agreed, the Mortgagor shall not make or allow any
material changes to be made in the nature of the occupancy or use of the
Premises as a whole from that for which the Premises was intended at the time
this Mortgage was delivered. The Mortgagor shall not initiate or acquiesce in
any change in any zoning or other land use classification now or hereafter in
effect which in any respect adversely affects the Premises or any part thereof
without in each case obtaining the Mortgagee's prior written consent thereto.
1.10. NO MECHANICS' LIENS. The Mortgagor will not suffer any mechanic's,
laborer's or materialman's Lien to be created or remain outstanding upon the
Collateral or any part thereof. Anything herein contained to the contrary
notwithstanding, the Mortgagor shall not be deemed in Default with respect to
the provisions of this Section if the Mortgagor provides the Mortgagee with
written notice of the Mortgagor's good faith intention to diligently contest
such Lien by appropriate proceedings (and the Mortgagor does so contest such
Lien) at the Mortgagor's sole expense and, if requested by the Mortgagee, the
Mortgagor furnishes to the Mortgagee either a bond, in form and with sureties
reasonably satisfactory to the Mortgagee, or an updated title insurance policy
or endorsement to the Mortgagee's existing policy acceptable to the Mortgagee
indemnifying the Mortgagee and the Lenders against any loss, cost, damage or
expenses on account of any such Lien. The Mortgagor agrees to promptly deliver
to the Mortgagee a copy of any notices that the Mortgagor receives with respect
to any pending or threatened Lien or the foreclosure thereof. IT IS FURTHER
EXPRESSLY MADE A COVENANT AND CONDITION HEREOF THAT THE LIEN OF THIS MORTGAGE
SHALL EXTEND TO ALL RIGHT, TITLE AND INTEREST OF THE MORTGAGOR IN ANY AND ALL
IMPROVEMENTS AND FIXTURES NOW OR HEREAFTER ON THE PREMISES, PRIOR TO ANY OTHER
LIEN THEREON THAT MAY BE CLAIMED BY ANY PERSON, SO THAT SUBSEQUENTLY ACCRUING
CLAIMS FOR LIENS ON THE PREMISES SHALL BE JUNIOR AND SUBORDINATE TO THIS
MORTGAGE. ALL CONTRACTORS, SUBCONTRACTORS, AND OTHER PARTIES DEALING WITH THE
PREMISES, OR WITH ANY PARTIES INTERESTED THEREIN, ARE HEREBY REQUIRED TO TAKE
NOTICE OF THE ABOVE PROVISIONS.
1.11. CONTINUING PRIORITY. The Mortgagor will: pay such fees, taxes and
charges, execute and file (at the Mortgagor's expense) such financing
statements (and appropriate continuation statements with respect thereto),
obtain such acknowledgements or consents, notify such obligors or providers of
services and materials and do all such other acts and things as the Mortgagee
or any Lender may from time to time request to establish and maintain a valid
and perfected first and prior lien on and a first priority perfected security
interest in the Collateral (including, without limitation, any Collateral
acquired after the execution hereof); maintain its office and principal place
of business at all times at the address shown above except as otherwise
provided in the Credit Agreement; keep all of its books and records relating to
the Collateral at the corporate headquarters of the Mortgagor; keep all
tangible Collateral on the Real Estate except as the Mortgagee may otherwise
consent in writing, and except as otherwise provided in SECTION 1.3; make
notations on its books and records sufficient to enable the Mortgagee, as well
as third parties, to determine the interest of the Mortgagee hereunder; and not
collect any rents or the proceeds of any of the Occupancy Leases or Intangibles
more than 30 days before the same shall be due and payable except as the
Mortgagee may otherwise consent in writing. Promptly upon request by the
Mortgagee, and in any event not more than 30 days after a request therefor from
the Mortgagee, but not more than once in any Fiscal Year, the Mortgagor, at its
sole cost and expense, will furnish to the Mortgagee, an opinion (or opinions),
satisfactory in scope and form to the Mortgagee, of independent counsel
satisfactory to the Mortgagee, stating that the Mortgagor has taken all action
then or theretofore required by this Section, setting forth the particulars of
all such action not set forth in an opinion previously furnished pursuant to
this Section and specifying the particulars of all action required by this
Section during the period from the date of such opinion to and including the
date fifteen months after the date of such opinion.
1.12. UTILITIES. The Mortgagor will pay or cause to be paid all public
and private utility charges incurred in connection with the Collateral promptly
when due and maintain all utility services available for use at the Premises.
1.13. CONTRACT MAINTENANCE; OTHER AGREEMENTS; LEASES. The Mortgagor will,
for the benefit of the Lenders, fully and promptly keep, observe, perform and
satisfy each obligation, condition, covenant, and restriction of the Mortgagor
affecting the Premises or imposed on it under any agreement between Mortgagor
and a third party relating to the Collateral or the Liabilities secured hereby,
including, without limitation, the Occupancy Leases, the Contracts for Sale,
Contracts for Construction and the Intangibles (collectively, the "THIRD PARTY
AGREEMENTS"), so that there will be no default thereunder that is not cured
within any applicable cure period provided therefor in the Third Party
Agreements and so that the Persons (other than the Mortgagor) obligated thereon
shall be and remain at all times obligated to perform for the benefit of the
Lenders; and the Mortgagor will not permit to exist any condition, event or
fact which could allow or serve as a basis or justification for any such Person
to avoid such performance. Without the prior written consent of the Mortgagee,
the Mortgagor shall not (a) make or permit any termination or amendment of the
rights of the Mortgagor under any Third Party Agreement (PROVIDED, HOWEVER,
that the Mortgagee agrees not to unreasonably withhold, delay or condition its
consent to any termination or amendment of any Third Party Agreement);
(b) collect rents or the proceeds of any Occupancy Leases or Intangibles more
than 30 days before the same shall be due and payable; (c) modify or amend any
Occupancy Lease (PROVIDED, HOWEVER, that the Mortgagee agrees not to
unreasonably withhold, delay or condition its consent to any modification or
amendment of any Occupancy Leases), or, except where the lessee is in default
beyond any applicable grace period provided in such Occupancy Lease, cancel or
terminate the same or accept a surrender of the leased premises; (d) consent to
the assignment or subletting of the whole or any portion of any lessee's
interest under any Occupancy Lease, or grant any options to renew (PROVIDED,
HOWEVER, that the consent required under this CLAUSE (D) shall not be
unreasonably withheld, conditioned or delayed with respect to the assignment,
subletting or granting of options to renew any Occupancy Leases); (e) create or
permit any Lien which, upon foreclosure, would be superior to any Occupancy
Lease; or (f) in any other manner impair the Mortgagee's rights and interest
with respect to the Rents or the Occupancy Leases. The Mortgagor shall
promptly deliver to the Mortgagee copies of any demands or notices of default
received by the Mortgagor in connection with any Third Party Agreement and
allow the Mortgagee the right, but not the obligation, to cure any such
default. All security or other deposits, if any, received from tenants under
the Occupancy Leases shall be segregated and maintained in an account
reasonably satisfactory to the Mortgagee and in compliance with the law of the
State where the leased premises are located and with an institution reasonably
satisfactory to the Mortgagee. The provisions of CLAUSES (A) and (C) of this
SECTION 1.13 to the contrary notwithstanding, the Mortgagee's consent shall not
be required for any amendment or other modification of any Occupancy Lease if
the amendment or modification does not substantially reduce the rent payable
thereunder or increase any obligation, risk or liability of the Mortgagor.
1.14. NOTIFY THE MORTGAGEE OF DEFAULT. The Mortgagor shall notify the
Mortgagee in writing forthwith upon learning of the occurrence of any Default
hereunder or other event which, upon the giving of notice or the passage of
time or both, would constitute a Default hereunder, which notice shall describe
such Default or other event that could mature into a Default and the steps
being taken by the Mortgagor with respect thereto.
1.15. NO ASSIGNMENTS; FUTURE LEASES. The Mortgagor will not cause or
permit any Rents, Occupancy Leases, Contracts for Sale, or other contracts
relating to the Premises to be assigned, transferred, conveyed, pledged or
disposed of to any party other than the Mortgagee without first obtaining the
express written consent of the Mortgagee to any such assignment or permit any
such assignment to occur by operation of law. In addition, the Mortgagor shall
not cause or permit all or any portion of or interest in the Premises to be
leased (that word having the same meaning for purposes hereof as it does in the
law of landlord and tenant) directly or indirectly to any Person, except with
the prior written consent of the Mortgagee.
1.16. ASSIGNMENT OF LEASES AND RENTS AND COLLECTIONS.
(a) All of the Mortgagor's interest in and rights under the Occupancy
Leases now existing or hereafter entered into, and all of the Rents, whether
now due, past due, or to become due, and including all prepaid rents and
security deposits, and all other amounts due with respect to any of the other
Collateral, are hereby absolutely, presently and unconditionally assigned and
conveyed to the Mortgagee, to be applied by the Mortgagee in payment of all
sums due under the Notes, the other Liabilities and all other sums payable
under this Mortgage. Prior to the occurrence of any Default, the Mortgagor
shall have a license to collect and receive all Rents and other amounts, which
license shall be terminated at the sole option of the Mortgagee, without regard
to the adequacy of its security hereunder and without notice to or demand upon
the Mortgagor, upon the occurrence of any Default. It is understood and agreed
that neither the foregoing assignment to the Mortgagee nor the exercise by the
Mortgagee of any of its rights or remedies under ARTICLE III hereof shall be
deemed to make the Mortgagee a "mortgagee-in-possession" or otherwise
responsible or liable in any manner with respect to the Collateral or the use,
occupancy, enjoyment or operation of all or any portion thereof, unless and
until the Mortgagee, in person or by agent, assumes actual possession thereof,
nor shall appointment of a receiver for the Collateral by any court at the
request of the Mortgagee or by agreement with the Mortgagor, or the entering
into possession of any part of the Collateral by such receiver, be deemed to
make the Mortgagee a "mortgagee-in-possession" or otherwise responsible or
liable in any manner with respect to the Collateral or the use, occupancy,
enjoyment or operation of all or any portion thereof. Upon the occurrence of
any Default, this shall constitute a direction to and full authority to each
lessee under any Occupancy Lease, each guarantor of any of the Occupancy Leases
and any other Person obligated under any of the Collateral to pay all Rents and
other amounts to the Mortgagee without proof of the Default relied upon. The
Mortgagor hereby irrevocably authorizes each such Person to rely upon and
comply with any notice or demand by the Mortgagee for the payment to the
Mortgagee of any Rents and other amounts due or to become due.
(b) The Mortgagor shall apply the Rents and other amounts to the payment
of all necessary and reasonable operating costs and expenses of the Collateral,
debt service on the indebtedness secured hereby and otherwise in compliance
with the provisions of the Credit Agreement.
(c) The Mortgagor shall at all times fully perform the obligations of
the lessor under all Occupancy Leases. The Mortgagor shall at any time or from
time to time, upon request of the Mortgagee, transfer and assign to the
Mortgagee in such form as may be satisfactory to the Mortgagee, the Mortgagor's
interest in the Occupancy Leases, subject to and upon the condition, however,
that, prior to the occurrence of any Default hereunder, the Mortgagor shall
have a license to collect and receive all Rents under such Occupancy Leases
upon accrual, but not prior thereto, as set forth in PARAGRAPH (A) above.
(d) The Mortgagee shall have the right to assign the Mortgagee's right,
title and interest in any Occupancy Leases to any subsequent holder of this
Mortgage or any participating interest therein or to any Person acquiring title
to all or any part of the Collateral through foreclosure or otherwise. Any
subsequent assignee shall have all the rights and powers herein provided to the
Mortgagee. Upon the occurrence of any Default, the Mortgagee shall have the
right to execute new Occupancy Leases of any part of the Collateral, including
Occupancy Leases that extend beyond the term of this Mortgage. The Mortgagee
is hereby appointed and designated and shall have the authority, as the
Mortgagor's attorney-in-fact, such authority being coupled with an interest and
irrevocable, upon the occurrence of any Default, to sign the name of the
Mortgagor and to bind the Mortgagor on all papers and documents relating to the
operation, leasing and maintenance of the Collateral.
1.17. THE MORTGAGEE'S PERFORMANCE. If the Mortgagor fails to pay or
perform any of its obligations herein contained (including payment of expenses
of foreclosure and court costs), the Mortgagee, or its designee, may (but need
not), as agent or attorney-in-fact of the Mortgagor, make any payment or
perform (or cause to be performed) any obligation of the Mortgagor hereunder,
in any form and manner deemed expedient by the Mortgagee, and any amount so
paid or expended (plus reasonable compensation to the Mortgagee for its out-of-
pocket and other expenses for each matter for which it acts under this
Mortgage), with interest thereon at the Default Rate, shall be added to the
principal debt hereby secured and shall be repaid to the Mortgagee upon demand.
By way of illustration and not in limitation of the foregoing, the Mortgagee
may (but need not) do all or any of the following: make payments of principal
or interest or other amounts on any Lien on any of the Collateral; complete
construction; make repairs; collect rents; prosecute collection of the
Collateral or proceeds thereof; purchase, discharge, compromise or settle any
tax Lien or any other Lien; contest any tax or assessment; redeem from any tax
sale or forfeiture affecting the Premises. In making any payment or securing
any performance relating to any obligation of the Mortgagor hereunder, the
Mortgagee shall be the sole judge of the legality, validity and amount of any
Lien and of all other matters necessary to be determined in satisfaction
thereof. No such action of the Mortgagee shall ever be considered as a waiver
of any right accruing to it, or any Lender, on account of the occurrence of any
matter which constitutes a Default.
1.18. SUBROGATION. To the extent that the Mortgagee, on or after the
date hereof, pays any sum under any provision of law or any instrument or
document creating any Lien or other interest prior or superior to the lien
of this Mortgage, or the Mortgagor or any other Person pays any such sum
with the proceeds of the Loans, the Mortgagee shall have and be entitled to a
Lien or other interest on the Collateral equal in priority to the Lien or other
interest discharged and the Mortgagee shall be subrogated to, and receive and
enjoy all rights and Liens possessed, held or enjoyed by, the holder of such
Lien, which shall remain in existence and benefit the Lenders in securing the
Liabilities.
1.19. HAZARDOUS MATERIAL. The Mortgagor shall comply with the
provisions of the Credit Agreement regarding Hazardous Materials.
1.20. RESERVE FOR TAXES, ASSESSMENTS AND INSURANCE. Except as
otherwise provided in the last paragraph of this SECTION 1.20, the Mortgagor
covenants and agrees to pay to the Mortgagee monthly until the Notes and
all of the other Liabilities have been paid in full, in addition to the payments
of principal and interest under the terms of the Notes, a sum equal to taxes
and assessments next due upon the Premises (all as estimated by the Mortgagee)
and the premiums that will next become due and payable on policies of fire,
rental value and other insurance covering the Premises required under the
terms of this Mortgage, divided by the number of months to elapse before
one month prior to the date when such taxes, assessments and insurance
premiums will become due and payable, such sums to be held by the Mortgagee
without interest accruing thereon, to pay each of the said items.
All payments described above in this Section shall be paid by the
Mortgagor each month in a single payment to be applied by the Mortgagee to the
foregoing items in such order as the Mortgagee shall elect in its sole
discretion.
Except as otherwise provided in the last paragraph of this SECTION 1.20,
the Mortgagor shall also pay to the Mortgagee, not fewer than thirty (30) days
prior to the due date of any taxes, assessments or insurance premiums levied
on, against or with respect to the Premises, such additional amount as may be
necessary to provide the Mortgagee with sufficient funds to pay any such tax,
assessment and insurance premiums under this SECTION 1.20 not fewer than 15
days in advance of the due date thereof. The Mortgagor's failure timely to
make any payments required under this SECTION 1.20 shall be a Default under
this Mortgage.
