*TEXT OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY VICORP
RESTAURANTS, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) AND 200.83 AND UNDER
RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Execution Version
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
VI ACQUISITION CORP.
AS PARENT,
VICORP RESTAURANTS, INC.
AS BORROWER,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
WELLS FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF APRIL 14, 2004
TABLE OF CONTENTS
Page
----
1. DEFINITIONS AND CONSTRUCTION........................................................................... 2
1.1 Definitions................................................................................... 2
1.2 Accounting Terms.............................................................................. 38
1.3 Code.......................................................................................... 39
1.4 Construction.................................................................................. 39
1.5 Schedules and Exhibits........................................................................ 39
2. LOAN AND TERMS OF PAYMENT.............................................................................. 39
2.1 Revolver Advances............................................................................. 39
2.2 Term Loan..................................................................................... 40
2.3 Borrowing Procedures and Settlements.......................................................... 40
2.4 Payments...................................................................................... 47
2.5 Overadvances.................................................................................. 51
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations................... 52
2.7 Cash Management............................................................................... 53
2.8 Crediting Payments............................................................................ 55
2.9 Designated Account............................................................................ 55
2.10 Maintenance of Loan Account; Statements of Obligations........................................ 55
2.11 Fees.......................................................................................... 56
2.12 Letters of Credit............................................................................. 56
2.13 LIBOR Option.................................................................................. 59
2.14 Capital Requirements.......................................................................... 62
3. CONDITIONS; TERM OF AGREEMENT.......................................................................... 62
3.1 Conditions Precedent to the Initial Extension of Credit....................................... 62
3.2 Conditions Subsequent to the Initial Extension of Credit...................................... 66
3.3 Conditions Precedent to all Extensions of Credit.............................................. 67
3.4 Term.......................................................................................... 67
3.5 Effect of Termination......................................................................... 67
3.6 Early Termination by Borrower................................................................. 68
-i-
TABLE OF CONTENTS
(continued)
Page
----
4. CREATION OF SECURITY INTEREST.......................................................................... 69
4.1 Grant of Security Interest.................................................................... 69
4.2 Negotiable Collateral......................................................................... 69
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................ 69
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional
Documentation Required........................................................................ 70
4.5 Power of Attorney............................................................................. 71
4.6 Right to Inspect.............................................................................. 71
4.7 Control Agreements............................................................................ 72
5. REPRESENTATIONS AND WARRANTIES......................................................................... 72
5.1 No Encumbrances............................................................................... 72
5.2 [intentionally omitted]....................................................................... 72
5.3 [intentionally omitted]....................................................................... 72
5.4 Equipment..................................................................................... 72
5.5 Location of Inventory and Equipment........................................................... 72
5.6 Inventory Records............................................................................. 73
5.7 State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims................................................. 73
5.8 Due Organization and Qualification; Subsidiaries.............................................. 73
5.9 Due Authorization; No Conflict................................................................ 74
5.10 Litigation.................................................................................... 75
5.11 No Material Adverse Change.................................................................... 75
5.12 Fraudulent Transfer........................................................................... 76
5.13 Employee Benefits............................................................................. 76
5.14 Environmental Condition....................................................................... 76
5.15 Brokerage Fees................................................................................ 76
5.16 Intellectual Property......................................................................... 76
5.17 Leases........................................................................................ 77
5.18 Deposit Accounts and Securities Accounts...................................................... 77
Page
----
7.12 Investments................................................................................... 88
7.13 Transactions with Affiliates.................................................................. 89
7.14 Suspension.................................................................................... 89
7.15 [intentionally omitted]....................................................................... 89
7.16 Use of Proceeds............................................................................... 89
7.17 Inventory and Equipment with Bailees.......................................................... 89
7.18 Financial Covenants........................................................................... 89
8. EVENTS OF DEFAULT...................................................................................... 90
9. THE LENDER GROUP'S RIGHTS AND REMEDIES................................................................. 93
9.1 Rights and Remedies........................................................................... 93
9.2 Remedies Cumulative........................................................................... 95
10. TAXES AND EXPENSES..................................................................................... 95
11. WAIVERS; INDEMNIFICATION............................................................................... 96
11.1 Demand; Protest; etc.......................................................................... 96
11.2 The Lender Group's Liability for Borrower Collateral.......................................... 96
11.3 Indemnification............................................................................... 96
12. NOTICES................................................................................................ 97
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................................. 98
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................................................. 99
14.1 Assignments and Participations................................................................ 99
14.2 Successors................................................................................... 102
15. AMENDMENTS; WAIVERS................................................................................... 102
15.1 Amendments and Waivers....................................................................... 102
15.2 Replacement of Holdout Lender................................................................ 103
15.3 No Waivers; Cumulative Remedies.............................................................. 104
16. AGENT; THE LENDER GROUP............................................................................... 104
16.1 Appointment and Authorization of Agent....................................................... 104
16.2 Delegation of Duties......................................................................... 105
16.3 Liability of Agent........................................................................... 105
-iv-
TABLE OF CONTENTS
(continued)
Page
----
16.4 Reliance by Agent............................................................................ 106
16.5 Notice of Default or Event of Default........................................................ 106
16.6 Credit Decision.............................................................................. 106
16.7 Costs and Expenses; Indemnification.......................................................... 107
16.8 Agent in Individual Capacity................................................................. 108
16.9 Successor Agent.............................................................................. 108
16.10 Lender in Individual Capacity................................................................ 108
16.11 Withholding Taxes............................................................................ 109
16.12 Collateral Matters........................................................................... 111
16.13 Restrictions on Actions by Lenders; Sharing of Payments...................................... 112
16.14 Agency for Perfection........................................................................ 112
16.15 Payments by Agent to the Lenders............................................................. 113
16.16 Concerning the Collateral and Related Loan Documents......................................... 113
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information...................................................................... 113
16.18 Several Obligations; No Liability............................................................ 114
16.19 Bank Product Providers....................................................................... 114
16.20 Legal Representation of Agent................................................................ 115
17. GENERAL PROVISIONS.................................................................................... 115
17.1 Effectiveness................................................................................ 115
17.2 Section Headings............................................................................. 115
17.3 Interpretation............................................................................... 115
17.4 Severability of Provisions................................................................... 115
17.5 Counterparts; Electronic Execution........................................................... 115
17.6 Revival and Reinstatement of Obligations..................................................... 115
17.7 Confidentiality.............................................................................. 116
17.8 Integration.................................................................................. 116
-v-
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of April 14, 2004, by and among, on the one
hand, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and permitted assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders")
and WELLS FARGO FOOTHILL, INC., a California corporation ("WFF"), as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "Agent") and, on the other
hand, VI ACQUISITION CORP., a Delaware corporation ("Parent"), and VICORP
RESTAURANTS, INC., a Colorado corporation ("Borrower").
WHEREAS, Parent, Borrower, Midway Investors Holdings Inc., a
Delaware corporation ("Midway"), SunTrust Bank, a Georgia banking corporation,
as administrative agent ("Existing Agent") and the other persons signatory
thereto in their capacity as lenders (collectively, the "Existing Lenders" and
together with the Existing Agent, the "Existing Lender Group") are parties to
that certain Credit Agreement (as amended, supplemented, or otherwise modified
from time to time prior to the date hereof, the "Existing Loan Agreement"),
dated as of June 13, 2003, pursuant to which the Existing Lender Group provided
Borrower with (i) a revolving loan facility in an aggregate principal amount of
$25,000,000 (the "Existing Revolving Loan"), (ii) a term A loan in an aggregate
principal amount of $48,000,000 (the "Existing Term Loan A"), and (iii) a term B
loan in an aggregate principal amount of $42,000,000 (the "Existing Term Loan
B") (collectively, the Existing Revolving Loan, Existing Term Loan A, and
Existing Term Loan B are referred to herein as the "Existing Loans");
WHEREAS, the proceeds of a $126,530,000 senior unsecured high yield
offering, will be used to (i) retire Borrower's existing subordinated
indebtedness and partially repay the obligations under the Existing Loan
Agreement, (ii) pay certain transactional fees, costs, and expenses related to
this Agreement, (iii) pay the Existing Term Loan A and the Existing Term Loan B
in full, and (iv) finance the ongoing working capital, capital expenditures, and
general corporate needs of Borrower;
WHEREAS, WFF and each Existing Lender are parties to those certain
Assignment and Acceptance Agreements, each dated as of April 14, 2004
(collectively, the "Existing Lender Group Assignments) pursuant to which each
Existing Lender assigned all of its right, title and interest in and to the
Existing Loans to WFF;
WHEREAS, WFF, Existing Agent, and Existing Lenders are parties to
that certain Resignation Letter, dated as of April 14, 2004 (the "SunTrust
Resignation Letter"), pursuant to which Existing Agent resigned and Existing
Lenders appointed WFF as Agent;
WHEREAS, Borrower has requested that the Existing Loan Agreement be
amended and restated in its entirety to, among other things (i) increase the
Existing
1
Revolving Loan from $25,000,000 to $30,000,000, and (ii) consolidate Existing
Term Loan A and Existing Term Loan B into one term loan after taking into effect
the repayment of Existing Term Loan A and Existing Term Loan B resulting in a
term loan with an outstanding principal balance of $15,000,000;
WHEREAS, subject to the foregoing, Lender Group is willing to so
amend and restate the Existing Loan Agreement and that certain Borrower Security
Agreement dated as of June 13, 2003 (the "Existing Security Agreement") by
Borrower in favor of Existing Agent in accordance with the terms and conditions
hereof; it being understood that nothing contained herein shall be deemed a
satisfaction or novation of the Existing Loans or the indebtedness created or
evidenced by the Existing Loan Agreement as of the Closing Date and it being
further understood that the parties are merely an amending and restating the
Existing Loan Agreement and the Existing Security Agreement in accordance with
the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree to amend and restate the Existing Loan Agreement in its entirety as
follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"Account" means an account (as that term is defined in the Code).
"Account Debtor" means any Person who is obligated on an Account,
chattel paper, or a General Intangible.
"Acquisition" means (a) any Stock Acquisition, or (b) any Asset
Acquisition.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic fund transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Parent or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Adjusted EBITDA" means, as of any date of determination, the EBITDA
of Parent and its Subsidiaries adjusted by adding back to EBITDA the amounts
corresponding to the items set forth on Schedule A-1(a); provided however (a)
the Adjusted EBITDA for the 13 Fiscal Month period ending March 18, 2004 shall
be $41,438,000 and (b) the Adjusted EBITDA for each of the 13 Fiscal Months
ending March 18, 2004 shall be the amounts set forth on Schedule A-1(b).
2
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of Section 7.13 hereof: (a) any Person
which owns directly or indirectly 10% or more of the Stock having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.
"After Acquired Real Property" means Real Property acquired in fee
by Borrower or its Subsidiaries after the Closing Date and having an original
acquisition price in excess of $250,000.
"Agent" has the meaning set forth in the preamble to this Agreement.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent identified on
Schedule A-2.
"Agent's Liens" means the Liens granted by Parent or its
Subsidiaries to Agent under this Agreement or the other Loan Documents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 5% times the Maximum Revolver Amount, (b)
during the period from and including the date that is the first anniversary of
the Closing Date up to the date that is the second anniversary of the Closing
Date, 4% times the Maximum Revolver Amount, (c) during the period from and
including the date that is the second anniversary of the Closing Date up to date
that is the third anniversary of the Closing Date, 3% times the Maximum Revolver
Amount, (d) during the period from and including the date that is the third
anniversary of the Closing Date up to date that is the fourth anniversary of the
Closing Date, 2% times the Maximum Revolver
3
Amount, and (e) during the period from and including the date that is the fourth
anniversary of the Closing Date up to Maturity Date, 1% times the Maximum
Revolver Amount.
"Asset Acquisition" means any purchase or other acquisition by
Borrower or its Subsidiaries of all or substantially all of the assets of one or
more restaurants owned or leased and operated by any other Person.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of Borrower.
"Availability" means, as of any date of determination, the amount
that Borrower is entitled to borrow as Advances hereunder (after giving effect
to all then outstanding Obligations (other than Bank Product Obligations) and
all sublimits and reserves then applicable hereunder).
"Bank Product" means any financial accommodation extended to Parent
or its Subsidiaries by a Bank Product Provider (other than pursuant to this
Agreement) including: (a) credit cards, (b) credit card processing services, (c)
debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management,
including controlled disbursement, accounts or services, or (g) transactions
under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into from
time to time by Parent or its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Parent or its
Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that Parent or its
Subsidiaries are obligated to reimburse to Agent or any member of the Lender
Group as a result of Agent or such member of the Lender Group purchasing
participations from, or executing indemnities or reimbursement obligations to, a
Bank Product Provider with respect to the Bank Products provided by such Bank
Product Provider to Parent or its Subsidiaries.
"Bank Product Provider" means Wells Fargo or any of its Affiliates.
"Bank Product Reserve" means, as of any date of determination, the
amount of reserves that Agent has established (based upon the Bank Product
Providers' reasonable determination of the credit exposure of Parent and its
Subsidiaries in respect of Bank Products) in respect of Bank Products then
provided or outstanding.
4
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.
"Base Rate" means, the rate of interest announced, from time to
time, within Wells Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Wells Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.
"Base Rate Loan" means the portion of the Advances or the Term Loan
that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means, as of any date of determination, the
following margin based upon Parent's most recent Leverage Ratio calculation
(determined as set forth in the following paragraph); provided, however, that
(a) for the period from the Closing Date through the date Agent receives the
certified calculation of Parent's Leverage Ratio in respect of the testing
period ended with April 15, 2004 delivered pursuant to Section 6.3, and (b) at
any time that an Event of Default exists hereunder, the Base Rate Margin shall
be at Level I:
Level Leverage Ratio Base Rate Margin
----- -------------- ----------------
I equal to or greater than 4.0:1.0 1.50 percentage points
II less than 4.0:1.0 and equal to or greater than 1.25 percentage points
3.5:1.0
III less than 3.5:1.0 and equal to or greater than 1.00 percentage points
3.0:1.0
IV less than 3.0:1.0 0.75 percentage points
5
Except as set forth in the foregoing proviso, the Base Rate Margin
shall be based upon Parent's most recent Leverage Ratio calculation, which will
be calculated on a fiscal quarter basis. Except as set forth in the initial
proviso in this definition, the Base Rate Margin shall be re-determined each
fiscal quarter on the first day of the month following the date of delivery to
Agent of the certified calculation of Parent's Leverage Ratio pursuant to
Section 6.3 hereof; provided, however, that if Parent and Borrower fail to
provide such certification when such certification is due, the Base Rate Margin
shall be set at the margin in the row styled "Level I" as of the first day of
the month following the date on which the certification was required to be
delivered until the date on which such certification is delivered (on which date
(but not retroactively), without constituting a waiver of any Default or Event
of Default occasioned by the failure to timely deliver such certification, the
Base Rate Margin shall be set at the margin based upon the Leverage Ratio
calculation disclosed by such certification).
"Baseline Lease" has the meaning set forth in the definition of
Capital Lease.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Parent or any Subsidiary or ERISA Affiliate of Parent
has been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board of directors (or comparable managers).
"Books" means Parent's and its Subsidiaries' now owned or hereafter
acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Parent's or its Subsidiaries' Records relating to their
business operations or financial condition, and all of their goods or General
Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower Collateral" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims described on Schedule 5.7(d),
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
6
(g) all of its Inventory,
(h) all of its Investment Property (including all of its securities
and Securities Accounts),
(i) all of its Negotiable Collateral,
(j) all of its Supporting Obligations,
(k) money or other assets of Borrower that now or hereafter come
into the possession, custody, or control of any member of the Lender Group, and
(l) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loan) made on the same day by the Lenders
(or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or
by Agent in the case of an Agent Advance.
"Borrowing Base" means, as of any date of determination, the result
of:
(a) the result of
(y) 1.2 times Parent's Adjusted EBITDA for the most
recently completed 13 Fiscal Month period ending as of the date of
determination, minus
(z) $15,000,000, less
(b) the sum of the aggregate amount of reserves, if any,
established by Agent under Section 2.1(b).
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the state of New
York, except that, if a determination of a Business Day shall relate to a LIBOR
Rate Loan, the term "Business Day" also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.
"Canadian Sub" means Village Inn Pancake House of Canada, Limited, a
company organized under the laws of the province of Alberta.
7
"Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP; provided, however, that
any lease of real property of Borrower or its Subsidiaries extant as of the
Closing Date that is not required to be treated as a Capital Lease as of the
Closing Date (each, a "Baseline Lease") and any lease of real property of
Borrower or its Subsidiaries that is entered into after the Closing Date and
that is on economic terms, taken as a whole, comparable to a Baseline Lease,
shall not be deemed to be a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" means a Concentration Account or a
Collection Account.
"Cash Management Agreements" means those certain cash management
agreements, in form and substance satisfactory to Agent, each of which is among
Borrower or one of its Subsidiaries, and one of the Cash Management Banks.
"Cash Management Bank" means a Concentration Account Bank or a
Collection Account Bank.
8
"CFC" means a controlled foreign corporation (as that term is
defined in the IRC).
"Change of Control" means (a)(i) prior to the consummation of a
Qualified IPO, that (A) (x) WPP and its Affiliates cease to own, directly or
indirectly, and control 33 1/3% or more, of the Stock of Parent, or (y) WPP and
its Affiliates cease to have the power to elect a majority of the members of the
Board of Directors, or (z) a majority of the members of the Board of Directors
has not been elected by WPP and its Affiliates, or (B) that the Permitted
Holders cease to own, directly or indirectly, and control 51%, or more, of the
Stock of Parent, and (ii) from and after the consummation of a Qualified IPO,
(A) the consummation of any transaction (including any merger or consolidation)
the result of which is that any "person" (as such term is defined in Section
13(d)(3) of the Securities Exchange Act) or group of related persons, together
with any Affiliates thereof (other than the Permitted Holders), (x) becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more than 25% of the Stock of
Parent having the right to vote for the election of members of the Board of
Directors (as determined on a fully diluted basis and measured by voting power
rather than number of shares) or (y) obtains the power (whether or not
exercised) to elect a majority of the members of the Board of Directors, or (B)
any group of related persons, together with any Affiliates thereof (other than
WPP), becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act), directly or indirectly, of more of the Stock
of Parent having the right to vote for the election of members of the Board of
Directors (as determined on a fully diluted basis and measured by voting power
rather than number of shares) than is owned, directly or indirectly, by WPP, or
(b) prior to the consummation of a Qualified IPO, a majority of the members of
the Board of Directors do not constitute Continuing Directors, or (c) Parent
ceases to own, directly or indirectly, and control 100% of the outstanding Stock
of each of its Subsidiaries extant as of the Closing Date, or (d) a "change of
control" (as that term is defined in the Indenture as in effect on the Closing
Date) has occurred.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of Parent
for the 3 year period following the Closing Date in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent's Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term "Code" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.
9
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Parent or its Subsidiaries in or upon
which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Parent's or its Subsidiaries' Books, Equipment, or
Inventory, in each case, in form and substance satisfactory to Agent.
"Collection Account" has the meaning set forth in Section 2.7(b).
"Collection Account Bank" has the meaning set forth in Section
2.7(b).
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commercial Tort Claim Assignment" has the meaning set forth in
Section 4.4(b).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Concentration Account" has the meaning set forth in Section 2.7(a).
"Concentration Account Bank" has the meaning set forth in Section
2.7(a).
"Consolidated Operating Income" means, as of any date of
determination and for any period, (a) Adjusted EBITDA for such period, plus (b)
to the extent deducted in the calculation of Adjusted EBITDA, Parent and its
Subsidiaries' general and administrative costs and expenses for such period.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the
10
Continuing Directors, but excluding any such individual originally proposed for
election in opposition to the Board of Directors in office at the Closing Date
in an actual or threatened election contest relating to the election of the
directors (or comparable managers) of Parent and whose initial assumption of
office resulted from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Parent or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).
"Copyright Security Agreement" means an amended and restated
copyright security agreement executed and delivered by Borrower and Agent, the
form and substance of which is satisfactory to Agent.
"Credit Card Agreements" means those certain credit card receipts
agreements, each in form and substance reasonably satisfactory to Agent,
executed and delivered by Borrower or a Guarantor, Agent and the applicable
Credit Card Processor.
"Credit Card Processor" means any Person (including an issuer of a
credit card) that acts as a credit card clearinghouse or remits payments due to
Borrower or a Guarantor with respect to credit card charges accepted by Borrower
or a Guarantor.
"Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from and
after the date the relevant payment is due, the Base Rate, and (b) thereafter,
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means the Deposit Account of Borrower
identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"Dollars" or "$" means United States dollars.
11
"EBITDA" means, with respect to any fiscal period, net earnings (or
loss), minus extraordinary gains and interest income, plus interest expense,
income taxes, and depreciation and amortization for such period, in each case,
as determined in accordance with GAAP; provided, however, that for purposes of
calculating EBITDA for any period, the EBITDA attributable to (a) any Subsidiary
whose Stock is sold or otherwise transferred to any Person other than to
Borrower or to a Subsidiary of Borrower during such period, or (b) any
Restaurant the assets of which (whether all or substantially all) are sold,
leased or otherwise transferred to any Person other than to Borrower or to a
Subsidiary of Borrower during such period, or (c) any Permanently Closed
Restaurant, shall be excluded on a pro forma basis for such period (as if, for
purposes of such calculation, the consummation of such sale, lease or other
transfer occurred on the first day of such period).
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Borrower (which approval of Borrower shall not be
unreasonably withheld, delayed, or conditioned), and (f) during the continuation
of an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Parent, its Subsidiaries, or any of their predecessors in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by Parent, its
Subsidiaries, or any of their predecessors in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on Parent
or its Subsidiaries, relating to the environment, the effect of the environment
on employee health, or Hazardous Materials, including the Comprehensive
Environmental Response Compensation and Liability Act, 42 USC Section 9601 et
seq.; the Resource Conservation and Recovery Act, 42 USC Section 6901 et seq.;
the Federal Water Pollution Control Act, 33 USC Section 1251 et seq.; the Toxic
Substances Control Act, 15 USC
12
Section 2601 et seq.; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe
Drinking Water Act, 42 USC Section 3803 et seq.; the Oil Pollution Act of 1990,
33 USC Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC Section 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC Section 651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Parent or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Parent or its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Parent or any of its Subsidiaries is a member under IRC Section 414(m), or
(d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
Person subject to ERISA that is a party to an arrangement with Parent or any of
its Subsidiaries and whose employees are aggregated with the employees of Parent
or its Subsidiaries under IRC Section 414(o).
"Estoppel Agreement" means that certain estoppel agreement dated as
of the Closing Date executed and delivered by Parent, Borrower and its
Subsidiaries in favor of Agent.
"Event of Default" has the meaning set forth in Section 8.
13
"Excess Availability" means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Parent and its Subsidiaries aged in excess of historical levels with
respect thereto and all book overdrafts of Parent and its Subsidiaries in excess
of historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Excluded Assets" means (a) any Investment Property of Borrower
constituting Stock of Borrower's Subsidiaries that are CFCs, solely to the
extent that such Investment Property is in excess of 65% of the voting power of
the Stock of such CFC, (b) any agreement, permit, or license of Borrower solely
in the event and to the extent that a grant of a Lien on such license, contract,
or agreement is prohibited by law or results in a breach or termination of the
terms of, or constitutes a default under, or termination of any such license,
contract, or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408, or 9-409 of the
Code (or any successor provision or provisions), and (c) any intent-to-use
trademark or service mark application of Borrower if granting a security
interest therein is deemed to invalidate, void, cancel, or abandon such
applications; provided, however, that Excluded Assets shall not include (and,
accordingly, Collateral shall include) (i) any agreement, permit, or license
described in clause (b) immediately upon the ineffectiveness, lapse, or
termination of the relevant prohibition under applicable law or the terms of
such agreement, permit, or license, (ii) any agreement, permit, or license
described in clause (b) from and after such time as the lessor, licensor, or
other party to such agreement, permit, or license consents to the grant of a
Lien in favor of Agent in such agreement, permit, or license, (ii) any trademark
or service mark application at such time as the same are used in commerce, and
(iii) all proceeds of any of such assets.
"Existing Agent" has the meaning set forth in the recitals to this
Agreement.
"Existing Lender Group" has the meaning set forth in the recitals to
this Agreement.
"Existing Lender Group Assignments" has the meaning set forth in the
recitals to this Agreement.
"Existing Lenders" has the meaning set forth in the recitals to this
Agreement.
"Existing Loan Agreement" has the meaning set forth in the recitals
to this Agreement.
"Existing Loans" has the meaning set forth in the recitals to this
Agreement.
"Existing Revolving Loan" has the meaning set forth in the recitals
to this Agreement.
14
"Existing Security Agreement" has the meaning set forth in the
recitals to this Agreement.
"Existing Term Loan A" has the meaning set forth in the recitals to
this Agreement.
"Existing Term Loan B" has the meaning set forth in the recitals to
this Agreement.
"Extraordinary Receipts" means any Collections received by a Person
or any of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds described in Section 2.4(c)(i) hereof), excluding, (a)
foreign, United States, state or local tax refunds, (b) pension plan reversions,
(c) proceeds of insurance (including proceeds of key man life insurance policies
and business interruption insurance), (d) proceeds of judgments, proceeds of
settlements, or other consideration of any kind in connection with any cause of
action, but expressly including condemnation awards (and payments in lieu
thereof) in excess of amounts used to repair or restore the applicable property
as permitted by this Agreement, indemnity payments, and any purchase price
adjustment received in connection with any purchase agreement.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"Filing Authorization Letter" means a letter duly executed by
Borrower and each Guarantor authorizing Agent to file appropriate financing
statements in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the security interests to be created by the Loan
Documents.
"Fiscal Month" means a fiscal month of Borrower and its
Subsidiaries.
"Fixed Charges" means with respect to Parent and its Subsidiaries
for any period, the sum, without duplication, of (a) cash Interest Expense, (b)
principal payments required to be paid during such period in respect of
Indebtedness, (c) all federal, state, and local income taxes paid in cash during
such period, (d) all management fees paid in cash during such period, and (e)
the amount of the Permitted Distribution paid during such period.
"Fixed Charge Coverage Ratio" means, with respect to Parent and its
Subsidiaries for any period, the ratio of (a) Adjusted EBITDA for such period
minus non-financed Maintenance Capital Expenditures incurred during such period,
to (b) Fixed Charges for such period.
"Four Wall EBITDA" means, as of any date of determination and for
any period, with respect to the restaurant or restaurants that are to be the
subject of a proposed Acquisition, (a) the EBITDA of such restaurant or
restaurant for such period, plus (b) to the extent deducted in the calculation
of EBITDA, the general and administrative costs and expenses of such restaurant
or restaurants for such period.
15
"Free Cash Flow" means, as of any date of determination, with
respect to Borrower and its Subsidiaries from April 15, 2004 to the date of
determination, Adjusted EBITDA less non-financed Maintenance Capital
Expenditures, less the amount of cash severance payments and charges incurred in
connection with the redemption or repurchase of the Stock of Parent permitted
under Section 7.10(e)(i), less the amount of transaction costs for Permitted
Acquisitions that are incurred, paid, and expensed in such period, less the
amount of transaction costs associated with the closing of the transactions
contemplated by the High Yield Debt Documents, the transactions contemplated by
this Agreement and the merger of Midway into Parent that are paid after the
Closing Date and incurred, paid and expensed in such period, (excluding the
amount of costs associated with the termination of derivative contracts paid on
or after the Closing Date), less the amount that Gross Availability has been
reduced from April 15, 2004 through such date of determination less Fixed
Charges, plus the Net Cash Proceeds of Permitted Dispositions of the type
described in clauses (i) and (j) of the definition of Permitted Dispositions.
"Funded Debt" of any Person means Indebtedness of such Person that
by its terms matures more than one year after the date of creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year after such date, including
all amounts of Funded Debt of such Person required to be paid or prepaid within
one year after the date of determination.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"Funds Flow Agreement" means that certain Funds Flow Agreement,
dated of even date herewith, by and among Agent, Parent, and each of its
Subsidiaries.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"GE Fee Letter" means that certain fee letter, dated as of even date
herewith, by Borrower in favor of Agent and GE Capital Franchise Finance
Corporation, in form and substance satisfactory to Agent.
"General Intangibles" means general intangibles (as that term is
defined in the Code), including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any
16
other personal property other than Accounts, Deposit Accounts, goods, Investment
Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Gross Availability" means, as any date of determination, the amount
that Borrower is entitled to borrow as Advances hereunder (without giving effect
to all then outstanding Obligations or reserves).
"Growth Capital Expenditures" means the sum of (a) Capital
Expenditures in connection with new restaurant purchases (including in
connection with franchise buybacks and purchases of competitor restaurants),
plus (b) the amount paid in connection with the consummation of Permitted
Non-Equity Acquisitions.
"Growth Capital Expenditure Amount" means, as of any date of
determination, the result of (a) the amount of Excess Availability under the
Revolver on the Closing Date (after giving effect to all transactions and
expenses to occur on the Closing Date), less (b) $3,500,000, plus (c) the
cumulative positive Free Cash Flow generated from and after April 15, 2004 to
the date of determination, plus (d) the amount of Net Cash Proceeds consisting
solely of cash received by Borrower or its Subsidiaries from Permitted
Restaurant Dispositions so long as such Net Cash Proceeds are used to make
Growth Capital Expenditures within 360 days after the date of receipt thereof,
plus (e) the amount of Indebtedness permitted under Section 7.1(k) resulting
from a Permitted Acquisition, plus (f) the amount of Net Cash Proceeds resulting
from a Permitted Sale and Leaseback of a Restaurant that occurs within the
earlier of (i) 360 days of the initial acquisition of such Restaurant and (ii)
90 days after the date of the opening of such Restaurant, plus (g) the amount of
Net Cash Proceeds consisting solely of cash received by Borrower or its
Subsidiaries resulting from dispositions permitted by clause (k) of the
definition of Permitted Dispositions.
"Guarantor Pledge Agreement" means one or more amended and restated
stock pledge agreements executed and delivered by each Guarantor in favor of
Agent, in each case, in form and substance reasonably satisfactory to Agent.
"Guarantor Security Agreement" means one or more amended and
restated security agreements executed and delivered by each Guarantor in favor
of Agent, in each case, in form and substance satisfactory to Agent.
"Guarantors" means (a) Parent, and (b) each Subsidiary of Parent
(other than Borrower and Canadian Sub), and "Guarantor" means any one of them.
17
"Guaranty" means that certain amended and restated general
continuing guaranty executed and delivered by each Guarantor in favor of Agent,
for the benefit of the Lender Group and the Bank Product Providers, in form and
substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all agreements or documents now
existing or hereafter entered into by Parent or any of its Subsidiaries that
provide for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency rate
swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Parent's or any of its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security, or currency valuations or commodity prices.
"High Yield Note Documents" means the Indenture and the Notes.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"Inactive Subsidiary" means Canadian Sub.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
principal obligations under Capital Leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (excluding trade
payables incurred in the ordinary course of business and repayable in accordance
with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
18
"Indenture" means that certain Indenture, dated as of April 14,
2004, among Borrower, each of its Restricted Subsidiaries (as that term is used
therein), and Indenture Trustee.
"Indenture Trustee" means (a) Wells Fargo, in its capacity as
trustee under the Indenture, or (b) any successor trustee under the Indenture
from time to time.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Intercompany Advances" means loans or advances (in cash) (a) from
Borrower to a Guarantor, (ii) from a Guarantor to Borrower, or (iii) from a
Guarantor to another Guarantor.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Parent and each of its Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.
"Interest Expense" means, for any period, the aggregate of the
interest expense of Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period which
will end after the Maturity Date.
"Inventory" means inventory (as that term is defined in the Code).
19
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other Person),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"Investment Property" means investment property (as that term is
defined in the Code).
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means WFF or any other Lender that, at the request
of Borrower and with the consent of Agent, agrees, in such Lender's sole
discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Parent or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the
Lender Group, (b) actual out-of-pocket fees or charges paid or incurred by Agent
in connection with the Lender Group's transactions with Parent or its
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement),
real estate surveys, real estate title policies and endorsements, and
20
environmental audits, (c) actual out-of-pocket costs and expenses incurred by
Agent in the disbursement of funds to Borrower or other members of the Lender
Group (by wire transfer or otherwise), (d) actual out-of-pocket charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by the Lender Group to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with Parent or any its Subsidiaries, (h) Agent's
reasonable costs and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, syndicating, or amending the
Loan Documents, and (i) Agent's and each Lender's reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning Parent or
its Subsidiaries or in exercising rights or remedies under the Loan Documents),
or defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, officers, directors, employees,
attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Fee" means, as of any date of determination, the
following fee based upon Parent's most recent Leverage Ratio calculation
(determined as set forth in the following paragraph); provided, however, that
(a) for the period from the Closing Date through the date Agent receives the
certified calculation of Parent's Leverage Ratio in respect of the testing
period ended with April 15, 2004 delivered pursuant to Section 6.3, and (b) at
any time that an Event of Default exists hereunder, the Letter of Credit Fee
shall be at Level I:
Level Leverage Ratio Letter of Credit Fee
----- ---------------------------------------------- ----------------------
I equal to or greater than 4.0:1.0 3.50 percentage points
II less than 4.0:1.0 and equal to or greater than 3.25 percentage points
3.5:1.0
III less than 3.5:1.0 and equal to or greater than 3.00 percentage points
3.0:1.0
IV less than 3.0:1.0 2.75 percentage points
21
Except as set forth in the foregoing proviso, the Letter of Credit
Fee shall be based upon Parent's most recent Leverage Ratio calculation, which
will be calculated on a fiscal quarter basis. Except as set forth in the initial
proviso in this definition, the Letter of Credit Fee shall be re-determined each
fiscal quarter on the first day of the month following the date of delivery to
Agent of the certified calculation of Parent's Leverage Ratio pursuant to
Section 6.3 hereof; provided, however, that if Parent and Borrower fail to
provide such certification when such certification is due, the Letter of Credit
Fee shall be set at the margin in the row styled "Level I" as of the first day
of the month following the date on which the certification was required to be
delivered until the date on which such certification is delivered (on which date
(but not retroactively), without constituting a waiver of any Default or Event
of Default occasioned by the failure to timely deliver such certification, the
Letter of Credit Fee shall be set at the margin based upon the Leverage Ratio
calculation disclosed by such certification.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"Leverage Ratio" means, at any date of determination, the ratio of
(a) the outstanding principal amount of Total Debt at such date, to (ii)
Adjusted EBITDA for the most recently completed four fiscal quarter period ended
on or prior to the date of determination.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period,
by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance or the Term Loan
that bears interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means, as of any date of determination, the
following margin based upon Parent's most recent Leverage Ratio calculation
(determined as set forth in the following paragraph); provided, however, that
(a) for the period from the Closing Date through the date Agent receives the
certified calculation of Parent's Leverage Ratio in respect of the testing
period ended with April 15, 2004 delivered pursuant to Section 6.3,
22
and (b) at any time that an Event of Default exists hereunder, the LIBOR Rate
Margin shall be at Level I:
Level Leverage Ratio LIBOR Rate Margin
----- ---------------------------------------------- -----------------
I equal to or greater than 4.0:1.0 3.50 percentage points
II less than 4.0:1.0 and equal to or greater than 3.25 percentage points
3.5:1.0
III less than 3.5:1.0 and equal to or greater than 3.00 percentage points
3.0:1.0
IV less than 3.0:1.0 2.75 percentage points
Except as set forth in the foregoing proviso, the LIBOR Rate Margin
shall be based upon Parent's most recent Leverage Ratio calculation, which will
be calculated on a fiscal quarter basis. Except as set forth in the initial
proviso in this definition, the LIBOR Rate Margin shall be re-determined each
fiscal quarter on the first day of the month following the date of delivery to
Agent of the certified calculation of Parent's Leverage Ratio pursuant to
Section 6.3 hereof; provided, however, that if Parent and Borrower fail to
provide such certification when such certification is due, the LIBOR Rate Margin
shall be set at the margin in the row styled "Level I" as of the first day of
the month following the date on which the certification was required to be
delivered until the date on which such certification is delivered (on which date
(but not retroactively), without constituting a waiver of any Default or Event
of Default occasioned by the failure to timely deliver such certification, the
LIBOR Rate Margin shall be set at the margin based upon the Leverage Ratio
calculation disclosed by such certification).
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements,
the Cash Management Agreements, the Control Agreements, the Copyright Security
Agreement, the Credit Card Agreements, the Disbursement Letter, the Estoppel
Agreement, the Fee
23
Letter, the Funds Flow Agreement, the GE Fee Letter, the Guarantor Security
Agreement, the Guaranty, the Intercompany Subordination Agreement, the Letters
of Credit, the Mortgages, the Stock Pledge Agreement, the Trademark Security
Agreement, the Vectra Fee Letter, any note or notes executed by Borrower in
connection with this Agreement and payable to a member of the Lender Group, and
any other agreement entered into, now or in the future, by Borrower and the
Lender Group in connection with this Agreement.
"Maintenance Capital Expenditures" means all Capital Expenditures of
Borrower and its Subsidiaries other than Growth Capital Expenditures.
"Management Agreement" means that certain Professional Services
Agreement dated as of June 12, 2003 between Parent and WPP.
"Marginally Performing Restaurant" means a Restaurant (a) that has
been operated by Borrower or one of its Subsidiaries for at least 12 months and
whose allocable portion of TTM Consolidated Operating Income is less than
$50,000 but greater than $1, (b) that has been operated by Borrower or one of
its Subsidiaries for less than 12 months and whose allocable portion of
Consolidated Operating Income has been less than $50,000 but greater than $1
since inception on a cumulative basis), or (c) that is a Performing Restaurant;
however, the lease associated with such Restaurant will expire in 180 days and
after giving effect to the terms of the new lease for such Restaurant, the
allocable portion of TTM Consolidated Operating Income would be less than
$50,000 but greater than $1.
"Material Adverse Change" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Parent and its Subsidiaries, taken as a whole, (b) a
material impairment of Parent's and its Subsidiaries ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of Parent or its Subsidiaries.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $30,000,000.
"Midway" has the meaning specified therefor in the recitals to this
Agreement.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt (or assignments and
amendments thereof), delivered (and where applicable, executed) by Borrower or
its Subsidiaries in favor of Agent, in form and substance satisfactory to Agent,
that encumber the Real Property Collateral.
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper).
24
"Net Cash Proceeds" means, with respect to any sale or disposition
by any Person or any Subsidiary thereof of property or assets, the amount of
Collections received (directly or indirectly) from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of such Person or such Subsidiary, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any
Lender under this Agreement or the other Loan Documents and (B) Indebtedness
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such disposition, (ii) reasonable expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, and (iii)
taxes paid or payable to any taxing authorities by such Person or such
Subsidiary in connection therewith, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid or payable to a Person that is not an Affiliate and are properly
attributable to such transaction.
"Note" and "Notes" shall have the meanings ascribed thereto in the
Indenture.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrower's Loan Account
pursuant hereto), obligations (including indemnification obligations), fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the commencement of
an Insolvency Proceeding, would have accrued), lease payments, guaranties,
covenants, and duties of any kind and description owing by Borrower to the
Lender Group pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Group Expenses that
Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 14.1(e).
"Performing Restaurant" means a Restaurant that is not an
Unprofitable Restaurant or a Marginally Performing Restaurant.
"Permanently Closed Restaurant" means a Restaurant that has been
closed for 120 days or more and that has not replaced.
25
"Permitted Acquired Indebtedness" means, with respect to Borrower or
any of its Subsidiaries, Purchase Money Indebtedness of any other Person whose
assets are acquired by Borrower or any of its Subsidiaries in a Permitted
Acquisition or other unsecured Indebtedness incurred or acquired in connection
with a Permitted Acquisition, provided that such Indebtedness was existing prior
to the date of such Permitted Acquisition and was not incurred in connection
with, or in contemplation of, such Permitted Acquisition.
"Permitted Acquisition" means a Permitted Cash Acquisition or a
Permitted Non-Cash Acquisition, as the context requires.
"Permitted Cash Acquisition" means any Acquisition as to which each
of the following is applicable: (a) such Acquisition does not qualify as a
Permitted Non-Cash Acquisition solely because the consideration payable in
respect of the proposed Acquisition includes some form of consideration other
than solely the common Stock of Parent, and (b) no Indebtedness that is not
permitted under Section 7.1(k) will be incurred as a result of such Acquisition;
provided, however, that consideration payable in respect of such proposed
Acquisition shall be available to be expended as a Growth Capital Expenditure
under Section 7.18(b).
"Permitted Discretion" means a determination made in the exercise of
reasonable (from the perspective of a senior secured lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business, (e)
Permitted Sale and Leasebacks, (f) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, and so long as the sale or
other disposition is for 80% cash in an arms-length transaction for fair value,
Permitted Performing Restaurant Dispositions in the ordinary course of business,
(g) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, and so long as the sale or other disposition is for 80%
cash in an arms-length transaction for fair value, Permitted Marginally
Performing Restaurant Dispositions in the ordinary course of business, (h) so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom, and so long as the sale or other disposition is for 80% cash
in an arms-length transaction for fair value, Permitted Unprofitable Restaurant
Dispositions in the ordinary course of business, (i) so long as no Default or
Event of Default has occurred and is continuing or would result therefrom, and
so long as the sale or other disposition is for cash in an arms-length
transaction for fair value, the sale or other disposition of assets (other than
Accounts, owned Real Property Collateral, intellectual property, or Stock in
Borrower or any Guarantor) no longer useful in the conduct of Borrower's or its
Subsidiaries' business, so long as the aggregate Net Cash Proceeds from such
assets sold or otherwise disposed of pursuant to this clause (i) in any fiscal
year does not exceed $250,000 in the aggregate; provided, however,
26
that if such Net Cash Proceeds are used within 360 days of such disposition to
invest in assets used or useful in the business then the amount of such Net Cash
Proceeds so invested shall not be included in the calculation of the limitation
set forth in this clause (i), (j) sales of Inventory and Equipment located at
leased locations to a subtenant in connection with the sublease of any such
leased Real Property, (k) so long as no Default or Event of Default has occurred
and is continuing or would result therefrom, and so long as the sale or other
disposition is for 100% cash in an arms-length transaction for fair value, the
sale of Borrower's Real Property located at (i) 400 West 48th Avenue, Denver,
Colorado, and (ii) 1512 N. Neil Street, Champaign, Illinois, (l) the dissolution
of any Inactive Subsidiary, (m) the sale or discount, in each case without
recourse, of Accounts arising in the ordinary course of business, but only in
connection with the compromise or collection thereof, (n) so long as no Default
or Event of Default has occurred and is continuing or would result therefrom,
the transfer of assets from any Guarantor to Borrower or another Guarantor,
(o)(i) any involuntary loss, damage, or destruction of property, or (ii) any
condemnation, seizure, or taking, by exercise of the power of eminent domain or
otherwise, or confiscation or requisition of use of property, (p) so long as no
Default or Event of Default has occurred or is continuing or would result
therefrom, the donation of the Borrower's vacant Real Property located in Utica,
New York to the City of Utica, and (q) the sublease by Borrower of any Real
Property leased by Borrower in connection with a disposition permitted
hereunder. For the avoidance of doubt, it is understood that the restrictions
set forth in this definition do not otherwise restrict Permitted Intercompany
Advances.
"Permitted Distribution" means, so long as (a) no Default or Event
of Default has occurred and is continuing or would result therefrom, (b)
Borrower has Excess Availability of not less than $10,000,000 after giving
effect thereto, and (c) it is otherwise permitted under the Indenture (as in
effect on the Closing Date), the payment of a dividend by Borrower to Parent in
an aggregate amount not to exceed $10,000,000 in any fiscal year and in an
aggregate amount not to exceed $30,000,000 during the term of this Agreement,
and the redemption of, or payment of a dividend on account of, Parent's
outstanding Stock with 100% of the proceeds of the dividend received from
Borrower.
"Permitted Equity Acquisition" means any Permitted Acquisition that
is completed exclusively with the net cash proceeds of an equity contribution by
the Permitted Holders to Parent, that is then contributed by Parent to Borrower.
"Permitted Holder" means (a) WPP and its Affiliates, (b) Debra
Koenig, (c) Robert Kaltenbach, (d) Anthony Carroll, (e) Thomas Rink, (f) Thomas
Mejstrik, (g) Timothy Kanaly, (h) Daniel Gresham, (i) Donald Prismon, (j) Mark
Hampton, (k) Jeffry Guido, (l) Pete Pascuzzi, and (m) Mid Oaks Investments, LLC,
a Delaware limited liability company.
"Permitted Intercompany Advances" means Intercompany Advances so
long as such Intercompany Advances are made in the ordinary course of business.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection
27
with purchases of goods or services in the ordinary course of business, (d)
Investments received in settlement of amounts due to Parent or any of its
Subsidiaries effected in the ordinary course of business or owing to Parent or
any of its Subsidiaries as a result of Insolvency Proceedings involving an
Account Debtor or upon the foreclosure or enforcement of any Lien in favor of
Parent or its Subsidiaries, (e) Investments resulting from the making of
Permitted Intercompany Advances, (f) Investments resulting from the execution
and delivery of the Guaranty, (g) Investments consisting of promissory notes or
other non-cash consideration received as proceeds of Permitted Dispositions, (h)
Investments resulting from the entering into of Hedge Agreements permitted under
Section 7.1 hereof, (i) Investments resulting from the making of the guarantees
that are otherwise permitted under Section 7.1 hereof, (j) advances made in
connection with loans to employees for relocation costs, provided however that
the aggregate amount of all advances made under this clause (j) shall not exceed
$500,000 at any time, and (k) Investments by Borrower or any of its Subsidiaries
not otherwise permitted hereunder, provided, however, that the aggregate amount
of all Investments made under this clause (k) shall not exceed $500,000 at any
time.
"Permitted Liens" means (a) Liens held by Agent, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired, replacements thereof and the proceeds thereof, (f) Liens arising by
operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, incurred in the ordinary course of business
and not in connection with the borrowing of money, and which Liens either (i)
are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(g) Liens on amounts deposited in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens on amounts deposited in
connection with the making or entering into of bids, tenders, or leases in the
ordinary course of business and not in connection with the borrowing of money,
(i) Liens on amounts deposited as security for surety or appeal bonds in
connection with obtaining such bonds in the ordinary course of business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) with respect to any Real Property, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof, (l) Liens in favor of a landlord to secure Borrower's
obligations to pay rent, which Lien is (i) limited to the leasehold interest,
fixtures and personal property located at such Restaurant, (ii) is senior to
Agent's security interest in the leasehold and fixtures, and (iii) is
subordinate to Agent's security interest in the personal property (including
Equipment) located at such Restaurant; provided, however, that as a condition to
the ability of any such Lien to be a Permitted Lien the landlord must execute
and deliver to Agent an intercreditor agreement in form and substance
satisfactory to Agent, (m) Liens on each item of Real Property Collateral to the
extent permitted by the Mortgage applicable thereto, (n) Liens encumbering
deposits made to secure obligations arising from statutory, regulatory, or
warranty requirements of Borrower or any of its Subsidiaries, including rights
of offset, (o) Liens encumbering deposits made to secure Indebtedness under
Hedge Agreements
28
permitted under Section 7.1 hereof, (p) Liens securing Permitted Acquired
Indebtedness, provided that: (i) the Liens securing such Permitted Acquired
Indebtedness at the time of and prior to the incurrence of such Permitted
Acquired Indebtedness by Borrower or a Subsidiary of Borrower and were not
granted in connection with, or in anticipation of, the consummation of the
subject Acquisition by Borrower or a Subsidiary of Borrower; and (ii) such Liens
do not extend to or cover any property or assets of Borrower or of any of its
Subsidiaries other than the property or assets that secured the Permitted
Acquired Indebtedness prior to the time such Indebtedness became Permitted
Acquired Indebtedness of Borrower or a Subsidiary of Borrower, (q) banker's
Liens, rights of setoff and similar Liens with respect to cash and Cash
Equivalents on deposit in one or more deposit accounts in the ordinary course of
business, exclusive of deposit accounts that are subject to Control Agreements
or Cash Management Agreements, (r) Liens on deposits made in the ordinary course
of business to secure liability to Borrower and its Subsidiaries' insurance
carriers, and (s) rights of a licensor of intellectual property in and to such
property. For the avoidance of doubt, the parties agree that Liens permitted
under clause (l) above shall not be deemed to be Purchase Money Security
Interests.
"Permitted Management Fees" means consulting fees payable by
Borrower to WPP (or its Affiliates) in an aggregate amount not to exceed
$250,000 per fiscal quarter provided, however, that in any fiscal quarter,
Borrower may pay consulting fees in such quarter that exceed the foregoing
maximum amount (without giving effect to this proviso) by an amount equal to the
accrued and unpaid consulting fees, plus the reimbursement of reasonable
out-of-pocket expenses incurred by WPP (or its Affiliates) in connection with
the performance of its management duties related to Borrower and its
Subsidiaries.
"Permitted Marginally Performing Restaurant Dispositions" means the
sale or other dispositions of (a) an unlimited number of Marginally Performing
Restaurants so long as the sale or other disposition occurs contemporaneously
with the expiration of the lease related to such Restaurant and (b) not more
than 2 Marginally Performing Restaurants if the sale or other disposition occurs
any time prior to the expiration of the lease related to such Restaurant
provided, however, that if the number of sales or other dispositions of
Marginally Performing Restaurants is less than 2 in any consecutive 12 month
period then such amount may be carried forward to the immediately succeeding
consecutive 12 month period provided, further, that no amounts carried forward
may be carried forward to any consecutive 12 month period thereafter.
"Permitted Non - Cash Acquisition" means any Acquisition so long as:
(a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Acquisition,
(b) the assets being acquired are useful in or engaged in, as
applicable, the business of Borrower and its Subsidiaries or a business
reasonably related thereto,
(c) the consideration payable in respect of the proposed Acquisition
shall be composed solely of the common Stock of Parent,
29
(d) if the consideration payable in respect of the proposed
Acquisition is greater than or equal to $2,000,000, Parent has provided Agent
with written confirmation, supported by reasonably detailed calculations, that
on a pro forma basis, created by adding the historical combined financial
statements of Parent (including the combined financial statements of any other
Person or assets that were the subject of a prior Permitted Acquisition during
the relevant period) to the historical consolidated financial statements of the
Person to be acquired (or the historical financial statements related to the
assets to be acquired) pursuant to the proposed Acquisition (adjusted to
eliminate expense items that would not have been incurred and include income
items that would have been recognized, in each case, if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually agreed upon by Parent and Agent), Parent and Borrower
would have been in compliance with the financial covenants in Section 7.18
hereof for the four fiscal quarters ending as of the fiscal quarter ended
immediately prior to the proposed date of consummation of such proposed
Acquisition for which there are available financial statements,
(e) the subject assets are being acquired by Borrower or a Guarantor
that is a Subsidiary of Borrower and is not an Inactive Subsidiary,
(f) in the case of an Asset Acquisition, the subject assets are
being acquired by Borrower or a Guarantor,
(g) in the case of a Stock Acquisition, the subject Stock is being
acquired in such Acquisition directly by Borrower or a Guarantor,
(h) in the case of an Asset Acquisition, Borrower or the relevant
Guarantor, as applicable, shall have executed and delivered or authorized, as
applicable, any and all security agreements, financing statements, fixture
filings, and other documentation reasonably requested by Agent in order to
include the newly acquired assets within the collateral hypothecated under the
Loan Documents,
(i) in the case of a Stock Acquisition, Borrower or the relevant
Guarantor, as applicable, shall have executed and delivered a pledge agreement
respecting the Stock being acquired and shall have delivered to Agent possession
of the original Stock certificates respecting all of the issued and outstanding
shares of Stock of such acquired Person, together with stock powers with respect
thereto endorsed in blank,
(j) in the case of a Stock Acquisition, Borrower or the relevant
Guarantor, as applicable, shall have caused such acquired Person to execute and
deliver a joinder to either this Agreement or the Guaranty in order to make such
Person a party hereto or thereto, together with any and all security agreements,
financing statements, fixture filings, and other documentation reasonably
requested by Agent in order to cause such acquired Person to be obligated with
respect to the Obligations and to include the assets of the acquired Person
within the collateral hypothecated under the Loan Documents,
30
(k) (i) in the case of an Acquisition of a restaurant or restaurants
from a franchisee, the restaurant or restaurants that are the subject of the
proposed Acquisition shall have positive TTM Four Wall EBITDA for the most
recent four fiscal quarter period ended prior to the date of acquisition, and
(ii) in the case of an Acquisition of a restaurant or restaurant from any Person
other than a franchisee either (A) the restaurant or restaurants that are the
subject of the proposed Acquisition shall have positive TTM Four Wall EBITDA for
the most recent four fiscal quarter period ended prior to the date of
acquisition or (B) if no information exists to determine TTM Four Wall EBITDA
for the restaurant or restaurants that are the subject of the proposed
Acquisition, then there shall be no more than 3 of such restaurants acquired in
any fiscal year and no more than $2,500,000 of consideration paid or payable in
respect of such restaurants in any fiscal year, and
(l) the terms of such Acquisition are customary market terms,
negotiated on an arm's length basis and, to the extent the seller of such assets
is an Affiliate of Borrower, any of its Subsidiaries, or any Permitted Holder,
Agent shall have received a resolution of the Board of Directors of Parent
certifying compliance with the requirements set forth in this clause (l).
"Permitted Non-Equity Acquisition" means any Permitted Acquisition
that is not a Permitted Equity Acquisition.
"Permitted Performing Restaurant Dispositions" means the sale or
other dispositions of not more than 2 Performing Restaurants (whether the sale
or other disposition occurs at the expiration of the lease related to such
Restaurant or not) in any consecutive 12 month period; provided, however, that
(a) any Performing Restaurant which is replaced with another Performing
Restaurant within 360 days of the sale or other disposition of the original
Performing Restaurant shall not be included in the determination of the limit
set forth in the immediately preceding clause, and (b) if the number of
Performing Restaurants sold or otherwise disposed of in any consecutive 12 month
period is less than 2 then such amount may be carried forward to the immediately
succeeding consecutive 12 month period provided, further, that no amounts
carried forward may be carried forward to any consecutive 12 month period
thereafter.
"Permitted Protest" means the right of Parent or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Parent or its Subsidiary, as applicable, in good faith, and (c)
Agent is satisfied in its Permitted Discretion that, while any such protest is
pending, there will be no impairment of the enforceability, validity, or
priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date, and
Permitted
31
Acquisition Indebtedness in an aggregate principal amount outstanding at any one
time not in excess of $5,000,000.
"Permitted Redemption" means, so long as (a) no Default or Event of
Default has occurred and is continuing, (b) the Leverage Ratio as at the end of
the most recently completed fiscal quarter of Parent at the time of the proposed
redemption and after giving effect to the proposed redemption is less than
3.25:1.00, and (c) Borrower has Excess Availability of not less than $10,000,000
after giving effect thereto, the repurchase, prepayment, redemption, or other
retirement of the High Yield Debt.
"Permitted Reorganization Transaction" means (a) the merger of a
Guarantor with and into another Guarantor or into Borrower (so long as Borrower
is the surviving entity in any such merger involving Borrower), (b) the
dissolution and transfer of all of the assets or properties of a Guarantor to
another Guarantor or to Borrower, or (ii) by a Subsidiary of Borrower that is
not a Guarantor to a Guarantor or to Borrower, and (c) the dissolution of the
Inactive Subsidiary.
"Permitted Restaurant Dispositions" means Permitted Performing
Restaurant Dispositions, Permitted Marginally Performing Restaurant
Dispositions, and Permitted Unprofitable Restaurant Dispositions.
"Permitted Sale and Leaseback" means a sale and leaseback
transaction (a "Sale and Leaseback") that is in respect of real property and the
improvements thereto that is first acquired by Borrower after the date hereof,
so long as:
(a) no Default or Event of Default shall have occurred or be
continuing or shall result from the consummation of such Sale and Leaseback;
(b) Borrower receives fair market value for the sale of the subject
assets,
(c) 100% of the consideration received is cash or Cash Equivalents,
and
(d) such Sale and Leaseback shall be fully consummated within 360
days after the date of Borrower's acquisition of the subject real property and
improvements.
"Permitted Unprofitable Restaurant Dispositions" means the sale or
other dispositions of (a) an unlimited number of Unprofitable Restaurants so
long as the sale or other disposition occurs contemporaneously with the
expiration of the lease related to such Restaurant in any consecutive 12 month
period and (b) not more than 5 Unprofitable Restaurants if the sale or other
disposition occurs any time prior to the expiration of the lease related to such
Restaurant in any consecutive 12 month period; provided, however, that if the
number of sales or other dispositions of Unprofitable Restaurants is less than 5
in any consecutive 12 month period then such amount may be carried forward to
the immediately succeeding consecutive 12 month period provided, further, that
no amounts carried forward may be carried forward to any consecutive 12 month
period thereafter.
32
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitments being terminated or reduced to
zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitments have been terminated or reduced to
zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Lender's Advances by (z) the aggregate outstanding
principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender's Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or
reduced to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender's Advances by (z) the aggregate
outstanding principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term Loan and
receive payments of interest, fees, and principal with respect thereto, (i)
prior to the making of the Term Loan, the percentage obtained by dividing (y)
such Lender's Term Loan Commitment, by (z) the aggregate amount of all Lenders'
Term Loan Commitments, and (ii) from and after the making of the Term Loan, the
percentage obtained by dividing (y) the principal amount of such Lender's
portion of the Term Loan by (z) the principal amount of the Term Loan, and
(d) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment plus the
outstanding principal amount of such Lender's portion of the Term Loan, by (ii)
the aggregate amount of Revolver Commitments of all Lenders plus the outstanding
principal amount of the Term Loan; provided, however, that in the event the
Revolver Commitments have been terminated or reduced to zero, Pro Rata Share
under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Advances plus such Lender's
ratable portion of the Risk
33
Participation Liability with respect to outstanding Letters of Credit plus the
outstanding principal amount of such Lender's portion of the Term Loan, by (B)
the outstanding principal amount of all Advances plus the aggregate amount of
the Risk Participation Liability with respect to outstanding Letters of Credit
plus the outstanding principal amount of the Term Loan.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the amount
of unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries that
is in Deposit Accounts or in Securities Accounts, or any combination thereof,
and which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.
"Qualified IPO" shall mean a bona fide underwritten sale to the
public of common Stock of Parent or Borrower pursuant to a registration
statement (other than on Form S-8 or any other form relating to securities
issuable under any benefit plan of Parent or Borrower, as the case may be) that
is declared effective by the SEC and such offering results in gross cash
proceeds to Borrower or Parent (exclusive of underwriter's discounts and
commissions and other expenses) of at least $40,000,000.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower or its Subsidiaries and the improvements
thereto.
"Real Property Collateral" means the Real Property identified on
Schedule R-1 and any After Acquired Real Property hereafter acquired by Borrower
or its Subsidiaries.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.
"Replacement Lender" has the meaning set forth in Section 15.2(a).
"Report" has the meaning set forth in Section 16.17.
34
"Required Availability" means that the sum of (a) Excess
Availability, plus (b) Qualified Cash exceeds $15,000,000.
"Required Lenders" means, at any time, at least two Lenders whose
aggregate Pro Rata Shares (calculated under clause (d) of the definition of Pro
Rata Shares) equal or exceed 50.1%.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Restaurant" means a "Baker's Square" or "Village Inn" restaurant
owned or leased and operated by Borrower or one of its Subsidiaries.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the amount of outstanding Advances, plus (b) the amount of the Letter of
Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrower to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrower, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"Sale and Leaseback" has the meaning set forth in the definition
"Permitted Sale and Leaseback."
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a securities account (as that term is
defined in the Code).
"Settlement" has the meaning set forth in Section 2.3(f)(i).
35
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Acquisition" means the purchase or other acquisition by
Borrower or its Subsidiaries of all of the Stock of any other Person.
"Stock Pledge Agreement" means an amended and restated stock pledge
agreement, in form and substance satisfactory to Agent, executed and delivered
by Borrower to Agent with respect to the pledge of the Stock owned by Borrower.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"SunTrust Resignation Letter" has the meaning set forth in the
recitals to this Agreement.
"Supporting Obligation" means a letter-of-credit right or secondary
obligation that supports the payment or performance of an Account, chattel
paper, document, General Intangible, instrument, or Investment Property.
"Swing Lender" means WFF or any other Lender that, at the request of
Borrower and with the consent of Agent agrees, in such Lender's sole discretion,
to become the Swing Lender under Section 2.3(d).
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means (a) on the Closing Date, $15,000,000, and
(b) on any date of determination after the Closing Date, the outstanding
principal balance of Term Loan.
"Term Loan Commitment" means, with respect to each Lender, its Term
Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments,
in each case
36
as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder, as such amounts may be reduced
or increased from time to time pursuant to assignments made in accordance with
the provisions of Section 14.1.
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 14.1.
"Total Debt" means, as of any date of determination, without
duplication, the sum of (a) the Obligations (including without limitation the
Advances, the Term Loan, and the Letter of Credit Usage), (b) the outstanding
principal amount of Permitted Purchase Money Indebtedness of Parent and its
Subsidiaries, and (c) the outstanding principal amount of all Funded Debt of
Parent and its Subsidiaries; provided, however, that solely for purposes of
calculating the Leverage Ratio, liabilities under Hedge Agreements permitted to
be incurred under Section 7.1 hereof and Indebtedness in respect of letters of
credit pledged in connection with worker's compensation or other unemployment
insurance shall not be included in the calculation of Total Debt.
"Trademark Security Agreement" means an amended and restated
trademark security agreement executed and delivered by Borrower and Agent, the
form and substance of which is satisfactory to Agent.
"TTM Consolidated Operating Income" means, as of any date of
determination, the Consolidated Operating Income for the four fiscal quarters
most recently ended.
"TTM Four Wall EBITDA" means, as of any date of determination, the
Four Wall EBITDA for the restaurant or restaurants that are proposed to be
acquired and calculated for the four fiscal quarters most recently ended.
"UFOC" means Borrower's Uniform Franchise Offering Circular.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"United States" means the United States of America.
37
"Unit Level Cash Flow" means, with respect to any Restaurant and for
any fiscal period, the net revenue generated by such restaurant during such
fiscal period minus the aggregate amount of the cash operating expenses of such
Restaurant during such fiscal period, in each case calculated in a manner
consistent with Borrower's historical calculation of Unit Level Cash Flow.
"Unprofitable Restaurant" means a Restaurant (a) that has been
operated by Borrower or one of its Subsidiaries for at least 12 months and whose
allocable portion of TTM Consolidated Operating Income is less than or equal to
$1, (b) that has been operated by Borrower or one of its Subsidiaries for less
than 12 months and whose allocable portion of Consolidated Operating Income has
been less than or equal to $1 since inception on a cumulative basis, or (c) that
is a Performing Restaurant; however, the lease associated with such Restaurant
will expire in 180 days and after giving effect to the terms of the new lease
for such Restaurant, the allocable portion of TTM Consolidated Operating Income
would be less than or equal to $1.
"Unused Line Fee" means, as of any date of determination, the
following fee based upon Parent's most recent Leverage Ratio calculation
(determined as set forth in the following paragraph); provided, however, that
(a) for the period from the Closing Date through the date Agent receives the
certified calculation of Parent's Leverage Ratio in respect of the testing
period ended with April 15, 2004 delivered pursuant to Section 6.3, and (b) at
any time that an Event of Default exists hereunder, the applicable Unused Line
Fee shall be at Level I:
Level Leverage Ratio Unused Line Fee
----- -------------- ---------------
I equal to or greater than 3.5:1.0 0.50 percentage points
II less than 3.5:1.0 and equal to or greater than 0.375 percentage points
3.0:1.0
III less than 3.0:1.0 0.25 percentage points
Except as set forth in the foregoing proviso, the Unused Line Fee
shall be based upon Parent's most recent Leverage Ratio calculation, which will
be calculated on a fiscal quarter basis. Except as set forth in the initial
proviso in this definition, the Unused Line Fee shall be re-determined each
fiscal quarter on the first day of the month following the date of delivery to
Agent of the certified calculation of Parent's Leverage Ratio pursuant to
Section 6.3 hereof; provided, however, that if Parent and Borrower fail to
provide such certification when such certification is due, the Unused Line Fee
shall be set at the margin in the row styled "Level I" as of the first day of
the month following the date on which the certification was required to be
delivered until the date on which such certification is delivered (on which date
(but not retroactively), without constituting a waiver of any Default or Event
of Default occasioned by the failure to timely deliver such certification, the
Unused Line Fee shall be set at the margin based upon the Leverage Ratio
calculation disclosed by such certification).
38
"Vectra Fee Letter" means that certain fee letter, dated as of even
date herewith, by Borrower in favor of Agent and Vectra Bank Colorado, in form
and substance satisfactory to Agent.
"Voidable Transfer" has the meaning set forth in Section 17.6.
"Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.
"WFF" means Wells Fargo Foothill, Inc., a California corporation.
"WPP" means Wind Point Partners IV L.P., a Delaware limited
partnership and Wind Point Partners, V L.P., a Delaware limited partnership,
collectively.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Parent" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Parent and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than contingent indemnification Obligations and other than
any Bank Product Obligations that, at such time, are allowed by the applicable
Bank Product Provider to remain outstanding and are not required to be repaid or
cash
39
collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
1.6 INDENTURE. Any terms defined in the Indenture that are incorporated
herein by reference shall be construed and defined as set forth in the Indenture
as in effect on the Closing Date.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrower in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to the lesser of (i) the Maximum Revolver
Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less the
Letter of Credit Usage.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrower is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, and (ii) amounts owing by Borrower
or its Subsidiaries to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any Permitted Lien), which Lien or
trust, in the Permitted Discretion of Agent likely would have a priority
superior to the Agent's Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral; provided, however,
that Agent agrees not to establish a reserve with respect to Bank Products of
the type specified in clauses (e) and (f) of the definition of Bank Product and
will not establish a reserve with respect to any other types of Bank Products
unless Agent and Borrower otherwise agree.
(c) The Lenders with Revolver Commitments shall have no obligation
to make additional Advances hereunder to the extent such additional Advances
would cause the Revolver Usage to exceed the Maximum Revolver Amount.
40
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan") to Borrower in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan shall constitute
Obligations.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent. Such
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date specifying
(i) the amount of such Borrowing, and (ii) the requested Funding Date, which
shall be a Business Day; provided, however, that in the case of a request for a
Swing Loan in an amount of $5,000,000, or less, such notice will be timely
received if it is received by Agent no later than 10:00 a.m. (California time)
on the Business Day that is the requested Funding Date. At Agent's election, in
lieu of delivering the above-described written request, any Authorized Person
may give Agent telephonic notice of such request by the required time. In such
circumstances, Borrower agrees that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such telephonic notice, but the
failure to provide such written confirmation shall not affect the validity of
the request.
(b) AGENT'S ELECTION. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF LOANS.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in Section
2.3(b), then promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately
41
available funds, to Agent's Account, not later than 10:00 a.m. (California time)
on the Funding Date applicable thereto. After Agent's receipt of the proceeds of
such Advances (or the Term Loan, as applicable), Agent shall make the proceeds
thereof available to Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Borrower's Designated Account; provided, however, that, subject to the
provisions of Section 2.3(i), Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any Advance (or its portion of the
Term Loan) if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (2) the requested Borrowing would exceed the Availability on
such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing Date, prior
to 9:00 a.m. (California time) on the date of such Borrowing, that such Lender
will not make available as and when required hereunder to Agent for the account
of Borrower the amount of that Lender's Pro Rata Share of the Borrowing, Agent
may assume that each Lender has made or will make such amount available to Agent
in immediately available funds on the Funding Date and Agent may (but shall not
be so required), in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrower such amount, that Lender
shall on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender's Advance (or portion of the Term Loan, as applicable) on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to Agent on the Business Day following the Funding Date, Agent will
notify Borrower of such failure to fund and, upon demand by Agent, Borrower
shall pay such amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Advances (or
portion of the Term Loan, as applicable) composing such Borrowing. The failure
of any Lender to make any Advance (or portion of the Term Loan, as applicable)
on any Funding Date shall not relieve any other Lender of any obligation
hereunder to make an Advance (or portion of the Term Loan, as applicable) on
such Funding Date, but no Lender shall be responsible for the failure of any
other Lender to make the Advance (or portion of the Term Loan, as applicable) to
be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting Lender's
benefit, and, in the absence of such transfer to the Defaulting Lender, Agent
shall transfer any such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments (but only to the
extent that such Defaulting Lender's Advance was
42
funded by the other members of the Lender Group) or, if so directed by Borrower
and if no Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender Group),
retain same to be re-advanced to Borrower as if such Defaulting Lender had made
Advances to Borrower. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrower for the account of such Defaulting
Lender the amount of all such payments received and retained by Agent for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Borrower shall have waived such Defaulting Lender's default
in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting Lender in
respect thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by Borrower of
its duties and obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting Lender shall
constitute a material breach by such Defaulting Lender of this Agreement and
shall entitle Borrower at its option, upon written notice to Agent, to arrange
for a substitute Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be acceptable to Agent. In connection with the arrangement
of such a substitute Lender, the Defaulting Lender shall have no right to refuse
to be replaced hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance in favor of the substitute Lender (and agrees that it
shall be deemed to have executed and delivered such document if it fails to do
so) subject only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations, but including an assumption of its Pro Rata Share
of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever; provided, however, that any such assumption of the Commitment of
such Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrower's rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply to a
requested Borrowing as described in Section 2.3(b), Swing Lender as a Lender
shall make such Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred to collectively
as "Swing Loans") available to Borrower on the Funding Date applicable thereto
by transferring immediately available funds to Borrower's Designated Account.
Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject
to all the terms and conditions applicable to other Advances, except that no
such
43
Swing Loan shall be eligible to be a LIBOR Rate Loan and all payments on any
Swing Loan shall be payable to Swing Lender as a Lender solely for its own
account (and for the account of the holder of any participation interest with
respect to such Swing Loan). Subject to the provisions of Section 2.3(i), Agent
shall not request Swing Lender as a Lender to make, and Swing Lender as a Lender
shall not make, any Swing Loan if Agent has actual knowledge that (i) one or
more of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not otherwise
be required to determine whether the applicable conditions precedent set forth
in Section 3 have been satisfied on the Funding Date applicable thereto prior to
making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
constitute Obligations hereunder, and bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrower and the Lenders,
from time to time in Agent's sole discretion, (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2) at any time
that any of the other applicable conditions precedent set forth in Section 3
have not been satisfied, to make Advances to Borrower on behalf of the Lenders
that Agent, in its Permitted Discretion deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations (other than the Bank Product
Obligations), or (C) to pay any other amount chargeable to Borrower pursuant to
the terms of this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in Section 10 (any of the Advances described in
this Section 2.3(e) shall be referred to as "Agent Advances") provided, however,
that notwithstanding anything to the contrary contained in this Section 2.3(e),
the aggregate principal amount of Agent Advances outstanding at any time, when
taken together with the aggregate principal amount of Overadvances made in
accordance with Section 2.3(i) hereof outstanding at such time, shall not exceed
an amount equal to the lesser of (x) 10% of the Borrowing Base then in effect
and (y) $3,000,000. Each Agent Advance shall be deemed to be an Advance
hereunder, except that no such Agent Advance shall be eligible to be a LIBOR
Rate Loan and all payments thereon shall be payable to Agent solely for its own
account.