Except as otherwise provided in the last paragraph of this SECTION 1.20,
the Mortgagee shall, within 15 days of receipt from the Mortgagor of a written
request therefor, together with such supporting documentation as the Mortgagee
may reasonably require (including, without limitation, official tax bills or,
as applicable, statements for insurance premiums), cause proper amounts to be
withdrawn from such account and paid directly to the appropriate tax collecting
authority or insurer. Even though the Mortgagor may have made all appropriate
payments to the Mortgagee as required by this Mortgage, the Mortgagor shall
nevertheless have full and sole responsibility at all times to cause all taxes,
assessments, insurance premiums and rent and additional rent to be fully and
timely paid, and the Mortgagee shall have no responsibility or obligation of
any kind with respect thereto except with respect to payments required to be
made by the Mortgagor hereunder for which the Mortgagee has received funds to
cover such payments in full and all statements, invoices, reports or other
materials necessary to make such payments, all not fewer than 15 days prior to
the deadline for any such payment. If at any time the funds so held by the
Mortgagee shall be insufficient to cover the full amount of all taxes,
assessments and, insurance premiums then accrued (as estimated by the
Mortgagee) with respect to the then-current twelve-month period, the Mortgagor
shall, within 10 days after receipt of notice thereof from the Mortgagee
deposit with the Mortgagee such additional funds as may be necessary to remove
the deficiency. Failure to do so within such 10-day period shall be a Default
hereunder and all sums hereby secured shall immediately become due and payable
at the option of the Required Lenders. If the Premises described herein are
sold under foreclosure or are otherwise acquired by the Mortgagee,
accumulations under this SECTION 1.20 may be applied to the Liabilities in such
order of application as the Mortgagee may elect in its sole discretion.
Anything contained in this SECTION 1.20 to the contrary notwithstanding,
the Mortgagee hereby (by acceptance of this Mortgage and without the necessity
of any written waiver, consent or acknowledgment from the Mortgagor) waives the
requirement of all deposits described in this SECTION 1.20; PROVIDED, HOWEVER,
that the Mortgagee shall have the right, in its sole discretion, to rescind
such waiver from and after the occurrence of any Default hereunder or the
occurrence of any event or condition which, with the giving of notice or lapse
of time, or both, would constitute a Default hereunder.
1.21. LIEN ABSOLUTE. All rights and Liens of the Mortgagee hereunder, and
all obligations of the Mortgagor hereunder, shall be absolute and
unconditional, irrespective, to the fullest extent permitted by law, of:
(a) any lack of validity or enforceability of any of the Related
Documents;
(b) any change in the time, manner or place of payment of, or in
any other term of all or any of the Liabilities, or any other amendment,
modification or waiver of, or any consent to or any departure from,
renewal, extension, acceleration, compromise, indulgence or other action
or inaction in respect of, any of the Related Documents;
(c) any sale, exchange, release, surrender or non-perfection of
any of the Collateral, or any release or waiver of, or any consent to or
any departure from, any guaranty or support arrangement, for all or any
of the Liabilities; or
(d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Mortgagor.
1.22. FURTHER ASSURANCES. The Mortgagor agrees that it will, from time to
time at its expense, promptly execute and deliver all further instruments, and
take all further actions, that may be necessary or appropriate, or that the
Mortgagee may request, in order to perfect, continue the perfection and protect
the security interests created hereby or to enable the Mortgagee to enforce its
rights hereunder with respect to any Collateral, including the execution and
filing of financing and continuation statements and amendments thereto. The
Mortgagor further authorizes the Mortgagee to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of the Mortgagor where permitted by law.
A carbon, photographic or other reproduction of this Mortgage or any financing
statement covering the Collateral of any part thereof shall be sufficient as a
financing statement where permitted by law. The Mortgagor will furnish the
Mortgagee from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Mortgagee may reasonably request, in reasonable detail.
1.23. SECURITY AGREEMENT.
(a) PARTS OF THE COLLATERAL ARE OR ARE TO BECOME FIXTURES ON THE LAND.
Insofar as the Improvements, Goods, Intangibles, Rents, Occupancy Leases,
Plans, Contracts for Construction, Contracts for Sale and After-Acquired
Property are concerned, this Mortgage is hereby made and declared to be a
security agreement, and a security interest is hereby granted by the Mortgagor
to the Mortgagee encumbering each and every item of Improvements, Goods,
Intangibles, Rents, Occupancy Leases, Plans, Contracts for Construction,
Contracts for Sale, and After-Acquired Property in compliance with the
provisions of the applicable Uniform Commercial Code. A financing statement or
statements reciting this Mortgage to be a security agreement, affecting all of
the property aforementioned, if requested by the Mortgagee, shall be executed
by the Mortgagor and the Mortgagee and appropriately filed. The remedies for
any violation of the covenants, terms and conditions of the security agreement
herein contained shall be (i) as prescribed herein, (ii) as prescribed by
general law, and (iii) as prescribed by the specific statutory consequences now
or hereafter enacted and specified in the Uniform Commercial Code as enacted in
the relevant state, all at the Mortgagee's sole election. The Mortgagor and
the Mortgagee agree that the filing of such financing statement(s) in the
records normally having to do with personal property shall never be construed
as in anywise derogating from or impairing this declaration and the intention
of the Mortgagor and the Mortgagee that everything which is described or
reflected in this Mortgage as part of the Collateral, is, and at all times and
for all purposes (other than with respect to defining "Improvements") and in
all proceedings, both legal or equitable, shall be, regarded as part of the
real estate irrespective of whether (A) any such item is physically attached to
the improvements, (B) serial numbers are used for the better identification of
certain items capable of being thus identified in a recital contained herein,
or (C) any such item is referred to or reflected in any such financing
statement(s) so filed at any time. Similarly, the mention in any such
financing statement(s) of the rights in and to (x) the proceeds of any fire
and/or hazard insurance policy, or (y) any award in eminent domain proceedings
for a taking or for loss of value, or (z) the Mortgagor's interest as lessor in
any present or future lease or rights to income growing out of the use and/or
occupancy of the Premises, whether pursuant to lease or otherwise, shall never
be construed as altering any of the rights of the Mortgagee or the Mortgagor as
determined by this Mortgage or impugning the priority of the Mortgagee's lien
granted hereby or by any other recorded document, but such mention in such
financing statement(s) is declared to be for the protection of the Mortgagee in
the event any court shall at any time hold with respect to the foregoing
CLAUSES (X), (Y) or (Z), that notice of the Mortgagee's priority of interest to
be effective against a particular class of Persons must be filed in the Uniform
Commercial Code records.
(b) The Mortgagor warrants that (i) the Mortgagor's (that is, the
"Debtor's") name, identity or corporate structure, federal employer
identification number and residence or principal place of business are as set
forth in EXHIBIT B hereto; (ii) the Mortgagor is duly qualified to do business
in each state in which the Real Estate is located; and (iii) the location of
the Improvements is and shall be upon the Land. The Mortgagor covenants and
agrees that: (A) the Mortgagor will furnish Mortgagee with notice of any
change in the matters addressed by clauses (i) or (ii) of this SECTION 1.23(B)
within thirty (30) days preceding the effective date of any such change; (B)
the Mortgagor will promptly execute any financing statements or other
instruments deemed necessary by the Mortgagee to prevent any filed financing
statement from becoming misleading or losing its perfected status; and (C) the
Mortgagor will remain qualified to do business in each state in which the
Premises are located.
(c) Upon execution by the Mortgagee (where local practice requires or
allows the same), this Mortgage shall constitute a financing statement filed as
a fixture filing under the Uniform Commercial Code in the real estate or other
appropriate records of the county in which the Premises are located with
respect to all Improvements which are a part of the Premises and with respect
to any goods or other personal property that may now be or hereafter become an
Improvement on the Premises. The information contained in this SECTION 1.23(C)
and EXHIBIT B is provided in order that this Mortgage shall comply with the
requirements of the applicable state Uniform Commercial Code for instruments to
be filed as financing statements to perfect the security interests with respect
to Improvements. The names of the "Debtor" and the "Secured Party", the
identity or corporate structure, federal employer identification number and
residence or principal place of business of the "Debtor" are as set forth in
EXHIBIT B, attached hereto and by this reference made a part hereof; the
mailing address of the "Secured Party" from which information concerning the
security interest may be obtained, and the mailing address of the Mortgagor
(that is, the "Debtor"), are as set forth in EXHIBIT B attached hereto; and a
statement indicating the types, or describing the items, of Collateral is set
forth hereinabove.
1.24. CHANGES IN OWNERSHIP. The Mortgagor hereby acknowledges to the
Mortgagee and the Lenders that (i) the identity and expertise of the Mortgagor
were and continue to be material circumstances upon which the Mortgagee and the
Lenders have relied in connection with, and which constitute valuable
consideration to the Mortgagee and the Lenders for, the extending to the
Mortgagor of the indebtedness evidenced by the Notes and (ii) any change in
such identity or expertise could materially impair or jeopardize the security
for the payment of and performance of the Liabilities, granted to the Mortgagee
for the benefit of the Lenders by this Mortgage. The Mortgagor therefore
covenants and agrees with the Mortgagee and each Lender that, except as
expressly permitted by the provisions of the Credit Agreement (including,
without limitation, Sections 7.2.3 and 7.2.11 thereof), the Mortgagor may not
sell, transfer, exchange, assign, grant a security interest in, pledge or
encumber, without the prior written consent of the Required Lenders, all or any
part of the Collateral or any interest therein.
II. DEFAULT
Each of the following shall constitute a default ("DEFAULT") hereunder:
2.1. LIABILITIES. The failure of the Mortgagor to pay any of the
Liabilities as and when due in accordance with the respective terms thereof; or
2.2. THE CREDIT AGREEMENT. The occurrence of an Event of Default (as such
term is defined in the Credit Agreement) under the terms and provisions of the
Credit Agreement; or
2.3. PROVISIONS OF THIS MORTGAGE. Non-compliance by the Mortgagor with,
or failure by the Mortgagor to perform, any term, covenant, condition or
agreement contained herein (other than non-compliance or failure which
constitutes a Default under SECTION 2.1, 2.2 or 2.4) and continuance of such
non-compliance or failure for five days with respect to the payment of any
amounts required to be paid under this Mortgage or for 30 days after notice
thereof to the Mortgagor from the Mortgagee with respect to any other such non-
compliance or failure under this Mortgage; or
2.4. DEFAULT UNDER THIRD PARTY AGREEMENTS. The occurrence of a default by
the Mortgagor under the terms of any Occupancy Lease or under any other Third
Party Agreements and any such default continues for more than the applicable
period of grace, if any, therein set forth.
III. REMEDIES
3.1. ACCELERATION. Upon the occurrence of any Default, the indebtedness
evidenced by the Notes and all other Liabilities, together with interest
thereon at the Default Rate, may be declared or (as the case may be) shall
become due and payable in the manner and to the extent specified in Section 8.1
of the Credit Agreement.
3.2. REMEDIES CUMULATIVE. No remedy or right of the Mortgagee or the
Lenders hereunder or under the Notes or any of the Related Documents, or
otherwise, or available under applicable law or in equity, shall be exclusive
of any other right or remedy, but each such remedy or right shall be in
addition to every other remedy or right now or hereafter existing under any
such document or under applicable law or in equity. No delay in the exercise
of, or omission to exercise, any remedy or right accruing on any Default shall
impair any such remedy or right or be construed to be a waiver of any such
Default or an acquiescence therein, nor shall it affect any subsequent Default
of the same or a different nature. Every such remedy or right may be exercised
concurrently or independently, and when and as often as may be deemed expedient
by the Mortgagee and the Lenders. All obligations of the Mortgagor, and all
rights, powers and remedies of the Mortgagee expressed herein shall be in
addition to, and not in limitation of, those provided by law or in equity or in
the Notes or any other Related Documents or any other written agreement or
instrument relating to any of the Liabilities or any security therefor.
3.3. POSSESSION OF PREMISES; REMEDIES UNDER MORTGAGE, NOTES AND RELATED
DOCUMENTS. The Mortgagor hereby waives all right to the possession, income,
and rents of the Premises from and after the occurrence of any Default, and the
Mortgagee is hereby expressly authorized and empowered, at and following any
such occurrence, to enter into and upon and take possession of the Premises or
any part thereof, to complete any construction in progress thereon at the
expense of the Mortgagor, to lease the same, to collect and receive all Rents
and to apply the same, less the necessary or appropriate expenses of collection
thereof, either for the care, operation and preservation of the Premises or, at
the election of the Mortgagee in its sole discretion, to a reduction of such of
the Liabilities in such order as the Mortgagee may from time to time elect.
The Mortgagee, in addition to the rights provided under the Notes and any other
Related Documents, is also hereby granted full and complete authority to enter
upon the Premises, employ watchmen to protect the Goods and Improvements from
depredation or injury and to preserve and protect the Collateral, and to
continue any and all outstanding contracts for the erection and completion of
improvements to the Premises, to make and enter into any contracts and
obligations wherever necessary in its own name, and to pay and discharge all
debts, obligations and liabilities incurred thereby, all at the expense of the
Mortgagor. All such expenditures by the Mortgagee shall be Liabilities
hereunder. Upon the occurrence of any Default, the Mortgagee may also exercise
any or all rights or remedies under the law of the State in which the Premises
are located.
3.4. FORECLOSURE; RECEIVER. Upon the occurrence of any Default, the
Mortgagee shall also have the right immediately to foreclose this Mortgage.
Upon the filing of any complaint for that purpose, the court in which such
complaint is filed may, upon application of the Mortgagee, or at any time
thereafter, either before or after foreclosure sale, and without notice to the
Mortgagor or to any party claiming under the Mortgagor and without regard to
the solvency or insolvency at the time of such application of any Person then
liable for the payment of any of the Liabilities, without regard to the then
value of the Premises or whether the same shall then be occupied, in whole or
in part, as a homestead by the owner of the equity of redemption, and without
requiring any bond from the complainant in such proceedings, appoint a receiver
for the benefit of the Mortgagee and the Lenders, with power to take
possession, charge, and control of the Premises, to lease the same, to keep the
buildings thereon insured and in good repair, and to collect all Rents during
the pendency of such foreclosure suit, and, in case of foreclosure sale and a
deficiency, during any period of redemption. The Mortgagor hereby waives any
and all defenses to the application for appointment of such receiver and
consents to the appointment of such receiver without notice.
The court may, from time to time, authorize said receiver to apply the
net amounts remaining in its hands, after deducting reasonable compensation for
the receiver and its counsel as allowed by the court, in payment (in whole or
in part) of any or all of the Liabilities, including without limitation the
following, in such order of application as the Mortgagee may elect:
(i) amounts due under the Notes, (ii) amounts due upon any decree entered in
any suit foreclosing this Mortgage, (iii) costs and expenses of foreclosure and
litigation upon the Premises, (iv) insurance premiums, repairs, taxes, special
assessments, water charges and interest, penalties and costs, in connection
with the Premises, (v) any other Lien upon the Premises that may be or become
superior to the lien of this Mortgage, or of any decree foreclosing the same,
and (vi) all moneys advanced by the Mortgagee or the Lenders to cure or attempt
to cure any Default by the Mortgagor in the performance of any obligation or
condition contained in any Related Documents or this Mortgage or otherwise, to
protect the security hereof provided herein, or in any Related Documents, with
interest on such advances at the Default Rate. The overplus of the proceeds of
sale, if any, shall then be paid to the Mortgagor, upon reasonable request.
This Mortgage may be foreclosed once against all, or successively against any
portion or portions, of the Premises, as the Mortgagee may elect, until all of
the Premises have been foreclosed against and sold. In the case of any sale of
the Premises pursuant to any judgment or decree of any court at public auction
or otherwise, the Mortgagee, or its designee, if allowed by applicable law, may
become the purchaser, and for the purpose of making settlement for or payment
of the purchase price, shall be entitled to deliver over and use the Notes and
any claims for the debt in order that there may be credited as paid on the
purchase price the amount of the debt. In case of any foreclosure of this
Mortgage (or the commencement of or preparation therefor) in any court, all
expenses of every kind paid or incurred by the Mortgagee or the Lenders for the
enforcement, protection or collection of this security, including court costs,
attorneys' fees (to the extent permitted by applicable law), stenographers'
fees, costs of advertising, and costs of title insurance and any other
documentary evidence of title, shall be paid by the Mortgagor. To the extent
allowed by applicable law, the Mortgagee may in its discretion deem all or any
portion of the Collateral to be, and such Collateral may be foreclosed upon as,
real estate under the law of the State in which the Premises are located.
3.5. POWER OF SALE; ENFORCEMENT.
(a) IN GENERAL. If the entire unpaid principal amount of and the
premium, if any, and interest on the Notes at the time outstanding shall have
become due and payable (whether at maturity or on a date fixed for any
prepayment or by declaration or otherwise) and shall not have been paid, the
Mortgagee may, and if the Required Lenders deliver to the Mortgagee a written
declaration of Default and demand for sale and a written notice of Default and
of election to cause the Premises to be sold (which notice the Mortgagee shall
cause to be filed for record to the extent required by applicable law) will,
sell or offer for sale the Collateral to the highest bidder for cash in lawful
money of the United States at public auction in accordance with applicable law.
Upon the filing of any complaint for foreclosure or commencement of any other
legal proceedings hereunder, the court in which such complaint is filed may,
upon application of the Mortgagee or at any time thereafter, either before or
after sale, and without notice to the Mortgagor or to any party claiming under
the Mortgagor and without regard to the solvency or insolvency at the time of
such application of any Person then liable for the payment of any of the
Liabilities, without regard to the then value of the Premises or whether the
same shall then be occupied, in whole or in part, as a homestead by the owner
of the equity of redemption, and without requiring any bond from the
complainant in such proceedings, appoint a receiver for the benefit of the
Mortgagee, with power to take possession, charge, and control of the Premises,
to lease the same, to keep the buildings thereon insured and in good repair,
and to collect all Rents during the pendency of such foreclosure suit, and, in
case of foreclosure sale and a deficiency, during any period of redemption.
The court may, from time to time, authorize said receiver to apply the net
amounts remaining in its hands, after deducting reasonable compensation for the
receiver and its counsel as allowed by the court, in payment (in whole or in
part) of any or all of the Liabilities, including without limitation the
following, in such order of application as the Mortgagee may elect:
(i) amounts due under the Notes, (ii) amounts due upon any decree entered in
any suit foreclosing this Mortgage, (iii) costs and expenses of foreclosure and
litigation upon or sale of the Premises, (iv) insurance premiums, repairs,
taxes, special assessments, water charges and interest, penalties and costs in
connection with the Premises, (v) any other Lien or charge upon the Premises
that may be or become superior to the lien of this Mortgage, or of any decree
foreclosing the same, and (vi) all moneys advanced by the Mortgagee and the
Lenders to cure or attempt to cure any Default by the Mortgagor in the
performance of any obligation or condition contained in this Mortgage or any
other Related Document or otherwise, to protect the security hereof provided
herein, or in any Related Documents, with interest on such advances at the
Default Rate. The overplus of the proceeds of sale, if any, shall then be paid
to the Mortgagor, upon reasonable request. This Mortgage may be foreclosed or
the Collateral sold once against all, or successively against any portion or
portions, of the Premises, as the Mortgagee may elect, until all of the
Premises have been foreclosed against and sold. As part of the foreclosure or
sale, the Mortgagee in its discretion may, with or without entry, personally or
by attorney, sell to the highest bidder all or any part of the Premises, and
all right, title, interest, claim and demand therein, and the right of
redemption thereof, as an entirety, or in separate lots, as the Mortgagee may
elect, and in one sale or in any number of separate sales held at one time or
at any number of times, all in any manner and upon such notice as provided by
applicable law. Upon the completion of any such sale or sales, the Mortgagee
shall transfer and deliver, or cause to be transferred and delivered, to the
purchaser or purchasers the property so sold, in the manner and form as
provided by applicable law, and the Mortgagee is hereby irrevocably appointed
the true and lawful attorney-in-fact of the Mortgagor, in its name and stead,
to make all necessary transfers of property thus sold, and for that purpose the
Mortgagee may execute and deliver, for and in the name of the Mortgagor, all
necessary instruments of assignment and transfers, the Mortgagor hereby
ratifying and confirming all that said attorney-in-fact shall lawfully do by
virtue hereof. In the case of any sale of the Premises by the Mortgagee, or
pursuant to any judgment or decree of any court at public auction or otherwise,
the Mortgagee, or its designee, may become the purchaser, and for the purpose
of making settlement for or payment of the purchase price, shall be entitled to
deliver over and use the Notes and any claims for the debt in order that there
may be credited as paid on the purchase price the amount of the debt. In case
of any sale by the Mortgagee, or any foreclosure of this Mortgage (or the
commencement of or preparation therefor) in any court, all expenses of every
kind paid or incurred by the Mortgagee for the enforcement, protection or
collection of this security, including court costs, attorneys' fees,
stenographers' fees, costs of advertising, and costs of title insurance and any
other documentary evidence of title, shall be paid by the Mortgagor. To the
extent permitted by applicable State law, all proceeds received from the sale,
foreclosure or other disposition of the Premises shall be applied by Mortgagee,
as applicable, in accordance with the following priorities:
FIRST: to the costs and expenses of the sale, including the
Mortgagee's commission, if any, title and abstracting charges, reasonable
attorneys' fees and a reasonable auctioneer's fee if such expense has
been incurred;
SECOND: to the payment of the Liabilities (in such order as
Mortgagee may elect); and
THIRD: to the payment to whomever shall be entitled thereto under
law.
(b) SPECIFICALLY, WITH RESPECT TO FLORIDA PREMISES. If a Default shall
have occurred and be continuing, the Mortgagee may proceed by suit or suits at
law or in equity or by any other appropriate proceedings or remedy: (a) to
enforce payment of the Notes and the other Liabilities or the performance of
any term hereof or any other right; (b) to foreclose this Mortgage and to sell,
as an entirety or in separate lots or parcels, the Premises, under the judgment
or decree of a court or courts of competent jurisdiction; (c) to appoint a
receiver as provided in this Mortgage; (d) to exercise remedies as a secured
party under the Uniform Commercial Code as adopted by the State of Florida;
(e) to collect rents as provided under Chapter 697.07 of the FLORIDA STATUTES
and in this Mortgage; (f) to proceed to realize upon any and all other security
for the Liabilities; and (g) to pursue any other remedy available to it. The
Mortgagee shall take action either by such proceedings or by the exercise of
its powers with respect to entry or taking possession, or both, as the
Mortgagee may determine, and may recover the costs of its attorneys' fees and
court costs in all such events. The Mortgagee may bid at any foreclosure sale.
6. REMEDIES FOR LEASES AND RENTS. If any Default shall occur, then,
whether before or after institution of legal proceedings to foreclose the lien
of this Mortgage or before or after the sale thereunder, the Mortgagee, or its
designee, shall be entitled, in its discretion, to do all or any of the
following: (i) to the extent lawful under applicable law, enter and take actual
possession of the Premises, the Rents, the Occupancy Leases, and other
Collateral relating thereto or any part thereof personally, or by its agents or
attorneys, and exclude the Mortgagor therefrom; (ii) with or without process of
law (unless required under applicable law), enter upon and take and maintain
possession of all of the documents, books, records, papers and accounts of the
Mortgagor relating thereto; (iii) as attorney-in-fact or agent of the
Mortgagor, or in its own name as mortgagee and under the powers herein granted,
hold, operate, manage and control the Premises, the Rents, the Occupancy
Leases, and other Collateral relating thereto and conduct the business (if the
appropriate licenses are secured), if any, thereof, either personally or by its
agents, contractors or nominees, with full power to use such measures, legal or
equitable, as in its discretion or in the discretion of its successors or
assigns may be deemed proper or necessary to enforce the payment of the Rents,
the Occupancy Leases, and other Collateral relating thereto (including actions
for the recovery of rent, actions in forcible detainer and actions in distress
of rent); (iv) cancel or terminate any Occupancy Lease or sublease for any
cause or on any ground which would entitle the Mortgagor to cancel the same;
(v) elect to disaffirm any Occupancy Lease or sublease made subsequent hereto
or subordinated to the lien hereof; (vi) make all necessary or proper repairs,
decorations, renewals, replacements, alterations, additions, betterments and
improvements to the Premises that, in its discretion, may seem appropriate;
(vii) insure and reinsure the Collateral for all risks incidental to the
Mortgagee's, or its designee's, possession, operation and management thereof;
and (viii) receive all such Rents and proceeds, and perform such other acts in
connection with the management and operation of the Collateral, as the
Mortgagee in its discretion may deem proper, the Mortgagor hereby granting the
Mortgagee, or its designee, full power and authority to exercise each and every
one of the rights, privileges and powers contained herein at any and all times
after any Default without notice to the Mortgagor or any other Person. The
Mortgagee, in the exercise of the rights and powers conferred upon it hereby,
shall have full power to use and apply the Rents to the payment of or on
account of the following, in such order as it may determine: (a) to the
payment of the operating expenses of the Premises, including the cost of
management and leasing thereof (which shall include reasonable compensation to
the Mortgagee and its agents or contractors, if management be delegated to
agents or contractors, and it shall also include lease commissions and other
compensation and expenses of seeking and procuring tenants and entering into
leases), established claims for damages, if any, and premiums on insurance
hereinabove authorized; (b) to the payment of taxes, charges and special
assessments, the costs of all repairs, decorating, renewals, replacements,
alterations, additions, betterments and improvements of the Collateral,
including the cost from time to time of installing, replacing or repairing the
Collateral, and of placing the Collateral in such condition as will, in the
judgment of the Mortgagee, make it readily rentable; and (c) to the payment of
any Liabilities. The entering upon and taking possession of the Premises, or
any part thereof, and the collection of any Rents and the application thereof
as aforesaid shall not cure or waive any Default theretofore or thereafter
occurring or affect any notice or Default hereunder or invalidate any act done
pursuant to any such Default or notice, and, notwithstanding continuance in
possession of the Premises or any part thereof by the Mortgagee, its designee,
or a receiver, and the collection, receipt and application of the Rents, the
Mortgagee and the Lenders shall be entitled to exercise every right provided
for in this Mortgage or by law or in equity upon or after the occurrence of a
Default. Any of the actions referred to in this SECTION 3.6 may be taken by
the Mortgagee, or its designee, without regard to the adequacy of the security
for the indebtedness hereby secured.
7. PERSONAL PROPERTY. If any Default shall occur, the Mortgagee may
exercise from time to time any rights and remedies available to it under
applicable law upon default in payment of indebtedness. The Mortgagor shall,
after any Default, promptly upon request by the Mortgagee, assemble the
Collateral and make it available to the Mortgagee at such place or places,
reasonably convenient for both the Mortgagee and the Mortgagor, as the
Mortgagee shall designate. The Mortgagor hereby expressly waives, to the
fullest extent permitted by applicable law, any and all notices,
advertisements, hearings, or process of law in connection with the exercise by
the Mortgagee of any of its rights and remedies after a Default occurs. If any
notification of intended disposition of any of the Collateral is required by
law, such notification, if mailed, shall be deemed reasonably and properly
given if mailed by registered or certified mail, return receipt requested, at
least 5 Business Days before such disposition, postage prepaid, addressed to
the Mortgagor at the address shown above. Without limiting the foregoing,
whenever there exists a Default hereunder, the Mortgagee may, with respect to
so much of the Collateral as is personal property under applicable law, to the
fullest extent permitted by applicable law, without further notice,
advertisement, hearing or process of law of any kind, (a) notify any Person
obligated on the Collateral to perform directly for the Mortgagee its
obligations thereunder, (b) enforce collection of any of the Collateral by suit
or otherwise, and surrender, release or exchange all or any part thereof or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, (c) endorse any checks, drafts or other writings in the name of the
Mortgagor to allow collection of the Collateral, (d) take control of any
proceeds of the Collateral, (e) enter upon any premises where any of the
Collateral may be located and take possession of and remove such Collateral and
render all or any part of the Collateral unusable, all without being
responsible for loss or damage, (f) sell any or all of the Collateral, free of
all rights and claims of the Mortgagor therein and thereto, at any lawful
public or private sale, and (g) bid for and purchase any or all of the
Collateral at any such public or private sale. Any proceeds of any disposition
by the Mortgagee of any of the Collateral may be applied by the Mortgagee to
the payment of expenses in connection with the Collateral, including reasonable
attorneys' fees and legal expenses, and any balance of such proceeds shall be
applied by the Mortgagee toward the payment of such of the Liabilities and in
such order of application as the Mortgagee may from time to time elect.
Without limiting the foregoing, the Mortgagee may exercise from time to time
any rights and remedies available to it, as a secured party, under the Uniform
Commercial Code or other applicable law as in effect from time to time or
otherwise available to it under applicable law. The Mortgagor hereby expressly
waives presentment, demand, notice of dishonor, protest and notice of protest
in connection with the Notes and, to the fullest extent permitted by applicable
law, any and all other notices, demands, advertisements, hearings or process of
law in connection with the exercise by the Mortgagee of any of its rights and
remedies hereunder. The Mortgagor hereby constitutes the Mortgagee its
attorney-in-fact with full power of substitution to take possession of the
Collateral upon any Default and, as the Mortgagee in its sole discretion deems
necessary or proper, to execute and deliver all instruments required by the
Mortgagee to accomplish the disposition of the Collateral; this power of
attorney is a power coupled with an interest and is irrevocable while any of
the Liabilities are outstanding and/or while the Lenders have any obligation to
make any advance or extend any credit hereunder.
3.8. PERFORMANCE OF THIRD PARTY AGREEMENTS. The Mortgagee may, in its
sole discretion at any time after the occurrence of a Default (or prior thereto
if so provided in SECTION 1.17), notify any Person obligated to the Mortgagor
under or with respect to any Third Party Agreements of the existence of a
Default, require that performance be made directly to the Mortgagee at the
Mortgagor's expense, advance such sums as are necessary or appropriate to
satisfy the Mortgagor's obligations thereunder and exercise, on behalf of the
Mortgagor, any and all rights of the Mortgagor under the Third Party Agreements
as the Mortgagee, in its sole discretion, deems necessary or appropriate; and
the Mortgagor agrees to cooperate with the Mortgagee in all ways reasonably
requested by the Mortgagee (including the giving of any notices requested by,
or joining in any notices given by, the Mortgagee) to accomplish the foregoing.
3.9. NO LIABILITY ON MORTGAGEE OR LENDERS. Notwithstanding anything
contained herein, the Mortgagee and the Lenders shall not be obligated to
perform or discharge, and do not hereby undertake to perform or discharge, any
obligation, duty or liability of the Mortgagor, whether hereunder, under any of
the Third Party Agreements or otherwise, and the Mortgagor shall and does
hereby agree to indemnify against and hold the Mortgagee and the Lenders
harmless of and from: any and all liabilities, losses or damages which the
Mortgagee and the Lenders or any of them may incur or pay under or with respect
to any of the Collateral or under or by reason of its exercise of rights
hereunder, with the exception of any exercise of such rights by the Mortgagee
and the Lenders or any of them in a manner so as to constitute gross negligence
or willful misconduct; and any and all claims and demands whatsoever which may
be asserted against the Mortgagee and the Lenders or any of them by reason of
any alleged obligations or undertakings on their part to perform or discharge
any of the terms, covenants or agreements contained in any of the Collateral or
in any of the contracts, documents or instruments evidencing or creating any of
the Collateral. The Mortgagee and the Lenders shall not have responsibility
for the control, care, management or repair of the Premises or be responsible
or liable for any negligence in the management, operation, upkeep, repair or
control of the Premises resulting in loss, injury or death to any tenant,
licensee, employee, stranger or other Person. No liability shall be enforced
or asserted against the Mortgagee or any Lender in their exercise of the rights
or powers granted to them under this Mortgage, and the Mortgagor expressly
waives and releases any such liability. Should Mortgagee or any Lender incur
any such liability, loss or damage under any of the Third Party Agreements or
under or by reason of the Collateral or this Mortgage, or in the defense of any
claims or demands, the Mortgagor agrees to reimburse such person immediately
upon demand for the full amount thereof, including costs, expenses and
reasonable attorneys' fees.