(ii) The Agent Advances shall be repayable on demand, secured
by the Agent's Liens granted to Agent under the Loan Documents, constitute
Obligations hereunder, and bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the
44
other Lenders agree (which agreement shall not be for the benefit of or
enforceable by Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the
Advances, the Swing Loans, and the Agent Advances shall take place on a periodic
basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by
Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing
Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect
to Borrower's or its Subsidiaries' Collections received, as to each by notifying
the Lenders by telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the "Settlement Date"). Such notice of a
Settlement Date shall include a summary statement of the amount of outstanding
Advances, Swing Loans, and Agent Advances for the period since the prior
Settlement Date. Subject to the terms and conditions contained herein (including
Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances (including Swing
Loans and Agent Advances) exceeds such Lender's Pro Rata Share of the Advances
(including Swing Loans and Agent Advances) as of a Settlement Date, then Agent
shall, by no later than 12:00 p.m. (California time) on the Settlement Date,
transfer in immediately available funds to a Deposit Account of such Lender (as
such Lender may designate), an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro Rata Share of
the Advances (including Swing Loans and Agent Advances), and (z) if a Lender's
balance of the Advances (including Swing Loans and Agent Advances) is less than
such Lender's Pro Rata Share of the Advances (including Swing Loans and Agent
Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately available funds
to the Agent's Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its Pro Rata Share of
the Advances (including Swing Loans and Agent Advances). Such amounts made
available to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loans or Agent Advances
and, together with the portion of such Swing Loans or Agent Advances
representing Swing Lender's Pro Rata Share thereof, shall constitute Advances of
such Lenders. If any such amount is not made available to Agent by any Lender on
the Settlement Date applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account such amount on demand
from such Lender together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or greater
than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually received in
good funds by Agent with respect to principal, interest, fees payable by
Borrower and allocable to the Lenders hereunder, and proceeds of Collateral. To
the extent that a net amount is owed to any such Lender after such application,
such net amount shall be distributed by Agent to that Lender as part of such
next Settlement.
45
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender any
payments received by Agent, that in accordance with the terms of this Agreement
would be applied to the reduction of the Advances, for application to Swing
Lender's Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections of Borrower or its Subsidiaries received since the then immediately
preceding Settlement Date have been applied to Swing Lender's Pro Rata Share of
the Advances other than to Swing Loans, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and
Agent shall pay to the Lenders, to be applied to the outstanding Advances of
such Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the Advances.
During the period between Settlement Dates, Swing Lender with respect to Swing
Loans, Agent with respect to Agent Advances, and each Lender (subject to the
effect of agreements between Agent and individual Lenders) with respect to the
Advances other than Swing Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.
(g) NOTATION. Agent shall record on its books the principal amount
of the Advances (or portion of the Term Loan, as applicable) owing to each
Lender, including the Swing Loans owing to Swing Lender, and Agent Advances
owing to Agent, and the interests therein of each Lender, from time to time and
such records shall, absent manifest error, conclusively be presumed to be
correct and accurate. In addition, each Lender is authorized, at such Lender's
option, to note the date and amount of each payment or prepayment of principal
of such Lender's Advances (or portion of the Term Loan, as applicable) in its
books and records, including computer records.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrower notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) the aggregate principal amount of Overadvances
made pursuant to this Section 2.3(i) when taken together with the aggregate
principal amount of Agent Advances made pursuant to Section 2.3(e) does not
exceed at any time an amount equal to the lesser of (x) 10% of the Borrowing
Base then in effect, and (y) $3,000,000, (ii) after giving effect to such
Advances, the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account
46
for interest, fees, or Lender Group Expenses) does not exceed the Maximum
Revolver Amount, and (iii) at the time of the making of any such Advance, Agent
does not believe, in good faith, that the Overadvance created by such Advance
will be outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrower in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that
they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(A) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amounts permitted by the preceding paragraph,
regardless of the amount of, or reason for, such excess, Agent shall notify the
Lenders as soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent determines
that prior notice would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with
Borrower intended to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrower to an amount permitted by the preceding
paragraph. In the event Agent or any Lender disagrees over the terms of
reduction or repayment of any Overadvance, the terms of reduction or repayment
thereof shall be implemented according to the determination of the Required
Lenders.
(B) Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(f) for the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the charging to the Loan
Account of interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Agent's Account for the account of the
Lender Group and shall be made in immediately available funds, no later than
11:00 a.m. (California time) on the date specified herein. Any payment received
by Agent later than 11:00 a.m. (California time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will not make such
payment in full as and when required, Agent may assume that Borrower has made
(or will make) such payment in full to Agent on such date in immediately
available funds and Agent may (but
47
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent Borrower does not make such payment in full to Agent on the
date when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the Defaulting
Lender Rate for each day from the date such amount is distributed to such Lender
until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents (including
agreements between Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to any
agreements between Agent and individual Lenders) shall be apportioned ratably
among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. All payments shall be remitted to
Agent and all such payments, and all proceeds of Collateral received by Agent,
shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due
to Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due
to the Lenders under the Loan Documents, on a ratable basis, until paid in full,
(C) third, to pay any fees then due to Agent (for its
separate account, after giving effect to any agreements between Agent and
individual Lenders) under the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to any or all of
the Lenders (after giving effect to any agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all Agent
Advances until paid in full,
(F) sixth, ratably to pay interest due in respect of
the Advances (other than Agent Advances), the Swing Loans, and the Term Loan
until paid in full,
(G) seventh, to pay the principal of all Agent
Advances until paid in full,
48
(H) eighth ratably to pay all principal amounts then
due and payable (other than as a result of an acceleration thereof) with respect
to the Term Loan until paid in full,
(I) ninth, to pay the principal of all Swing Loans
until paid in full,
(J) tenth, so long as no Event of Default has occurred
and is continuing, and at Agent's election (which election Agent agrees will not
be made if an Overadvance would be created thereby), to pay amounts then due and
owing by Borrower or its Subsidiaries in respect of Bank Products until paid in
full,
(K) eleventh, so long as no Event of Default has
occurred and is continuing, to pay the principal of all Advances until paid in
full,
(L) twelfth, if an Event of Default has occurred and
is continuing, ratably (i) to pay the principal of all Advances and the
outstanding balance of the Term Loan until paid in full, (ii) to Agent, to be
held by Agent, for the ratable benefit of Issuing Lender and those Lenders
having a Revolver Commitment, as cash collateral in an amount up to 105% of the
Letter of Credit Usage until paid in full, and (iii) to Agent, to be held by
Agent, for the benefit of the Bank Product Providers, as cash collateral in an
amount up to the amount of the Bank Product Reserve established prior to the
occurrence of, and not in contemplation of, the subject Event of Default until
Borrower's and its Subsidiaries' obligations in respect of Bank Products have
been paid in full or the cash collateral amount has been exhausted;
(M) thirteenth, if an Event of Default has occurred
and is continuing, to pay any other Obligations (including the provision of
amounts to Agent, to be held by Agent, for the benefit of the Bank Product
Providers, as cash collateral in an amount up to the amount determined by Agent
in its Permitted Discretion as the amount necessary to secure Borrower's and its
Subsidiaries' obligations in respect of Bank Products) until paid in full, and
(N) fourteenth, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(f).
(iii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.4(b) shall not apply to any payment
made by Borrower to Agent and specified by Borrower to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.
49
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees, interest (and
specifically including interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and expense reimbursements,
whether or not any of the foregoing would be or is allowed or disallowed in
whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any other Loan
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.4 shall control and govern.
(c) MANDATORY PREPAYMENTS.
(i) Immediately upon any voluntary or involuntary sale or
disposition by Parent or any of its Subsidiaries of property or assets (other
than sales or dispositions which qualify as Permitted Dispositions under clauses
(a), (b), (c), (d), (e), (f), (g), (h), (k), (l), (m), (n) and (p) of the
definition of Permitted Dispositions), Borrower shall prepay the outstanding
Obligations in accordance with clause (d) below in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such sales or
dispositions to the extent that the aggregate amount of Net Cash Proceeds
received by Parent and its Subsidiaries (and not paid to Agent as a prepayment
of the Obligations) for all such sales or dispositions shall exceed $250,000 in
any fiscal year. Nothing contained in this subclause (i) shall permit Parent or
any of its Subsidiaries to sell or otherwise dispose of any property or assets
other than in accordance with Section 7.4.
(ii) Immediately upon the receipt by Parent or any of its
Subsidiaries of any Extraordinary Receipts, Borrower shall prepay the
outstanding Obligations in accordance with clause (d) below in an amount equal
to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred
in collecting such Extraordinary Receipts.
(iii) Immediately upon the issuance or incurrence by Parent or
any of its Subsidiaries of any Indebtedness (other than Indebtedness referred to
in clauses (a) through (l), inclusive, of Section 7.1), or the sale or issuance
by Parent or any of its Subsidiaries of any shares of its Stock (other than (A)
the amount of equity contributed to Parent and then to Borrower by Parent to the
extent used to complete a Permitted Equity Acquisition, or (B) the sale or
issuance by Parent of shares of its Stock to its employees or directors having a
value, at the time of issuance, of less than $500,000), Borrower shall prepay
the outstanding principal of the Obligations in accordance with clause (d) in an
amount equal to 100% of the Net Cash Proceeds received by Parent or its
Subsidiaries in connection with such sale, issuance, or incurrence; provided,
however, that (x) if the Leverage Ratio as at the end of the most recently
completed fiscal quarter of Parent is less
50
than 3:25:1:00 at the time of receipt of any proceeds from the sale or issuance
of any shares of Parent's or its Subsidiaries' Stock of the issuance or
incurrence by Parent or any of its Subsidiaries of any Indebtedness (other than
Indebtedness referred to in clauses (a) through (l), inclusive, of Section 7.1),
then Borrower shall only be required to use 50% of such proceeds to prepay the
Obligations. The provisions of this subsection (iii) shall not be deemed to be
implied consent to any such sale, issuance, or incurrence otherwise prohibited
by the terms and conditions of this Agreement.
(d) APPLICATION OF PAYMENTS.
(i) Each prepayment pursuant to subclause (c)(ii) above
(except with respect to insurance proceeds and condemnation awards related to a
casualty or loss of Collateral) or pursuant to subclause (c)(iii) above shall,
(A) so long as no Event of Default shall have occurred and be continuing, be
applied to the outstanding principal amount of the Term Loan, until paid in
full, and (B) if an Event of Default shall have occurred and be continuing, be
applied in the manner set forth in Section 2.4(b)(i).
(ii) Each prepayment pursuant to subclause (c)(i) above or
pursuant to subclause (c)(ii) above (with respect to insurance proceeds and
condemnation awards related to a casualty or loss of Collateral) shall, (A) so
long as no Event of Default shall have occurred and be continuing, be applied as
follows:
(1) if the proceeds are from any sale or disposition of any Accounts
or Inventory or any insurance policy or condemnation award with
respect to Inventory, such proceeds shall be applied, first, to the
outstanding principal amount of the Advances, until paid in full,
and second, to the outstanding principal amount of the Term Loan,
until paid in full;
(2) subject to clause (3) below, if the proceeds are from the sale
or disposition of any other assets or any insurance policy or
condemnation award not described in clause (1) above, such proceeds
shall be applied, solely, to the outstanding principal amount of the
Term Loan, until paid in full; provided, however, that, except
during the continuance of a Default or an Event of Default, such
proceeds shall not be required to be so applied to the extent that
such proceeds are used to replace, repair, or restore the properties
or assets in respect of which such proceeds were paid if (i) the
amount of proceeds received in respect of such sales, dispositions,
insurance policies, or condemnation awards are less than $1,000,000
in the aggregate at any one time, (ii) Borrower delivers a
certificate to Agent within 10 days after such sale or 30 days after
the date of such loss, destruction, or taking, as the case may be,
stating that such proceeds shall be used to replace, repair, or
restore such properties or assets within a period specified in such
certificate not to exceed the earlier of (x) 180 days after the
receipt of such proceeds and (y) the Maturity Date (which
certificate shall set forth estimates of the proceeds to be so
expended), and (iii) such proceeds are immediately deposited in a
Deposit
51
Account subject to a Control Agreement in favor of Agent. If all or
any portion of such proceeds not so applied to the prepayment of the
Obligations in accordance with this clause (2) are not used in
accordance with the preceding sentence within the period specified
in the relevant certificate furnished pursuant hereto, such
remaining portion shall be applied to the Obligations in accordance
with this clause (2) on the last day of such specified period; and
(3) if the proceeds are from a sale or disposition of all or
substantially all of the assets or Stock of any Person, which sale
or disposition includes both Accounts or Inventory and other assets,
such proceeds shall be applied as follows: (x) an amount equal to
the net book value of such Accounts and Inventory (determined at the
time of such sale or disposition or event resulting in such
insurance proceeds), shall be applied first, to the outstanding
principal amount of the Advances, until paid in full, and (y) the
remaining proceeds shall be applied, solely, to the outstanding
principal amount of the Term Loan, until paid in full; and
(4) if an Event of Default shall have occurred and be continuing, be
applied in the manner set forth in Section 2.4(b)(i).
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to the Lender
Group pursuant to Section 2.1 or Section 2.12 is greater than any of the
limitations set forth in Section 2.1 or Section 2.12, as applicable (an
"Overadvance"), Borrower immediately shall pay to Agent, in cash, the amount of
such excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in Section 2.4(b). In addition,
Borrower hereby promises to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full as and when due and payable under
the terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal
to the Base Rate plus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrower shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any
agreements between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to
52
the Letter of Credit Fee per annum times the Daily Balance of the undrawn amount
of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
(ii) the Letter of Credit Fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise applicable
hereunder.
(d) PAYMENT. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit Fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrower hereby
authorizes Agent, from time to time without prior notice to Borrower, to charge
all interest and fees (when due and payable), all Lender Group Expenses (as and
when incurred), all charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), all fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loan and including any amounts due and payable
to the Bank Product Providers in respect of Bank Products up to the amount of
the Bank Product Reserve) to Borrower's Loan Account, which amounts thereafter
shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to Borrower's Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such
53
maximum as allowed by law, and payment received from Borrower in excess of such
legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall and shall cause each of its Subsidiaries to (i)
establish and maintain a concentration account or accounts in the name of Agent
unless such account is a concentration account maintained with Bank of America,
N.A. or unless otherwise agreed to by Agent (each, a "Concentration Account") on
terms reasonably satisfactory to Agent at one or more of the banks set forth on
Schedule 2.7(a) (each, a "Concentration Account Bank"), (ii) cause each of the
Collection Account Banks to forward payment, on a daily basis, of the amounts in
the Collection Accounts directly to the Concentration Accounts, and (iii)
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all of their Collections
(including those sent directly by their Account Debtors to Borrower or one of
its Subsidiaries) into a Concentration Account or Collection Account.
(b) As to those deposit accounts of Borrower and its Subsidiaries
that Agent, in its discretion, determines should be subject to this subsection,
Borrower shall and shall cause each of its Subsidiaries to (i) establish and
maintain a collection account or accounts in the name of Agent unless otherwise
agreed to by Agent (each, a "Collection Account") on terms satisfactory to Agent
at one or more of the banks set forth on Schedule 2.7(b) (each, a "Collection
Account Bank"), (ii) request in writing and otherwise take such reasonable steps
to ensure that all of its and its Subsidiaries' Account Debtors forward payment
of the amounts owed by them directly to such Collection Account, and (iii) cause
each of the Collection Account Banks to forward payment, on a daily basis, of
the amounts in the applicable Collection Account directly to one of the
Concentration Accounts. Anything to contrary in this Section 2.7(b)
notwithstanding, Agent agrees that the Collection Accounts listed on Schedule
2.7(b) as of the Closing Date need not be in the name of Agent.
(c) Borrower shall, and shall cause each Subsidiary that receives
Collections through credit card charges to, establish and maintain Credit Card
Agreements with Agent and each Credit Card Processor. Each such Credit Card
Agreement shall provide, among other things, that each such Credit Card
Processor shall transfer all proceeds of credit card charges for sales by
Borrower or such Subsidiary, as applicable, received by it (or other amounts
payable by such Credit Card Processor) into a Concentration Account on a daily
basis. Neither Borrower nor any Subsidiary may change any direction or
designation set forth in the Credit Card Agreements regarding payment of charges
without the prior written consent of Agent, and neither Borrower nor any
Subsidiary shall cause the proceeds of credit card charges to be transferred to
any Deposit Account other than the Concentration Account.
(d) Within 5 Business Days of the Closing Date, each Concentration
Account Bank and, within 90 days of the Closing Date, each Collection Account
Bank (other
54
than for those Collection Accounts set forth on Schedule 3.2(d)) shall establish
and maintain Cash Management Agreements with Agent, in form and substance
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) the applicable Cash Management Bank will comply with any
instructions originated by Agent directing the disposition of the funds in such
Cash Management Account without further consent by Borrower or its Subsidiaries,
as applicable, and (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account
other than for payment of its service fees and other charges directly related to
the administration of such Cash Management Account and for returned checks or
other items of payment.
(e) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 2.7(a) and Schedule 2.7(b) to add or
replace a bank or account; provided, however, that (i) such prospective bank
shall be reasonably satisfactory to Agent, and (ii) prior to the time of the
opening of such account, Borrower or its Subsidiary, as applicable, and such
prospective bank shall have executed and delivered to Agent the kind of
agreements required under clause (a), (b), (c), or (d) above, as applicable.
Borrower or its Subsidiaries, as applicable shall close any of its accounts (and
establish replacement accounts in accordance with the foregoing sentence)
promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any bank is no longer acceptable in Agent's reasonable
judgment, or as promptly as practicable and in any event within 60 days of
notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the bank with respect to accounts or
Agent's liability under any Cash Management Agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(f) The Cash Management Accounts shall be cash collateral accounts
subject to Control Agreements and the Cash Management Agreements shall provide
that from and after the date that the applicable Cash Management Bank receives
written notification from Agent, it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent's Account.
Anything contained herein into the contrary notwithstanding, Agent agrees that
it shall not provide the above-described notice to any Cash Management Bank
unless and until an Event of Default has occurred and is continuing. Once an
Event of Default has occurred and is continuing, Agent shall be free to exercise
its right to issue such notice and the subsequent elimination of the subject
Event of Default shall not eliminate the effectiveness of such notice.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
55
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and the
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person or, without instructions, if
pursuant to Section 2.6(d). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance,
Agent Advance, or Swing Loan requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with the Term Loan, all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrower or for Borrower's account, the Letters of Credit issued by Issuing
Lender for Borrower's account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Agent from Borrower or for Borrower's account, including all amounts
received in the Agent's Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrower and the Lender Group unless, within 30 days
after receipt thereof by Borrower, Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.
2.11 FEES. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter):
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to the Unused Line
Fee per annum times the result of (i) the Maximum Revolver Amount, less (ii) the
sum of (A) the average Daily Balance of Advances that were outstanding during
the immediately preceding month, plus (B) the average Daily Balance of the
Letter of Credit Usage during the immediately preceding month, which shall be
apportioned to those Lenders with a Revolver Commitment in accordance with their
Pro Rata Shares,
56
(b) FEE LETTER FEES. As and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter, the GE Fee Letter and
the Vectra Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal, and
valuation fees and charges as follows (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses for each financial audit of Parent or its
Subsidiaries performed by personnel employed by Agent, (ii) [intentionally
omitted], (iii) [intentionally omitted], and (iv) the actual charges paid or
incurred by Agent if it elects to employ the services of one or more third
Persons to perform financial audits of Parent or its Subsidiaries. The foregoing
notwithstanding, so long as no Default or Event of Default has occurred and is
continuing, Borrower shall not be required to pay or reimburse for more than 4
audits per year and more than $20,000 in fees and charges per each audit.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrower. Each request for the issuance of a Letter of Credit, or the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be made in
writing by an Authorized Person and delivered to the Issuing Lender and Agent
via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of
Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such other
information (including, in the case of an amendment, renewal, or extension,
identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit. If requested by the Issuing Lender, Borrower also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $15,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the outstanding amount Advances.
57
Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans under Section 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower's obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share of each L/C Disbursement made by
the Issuing Lender pursuant to this Section 2.12(b)
58
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, such Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of the Issuing Lender)
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group. Borrower agrees to
be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for Borrower's account, even though this
interpretation may be different from Borrower's own, and Borrower understands
and agrees that the Lender Group shall not be liable for any error, negligence,
or mistake, whether of omission or commission, in following Borrower's
instructions or those contained in the Letter of Credit or any modifications,
amendments, or supplements thereto. Borrower understands that the L/C
Undertakings may require Issuing Lender to indemnify the Underlying Issuer for
certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by the Lender Group under any
L/C Undertaking as a result of the Lender Group's indemnification of any
Underlying Issuer; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Borrower hereby acknowledges and
agrees that neither the Lender Group nor the Issuing Lender shall be responsible
for delays, errors, or omissions resulting from the malfunction of equipment in
connection with any Letter of Credit.
(d) Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825%
59
per annum times the face amount of each Underlying Letter of Credit, that such
issuance charge may be changed from time to time, and that the Underlying Issuer
also imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit or
any Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
or the Term Loan be charged at a rate of interest based upon the LIBOR Rate.
Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto, (ii) the occurrence of an Event
of Default in consequence of which the Required Lenders or Agent on behalf
thereof have elected to accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances or the Term Loan bear
60
interest at a rate based upon the LIBOR Rate and Agent shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.
(b) LIBOR ELECTION.
(i) Borrower may, at any time and from time to time, so long
as no Event of Default has occurred and is continuing, elect to exercise the
LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at least 3
Business Days prior to the commencement of the proposed Interest Period (the
"LIBOR Deadline"). Notice of Borrower's election of the LIBOR Option for a
permitted portion of the Advances or the Term Loan and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice received by
Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (California time) on the same day).
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall indemnify,
defend, and hold Agent and the Lenders harmless against any loss, cost, or
expense incurred by Agent or any Lender as a result of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively, "Funding
Losses"). Funding Losses shall, with respect to Agent or any Lender, be deemed
to equal the amount determined by Agent or such Lender to be the excess, if any,
of (i) the amount of interest that would have accrued on the principal amount of
such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would
have been applicable thereto, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert, or continue, for the period that would have been the
Interest Period therefor), minus (ii) the amount of interest that would accrue
on such principal amount for such period at the interest rate which Agent or
such Lender would be offered were it to be offered, at the commencement of such
period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Borrower
setting forth any amount or amounts that Agent or such Lender is entitled to
receive pursuant to this Section 2.13 shall be conclusive absent manifest error.
(iii) Borrower shall have not more than 7 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR Option for LIBOR
Rate Loans of at least $500,000 and integral multiples of $100,000 in excess
thereof.
61
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrower's and its Subsidiaries' Collections
in accordance with Section 2.4(b) or for any other reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with clause (b)(ii) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In any
such event, the affected Lender shall give Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender,
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Borrower a statement setting forth the basis for adjusting such LIBOR
Rate and the method for determining the amount of such adjustment, or (z) repay
the LIBOR Rate Loans with respect to which such adjustment is made (together
with any amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and Borrower and
Agent promptly shall transmit the notice to each other Lender and (y) in the
case of any LIBOR Rate Loans of such Lender that are outstanding, the date
specified in such Lender's notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrower shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be unlawful or
impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their
62
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make its initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Agent and each
Lender (the making of such initial extension of credit by a Lender being
conclusively deemed to be its satisfaction or waiver of the following), of each
of the following conditions precedent:
(a) the Closing Date shall occur on or before April 14, 2004;
(b) Agent shall have received a Filing Authorization Letter, duly
executed by Borrower and each Guarantor, together with appropriate financing
statements duly filed in such office or offices as may be necessary or, in the
opinion of Agent, desirable to perfect the Agent's Liens in and to the
Collateral, and Agent shall have received searches reflecting the filing of all
such financing statements;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
63
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Copyright Security Agreement,
(iv) the Credit Card Agreements,
(v) the Estoppel Agreement,
(vi) the Fee Letter,
(vii) the Funds Flow Agreement,
(viii) the GE Fee Letter
(ix) the Guarantor Security Agreement,
(x) the Guaranty,
(xi) the Intercompany Subordination Agreement,
(xii) the Mortgages,
(xiii) the Existing Lender Group Assignments, together with
assignment statements and other documentation evidencing the assignment by
Existing Lender Group of its Liens in and to the properties and assets of
Borrower and its Subsidiaries,
(xiv) the SunTrust Resignation Letter,
(xv) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged thereunder, as well as
Stock powers with respect thereto endorsed in blank,
(xvi) the Trademark Security Agreement, and
(xvii) the Vectra Fee Letter;
(d) Agent shall have received a certificate from the Secretary of
Borrower (i) attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party, (ii) authorizing specific
officers of Borrower to execute the same, and (iii) attesting to the incumbency
and signatures of such specific officers of Borrower;
(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
64
(f) Agent shall have received a certificate of status with respect
to Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of status with respect
to Borrower, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary of
each Guarantor (i) attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party, (ii) authorizing specific officers
of such Guarantor to execute the same and (iii) attesting to the incumbency and
signatures of such specific officers of Guarantor;
(i) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with respect
to each Guarantor, dated within 10 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(k) Agent shall have received certificates of status with respect
to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;
(m) Agent shall have received Collateral Access Agreements with
respect to the following locations: 1260 Sycamore Road, Manteno, IL 60950;6100
East Sheila Street, City of Commerce, CA 90040; and 2233 Maxwell Avenue,
Newport, MN 55055;
(n) Agent shall have received an opinion of Borrower's and each
Guarantor's counsel in form and substance satisfactory to Agent;
65
(o) Agent shall have received a certificate of the secretary of
Parent, in form and substance satisfactory to Agent, that all tax returns
required to be filed by Parent and its Subsidiaries have been timely filed and
all taxes upon Parent and its Subsidiaries or their properties, assets, income,
and franchises (including Real Property taxes, sales taxes, and payroll taxes)
have been paid prior to delinquency, except such taxes that are the subject of a
Permitted Protest;
(p) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder and the payment of all fees
and expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;
(q) Agent shall have completed its business, legal, and collateral
due diligence, including a collateral audit and review of Borrower's and its
Subsidiaries books and records and verification of Borrower's representations
and warranties to the Lender Group, the results of which shall be satisfactory
to Agent;
(r) Agent shall have received completed reference checks with
respect to Borrower's senior management, the results of which are satisfactory
to Agent in its sole discretion;
(s) Agent shall have received Borrower's Closing Date Business
Plan;
(t) Borrower shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(u) Agent shall have received copies of each of (a) the High Yield
Note Documents, (b) the Management Agreement, together with a certificate of the
Secretary of Borrower certifying each such document as being a true, correct,
and complete copy thereof;
(v) Agent shall have reviewed and approved the terms and
conditions of the High Yield Note Documents, including the subordination
provisions and terms thereof;
(w) Borrower shall have provided Agent with sufficient evidence to
demonstrate that the offering of the Notes described in the Indenture has
closed;
(x) Borrower and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrower or its
Subsidiaries of the Loan Documents or with the consummation of the transactions
contemplated thereby;
(y) Borrower shall have caused Vicorp Restaurants, Inc., a
Delaware corporation to be dissolved and Agent shall have received evidence of
such dissolution in form and substance satisfactory to Agent;
(z) Borrower shall have caused Midway to be merged into Borrower
and Agent shall have received a copy of a file stamped certificate of merger or
confirmation by
66
CSC or a representative thereof that a certificate of merger has been filed with
respect to the merger of Midway with and into Borrower, such file stamp to have
been made by the office of the jurisdiction of incorporation of Borrower;
(aa) Agent shall have received confirmation of the filing of UCC
termination statements, all in form and substance satisfactory to Agent,
evidencing the termination of the following Liens in and to the properties and
assets of Borrower, each in favor of General Electric Capital Business Asset
Funding Corporation: (1) financing statement number 20022047188, filed in
Colorado on May 3, 2002; (2) financing statement number 20022047189, filed in
Colorado on May 3, 2002; (3) financing statement number 20022053452, filed in
Colorado on May 20, 2002; (4) financing statement number 20022053453, filed in
Colorado on May 20, 2002; and (5) financing statement number 20023739367, filed
in Minnesota on April 16, 2002; and
(bb) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Agent copies of
the policies of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Agent and its counsel;
(b) within 30 days of the Closing Date, deliver to Agent a duly
executed Mortgage for each of the Real Properties owned by Borrower and listed
on Schedule 3.2(b);
(c) use commercially reasonable efforts to obtain recording
information for the mortgages previously granted by Borrower in favor of the
Existing Agent for each of the Real Properties listed on Schedule 3.2(c) and to
cause the title company to record the assignments thereof delivered by the
Existing Agent to Agent, and if Borrower is unable to obtain the recording
information on or before June 30, 2004, then Borrower shall execute and deliver
to Agent by no later than July 15, 2004, a Mortgage (granting a Lien in favor of
Agent) upon such Real Properties which such Mortgages will expressly provide
that if the Lien in favor of the Existing Agent has been recorded or is
thereafter recorded then Agent shall take such actions as may be reasonably
necessary to merge or consolidate the Liens;
(d) use commercially reasonable efforts, to cause each Collection
Account Bank to execute and deliver a Control Agreement for the Collection
Accounts listed on Schedule 3.2(d);
67
(e) on or before May 15, 2004, deliver to Agent Schedule A-1(b)
which such schedule shall set forth Adjusted EBITDA for Parent and its
Subsidiaries on a Fiscal Month by Fiscal Month basis for the 13 Fiscal Months
ended prior to the Closing Date and shall be in form and substance satisfactory
to Agent;
(f) within 15 days of the Closing Date, Agent shall have received
a Collateral Access Agreement with respect to 12865 Ann Street, Santa Fe
Springs, CA 90670;
(g) within 2 days of the Closing Date, Agent shall have received
evidence in form and satisfactory to Agent that the interest swap agreement with
Wells Fargo shall have been terminated and that all amounts owed to Wells Fargo
thereunder have been paid in full; and
(h) within 90 days of the Closing Date, Parent and its
Subsidiaries shall have closed their Deposit Accounts with Bank of America, N.A.
and established Deposit Accounts with another bank on terms and conditions
satisfactory to Agent and subject to Control Agreements in form and substance
satisfactory to Agent if Bank of America, N.A. has not executed and delivered an
acceptable Cash Management Agreement to Agent within 5 Business Days of the
Closing Date as required by Section 2.7.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder at any
time (or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against Borrower, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on April 14, 2009 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall
68
become due and payable without notice or demand (including (a) either (i)
providing cash collateral to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the Letter of Credit
Usage, (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, or (iii) causing an irrevocable letter of credit (in an amount equal to
105% of the Letter of Credit Usage and in form, substance, and by an issuer
satisfactory to Agent) to be issued and delivered to Agent, and (b) providing
cash collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of the
Bank Product Providers with respect to the Bank Product Obligations). No
termination of this Agreement, however, shall relieve or discharge Parent or its
Subsidiaries of their duties, Obligations, or covenants hereunder or under any
other Loan Document and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been paid in
full and the Lender Group's obligations to provide additional credit under the
Loan Documents have been terminated irrevocably, Agent will, at Borrower's sole
expense, execute and deliver any termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent's Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.
3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 90 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage,
(ii) causing the original Letters of Credit to be returned to the Issuing
Lender, or (iii) causing an irrevocable letter of credit (in an amount equal to
105% of the Letter of Credit Usage and in form, substance, and by an issuer
satisfactory to Agent) to be issued and delivered to Agent, and (b) providing
cash collateral (in an amount determined by Agent as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Agent for the benefit of the
Bank Product Providers with respect to the Bank Product Obligations), in full,
together with the Applicable Prepayment Premium (to be allocated based upon the
Pro Rata Shares of those Lenders with a Revolver Commitment). If Borrower has
sent a notice of termination pursuant to the provisions of this Section, then
the Commitments shall terminate and Borrower shall be obligated to repay the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of those Lenders with a Revolver Commitment in an amount
equal to 105% of the Letter of Credit Usage, (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, or (iii) causing an irrevocable
letter of credit (in an amount equal to 105% of the Letter of Credit Usage and
in form, substance, and by an issuer satisfactory to Agent) to be issued and
delivered to Agent and (b) providing cash collateral (in an amount determined by
Agent as sufficient to satisfy the reasonably estimated credit exposure) to be
held by Agent for the benefit of the Bank Product Providers with respect to the
Bank Product Obligations), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of
69
termination of this Agreement in such notice. In the event of the termination of
this Agreement and repayment of the Obligations at any time prior to the
Maturity Date, for any other reason, including (a) termination upon the election
of the Required Lenders to terminate after the occurrence and during the
continuation of an Event of Default, (b) foreclosure and sale of Collateral, (c)
sale of the Collateral in any Insolvency Proceeding, or (d) restructure,
reorganization, or compromise of the Obligations by the confirmation of a plan
of reorganization or any other plan of compromise, restructure, or arrangement
in any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to the Lender Group or
profits lost by the Lender Group as a result of such early termination, and by
mutual agreement of the parties as to a reasonable estimation and calculation of
the lost profits or damages of the Lender Group, Borrower shall pay the
Applicable Prepayment Premium to Agent (to be allocated based upon the Pro Rata
Shares of those Lenders with a Revolver Commitment), measured as of the date of
such termination. The foregoing to the contrary notwithstanding, in the event
that Borrower repays the Obligations in full and terminates this Agreement
pursuant to the first sentence of this Section 3.6 and if (a) such repayment
occurs with the proceeds of a refinancing provided by Wells Fargo or WFF, or (b)
such repayment occurs after the third anniversary of the Closing Date and occurs
with the proceeds of (i) Parent's or Borrower's consummation of an underwritten
public equity offering, or (ii) the sale of all or substantially all of the
Stock of Borrower or all or substantially all of Borrower's and its
Subsidiaries' assets, in one or a series of related transactions, then the
Applicable Prepayment Premium shall be zero ($0).
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Agent, for the
benefit of the Lender Group and the Bank Product Providers, a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Borrower Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with the
terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Loan
Documents. The Agent's Liens in and to the Borrower Collateral shall attach to
all Borrower Collateral without further act on the part of Agent or Borrower.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Parent and its Subsidiaries
have no authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, Borrower, promptly
upon the request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or
70
Agent's designee may (a) notify Account Debtors of Borrower that Borrower's
Accounts, chattel paper, or General Intangibles have been assigned to Agent or
that Agent has a security interest therein, or (b) collect Borrower's Accounts,
chattel paper, or General Intangibles directly and charge the collection costs
and expenses to the Loan Account. Borrower agrees that it will hold in trust for
the Lender Group, as the Lender Group's trustee, any of its or its Subsidiaries'
Collections that it receives and immediately will deliver such Collections to
Agent or a Cash Management Bank in their original form as received by Borrower
or its Subsidiaries.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED.
(a) Borrower authorizes Agent to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of Borrower where permitted
by applicable law. Borrower hereby ratifies the filing of any financing
statement filed without the signature of Borrower prior to the date hereof.