3.10. PREPAYMENT CHARGE. If this Mortgage or any obligation secured
hereby provides for any charge for prepayment of any indebtedness secured
hereby, the Mortgagor agrees to pay such charge if such payment is required
under the Credit Agreement.
3.11. SALE A BAR AGAINST THE MORTGAGOR. Any sale of the Collateral or any
part thereof or any interest therein, whether pursuant to foreclosure or power
of sale or otherwise hereunder, shall, to the extent permitted by applicable
law, forever be a perpetual bar against the Mortgagor.
3.12. PROCEEDS OF SALE. Unless otherwise required by applicable law, the
proceeds of any sale of, and any Rents and other amounts generated by the
holding, leasing, operation or other use of, the Premises shall be applied by
the Mortgagee (or the receiver, if one is appointed) to the extent that funds
are so available therefrom in the following order of priority:
(1) first, to the payment of the costs and expenses of taking
possession of the Premises and of holding, using, leasing, repairing,
improving and selling the same, including, without limitation, (i) the
Mortgagee's and receivers' fees, (ii) court costs, (iii) attorneys' and
accountants' fees, (iv) costs of advertisement, and (v) the payment of
any and all taxes, liens, security interests or other rights, titles or
interests superior to the lien and security interest of this Mortgage
(except those to which the Premises have been sold subject to and without
in any way implying the Mortgagee's or Lenders' prior consent to the
creation thereof);
(2) second, to the payment of all amounts, other than the
principal balance and accrued but unpaid interest, which may be due to
the Lenders under the Notes or any documents or instruments securing
payment or performance of the Notes or any of the Liabilities, together
with interest thereon as provided therein;
(3) third, to the payment of all accrued but unpaid interest due
on the Liabilities;
(4) fourth, to the payment of the principal balance on the
Liabilities and any documents or instruments securing payment of the
Liabilities, irrespective of whether then matured;
(5) fifth, to the extent funds are available therefor out of the
sale proceeds or any Rents and, to the extent known by the Mortgagee, to
the payment of any indebtedness or obligation secured by a subordinate
mortgage on or security interest in the Premises; and
(6) sixth, to the Mortgagor, its legal representatives,
successors and assigns.
IV. GENERAL
4.1. PERMITTED ACTS. The Mortgagor agrees that, without affecting or
diminishing in any way the liability of the Mortgagor or any other Person
(except any Person expressly released in writing by the Mortgagee) for the
payment or performance of any of the Liabilities or for the performance of any
obligation contained herein or affecting the lien hereof upon the Collateral or
any part thereof, the Mortgagee may at any time and from time to time, without
notice to or the consent of any Person, all in accordance with the terms of the
Credit Agreement, release any Person liable for the payment or performance of
the Notes or any of the other Liabilities or any guaranty given in connection
therewith; extend the time for, or agree to alter the terms of payment of, any
indebtedness under the Notes or any of the other Liabilities or any guaranty
given in connection therewith; modify or waive any obligation; subordinate,
modify or otherwise deal with the lien hereof; accept additional security of
any kind for repayment of the Notes or the other Liabilities or any guaranty
given in connection therewith; release any Collateral or other property
securing any or all of the Notes or the other Liabilities or any guaranty given
in connection therewith; make releases of any portion of the Premises; consent
to the making of any map or plat of the Premises; consent to the creation of a
condominium regime on all or any part of the Premises or the submission of all
or any part of the Premises to the provisions of any condominium act or any
similar provisions of law of the State where the Premises are located, or to
the creation of any easements on the Premises or of any covenants restricting
the use or occupancy thereof; or exercise or refrain from exercising, or waive,
any right the Mortgagee or the Lenders may have.
4.2. LEGAL EXPENSES. The Mortgagor agrees to indemnify the Mortgagee and
the Lenders from all loss, damage and expense, including (without limitation)
reasonable attorneys' fees, incurred in connection with any suit or proceeding
in or to which the Mortgagee or the Lenders, or any of them, may be made or
become a party for the purpose of protecting any lien or priority created by
this Mortgage.
4.3. RELATED DOCUMENTS. The Mortgagor covenants that it will timely and
fully perform and satisfy all the terms, covenants and conditions of any and
all Related Documents. If there shall be any inconsistency between the
provisions of this Mortgage and the Credit Agreement, the terms and provisions
of the Credit Agreement shall prevail.
4.4. SECURITY AGREEMENT; FIXTURE FILING. This Mortgage, to the extent
that it conveys or otherwise deals with personal property or with items of
personal property which are or may become fixtures, shall also be construed as
a security agreement under the Uniform Commercial Code as in effect in the
State or States in which each portion of the Collateral is located, and the
Mortgagor hereby grants to the Mortgagee a security interest in such items of
personal property as additional security for the Liabilities. This Mortgage
constitutes a financing statement filed as a fixture filing in the Official
Records of the County Recorder of the County in which the Premises are located
with respect to any and all fixtures included within the term "Collateral" as
used herein and with respect to any Goods or other personal property that may
now be or hereafter become such fixtures. For purposes of the foregoing, the
Mortgagor is the debtor (with its address as set forth in EXHIBIT B) and the
Mortgagee is the secured party (with its address as set forth in EXHIBIT B).
If any item of Collateral hereunder also constitutes collateral granted to the
Mortgagee under any other mortgage or security agreement, in the event of any
conflict between the provisions of this Mortgage and the provisions of such
other mortgage or security agreement relating to the Collateral, the provision
or provisions contained in this Mortgage shall control with respect to the
Collateral that constitutes real property under applicable law.
4.5. DEFEASANCE. Upon indefeasible full payment of all indebtedness
secured hereby and satisfaction of all the Liabilities in accordance with their
respective terms and at the time and in the manner provided, and when the
Lenders have no further obligation to make any advance, or extend any credit
hereunder, under the Notes or any other Related Documents, this conveyance
shall be null and void, and thereafter, upon demand therefor, an appropriate
instrument of reconveyance or release shall promptly be made, at the expense of
the Mortgagor, by the Mortgagee to the Mortgagor.
4.6. NOTICES. Each notice, demand or other communication in connection
with this Mortgage shall be in writing. Notices forwarded by mail shall be
deemed to have been given when received if sent by registered or certified
mail, postage paid, and:
(i) IF TO THE MORTGAGOR, addressed to it at its address shown
above;
(ii) IF TO THE MORTGAGEE, addressed to it at the address shown
above; or
at such other address as any party may, by written notice received by the other
parties to this Mortgage, have designated as its address for notices.
4.7. SUCCESSORS; THE MORTGAGOR; GENDER. All provisions hereof shall bind
the Mortgagor and the Mortgagee and their respective successors, vendees and
assigns and shall inure to the benefit of each of the Mortgagee and its
successors and assigns, and the Mortgagor and its permitted successors and
assigns. The Mortgagor shall not have any right to assign any of its rights
hereunder. Except as limited by the preceding sentence, the word "MORTGAGOR"
shall include all Persons claiming under or through the Mortgagor and all
Persons liable for the payment or performance by the Mortgagor of any of the
Liabilities, whether or not such Persons shall have executed the Notes or this
Mortgage. Wherever used, the singular shall include the plural, the plural the
singular, and the use of any gender shall be applicable to all genders.
4.8. CARE BY THE MORTGAGEE AND LENDERS. The Mortgagee and the Lenders
shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral assigned by the Mortgagor to the
Mortgagee or the Lenders or in the possession of any representative or agent of
the Mortgagee or the Lenders including, without limitation, a receiver, if they
take such action for that purpose as the Mortgagor requests in writing, but the
failure of the Mortgagee or the Lenders, or any agent or representative of the
Mortgagee or the Lenders, to comply with any such request shall not be deemed
to be a failure to exercise reasonable care, and no failure of the Mortgagee or
the Lenders, or any agent or representative of the Mortgagee or the Lenders, to
preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by the Mortgagor, shall of itself be deemed a failure to
exercise reasonable care in the custody or preservation of such Collateral.
4.9. NO OBLIGATION ON MORTGAGEE OR THE LENDERS. This Mortgage is intended
only as security for the Liabilities. Anything herein to the contrary
notwithstanding (i) the Mortgagor shall be and remain liable under and with
respect to the Collateral to perform all of the obligations assumed by it under
or with respect to each thereof, (ii) the Mortgagee and the Lenders shall have
no obligation or liability under or with respect to the Collateral by reason or
arising out of this Mortgage and (iii) the Mortgagee and the Lenders shall not
be required or obligated in any manner to perform or fulfill any of the
obligations of the Mortgagor under, pursuant to or with respect to any of the
Collateral.
4.10. NO WAIVER; WRITING. No delay on the part of the Mortgagee or the
Lenders in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Mortgagee or the Lenders of
any right or remedy shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. The granting or withholding of consent
by the Mortgagee or the Lenders or the Required Lenders to any transaction as
required by the terms hereof shall not be deemed a waiver of the right to
require consent to future or successive transactions.
4.11. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS MORTGAGE WAS
NEGOTIATED IN THE STATE OF NEW YORK AND ACCEPTED BY THE MORTGAGEE IN THE STATE
OF NEW YORK, AND THE PROCEEDS OF THE LOANS SECURED HEREBY HAVE BEEN AND WILL BE
DISBURSED IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY. THIS MORTGAGE, TOGETHER WITH THE NOTES AND THE OTHER RELATED
DOCUMENTS, SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN
THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT WITH RESPECT TO THE PROVISIONS
HEREOF WHICH RELATE TO THE CREATION, PERFECTION, PRIORITY OR ENFORCEMENT OF
LIENS ON REAL PROPERTY, THIS MORTGAGE SHALL BE GOVERNED BY THE LAWS OF THE
STATE WHERE THE PREMISES ARE LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE VALIDITY AND ENFORCEABILITY OF THIS MORTGAGE. WHENEVER
POSSIBLE, EACH PROVISION OF THIS MORTGAGE SHALL BE INTERPRETED IN SUCH MANNER
AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
MORTGAGE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY AND DEEMED
REMOVED AB INITIO FROM THIS MORTGAGE, WITHOUT INVALIDATING THE REMAINDER OF
SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS MORTGAGE. EXCEPT AS
PROVIDED HEREIN WITH RESPECT TO LOCAL LAW, THE MORTGAGEE AND THE LENDERS MAY
ENFORCE ANY CLAIM ARISING OUT OF THIS MORTGAGE, THE NOTES OR THE RELATED
DOCUMENTS IN ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND
LOCATED IN NEW YORK, NEW YORK. For the purpose of any action or proceeding
instituted with respect to any such claim, the Mortgagor has, pursuant to the
terms of the Credit Agreement and the other Related Documents, irrevocably
submitted to the jurisdiction of such courts and has irrevocably consented to
the service of process out of said courts by mailing a copy of such service of
process by registered mail, postage prepaid, to the Mortgagor at its address
for notices as set forth in the Credit Agreement, and agrees that such service,
to the fullest extent permitted by law (a) shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding,
and (b) shall be taken and held to be valid personal service upon and personal
delivery to it. Nothing herein contained shall affect the right of the
Mortgagee or the Lenders to serve process in any other manner permitted by law
or preclude the Mortgagee or the Lenders from bringing an action or proceeding
in respect hereof in any other country, state or place having jurisdiction over
such action. The Mortgagor irrevocably waives, to the fullest extent permitted
by law, any objection which it may have or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any court located in
New York, New York, and any claim that any such suit, action or proceeding
brought in such a court has been brought in an inconvenient forum.
4.12. WAIVER. (a) THE MORTGAGOR, ON BEHALF OF ITSELF AND ALL PERSONS NOW
OR HEREAFTER INTERESTED IN THE PREMISES OR THE OTHER COLLATERAL, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY WAIVES ALL RIGHTS UNDER ALL
APPRAISEMENT, HOMESTEAD, MORATORIUM, VALUATION, EXEMPTION, STAY, OR EXTENSION
LAWS OR EQUITIES NOW OR HEREAFTER EXISTING, INCLUDING THE STATUTORY RIGHT OF
REDEMPTION, AND HEREBY FURTHER WAIVES THE PLEADING OF ANY STATUTE OF
LIMITATIONS AS A DEFENSE TO ANY AND ALL LIABILITIES SECURED BY THIS MORTGAGE,
AND THE MORTGAGOR AGREES THAT NO DEFENSE, CLAIM OR RIGHT BASED ON ANY THEREOF
WILL BE ASSERTED, OR MAY BE ENFORCED, IN ANY ACTION ENFORCING OR RELATING TO
THIS MORTGAGE OR ANY OF THE COLLATERAL. THE MORTGAGOR, FOR ITSELF AND FOR ALL
PERSONS HEREAFTER CLAIMING THROUGH OR UNDER IT OR WHO MAY AT ANY TIME HEREAFTER
BECOME HOLDERS OF LIENS JUNIOR TO THE LIEN OF THIS MORTGAGE, HEREBY EXPRESSLY
WAIVES AND RELEASES ALL RIGHTS TO DIRECT THE ORDER IN WHICH ANY OF THE
COLLATERAL SHALL BE SOLD IN THE EVENT OF ANY SALE OR SALES PURSUANT HERETO AND
TO HAVE ANY OF THE COLLATERAL AND/OR ANY OTHER PROPERTY NOW OR HEREAFTER
CONSTITUTING SECURITY FOR ANY OF THE INDEBTEDNESS SECURED HEREBY MARSHALLED
UPON ANY FORECLOSURE OF THIS MORTGAGE OR OF ANY OTHER SECURITY FOR ANY OF SAID
INDEBTEDNESS. THE MORTGAGOR'S WAIVER CONTAINED HEREIN OF ITS RIGHT OF
REDEMPTION, IF ANY, SHALL BE NULL AND VOID IF THE CONSIDERATION OF SUCH WAIVER,
WHETHER OR NOT EXPRESSED BY ITS TERMS, SHALL BE THE WAIVER AND RELEASE BY THE
MORTGAGEE OR ANY LENDER OF ANY DEFICIENCY JUDGMENT AGAINST THE MORTGAGOR.
(b) BY EXECUTION OF THIS MORTGAGE AND BY INITIALING THIS SECTION 4.12,
THE MORTGAGOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE
LIABILITIES UPON DEFAULT BY THE MORTGAGOR WITHOUT ANY NOTICE (EXCEPT AS
OTHERWISE PROVIDED HEREIN); (B) EXCEPT TO THE EXTENT PROVIDED OTHERWISE HEREIN,
WAIVES ANY AND ALL RIGHTS WHICH THE MORTGAGOR MAY HAVE UNDER THE CONSTITUTION
OF THE UNITED STATES (INCLUDING THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF),
THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY
REASON OF ANY OTHER APPLICABLE LAW, TO NOTICE AND TO JUDICIAL HEARING PRIOR TO
THE EXERCISE BY THE MORTGAGEE OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO THE
MORTGAGEE; (C) ACKNOWLEDGES THAT THE MORTGAGOR HAS READ THIS MORTGAGE AND ITS
PROVISIONS HAVE BEEN EXPLAINED FULLY TO THE MORTGAGOR AND THE MORTGAGOR HAS
CONSULTED WITH COUNSEL OF THE MORTGAGOR'S CHOICE PRIOR TO EXECUTING THIS
MORTGAGE; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF THE
MORTGAGOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY THE
MORTGAGOR AS PART OF A BARGAINED FOR TRANSACTION:
INITIALLED BY THE MORTGAGOR:
SHONEY'S, INC.
By______________________
4.13. JURY TRIAL. THE MORTGAGOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS MORTGAGE OR ANY OTHER RELATED DOCUMENTS TO WHICH IT IS A PARTY, OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS MORTGAGE OR ANY OTHER RELATED
DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
4.14. NO MERGER. It being the desire and intention of the parties hereto
that this Mortgage and the lien hereof not merge in fee simple title to the
Premises, it is hereby understood and agreed that should the Mortgagee acquire
an additional or other interest in or to the Premises or the ownership thereof,
then, unless a contrary intent is manifested by the Mortgagee as evidenced by
an express statement to that effect in an appropriate document duly recorded,
this Mortgage and the lien hereof shall not merge in the fee simple title,
toward the end that this Mortgage may be foreclosed as if owned by a stranger
to the fee simple title. The provisions of this SECTION 4.14 shall not apply
in the event the Mortgagee or the Lenders acquire the fee of the Premises
except if the Required Lenders shall so elect.
4.15. MORTGAGEE AND LENDERS NOT JOINT VENTURERS OR PARTNERS. The
Mortgagor, the Mortgagee and the Lenders acknowledge and agree that in no event
shall the Mortgagee or any Lender be deemed to be partners or joint venturers
with the Mortgagor. Without limitation of the foregoing, the Mortgagee and
Lenders shall not be deemed to be such partners or joint venturers on account
of their becoming a mortgagee in possession or exercising any rights pursuant
to this Mortgage or pursuant to any other instrument or document evidencing or
securing any of the Liabilities secured hereby, or otherwise.
4.16. TIME OF ESSENCE. Time is declared to be of the essence in this
Mortgage, the Notes and the other Related Documents and of every part hereof
and thereof.
4.17. NO THIRD PARTY BENEFITS. This Mortgage, the Notes and the other
Related Documents are made for sole benefit of the Mortgagor, the Mortgagee and
the Lenders and, subject to the provisions of SECTION 4.7, their successors and
assigns, and no other Person shall have any legal interest of any kind under or
by reason of any of the foregoing. Whether or not the Mortgagee or any Lender
elects to employ any or all the rights, powers or remedies available to it
under any of the foregoing, neither the Mortgagee nor any of the Lenders shall
have any obligation or liability of any kind to any third party by reason of
any of the foregoing or any action or omission by the Mortgagee or any Lender
pursuant thereto or otherwise in connection with this transaction.
4.18. FUTURE ADVANCES. (a) GENERALLY. This Mortgage secures all present
and future Liabilities of the Mortgagor to the Mortgagee and the Lenders. The
amount of present Liabilities secured hereby is $125,000,000; the maximum
amount, including present and future Liabilities, which may be secured hereby
at any one time is $125,000,000, plus interest, plus any disbursements and
taxes and insurance on the Premises, plus interest thereon, related costs and
expenses, prepayment charges set forth in the Credit Agreement, and any other
sums advanced in accordance with the terms hereof or any of the Related
Documents to protect the security of this Mortgage or any of the Related
Documents.
(b) FLORIDA FUTURE ADVANCES. This Mortgage secures any and all future
or further advances as shall be made by Lenders, or their successors and
assigns, to or for the benefit of the Mortgagor and its successors or assigns,
under or pursuant to the Credit Agreement within twenty (20) years from and
after the date hereof, all such further and future advances to be secured
hereby as if made on the date hereof; PROVIDED, HOWEVER, that the aggregate
amount at any one time of the principal amount outstanding under the Notes and
the principal amount outstanding under any such future or further advance shall
not exceed ONE HUNDRED TWENTY-FIVE MILLION AND NO/100 DOLLARS ($125,000,000).
Notwithstanding the foregoing provision of this SECTION 4.18, recovery by the
Mortgagee and the Lenders from the Premises located in the County of
____________ for application against the Notes and the Note Obligations shall
not exceed ____________________________________ DOLLARS ($____________).
4.19. INTEREST RATES BEFORE OR AFTER JUDGMENT. The applicable rates of
interest set forth for the Liabilities shall apply whether before or after any
judgment on the Liabilities. If any of the terms or provisions of this
instrument or of the Notes or other evidence of the Liabilities secured
hereby is susceptible of being construed as binding or obligating the Mortgagor
or any other persons or concerns obligated, either primarily, secondarily or
conditionally, for the payment of any debt, whether or not secured hereby,
under any circumstances or contingencies whatsoever, to pay interest in
excess of the maximum rate of interest permitted by whichever of applicable
federal or state law from time to time permits the higher maximum non-usurious
rate (the "HIGHEST LAWFUL RATE"), it is agreed that such terms or provisions
are a mistake in calculation or wording and, notwithstanding the same, it
is expressly agreed that neither the Mortgagor, nor any other person or concern
obligated in any manner on any such debt shall ever be required or obligated
under the terms hereof, or under the terms of the Notes or other evidence of
the Liabilities or otherwise, to pay interest in excess of the Highest Lawful
Rate, and if, for any reason whatever, the interest paid on the Notes
and/or the Liabilities shall exceed the Highest Lawful Rate, the holder of
the Notes and/or the Liabilities receiving such excess shall either (at the
option of such holder) refund to the payor or credit against the principal of
the Notes and/or the Liabilities such portion of said interest as may be
necessary to cause the interest paid on the Notes and/or the Liabilities to
equal the Highest Lawful Rate, and no more. Without notice to the Mortgagor
or any other Person, the Highest Lawful Rate shall automatically fluctuate
upward and downward as and in the amount by which said maximum non-usurious
rate of interest shall fluctuate.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Mortgage on the day and year first above written.
SHONEY'S, INC.,
a Tennessee corporation
By: /S/ W. CRAIG BARBER
Name: W. Craig Barber
Title: Vice President, Finance,
and Chief Financial Officer
Witnesses: Attest:
/S/ F.E. MCDANIEL, JR.
Name: Name: F.E. McDaniel, Jr.
Title: Secretary and Treasurer
Name:
THIS INSTRUMENT WAS PREPARED BY:
Michael N. Sloyer
Mayer, Brown & Platt
787 Seventh Avenue
New York, New York 10019
<PAGE>
FLORIDA ACKNOWLEDGMENT
STATE OF TENNESSEE )
) ss.
COUNTY OF DAVIDSON )
The foregoing instrument was acknowledged before me this
____________ day of July, 1993, by W. CRAIG BARBER, the VICE PRESIDENT,
FINANCE, and CHIEF FINANCIAL OFFICER of SHONEY'S, INC., a Tennessee
corporation, on behalf of the corporation. He is personally known to me or has
produced ______________________ as identification and (did)(did not) take an
oath.
IN WITNESS WHEREOF, the undersigned has executed this acknowledgment and
affixed his/her official seal the day and year first above written.
[Notarial Seal] ________________________
Name:___________________
Notary Public
My commission expires ____________________, ____
<PAGE>
, EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
Exhibit A
<PAGE>
EXHIBIT B
Description of "Debtor" and "Secured Party"
1. Name of Debtor: Shoney's, Inc.
State of Incorporation Tennessee
Principal Place of
Business and Location
of Chief Executive Office: 1727 Elm Hill Pike
Nashville, Tennessee 37210
2. Inquiries should be addressed to Debtor at:
1727 Elm Hill Pike
Nashville, Tennessee 37210
3. Debtor has been using or operating under the above corporate structure
without change since: November 1, 1968.
4. Name and identity of Secured Party:
Canadian Imperial Bank of Commerce, New York Agency, as Collateral
Agent
5. Inquiries should be addressed to Secured Party at:
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30379
6. Federal Employer Identification Number of Debtor:
62-0799798
7. Statement concerning the types, or describing the items, of Collateral:
Real Estate, Improvements, Goods, Intangibles, Rents, Occupancy
Leases, Plans, Contracts for Construction, Contracts for Sale, After-
acquired Property and other property related to the foregoing, as more
particularly described in the foregoing mortgage.
Exhibit B
<PAGE>
EXHIBIT J
[CONFORMED COPY]
SUBSIDIARY GUARANTY
THIS GUARANTY, dated as of July 21, 1993, made jointly and severally by
MIKE ROSE FOODS, INC., a Tennessee corporation, COMMISSARY OPERATIONS, INC., a
Tennessee corporation, EVADON CORPORATION, a Tennessee corporation, CORPORATE
BENEFIT SERVICES, INCORPORATED, OF NASHVILLE, a Tennessee corporation, SHONEY'S
INVESTMENTS, INC., a Nevada corporation, SHONEY'S REAL ESTATE, INC., a
Tennessee corporation, PARGO'S OF FREDERICK, INC., a Tennessee corporation,
PARGO'S OF YORK, INC., a Tennessee corporation, RJR INVESTMENTS, INC., a Nevada
corporation, SHONEY'S FUNDING CORP., a Tennesse corporation, SHONEY'S EQUIPMENT
CORPORATION, a Tennessee corporation and SHONEY'S OF CANADA, INC., a Canadian
corporation (individually, a "GUARANTOR," and collectively, the "GUARANTORS"),
in favor of CANADIAN IMPERIAL BANK OF COMMERCE, New York Agency, acting in its
capacity as the collateral agent (the "COLLATERAL AGENT") for the various
financial institutions (the "LENDERS") which are, or may from time to time
become, parties to the Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, the Guarantors are direct wholly-owned Subsidiaries of Shoney's,
Inc., a Tennessee corporation (the "BORROWER");
WHEREAS, pursuant to the Reducing Revolving Credit Agreement, dated as of
July 21, 1993 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the
Lenders, and Canadian Imperial Bank of Commerce, New York Agency, as the agent
for the Lenders (in such capacity, the "AGENT"), the Lenders have extended
Commitments (such capitalized term, and all other capitalized terms used in
these recitals without definition, to have the meanings assigned to such terms
in, or by reference in, SECTIONS 1.1 and 1.2 hereof) to the Borrower and have
agreed to make Loans to the Borrower pursuant to such Commitments;
WHEREAS, as a condition precedent to any Loans under the Credit
Agreement, each Guarantor is required to execute and deliver this Guaranty;
WHEREAS, the Borrower has determined that it is in its business interests
to transfer certain of its real properties and certain improvements thereon to
Realco and the Lenders are willing to consent to such transfer in return for a
pledge of all the issued and outstanding capital stock of Realco upon which
pledge the Lenders are relying to make the Loans under the Credit Agreement;
WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty and will receive direct and indirect benefits by
reason of the availability of such Loans made from time to time to the Borrower
by the Lenders; and
WHEREAS, each Guarantor's business is a specialized part of an integrated
and coordinated enterprise conducted by the Borrower through the Borrower and
the Guarantors for the convenience, economic advantage and greater profit of
the integrated and coordinated enterprise represented by the Borrower and the
Guarantors;
WHEREAS, each Guarantor shall derive direct and indirect benefits by
reason of the Credit Agreement;
NOW, THEREFORE, in order to induce the Lenders to make Loans to the
Borrower pursuant to the Credit Agreement, and for other good and valuable
consideration,receipt of which is hereby acknowledged by each Guarantor, each
Guarantor hereby agrees with the Collateral Agent, for its benefit and the
Ratable benefit of the Agent and each Lender, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" has the meaning assigned to that term in the SECOND
RECITAL hereto.
"BORROWER" has the meaning assigned to that term in the FIRST
RECITAL hereto.
"COLLATERAL AGENT" has the meaning assigned to that term in the
PREAMBLE hereto.
"CREDIT AGREEMENT" has the meaning assigned to that term in the
SECOND RECITAL hereto.
"FUNDING GUARANTOR" has the meaning assigned to such term in
SECTION 4.5 hereof.
"GUARANTEED OBLIGATIONS" has the meaning assigned to that term in
SECTION 2.1 hereof.
"GUARANTOR" and "GUARANTORS" have the respective meanings
assigned to those terms in the PREAMBLE hereto.
"GUARANTY" means this Subsidiary Guaranty, as the same may be
amended, supplemented, amended and restated or otherwise modified from
time to time.
"LENDERS" has the meaning assigned to that term in the PREAMBLE
hereto.
"RATABLE" has the meaning assigned to that term in the Subsidiary
Security Agreement.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
ARTICLE II
GUARANTY
SECTION 2.1. GUARANTY. Each Guarantor jointly and severally with each
other Guarantor hereby unconditionally and irrevocably guarantees the full and
prompt payment when due, whether at stated maturity, by acceleration or
otherwise (including, without limitation, all amounts which would have become
due but for the operation of the automatic stay under Section 362(a) of the
Federal Bankruptcy Code, 11 U.S.C. 362(a)), of the following (collectively, the
"GUARANTEED OBLIGATIONS"),
(a) all obligations of the Borrower to the Collateral Agent, the
Agent and each of the Lenders now or hereafter existing under the Credit
Agreement and each other Loan Document (including this Guaranty), whether
for principal, interest, fees, expenses or otherwise;
(b) all obligations of the Borrower to any Lender under any Rate
Swap Agreement provided by such Lender;
(c) all other Obligations to the Collateral Agent, the Agent and
each of the Lenders now or hereafter existing under any of the Loan
Documents, whether for principal, interest, fees, expenses or otherwise;
and
(d) any and all expenses (including counsel fees and expenses)
incurred by the Collateral Agent, the Agent or any Lender in enforcing
any of their respective rights under this Guaranty;
PROVIDED,
HOWEVER, that any term or provision of this Guaranty to the contrary
notwithstanding, the aggregate amount of each Guarantor's liability under this
Guaranty shall not exceed the maximum amount of such liability that can be
hereby incurred without rendering this Guaranty voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer and not for any
greater amount. This Guaranty constitutes a guaranty of payment when due and
not merely of collection, and each Guarantor specifically agrees that it shall
not be necessary or required that any Lender or any holder of any Note exercise
any right, assert any claim or demand or enforce any remedy whatsoever against
the Borrower before or as a condition to the obligations of any Guarantor
hereunder.
SECTION 2.2. ACCELERATION OF GUARANTY. Each Guarantor agrees that, in
the event of the dissolution or insolvency of the Borrower or any Guarantor, or
the inability or failure of the Borrower or any Guarantor to pay debts as they
become due, or an assignment by the Borrower or any Guarantor for the benefit
of creditors, or the commencement of any case or proceeding in respect of the
Borrower or any Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Obligations of the Borrower
may not then be due and payable, each Guarantor will pay to the Lenders
forthwith the full amount which would be payable hereunder by each Guarantor if
all such Obligations were then due and payable.
SECTION 2.3. GUARANTY ABSOLUTE. This Guaranty shall be construed as a
continuing, absolute, unconditional and irrevocable guarantee of payment and
shall remain in full force and effect until all Obligations of the Borrower
have been paid in full, all obligations of each Guarantor hereunder have been
paid in full and all Commitments shall have terminated. Each Guarantor
guarantees that the Obligations will be paid strictly in accordance with the
terms of the Credit Agreement, and that all other Guaranteed Obligations shall
be paid strictly in accordance with the terms of the Loan Documents, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Collateral Agent, the Agent or
any of the Lenders with respect thereto. The liability of each Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, the Notes, any other Loan Document or any other agreement or
instrument relating to any thereof;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations, or any
compromise, renewal, extension, acceleration or release with respect
thereto, or any other amendment or waiver of or any consent to departure
from the Credit Agreement, the Notes, or any other Loan Document;
(c) any addition, exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) the failure of any Lender or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Person (including any
other guarantor) under the provisions of the Credit Agreement, any
Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Credit
Agreement, any Note, or any other Loan Document;
(f) any defense, set-off or counter-claim which may at any time be
available to or be asserted by the Borrower against the Collateral Agent,
the Agent or any Lender;
(g) any reduction, limitation, impairment or termination of the
Obligations of the Borrower for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be
subject to (and each Guarantor hereby waives any right to or claim of)
any defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, the Obligations of the Borrower or otherwise; or
(h) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower
or a Guarantor.
SECTION 2.4. REINSTATEMENT, ETC. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender or any holder of any
Note, upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.
SECTION 2.5. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the
Collateral Agent, the Agent or any Lender protect, secure, perfect or insure
any security interest or lien or any property subject thereto or exhaust any
right or take any action against the Borrower or any other person or entity
(including any other guarantor) or any collateral.