(b) If Borrower or its Subsidiaries acquire any commercial tort
claims in an amount in excess of $500,000 after the date hereof, Borrower shall
promptly (but in any event within 30 Business Days of a senior or executive
officer of Borrower or any of its Subsidiaries having knowledge of such claim)
deliver to Agent a written description of such commercial tort claim and shall
deliver a written agreement, in form and substance reasonably satisfactory to
Agent in its Permitted Discretion, pursuant to which Borrower or its Subsidiary,
as applicable, shall grant a perfected security interest in all of its right,
title and interest in and to such commercial tort claim to Agent, as security
for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, Borrower shall execute
or deliver to Agent, and shall cause its Subsidiaries to execute or deliver to
Agent, any and all financing statements, original financing statements in lieu
of continuation statements, amendments to financing statements, fixture filings,
security agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Agent may request in its Permitted Discretion,
in form and substance satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in the assets of Borrower and
its Subsidiaries (whether now owned or hereafter arising or acquired, tangible
or intangible, real or personal), to create and perfect Liens in favor of Agent
in any After Acquired Real Property, and in order to fully consummate all of the
transactions contemplated hereby and under the other Loan Documents. To the
maximum extent permitted by applicable law, Borrower authorizes Agent to execute
any such Additional Documents in Borrower's name and authorizes Agent in the
exercise of its Permitted Discretion to file such executed Additional Documents
in any appropriate filing office. In addition, on such periodic basis as Agent
shall require, Borrower shall (i) provide Agent with a report of all new
material
71
patentable, copyrightable, or trademarkable materials acquired or generated by
Borrower or its Subsidiaries during the prior period, (ii) cause all material
patents, copyrights, and trademarks acquired or generated by Borrower or its
Subsidiaries that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrower's or the applicable Subsidiary's
ownership thereof, and (iii) cause to be prepared, executed, and delivered to
Agent supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder; provided, however, that neither Borrower nor any of its
Subsidiaries shall register with the U.S. Copyright Office any unregistered
copyrights (whether in existence on the Closing Date or thereafter acquired,
arising, or developed) unless (i) Borrower provides Agent with written notice of
its intent to register such copyrights not less than 30 days prior to the date
of the proposed registration, and (ii) prior to such registration, the
applicable Person executes and delivers to Agent a copyright security agreement
in form and substance satisfactory to Agent, supplemental schedules to any
existing copyright security agreement, or such other documentation as Agent
reasonably deems necessary in order to perfect and continue perfected Agent's
Liens on such copyrights following such registration.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or bill of lading
relating to the Borrower Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Borrower's or its
Subsidiaries' Accounts, (d) endorse Borrower's name on any of its payment items
(including all of its Collections) that may come into the Lender Group's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting Borrower's
or its Subsidiaries' Accounts, chattel paper, or General Intangibles directly
with Account Debtors, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as
Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully and finally repaid and performed and the Lender Group's obligations to
extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter during normal business hours, or at any time following a Default
or Event of Default, to inspect the Books and make copies or abstracts thereof
and to check, test, and appraise the Collateral, or
72
any portion thereof, in order to verify Borrower's and its Subsidiaries'
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral; provided, however, that unless an Event of
Default has occurred and is continuing, (a) the costs of all such inspections
shall be limited by the provisions of Section 2.11(c), and (b) all inspections
by Lenders shall be completed in combination with Agent. Parent and its
Subsidiaries acknowledge and agree that Agent and Lenders are not required to
give any notice prior to any inspection, however, Agent and Lenders will
endeavor to notify Borrower not less than five (5) Business Days prior to an
inspection so long as a Default or Event of Default has not occurred. Parent and
its Subsidiaries further agree that neither Agent nor any Lender shall be liable
or responsible in any way or manner for failing to provide any such notice.
4.7 CONTROL AGREEMENTS. Borrower agrees that it will and will cause its
Subsidiaries to take any or all reasonable steps in order for Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to (subject to the proviso contained in Section 7.12) all of
its or their Securities Accounts, Deposit Accounts, electronic chattel paper,
Investment Property, and letter-of-credit rights. Upon the occurrence and during
the continuance of a Default or Event of Default, Agent may notify any bank or
securities intermediary to liquidate the applicable Deposit Account or
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Parent and Borrower each makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Parent and its Subsidiaries have good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property, in each case, free and clear of Liens except for Permitted Liens.
5.2 [INTENTIONALLY OMITTED].
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment of Parent and its Subsidiaries is
used or held for use in their business and is fit for such purposes, reasonable
wear and tear excepted.
73
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment of
Parent and its Subsidiaries are not stored with a bailee, warehouseman, or
similar party and are located only at, or in-transit between, the locations
identified on Schedule 5.5 (as such Schedule may be updated pursuant to Section
6.9).
5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of Parent and each of its
Subsidiaries is set forth on Schedule 5.7(a).
(b) The chief executive office of Parent and each of its
Subsidiaries is located at the address indicated on Schedule 5.7(b) (as such
Schedule may be updated pursuant to Section 6.9).
(c) Parent's and each of its Subsidiaries' organizational
identification numbers, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Parent and its Subsidiaries do not
hold any commercial tort claims, except as set forth on Schedule 5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding. Other than as described on Schedule 5.8(b), there
are no subscriptions, options, warrants, or calls relating to any shares of
Borrower's capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list
of Parent's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries, and (iii) the number
and the percentage of the outstanding shares of each such
74
class owned directly or indirectly by Parent. All of the outstanding capital
Stock of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Parent's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Parent nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Parent's or Borrower's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
applicable to Borrower, the Governing Documents of Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of Borrower, (iii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
contractual obligation of Borrower, which conflict, breach, or default could
reasonably be expected to result in a Material Adverse Change, (iv) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than Permitted Liens, (v) require any
approval of Borrower's interestholders (except as have been obtained), or (vi)
require any approval or consent of any Person under any contractual obligation
of Borrower, other than consents or approvals that have been obtained and are
still in force and effect or which approval or consent if not obtained could not
reasonably be expected to result in a Material Adverse Change.
(c) Other than the filing of financing statements, the recordation
of the Mortgages, and the filing of appropriate recordations in the U.S. Patent
and Trademark Office and the U.S. Copyright Office with respect to copyrights
and trademarks to the extent required by federal law, the execution, delivery,
and performance by Borrower of this Agreement and the other Loan Documents to
which Borrower is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.
(d) This Agreement and the other Loan Documents to which Borrower
is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower,
75
enforceable against Borrower in accordance with their respective terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any contractual obligation of such
Guarantor, which conflict, breach, or default could reasonably be expected to
result in a Material Adverse Change, (iv) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Guarantor, other than Permitted Liens, (v) require any approval of
Guarantor's interestholders (except as have been obtained), or (vi) require any
approval or consent of any Person under any contractual obligation of such
Guarantor, other than consents or approvals that have been obtained and are
still in force and effect or which approval or consent if not obtained could not
reasonably be expected to result in a Material Adverse Change.
(h) Other than the filing of financing statements and the
recordation of the Mortgages, the execution, delivery, and performance by each
Guarantor of the Loan Documents to which such Guarantor is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority, other than consents or
approvals that have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and delivered by
such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the best knowledge of Parent or Borrower, threatened
against Parent or any of its Subsidiaries.
76
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Parent and its Subsidiaries that have been delivered by Borrower to the Lender
Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Parent's and its Subsidiaries' condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Parent and its Subsidiaries since the date of the latest
financial statements submitted to Agent on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Each of Parent and each of its Subsidiaries is Solvent.
(b) No transfer of property is being made by Parent or its
Subsidiaries and no obligation is being incurred by Parent or its Subsidiaries
in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Parent or its Subsidiaries.
5.13 EMPLOYEE BENEFITS. None of Parent, any of its Subsidiaries, or any
of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a)
to Parent's and Borrower's knowledge, none of Parent's or its Subsidiaries'
properties or assets has ever been used by Parent, its Subsidiaries, or by
previous owners or operators in the disposal of, or to produce, store, handle,
treat, release, or transport, any Hazardous Materials, where such use,
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of any applicable Environmental Law, (b) to Parent's
and Borrower's knowledge, none of Parent's or its Subsidiaries' properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
neither Parent nor any of its Subsidiaries has received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Parent or its Subsidiaries, and (d) neither Parent
nor its Subsidiaries has received a summons, citation, notice, or directive from
the United States Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Parent or its
Subsidiaries resulting in the releasing or disposing of Hazardous Materials into
the environment.
5.15 BROKERAGE FEES. Neither Parent nor any of its Subsidiaries has
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Parent or its Subsidiaries in connection
herewith.
5.16 INTELLECTUAL PROPERTY. Parent and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted, and attached hereto as Schedule 5.16 (as updated from time to time)
is a true, correct, and complete listing of all material patents,
77
patent applications, trademarks, trademark applications, copyrights, and
copyright registrations as to which Parent or one of its Subsidiaries is the
owner or is an exclusive licensee.
5.17 LEASES. Parent and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and all of such leases are valid and
subsisting and no material default by Parent or its Subsidiaries exists under
any of them.
5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule 5.18
is a listing of all of Parent's and its Subsidiaries' Deposit Accounts and
Securities Accounts, including, with respect to each bank or securities
intermediary (a) the name and address of such Person, and (b) the account
numbers of the Deposit Accounts or Securities Accounts maintained with such
Person.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Parent or its Subsidiaries in writing to Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Parent or its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Parent's and Borrower's good faith
estimate of Parent's and its Subsidiaries future performance for the periods
covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of Parent and its Subsidiaries outstanding immediately prior
to the Closing Date that is to remain outstanding after the Closing Date and
such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and describes the principal terms thereof.
5.21 UFOC. (a) Borrower has delivered to Agent true and correct copies of
Borrower's UFOC, which is currently being used in connection with the offers to
sell and the sales of its and their franchises, (b) the UFOC (i) complies in all
material respects with all applicable federal, state and foregoing laws and
regulations pertaining to offers to sell and the sale of franchises in
jurisdictions in which they are being used, including, in the United States, the
Uniform Franchise Offering Circular Guidelines adopted by the North American
Securities Administrators Association in April 25, 1993 and approved by the FTC
on December 30, 1993 as an alternative to the FTC disclosure statement, and (ii)
does not contain any untrue statement of a material fact or omit to state a
material fact required to be
78
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; in all cases,
except where any failure to comply or an untrue statement or omission could not
reasonably be expected to result in a Material Adverse Change.
5.22 CREDIT CARD RECEIPTS. Schedule 5.22 sets forth all of Borrower's and
each of its Subsidiary's Credit Card Processors and all arrangements to which
Borrower or any Subsidiary is a party with respect to the payment to Borrower or
any Subsidiary of the proceeds of all credit card charges for sales by Borrower
or any of its Subsidiaries.
5.23 INACTIVE SUBSIDIARIES. The Inactive Subsidiary does not own any
material assets and does not engage in any business activity whatsoever.
5.24 CFCS. None of Borrower's Subsidiaries that are CFCs could execute
and deliver guaranties of the Obligations or grant Liens in their assets to
secure the Obligations without creating a material tax obligation under Section
956 of the IRC.
5.25 LOAN DOCUMENTS. Borrower has delivered to Agent fully executed, true
and correct copies of each Mortgage and the associate title policy previously
delivered to the Existing Agent and Existing Lender Group and all such Mortgages
and title policies are assignable to Agent.
6. AFFIRMATIVE COVENANTS.
Parent and Borrower each, jointly and severally, covenants and
agrees that, until termination of all of the Commitments and payment in full of
the Obligations, each shall and shall cause each of its Subsidiaries to do all
of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrower also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to its and its Subsidiaries' sales.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
79
Monthly (not later than (a) a detailed calculation of the Borrowing Base signed
the 30th day of Fiscal by Borrower's chief financial officer or treasurer,
Month)
(b) a summary aging of Borrower's and its Subsidiaries'
accounts payable and a list of book overdrafts (which
need not be aged),
(c) a detailed report regarding Borrower and its
Subsidiaries' cash and Cash Equivalents including an
indication of which amounts constitute Qualified Cash,
and
(d) a detailed report regarding the amount of Net Cash
Proceeds resulting from Permitted Dispositions
(including any amounts re-invested) pursuant to clause
(i) of the definition of Permitted Dispositions.
Quarterly (not later (e) a report regarding Borrower's and its Subsidiaries'
than the 45 day after accrued, but unpaid, ad valorem, Real Property, sales,
the end of each fiscal and payroll taxes,
quarter of Borrower)
(f) a report on each of the Restaurants, together with a
listing of any new Restaurants or locations owned,
leased, franchised or closed by Borrower or any of its
Subsidiaries, and a reconciliation explaining any change
(whether due to a Permitted Disposition or otherwise) in
the ownership or operation of the Restaurants and
locations listed in the corresponding report for the
immediately preceding fiscal quarter.
Upon reasonable (g) such other reports as to the Collateral or the
request by Agent financial condition of Parent and its Subsidiaries as
Agent requests and determines in its Permitted
Discretion not to be unduly burdensome; provided,
however, so long as no Default or Event of Default shall
have occurred or be continuing, Agent will not request
an aged book overdraft summary, copies of Parent's or
any Guarantor's federal income tax reports, monthly
sales reports for each Restaurant or a copy of the
monthly reporting package delivered by Borrower or
Parent to its respective Board of Directors.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days after
the end of each Fiscal Month during each of Parent's fiscal years, an unaudited
consolidated balance sheet, income statement, and statement of cash flow
covering Parent's and its Subsidiaries' operations during such period,
80
(b) as soon as available, but in any event within 45 days after
the end of each of Parent's fiscal quarters,
(i) an unaudited consolidated balance sheet, income statement,
and statement of cash flow covering Parent's and its Subsidiaries' operations
during such period,
(ii) a certificate detailing Parent's Leverage Ratio as of the
last day of the fiscal quarter then ended, and
(iii) a Compliance Certificate,
(iv) a company prepared profit and loss report in form and
detail reasonably acceptable to Agent in its Permitted Discretion and Unit Level
Cash Flow for each of the currently operating restaurants for the immediately
preceding quarter and for the then current fiscal year to date,
(c) as soon as available, but in any event within 90 days after
the end of each of Parent's fiscal years,
(i) consolidated financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications (including any (A) "going concern" or like qualification or
exception, (B) qualification or exception as to the scope of such audit, or (C)
qualification which relates to the treatment or classification of any item and
which, as a condition to the removal of such qualification, would require an
adjustment to such item, the effect of which would be to cause any noncompliance
with the provisions of Section 7.18), by such accountants to have been prepared
in accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of the existence
of any Default or Event of Default under Section 7.18, and
(iii) a Compliance Certificate,
(d) as soon as available, but in any event within 60 days after
the start of each of Parent's fiscal years, copies of Parent's Projections, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its Permitted Discretion, for the forthcoming 3 years,
year by year, and for the forthcoming fiscal year, month by month, certified by
the chief financial officer of Parent as being such officer's good faith
estimate of the financial performance of Parent during the period covered
thereby,
(e) if and when filed by Parent,
81
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Parent with the SEC,
(iii) [intentionally omitted], and
(iv) after the consummation of a Qualified IPO, any other
information that is provided by Parent to its shareholders generally,
(f) promptly, but in any event within 5 days after Parent or
Borrower has knowledge of any event or condition that constitutes a Default or
an Event of Default, notice thereof and a statement of the curative action that
Parent or Borrower proposes to take with respect thereto,
(g) promptly after the commencement thereof, but in any event
within 5 Business Days after the service of process with respect thereto on
Parent or any of its Subsidiaries, notice of all actions, suits, or proceedings
brought by or against Parent or any of its Subsidiaries before any Governmental
Authority which reasonably could be expected to result in a Material Adverse
Change, and
(h) upon the request of Agent, any other information reasonably
requested relating to the financial condition of Parent or its Subsidiaries.
In addition, Parent agrees that no Subsidiary of Parent will have a
fiscal year different from that of Parent. Parent also agrees to cooperate with
Agent to allow Agent to consult with its independent certified public
accountants if Agent reasonably requests the right to do so and that, in such
connection, its independent certified public accountants are authorized to
communicate with Agent (so long as, prior to the occurrence and continuation of
an Event of Default, a representative of Borrowers is afforded the opportunity
(but need not be present) to be present) and to release to Agent whatever
financial information concerning Parent or its Subsidiaries that Agent
reasonably may request.
6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements.
6.5 [INTENTIONALLY OMITTED].
6.6 MAINTENANCE OF PROPERTIES. Except for assets disposed of pursuant to
a Permitted Disposition, maintain and preserve all of its properties which are
necessary or useful in the proper conduct to its business in good working order
and condition, ordinary wear and tear excepted, and comply at all times with the
provisions of all material leases to which it is a party as lessee, so as to
prevent any loss or forfeiture thereof or thereunder.
82
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Parent,
its Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Parent will and will cause its Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of it and
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Agent with proof satisfactory to Agent indicating that Parent
and its Subsidiaries have made such payments or deposits.
6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting Parent's
and its Subsidiaries' assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Borrower
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrower shall deliver copies of all such policies to Agent with an
endorsement naming Agent as a loss payee (under a satisfactory lender's loss
payable endorsement) or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss exceeding
$250,000 covered by such insurance. Subject to the rights of lessors and
subtenants, Agent shall have the exclusive right to approve any adjustment of
losses claimed under any such insurance policies in excess of $1,000,000 (or in
any amount after the occurrence and during the continuation of an Event of
Default), without any liability to Parent or Borrower whatsoever in respect of
such adjustments.
(c) Parent will not and will not suffer or permit its Subsidiaries
to take out separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 6.8, unless Agent
is included thereon as an additional insured or loss payee under a lender's loss
payable endorsement. Parent promptly shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Parent's and its
Subsidiaries' Inventory and Equipment only at the locations identified on
Schedule 5.5 and their chief executive offices only at the locations identified
on Schedule 5.7(b); provided, however, that Borrower may amend Schedule 5.5 and
Schedule 5.7 so long as such amendment occurs by
83
written notice to Agent not less than 30 days after the date on which such
Inventory or Equipment is moved to such new location or such chief executive
office is relocated, so long as such new location is within the continental
United States, and so long as, at the time of such written notification,
Borrower provides Agent a Collateral Access Agreement with respect thereto.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
material leases to which Parent or any of its Subsidiaries is a party or by
which Parent's or any such Subsidiaries' properties and assets are bound, unless
such payments are the subject of a Permitted Protest, unless the non-compliance
thereof could not reasonably be expected to result in a Material Adverse Change.
6.12 EXISTENCE. At all times preserve and keep in full force and effect
Parent's and its Subsidiaries valid existence and good standing and any rights
and franchises material to their businesses unless the non-compliance of such
franchises could not reasonably be expected to result in a Material Adverse
Change.
6.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by Parent or its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
Parent or its Subsidiaries and take any Remedial Actions required to abate said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly, but in any event within 5 days of its receipt thereof, provide
Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Parent or its Subsidiaries, (ii) commencement of any Environmental Action or
notice that an Environmental Action will be filed against Parent or its
Subsidiaries, and (iii) notice of a violation, citation, or other administrative
order which reasonably could be expected to result in a Material Adverse Change.
6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
84
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect of
amending or modifying this Agreement or any of the Schedules hereto.
6.15 FORMATION OF SUBSIDIARIES. At the time that Borrower or any
Guarantor forms any direct or indirect Subsidiary or acquires any direct or
indirect Subsidiary after the Closing Date or any Inactive Subsidiary owns
material assets and engages in any business Borrower or such Guarantor shall (a)
cause such Subsidiary to provide to Agent a joinder to the Guaranty and the
Guarantor Security Agreement, together with such other security documents
(including Mortgages with respect to any Real Property of such Subsidiary), as
well as appropriate financing statements (and with respect to all property
subject to a Mortgage, fixture filings), all in form and substance satisfactory
to Agent (including being sufficient to grant Agent a first priority Lien
(subject to Permitted Liens) in and to the assets of such newly formed or
acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Agent, and (c) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all property subject to a
Mortgage). Any document, agreement, or instrument executed or issued pursuant to
this Section 6.15 shall be a Loan Document.
7. NEGATIVE COVENANTS.
Parent and Borrower each, jointly and severally, covenants and
agrees that, until termination of all of the Commitments and payment in full of
the Obligations, each will not and will not permit any of its Subsidiaries to do
any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) Indebtedness of Borrower evidenced by the High Yield Note
Documents in an aggregate principal amount not to exceed $126,530,000 at any one
time outstanding,
(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), and (d) of this Section 7.1 (and continuance
or renewal of any Permitted
85
Liens associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not, in Agent's reasonable judgment,
materially impair the prospects of repayment of the Obligations by Borrower or
materially impair Borrower's creditworthiness, (ii) such refinancings, renewals,
or extensions do not result in an increase in the principal amount of, or
interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to Borrower, (iv) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right
of payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must include subordination terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and (v) the
Indebtedness that is refinanced, renewed, or extended is not recourse to any
Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended,
(f) endorsement of instruments or other payment items for deposit,
(g) Indebtedness resulting from Permitted Intercompany Advances,
(h) so long as no Default or Event of Default has occurred and is
continuing at the time of the incurrence thereof, Indebtedness under Hedge
Agreements of Borrower in respect of Indebtedness of Borrower or any of its
Subsidiaries; provided, however, that such Hedge Agreements are entered into for
the purpose of fixing or hedging interest rates with respect to any fixed or
variable rate Indebtedness that is permitted hereunder,
(i) Indebtedness incurred by Borrower or its Subsidiaries in the
ordinary course of business with respect to surety and appeal bonds, performance
and return-of-money bonds and other similar obligations, all in the ordinary
course of business in accordance with customary industry practices, in amounts
and for the purposes customary in Borrower's industry; provided, however, that
the principal amount of such Indebtedness outstanding at any time shall not
exceed $1,000,000 in the aggregate,
(j) Indebtedness of a Subsidiary of Borrower resulting from its
guaranty of Indebtedness or other obligation of Borrower or any other
Subsidiary, so long as such Subsidiary has guaranteed the Obligations pursuant
to a Guaranty and has granted to the Agent for the benefit of the Agent and the
Lenders a security interest in its assets, to the extent the incurrence of such
Indebtedness is otherwise permitted hereunder,
(k) so long as no Default or Event of Default has occurred and is
continuing at the time of the incurrence thereof, unsecured Funded Debt and
Permitted Acquired Indebtedness of Borrower in an aggregate amount not to exceed
$3,000,000 outstanding at any one time,
86
(l) Indebtedness of Parent, Borrower, or any Guarantor resulting
from the guaranty of any lease obligations of Borrower or any Guarantor to the
extent such lease obligations are permitted hereunder, and
(m) Indebtedness of the Parent or its Subsidiaries resulting from
the guaranty of the obligations of Borrower, as franchisor, pursuant to the
registration requirements of one or more states in which franchises are offered
to franchisees.
7.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(e) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Except for the consummation of Permitted Reorganization
Transactions, enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Except for the consummation of Permitted Reorganization
Transactions, liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).
(c) Except for the consummation of Permitted Reorganization
Transactions and Permitted Dispositions, convey, sell, lease, license, assign,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, sub-lease, license, assign, transfer, or otherwise dispose of any of
Parent's or its Subsidiaries assets. With respect to any Permitted Disposition,
Agent agrees and is authorized, on reasonable prior written request therefor
from Borrower, to release its Lien on the asset (but not the proceeds) subject
to such Permitted Disposition concurrent with the consummation of the
disposition so long as, in connection therewith, Borrower certifies to Agent
that the subject disposition is permitted hereunder.
7.5 CHANGE NAME. Change Parent's or any of its Subsidiaries' names,
organizational identification number, state of organization or organizational
identity; provided, however, that Parent or any of its Subsidiaries may change
their names upon at least 30 days prior written notice to Agent of such change
and so long as, at the time of such written notification, Parent or its
Subsidiary provides any financing statements necessary to perfect and continue
perfected the Agent's Liens.
7.6 NATURE OF BUSINESS. Make any change in the principal nature of its
or their business.
87
7.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a refinancing
permitted by Section 7.1(e),
(a) optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of Parent or its Subsidiaries, other than the (i)
Obligations in accordance with this Agreement, (ii) the consummation of a
Permitted Redemption, and (iii) payments made in the ordinary course of business
for the repayment of Permitted Intercompany Advances, or
(b) directly or indirectly, amend, modify, alter, increase, or
change in any way materially adverse to the Lender Group any of the terms or
conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Section 7.1.
7.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.9 [INTENTIONALLY OMITTED]..
7.10 DISTRIBUTIONS. Make or pay (a) any distribution or dividend (in cash
or other property, other than common Stock) on, or purchase, acquire, redeem, or
retire any of Parent's or Borrower's Stock, of any class, whether now or
hereafter outstanding, or (b) any management fees or any other fees or expenses
pursuant to any management, consulting, or other services agreement to any of
the shareholders or other equityholders of Parent or any of its Subsidiaries or
other Affiliates, or to any other Subsidiaries or Affiliates of any Restricted
Party; provided, however, that the foregoing shall not prevent:
(a) the making of the Permitted Distribution,
(b) so long as no Default or Event of Default has occurred and is
continuing after giving effect thereto and so long as Borrower has Excess
Availability of not less than $1,500,000 after giving effect thereto, the
payment of Permitted Management Fees,
(c) distributions by any Subsidiary of Borrower to Borrower or to
another Subsidiary of Borrower (other than to a Subsidiary that is a CFC),
(d) payments by Borrower to Parent to permit Parent to pay federal
and state income taxes, franchise taxes, and other similar expenses incurred in
the ordinary course of business which are owed or payable by Parent,
(e) payments by Borrower to Parent to enable Parent to (i) effect
the repurchase, redemption, acquisition, cancellation, or other retirement for
value of the Stock of Parent or to effect the termination of options to purchase
Stock of Parent, in each case, held by former managers and employees of Parent
or its Subsidiaries (or their estates or beneficiaries under their estates) upon
the death, disability, retirement, or termination of employment of any such
former managers or employees; and (ii) to make payments on subordinated
promissory notes or other obligations representing the unpaid repurchase,
88
redemption, acquisition, or cancellation price for Stock of Parent owned by such
former managers or employees of Parent or its Subsidiaries, provided, however,
that the sum of all such payments shall not exceed $500,000 (the "maximum
amount") in any fiscal year plus up to $500,000 of any unused amount permitted
under this clause (e) for the immediately preceding fiscal year; provided
further, however, that if the Leverage Ratio as at the end of the most recent
fiscal quarter of Parent is less than 3:00:1:00 on a pro forma basis after
giving effect to any proposed payment under this clause (e), the maximum amount
may be increased to not more than $1,500,000 plus up to $500,000 of any unused
amount permitted under this clause (e) for the immediately preceding fiscal
year; provided further, however, that any repurchase, redemption, acquisition,
cancellation, or other retirement for value of the Stock of Parent that is made
solely from proceeds received (A) from key-man life insurance, or (2) by Parent
from an equity issuance by Parent to WPP for the purpose of making any such
repurchase, redemption, acquisition, cancellation, or other retirement of Stock
from an executive officer of Parent shall not be subject to the maximum amount
limitation,
(f) payment on the Closing Date of a transaction fee to the
Permitted Holders in an aggregate amount not to exceed $320,000 and reimburse
the Permitted Holders for reasonable out-of-pocket fees, costs and expenses
incurred in connection with the transactions contemplate hereby,
(g) payments by Borrower to Parent to enable the Parent to pay
costs and expenses incurred in the ordinary course of business and in the
conduct of its business as a holding company, including payment of
administrative costs and expenses, officers' salaries and reasonable
out-of-pocket expenses incurred by members of the Board of Directors; provided,
however, that the aggregate amount of all such payments permitted under this
clause (g) shall not exceed $350,000 in any fiscal year,
(h) payments by Borrower of Parent's outside directors' fees,
reimbursement of reasonable out-of-pocket expenses incurred in connection with
attending Board of Director meetings, and payment of indemnification claims to
the extent not covered by insurance, and
(i) repurchases of stock of Parent deemed to occur upon the
cashless exercise of stock options and warrants.
7.11 ACCOUNTING METHODS. Modify or change its fiscal year or its method
of accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Parent's or its Subsidiaries' accounting records
without said accounting firm or service bureau agreeing to provide Agent
information regarding Parent's and its Subsidiaries' financial condition.
7.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Parent and its Subsidiaries shall not have Permitted Investments
(other than in the Cash Management Accounts) in Deposit
89
Accounts or Securities Accounts in an aggregate amount in excess of $250,000 at
any one time unless Parent or its Subsidiary, as applicable, and the applicable
securities intermediary or bank have entered into Control Agreements governing
such Permitted Investments in order to perfect (and further establish) the
Agent's Liens in such Permitted Investments. Subject to the foregoing proviso,
Parent shall not and shall not permit its Subsidiaries to establish or maintain
any Deposit Account or Securities Account unless Agent shall have received a
Control Agreement in respect of such Deposit Account or Securities Account.
7.13 TRANSACTIONS WITH AFFILIATES. Except as permitted by Sections 7.1,
7.3, 7.7, 7.10, and 7.12, and except as set forth on Schedule 7.13, directly or
indirectly enter into or permit to exist any transaction with any Affiliate of
Parent except for transactions that (a) are in the ordinary course of business,
(b) are upon fair and reasonable terms, (c) if they involve one or more payments
by Parent or its Subsidiaries in excess of $1,500,000, are fully disclosed to
Agent, and (d) are no less favorable to Parent or its Subsidiaries, as
applicable, than would be obtained in an arm's length transaction with a
non-Affiliate.
7.14 SUSPENSION. Suspend or go out of a substantial portion of its or
their business.
7.15 [INTENTIONALLY OMITTED].
7.16 USE OF PROCEEDS. Use the proceeds of the Advances and the Term Loan
for any purpose other than (a) on the Closing Date, (i) to restructure a portion
of the outstanding principal, accrued interest, and accrued fees and expenses
owing under the Existing Loan Agreement, and (ii) to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes.
7.17 INVENTORY AND EQUIPMENT WITH BAILEES. Unless a Collateral Access
Agreement has been delivered to Agent, and except for storage of up to
$3,500,000 of Inventory in the aggregate for temporary periods not exceeding 120
days, store the Inventory or Equipment of Parent or its Subsidiaries at any time
now or hereafter with a bailee, warehouseman, or similar party.
7.18 FINANCIAL COVENANTS.
(a) Fail to maintain or achieve:
(i) MINIMUM ADJUSTED EBITDA. Adjusted EBITDA, measured on each
fiscal quarter-end basis, for the then most recently completed thirteen Fiscal
Month period, of at least $35,000,000.
(ii) FIXED CHARGE COVERAGE RATIO. A Fixed Charge Coverage
Ratio, measured on a fiscal quarter-end basis, of at least the required amount
set forth in the following table for the applicable period set forth opposite
thereto:
90
Applicable Ratio Applicable Period
---------------- ------------------
1.05:1.0 For the fiscal quarter
ending July 8, 2004
1.05:1.0 For the two fiscal quarters
ending October 28, 2004
1.05:1.0 For the three fiscal quarters
ending January 27, 2005
1.05:1.0 For the four fiscal quarters
ending April 21, 2005
1.05:1.0 For each of the four fiscal quarters
ended thereafter
(b) Make:
(i) GROWTH CAPITAL EXPENDITURES. Growth Capital Expenditures
in any fiscal year in excess of the Growth Capital Expenditure Amount.
7.19 INACTIVE SUBSIDIARY. Permit any Inactive Subsidiary to (a) own any
material assets, or (b) engage in any business activity (other than the
ownership of certain intellectual property rights).
7.20 UFOC. Fail to maintain Borrower's UFOC in compliance with the
representation and warranty contained in Section 5.21 hereof.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If Parent or any of its Subsidiaries:
(a) fails to perform, keep, or observe any term, provision,
covenant, or agreement contained in Sections 2.7, 3.2, 4.2, 4.4, 4.5 4.6, 6.8,
6.12, 6.14 6.15, and 7.1 through 7.19 of this Agreement; or
91
(b) fails or neglects to perform, keep, or observe any term,
provision, covenant, or agreement contained in Sections 6.2 6.3, 6.6, 6.7, 6.9,
6.10, and 6.11 of this Agreement and such failure continues for a period of 5
days; or
(c) fails or neglects to perform, keep, or observe any other term,
provision, covenant, or agreement contained in this Agreement, or in any of the
other Loan Documents (giving effect to any grace periods, cure periods, or
required notices, if any, expressly provided for in such Loan Documents); in
each case, other than any such term, provision, covenant, or agreement that is
the subject of another provision of this Section 8 (in which event such other
provision of this Section 8 shall govern), and such failure continues for a
period of 10 days;
provided that, during any period of time that any such failure or
neglect referred to in this paragraph exists, even if such failure or neglect is
not yet an Event of Default, the Lender Group shall be relieved of its
obligation to extend credit hereunder;
8.3 If any material portion of Parent's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person and the same is not
discharged before the earlier of 60 days after the date it first arises or 5
days prior to the date on which such property or asset is subject to forfeiture
by Parent or any of its Subsidiaries;
8.4 If an Insolvency Proceeding is commenced by Parent or any of its
Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Parent, or any of
its Subsidiaries (except for any Subsidiary that does not own any material
assets and does not engage in any business activity whatsoever as determined at
such time the Insolvency Proceeding is commenced), and any of the following
events occur: (a) Parent or such Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted; provided, however, that, during the
pendency of such period, each member of the Lender Group shall be relieved of
its obligations to extend credit hereunder, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
each member of the Lender Group shall be relieved of its obligations to extend
credit hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, Parent or any of its Subsidiaries,
or (e) an order for relief shall have been entered therein;
8.6 If Parent or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;
8.7 (a) If a notice of Lien is filed of record with respect to Parent's
or any of its Subsidiaries' assets by the United States or any department,
agency, or instrumentality
92
thereof (a "Federal Lien"), or by any state, county, municipal, or governmental
agency and such state, county, municipal, or governmental agency Lien has
priority over the Liens of Lender in and to the Collateral or any portion
thereof (a "Non-Federal Priority Lien"); or
(b) If a notice of Lien is filed of record with respect to
Parent's assets or any of its Subsidiaries' assets by any state, county,
municipal, or governmental agency that is not a Non-Federal Priority Lien (a
"Non-Federal Non-Priority Lien"); provided, however, that, if the aggregate
amount claimed with respect to any such Non-Federal Non-Priority Liens, or
combination thereof, is less than $100,000, an Event of Default shall not occur
under this subsection if the claims that are the subject of such Liens are the
subject of Permitted Protests and if the Liens are released, discharged, or
bonded against within 30 days of each such Lien first being filed of record or,
if earlier, at least 5 days prior to the date on which assets that are subject
to such Liens are subject to being sold or forfeited and, in any such case,
Agent shall have the absolute right to establish and maintain a reserve against
the Borrowing Base and the Maximum Revolver Amount in an amount equal to the
aggregate amount of the underlying claims (determined by Agent in its Permitted
Discretion, and irrespective of any Permitted Protests with respect thereto and
including any penalties or interest that are estimated by Agent, in its
Permitted Discretion, to arise in connection therewith);
8.8 If one or more judgments or other claims involving an aggregate
amount of $500,000, or more, in excess of the amount covered by insurance,
becomes a Lien or encumbrance upon any of Parent's or any of its Subsidiaries'
assets and the same is not released, discharged, bonded against, or stayed
pending appeal before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such asset is subject to being forfeited by
Parent or any of its Subsidiaries;
8.9 (a) If there is a default in one or more agreements to which Parent
or any of its Subsidiaries is a party with one or more third Persons relative to
Parent's or any of its Subsidiaries' Indebtedness involving an aggregate amount
of $1,000,000, or more, and such default (i) occurs at the final maturity of
obligations thereunder, or (ii) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of Parent's or any
of its Subsidiaries' obligations thereunder; or
(a) If there is a default in any other material agreement to which
Parent or any of its Subsidiaries is a party with one or more third Persons and
such default results in a right by such third Person(s), irrespective of whether
exercised, to terminate such agreement;
8.10 If Parent or any of its Subsidiaries makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to Lender
by Borrower or any
93
officer, employee, agent, or director of Borrower, or if any such warranty or
representation is withdrawn;
8.12 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement; or
8.14 Any provision of any Loan Document (other than any immaterial
provision) shall at any time for any reason be declared to be null and void, or
the validity or enforceability thereof shall be contested by Parent or its
Subsidiaries, or a proceeding shall be commenced by Parent or its Subsidiaries,
or by any Governmental Authority having jurisdiction over Parent or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or Parent or its Subsidiaries shall deny that Parent or its Subsidiaries has any
liability or obligation purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrower:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with Borrower's
Account Debtors for amounts and upon terms which Agent considers advisable, and
in such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in
94
payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;
(e) Cause Borrower to hold all of its returned Inventory in trust
for the Lender Group and segregate all such Inventory from all other assets of
Borrower or in Borrower's possession;
(f) Without notice to or demand upon Borrower, make such payments
and do such acts as Agent considers necessary or reasonable to protect its
security interests in the Collateral. Borrower agrees to assemble the Collateral
if Agent so requires, and to make the Collateral available to Agent at a place
that Agent may designate which is reasonably convenient to both parties.
Borrower authorizes Agent to enter the premises where the Collateral is located,
to take and maintain possession of the Collateral, or any part of it, and to
pay, purchase, contest, or compromise any Lien that in Agent's determination
appears to conflict with the priority of Agent's Liens in and to the Collateral
and to pay all expenses incurred in connection therewith and to charge
Borrower's Loan Account therefor. With respect to any of Borrower's owned or
leased premises, Borrower hereby grants Agent a license to enter into possession
of such premises and to occupy the same, without charge, in order to exercise
any of the Lender Group's rights or remedies provided herein, at law, in equity,
or otherwise;
(g) Without notice to Borrower (such notice being expressly
waived), and without constituting an acceptance of any collateral in full or
partial satisfaction of an obligation (within the meaning of the Code), set off
and apply to the Obligations any and all (i) balances and deposits of Borrower
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Borrower Collateral. Borrower hereby grants to Agent a license or
other right to use, without charge, Borrower's labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Borrower Collateral,
in completing production of, advertising for sale, and selling any Borrower
Collateral and Borrower's rights under all licenses and all franchise agreements
shall inure to the Lender Group's benefit;
(j) Sell the Borrower Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Agent determines is commercially reasonable. It is not necessary that the
Borrower Collateral be present at any such sale;
95
(k) Except in those circumstances where no notice is required
under the Code, Agent shall give notice of the disposition of the Borrower
Collateral as follows:
(i) Agent shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Borrower Collateral,
the time on or after which the private sale or other disposition is to be made;
and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in Section 12, at least 10 days before
the earliest time of disposition set forth in the notice; no notice needs to be
given prior to the disposition of any portion of the Borrower Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Borrower Collateral or to operate same
and, to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing; and
(n) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Parent or its Subsidiaries fails to pay any monies (whether
taxes, assessments, insurance premiums, or, in the case of leased properties or
assets, rents or other
96
amounts payable under such leases) due to third Persons, or fails to make any
deposits or furnish any required proof of payment or deposit, all as required
under the terms of this Agreement, then, Agent, in its sole discretion and
without prior notice to Parent or Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves
against the Borrowing Base or the Maximum Revolver Amount as Agent deems
necessary to protect the Lender Group from the exposure created by such failure,
or (c) in the case of the failure to comply with Section 6.8 hereof, obtain and
maintain insurance policies of the type described in Section 6.8 and take any
action with respect to such policies as Agent deems prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each of Parent and Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Parent or Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR BORROWER COLLATERAL. Borrower
hereby agrees that: (a) so long as Agent complies with its obligations, if any,
under the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Borrower Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Borrower Collateral shall be borne
by Borrower; provided, however, that, nothing contained in this Section 11.2
shall be deemed to relieve Agent or any member of the Lender Group, as
applicable, from liability arising from Agent's or such member of the Lender
Group's willful misconduct, fraud or gross negligence, as finally determined by
a court of competent jurisdiction.
11.3 INDEMNIFICATION. Each of Parent and Borrower, jointly and severally,
shall pay, indemnify, defend, and hold the Agent-Related Persons, the
Lender-Related Persons, and each Participant (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith or in connection with the enforcement
of this indemnification (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration (including
any restructuring or
97
workout with respect hereto) of this Agreement, any of the other Loan Documents,
or the transactions contemplated hereby or thereby or the monitoring of Parent's
and its Subsidiaries' compliance with the terms of the Loan Documents, and (b)
with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Parent and Borrower shall have no
obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the fraud, gross negligence, or willful misconduct of such
Indemnified Person or for any consequential damages (other than consequential
damages payable to a third person). This provision shall survive the termination
of this Agreement and the repayment of the Obligations. If any Indemnified
Person makes any payment to any other Indemnified Person with respect to an
Indemnified Liability as to which Parent or Borrower was required to indemnify
the Indemnified Person receiving such payment, the Indemnified Person making
such payment is entitled to be indemnified and reimbursed by Parent or Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Parent, Borrower, or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Parent, Borrower, or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Parent,
Borrower, or Agent, as the case may be, at its address set forth below:
If to Parent or
Borrower: VICORP RESTAURANTS, INC.
400 West 48th Avenue
Denver, Colorado 80216
Attn: Anthony J. Carroll and Michael R. Kinnen
Fax No. (303) 672-2668
with copies to: WIND POINT PARTNERS
676 North Michigan Avenue
Chicago, Illinois 60611
98
Attn: Michael Solot
Fax No. (312) 255-4820
with copies to: SACHNOFF & WEAVER
30 South Wacker Drive
Chicago, Illinois 60606
Attn: Bradley S. Schmarak, Esq.
Fax No. (312) 207-6400
If to Agent: WELLS FARGO FOOTHILL, INC.
2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
Attn: Specialty Finance Manager
Fax No.: (310) 453-7442
with copies to: PAUL, HASTINGS, JANOFSKY & WALKER LLP
515 South Flower Street, 25th Floor
Los Angeles, CA 90071
Attn: John Francis Hilson, Esq.
Fax No.: (213) 627-0705
Agent, Parent, and Borrower may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Agent in connection with enforcement rights against
the Borrower Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Borrower acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Borrower Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW
99
YORK INCLUDING, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER
OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more assignees
(each an "Assignee") that are Eligible Transferees all, or any ratable part of
all, of the Obligations, the Commitments and the other rights and obligations of
such Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that Borrower and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower and Agent by such Lender and the Assignee,
(ii)
100
such Lender and its Assignee have delivered to Borrower and Agent an Assignment
and Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for
Agent's separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, (A) the payment of any fees
shall not be required if such assignment is to an Affiliate of the assigning
Lender and (B) the payment of any fees shall not be required and the Assignee
need not be an Eligible Transferee if such assignment is in connection with any
merger, consolidation, sale, transfer, or other disposition of all or any
substantial portion of the business or loan portfolio of the assigning Lender.
(b) From and after the date that Agent notifies the assigning
Lender (with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from any future obligations
under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be
a party hereto and thereto), and such assignment shall effect a novation between
Borrower and the Assignee; provided, however, that nothing contained herein
shall release any assigning Lender from obligations that survive the termination
of this Agreement, including such assigning Lender's obligations under Article
16 and Section 17.7 of this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (5)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
101
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing
fee payment and the fully executed Assignment and Acceptance, this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other Persons
(a "Participant") participating interests in its Obligations, the Commitment,
and the other rights and interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents (provided that no written consent
of Agent shall be required in connection with any sale of any such participating
interests by a Lender to an Eligible Transferee); provided, however, that (i)
the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or
substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the
102
other Lenders, Agent, Borrower, the Collections of
Borrower or its Subsidiaries, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 17.7, disclose all documents and information which it now or hereafter
may have relating to Borrower and its Subsidiaries and their respective
businesses.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.24, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
(h) Anything to the contrary contained herein notwithstanding, at
all times during the term hereof, WFF agrees to maintain (i) have and retain a
Revolver Commitment of no less than 44% of all of the Revolver Commitments, and
(ii) have no less than a 44% interest in the Term Loan Amount; provided,
however, that the foregoing shall not be applicable (A) at any time that a
Default or Event of Default has occurred and is continuing, or (B) to any
assignment that is in connection with any merger, consolidation, sale, transfer,
or other disposition of all or any substantial portion of the business or loan
portfolio of WFF. This clause (h) is for the sole benefit of WFF and Borrower
and there are no other Persons that are intended to be benefited by this clause.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements),
and no consent with respect to any departure by Borrower therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by Agent at the written request of the Required Lenders), Parent and
Borrower and then any such waiver or consent shall be effective, but only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in
103
writing and signed by all of the Lenders affected thereby and Borrower, do any
of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan
or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the Pro Rata Share that is required to take any action
hereunder,
(e) amend or modify this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) other than as permitted by Section 16.12, release Agent's Lien
in and to any of the Collateral,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) except as expressly contemplated herein with respect to
Permitted Purchase Money Indebtedness, contractually subordinate any of the
Agent's Liens,
(i) release Borrower or any Guarantor from any obligation for the
payment of money, or
(j) change the definition of Borrowing Base or the definitions of
Maximum Revolver Amount, Term Loan Amount, or change Section 2.1(b), or
(k) amend any of the provisions of Section 16.
and, provided further, however, that (i) no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document, or (ii)
no amendment, waiver or consent shall, unless in writing and signed by WFF and
Borrower shall affect the rights or duties of WFF or Borrower under Section
14.1(h) and no such amendment, waiver, or consent shall require the approval or
consent of any other party hereto. The foregoing notwithstanding, any amendment,
modification, waiver, consent, termination, or release of, or with respect to,
any provision of this Agreement or any other Loan Document that relates only to
the relationship of the Lender Group among themselves, and that does not affect
the rights or obligations of Borrower, shall not require consent by or the
agreement of Borrower.
104
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints WFF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions
105
of this Section 16 (other than the proviso to Section 16.11(a))are solely for
the benefit of Agent, and the Lenders, and Borrower and its Subsidiaries shall
have no rights as a third party beneficiary of any of the provisions contained
herein. Any provision to the contrary contained elsewhere in this Agreement or
in any other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that WFF is merely the representative of the
Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of Borrower and its
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Borrower and its Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections of Borrower and its Subsidiaries, (f) perform, exercise, and enforce
any and all other rights and remedies of the Lender Group with respect to
Borrower, the Obligations, the Collateral, the Collections of Borrower and its
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any
106
of the Lenders for any recital, statement, representation or warranty made by
Borrower or any Subsidiary or Affiliate of Borrower, or any officer or director
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Books or properties of Borrower or the
books or records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be
107
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrower. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower and any
other Person party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrower and any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrower and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses from the Collections of Borrower and its Subsidiaries received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such
108
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make an Advance or other extension of credit
hereunder. Without limitation of the foregoing, each Lender shall reimburse
Agent upon demand for such Lender's Pro Rata Share of any costs or out of pocket
expenses (including attorneys, accountants, advisors, and consultants fees and
expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that Agent is not reimbursed for such expenses by or on behalf of Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrower or its Affiliates and any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include WFF in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders and Borrower. If Agent resigns under this Agreement, the Required
Lenders, and so long as no Default or Event of Default has occurred or is
continuing, the Required Lenders with the consent of Borrower (which such
consent shall not be unreasonably withheld or delayed) shall appoint a successor
Agent for the Lenders. If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 16 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation
109
shall nevertheless thereupon become effective and the Lenders shall perform all
of the duties of Agent hereunder until such time, if any, as the Lenders appoint
a successor Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with
Borrower and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though such Lender were not a Lender hereunder without notice
to or consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, such Lender and its
respective Affiliates may receive information regarding Borrower or its
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) All payments made by Borrower hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, Borrower shall comply with the
penultimate sentence of this Section 16.11(a). "Taxes" shall mean, any taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but excluding
any tax imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein measured by or based on the net income or net
profits of any Lender) and all interest, penalties or similar liabilities with
respect thereto. If any Taxes are so levied or imposed, Borrower agrees to pay
the full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.11(a) after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein; provided, however, that Borrower shall not be
required to increase any such amounts if the increase in such amount payable
results from Agent's or such Lender's own willful misconduct or gross negligence
(as finally determined by a court of competent jurisdiction). Borrower will
furnish to Agent as promptly as possible after the date the payment of any Tax
is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by Borrower.
110
(b) If a Lender claims an exemption from United States withholding
tax, Lender agrees with and in favor of Agent and Borrower, to deliver to Agent:
(i) if such Lender claims an exemption from United States
withholding tax pursuant to its portfolio interest exception, (A) a statement of
the Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower
(within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled
foreign corporation related to Borrower within the meaning of Section 864(d)(4)
of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed and
executed IRS Form W-8BEN before receiving its first payment under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or Borrower; or;
(iv) such other form or forms, including IRS Form W-9, as may
be required under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding or backup withholding
tax before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent or Borrower.
Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, Lender agrees with and in favor of
Agent and Borrower, to deliver to Agent any such form or forms, as may be
required under the laws of such jurisdiction as a condition to exemption from,
or reduction of, foreign withholding or backup withholding tax before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Borrower.
Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims exemption from, or reduction of,
withholding tax and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrower to such Lender,
such Lender agrees to notify Agent and Borrower of the percentage amount in
which it is no longer the beneficial owner of
111
Obligations of Borrower to such Lender. To the extent of such percentage amount,
Agent and Borrower will treat such Lender's documentation provided pursuant to
Sections 16.11(b) or 16.11(c) as no longer valid. With respect to such
percentage amount, Lender may provide new documentation, pursuant to Sections
16.11 (b) or 16.11(c), if applicable.
(e) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (b)
or (c) of this Section 16.11 are not delivered to Agent, then Agent may withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender due to a
failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent, as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section 16.11, together with all costs and expenses (including
attorneys fees and expenses). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower or its Subsidiaries owned no interest at the time the Agent's
Lien was granted nor at any time thereafter, or (iv) constituting property
leased to Borrower or its Subsidiaries under a lease that has expired or is
terminated in a transaction permitted under this Agreement. Except as provided
above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Borrower at any time,
the Lenders will confirm in writing Agent's authority to release any such Liens
on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than
112
the release of such Lien without recourse, representation, or warranty, and (2)
such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of Borrower in respect of) all interests retained by Borrower,
including, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrower or is cared
for, protected, or insured or has been encumbered, or that the Agent's Liens
have been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to Borrower or any deposit
accounts of Borrower now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the
113
extent that such purchasing party is required to pay interest in connection with
the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer of immediately available
funds pursuant to such wire transfer instructions as each party may designate
for itself by written notice to Agent. Concurrently with each such payment,
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 17.7, and
114
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or fail to take or any conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations that
the indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
115
16.19 BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be deemed a
party hereto for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
16.20 LEGAL REPRESENTATION OF AGENT. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Paul, Hastings,
Janofsky & Walker LLP ("Paul Hastings") only has represented and only shall
represent WFF in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that Paul Hastings does not represent it in connection with any
such matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart
116
of this Agreement but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.7 CONFIDENTIALITY. Agent and Lenders each individually (and not
jointly or jointly and severally) agree that material, non-public information
regarding Borrower and its Subsidiaries, their operations, assets, and existing
and contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this Section 17.7, (c) as may be required by statute, decision, or
judicial or administrative order, rule, or regulation, (d) as may be agreed to
in advance by Borrower or its Subsidiaries or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, (e) as
to any such information that is or becomes generally available to the public
(other than as a result of prohibited disclosure by Agent or the Lenders), (f)
in connection with any assignment, prospective assignment, sale, prospective
sale, participation or prospective participations, or pledge or prospective
pledge of any Lender's interest under this Agreement, provided that any such
assignee, prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves
claims related to the rights or duties of such parties under this Agreement or
the other Loan Documents. The provisions of this Section 17.7 shall survive for
2 years after the payment in full of the Obligations.
17.8 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated
117
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.
17.9 AMENDMENT AND RESTATEMENT OF EXISTING LOAN AGREEMENT AND EXISTING
SECURITY AGREEMENT. This Agreement constitutes an amendment and restatement of
the Existing Loan Agreement effective on the Closing Date. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby are not intended by the parties to be, and shall not constitute, a
novation or an accord and satisfaction of the Obligations or any other
obligations owing under the Existing Loan Agreement and Existing Security
Agreement. On the Closing Date, the terms and conditions thereof described in
the Existing Loan Agreement and Existing Security Agreement shall be amended and
replaced in their entirety by the terms and conditions described herein, and all
obligations of Borrower outstanding as of such date under the Existing Loan
Agreement shall be deemed to be Obligations outstanding hereunder, without
further action by any Person. Each of the parties hereto hereby acknowledges and
agrees that the grant of the security interests in the Collateral pursuant to
Section 4.1 of this Agreement and in any other Loan Document (unless explicitly
agreed to by WFF in writing) is not intended to, nor shall it be construed, as
constituting a release of any prior security interests granted by Borrower in
favor of the Existing Agent in or to any property of Borrower, but is intended
to constitute a restatement and reconfirmation of the prior security interests
granted by Borrower in favor of Existing Agent in and to the collateral and a
grant of a new security interest in any Collateral that is not included in the
prior security grants by Borrower and in favor of Agent to the extent such grant
was not included in the prior security interest grants. Borrower further agrees
that (a) all references in the Existing Loan Agreement (or related loan
documents) to "Credit Agreement" shall mean and include this Agreement, (b) all
references in the Existing Loan Agreement (or related documents) to "Loan
Documents" shall mean and include the Loan Documents (as defined in this
Agreement), and (c) all references in the Existing Loan Agreement (or related
loan documents) to "Obligations" shall mean and include the Obligations (as
defined in this Agreement).
[Signature pages to follow.]
118
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
VI ACQUISITION CORP.,
a Delaware corporation
By: /s/ Debra Koenig
------------------------------
Title: Executive Vice President
WELLS FARGO FOOTHILL, INC., a California corporation,
as Agent and as a Lender
By: /s/ Rhonda Noell
------------------------------
Title: Senior Vice President
120
GE CAPITAL FRANCHISE FINANCE CORPORATION,
a Delaware corporation, as a Lender
By: /s/ Ryan Kress
------------------------------
Title: Vice President
121
VECTRA BANK COLORADO,
as a Lender
By: /s/ Steven Griffith
------------------------------
Title: Senior Vice President
122
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1(a) Post-Closing Adjustments to TTM EBITDA
Schedule A-1(b) Monthly Adjusted EBITDA
Schedule A-2 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Concentration Account Banks
Schedule 2.7(b) Collection Account Banks
Schedule 3.2(b) Mortgages in Favor of Agent
Schedule 3.2(c) Best Efforts Assignments
Schedule 3.2(d) Post Closing Collection Accounts/Control Agreements
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) States of Organization
Schedule 5.7(b) Chief Executive Offices
Schedule 5.7(c) Organizational Identification Numbers
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Parent's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Deposit Accounts and Securities Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.22 Credit Card Processors
Schedule 7.13 Affiliate Transactions
ES-1
SCHEDULE A-1(a)
POST-CLOSING ADJUSTMENTS TO TTM EBITDA
Without duplication and to the extent deducted in the calculation of EBITDA:
(i) Management Fees paid or accruing in such period (to the extent not
added back in a prior period), all as determined in accordance with
GAAP;
(ii) all fees, costs and expenses, including attorneys' fees and fees of
other professionals in connection with the Acquisition of Midway by
VI Acquisition, the negotiation and closing of the high yield bond
offering and subsequent exchange offering (and SEC related costs)
and the closingof the transactions contemplated by this Agreement;
(iii) all cash costs incurred in connection with the extinguishment of the
previous debt, including prepayment penalties, costs to terminate
derivative contracts, and accelerated write off of deferred
financing costs paid on the Closing Date and costs to terminate
derivitative contracts paid after the Closing Date;
(iv) cash severance payments and charges incurred in connection with
redemption or repurchase of options or shares of former employees;
(v) transaction costs incurred and paid in such period (to the extent
expensed) for acquisitions permitted hereunder;
(vi) expenses incurred and paid in such period to the extent the Company
or its Subsidiaries has collected monies from the June 13, 2003
closing escrow as reimbursements for such expenses; and
(vii) non-cash charges relating to (1) asset impairment, including
impairment of intangible assets; (2) compensation and other expense
in connection with the granting, vesting or exercise of stock
options or warrants; (3) rental expenses for such period; (4)
disposals of assets and (5) other non-cash charges subject to
Agent's approval.
ES-2
SCHEDULE A-1(b)
MONTHLY ADJUSTED EBITDA
[Post- Closing]
ES-3
SCHEDULE A-2
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as the account
into which Borrower shall make all payments to Agent for the benefit of the
Lender Group and into which the Lender Group shall make all payments to Agent
under this Agreement and the other Loan Documents; unless and until Agent
notifies Borrower and the Lender Group to the contrary, Agent's Account shall be
that certain deposit account bearing account number [...***...] and maintained
by Agent with JPMorgan Chase Bank, 4 New York Plaza, 15th Floor, New York, New
York 10004, ABA #021000021.
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-4
SCHEDULE C-1
COMMITMENTS
REVOLVER TERM LOAN
LENDER COMMITMENT COMMITMENT TOTAL COMMITMENT
---------------------------- -------------- ----------- ----------------
WELLS FARGO FOOTHILL, INC. $20,000,000 $10,000,000 $ 30,000,000
VECTRA BANK COLORADO $ 5,000,000 $ 0 $ 5,000,000
GE CAPITAL FRANCHISE FINANCE
CORPORATION $ 5,000,000 $ 5,000,000 $ 10,000,000
----------- ----------- ----------------
ALL LENDERS $30,000,000 $15,000,000 $ 45,000,000
=========== =========== ================
ES-5
SCHEDULE D-1
DESIGNATED ACCOUNT
Account number [...***...] of Borrower maintained with Borrower's
Designated Account Bank, or such other deposit account of Borrower (located
within the United States) that has been designed as such, in writing, by
Borrower to Agent.
"Designated Account Bank" means Bank of America, whose office is located
at 555 S. Flower Street, 3rd Floor, CA9-706-03-11, Los Angeles, CA 90071, and
whose ABA number is 111000012.
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-6
SCHEDULE P-1
PERMITTED LIENS
SECURED DATE COLLATERAL
JURISDICTION DEBTOR PARTY FILE NUMBER FILED DESCRIPTION
-------------------------------------------------------------------------------------------------------------
California, VICORP Allied Bakery 9922661012 8/2/99 Financing statement
State Restaurant Equipment covering specific leased
Co., Inc. equipment.
Colorado, VICORP Toyota Motor 20002090520 10/16/00 Financing statement
State Restaurants, Credit Corp. covering two new Toyotas;
Inc. assigned by First Access on
VICOM face of UCC; also reported
in VICOM search
Colorado, VICORP Global 20012024246 3/29/01 Financing statement
State Restaurants, Financial covering specific copy
Inc. Services equipment pursuant to
Agreement with TotalCopy
Management Agreement
Illinois, State VICORP Toyota Motor 4269728 9/19/00 Two New Toyotas;
Restaurants Credit Corp. assigned by First Access on
Inc. initial filing
Minnesota VICORP ECOLAB, Inc 2206518 3/2/00 Jackson ES 4000 and ES
State Restaurants 53610 Dishmachine
Colorado, VICORP Toyota Motor 20002090520 10/16/00 Financing statement
State Restaurants, Credit Corp. covering two new Toyotas;
Inc. assigned by First Access on
VICOM face of UCC; also reported
in VICORP Restaurants,
("VICOM" Inc. search
searched)
ES-7
SCHEDULE R-1
REAL PROPERTY COLLATERAL
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
--------------------------------------------------------------------------------------------------------------------
L4 110138 3715 N. Kaspar Ave. Village Inn Recorded and sent To be assigned by SunTrust
Flagstaff, AZ Ground to Lender
Lease
L5 110394 1111 S. Milton Rd Village Inn Recorded and sent To be assigned by SunTrust
Flagstaff, AZ Lease to Lender
L6 110329 5959 W. Thunderbird Village Inn Sent for recording To be assigned by SunTrust
Glendale, AZ Lease
L7 110388 1155 S. Dobson Village Inn Sent for recording To be assigned by SunTrust
Mesa, AZ Lease
L11 110134 2510 W. Northern Ave. Village Inn Sent for recording To be assigned by SunTrust
Phoenix, AZ Lease
L13 110346 17017 N. 33rd Ave. Village Inn Sent for recording To be assigned by SunTrust
4949 E. Bell Rd. Lease
Phoenix, AZ
L14 110058 6940 E. Indian School Rd. Village Inn Sent for recording To be assigned by SunTrust
Scottsdale, AZ Lease
L15 110779 17030 N. Scottsdale Rd. Village Inn Sent for recording To be assigned by SunTrust
Scottsdale, AZ Lease
L16 110718 10652 N. 89th Place Village Inn Sent for recording To be assigned by SunTrust
Scottsdale, AZ Ground
Lease
L19 110732 1080 W. Elliot Rd. Village Inn Sent for recording To be assigned by SunTrust
Tempe, AZ Lease
L20 110117 6635 East Grant Rd. Village Inn Recorded and sent To be assigned by SunTrust
Tucson, AZ Lease to Lender
L21 110324 6251 N. Oracle Rd. Village Inn Sent for recording To be assigned by SunTrust
Tucson, AZ Lease
L25 520522 2110 S. Harbor Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
Anaheim, CA Lease to Lender
L26 520439 13365 E. Lincoln Way Bakers Square Recorded Delivered To be assigned by SunTrust
Auburn, CA Lease to Lender
L27 520469 3939 Ming Ave. Bakers Square Recorded Delivered To be assigned by SunTrust
Bakersfield, CA Lease to Lender
ES-8
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
--------------------------------------------------------------------------------------------------------------------
L29 520466 3360 Castro Valley Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
Castro Valley, CA Lease to Lender
L30 520493 12193 Central Bakers Square Sent for recording To be assigned by SunTrust
Chino, CA Lease
L31 520524 710 S. Indian Hill Rd. Bakers Square Recorded and sent To be assigned by SunTrust
Claremont, CA Lease to Lender
L32 520446 1680 Willow Pass Rd. Bakers Square Sent for recording To be assigned by SunTrust
Concord, CA Lease
OLB16 520742 3585 W. Shaw Bakers Square Recorded and sent To be assigned by SunTrust
Fresno, CA Lease to Lender
L37 520485 23515 El Toro Rd. Bakers Square Recorded and sent To be assigned by SunTrust
Lake Forest, CA Lease to Lender
L40 520496 1401 Foothill Bakers Square Recorded and sent To be assigned by SunTrust
LaVerne, CA Lease to Lender
L44 520443 165 Los Gatos - Saratoga Bakers Square Recorded and sent To be assigned by SunTrust
Rd. Los Gatos, CA Lease to Lender
L47 520495 1322 W. Beverly Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
Montebello, CA Lease to Lender
L50 520503 2420 Vineyard Ave. Bakers Square Recorded and sent To be assigned by SunTrust
Oxnard, CA Lease to Lender
L52 520526 1596 N. Palm Canyon Bakers Square Recorded and sent To be assigned by SunTrust
Palm Springs, CA Lease to Lender
L54 520494 473 N. Rosemead Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
Pasadena, CA Lease to Lender
L55 520690 6770 Santa Rita Rd. Bakers Square Recorded and sent To be assigned by SunTrust
Pleasanton, CA Lease to Lender
L58 520480 949 Veteran's Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
Redwood City, CA Lease to Lender
L60 520740 301 Rohnert Park Bakers Square Recorded and sent To be assigned by SunTrust
Expressway Rohnert Park, Lease to Lender
CA
ES-9
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
--------------------------------------------------------------------------------------------------------------------
L61 520486 2244 Fair Oaks Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
Sacramento, CA Lease to Lender
L67 520722 1735 E. Capitol Expressway Bakers Square Recorded Delivered To be assigned by SunTrust
San Jose, CA Lease to Lender
L69 520479 1650 Descanso Ave. Bakers Square Recorded and sent To be assigned by SunTrust
San Marcos, CA Lease to Lender
L71 520444 1107 Ocean Street Bakers Square Recorded and sent To be assigned by SunTrust
Santa Cruz, CA Lease to Lender
L80 520487 1235 Harbor Blvd. Bakers Square Recorded and sent To be assigned by SunTrust
West Sacramento, CA Lease to Lender
L81 110078 15395 E. Colfax Ave. Village Inn Recording To be assigned by SunTrust
Aurora, CO Lease information only
06/19/03 Doc. #
C161584
L82 110777 18601 E. Hampden Village Inn Recording To be assigned by SunTrust
Aurora, CO Lease Information only
06/20/03 Doc #
B131975
L83 110035 921 S. Havana Street Village Inn Recording To be assigned by SunTrust
Aurora, CO Lease Information only
06/20/03 Doc #
B3131971
OLB3 110774 6370 Parker Rd. Village Inn Fee Recording To be assigned by SunTrust
Aurora, CO Information only
06/20/03 Reception
No. B3131974
L86 110785 13800 E. Mississippi Village Inn Recording To be assigned by SunTrust
Aurora, CO Lease Information only
06/20/03 Doc. No.
B3131973
L87 110125 1190 E. First Ave. Village Inn Sent for recording To be assigned by SunTrust
Broomfield, CO Lease
L94 110772 1430 Harrison Rd. Village Inn Recording To be assigned by SunTrust
Colorado Springs, CO Lease Information only
06/20/03 Doc No.
203138541
ES-10
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
------------------------------------------------------------------------------------------------------------------------
OLB1 110066 400 West 48th Ave. Home Office Sent for recording To be assigned by SunTrust
Denver, CO Fee
L98 110014 1595 S. Colorado Blvd. Village Inn Sent for recording To be assigned by SunTrust
Denver, CO Lease
L101 11038 9050 E. Hampden Ave. Village Inn Recording To be assigned by SunTrust
Denver, CO Lease Information only
06/19/03 Doc. No.
2003123116
L102 110717 4100 E. Village Inn Recorded Delivered To be assigned by SunTrust
Mexico Lease to Lender
Denver, CO
L104 909044 300 W. 53rd Place Warehouse Sent for recording To be assigned by SunTrust
Unit D
Denver, CO
L105 110591 23 W. Centennial Blvd. Village Inn Sent for recording To be assigned by SunTrust
Littleton, CO Lease
L107 110132 3497 S. Wadsworth Blvd. Village Inn Delivered but not To be granted directly to Agent
Lakewood, CO Lease recorded
L109 110788 12622 W. Ken Caryl Ave. Village Inn Recorded Delivered To be assigned by SunTrust
Littleton, CO Lease to Lender
L113 531 Silverthorne Lane Franchise Sent for recording To be assigned by SunTrust
Silverthorne, CO Sublease
(Leasehold
Interest)
L114 110025 8370 Sherman Way Village Inn Sent for recording To be assigned by SunTrust
Thornton, CO Lease
L116 110238 9000 Yukon St. Village Inn Recorded Delivered To be assigned by SunTrust
Broomfield (Westminster), Lease to Lender
CO
L118 110170 4775 Kipling Street Village Inn Recorded Delivered To be assigned by SunTrust
Wheatridge, CO Lease to Lender
L119 110564 825 W. Brandon Village Inn Delivered but not To be granted directly to Agent
Brandon, FL Lease recorded
L123 110158 10140 San Jose Blvd. Village Inn Recorded Delivered To be assigned by SunTrust
Jacksonville, FL Lease to Lender
L126 110382 200 S. Third St. Village Inn CTT 171 Delivered To be granted directly to Agent
Neptune Beach, FL Lease but not recorded
ES-11
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L128 110385 900 Ponce de Leon Village Inn Recorded To be assigned by SunTrust
Blvd. Lease Delivered to
St. Augustine, FL Lender
OLB2 10560 4945 Gulf Blvd. Village Inn Loan Policy To be assigned by SunTrust
St. Petersburg, FL Lease Delivered
L129 110153 9107 Fourth St. N. Village Inn Recorded To be assigned by SunTrust
St. Petersburg, FL Lease Delivered to
Lender
L131 110559 3101 U.S. 27 S. Village Inn Sent for To be assigned by SunTrust
Sebring, FL Lease recording
L135 220211 4839 W. 111th St. Bakers Recorded To be assigned by SunTrust
Alsip, IL Square Delivered to
Lease Lender
L136 220803 361 S. Bolingbrook Dr. Bakers Recorded To be assigned by SunTrust
Bolingbrook, IL Square Delivered to
Lease Lender
L137 220724 1315 Armour Rd. Bakers Recorded To be assigned by SunTrust
Bradley (Bourbonnais), Square Delivered to
IL Lease Lender
L138 220200 4849 W. 79th Street Bakers Recorded To be assigned by SunTrust
Burbank, IL Square Delivered to
Lease Lender
OLB19 790247 1512 N. Neil Street CLOSED Recorded To be assigned by SunTrust
Champaign, IL RESTAURANT Delivered to
FEE Lender
OLB8 220185 3649 North Harlem Ave. Bakers Recorded To be assigned by SunTrust
Chicago, IL Square Fee Delivered to
Lender
L142 220685 5689 NW Highway Bakers Recorded To be assigned by SunTrust
Crystal Lake, IL Square Delivered to
Ground Lender
Lease
OLB10 220203 7131 N. Western Ave. Bakers Recorded To be assigned by SunTrust
Chicago, IL Square Fee Delivered to
Lender
L143 220186 560 Waukegan Rd. Bakers Recorded To be assigned by SunTrust
Deerfield, IL Square Delivered to
Lease Lender
OLB15 220809 131 N. Annie Glidden Bakers Recorded To be assigned by SunTrust
Rd. Square Delivered to
DeKalb, IL Lease Lender
L144 220216 3000 Oak Grove Rd. Bakers Sent for To be assigned by SunTrust
Downers Grove, IL Square recording
Lease
L145 220675 1800 Oakton St. Bakers Recorded To be assigned by SunTrust
Elk Grove Village, IL Square Lease Delivered to
Lender
ES-12
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L147 220232 2130 Bloomingdale Rd. Bakers Sent for To be assigned by SunTrust
Glendale Heights, IL Square recording
Lease
L148 220666 6340 Grand Ave. Bakers Recorded To be assigned by SunTrust
Gurnee, IL Square Delivered to
Lease Lender
L149 220694 7600 N. Barrington Rd. Bakers Recorded To be assigned by SunTrust
Hanover Park, IL Square Delivered to
Ground Lender
Lease
L150 220192 790 W. Higgins Rd. Bakers Square Recorded To be assigned by SunTrust
Hoffman Estates, IL Lease Delivered to
Lender
L151 220215 18849 Dixie Highway Bakers Square Recorded To be assigned by SunTrust
Homewood, IL Lease Delivered to
Lender
OLB11 220212 2211 W. Jefferson St. Bakers Square Recorded To be assigned by SunTrust
Joliet, IL Fee Delivered to
Lender
L152 220206 942 S. LaGrange Rd. Bakers Square Recorded To be assigned by SunTrust
LaGrange, IL Lease Delivered to
Lender
L153 220199 3545 Ridge Rd. Bakers Square Recorded To be assigned by SunTrust
Lansing, IL Lease Delivered to
Lender
L154 220188 1195 S. Milwaukee Ave. Bakers Square Recorded To be assigned by SunTrust
Libertyville, IL Lease Delivered to
Lender
L155 220226 4721 Lincoln Mall Dr. Bakers Square Recorded To be assigned by SunTrust
Matteson, IL Lease Delivered to
Lender
L156 220673 1319 W. North Ave. Bakers Square Recorded To be assigned by SunTrust
Melrose Park, IL Lease Delivered to
Lender
L160 220674 13 W. Rand Rd. Bakers Square Recorded To be assigned by SunTrust
Mount Prospect, IL Lease Delivered to
Lender
L161 220190 850 Ogden Ave. Bakers Square Sent for To be assigned by SunTrust
Naperville, IL Lease recording
L162 220693 796 S. Route 59 Bakers Square Sent for To be assigned by SunTrust
Naperville, IL Ground Lease recording
L163 220180 8584 Dempster St. Bakers Square Recorded To be assigned by SunTrust
Niles, IL Lease Delivered to
Lender
ES-13
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L164 220730 321 S. Veteran's Pkwy Bakers Square Record To be assigned by SunTrust
Normal, IL Lease Information
only 06/25/03
File No.