SECTION 2.6. WAIVER OF SUBROGATION. Each Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Borrower that arise from the existence, payment, performance or enforcement
of each Guarantor's obligations under this Guaranty or any other Loan Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the Lender
against the Borrower or any collateral which the Lender now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including the right to take or receive from
the Borrower, directly or indirectly, in cash or other property or by set-off
or in any manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Obligations shall not have been paid in cash in full and the
Commitments and any other commitments by the Lender to the Borrower have not
been terminated, such amount shall be deemed to have been paid to each
Guarantor for the benefit of, and held in trust for, the Lender, and shall
forthwith be paid to the Lender to be credited and applied upon the
Obligations, whether matured or unmatured. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
SECTION 2.7. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS OF NOTES,
ETC. This Guaranty shall:
(a) be binding upon each Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Agent and
each other Lender.
Without limiting the generality of CLAUSE (B), any Lender may assign or
otherwise transfer (in whole or in part) any Note or Loan held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all rights and benefits in respect thereof granted to such Lender
under any Loan Document (including this Guaranty) or otherwise, subject,
however, to the provisions of SECTION 10.10 of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND COVENANTS
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
represents and warrants to the Collateral Agent, the Agent and each Lender as
follows:
(a) As to representations and warranties contained in ARTICLE VI
of the Credit Agreement, in the Collateral Documents and in any other
Loan Documents insofar as the representations and warranties contained
therein by their terms are applicable to such Guarantor and its
properties, each such representation and warranty (insofar as applicable
as aforesaid), together with all related definitions and ancillary
provisions, being hereby incorporated into this Guaranty by reference as
though specifically set forth in this Section.
(b) No Guarantor has any Subsidiaries.
(c) Such Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of Canada or the State of
Tennessee or Nevada, as the case may be, and has full corporate power and
authority to enter into this Guaranty and the other Collateral Documents
and Loan Documents to which it is a party and to carry out the
transactions contemplated hereby and thereby.
(d) The execution and delivery by such Guarantor of this Guaranty
and the other Loan Documents to which it is a party and the consummation
by such Guarantor of the transactions contemplated hereby and thereby
have been duly authorized by such Guarantor. This Guaranty and the other
Loan Documents to which such Guarantor is a party have each been duly
executed and delivered by such Guarantor and each constitutes the legal,
valid and binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, subject, as to enforcement only,
to bankruptcy, insolvency, reorganization, moratorium or similar laws at
the time in effect affecting the enforceability of the rights of
creditors generally.
(e) The execution and delivery of this Guaranty and the other Loan
Documents to which such Guarantor is a party and the consummation by such
Guarantor of the transactions contemplated hereby and thereby have not
resulted, and will not (with or without the lapse of time or the giving
of notice or both) result, (i) in any breach of any of the terms or
provisions of, or constitute a default under, the charter or bylaws of
such Guarantor, any agreement, license or other instrument, any law, rule
or regulation or any judgment, decree or order of any court to which such
Guarantor is a party or by which its property may be bound, or (ii) in
the creation or imposition of any claim, lien, charge or encumbrance of
any nature whatsoever upon, or give to others any claim, interest or
right, with respect to any of the properties, assets, contracts or
licenses of such Guarantor (except pursuant to the Loan Documents to
which it is a party).
SECTION 3.2. COVENANTS. Each Guarantor agrees with the Collateral
Agent, the Agent and each Lender that, until all Guaranteed Obligations shall
have been paid in full, such Guarantor will perform, comply with and be bound
by all of the agreements, covenants and obligations contained in ARTICLE VII of
the Credit Agreement and in the Loan Documents which by their terms are
applicable to such Guarantor or its properties, each such agreement, covenant
and obligation contained in such Article and in the Loan Documents, together
with all related definitions and ancillary provisions, being hereby
incorporated into this Guaranty by reference as though specifically set forth
in this Section and all of such agreements, covenants and obligations shall
survive the termination of the Credit Agreement, the Collateral Documents and
the Loan Documents for purposes hereof; PROVIDED, HOWEVER, that without
limiting the generality of the foregoing, each Guarantor agrees that, until all
Guaranteed Obligations shall have been paid in full, in any event it will not
create, incur, assume, or suffer to exist any Security Interest upon any of its
revenues, property or assets, whether now owned or hereafter acquired, except
as may be provided pursuant to the Collateral Documents to which it is a party,
or those permitted by SECTION 7.2.3 of the Credit Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. LOAN DOCUMENT. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof, including, without limitation, ARTICLE X.
SECTION 4.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT.
In addition to, and not in limitation of, SECTION 2.7, this Guaranty shall be
binding upon each Guarantor and their successors, transferees and assigns and
shall inure to the benefit of and be enforceable by each Lender and each holder
of a Note and their respective successors, transferees and assigns (to the full
extent provided pursuant to SECTION 2.7); PROVIDED, HOWEVER, that each
Guarantor may not assign any of its obligations hereunder without the prior
written consent of all Lenders.
SECTION 4.3. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Guaranty nor consent to any departure by any of the Guarantors
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent and each Guarantor (subject to SECTION 10.1
of the Credit Agreement), and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 4.4. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing or by facsimile
transmission and, if to the Guarantors, mailed, given by facsimile transmission
or delivered to them in care of Shoney's, Inc. at 1727 Elm Hill Pike, Attention
of F.E. McDaniel, Jr., and if to the Collateral Agent, mailed, telexed, given
by facsimile transmission or delivered to it, addressed to it at 425 Lexington
Avenue, New York, New York 10017, Attention: Bradford D. Jones, (facsimile
number 212 856-3599) or as to each party at such other address as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section. Any notice, if mailed and properly
addressed with postage prepaid, shall be deemed given when received; any
notice, if transmitted by facsimile transmission or delivery, shall be deemed
given when received.
SECTION 4.5. NO WAIVER; REMEDIES. No failure on the part of the
Collateral Agent, the Agent or any Lender to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law or equity.
SECTION 4.6. RIGHT TO SET-OFF. Upon the occurrence and during the
continuance of any Default of the nature referred to in SECTION 8.1.4 of the
Credit Agreement or, with the consent of the Required Lenders, any Event of
Default the Collateral Agent, the Agent and each Lender are each hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Collateral Agent, the Agent or such Lender, as the case may
be, to or for the credit or the account of any Guarantor against any and all of
the Guaranteed Obligations of the Guarantors now or hereafter existing under
this Guaranty, irrespective of whether the Collateral Agent shall have made any
demand under this Guaranty. The Collateral Agent agrees promptly to notify the
Guarantors after any such set-off and application made by the Collateral Agent,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Collateral Agent, the Agent or
such Lender, as the case may be, under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Collateral Agent, the Agent or any of the Lenders may have.
SECTION 4.7. CONTRIBUTION OBLIGATIONS AMONG GUARANTORS. In order to
provide for just and equitable contribution among the Guarantors, the
Guarantors agree, among themselves, that in the event any payment or
distribution is made by a Guarantor (a "FUNDING GUARANTOR") under this
Guaranty, such Funding Guarantor shall be entitled to a contribution from the
other Guarantors for all such payments or distributions, or damages and
expenses incurred by such Funding Guarantor in discharging any Guaranteed
Obligations. Each Guarantor which is not a Funding Guarantor shall be liable
to a Funding Guarantor with respect to any such payments or distributions, or
damages and expenses, in an aggregate amount equal to (a) the ratio of (i) the
net worth of such Guarantor, as determined in accordance with the most recent
balance sheet of such Guarantor at the time of such payment by a Funding
Guarantor, to (ii) the aggregate net worth of all Guarantors, similarly
determined, multiplied by (b) the amount which the Funding Guarantor paid on
account of the Guaranteed Obligations. In the event that at any time there
exists more than one Funding Guarantor, then payment from the other Guarantors
pursuant to this Section shall be in an aggregate amount equal in proportion to
the total amount of money paid for or on account of the Guaranteed Obligations
by the Funding Guarantors pursuant to this Guaranty. If the Funding Guarantor
is required to make any payment hereunder, such Funding Guarantor shall also be
entitled to a right of subrogation in respect of such payment from the other
Guarantors. Notwithstanding anything in this Section to the contrary, the
agreements in this Section are to establish the relative rights of contribution
of the Guarantors and shall not modify the joint and several nature of the
obligations of each Guarantor owed to the Collateral Agent for the benefit of
the Agent and each of the Lenders or impair the rights of the Collateral Agent
for the benefit of the Agent and each of the Lenders to hold any of the
Guarantors liable for payment of the full amount of all Guaranteed Obligations.
SECTION 4.8. CONTINUING GUARANTY. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until final payment in
full of the Guaranteed Obligations and all other amounts payable under this
Guaranty, subject to reinstatement in accordance with SECTION 2.2 hereof, (b)
be jointly and severally binding upon each of the Guarantors, their successors
and assigns, and (c) inure to the benefit of and be enforceable by the
Collateral Agent for its benefit and the benefit of the Agent, the Lenders and
their respective successors, transferees and assigns.
SECTION 4.9. SEVERABILITY. Any provision of this Guaranty 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 of this Guaranty or affecting the
validity or enforceability of such provisions in any other jurisdiction.
SECTION 4.10. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.
(a) Each Guarantor hereby irrevocably submits to the non-exclusive
IN PERSONAM jurisdiction of any New York State or Federal court of
competent jurisdiction sitting in New York City in any action or
proceeding arising out of or relating to this Guaranty, and each
Guarantor hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard or determined in such New York State or
Federal court. Each Guarantor hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. Each Guarantor hereby
irrevocably appoints CT Corporations System (the "Process Agent") with an
office at 1633 Broadway, New York New York 10019, as its agent to receive
on behalf of such Guarantor and its property service of copies of the
summons and complaint and any other process which may be served in any
such action or proceeding. Each Guarantor may, with the prior written
consent of the Collateral Agent, appoint any other Person maintaining an
office in New York City as a successor Process Agent, and upon the
acceptance of the appointment as Process Agent by a successor Process
Agent, such successor Process Agent shall thereupon become Process Agent
hereunder and the retiring Process Agent shall be discharged from its
duties and obligations hereunder. Service of process in any such action
or proceeding may be made by mailing (by certified mail) or delivering a
copy of such process to each of the Guarantors in care of the Process
Agent, at the Process Agent's above address, and each Guarantor hereby
irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, each
Guarantor also irrevocably consents to the service of any and all process
in any such action or proceeding by the mailing (by certified mail) of
copies of such process to the Guarantors at their addresses specified in
SECTION 4.4. Each Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in
accordance with applicable law in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this Section shall affect the right of the
Collateral Agent to serve legal process in any other manner permitted by
law or affect the right of the Collateral Agent to bring any action or
proceeding against each Guarantor or its property in the courts of any
other jurisdictions.
(c) To the extent that any of the Guarantors has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or to its property, each Guarantor hereby irrevocably waives such
immunity in respect of its obligations under this Guaranty.
(d) By executing this Guaranty, each Guarantor hereby irrevocably
and unconditionally waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty brought in
any of the aforesaid courts, and hereby further irrevocably and
unconditionally waives and agrees not to plead any claim that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 4.11. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 4.12. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE COLLATERAL AGENT, THE
LENDERS, OR ANY OF THE GUARANTORS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE COLLATERAL AGENT ENTERING INTO THIS GUARANTY.
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
MIKE ROSE FOODS, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Assistant Secretary
and Treasurer
COMMISSARY OPERATIONS, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Treasurer and
Assistant Secretary
EVADON CORPORATION
By /S/ F.E. MCDANIEL, JR.
Title: Treasurer and
Assistant Secretary
CORPORATE BENEFIT SERVICES,
INCORPORATED, OF NASHVILLE
By /S/ F.E. MCDANIEL, JR.
Title: Assistant Secretary
SHONEY'S INVESTMENTS, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Secretary
SHONEY'S REAL ESTATE, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Treasurer and
Assistant Secretary
<PAGE>
PARGO'S OF FREDERICK, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Treasurer and
Assistant Secretary
PARGO'S OF YORK, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Secretary
RJR INVESTMENTS, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Secretary
SHONEY'S FUNDING CORP.
By /S/ F.E. MCDANIEL, JR.
Title: Treasurer and
Assistant Secretary
SHONEY'S EQUIPMENT CORPORATION
By /S/ F.E. MCDANIEL, JR.
Title: Assistant Secretary
and Treasurer
SHONEY'S OF CANADA, INC.
By /S/ F.E. MCDANIEL, JR.
Title: Secretary and
Treasurer
<PAGE>
EXHIBIT K
[CONFORMED COPY]
SHONEY'S, INC.
FINANCIAL CONDITION CERTIFICATE
Furnished pursuant to Section 5.1.14 of the Reducing Revolving Credit
Agreement, dated as of July 21, 1993 (the "CREDIT AGREEMENT"), among
Shoney's, Inc., a Tennessee corporation (the "BORROWER"), various
financial institutions now or hereafter parties thereto (the "LENDERS")
and Canadian Imperial Bank of Commerce, New York Agency, as the Agent
for the Lenders (in such capacity, the "AGENT").
THIS FINANCIAL CONDITION CERTIFICATE is delivered in connection with and
as a condition to the making of the initial Borrowing under the Credit
Agreement. Capitalized terms used herein without definition have the meanings
given thereto in the Credit Agreement.
I hereby certify to the Agent and each Lender, in good faith and to the
best of my knowledge and belief, as follows:
1. Since December 17, 1992, I have been the duly qualified and acting
Chief Financial Officer of the Borrower, and prior to that time for over four
years was the duly qualified and acting Treasurer of the Borrower, and at all
pertinent times mentioned herein I have been employed in positions involving
responsibility for the management of the financial affairs and the preparation
of financial statements of the Borrower. I have, together with other officers
of the Borrower, acted on behalf of the Borrower in connection with the Credit
Agreement and the consummation of the transactions contemplated thereby.
2. I have carefully reviewed the contents of this Certificate, and I
have conferred with counsel for the Borrower for the purpose of discussing the
meaning of its contents.
3. In connection with preparing for the consummation of the
transactions contemplated by the Credit Agreement, I have assisted in the
preparation of and I have reviewed the projections set forth in the Memorandum.
The projections set forth in the Memorandum were prepared on the basis of
information and estimates available on the date thereof, and I have no reason
to believe that, if such statements were to be prepared today, they would be
different in any materially adverse way.
4. In connection with the issuance of this Certificate and the
preparation of the projections set forth in the Memorandum, I have assisted in
the preparation of and have reviewed the financial statements described in
Section 6.4 of the Credit Agreement as having been previously delivered to the
Lenders. I have no reason to believe that the assumptions upon which the
projections set forth in the Memorandum are based are not reasonable, subject
to the recognition by the Lenders, however, that (x) projections as to future
events are not to be viewed as fact, and (y) because certain assumptions may
not materialize, either partially or wholly, and because unanticipated events
may occur and circumstances may arise subsequent to the date of such
projections, actual results during the period or periods covered by any
projections may differ from the projected results. I believe that the
projections set forth in the Memorandum provide reasonable estimations of
future performance, subject, as stated above, to the uncertainty and
approximation inherent in any projections.
5. I have reviewed the information delivered to the Lenders under
Section 5.1.15 of the Credit Agreement, and have made such other reviews,
investigations and inquiries as I have deemed necessary or prudent therefor.
Based upon the foregoing, I have concluded, in good faith and to the
best of my knowledge and belief, that as of the Closing Date and after giving
effect to all transactions comprising and incidental to and contemplated by the
Credit Agreement and the consummation of the transactions contemplated by the
Credit Agreement:
4.13. the fair salable value of the Borrower's assets exceeds the
total amount of liabilities (including contingent (including full
utilization of the Commitment under the Credit Agreement),
subordinated, unmatured and unliquidated liabilities, in each case
valued at the probable liability of the Borrower with respect
thereto) of the Borrower by more than $100,000,000, and, therefore,
the Borrower is not "insolvent";
4.14. the present fair salable value of the assets of the
Borrower is not less than the amount that will be required to pay
its probable liabilities as they become absolute and matured;
4.15. The Borrower will be able to realize upon its assets and
will have sufficient cash flow from operations to enable it to pay
its debts, other liabilities and contingent obligations as they
mature in the ordinary course of business;
4.16. the Borrower does not have an unreasonably small capital
with which to engage in its anticipated businesses; in reaching
this conclusion, I understand that "unreasonably small capital"
depends upon the nature of the particular business or businesses
conducted or to be conducted, and I have reached my conclusions
based on the needs and anticipated needs for capital of the
business conducted or anticipated to be conducted by the Borrower;
and
4.17. the Borrower has not incurred any obligation under the
Credit Agreement or made any conveyance pursuant to or in
connection with thereof, with actual intent to hinder, delay or
defraud either present or future creditors of the Borrower.