2003-00030641
L166 220805 15711 S. Harlem Orland Insert "B" Recorded To be assigned by SunTrust
Park, IL Bakers Square Delivered to
Ground Lease Lender
OLB23 8129724 16426 S. Kedvale Vacant Land - Recorded To be assigned by SunTrust
(Kedzie), Oak Forest IL Fee - Adjacent Delivered to
to Commissary Lender
OLB21 800358 16425 S. Kilbourn Commissary Recorded To be assigned by SunTrust
Oak Forest, IL Vicom Delivered to
Production Lender
Division - Fee
L167 220672 14651 S. LaGrange Rd. Bakers Square Recorded To be assigned by SunTrust
Orland Park, IL Lease Delivered to
Lender
L168 220209 270 E. Northwest Bakers Square Recorded To be assigned by SunTrust
Highway Lease Delivered to
Palatine, IL Lender
L140 220228 7105 Cherry Vale Blvd. Bakers Square Sent for To be assigned by SunTrust
Rockford, IL Lease recording
L170 220205 1755 Algonquin Rd. Bakers Square Recorded To be assigned by SunTrust
Rolling Meadows, IL Lease Delivered to
Lender
L171 220210 1510 E. Main St. Bakers Square Sent for To be assigned by SunTrust
St. Charles, IL Lease recording
L172 220729 3434 Freedom Dr. Bakers Square Recorded To be assigned by SunTrust
Springfield, IL Lease Delivered to
Lender
L173 220184 298A W. Roosevelt Rd. Bakers Square Sent for To be assigned by SunTrust
Villa Park, IL Lease recording
L174 220181 420 E. Ogden Ave. Bakers Square Sent for To be assigned by SunTrust
Westmont, IL Lease recording
L176 220214 110 W. Geneva Rd. Bakers Square Sent for To be assigned by SunTrust
Wheaton, IL Lease recording
ES-14
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L177 220187 7409 S. Kingery Bakers Square Recorded To be assigned by SunTrust
Highway Lease Delivered to
Willowbrook, IL Lender
L178 220194 200 Skokie Blvd. Bakers Square Recorded To be assigned by SunTrust
Wilmette, IL Lease Delivered to
Lender
L179 220208 8140 Mississippi St. Bakers Square Recorded To be assigned by SunTrust
Merrillville, IN Lease Delivered to
Lender
L180 110828 5250 Franklin Street Village Inn Recorded To be assigned by SunTrust
Michigan City, IN Lease Delivered to
Lender
L182 220700 1675 U.S. Highway 41 Bakers Square Delivered but To be granted directly to
Schererville, IN Lease not recorded Agent
L184 110789 1024 E. First St. Village Inn Recorded To be assigned by SunTrust
Ankeny, IA Ground Lease Delivered to
Lender
L185 110097 1210 State St. Village Inn Recorded To be assigned by SunTrust
Bettendorf, IA Lease Delivered to
Lender
L190 110778 2800 Commerce Dr. Village Inn Recorded To be assigned by SunTrust
Coralville, IA Lease Delivered to
Lender
L192 110786 1906 Rue St. Village Inn Recorded To be assigned by SunTrust
Council Bluffs, IA Lease Delivered to
Lender
L194 110775 5239 Elmore Ave. Village Inn Sent for To be assigned by SunTrust
Davenport, IA Lease recording
L198 220179 3121 Ingersoll Ave. Bakers Square Sent for To be assigned by SunTrust
Des Moines, IA Lease recording
L199 220173 4107 Merle Hay Rd. Bakers Square Recorded To be assigned by SunTrust
Des Moines, IA Lease Delivered to
Lender
L202 110793 8510 Birchwood Ct. Village Inn Recorded To be assigned by SunTrust
Johnston, IA Lease Delivered to
Lender
L205 220229 825 Bowers St. Bakers Square Recorded To be assigned by SunTrust
Birmingham, MI Lease Delivered to
Lender
L206 220225 5946 Sheldon Rd. Bakers Square Recorded To be assigned by SunTrust
Canton Township, MI Lease Delivered to
Lender
ES-15
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L207 220726 29622 Seven Mile Rd. Bakers Square Delivered but To be granted directly to
Livonia, MI Ground Lease not recorded Agent
OLB13 220720 5575 Greenfield Rd. Bakers Square Recorded To be assigned by SunTrust
Dearborn, MI Lease Delivered to
Lender
OLB14 220721 22373 Eureka Rd. Bakers Square Recorded To be assigned by SunTrust
Taylor, MI Lease Delivered to
Lender
L209 220230 13602 14 Mile Rd. Bakers Square Recorded To be assigned by SunTrust
Warren, MI Lease Delivered to
Lender
L210 220697 36101 Warren Rd. Bakers Square Delivered but To be granted directly to
Westland, MI Ground Lease not recorded Agent
L212 220221 221 Highway 10 Bakers Square Sent for To be assigned by SunTrust
Blaine, MN Lease recording
L213 220202 611 W. 98th St. Bakers Square Sent for To be assigned by SunTrust
Bloomington, MN Lease recording
L214 220652 8000 Brooklyn Blvd. Bakers Square Recording Copy of recorded Mortgage
Brooklyn Park, MN Lease Information delivered; to be assigned
only 06/25/03 by SunTrust
Doc.
No. 8299259
L215 220218 14201 Burngarten Dr. Bakers Square Recorded To be assigned by SunTrust
Burnsville, MN Lease Delivered to
Lender
OLB22 800679 300 Lake Hazeltine Dr. Vicom Recorded To be assigned by SunTrust
Chaska, MN Production Delivered to
Division - Lender
Frozen Pie
Production
Facility Fee
L217 220711 12951 Riverdale Bakers Square Sent for To be assigned by SunTrust
Crossing Lease recording
Coon Rapids, MN
L219 220650 928 Prairie Center Dr. Bakers Square Sent for Executed copy of Leasehold
Eden Prairie, MN Lease recording Mortgage delivered.
Recording in process -
Ramsey County; to be
assigned by SunTrust
ES-16
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
OLB4 220174 210 North Blake Rd. Bakers Square Recording To be assigned by SunTrust
Hopkins, MN Fee Information
only 06/26/03
Doc.
No. 3638823
L220 220714 1861 Madison Ave. Bakers Square Sent for To be assigned by SunTrust
Mankato, MN Lease recording
L221 220702 13950 Grove Dr. Bakers Square Recorded To be assigned by SunTrust
Maple Grove, MN Lease Delivered to
Lender
L223 220688 2425 University Ave. Bakers Square Delivered but To be granted directly to
S.E. Ground Lease not recorded Agent
Minneapolis, MN
L224 220182 12608 Wayzata Blvd. Bakers Square Sent for To be assigned by SunTrust
Minnetonka, MN Lease recording
L227 220703 819 Apache Ln. S.W. Bakers Square Sent for To be assigned by SunTrust
Rochester, MN Lease recording
L228 220689 3539 - 22nd Ave. N.W. Bakers Square Sent for To be assigned by SunTrust
Rochester, MN Lease recording
L229 220197 1881 W. Highway 36 Bakers Square Recorded To be assigned by SunTrust
Roseville, MN Lease Delivered to
Lender
OLB5 220175 3701 Stinson Blvd. Bakers Square Recorded To be assigned by SunTrust
St. Anthony Village, Lease Information
MN 22075 only 08/08/03
Doc.
No. 3656836
OLB6 220177 2239 Ford Parkway Bakers Square Recorded To be assigned by SunTrust
St. Paul, MN 55116 Fee D154 Delivered to
Lender
OLB12 220213 1751 Suburban Ave. Bakers Square Recorded To be assigned by SunTrust
St. Paul, MN Lease Delivered to
Lender
OLB7 220183 1949 S. Robert St. Bakers Square Recorded To be assigned by SunTrust
St. Paul, MN Lease Delivered to
Lender
L231 220701 14130 N. 60th St. Bakers Square Sent for To be assigned by SunTrust
Stillwater, MN Lease recording
L233 110013 309 N. Fort Crook Rd. Village Inn Sent for To be assigned by SunTrust
Bellevue, NE Lease recording
ES-17
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L235 110045 6555 O Street Village Inn Sent for To be assigned by SunTrust
Lincoln, NE Lease recording
L236 110416 5001 Van Dorn Village Inn Sent for To be assigned by SunTrust
Lincoln, NE Lease recording
L238 110780 7101 S. 27th St. Village Inn Sent for To be assigned by SunTrust
Lincoln, NE Lease recording
L241 110008 4416 Dodge St. Village Inn Sent for To be assigned by SunTrust
Omaha, NE Lease recording
L242 110787 7837 Dodge St. Village Inn Sent for To be assigned by SunTrust
Omaha, NE Lease recording
L243 110131 5425 L St. Village Inn Sent for To be assigned by SunTrust
Omaha, NE Lease recording
L244 110046 10770 M St. Village Inn Sent for To be assigned by SunTrust
Omaha, NE Lease recording
L248 110801 3839 N. 138th St. Village Inn Sent for To be assigned by SunTrust
Omaha, NE Ground Lease recording
L249 110719 3304 S. 143rd Plaza Village Inn Delivered but To be granted directly to
Omaha, NE Ground Lease not recorded Agent
L252 110004 5505 Central Ave., NE Village Inn Sent for To be assigned by SunTrust
Albuquerque, NM Lease recording
L253 110743 1514 Coors Blvd., NW Village Inn Recorded To be assigned by SunTrust
Albuquerque, NM Lease Delivered to
Lender
L254 110635 840 Juan Tabo, SE Village Inn Recorded To be assigned by SunTrust
Albuquerque, NM Lease Delivered to
Lender
L255 110068 2017 Menaul Blvd., NE Village Inn Recorded To be assigned by SunTrust
Albuquerque, NM Lease Delivered to
Lender
L256 110106 6300 San Mateo Blvd., Village Inn Sent for To be assigned by SunTrust
NE Lease recording
Albuquerque, NM
L257 110080 2282 Wyoming Blvd., NE Village Inn Sent for To be assigned by SunTrust
Albuquerque, NM Lease recording
L258 110164 2340 Yale Blvd., SE Village Inn Sent for To be assigned by SunTrust
Albuquerque, NM Lease recording
OLB18 700759 1741 Rio Rancho Rd. Franchise Sent for To be assigned by SunTrust
Rio Rancho, NM Sublease recording
(Leasehold
Interest)
L261 220220 1280 Independence Ave. Bakers Square Delivered but To be granted directly to
Akron, OH Lease not recorded Agent
ES-18
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
L262 220231 60 Severance Cir. Dr. Bakers Square Recorded To be assigned by SunTrust
Cleveland Heights, OH Lease Delivered to
Lender
L263 220820 1201 N. Court St. Bakers Square Recorded To be assigned by SunTrust
Medina, OH Lease Delivered to
Lender
L 264 220217 7800 Plaza Blvd. Bakers Square Recorded To be assigned by SunTrust
Mentor, OH Lease Delivered to
Lender
L 265 220227 24025 Lorain Rd. Bakers Square Recorded To be assigned by SunTrust
North Olmsted, OH Lease Delivered to
Lender
L 266 220219 4680 Northfield Rd. Bakers Square Recorded To be assigned by SunTrust
North Randall, OH Lease Delivered to
Lender
L 267 220223 7011 - 130th St. Bakers Square Recorded To be assigned by SunTrust
Parma Heights, OH Lease Delivered to
Lender
L 268 220222 28601 28801 Bakers Square Recorded To be assigned by SunTrust
Chardon Rd. Lease Delivered to
Willoughby Hills, OH Lender
L272 790139 2301 N. Ben Jordan SUBLEASE Recorded To be assigned by SunTrust
Victoria, TX TERMINATED Delivered to
08/28/03 Lender
L274 110081 450 E. 1100 N. Village Inn Recorded To be assigned by SunTrust
North Salt Lake City, Lease Delivered to
UT Lender
L275 110750 322 - 12th St. Village Inn Sent for To be assigned by SunTrust
Ogden, UT Lease recording
L276 110119 212 E. 1300 S. Village Inn Recorded To be assigned by SunTrust
Orem, UT Lease Delivered to
Lender
L278 110784 1780 W. 5600 S. Village Inn Recorded To be assigned by SunTrust
Roy, UT Lease Delivered to
Lender
L279 110002 2929 S. State St. Village Inn Recorded To be assigned by SunTrust
Salt Lake City, UT Lease Delivered to
Lender
L280 110076 910 E. Fourth S. Village Inn Sent for To be assigned by SunTrust
Salt Lake City, UT Lease recording
L282 110085 4681 S. Redwood Rd. Village Inn To be Legal Description/PIN
Taylorsville, UT Lease delivered number discrepancy; to be
granted directly to Agent
ES-19
PROPERTY VICORP MORTGAGE
# UNIT ADDRESS TYPE STATUS OTHER
-------------------------------------------------------------------------------------------------------
OLB17 700234 313 Independence Rd. Franchise Sent for To be assigned by SunTrust
Virginia Beach, VA Sublease recording
L286 220731 1190 N. Casaloma Dr. Bakers Square Recorded To be assigned by SunTrust
Appleton, WI Ground Lease Delivered to
Lender
L288 220245 15300 E. Bluemound Bakers Square Recorded To be assigned by SunTrust
Elm Grove, WI Lease Delivered to
Lender
L289 220198 4900 S. 76th St. Bakers Square Recorded To be assigned by SunTrust
Greenfield, WI Lease Delivered to
Lender
OLB9 220201 7320 W. Goodhope Rd. Bakers Square Recorded To be assigned by SunTrust
Milwaukee, WI Fee Lease Delivered to
Lender
L290 220727 1227 Crossing Bakers Square Delivered but To be granted directly to
Meadow Dr. Lease not recorded Agent
Onalaska, WI
L 291 220195 1305 E. Capital Dr. Bakers Square Recorded To be assigned by SunTrust
Shorewood, WI Lease Delivered to
Lender
L 292 220196 10200 W. National Ave. Bakers Square Recorded To be assigned by SunTrust
West Allis, WI Lease Delivered to
Lender
ES-20
SCHEDULE 2.7(a)
CONCENTRATION ACCOUNT BANKS
ACCOUNT
BANK NUMBER ADDRESS
---------------------------------------------------------------------
Bank of America [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-21
SCHEDULE 2.7(b)
COLLECTION ACCOUNT BANKS
ACCOUNT
BANK NUMBER ADDRESS
--------------------------------------------------------------------------------------------------
Wells Fargo - Corporate Depository [...***...] 1740 Broadway
Denver, CO 80274
Fifth Third Bank - Corporate Depository [...***...] 38 Fountain Square Plaza
MD 109046
Cincinnati, OH 45202
Bank of America - CA [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
LaSalle Bank [...***...] 135 S. LaSalle St., Suite 515
Chicago, IL 60603
National City Bank - MI/IL [...***...] 155 E. Broad Street
Columbus, OH 43251-0077
National City Bank - Ohio [...***...] 155 E. Broad Street
Columbus, OH 43251-0077
US Bank [...***...] 918 17th Street, 4th Floor
DN-CO-BB4A
Denver, CO 55402
Wells Fargo [...***...] 1740 Broadway
Denver, CO 80274
First State Bank (VILLAGE INN PANCAKE [...***...] P.O. Box 3686
HOUSE OF ALBUQUERQUE, INC.) Albuquerque, NM 87190-3686
Bank of America - FL [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
Great Lakes Bank [...***...] 18106 Dixie Hwy
Homewood, IL 60430
Canon National Bank [...***...] 2101 Fremont Drive
P.O. Box 829
Canon City, CO 81215
Clinton National Bank [...***...] 235 6th Ave. South
Clinton, IA 52733
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-22
ACCOUNT
BANK NUMBER ADDRESS
----------------------------------------------------------------------------------------------
Commerce Bank [...***...] 15305 E. Colfax Ave.
Aurora, CO 80011
First Bank and Trust of Illinois [...***...] 300 E. Northwest Hwy
Palatine, IL 60067
First National Bank of Illinois [...***...] 2108 W. Jefferson
Joliet, IL 60435
First National Bank of Strasburg [...***...] 120 S. Wilcox Street
Castle Rock, CO 80104
Harris Bank [...***...] 4 Blanchard Circle
Wheaton, IL 60187
KeyBank [...***...] 1675 Broadway, 5th Floor
Denver, CO 80202
Mid State Bank [...***...] 91 W. Highway 246 & Central Ave
Buelton, CA 93427
National City Bank - IN [...***...] 155 E. Broad Street
Columbus, OH 43251-0077
Nebraska State Bank [...***...] 3211 N. 90th Street
Omaha, NE 68134
Peoples National Bank [...***...] 1899 Woodmore Dr.
Monument, CO 80132
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-23
SCHEDULE 3.2(b)
MORTGAGES IN FAVOR OF AGENT
PROPERTY VICORP
# UNIT ADDRESS TYPE
-------------------------------------------------------------------------------------------
L107 110132 3497 S. Wadsworth Blvd. Village Inn Lease
Lakewood, CO
L119 110564 825 W. Brandon Village Inn Lease
Brandon, FL
L126 110382 200 S. Third St. Village Inn Lease
Neptune Beach, FL
L182 220700 1675 U.S. Highway 41 Bakers Square Lease
Schererville, IN
L207 220726 29622 Seven Mile Rd. Bakers Square Ground Lease
Livonia, MI
L210 220697 36101 Warren Rd. Bakers Square Ground Lease
Westland, MI
L223 220688 2425 University Ave. S.E. Bakers Square Ground Lease
Minneapolis, MN
L249 110719 3304 S. 143rd Plaza Village Inn Ground Lease
Omaha, NE
L261 220220 1280 Independence Ave. Bakers Square Lease
Akron, OH
L282 110085 4681 S. Redwood Rd. Village Inn Lease
Taylorsville, UT
L290 220727 1227 Crossing Meadow Dr. Bakers Square Lease
Onalaska, WI
ES-24
SCHEDULE 3.2(c)
BEST EFFORTS ASSIGNMENTS
PROPERTY VICORP
# UNIT ADDRESS TYPE
----------------------------------------------------------------------------------
L6 110329 5959 W. Thunderbird Village Inn Lease
Glendale, AZ
L7 110388 1155 S. Dobson Village Inn Lease
Mesa, AZ
L11 110134 2510 W. Northern Ave. Village Inn Lease
Phoenix, AZ
L13 110346 17017 N. 33rd Ave. Village Inn Lease
4949 E. Bell Rd.
Phoenix, AZ
L14 110058 6940 E. Indian School Rd. Village Inn Lease
Scottsdale, AZ
L15 110779 17030 N. Scottsdale Rd. Village Inn Lease
Scottsdale, AZ
L16 110718 10652 N. 89th Place Village Inn Ground Lease
Scottsdale, AZ
L19 110732 1080 W. Elliot Rd. Village Inn Lease
Tempe, AZ
L21 110324 6251 N. Oracle Rd. Village Inn Lease
Tucson, AZ
L30 520493 12193 Central Bakers Square Lease
Chino, CA
L32 520446 1680 Willow Pass Rd. Bakers Square Lease
Concord, CA
L50 520503 2420 Vineyard Ave. Bakers Square Lease
Oxnard, CA
L87 110125 1190 E. First Ave. Village Inn Lease
Broomfield, CO
L104 909044 300 W. 53rd Place Warehouse
Unit D
Denver, CO
ES-25
PROPERTY VICORP
# UNIT ADDRESS TYPE
----------------------------------------------------------------------------------
L105 110591 23 W. Centennial Blvd. Village Inn Lease
Littleton, CO
L114 110025 8370 Sherman Way Village Inn Lease
Thornton, CO
L131 110559 3101 U.S. 27 S. Village Inn Lease
Sebring, FL
L219 220650 928 Prairie Center Dr. Bakers Square Lease
Eden Prairie, MN
L233 110013 309 N. Fort Crook Rd. Village Inn Lease
Bellevue, NE
L235 110045 6555 O Street Village Inn Lease
Lincoln, NE
L236 110416 5001 Van Dorn Village Inn Lease
Lincoln, NE
L238 110780 7101 S. 27th St. Village Inn Lease
Lincoln, NE
L241 110008 4416 Dodge St. Village Inn Lease
Omaha, NE
L242 110787 7837 Dodge St. Village Inn Lease
Omaha, NE
L243 110131 5425 L St. Village Inn Lease
Omaha, NE
L244 110046 10770 M St. Village Inn Lease
Omaha, NE
L248 110801 3839 N. 138th St. Village Inn Ground Lease
Omaha, NE
L252 110004 5505 Central Ave., NE Village Inn Lease
Albuquerque, NM
L256 110106 6300 San Mateo Blvd., NE Village Inn Lease
Albuquerque, NM
L257 110080 2282 Wyoming Blvd., NE Village Inn Lease
Albuquerque, NM
ES-26
PROPERTY VICORP
# UNIT ADDRESS TYPE
-------------------------------------------------------------------------------------------------
L258 110164 2340 Yale Blvd., SE Village Inn Lease
Albuquerque, NM
OLB18 700759 1741 Rio Rancho Rd. Franchise Sublease (Leasehold Interest)
Rio Rancho, NM
OLB17 700234 313 Independence Rd. Franchise Sublease
Virginia Beach, VA
ACCOUNT
BANK NUMBER ADDRESS
-----------------------------------------------------------------------------------------
Great Lakes Bank [...***...] 18106 Dixie Hwy
Homewood, IL 60430
Canon National Bank [...***...] 2101 Fremont Drive
P.O. Box 829
Canon City, CO 81215
Clinton National Bank [...***...] 235 6th Ave. South
Clinton, IA 52733
First Bank and Trust of Illinois [...***...] 300 E. Northwest Hwy
Palatine, IL 60067
First National Bank of Illinois [...***...] 2108 W. Jefferson
Joliet, IL 60435
First National Bank of Strasburg [...***...] 120 S. Wilcox Street
Castle Rock, CO 80104
Harris Bank [...***...] 4 Blanchard Circle
Wheaton, IL 60187
Mid State Bank [...***...] 91 W. Highway 246 &
Central AVE
Buelton, CA 93427
Nebraska State Bank [...***...] 3211 N. 90th Street
Omaha, NE 68134
Peoples National Bank [...***...] 1899 Woodmore Dr.
Monument, CO 80132
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-28
SCHEDULE 5.5
LOCATION OF INVENTORY AND EQUIPMENT
VICORP RESTAURANTS, INC.:
ON SITE INVENTORY (BAKERS SQUARE LOCATIONS)
Unit # Address
------ -------
520508 810 E. Valley Blvd.
Alhambra, CA 91801
520522 2110 S. Harbor Blvd.
Anaheim, CA 92802
520439 13365 E. Lincoln Way
Auburn, CA 95603
520469 3939 Ming Av.
Bakersfield, CA 93309
520447 321 McMurray Rd.
Buellton, CA 93427
520466 3360 Castro Valley Blvd.
Castro Valley, CA 94546
520493 12193 Central Av.
Chino, CA 91710
520524 710 S. Indian Hill Blvd.
Claremont, CA 91711
520446 1680 Willow Pass Rd.
Concord, CA 94520
520456 255 Second St.
Davis, CA 95616
520431 7954 Imperial Highway
Downey, CA 90242
520742 3585 W. Shaw
Fresno, CA 93721
520506 17921 Chatsworth St.
Granada Hills, CA 91344
520485 23515 El Toro Rd.
Lake Forest, CA 92630
520491 5520 South St.
Lakewood, CA 90713
520474 5270 Baltimore Dr.
LaMesa, CA 92041
520496 1401 Foothill Blvd.
LaVerne, CA 91750
520829 1116 E. Stanley Blvd.
Livermore, CA 94550-4156
520477 936 N. "H" St.
Lompoc, CA 93436
520443 165 Los Gatos-Saratoga Av.
Los Gatos, CA 95030
520481 174 W. Calaveras Blvd.
Milpitas, CA 95035
520723 2200 Plaza Parkway, #D
Modesto, CA 95350
520495 1322 W. Beverly Blvd.
Montebello, CA 90640
ES-29
Unit # Address
------ -------
520463 303 Soscol Av.
Napa, CA 94558
520464 5475 Thornton Av.
Newark, CA 94560
520503 2420 Vineyard Av.
Oxnard, CA 93030
520429 73-075 Highway 111
Palm Desert, CA 92260
520526 1596 N. Palm Canyon Dr.
Palm Springs, CA 92262
520455 350 W. Palmdale Blvd.
Palmdale, CA 93550
520494 473 N. Rosemead Blvd.
Pasadena, CA 91107
520690 6770 Santa Rita Rd.
Pleasanton, CA 94566
520475 747 W. Channel Islands Blvd.
Port Hueneme, CA 93041
520488 2817 Zinfandel Dr.
Rancho Cordova, CA 95670
520480 949 Veteran's Blvd.
Redwood City, CA 94063
520454 3650 Tyler St.
Riverside, CA 92503
520740 301 Rohnert Park Expressway
Rohnert Park, CA 94928
520486 2244 Fair Oaks Blvd.
Sacramento, CA 95825
520484 1190 S. Main St.
Salinas, CA 93901
520450 2010 Rollingwood Dr.
San Bruno, CA 94066
520519 610 Camino De Los Mares
San Clemente, CA 92672
520168 3711-3713 Sports Arena Blvd.
San Diego, CA 92110
520470 5055 Almaden Expressway
San Jose, CA 95118
520722 1735 Capitol Expressway
San Jose, CA 95121
520438 15501 Hesperian Blvd.
San Leandro, CA 94579
520479 1650 Descanso Av.
San Marcos, CA 92069
520441 2910 El Camino Real
Santa Clara, CA 95051
520444 1107 Ocean St.
Santa Cruz, CA 95060
520410 1841 S. Broadway
Santa Maria, CA 93454
520442 1350 Farmers Lane
Santa Rosa, CA 95405
520512 819 W. Carson
Torrance, CA 90502
520472 951 Merchant St.
Vacaville, CA 95688
520831 3301 S. Mooney Blvd.
Visalia, CA 93277
(under development)
520487 1235 Harbor Blvd.
West Sacramento, CA 95691
ES-30
Unit # Address
------ -------
220211 4839 W. 111th St.
Alsip, IL 60803
220803 361 S. Bolingbrook Dr.
Bolingbrook, IL 60440
220724 1315 Armour Rd.
Bourbonnais, IL 60914
220200 4849 W. 79th St.
Burbank, IL 60459
220826 1902 Center Dr.
Champaign, IL 61820-7821
220185 3649 N. Harlem Av.
Chicago, IL 60634
220658 5220 N. Harlem Av.
Chicago, IL 60656
220203 7131 N. Western Av.
Chicago, IL 60645
220685 5689 Northwest Hwy.
Crystal Lake, IL 60014
220186 560 Waukegan Rd.
Deerfield, IL 60015
220809 131 N. Annie Glidden Rd.
DeKalb, IL 60115
220216 3000 Oak Grove Rd.
Downers Grove, IL 60515
220675 1800 Oakton St.
Elk Grove Village, IL 60007
220232 2130 Bloomingdale Rd.
Glendale Heights, IL 60139
220666 6340 Grand Av.
Gurnee, IL 60031
220694 7600 N. Barrington Rd.
Hanover Park, IL 60103
220192 790 W. Higgins Rd.
Hoffman Estates, IL 60195
220215 18849 Dixie Hwy.
Homewood, IL 60430
220212 2211 W. Jefferson St.
Joliet, IL 60435
220206 942 S. LaGrange Rd.
LaGrange, IL 60525
220199 3545 Ridge Rd.
Lansing, IL 60438
220188 1195 S. Milwaukee Av.
Libertyville, IL 60048
220226 4721 Lincoln Mall Dr.
Matteson, IL 60443
220673 1319 W. North Av.
Melrose Park, IL 60160
220674 13 W. Rand Rd.
Mt. Prospect, IL 60056
220190 850 E. Ogden Av.
Naperville, IL 60540
220693 796 S. Route 59
Naperville, IL 60540
220180 8584 Dempster St.
Niles, IL 60714
220730 321 S. Veterans Pkwy.
Normal, IL 61761
220805 15711 Harlem Av.
Orland Park, IL 60462
ES-31
Unit # Address
------ -------
220672 14651 S. LaGrange Rd.
Orland Park, IL 60462
220209 270 E. Northwest Hwy.
Palatine, IL 60067
220204 6431 - 127th St.
Palos Heights, IL 60463
220830 24020 West 119th St.
Plainfield, IL 60544
220228 7105 Cherryvale N. Blvd.
Rockford, IL 61016
220205 1755 Algonquin Rd.
Rolling Meadows, IL 60008
220210 1510 E. Main St.
St. Charles, IL 60174
220729 3434 Freedom Dr.
Springfield, IL 62704
220184 298-A W. Roosevelt Rd.
Villa Park, IL 60181
220181 420 E. Ogden Av.
Westmont, IL 60559
220214 110 W. Geneva Rd.
Wheaton, IL 60187
220187 7409 S. Kingery Hwy.
Willowbrook, IL 60521
220194 200 Skokie Blvd.
Wilmette, IL 60091
220208 8140 Mississippi St.
Merrillville, IN 46410
220744 5758 N. Grape Rd.
Mishawaka, IN 46545
220700 1675 US Hwy 41
Schererville, IN 46375
220725 1310 NW 114th St.
Clive, IA 50325
220179 3121 Ingersoll Av.
Des Moines, IA 50312
220173 4107 Merle Hay Rd.
Des Moines, IA 50310
220229 825 Bowers St.
Birmingham, MI 48011
220225 5946 N. Sheldon Rd.
Canton, MI 48187
220720 5575 Greenfield Rd.
Dearborn, MI 48126
220726 29622 7-Mile Rd.
Livonia, MI 48152
220721 22373 Eureka Rd.
Taylor, MI 48180
220230 13602 14-Mile Rd.
Warren, MI 48093
220697 36101 Warren Rd.
Westland, MI 48185
220696 15200 Cedar Av.
Apple Valley, MN 55124
220221 221 Highway 10
Blaine, MN 55434
220202 611 W. 98th St.
Bloomington, MN 55420
220652 8000 Brooklyn Blvd.
Brooklyn Park, MN 55445
ES-32
Unit # Address
------ -------
220218 14201 Burngarten Dr.
Burnsville, MN 55337
220711 12951 Riverdale Crossing
Coon Rapids, MN 55448
220669 1960 Rahncliff Ct.
Eagan, MN 55122
220650 928 Prairie Center Dr.
Eden Prairie, MN 55344
220174 210 North Blake Rd.
Hopkins, MN 55343
220714 1861 Madison Av.
Mankato, MN 56001
220702 13950 Grove Dr.
Maple Grove, MN 55311
220670 3088 White Bear Av.
Maplewood, MN 55109
220688 2425 University Av. SE
Minneapolis, MN 55414
220182 12608 Wayzata Blvd.
Minnetonka, MN 55343
220704 4100 Vinewood Lane
Plymouth, MN 55442
220176 3000 W. 66th St.
Richfield, MN 55423
220703 819 Apache Lane W
Rochester, MN 55902
220689 3539 - 22nd Av. NW
Rochester, MN 55902
220197 1881 W. Highway 36
Roseville, MN 55113
220175 3701 Stinson Blvd.
St. Anthony Village, MN 55421
220705 2860 Division St.
St. Cloud, MN 56302
220177 2339 Ford Pkwy.
St. Paul, MN 55116
220213 1751 Suburban Av.
St. Paul, MN 55106
220701 14130 N. 60th St.
Stillwater, MN 55082
220183 1949 S. Robert St.
West St. Paul, MN 55118
220220 1280 Independence Av.
Akron, OH 44310
220231 60 Severence Circle Dr.
Cleveland Heights, OH 44118
220820 1201 N. Court St.
Medina, OH 44256
220217 7800 Plaza Blvd.
Mentor, OH 44060
220227 24025 Lorain Rd.
North Olmsted, OH 44070
220219 4680 Northfield Rd.
North Randall, OH 44128
220223 7011 - 130th St.
Parma Heights, OH 44130
220222 28601 Chardon Rd.
Willoughby Hills, OH 44092
220731 1190 N. Casaloma Dr.
Appleton, WI 54915
ES-33
Unit # Address
------ -------
220728 4750 Golf Rd.
Eau Claire, WI 54701
220245 15300 Bluemound Rd.
Elm Grove, WI 53122
220198 4900 S. 76th St.
Greenfield, WI 53220
220201 7320 W. Goodhope Rd.
Milwaukee, WI 53223
220727 1227 Crossing Meadow Dr.
Onalaska, WI 54650
220195 1305 E. Capitol Dr.
Shorewood, WI 53211
220196 10200 W. National Av.
West Allis, WI 53227
ON SITE INVENTORY (VILLAGE INN LOCATIONS)
Unit # Address
------ -------
110390 575 W. Apache Trail
Apache Junction, AZ 85220
110832 7250 W. Chandler Blvd.
Chandler, AZ 85226
110138 3715 N. Kaspar Av.
Flagstaff, AZ 86004
110394 1111 S. Milton Rd.
Flagstaff, AZ 86001
110329 5959 W. Thunderbird
Glendale, AZ 85306
110388 1155 S. Dobson
Mesa, AZ 85202
110100 1663 E. Main St.
Mesa, AZ 85201
110391 6813 E. Main St.
Mesa, AZ 85207
110834 2034 E. Southern
Mesa, AZ 85204
110833 310 E. Bell Rd.
Phoenix, AZ 85022
110800 4040 E. Bell Rd.
Phoenix, AZ 85032
110134 2510 W. Northern Av.
Phoenix, AZ 85021
110346 17017 N. 33rd Av.
Phoenix, AZ 85023
110058 6940 E. Indian School Rd.
Scottsdale, AZ 85251
110779 17030 N. Scottsdale
Scottsdale, AZ 85260
110718 10652 N. 89th Pl.
Scottsdale, AZ 85260
110387 950 E. Baseline
Tempe, AZ 85283
110732 1080 W. Elliot Rd.
Tempe, AZ 85284
ES-34
Unit # Address
------ -------
110117 6635 E. Grant Rd.
Tucson, AZ 85715
110324 6251 N. Oracle
Tucson, AZ 85704
110040 4245 E. Speedway Blvd.
Tucson, AZ 85712
110078 15395 E. Colfax
Aurora, CO 80011
110777 18601 E. Hampden
Aurora, CO 80013
110035 921 S. Havana
Aurora, CO 80012
110147 15200-A E. Iliff Ave,
Aurora, CO 80014
110785 13800 E. Mississippi
Aurora, CO 80012
110774 6370 S. Parker Rd.
Aurora, CO 80016
110804 1190 E. First Av.
Broomfield, CO 80020
110238 9000 Yukon
Westminster, CO 80020
110334 1837 Fremont Dr.
Canon City, CO 81212
110135 207 W. Wolfensberger Rd.
Castle Rock, CO 80104
110165 5290 E. Arapahoe Rd.
Centennial, CO 80122
110120 4275 N. Academy Blvd.
Colorado Springs, CO 80917
110649 8050 N. Academy Blvd.
Colorado Springs, CO 80920
110050 535 Garden of the Gods
Colorado Springs, CO 80907
110772 1430 Harrison Rd.
Colorado Springs, CO 80906-4002
110123 3902 E. Palmer Park
Colorado Springs, CO 80909
110014 1595 S. Colorado Blvd.
Denver, CO 80222
110122 222 Columbine
Denver, CO 80206
110032 4850 Federal
Denver, CO 80221
110038 9050 E. Hampden
Denver, CO 80231
110717 4100 E. Mexico
Denver, CO 80222
110087 4490 Peoria
Denver, CO 80239
110066 400 W. 48th Av.
Denver, CO 80216
110047 7381 W. Alameda
Lakewood, CO 80226
110132 3497 S. Wadsworth
Lakewood, CO 80227
110591 23 W. Centennial Blvd.
Littleton, CO 80126
110788 12622 W. Ken Caryl Av.
Littleton, CO 80127
ES-35
Unit # Address
------ -------
110051 P.O. Box 828
315 N. Hwy 105
Monument, CO 80132
110159 19502 E. Parker Square Dr.
Parker, CO 80134
110025 8370 Sherman Way
Thornton, CO 80221
110578 395 W. 120th Av.
Westminster, CO 80234
110170 4775 Kipling
Wheat Ridge, CO 80033
110564 825 W. Brandon
Brandon, FL 33511
110143 7716 Atlantic Blvd.
Jacksonville, FL 32211
110158 10140 San Jose Blvd.
Jacksonville, FL 32217
110546 13100 Walsingham Rd.
Largo, FL 34644
110382 200 Third St.
Neptune Beach, FL 32266
110385 900 Ponce deLeon Blvd.
St. Augustine, FL 32084
110560 4945 Gulf Blvd.
St. Petersburg, FL 33706
110153 9107 Fourth St. North
St. Petersburg, FL 33702
110112 4000 S. Tamiami Trail
Sarasota, FL 34231
110559 3101 U.S. 27 South
Sebring, FL 33870
110549 8602 N. Dale Mabry
Tampa, FL 33614
110163 2001 1st St. A
Moline, IL 61265
110094 2122 - 53rd St.
Moline, IL 61265
110828 5250 Franklin
Michigan City, IN 46360
110235 524 Lincoln Way
Ames, IA 50010
110789 1024 E. First St.
Ankeny, IA 50021
110097 1210 State St.
Bettendorf, IA 52722
110691 229 Collins Rd. NE
Cedar Rapids, IA 52402
110328 1710 Lincoln
Clinton, IA 52732
110778 2800 Commercial Dr.
Coralville, IA 52241-2756
110075 2935 W. Broadway
Council Bluffs, IA 51501
110786 1906 Rue St.
Council Bluffs, IA 51503
110338 5925 Brady St.
Davenport, IA 52806
110775 5239 Elmore Av.
Davenport, IA 52807
110042 1919 Harrison St.
Davenport, IA 52803
ES-36
Unit # Address
------ -------
110355 1140 E. Army Post Rd.
Des Moines, IA 50315
110033 3600 E. 14th St.
Des Moines, IA 50316
110156 #9 Sturgis Dr.
Iowa City, IA 52240
110793 8510 Birchwood Ct.
Johnston, IA 50131
110133 2300 University Av.
West Des Moines, IA 50265
110013 309 N. Ft. Crook Rd.
Bellevue, NE 68005
110171 1110 E. 23rd St.
Fremont, NE 68025
110045 6555 "O" St.
Lincoln, NE 68510
110416 5001 Van Dorn
Lincoln, NE 68506
110107 2949 N. 27th
Lincoln, NE 68521
110780 7101 S. 27th St.
Lincoln, NE 68512
110028 111 S. 29th St.
Lincoln, NE 68510
110027 7255 Cedar St.
Omaha, NE 68124
110008 4416 Dodge St.
Omaha, NE 68131
110787 7837 Dodge St.
Omaha, NE 68114
110131 5425 "L" St.
Omaha, NE 68117
110046 10770 "M" St.
Omaha, NE 68127
110111 3333 N. 90th St.
Omaha, NE 68134
110801 3839 N. 138th St.
Omaha, NE 68164
110719 3304 S. 143rd Plaza
Omaha, NE 68144
110806 2525 S. 180th St.
Omaha, NE 68130
110010 2437 Central Av., NW
Albuquerque, NM 87104-1639
110004 5505 Central Av., NE
Albuquerque, NM 87108-1601
110743 1514 Coors Blvd., NW
Albuquerque, NM 87121-1152
110635 840 Juan Tabo Blvd., SE
Albuquerque, NM 87123-1427
110068 2017 Menaul Blvd., NE
Albuquerque, NM 87107-1716
110106 6300 San Mateo Blvd., NE
Albuquerque, NM 87109
110080 2282 Wyoming Blvd., NE
Albuquerque, NM 87112-2620
110164 2340 Yale Blvd., SE
Albuquerque, NM 87106-4273
110053 10301 SE Stark St.
Portland, OR 97216
ES-37
Unit # Address
------ -------
110043 5941 S. State St.
Murray, UT 84107
110081 450 E. 1100 North
North Salt Lake, UT 84054
110750 322 - 12th St.
Ogden, UT 84404
110119 212 E. 1300 S.
Orem, UT 84058
110737 933 S. University Av.
Provo, UT 84606
110784 1780 W 5600 S
Roy, UT 80467-2955
110002 2929 S. State St.
Salt Lake City, UT 84115
110076 910 East Fourth South
Salt Lake City, UT 84102
110716 150 West 10600 South
Sandy, UT 84070
110085 4681 S. Redwood Rd.
Taylorsville, UT 84123
110807 8921 S. Redwood Rd.
West Jordan, UT 84088
ES-38
ON SITE INVENTORY (HEADQUARTER/COMISSARY LOCATIONS)
Home Office 400 W 48th Av Denver CO 80216
Commissary 16425 S Kilbourn Oak Forest IL 60452
Commissary Storage 16345 Frontage Rd. Oak Forest IL 60452
Commissary 300 Lake Hazeltine Dr Chaska MN 55318
Commissary Storage 312 Lake Drive Chaska MN 55318
Commissary 12865 Ann St. Santa Fe Springs CA 90670
OFF SITE INVENTORY
SITE ADDRESS ITEMS
------------------------------------------------------------------------------------------
CERTIFIED AIR CONTRACTORS EVAP COIL FOR AC UNIT
4505 MARQUETTE AV
JACKSONVILLE, FL 32210
DUVAL COUNTY
MVM CORP MISC DINING ROOM EQUIP & BOOTH MAT'L, CARPET COVER
5650 WEST BUCKEYE RD
PHOENIX, AZ 84053
MARICOPA COUNTY
MANNINGTON CARPETS DINING ROOM CARPET
1844 US HIGHWAY 41 SE
CALHOUN, GA 30703
GORDON COUNTY
TREND LIGHTING LIGHT FIXTURES
2700 SIDNEY ST
ST LOUIS, MO 63104
ST LOUIS COUNTY
PRA FULFILLMENT MARKETING MATERIALS
15300 25TH AV NORTH
PLYMOUTH, MN 55447
HENNEPIN COUNTY
1-25 PRODUCTIONS MARKETING MATERIALS
4855 EAST ASHTON AV
CASTLE ROCK CO 80104
DOUGLAS COUNTY
ES-39
SITE ADDRESS ITEMS
------------------------------------------------------------------------------------------
POWER LOGISTICS FOOD
1260 SYCAMORE RD
MANTENO, IL
KANKAKEE COUNTY
WESTERN STAR TRANSPORT FOOD
6100 EAST SHEILA ST
CITY OF COMMERCE, CA 90040-2407
LOS ANGELES COUNTY
NEWPORT ST. PAUL COLD STORAGE FOOD
2233 MAXWELL AV
NEWPORT, MN 55055
WASHINGTON COUNTY
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
ES-40
SCHEDULE 5.7(a)
STATES OF ORGANIZATION
ENTITY STATE OF ORGANIZATION
------ ---------------------
VICORP Restaurants, Inc. Colorado
VI Acquisition Corp. Delaware
Village Inn Pancake House of Albuquerque, Inc. New Mexico
Village Inn Pancake House of Canada Limited Canada
ES-41
SCHEDULE 5.7(b)
CHIEF EXECUTIVE OFFICES
ENTITY CHIEF EXECUTIVE OFFICES
------ -----------------------
VICORP Restaurants, Inc. 400 West 48th Avenue
Denver, CO 80216
VI Acquisition Corp. 676 N. Michigan Avenue
Suite 3700
Chicago, IL 60611
Village Inn Pancake House of Albuquerque, Inc. 400 West 48th Avenue
Denver, CO 80216
Village Inn Pancake House of Canada Limited 400 West 48th Avenue
Denver, CO 80216
ES-42
SCHEDULE 5.7(c)
ORGANIZATIONAL IDENTIFICATION NUMBERS
ENTITY ORGANIZATIONAL ID NUMBER
------ ------------------------
VICORP Restaurants, Inc. 19871173554
VI Acquisition Corp. 3620146
Village Inn Pancake House of Albuquerque, Inc. SCC #: 0438762
Village Inn Pancake House of Canada Limited 87320
ES-43
SCHEDULE 5.7(d)
COMMERCIAL TORT CLAIMS
VICORP Restaurants, Inc. : NONE
VI Acquisition Corp.: NONE
Village Inn Pancake House of Albuquerque, Inc.: NONE
Village Inn Pancake House of Canada Limited: NONE
ES-44
SCHEDULE 5.8(b)
CAPITALIZATION OF BORROWER
VICORP Restaurants, Inc., a Colorado corporation
Authorized: 10,000 shares of common stock
Issued: 100 shares to VI Acquisition Corp.
Ownership: 100% VI Acquisition Corp.
ES-45
SCHEDULE 5.8(c)
CAPITALIZATION OF PARENT'S SUBSIDIARIES
Village Inn Pancake House of Canada Limited
Authorized: The authorized capital consists of common stock
(unspecified number) without nominal or par value
Issued: 10 shares of common stock to VICORP
Restaurants, Inc.
Ownership: 100% VICORP Restaurants, Inc.
Village Inn Pancake House of Albuquerque, Inc.
Authorized: 250,000 common stock with a par value of $1.00
per share
Issued: 1,250 shares of common stock to VICORP
Restaurants, Inc,
Ownership: 100% VICORP Restaurants, Inc.
ES-46
SCHEDULE 5.10
LITIGATION
VICORP RESTAURANTS, INC.:
Hollynn D'Lil v. VICORP Restaurants. Inc., United States District Court for the
Eastern District of California, Case No. CV S 03-1542 GEB DAD. Marshall Loskor,
et al. v. VICORP Restaurants Inc., et al., United States District Court for the
Eastern District of California, Case No. CIV S 03-22337 FCD DAD. These are two
separate cases filed by disabled customers who allege violations of California
and federal disabilities laws at the Bakers Square in West Sacramento,
California. Each complaint requests injunctive relief and damages for alleged
violations. Defense counsel has been retained and discovery is proceeding. No
trial date has been set for either case. VICORP will move to consolidate these
two cases and retain an expert witness to confirm previous repairs to
accommodate disabled customers. VICORP believes it has meritorious defenses and
it intends to vigorously defend the litigation. [...***...]
George Miller, Jr., v. VICORP Restaurants, Inc., United States District Court,
Northern District of California, Case No. C-03-0777-RS. This is an action
brought by a terminated employee of one of the Bakers Square Restaurants in
California. In the Complaint the plaintiff makes claims for age, race, and
disability discrimination; violation of various California labor code
provisions; and, for tortious discharge in violation of public policy. The
plaintiff is seeking damages (general, special, consequential, statutory, and
punitive), injunctive and declaratory relief, costs, and attorneys' fees.
Discovery is proceeding. Trial is set for May 17, 2004. VICORP believes it has
meritorious defenses and intends to vigorously defend the litigation.
[...***...]
Eric and Kelley Anne Nichols v. VICORP Restaurants, Inc., Pete Pascuzzi, and
Brandon Gilbert, Superior Court, Sacramento County, California, Case No.
01AS04708. This is an action brought by a former Bakers Square employee in
California. In the complaint; the plaintiffs allege malicious prosecution,
defamation, intentional infliction of emotional distress, negligent infliction
of emotional distress, and loss of consortium. They are seeking special general
and punitive damages, pre-judgment interest and the costs of suit. VICORP
believes it has meritorious defenses and is vigorously defending this action. No
trial date has been set. [...***...]
Oak Center Real Estate. Inc., v. VICORP Restaurants. Inc., Circuit Court of the
Eighteenth Judicial District, DuPage County, Illinois, Case No. 2003AR003571.
This is an action brought by a real estate brokerage firm alleging damages for
failure to pay all commercial property valuations and alleges breach of contract
and quantum meruit claims. Plaintiff seeks monetary damages plus costs of the
suit. VICORP believes it has meritorious defenses and it intends to vigorously
defend the litigation. No trial date has been set. [...***...]
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-47
Deanna O'Neill, et al., v VICORP Restaurants, Inc., Superior Court of the State
of California for the County of Los Angeles - Central, Case No. BC304354. This
is an action brought by an ex-general manager, an ex-associate manager, and a
current server of VICORP's Bakers Square Division in California, alleging seven
claims for relief. The suit alleges that VICORP has violated California law. The
"server" allegations are that rest periods and meal breaks were not given as
required. The "manager" allegations relate to alleged unlawful deductions in the
calculation of bonuses. Both the server and the manager allege that VICORP has
engaged in unfair business practices. Plaintiffs are seeking class
certification, compensatory damages, penalties, interest, disgorgement of
profits and accounting, declaratory judgment, attorneys' fees, and costs. VICORP
has tendered defense of this litigation to the Sellers under the Stock Purchase
Agreement dated April 15, 2003, pursuant to an indemnification agreement for
defense of claim in an amount in excess of $1,000,000. VICORP intends to
vigorously defend the litigation. [...***...]
Richard Stickney v. VICORP Restaurants. Inc.. et al., United States District
Court, Eastern District of California, Case No. CIV S-03-1339 FCD DAD. This is a
complaint for injunctive relief and damages for alleged violations of the
California and federal disabilities laws brought by a disabled customer of a
Bakers Square in California. No trial date has been set. VICORP is defending the
litigation. [...***...]
The Bellaire Shopping Center, Inc.. v. VICORP Restaurants. Inc.. et al.,
District Court Shawnee County, Kansas, Case No. 02C1554. This action was brought
by a former landlord of a location in Topeka, Kansas, asserting that the Company
failed to maintain the premises as required by the lease. The plaintiff is
seeking damages for lost rent, due to its inability to rent the location, for
the cost of repairs, pre and post-judgment interest, and equitable remedies.
Discovery is proceeding. No trial date has been set. VICORP believes its has
meritorious defenses and intends to vigorously defend the litigation.
[...***...]
Samantha L. Rash v. Thomas M. Porth and VICORP Restaurants, Inc., et al.,
Eighteenth Judicial District, Sedgwick County, Kansas, Case No. 04 CV 0307. This
action is being brought by a former waitress who was employed at a franchised
Village Inn Restaurant in Wichita, Kansas. This waitress was "strip-searched" by
a general and associate manager who fell victim to a bizarre hoax in which a
telephone caller identified himself as a police officer and ordered the strip
search of Ms. Rash. The plaintiff alleges a number of personal injury torts and
also named VICORP in the litigation alleging negligent training and supervision
and respondeat superior. Based upon the fact that this is a franchised location,
it is my belief that VICORP will be ultimately dismissed from this litigation,
as we have no causal connection to this tort action. [...***...]
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-48
Theresa Wang v. Taher Abusaad and VICORP Restaurants, U.S. District Court,
Northern District of Illinois, Case No. 020 2300. This is an action filed by a
former server of a Bakers Square Restaurant in Illinois. Plaintiff alleges
violation of Title VII resulting from alleged sexual harassment and the creation
of a hostile work environment. Following trial to a jury, damages were awarded
in the amount of $125,000.00, plus attorneys' fees. However, the Federal
District Court Judge has ordered a settlement conference for April 29, 2004, as
he feels the damage award is excessive. If plaintiff does not negotiate for a
lesser award, the Judge will order a new trial on damages. [...***...]
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-49
SCHEDULE 5.14
ENVIRONMENTAL MATTERS
VICORP RESTAURANTS, INC.:
1. 3649 North Harlem Avenue, Chicago, Illinois: Potential petroleum,
petrochemical, hazardous or toxic substances on or under or in the
property, or migrating therefrom, including, but not limited to the soil
and groundwater, as further described in that certain Limited Subsurface
Investigation Report dated May 8, 2001 by Goldman Environmental
Consultants, Inc. and Limited Subsurface Investigation letter report of
LFR Levine-Fricke ("LFR") dated March 18, 2004.
2. 7131 North Western Avenue, Chicago, Illinois: Petroleum, petrochemical,
hazardous or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Limited Subsurface Investigation Report
dated May 8, 2001 by Goldman Environmental Consultants, Inc. and LFR
letter report dated March 15, 2004.
3. 131 No. Annie Glidden Road, DeKalb, Illinois: Potential petroleum,
petrochemical, hazardous or toxic substances on or under or in the
adjacent property, or migrating therefrom , including, but not limited to
the soil and groundwater in connection with leaking underground storage
tanks from the off-site Clark Filling Station, as further described in
that certain Phase I Environmental Site Assessment dated May 11, 2001, by
Environmental Management Group, Inc. and LFR letter report dated March 12,
2004.
4. 4849 West 79th Street, Burbank, Illinois: Potential petroleum,
petrochemical, hazardous or toxic substances on or under or in the
adjacent property, or migrating therefrom, including, but not limited to
the soil and groundwater, as further described in that certain Phase I
Environmental Site Assessment by EMG, Inc. dated October 1, 1999, and LFR
letter report dated March 15, 2004, in connection with potential off-site
migration of contamination to the subject property.
5. 16425 South Kilbourn Avenue, Oak Forest, Illinois: Petroleum,
petrochemical, hazardous or toxic substances on or under or in the
property, or migrating therefrom, including, but not limited to the soil
and groundwater, as further described in that certain Limited Subsurface
Investigation Report by GEC dated May 8, 2001, and LFR letter report dated
March 12, 2004, in connection with potential on-site impacts from former
USTs.
6. 321 South Veterans Parkway, Normal, Illinois: Petroleum, petrochemical,
hazardous or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I Environmental Site Assessment by
EMG, Inc. dated April 26, 2001, and LFR letter report dated March 16,
2004, in connection with potential impacts from off-site filling station.
ES-50
7. 22373 Eureka Road, Taylor, Michigan: Petroleum, petrochemical, hazardous
or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I Environmental Site Assessment by
GEC, Inc. dated May 2, 2001, and LFR letter report dated March 15, 2004,
in connection with identified petroleum impacts on-site and potential
impacts from off-site.
8. 210 North Blake Road, Hopkins, Minnesota: Petroleum, petrochemical,
hazardous or toxic substances on or under or in the adjacent property, or
potentially migrating therefrom, including, but not limited to the soil
and groundwater, as further described in that certain Phase I
Environmental Site Assessment Update by ATC Associates, Inc. dated
February 19, 2002, and LFR letter report dated March 1, 2004.
9. 400 W. 48th Avenue, Denver, Colorado: Petroleum, petrochemical, hazardous
or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I Environmental Site Assessment by
GEC, Inc. dated May 1, 2001 and Site Investigations' letter report dated
May 9, 2001 by GEC in connection with potential area-wide lead and arsenic
contamination from former smelter operations.
10. 4100 E. Mexico Avenue, Denver, Colorado: Petroleum, petrochemical,
hazardous or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I Environmental Site Assessment by
EMG, Inc. dated April 26, 2001, and LFR letter report dated March 15,
2004, in connection with former underground storage tanks (USTs) once
located at the property.
11. 1430 Harrison Road, Colorado Springs, Colorado: Potential petroleum,
petrochemical, hazardous or toxic substances on or under or in the
property, or migrating therefrom, including, but not limited to the soil
and groundwater, as further described in that certain Phase II
Environmental Site Assessment by EMG, Inc. dated May 8, 2001, and LFR
letter report dated March 15, 2004, in connection with the site's former
use as a filling station.
12. 300 Lake Hazeltine Drive, Chaska, Minnesota: Wastewater discharge to the
Chaska Treatment Plant in violation of Environmental Laws.
13. 2239 Ford Parkway, St. Paul, Minnesota: Petroleum, petrochemical,
hazardous or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I Environmental Site Assessment
Update by ATC Associates, Inc. dated February 15, 2002, in connection with
the remediation activities of fuel oil contamination at the site and LFR
letter report dated March 10, 2004.
14. 1024 East First St., Ankeny, Iowa: Petroleum, petrochemical, hazardous or
toxic substances on or under or in the property, or migrating therefrom,
including, but not
ES-51
limited to the soil and groundwater, as further described in that certain
Letter Report by Seneca Environmental Services dated August 31, 1998, and
LFR letter report dated March 15, 2004, in connection with an on-site
leaking underground storage tank incident.
15. 6301 University Avenue, Cedar Falls, Iowa: Potential asbestos containing
materials in poor condition as further described in LFR's Phase I
Environmental Assessment Report dated March 11, 2004. Petroleum,
petrochemical, hazardous or toxic substances on or under or in the
property, or migrating therefrom, including, but not limited to the soil
and groundwater in connection with potential USTs.
16. 4850 Federal Boulevard, Denver, Colorado: Petroleum, petrochemical,
hazardous or toxic substances on or under or in an adjacent property, and
potentially migrating therefrom, including, but not limited to the soil
and groundwater in connection with potential USTs, as further described in
LFR letter report dated March 10, 2004.
17. 7320 West Good Hope, Milwaukee, Wisconsin: Asbestos containing materials
in the roofing materials of the on-site structure as further described in
the Phase I Environmental Site Assessment Update by ATC Associates, Inc.
dated February 19, 2002.
18. 819 Apache Lane, S.W., Rochester, Minnesota: Petroleum, petrochemical,
hazardous or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I Environmental Site Assessment by
Twin City Testing dated July 20, 1990, and LFR letter report dated March
18, 2004, in connection with refuse disposal on Lot 7 and the southwest
corner of Lot 6.
19. 4750 Golf Road, Eau Claire, Wisconsin: Petroleum, petrochemical, hazardous
or toxic substances on or under or in the property, or migrating
therefrom, including, but not limited to the soil and groundwater, as
further described in that certain Phase I and Phase II Environmental Site
Assessment by Twin City Testing dated September 8, 1992, in connection
with on-site hydrocarbon detections during geotechnical investigation and
LFR letter report dated March 10, 2004.
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
ES-52
SCHEDULE 5.16
INTELLECTUAL PROPERTY
TRADEMARK REGISTRATIONS
VICORP RESTAURANTS, INC.:
Trademark Registrations --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------------------------------------------ ---------------- -----------------
ALL-WORLD DOUBLE CHEESEBURGER 1883771 03/14/1995
AN AMERICAN DINER AND PROUD OF IT 1889030 04/11/1995
ANGEL'S 1930867 10/31/1995
ANGEL'S and Design 1783034 07/20/1993
[ANGEL'S LOGO]
ANGEL'S DINER 1899370 06/13/1995
ANGEL'S DINER BEST
AMERICAN DINER and
Design 1979154 06/11/1996
[ANGEL'S DINER BEST AMERICAN DINER LOGO]
BAKERS DOME 2228259 03/02/1999
BAKERS SQUARE 1394236 05/20/1986
BAKERS SQUARE 1394423 05/20/1986
ES-53
Trademark Registrations --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------------------------------------------ ---------------- -----------------
BAKERS SQUARE
RESTAURANT & PIES
and Design 2002503 09/24/1996
[BAKERS SQUARE RESTAURANT & PIES LOGO]
BAKERS SQUARE and Design 1403328 07/29/1986
[BAKERS SQUARE LOGO]
BAKERS SQUARE and Design 1394428 05/20/1986
[BAKERS SQUARE LOGO]
BAKERS SQUARE BEST
PIE IN AMERICA and
Design 2213980 12/29/1998
[BAKERS SQUARE BEST PIE IN AMERICA LOGO]
BAKERS SQUARE YUKON MOUNTAIN ICE CREAM PIE 2717922 5/20/2003
ES-54
Trademark Registrations --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------------------------------------------ ---------------- -----------------
BEST PIE IN AMERICA 2239993 04/13/1999
THE BREAKFAST
EXPERTS 1682297 04/07/1992
BREAKFAST LIKE YOU LIKE IT. ANY TIME YOU WANT. 1517633 12/20/1998
BUCKY 1307977 12/04/1984
CANDY CANE PIE 1942036 12/19/1995
GOOD FOOD...GOOD FEELINGS 1979914 06/11/1996
GREAT FOOD. UNBELIEVABLE PIE 2237698 04/06/1999
J. HORNER'S 2317331 02/08/2000
J.HORNER'S
LEGENDARY PIES &
DESSERTS and Design 2463068 06/26/2001
[J.HORNER'S LEGENDARY PIES & DESSERTS LOGO]
J. HORNER'S
LEGENDARY PIES &
DESSERTS and Design 2587251 07/02/2002
[J. HORNER'S LEGENDARY PIES & DESSERTS LOGO]
ES-55
Trademark Registrations --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------------------------------------------ ---------------- -----------------
MAGNIFICENT! 2730131 06/24/2003
THE SKILLET EXPERTS 2603514 08/06/2002
SKILLET WRAPS 2233721 03/23/1999
SWEET RETURNS 2100736 09/30/1997
VILLAGE INN 1070440 07/26/1977
VILLAGE INN and Design 1118490 05/15/1979
[VILLAGE INN LOGO]
VILLAGE INN (Stylized) 1197458 06/08/1982
VILLAGE INN
VILLAGE INN (Stylized) 0768280 04/14/1964
VILLAGE INN
VILLAGE INN PANCAKE HOUSE 1118489 05/15/1979
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
TRADEMARK PENDING APPLICATIONS
VICORP RESTAURANTS, INC.
Trademark Pending Applications --
or United States Patent and Trademark Office
Service Mark Application No. Application Date
---------------------------------- --------------- ----------------
ES-56
EARLY DINNER DEALS ON SQUARE MEALS 78276945 07/21/2003
PANTRY PERFECT and design 78380082 03/08/2004
PANTRY PERFECT
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
STATE AND FOREIGN REGISTERED TRADEMARKS
Trademark
or Registration State or Country of
Service Mark Number Filing Date Registration
------------------------- ------------- ----------- -------------------
VILLAGE INN 19851012506 05/19/1966 Colorado
BAKERS SQUARE 757934 10/19/1984 Nebraska
VILLAGE INN PANCAKE HOUSE 2510174 09/14/1979 Utah
ANGEL'S DINER 481833 12/07/1994 Mexico
BAKERS SQUARE 442737 05/12/1995 Canada
VILLAGE INN 40068 01/08/1998 Korea
1.
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
ES-57
2. COPYRIGHTS REGISTERED WITH U.S. COPYRIGHT OFFICE
VICORP RESTAURANTS, INC.:
COPYRIGHT REGISTRATION
3. TITLE NUMBER DATE
----- ------ ----
Village Inn VA-889-124 April 13, 1998
Suggestive Selling Incentive Program TXu-136-317 October 3, 1983
Suggestive Selling Incentive Program TXu-136-318 October 3, 1983
Special Menu for Little Villagers VA-119-323 March 3, 1983
Village Inn VA-119-324 March 3, 1983
Village Inn VA-119-325 March 3, 1983
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
ES-58
SCHEDULE 5.18
DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS
ACCOUNT
BANK NUMBER ADDRESS
---- ------ -------
CORPORATE ACCOUNTS
Bank of America - A/P [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
Bank of America - Vacation Benefits [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
Bank of America - Master Funding [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
Bank of America - Investments [...***...] 2044 Franklin Street Mezzanine
Oakland, CA 94612
First National Bank of Omaha - Med. Claims Funding [...***...] 1620 Dodge Street
Stop 2254
Omaha, NE 68197
Wells Fargo - Payroll Greenville, NC [...***...] 1740 Broadway
Denver, CO 80274
Wells Fargo - Payroll Funding [...***...] 1740 Broadway
Denver, CO 80274
Wells Fargo - Corporate Depository [...***...] 1740 Broadway
Denver, CO 80274
US Bank - Med. and Childcare Reimb. [...***...] 918 17th Street, 4th Floor
DN-CO-BB4A
Denver, CO 55402
Fifth Third Bank - Corporate Depository [...***...] 38 Fountain Square Plaza
MD 109046
Cincinnati, OH 45202
Wells Fargo - Corp Debit Card [...***...] 1740 Broadway
Denver, CO 80274
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-59
ACCOUNT
BANK NUMBER ADDRESS
--------------------------------------------------------------------------------------------
RESTAURANT ACCOUNTS - AGENCY
ACCOUNTS
Bank of America - CA [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
LaSalle Bank [...***...] 135 S. LaSalle St., Suite 515
Chicago, IL 60603
National City Bank - MI/IL [...***...] 155 E. Broad Street
Columbus, OH 43251-0077
National City Bank - Ohio [...***...] 155 E. Broad Street
Columbus, OH 43251-0077
US Bank [...***...] 918 17th Street, 4th Floor
DN-CO-BB4A
Denver, CO 55402
Wells Fargo [...***...] 1740 Broadway
Denver, CO 80274
First State Bank (VILLAGE INN PANCAKE [...***...] P.O. Box 3686
HOUSE OF ALBUQUERQUE, INC.) Albuquerque, NM 87190-3686
CONVENIENCE ACCOUNTS
Bank of America - FL [...***...] 555 S. Flower Street, 3rd Floor
CA9-706-03-11
Los Angeles, CA 90071
Great Lakes Bank [...***...] 18106 Dixie Hwy
Homewood, IL 60430
Canon National Bank [...***...] 2101 Fremont Drive
P.O. Box 829
Canon City, CO 81215
Clinton National Bank [...***...] 235 6th Ave. South
Clinton, IA 52733
Commerce Bank [...***...] 15305 E. Colfax Ave.
Aurora, CO 80011
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-60
ACCOUNT
BANK NUMBER ADDRESS
----------------------------------------------------------------------------------------
First Bank and Trust of Illinois [...***...] 300 E. Northwest Hwy
Palatine, IL 60067
First National Bank of Illinois [...***...] 2108 W. Jefferson
Joliet, IL 60435
First National Bank of Strasburg [...***...] 120 S. Wilcox Street
Castle Rock, CO 80104
Harris Bank [...***...] 4 Blanchard Circle
Wheaton, IL 60187
KeyBank [...***...] 1675 Broadway, 5th Floor
Denver, CO 80202
Mid State Bank [...***...] 91 W. Highway 246 & Central Ave
Buelton, CA 93427
National City Bank - IN [...***...] 155 E. Broad Street
Columbus, OH 43251-0077
Nebraska State Bank [...***...] 3211 N. 90th Street
Omaha, NE 68134
Peoples National Bank [...***...] 1899 Woodmore Dr.
Monument, CO 80132
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-61
SCHEDULE 5.20
PERMITTED INDEBTEDNESS
VICORP RESTAURANTS, INC.:
Capital lease obligations, as follows:
TOTAL
LOCATION OBLIGATION
-------------------- ---------------
SALT LAKE CITY (986,821.12)
DENVER-E. HAMPDEN (850,858.34)
OREM (0.00)
COLO SPRINGS (0.00)
CASTLE ROCK (184,322.88)
ST AUGUSTINE (48,302.93)
TEMPE-BASELINE (17,336.70)
APACHE JUNCTION (11,779.15)
FLAGSTAFF (45,853.43)
BRANDON (0.00)
AURORA - SEVEN HILLS (1,491,195.87)
SANDIEGO (133,945.63)
SALINAS (0.00)
EL TORO (0.00)
RANCHO CORDOVA (31,311.84)
LAKEWOOD (0.00)
CEDAR FALLS (52,328.01)
MOBILE (125,034.94)
GARDEN GROVE (0.00)
--------------
(3,979,090.84))
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
ES-62
SCHEDULE 5.22
CREDIT CARD PROCESSORS
VICORP RESTAURANTS, INC.
PROCESSOR CREDIT CARDS PROCESSED APPROXIMATE ANNUAL SETTLEMENTS
--------- ---------------------- ------------------------------
Fifth Third Bank Visa, Mastercard, Discover [...***...]
American Express American Express [...***...]
Diners Club Diners Club [...***...]
VI ACQUISITION CORP.: NONE
VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE
VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC.
ES-63
SCHEDULE 7.13
AFFILIATE TRANSACTIONS
Professional Services Agreement, dated June 13, 2003, by and among Wind Point
Investors, IV, L.P., Wind Point Investors V, L.P. and VICORP Restaurants, Inc.
Stockholders Agreement, dated June 13, 2003, by and among VI Acquisition Corp.,
Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Mid Oaks Investments
LLC, A.G. Edwards Private Equity Partners QP II, L.P., A.G. Edwards Private
Equity Partners II, L.P., Debra Koenig, Walter van Benthuysen, Allied Capital
Corporation, Gleacher Mezzanine Fund I, L.P., Gleacher Mezzanine Fund P, L.P.,
and SunTrust Banks, Inc.
Stock Purchase Agreement, dated June 13, 2003, by and among VI Acquisition
Corp., Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Mid Oaks
Investments LLC, A.G. Edwards Private Equity Partners QP II, L.P., A.G. Edwards
Private Equity Partners II, L.P., Debra Koenig, Walter van Benthuysen, William
Hoppe, Robert Kaltenbach, Joseph Trungale, Timothy R. Kanaly, Daniel W. Gresham,
Mark A. Hampton, Jeffry Guido, Peter M. Pazcuzzi, John A. Stocherro, and Thomas
M. Rink.
Registration Rights Agreement, dated as of June 13, 2003, by and among VI
Acquisition Corp., Wind Point Partners IV, L.P., Wind Point Partners V, L.P.,
Mid Oaks Investments LLC, A.G. Edwards Private Equity Partners QP II, L.P., A.G.
Edwards Private Equity Partners II, L.P., Debra Koenig, Walter van Benthuysen,
William Hoppe, Robert Kaltenbach, Joseph Trungale Allied Capital Corporation,
Gleacher Mezzanine Fund I, L.P., Gleacher Mezzanine Fund P, L.P., and SunTrust
Banks, Inc
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Timothy R. Kanaly.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Daniel W. Gresham.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Mark A. Hampton.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Jeffry Guido.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Peter M. Pascuzzi.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Thomas M. Rink.
ES-64
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Debra Koenig.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Robert Kaltenbach.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Walter van Benthuysen.
Management Agreement, dated as of June 13, 2003, by and between VI Acquisition
Corp. and Donald R. Prismon.
Management Agreement, dated as of February 20, 2004, by and between VI
Acquisition Corp. and Anthony Carroll.
Management Agreement, dated as of March 3, 2004, by and between VI Acquisition
Corp. and Debra Koenig.
Management Agreement, dated as of March 3, 2004, by and between VI Acquisition
Corp. and Thomas M. Rink.
Management Agreement, dated as of March 11, 2004, by and between VI Acquisition
Corp. and Walter van Benthuysen.