For purposes of this Certificate, the "fair salable value" of the
Borrower's assets and investments has been determined on the basis of the
amount which I have concluded, in good faith and to the best of my knowledge
and belief, may be realized within a reasonable time, either through collection
or sale of such investments and other assets at the regular market value,
conceiving the latter as the amount which could be obtained for the property in
question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
I understand that the Agent and the Lenders are relying on the truth and
accuracy of the foregoing in connection with their entering into the Credit
Agreement and consummating the transactions contemplated thereby.
I represent the foregoing information to be, in good faith and to the
best of my knowledge and belief, true and correct and have executed this
Certificate this 21st day of July, 1993.
/S/ W. CRAIG BARBER
W. CRAIG BARBER,
Vice President-Finance and
Chief Financial Officer
<PAGE>
EXHIBIT L
LENDER ASSIGNMENT AGREEMENT
To: Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
To: Canadian Imperial Bank of Commerce,
as Agent
425 Lexington Avenue
New York, New York 10017
SHONEY'S, INC.
Gentlemen and Ladies:
We refer to CLAUSE (E) of SECTION 10.10.1 of the Reducing Revolving
Credit Agreement, dated as of July 21, 1993 (together with all amendments,
restatements, amendments and restatements and other modifications from time to
time thereafter made thereto, the "CREDIT AGREEMENT"), among Shoney's, Inc., a
Tennessee corporation (the "BORROWER"), the various financial institutions (the
"LENDERS") as are, or shall from time to time become, parties thereto, and
Canadian Imperial Bank of Commerce, as agent (in such capacity, the "AGENT")
for the Lenders. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to CLAUSE (E) of SECTION
10.10.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to CLAUSE (D) of SECTION 10.10.1 of the Credit Agreement, of the
assignment and delegation to _______________ (the "ASSIGNEE") of ___% of the
Loans and Commitment of _____________ (the "ASSIGNOR") outstanding under the
Credit Agreement on the date hereof, and of a like percent of all of the
Assignor's rights and obligations under all of the Collateral Documents and
other Loan Documents. After giving effect to the foregoing assignment and
delegation, the Assignor's and the Assignee's Percentages for the purposes of
the Credit Agreement are set forth opposite such Person's name on the signature
pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to
Loans assigned.]
The Assignee hereby acknowledges and confirms that it has received a
copy of the Credit Agreement and the exhibits related thereto, together with
copies of the documents which were required to be delivered under the Credit
Agreement as a condition to the making of the Loans thereunder. THE ASSIGNEE
FURTHER CONFIRMS AND AGREES THAT IN BECOMING A LENDER AND IN MAKING ITS
COMMITMENT AND LOANS UNDER THE CREDIT AGREEMENT, SUCH ACTIONS HAVE AND WILL BE
MADE WITHOUT RECOURSE TO, OR REPRESENTATION OR WARRANTY BY, THE AGENT OR THE
ASSIGNOR.
Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent
(a) the Assignee
(i) shall be deemed automatically to have become a party to
the Credit Agreement, have all the rights and obligations of a
"Lender" under the Credit Agreement and the other Loan Documents
as if it were an original signatory thereto to the extent
specified in the second paragraph hereof, and expressly confirms
and ratifies the provisions of ARTICLE IX of the Credit Agreement;
(ii) agrees to be bound by the terms and conditions set
forth in the Credit Agreement and the other Loan Documents as if
it were an original signatory thereto; and
(b) the Assignor shall be released from its obligations under the
Credit Agreement and the other Loan Documents to the extent specified in
the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor]
[Assignee] will pay to the Agent the processing fee referred to in SECTION
10.10.1 of the Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitment and requests the
Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
LIBOR Office:
Telephone:
Facsimile:
Telex (Answerback):
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by SECTION 4.6 (if
so required) of the Credit Agreement no later than the date of acceptance
hereof by the Agent.
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same agreement.
ADJUSTED PERCENTAGE [ASSIGNOR]
Commitment
and
Loans: __%
By:_______________________
Title:
PERCENTAGE [ASSIGNEE]
Commitment
and
Loans: __%
By:_______________________
Title:
Accepted and Acknowledged
this __ day of _______, 19
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
By:________________________
Title:
SHONEY'S, INC.
By:_______________________
Title:
<PAGE>
EXHIBIT M
TUKE YOPP & SWEENEY
ATTORNEYS
NATIONSBANK PLAZA, SUITE 1100
414 UNION STREET
NASHVILLE, TENNESSEE 37219
TELEPHONE (615) 313-3300
FACSIMILE (615) 313-3310
May 3, 1996
The Lenders now or hereafter parties
to the Loan Agreement hereinafter
referred to and Canadian Imperial Bank
of Commerce, New York Agency, as the
Agent for the Lenders
Re: Shoney's, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Shoney's, Inc., a Tennessee
corporation (the "Borrower"), in connection with the Amended and Restated
Reducing Revolving Credit Agreement, dated as of July 21, 1993, as amended and
restated as of May 3, 1996 (the "LOAN AGREEMENT"), among the Borrower, CIBC
Inc., acting through its Atlanta Office, and various other financial
institutions which are, or may from time to time become, parties thereto
(collectively, the "Lenders"), and Canadian Imperial Bank of Commerce, New York
Agency, as Agent (in such capacity, the "Agent") for the Lenders. This opinion
is delivered to you pursuant to Section 5.1.12 of the Loan Agreement.
Capitalized terms that are used herein and are not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement; provided,
however, that the term "Subsidiary" shall not include the Transferred
Subsidiaries.
In connection with this opinion letter, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such corporate agreements, instruments, documents and
records of the Borrower and its Subsidiaries, such certificates of public
officials and such other documents, and (iii) received such certificates and
other information from officers and representatives of the Borrower and its
Subsidiaries, in each case, as we have deemed necessary or appropriate for the
purposes of this opinion letter. We have examined, among other documents, the
following documents:
<PAGE>
TUKE YOPP & SWEENEY
May 3, 1996
Page 2
(a) an executed copy of the Loan Agreement (including all
exhibits and schedules thereto); and
(b) an executed copy of the Subsidiary Acknowledgment.
The documents described in items (a) and (b) above are referred to herein
collectively as the "Transaction Documents."
In all such examinations, we have assumed the genuineness of all
signatures on original or certified, conformed or reproduction copies of
documents of all parties other than the Borrower or any of its Subsidiaries and
the conformity to original or certified copies of all copies submitted to us as
conformed or reproduction copies. As to various questions of fact relevant to
the opinions expressed herein which have not been independently verified by us,
we have relied upon, and assumed the accuracy of the factual content of,
representations and warranties contained in the Transaction Documents, written
information and certificates of public officials, of representatives of the
Borrower and its Subsidiaries, and of others deemed by us to be appropriate. In
the course of our representation of the Borrower, nothing has come to our
attention that causes us to believe that we are not justified in relying upon
such representations, warranties, written information and certificates.
To the extent it may be relevant to the opinions expressed herein, we
have assumed that the Transaction Documents have been duly authorized, executed
and delivered by, and constitute legal, valid and binding obligations of, the
parties thereto other than the Borrower or any of its Subsidiaries.
Based upon the foregoing and such legal considerations as we have deemed
necessary, and subject to the limitations, assumptions and qualifications set
forth in this opinion letter, we are of the opinion that:
(a) The Borrower (i) is a corporation duly incorporated and validly
existing under the laws of the State of Tennessee, (ii) is licensed, registered
or qualified to do business and is in good standing (or the equivalent thereof)
as a foreign corporation in each jurisdiction where the nature of its business
makes such qualification necessary and where the failure to so qualify might
have a Materially Adverse Effect, and (iii) has full corporate power and
authority to own its property and conduct its business substantially as
currently conducted by it. The Borrower has paid all taxes affecting its
corporate existence in the State of
<PAGE>
TUKE YOPP & SWEENEY
May 3, 1996
Page 3
Tennessee and no articles of termination of corporate existence have been filed
with respect to the Borrower. The Borrower has full corporate power and
authority to: (i) enter into and to perform its obligations under the Loan
Agreement and (ii) obtain Loans and other credit extensions from time to time
under the Loan Agreement to the extent provided therein.
(b) The execution and delivery by the Borrower of the Loan Agreement,
the performance by the Borrower of its obligations under the Loan Agreement and
the Loans and other credit extensions made under the Loan Agreement to the
Borrower (i) have been duly authorized by all necessary corporate action by the
Borrower; (ii) do not (except for filings, registrations, approvals and
consents which have been made or obtained) require any filing or registration
by the Borrower with, or approval or consent of, any governmental agency or
authority or any creditor or shareholder of the Borrower; (iii) do not and will
not conflict with, result in any violation of, or constitute any default under
(A) any provision of the charter or by-laws of the Borrower, (B) any present
law or governmental regulation applicable to the Borrower or its property,
including, without limitation, the Tennessee Business Corporation Act, or (C)
the LYONS Indenture or any other material agreement or instrument binding upon
or applicable to the Borrower or its property, or any court decree or order
applicable to the Borrower or its property, the opinion rendered in this
subclause (C) being limited to those agreements, instruments, decrees or orders
of which we have knowledge after due inquiry; and (iv) will not result in or
require the creation or imposition of any security interest in or upon any of
its properties pursuant to the provisions of any agreement or other instrument
binding upon or applicable to the Borrower or its property, the opinion
rendered in this clause (iv) being limited to those agreements or other
instruments of which we have knowledge after due inquiry.
(c) The Loan Agreement has been duly executed and delivered by the
Borrower and, insofar as the laws of the State of Tennessee may be concerned,
constitutes the legal, valid and binding obligation of the Borrower enforceable
in accordance with its terms.
(d) Each Subsidiary of the Borrower (i) is a corporation duly
incorporated and validly existing in good standing under the laws of the state
of its incorporation; (ii) is licensed, registered or qualified to do business
and in good standing as a foreign corporation in each jurisdiction where the
nature of its business makes each qualification necessary and where the failure
to so
<PAGE>
TUKE YOPP & SWEENEY
May 3, 1996
Page 4
qualify might have a Materially Adverse Effect; and (iii) has full corporate
power and authority to own its property and conduct its business substantially
as currently conducted by it. Each Subsidiary of the Borrower has full
corporate power and authority to enter into and to perform its obligations
under the Subsidiary Acknowledgment.
(e) The execution and delivery by each Subsidiary of the Borrower of
the Subsidiary Acknowledgment and the performance by each Subsidiary of the
Borrower of its obligations under the Subsidiary Acknowledgment: (i) have been
duly authorized by all necessary corporate action by the applicable Subsidiary
of the Borrower; (ii) do not (except for filings, registrations, approvals and
consents which have been made or obtained) require any filing or registration
by any such Subsidiary, with, or approval or consent of, any governmental
agency or authority or any shareholder or creditor of such Subsidiary; (iii) do
not and will not conflict with, result in any violation of, or constitute any
default under (A) any provision of the charter or articles of incorporation or
by-laws of such Subsidiary, (B) any present law or governmental regulation
applicable to such Subsidiary or its property, or (C) any material agreement or
other material instrument binding upon or applicable to such Subsidiary or its
property, or any court decree or order applicable to such Subsidiary or its
property, the opinion rendered in this subclause (C) being limited to those
agreements, instruments, decrees or orders of which we have knowledge after due
inquiry; and (iv) will not result in or require the creation or imposition of
any security interest in or upon any of its properties pursuant to the
provisions of any agreement or other instrument binding upon or applicable to
such Subsidiary or its property, the opinion rendered in this clause (iv) being
limited to those agreements or other instruments of which we have knowledge
after due inquiry.
(f) The Subsidiary Acknowledgment has been duly executed and delivered
by each Subsidiary of the Borrower and, insofar as the laws of the State of
Tennessee may be concerned, constitutes the legal, valid and binding obligation
of each such Subsidiary enforceable in accordance with its terms.
(g) To the best of our knowledge, after due inquiry, and relying solely
upon representations of the Borrower, except for the matters disclosed pursuant
to the Loan Agreement, no litigation, arbitration or governmental investigation
or proceeding against the Borrower or any Subsidiary of the Borrower, or to
which any of the properties of the Borrower or any Subsidiary of the Borrower
<PAGE>
TUKE YOPP & SWEENEY
May 3, 1996
Page 5
is subject, is pending or threatened which:
(i) if adversely determined, might have a Materially Adverse
Effect; or
(ii) relates to the Transaction Documents, or any transaction
stated in the Loan Agreement to be financed in whole or in part directly
or indirectly with the proceeds of the Loans.
(h) The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock. The making of the Loans or any other credit extension
and the application of the proceeds thereof as provided in the Loan Agreement
will not violate Regulations G, U or X of the Board of Governors of the Federal
Reserve System.
(i) The Borrower is not an "investment company" or a "company
controlled by an investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(j) The Loan Agreement and the Subsidiary Acknowledgment contain
provisions with respect to the choice of law applicable to govern the
provisions thereof. Each such provision states that New York law is wholly or
partially to govern the instrument in which such provision appears. In this
connection T.C.A. <section> 47-14-119 provides as follows:
In any transaction otherwise subject to this chapter which is not subject
to the disclosure requirements of the Federal Consumer Credit Protection
Act, where the transaction bears a reasonable relationship to this state
and also to another state or nation, the parties may agree in the written
contract evidencing such transaction that the laws of this state or of
any other such state or nation shall govern their rights and duties with
respect to interest, loan charges, commitment fees, and brokerage
commissions.
Tennessee courts have recognized that parties ordinarily are free to contract
that the law of some jurisdiction other than the law of
<PAGE>
TUKE YOPP & SWEENEY
May 3, 1996
Page 6
the place of making the contract shall govern their relationship. In previous
cases, such a stipulation has been sustained when made in good faith and when
the other state had some direct and relevant connection with the transaction.
The choice of its law must not be a sham or subterfuge and the application of
its law must not be contrary to a fundamental policy of the State of Tennessee.
We have not been advised, and are not otherwise aware, of any facts which
indicate that any party to the Loan Agreement or the Subsidiary Acknowledgement
did not enter into the transactions contemplated thereby in good faith or that
any party to the Loan Agreement or the Subsidiary Acknowledgement engaged in
fraud or chicanery, or misled any other party to such transactions. We believe
that a Tennessee court (or federal court of the United States applying the laws
of Tennessee), properly applying the general choice of law rules and principles
applied by such courts as a matter of Tennessee law, would uphold and enforce
the choice of law provisions in the Loan Agreement and the Subsidiary
Acknowledgement.
The opinions set forth above are subject to the following qualifications:
(A) Our opinions in paragraphs (b)(iii)(B), (c), (e)(iii)(B), (f) and (j)
above, insofar as they relate to enforceability, are subject to the effect of
any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, including, without limitation, fraudulent conveyance laws and
judicially developed doctrines relevant to any of the foregoing laws.
(B) Our opinions in paragraphs (b)(iii)(B), (c), (e)(iii)(B), (f) and
(j) above, insofar as they relate to enforceability, are subject to the effect
of judicial discretion or general equitable principles that may be applied by a
court to the exercise of certain rights and remedies but which, in our opinion,
will not materially interfere with the practical realization of the rights and
benefits intended to be provided therein or thereby.
(C) In rendering our opinions in paragraphs (b)(iii)(B), (c),
(e)(iii)(B) and (f) above as to compliance with law and enforceability, we have
assumed that the Borrower and its Subsidiaries are not insolvent on the Closing
Date and do not have unreasonably small capital with which to engage in their
businesses. We understand that the Lenders have satisfied themselves as to the
Borrower's and its Subsidiaries' solvency and
<PAGE>
TUKE YOPP & SWEENEY
May 3, 1996
Page 7
capital position on the basis of, among other things, the financial information
contained in the financial statements described in Section 6.4 of the Loan
Agreement and the certificate referred to in Section 5.1.6 of the Loan
Agreement.
(D) We express no opinion as to the creation, priority or perfection of
any lien or security interest.
(E) In rendering the opinions expressed herein, we have assumed that
the Agent and the Lenders at all times will act equitably and in good faith in
a commercially reasonable manner and in compliance with all applicable laws and
regulations.
(F) The opinions expressed herein are limited to the federal laws of
the United States and the laws of the State of Tennessee and we express no
opinion as to any other laws or regulations.
(G) The opinions expressed herein are as of the date hereof. We assume
no obligation to update or supplement the opinions expressed herein to reflect
any facts or circumstances that may hereafter come to our attention or any
change in laws that may hereafter occur.
(H) The opinions expressed herein are solely for the benefit of the
Agent and the Lenders now or hereafter parties to the Loan Agreement and may
not be relied on in any manner or for any purpose by any other person or
entity, without our express written consent.
(I) This letter is strictly limited to those matters expressly
addressed herein. We express no opinion as to any matter not specifically
stated to be and listed as an opinion.
Very truly yours,
TUKE YOPP & SWEENEY
<PAGE>
EXHIBIT N
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK 10019-6092
TELEPHONE 212 259-8000 FACSIMILE 212 259-6333
May 3, 1996
The Lenders now or hereafter parties to
the Credit Agreement hereinafter
referred to and Canadian Imperial
Bank of Commerce, New York Agency,
as Agent for the Lenders
Ladies and Gentlemen:
We have acted as special New York counsel to Shoney's, Inc., a Tennessee
corporation (the "Borrower"), in connection with the Amended and Restated
Reducing Revolving Credit Agreement, dated as of July 21, 1993 and amended and
restated as of May 3, 1996 (the "CREDIT AGREEMENT") among the Borrower, CIBC
Inc., acting through its Atlanta Office, and the various other financial
institutions now or hereafter parties thereto (collectively, the "LENDERS") and
Canadian Imperial Bank of Commerce, New York Agency, as the agent for the
Lenders (in such capacity, the "Aqent"). This opinion is delivered to you
pursuant to CLAUSE (B) of SECTION 5.1.12 of the Credit Agreement. All
capitalized terms used herein which are defined in, or by reference in, the
Credit Agreement have the meanings assigned to such terms in, or by reference
in, the Credit Agreement unless otherwise defined herein.
In connection with this opinion, we have (i) investigated such questions
of law, (ii) examined the originals or certified, confirmed or reproduction
copies of such corporate agreements, instruments, documents and records of the
Borrower and its subsidiaries, such certificates of public officials and such
other documents, (iii) received such certificates and other information from
officers and representatives of the Borrower and its Subsidiaries, as we have
deemed necessary or appropriate for the purpose of this opinion. We have
examined, among other documents an executed copy of the Credit Agreement
(including all exhibits and schedules thereto.
For purposes of this opinion, we have assumed the following:
(a) The genuineness of all signatures on original or certified,
conformed or reproduction copies of documents of all parties;
(b) The conformity to original or certified copies of all copies
submitted to us as conformed or reproduction copies;
(c) As to various questions of fact relevant to the opinions expressed
herein, the accuracy of the factual content of representations and
warranties contained in the Credit Agreement and statements,
written information and certificates of public officials, of
representatives of the Borrower and its Subsidiaries and of others
deemed by us to be appropriate;
(d) The Borrower is a corporation duly incorporated and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
(e) The Borrower has full corporate power and authority to enter into
and perform its obligations under the Credit Agreement; and
(f) That the Credit Agreement has been duly authorized, executed and
delivered by all of the parties thereto and constitutes the legal,
valid and binding obligation of the parties thereto other than the
Borrower.
Based on the foregoing, and subject to the limitations and assumptions
heretofore and hereinafter set forth, we are of the opinion that:
1. To the extent New York law applies thereto, the signature page of
the Credit Agreement is in form sufficient for the due execution
thereof by the Borrower.
2. The Credit Agreement constitutes the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
3. The execution and delivery by the Borrower of the Credit Agreement,
the performance by the Borrower of its obligations thereunder and
the Loans made under the Credit Agreement to the Borrower (i) do
not require any filing, registration or declaration by the Borrower
with or authorization, approval or consent of any governmental
agency or authority of the State of New York and (ii) do not and
will not conflict with, or result in any violation of, or
constitute a default under any present material law or governmental
regulation of the State of New York applicable to the Borrower or
its property.
The opinions set forth above are subject to the following exceptions and
qualifications:
A. Our opinions herein, insofar as they relate to enforceability, are
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement or creditors' rights
generally;
B. Our opinions herein, insofar as they relate to enforceability, are
subject to the effect of general equitable principles which may be applied by a
court to the exercise of certain rights and remedies (whether such
enforceability is considered in a proceeding at law or in equity);
C. Our opinions herein, insofar as they relate to enforceability, are
subject to the effect of standards of good faith, fair dealing and
reasonableness which may be applied by a court to the exercise of certain
rights and remedies;
D. No opinion is being rendered herein as to the perfection of any
security interest;
E. We express no opinion as to any provision of the Credit Agreement
insofar as it provides that any Person purchasing a participation from another
Person pursuant thereto may exercise set-off or similar rights with respect to
such participation or that the Agent or any other Person may exercise set-off
rights other than in accordance with applicable law;
F. We express no opinion as to the effect of the compliance or
noncompliance of any of the Lenders, the Agent or the Collateral Agent with any
state or Federal laws or regulations applicable because of the legal or
regulatory status or the nature of the business of any of them or their
participation in the Credit Agreement;
G. We express no opinion as to the value of, or as to the right, title
and interest of the Borrower in, and collateral; and
H. We express no opinion as to New York securities laws (including,
without limitation, as to the applicability of Sections 352-e, 352-f, 352-h or
359-e of the New York General Business Law).
The opinions expressed herein are limited to the laws of the State of New
York.
The opinions expressed herein are rendered as of the date hereof, and we
disclaim any undertaking to advise you of changes in law or fact which may
affect the continued correctness of any of our opinions as of a later date.
The opinions expressed herein are solely for the benefit of the Agent,
the Collateral Agent and the Lenders now or hereafter parties to the Credit
Agreement and may not be relied on in any manner or for any purpose by any
other person or entity.
Very truly yours,
<PAGE>
EXHIBIT O
IRREVOCABLE LETTER OF CREDIT
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Irrevocable Letter of Credit No.
Attention:
Gentlemen:
At the request and on the instructions of our customer, Shoney's, Inc., a
Tennessee corporation (the "ACCOUNT PARTY"), we hereby establish in your favor
this irrevocable, non-transferable Letter of Credit in the original amount of
*_____________.
SECTION 1. DEFINITIONS. The following terms when used in this Letter of
Credit shall have the following meanings:
"ACCOUNT PARTY" is defined in the FIRST PARAGRAPH.
"AUTHORIZED OFFICER" shall mean any of your whose signatures shall have
been satisfactorily certified to us.
"BUSINESS DAY" shall mean any day on which we are open for the purpose of
conducting commercial banking business at our Payment Office.
"CREDIT AGREEMENT" means the Amended and Restated Reducing Revolving
Credit Agreement, dated as of May 3, 1996 (as amended, supplemented, amended
and restated or otherwise modified from time to time), among the Account Party,
CIBC Inc., acting through its Atlanta office, as a lender, the various other
financial institutions which are, or may from time to time become, parties
thereto (the "LENDERS") and Canadian Imperial Bank of Commerce, New York
Agency, as agent (in such capacity, the "Agent") for the Lenders.
* Insert appropriate Dollar amount.
<PAGE>
"LOCAL TIME" means New York, New York time.
"PAYMENT OFFICE" is defined in SECTION 2.
"STATED AMOUNT" means, at any time, the original amount of this Letter of
Credit set forth in the FIRST PARAGRAPH, as such amount has at such time been
reduced in accordance with SECTION 4.
"STATED EXPIRY DATE" means , 19 _, or such later date of which we advise
you as being the date to which this Letter of Credit has been extended.
SECTION 2. PRESENTATION. Funds under this Letter of Credit will be made
available to you, in lawful currency of the United States of America, against
receipt by us of your written certificate in the form of ATTACHMENT 1 hereto,
appropriately completed and signed by an Authorized Officer accompanied by a
photocopy of this Letter of Credit. Presentation of each such certificate shall
be made in person at our office located at 425 Lexington Avenue, New York, New
York 10017, Attention: (our "Payment Office").
SECTION 3. PAYMENTS. Demands for payment in lawful money of the United
States of America may be made by you under this Letter of Credit at any time
during our business hours at our Payment Office on any Business Day; PROVIDED,
HOWEVER, that at no time shall the number of demands exceed [ ]. If demand for
payment is made by you hereunder at or prior to 11:00 a.m. (local time) on a
Business Day, and provided that such demand for payment and the documents
presented in connection therewith conform to the terms and conditions hereof,
payment will be made to you, or to your designee, of the amount demanded, in
same day funds, at our Payment Office not later than 10:00 a.m. (local time) on
the third succeeding Business Day. If demand for payment is made by you
hereunder after 11:00 a.m. (local time) on a Business Day, and provided that
such demand for payment and the documents presented in connection therewith
conform to the terms and conditions hereof, payment shall be made to you, or to
your designee, of the amount demanded, in same day funds, at our Payment Office
not later than 10:00 a.m. (local time), on the fourth succeeding Business Day.
If requested by you, payment under this Letter of Credit will be made by wire
transfer of same day funds to the account specified in your demand for payment.
If a demand for payment made by you hereunder does not, in any instance,
conform to the terms and conditions of this Letter of Credit, we shall give you
prompt notice that the demand for payment was not effected in accordance with
the terms and conditions of this Letter of Credit, stating the reasons
therefor, and that we will (subject to your further instructions) hold any
documents which have been delivered to us by you. Upon being notified that the
demand for payment was not effected in
<PAGE>
conformity with this Letter of Credit, you may attempt to correct any such
non-conforming demand for payment to the extent that you are then entitled and
able to do so.
SECTION 4. REDUCTION OF STATED AMOUNT. Each payment made by us hereunder
shall permanently reduce the Stated Amount by the amount of such payment, and
no demand for payment hereunder shall exceed the Stated Amount in effect at
such time. The Stated Amount of this Letter of Credit shall also be permanently
reduced from time to time upon our receipt of your certification in the form of
ATTACHMENT 2 hereto, appropriately completed and signed by an Authorized
Officer.
SECTION 5. DISCHARGE. Only you may make a demand for payment under this
Letter of Credit. Upon the payment to you, to your designee, or to your account
of the amount demanded hereunder, we shall be fully discharged of our
obligation under this Letter of Credit to the extent of such demand for
payment, and, to the extent of such payment, we shall not thereafter be
obligated to make any further payments under this Letter of Credit. By paying
to you, to your designee, or to your account any amount demanded in accordance
herewith, we make no representation as to the correctness of the amount
demanded.
SECTION 6. TERMINATION. Upon the earliest of:
(a) the making by us of the final payment available to be made
hereunder;
(b) the close of business at our Payment Office on the Stated
Expiry Date;
(c) the close of business at our Payment Office on the day
occurring 30 days after we have given you written notice, at your address
specified above, that an Event of Default (as defined in the Credit
Agreement) has occurred and is continuing; or
(d) receipt by us of a certificate signed by an Authorized
Officer stating that all obligations to which this Letter of Credit
relates have been terminated, paid, or otherwise satisfied in full,
this Letter of Credit shall automatically terminate; PROVIDED, HOWEVER, that
you shall have the right to make a demand for payment under this Letter of
Credit during the 30-day period prior to any termination pursuant to CLAUSE (D)
of this SECTION 6. Upon its termination, you shall promptly deliver the
original counterparty of this Letter of Credit to us for cancellation.
SECTION 7. NOTICES. ETC. Communications with respect to this Letter of
Credit shall be in writing and shall be addressed
<PAGE>
to us at our Payment Office, Attention: _________________ specifically
referring thereon to this Letter of Credit by number, followed by a copy to the
Account Party at the address set forth in SECTION 2.
SECTION 8. GOVERNING LAW. THIS LETTER OF CREDIT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF NEW YORK, INCLUDING ARTICLE 5 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
THE STATE OF NEW YORK, (THE "UCC"); provided, however, that, to the extent of
any inconsistency between the terms of this Letter of Credit and the UCC, the
terms of this Letter of Credit shall govern.
SECTION 9. MISCELLANEOUS. This Letter of Credit may not be transferred or
assigned, either in whole or in part. This Letter of Credit sets forth in full
our undertaking, and such undertaking shall not in any way be modified,
amended, amplified, or limited by reference to any document, instrument, or
agreement referred to herein.
Very truly yours,
CANADIAN IMPERIAL BANK OF
COMMERCE
By:
Title:
<PAGE>
ATTACHMENT 1
CERTIFICATE OF DEMAND FOR PAYMENT
____________, 19 _
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention:
Re: IRREVOCABLE LETTER OF CREDIT NO. -
The undersigned, a duly Authorized Officer of ________________ (the
"BENEFICIARY"), hereby certifies to Canadian Imperial Bank of Commerce (the
"Issuer") that:
(a) Unless otherwise defined, all capitalized terms used herein
have the meanings assigned thereto in the Irrevocable Letter of Credit
No. ___ (the "LETTER OF Credit"), dated ________, 19__, issued by the
Issuer on the application of Shoney's, Inc. (the "Account Party").
*[(b) The Beneficiary is making a demand for payment in lawful
money of the United States of America under the Letter of Credit in the
amount of ______________________, which will be applied to payment of the
obligations of the Account Party in connection with ______________ under
the Agreement (the "Agreement"). The amount being demanded hereunder is
now due and owing under the Agreement and payment of the amount being
demanded hereunder was demanded of the Account Party on (which is not
less than five Business Days prior to the date hereof), and has not yet
been paid. The amount demanded hereby does not on the date hereof, and
will not on the date payment hereunder is required to be made after
giving effect to all other amounts demanded under the Letter of Credit,
exceed the Stated Amount of the Letter of Credit.]
*[(b) The Beneficiary is making a demand for payment in lawful
money of the United States of America under the Letter of Credit in the
amount of _______________, which is the entire Stated Amount of the
Letter of Credit as in effect on the date hereof, following its receipt
of a written notice from you stating that an Event of Default
* Select appropriate alternative and complete appropriately.
<PAGE>
has occurred and is continuing and, as a result thereof, the Letter of
Credit will be terminated.]
(c) Upon its receipt of the amount demanded under the Letter of
Credit, the Beneficiary will
(i) apply such amount directly to the payment of the Account
Party's obligations under the Agreement; and
(ii) if after the application of proceeds described in CLAUSE
(I) such obligations will be paid in full, deliver to you the
original copy of the Letter of Credit, all releases as you may
reasonably request, and all security, if any, held in respect of
such obligations.
(d) [Insert disbursement instructions.]
IN WITNESS WHEREOF, the Beneficiary has caused its Authorized Officer to
execute and deliver this Certificate as of the _______ day of _______________,
19__.
[Name of Beneficiary]
By:
Title
<PAGE>
ATTACHMENT 2
CERTIFICATE OF REDUCTION
__________, 19 _
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention:
Re: IRREVOCABLE LETTER OF CREDIT NO.
The undersigned, a duly Authorized Officer of ________________
(the "BENEFICIARY"), hereby requests Canadian Imperial Bank of Commerce (the
"Issuer"), to reduce the Stated Amount of the Irrevocable Letter of Credit No.
(the "Letter of Credit"), dated , 19 _, issued on the application of *from to
_____________________.
Unless otherwise defined herein, all capitalized terms used herein and
defined in the Letter of Credit shall be used herein as so defined.
IN WITNESS WHEREOF, the Beneficiary has caused its Authorized Officer to
execute and deliver this Certificate as of the _______ day of ______________,
19__.
[Name of Beneficiary]
By:
Title:
* Insert appropriate amounts and currency.