Indemnification of officers and directors under the Bylaws of VI Acquisition
Corp., Midway Investors Holdings, Inc., VICORP Restaurants, Inc. (Colorado),
VICORP Restaurants, Inc. (Delaware), Village Inn Pancake House of Canada
Limited, and Village Inn Pancake House of Albuquerque, Inc.
ES-65
Exhibit 10.6
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of June 13, 2003,
between VI Acquisition Corp., a Delaware corporation (the "Company"), and Debra
Koenig ("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will commit to purchase, and the Company will commit to sell, an
aggregate of 86,250 shares of the Company's Common Stock, par value $.0001 per
share (the "Common Stock"). All of such shares of Common Stock are referred to
herein as "Executive Shares." Certain definitions are set forth in Section 7 of
this Agreement.
The execution and delivery of this Agreement by the Company and Executive
is a condition to the purchase of shares of Common Stock and the commitment to
purchase shares of the Company's Series A Preferred Stock, par value $.0001 per
share (the "Preferred Stock"), by Wind Point Partners IV, L.P., Wind Point
Partners V, L.P., Wind Point IV Executive Advisor Partners, LP, Wind Point
Associates IV, LLP, Mid Oaks Investments LLC, A.G. Edwards Private Equity
Partners QP II, L.P. and A.G. Edwards Private Equity Partners II, L.P.
(collectively, the "Investors" and each an "Investor"), pursuant to a stock
purchase agreement between the Company, the Investors and certain executives of
the Company dated as of the date hereof (the "Purchase Agreement"). Certain
provisions of this Agreement are intended for the benefit of, and will be
enforceable by, the Investors.
Pursuant to the Purchase Agreement, Executive has also agreed to purchase
19,080 shares of Common Stock and 1,094.67 shares of Preferred Stock. Any shares
of Common Stock or Preferred Stock purchased by Executive pursuant to the
Purchase Agreement are referred to herein as "Coinvest Shares," and Coinvest
Shares, together with Executive Shares, are referred to herein as "Shares".
The parties hereto agree as follows:
1. Executive Shares.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 86,250 shares of Common Stock at a price of $1.00 per share,
the fair market value of the Common Stock on the date hereof. The Company will
deliver to Executive the certificates representing such Executive Shares, and
Executive will deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $86,250.
(b) Within thirty (30) days after each purchase by Executive of
Executive Shares pursuant to this Agreement, Executive will make an effective
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code and the regulations promulgated thereunder in the form of Exhibit A
attached hereto.
(c) In connection with the purchase and sale of the Executive Shares
pursuant hereto, Executive represents and warrants to the Company that:
(i) The Executive Shares to be acquired by Executive pursuant to
this Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the Executive
Shares will not be disposed of in contravention of the Securities Act or
any applicable state securities laws;
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Shares;
(iii) Executive is able to bear the economic risk of her investment
in the Executive Shares for an indefinite period of time because the
Executive Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available;
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the
Executive Shares and has had full access to such other information
concerning the Company as he has requested;
(v) This Agreement and each of the other agreements contemplated
hereby and by the Purchase Agreement to which Executive is a party
constitute legal, valid and binding obligations of Executive, enforceable
in accordance with their terms, and the execution, delivery and
performance of this Agreement and such other agreements by Executive does
not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject;
(vi) Executive is not a party to or bound by any other employment
agreement, noncompete agreement or confidentiality agreement which
conflicts with the obligations set forth in this Agreement or in the
Employment Agreement; and
(vii) Executive is a resident of the State of Illinois.
(d) As an inducement for the Company to commit to issue the Executive
Shares to Executive, and as a condition thereto, Executive acknowledges and
agrees that neither any future issuance of capital stock of the Company to
Executive nor any provision contained herein or in the Purchase Agreement shall
entitle Executive to remain in the employment of the Company, or any Subsidiary
of the Company, or affect the right of the Company or any Subsidiary to
terminate Executive's employment at any time for any reason, subject to the
terms and conditions of the Employment Agreement.
2. Vesting of Shares.
(a) Except as otherwise provided in Section 2(b) below, the Executive
Shares purchased hereunder will become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the Company or
any Subsidiary of the Company:
2
CUMULATIVE PERCENTAGE OF
DATE EXECUTIVE SHARES TO BE VESTED
---- -----------------------------
1st Anniversary of this Agreement 20%
2nd Anniversary of this Agreement 40%
3rd Anniversary of this Agreement 60%
4th Anniversary of this Agreement 80%
5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary,
upon the occurrence of a Sale of the Company, all Executive Shares which have
not yet become vested shall become vested at the time of such Sale of the
Company (such portion being referred to herein as the "Accelerated Shares");
provided, however, and subject to and unless otherwise provided for under the
Stockholders Agreement by and among the Company, the Investors, the Executive
and certain other parties, that Executive shall not Transfer any interest in any
Accelerated Shares unless and until such time as the Investors shall have
received cash dividends or other cash proceeds resulting from any distributions
on or dispositions of any Preferred Stock or Common Stock in an aggregate amount
equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase
price paid by the Investors to the Company for all Preferred Stock, Common Stock
and other equity interests of the Company purchased by the Investors (but not in
any event including amounts committed but not yet contributed to the capital of
the Company). Executive Shares which have become vested hereunder are referred
to herein as "Vested Shares," and all other Executive Shares are referred to
herein as "Unvested Shares."
(c) The Executive Securities shall at all times be subject to such
restrictions or limitations with respect to the Transfer thereof that may be
contained herein or in the Stockholders Agreement or as otherwise provided by
law.
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company or any
Subsidiary for any reason (a "Separation"), the Shares and all other Executive
Securities (whether held by Executive or one or more of Executive's transferees,
other than the Company and the Investors) will be subject to repurchase, in each
case by the Company pursuant to the terms and conditions set forth in this
Section 3 (the "Repurchase Option").
(b) In the event of a Separation, the Executive Shares purchased
hereunder shall be subject to repurchase as follows: (i) the purchase price for
each Unvested Share of Common Stock will be the Executive's Original Cost for
such share; provided, that if Executive's employment is terminated by the
Company or a Subsidiary with Due Cause or by the Executive without Good Reason,
then the purchase price for each Unvested Share of Common Stock will be the
lesser of (a) Executive's Original Cost for such share and (b) the Fair Market
Value for such share, and (ii) the purchase price for each Vested Share of
Common Stock will be the Fair Market Value for such share; provided that if
Executive's employment is terminated by the
3
Company or a Subsidiary with Due Cause or by the Executive without Good Reason,
then the purchase price for each Vested Share of Common Stock will be the lesser
of (a) Executive's Original Cost for such share and (b) the Fair Market Value
for such share.
(c) In the event of a Separation, the Coinvest Shares purchased pursuant
to the Purchase Agreement, and any other Executive Securities not otherwise
described in Section 3(b) above or this Section 3(c), shall be subject to
repurchase as follows: (i) the purchase price for each share of Common Stock
will be the Fair Market Value for such share and (ii) the purchase price for
each share of Preferred Stock will be Executive's Original Cost for such share.
(d) In the event of a Separation, the Company may elect to purchase all
or any portion of the Executive Securities by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Executive Securities within
60 days after the Separation. The Repurchase Notice will set forth the number of
Unvested Shares, Vested Shares and Coinvest Shares to be acquired from each
holder, the aggregate consideration to be paid for such securities and the time
and place for the closing of the transaction. The number of each type of
securities to be repurchased by the Company shall first be satisfied to the
extent possible from the Executive Securities held by Executive at the time of
delivery of the Repurchase Notice. If the number of any or all types of
Executive Securities then held by Executive is less than the total number of
such securities which the Company has elected to purchase, the Company shall
purchase the remaining securities elected to be purchased from the other
holder(s) of Executive Securities under this Agreement, pro rata according to
the number of the applicable type of Executive Securities held by such other
holder(s) at the time of delivery of such Repurchase Notice (determined as
nearly as practicable to the nearest share). The number of Unvested Shares,
Vested Shares and Coinvest Shares to be repurchased hereunder will be allocated
among Executive and the other holders of Executive Securities (if any) pro rata
according to the number of the applicable type of Executive Securities to be
purchased from such Person.
(e) If, following a Separation due to the death of the Executive, the
Company does not exercise its Repurchase Option as to the Coinvest Shares,
within the period specified in Section 3(d) above, then the estate of the
Executive shall have 90 days from the expiration of the Company's 60 day
exercise period to compel the Company to purchase the Coinvest Shares at the
lesser of (i) the Original Cost or (ii) the price determined as set forth in
Section 3(c) above. The estate of the Executive shall exercise its right to
compel the repurchase of the Coinvest Shares, if at all, by giving written
notice to the Company within such 90 day period (the "Put Notice").
(f) The closing of the purchase of the Executive Securities pursuant to
the Repurchase Option or the Put Notice shall take place on the date designated
by the Company in the Repurchase Notice, or on the date designated by the estate
of the Executive in the Put Notice, which date in either such event shall not be
more than 2 months nor less than 5 days after the delivery of such notice. The
Company will pay for the Executive Securities to be purchased by it pursuant to
the Repurchase Option or Put Notice by first offsetting amounts outstanding
under any bona fide debts owed by Executive to the Company, including but not
limited to any promissory note payable to the Company by the Executive, and will
pay the remainder of the purchase price to the extent reasonably permissible
under the Company's and its Subsidiaries' equity financing agreements and
agreements evidencing indebtedness for borrowed money and
4
to the extent the Company has the financial wherewithal at the time to make such
payments, by a check or wire transfer of funds and, if not, by a subordinate
note or notes, each on terms acceptable to banks and other financial
institutions loaning money to the Company and its Subsidiaries, payable in up to
three substantially equal, semi-annual installments beginning on the six month
anniversary of the closing of such purchase and bearing interest (payable
quarterly) at a rate per annum equal to the prime rate as published in The Wall
Street Journal from time to time, in the aggregate amount of the purchase price
for such securities. The Company will be entitled to receive customary
representations and warranties from the sellers of Executive Securities
(including representations and warranties regarding good title to the Executive
Securities, the absence of any liens on such title or other encumbrances with
respect to the Transfer of the Executive Securities and the ability of such
sellers to consummate the sale).
(g) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Securities by the Company shall be
subject to applicable restrictions contained in the Delaware General Corporation
Law and as may be required by other parties in the Company's or any
Subsidiaries' equity financing agreements and agreements evidencing indebtedness
for borrowed money, if any. If any such restrictions prohibit the repurchase of
Executive Securities hereunder which the Company is otherwise entitled or
required to make, the Company may make such repurchases as soon as it is
permitted to do so under such restrictions.
(h) Notwithstanding anything to the contrary contained in this
Agreement, if Executive delivers the notice of objection described in the
definition of Fair Market Value, or if the Fair Market Value of a Share is
otherwise determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board, the Company
shall have the right to revoke its exercise of the Repurchase Option for all or
any portion of the Shares elected to be repurchased by it by delivering notice
of such revocation in writing to the holders of the Shares during (i) the
thirty-day period beginning on the date the Company receives Executive's written
notice of objection and (ii) the thirty-day period beginning on the date the
Company is given written notice that the Fair Market Value of a Share was
finally determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board.
4. Restrictions on Transfer of Executive Securities.
(a) Transfer of Executive Securities. Executive shall not Transfer any
interest in any Executive Securities, except at such time as the restrictions
herein terminate as provided in Section 4(b) below. Notwithstanding the
foregoing, the restrictions contained in this Section 4 will not apply with
respect to (i) Transfers of shares of Executive Securities pursuant to
applicable laws of descent and distribution or (ii) Transfer of shares of
Executive Securities among Executive's Family Group; provided that in each case
such restrictions will continue to be applicable to the Executive Securities
irrespective of any such Transfer. Any transferee of Executive Securities
pursuant to a Transfer in accordance with the provisions of this Section 4(a) is
herein referred to as a "Permitted Transferee."
(b) Termination of Restrictions. The restrictions on the Transfer of
Executive Securities set forth in this Section 4 will continue with respect to
each Executive Security until the earlier of (i) a Qualified Public Offering; or
(ii) a Sale of the Company.
5
5. Registration. Executive understands that the Shares are not
currently being registered under the Securities Act by reason of their
contemplated issuance in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Rule 701
thereof. Executive further agrees that he will not sell or otherwise dispose of
the Shares unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered or
qualified or is exempt from registration or qualification under applicable
securities laws of any state. Executive understands that a restrictive legend
consistent with the foregoing, and as set forth in Section 6, will be placed on
the certificates evidencing the Shares, and related stop transfer instructions
will be noted in the stock transfer records of the Company and/or its stock
transfer agent for the Shares.
6. Additional Restrictions on Transfer of Executive Securities.
(a) Legend. The certificates representing the Executive Securities will
bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF JUNE 13, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY
DATED AS OF JUNE 13, 2003. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) Opinion of Counsel. No holder of Executive Securities may transfer
any Executive Securities (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel (reasonably acceptable in form and substance to the Company) that
neither registration nor qualification under the Securities Act and applicable
state securities laws is required in connection with such Transfer.
7. Definitions.
"Affiliate" of the Investors means any direct or indirect general or
limited partner or member of an Investor, as applicable, or any employee or
owner thereof, or any other person, entity or investment fund controlling,
controlled by or under common control with an Investor.
"Due Cause" has the meaning set forth in the Employment Agreement.
"Employment Agreement" means that certain Employment Agreement of even
date herewith between VICORP Restaurants, Inc. and the Executive.
6
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants and any retirement plan for the
Executive.
"Executive Securities" means the Shares and any other securities of the
Company held by Executive or any of Executive's transferees permitted hereunder.
All Executive Securities will continue to be Executive Securities in the hands
of any holder other than Executive (except for the Company, the Investors and
the Investors' Affiliates and except for transferees in a Public Sale). Except
as otherwise provided herein, each such other holder of Executive Securities
will succeed to all rights and obligations attributable to Executive as a holder
of Executive Securities hereunder. Executive Securities will also include shares
of the Company's capital stock or other securities of the Company issued with
respect to Executive Securities by way of a stock split, dividend or other
recapitalization or reclassification.
"Fair Market Value" of each Share as of a relevant date means the average
of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed on that date, or,
if there have been no sales or exchange on which the Common Stock is listed on
any day, the average of the highest bid and lowest asked prices on all
nationally-recognized exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, of the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Common
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Common Stock determined in good faith by the Board of Directors of the
Company (the "Board Calculation"). If the Executive disagrees with the Board
Calculation, the Executive may, within 30 days after receipt of the Board
Calculation, deliver a notice (an "Objection Notice") to the Company setting
forth the Executive's calculation of Fair Market Value. The Board and the
Executive will negotiate in good faith to agree on such Fair Market Value, but
if such agreement is not reached within 30 days after the Company has received
the Objection Notice, Fair Market Value shall be determined by an appraiser
selected by the Board, which appraiser shall submit to the Board and the
Executive a report within 30 days of its engagement setting forth such
determination. The determination of such appraiser shall be final and binding
upon all parties. If the Repurchase Option is exercised within 45 days after a
Separation, then Fair Market Value shall be determined as of the date of such
Separation; thereafter, Fair Market Value shall be determined as of the date the
Repurchase Option or Put Notice, as applicable, is exercised. A comparable
process will be employed to determine the Fair Market Value of Preferred Stock.
"Good Reason" has the meaning set forth in the Employment Agreement.
"Original Cost" means, (i) with respect to each share of Common Stock
purchased hereunder or under the Purchase Agreement, $1.00 (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations) and (ii) with respect to each
7
share of Preferred Stock purchased under the Purchase Agreement, $1,000.00 plus
all accrued and unpaid dividends of the Preferred Stock (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations).
"Person" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Board pursuant to which the Investors have realized in
cash a return of two or more times the amount of their investment in the
Company.
"Sale of the Company" means any transaction or series of transactions
pursuant to which (A) any Person(s) other than the Investors and their
respective Affiliates in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include any sale
of equity or debt securities by the Company in a private offering to other
investors selected by the Investors; or (B) more than 50% of the assets of the
Company (treating investments in Affiliates as assets for these purposes) is
spun off, split off or otherwise distributed.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholders Agreement" means that certain Stockholders Agreement dated
as of even date hereof among the Company, the Investors, the Executive and
certain other parties.
"Subsidiary" means any entity of which the Company owns securities having
a majority of the ordinary voting power in electing the board of directors, or
the equivalent governing body, directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
8. Notices. Any notice, consent, waiver and other communications
required or permitted pursuant to the provisions of this Agreement must be in
writing and will be deemed to have been properly given (a) when delivered by
hand; (b) when sent by telecopier (with acknowledgement of complete
transmission), provided that a copy is mailed by U.S. certified mail, return
receipt requested; (c) three (3) days after sent by certified mail, return
receipt
8
requested; or (d) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
telecopier numbers set forth below:
If to the Company:
VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Tel: (312) 255-4800
Fax: (312) 255-4820
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Fax: (312) 207-6400
Tel: (312) 207-1000
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt of
subsequent notices by giving written notice thereof to the other party in
accordance with this Section 8.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Securities as the
owner of such securities for any purpose.
(b) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
9
(c) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Executive hereby releases the Company and its affiliates and its and their
predecessors from any obligation or liability the Company or any of its
affiliates or its or their predecessors owes or owed to Executive or any of her
affiliates and related persons prior to the date hereof.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns.
(i) All Executive Securities will continue to be Executive
Securities in the hands of any holder other than Executive, including any
of Executive's transferees permitted hereunder or under the Stockholders
Agreement (except for the Company, the Investors and the Investors'
Affiliates and except for transferees in a Public Sale). Except as
otherwise provided herein, each such other holder of Executive Securities
will succeed to all rights and obligations attributable to Executive as a
holder of Executive Securities hereunder.
(ii) Except as otherwise provided herein, this Agreement shall bind
and inure to the benefit of and be enforceable by Executive, the Company,
the Investors and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights and
obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Securities
hereunder.
(iii) Each of the Investors is intended to be a third party
beneficiary of this Agreement and may enforce any rights granted to it
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
Furthermore, Executive and Company agree and consent to submit to personal
jurisdiction in the State of Illinois in any state or federal court of competent
subject matter jurisdiction situated in Cook County, Illinois. Executive and
Company agree that the sole and exclusive venue for any suit arising out of, or
seeking to enforce, the terms of this Agreement shall be in a state or federal
court of competent subject matter jurisdiction situated in Cook County,
Illinois.
10
(g) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive. No cause of conduct or failure or delay in enforcing the provisions
of this Agreement shall affect the validity, binding effect or enforceability of
this Agreement.
(i) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Indemnification and Reimbursement of Payments on Behalf of
Executive. The Company and any Subsidiary shall be entitled to deduct or
withhold from any amounts owing from the Company or any Subsidiary to the
Executive any federal, state, local or foreign withholding taxes, excise taxes,
or employment taxes ("Taxes") imposed with respect to the Executive's
compensation or other payments from the Company or any Subsidiary or the
Executive's ownership interest in the Company, including, but not limited to,
wages, bonuses, dividends, the receipt or exercise of stock options and/or the
receipt or vesting of restricted stock. The Executive shall indemnify the
Company and any Subsidiary for any amounts paid with respect to any such Taxes,
together with any interest, penalties and related expenses thereto.
(k) Termination. This Agreement shall survive the termination of
Executive's employment with the Company or any Subsidiary and shall remain in
full force and effect after such termination.
(l) Generally Accepted Accounting Principles; Adjustments of Numbers.
Where any accounting determination or calculation is required to be made under
this Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with United States generally
accepted accounting principles, consistently applied. All numbers set forth
herein which refer to share prices or amounts will be appropriately adjusted to
reflect stock splits, stock dividends, combinations of shares, recapitalizations
or other similar transactions affecting the subject class of stock.
(m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury of any claim or cause of action in any
legal proceeding arising out of or related to this Agreement or the transactions
or events contemplated hereby or any course of conduct, course of dealing,
statements (whether verbal or written) or actions of any party hereto. The
parties hereto each agree that any and all such claims and causes of action
shall be tried by a
11
court trial without a jury. Each of the parties hereto further waives any right
to seek to consolidate any such legal proceeding in which a jury trial has been
waived with any other legal proceeding in which a jury trial cannot or has not
been waived.
*****
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
as of the date first written above.
VI ACQUISITION CORP.
By: /s/ Michael J. Solot
-----------------------------------
Name: Michael J. Solot
Its: President
/s/ Debra Koenig
----------------------------------------
DEBRA KOENIG
12
EXHIBIT A
ELECTION TO INCLUDE VALUE OF
RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)
The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of
the Internal Revenue Code to include the restricted property described below in
his gross income for the tax year ending December 31, 2003 and supplies the
following information in accordance with the regulations promulgated thereunder:
1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE:
2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE:
86,250 shares (the "SHARES") of Common Stock, par value $0.01 per share, of
VI Acquisition Corp., a Delaware corporation (the "COMPANY").
3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS JUNE __, 2003.
The taxable year to which this election relates is calendar year 2003.
4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
A. The Shares are not transferable except as permitted by a Management
Agreement. Transferees are generally subject to the same restrictions as are
imposed on their transferors. Certificates representing the Shares contain
legends to give notice of restrictions on transfer.
B. If the Taxpayer ceases to serve as an employee of the Company for a
reason other than cause, prior to certain specified time periods (the last day
of each such period, a "VESTING DATE"), a portion of the Shares will be subject
to repurchase by the Company at the amount the Taxpayer paid for the Shares (the
"PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares
subject to repurchase at the Purchase Price will lapse and such portion will
then be repurchasable at its fair market value in the event the Taxpayer ceases
to serve as an employee of the Company for a reason other than cause. On the
June __, 2008 Vesting Date, all Shares then will be repurchasable at their fair
market value in the event the Taxpayer ceases to serve as an employee of the
Company for a reason other than cause.
5. FAIR MARKET VALUE:
The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the property with respect to which this election is being made is $1.00 per
Share.
6. AMOUNT PAID FOR PROPERTY:
The amount paid by Taxpayer for said property is $1.00 per Share.
7. FURNISHING STATEMENT TO EMPLOYER:
A copy of this statement has been furnished to the Company.
Dated: June __, 2003
Debra Koenig
This election must be filed with the Internal Revenue Service Center with which
the Taxpayer files his or her Federal income tax returns and must be filed
within thirty (30) days after the date of purchase. This filing should be made
by registered or certified mail, return receipt requested. The taxpayer must
retain two copies of the completed form for filing with his or her Federal and
State tax returns for the current tax year and an additional copy for his or her
records.
2
Exhibit 10.7
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of June 13,
2003, between VI Acquisition Corp., a Delaware corporation (the "Company"), and
Robert Kaltenbach ("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will commit to purchase, and the Company will commit to sell, an
aggregate of 45,000 shares of the Company's Common Stock, par value $.0001 per
share (the "Common Stock"). All of such shares of Common Stock are referred to
herein as "Executive Shares." Certain definitions are set forth in Section 7 of
this Agreement.
The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of Common Stock and the
commitment to purchase shares of the Company's Series A Preferred Stock, par
value $.0001 per share (the "Preferred Stock"), by Wind Point Partners IV, L.P.,
Wind Point Partners V, L.P., Wind Point IV Executive Advisor Partners, LP, Wind
Point Associates, IV, LLC, Mid Oaks Investments LLC and AG Edwards & Sons, Inc.
(collectively, the "Investors" and each an "Investor"), pursuant to a stock
purchase agreement between the Company, the Investors and certain executives of
the Company dated as of the date hereof (the "Purchase Agreement"). Certain
provisions of this Agreement are intended for the benefit of, and will be
enforceable by, the Investors.
Pursuant to the Purchase Agreement, Executive has also agreed to
purchase 7,795 shares of Common Stock and, pursuant to a Nonstatutory Stock
Option Agreement, has received an option to purchase 458.57 shares of Preferred
Stock. Any shares of Common Stock or Preferred Stock purchased by Executive
pursuant to the Purchase Agreement or the Nonstatutory Stock Option Agreement
are referred to herein as "Coinvest Shares," and Coinvest Shares, together with
Executive Shares, are referred to herein as "Shares".
The parties hereto agree as follows:
1. Executive Shares.
(a) Upon execution of this Agreement, Executive will purchase, and
the Company will sell, 45,000 shares of Common Stock at a price of $1.00 per
share, the fair market value of the Common Stock on the date hereof. The Company
will deliver to Executive the certificates representing such Executive Shares,
and Executive will deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $45,000.
(b) Within thirty (30) days after each purchase by Executive of
Executive Shares pursuant to this Agreement, Executive will make an effective
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code and the regulations promulgated thereunder in the form of Exhibit A
attached hereto.
(c) In connection with the purchase and sale of the Executive
Shares pursuant hereto, Executive represents and warrants to the Company that:
(i) The Executive Shares to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own account
and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities
laws, and the Executive Shares will not be disposed of in contravention
of the Securities Act or any applicable state securities laws;
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks
and benefits of the investment in the Executive Shares;
(iii) Executive is able to bear the economic risk of his
investment in the Executive Shares for an indefinite period of time
because the Executive Shares have not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available;
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Executive Shares and has had full access to such other information
concerning the Company as he has requested;
(v) This Agreement and each of the other agreements
contemplated hereby and by the Purchase Agreement to which Executive is
a party constitute legal, valid and binding obligations of Executive,
enforceable in accordance with their terms, and the execution, delivery
and performance of this Agreement and such other agreements by
Executive does not and will not conflict with, violate or cause a
breach of any agreement, contract or instrument to which Executive is a
party or any judgment, order or decree to which Executive is subject;
(vi) Executive is not a party to or bound by any other
employment agreement, noncompete agreement or confidentiality agreement
which conflicts with the obligations set forth in this Agreement or in
the Employment Agreement; and
(vii) Executive is a resident of the State of Colorado.
(d) As an inducement for the Company to commit to issue the
Executive Shares to Executive, and as a condition thereto, Executive
acknowledges and agrees that neither any future issuance of capital stock of the
Company to Executive nor any provision contained herein or in the Purchase
Agreement shall entitle Executive to remain in the employment of the Company, or
any Subsidiary of the Company, or affect the right of the Company or any
Subsidiary to terminate Executive's employment at any time for any reason,
subject to the terms and conditions of the Employment Agreement.
2. Vesting of Shares.
(a) Except as otherwise provided in Section 2(b) below, the
Executive Shares purchased hereunder will become vested in accordance with the
following schedule, if as of each such date Executive is still employed by the
Company or any Subsidiary of the Company:
2
CUMULATIVE PERCENTAGE OF
DATE EXECUTIVE SHARES TO BE VESTED
---- -----------------------------
1st Anniversary of this Agreement 20%
2nd Anniversary of this Agreement 40%
3rd Anniversary of this Agreement 60%
4th Anniversary of this Agreement 80%
5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the
contrary, upon the occurrence of a Sale of the Company, all Executive Shares
which have not yet become vested shall become vested at the time of such Sale of
the Company (such portion being referred to herein as the "Accelerated Shares");
provided, however, and subject to and unless otherwise provided for under the
Stockholders Agreement by and among the Company, the Investors, the Executive
and certain other parties, that Executive shall not Transfer any interest in any
Accelerated Shares unless and until such time as the Investors shall have
received cash dividends or other cash proceeds resulting from any distributions
on or dispositions of any Preferred Stock or Common Stock in an aggregate amount
equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase
price paid by the Investors to the Company for all Preferred Stock, Common Stock
and other equity interests of the Company purchased by the Investors (but not in
any event including amounts committed but not yet contributed to the capital of
the Company). Executive Shares which have become vested hereunder are referred
to herein as "Vested Shares," and all other Executive Shares are referred to
herein as "Unvested Shares."
(c) The Executive Securities shall at all times be subject to such
restrictions or limitations with respect to the Transfer thereof that may be
contained herein or in the Stockholders Agreement or as otherwise provided by
law.
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company or
any Subsidiary for any reason (a "Separation"), the Shares and all other
Executive Securities (whether held by Executive or one or more of Executive's
transferees, other than the Company and the Investors) will be subject to
repurchase, in each case by the Company pursuant to the terms and conditions set
forth in this Section 3 (the "Repurchase Option").
(b) In the event of a Separation, the Executive Shares purchased
hereunder shall be subject to repurchase as follows: (i) the purchase price for
each Unvested Share of Common Stock will be the Executive's Original Cost for
such share; provided, that if Executive's employment is terminated by the
Company or a Subsidiary with Due Cause or by the Executive without Good Reason,
then the purchase price for each Unvested Share of Common Stock will be the
lesser of (a) Executive's Original Cost for such share and (b) the Fair Market
Value for such share, and (ii) the purchase price for each Vested Share of
Common Stock will be the Fair Market Value for such share; provided that if
Executive's employment is terminated by the Company or a Subsidiary with Due
Cause or by the Executive without Good Reason, then the
3
purchase price for each Vested Share of Common Stock will be the lesser of (a)
Executive's Original Cost for such share and (b) the Fair Market Value for such
share.
(c) In the event of a Separation, the Coinvest Shares purchased
pursuant to the Purchase Agreement, and any other Executive Securities not
otherwise described in Section 3(b) above or this Section 3(c), shall be subject
to repurchase as follows: (i) the purchase price for each share of Common Stock
will be the Fair Market Value for such share and (ii) the purchase price for
each share of Preferred Stock will be Executive's Original Cost for such share.
(d) In the event of a Separation, the Company may elect to
purchase all or any portion of the Executive Securities by delivering written
notice (the "Repurchase Notice") to the holder or holders of the Executive
Securities within 60 days after the Separation or, if later, within 60 days of
the exercise of the option pursuant to the Nonstatutory Stock Option Agreement.
The Repurchase Notice will set forth the number of Unvested Shares, Vested
Shares and Coinvest Shares to be acquired from each holder, the aggregate
consideration to be paid for such securities and the time and place for the
closing of the transaction. The number of each type of securities to be
repurchased by the Company shall first be satisfied to the extent possible from
the Executive Securities held by Executive at the time of delivery of the
Repurchase Notice. If the number of any or all types of Executive Securities
then held by Executive is less than the total number of such securities which
the Company has elected to purchase, the Company shall purchase the remaining
securities elected to be purchased from the other holder(s) of Executive
Securities under this Agreement, pro rata according to the number of the
applicable type of Executive Securities held by such other holder(s) at the time
of delivery of such Repurchase Notice (determined as nearly as practicable to
the nearest share). The number of Unvested Shares, Vested Shares and Coinvest
Shares to be repurchased hereunder will be allocated among Executive and the
other holders of Executive Securities (if any) pro rata according to the number
of the applicable type of Executive Securities to be purchased from such Person.
(e) If, following a Separation due to the death of the Executive,
the Company does not exercise its Repurchase Option as to the Coinvest Shares,
within the period specified in Section 3(d) above, then the estate of the
Executive shall have 90 days from the expiration of the Company's exercise
period to compel the Company to purchase the Coinvest Shares at the lesser of
(i) the Original Cost or (ii) the price determined as set forth in Section 3(c)
above. The estate of the Executive shall exercise its right to compel the
repurchase of the Coinvest Shares, if at all, by giving written notice to the
Company within such 90 day period (the "Put Notice").
(f) The closing of the purchase of the Executive Securities
pursuant to the Repurchase Option or the Put Notice shall take place on the date
designated by the Company in the Repurchase Notice, or on the date designated by
the estate of the Executive in the Put Notice, which date in either such event
shall not be more than 2 months nor less than 5 days after the delivery of such
notice. The Company will pay for the Executive Securities to be purchased by it
pursuant to the Repurchase Option or Put Notice by first offsetting amounts
outstanding under any bona fide debts owed by Executive to the Company and will
pay the remainder of the purchase price to the extent reasonably permissible
under the Company's and its Subsidiaries' equity financing agreements and
agreements evidencing indebtedness for borrowed money and to the extent the
Company has the financial wherewithal at the time to make such payments, by a
check or wire transfer of funds and, if not, by a subordinate note or notes,
each on terms
4
acceptable to banks and other financial institutions loaning money to the
Company and its Subsidiaries, payable in up to three substantially equal,
semi-annual installments beginning on the six month anniversary of the closing
of such purchase and bearing interest (payable quarterly) at a rate per annum
equal to the prime rate as published in The Wall Street Journal from time to
time, in the aggregate amount of the purchase price for such securities. The
Company will be entitled to receive customary representations and warranties
from the sellers of Executive Securities (including representations and
warranties regarding good title to the Executive Securities, the absence of any
liens on such title or other encumbrances with respect to the Transfer of the
Executive Securities and the ability of such sellers to consummate the sale).
(g) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Securities by the Company shall be
subject to applicable restrictions contained in the Delaware General Corporation
Law and as may be required by other parties in the Company's or any
Subsidiaries' equity financing agreements and agreements evidencing indebtedness
for borrowed money, if any. If any such restrictions prohibit the repurchase of
Executive Securities hereunder which the Company is otherwise entitled or
required to make, the Company may make such repurchases as soon as it is
permitted to do so under such restrictions.
(h) Notwithstanding anything to the contrary contained in this
Agreement, if Executive delivers the notice of objection described in the
definition of Fair Market Value, or if the Fair Market Value of a Share is
otherwise determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board, the Company
shall have the right to revoke its exercise of the Repurchase Option for all or
any portion of the Shares elected to be repurchased by it by delivering notice
of such revocation in writing to the holders of the Shares during (i) the
thirty-day period beginning on the date the Company receives Executive's written
notice of objection and (ii) the thirty-day period beginning on the date the
Company is given written notice that the Fair Market Value of a Share was
finally determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board.
4. Restrictions on Transfer of Executive Securities.
(a) Transfer of Executive Securities. Executive shall not Transfer
any interest in any Executive Securities, except at such time as the
restrictions herein terminate as provided in Section 4(b) below. Notwithstanding
the foregoing, the restrictions contained in this Section 4 will not apply with
respect to (i) Transfers of shares of Executive Securities pursuant to
applicable laws of descent and distribution or (ii) Transfer of shares of
Executive Securities among Executive's Family Group; provided that in each case
such restrictions will continue to be applicable to the Executive Securities
irrespective of any such Transfer. Any transferee of Executive Securities
pursuant to a Transfer in accordance with the provisions of this Section 4(a) is
herein referred to as a "Permitted Transferee."
(b) Termination of Restrictions. The restrictions on the Transfer
of Executive Securities set forth in this Section 4 will continue with respect
to each Executive Security until the earlier of (i) a Qualified Public Offering;
or (ii) a Sale of the Company.
5
5. Registration. Executive understands that the Shares are not
currently being registered under the Securities Act by reason of their
contemplated issuance in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Rule 701
thereof. Executive further agrees that he will not sell or otherwise dispose of
the Shares unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered or
qualified or is exempt from registration or qualification under applicable
securities laws of any state. Executive understands that a restrictive legend
consistent with the foregoing, and as set forth in Section 6, will be placed on
the certificates evidencing the Shares, and related stop transfer instructions
will be noted in the stock transfer records of the Company and/or its stock
transfer agent for the Shares.
6. Additional Restrictions on Transfer of Executive Securities.
(a) Legend. The certificates representing the Executive Securities
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF JUNE 13, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET
FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF
THE COMPANY DATED AS OF JUNE 13, 2003. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Executive Securities may
transfer any Executive Securities (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such Transfer.
7. Definitions.
"Affiliate" of the Investors means any direct or indirect general or
limited partner or member of an Investor, as applicable, or any employee or
owner thereof, or any other person, entity or investment fund controlling,
controlled by or under common control with an Investor.
"Due Cause" has the meaning set forth in the Employment Agreement.
"Employment Agreement" means that certain Employment Agreement of even
date herewith between VICORP Restaurants, Inc. and the Executive.
6
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants and any retirement plan for the
Executive.
"Executive Securities" means the Shares and any other securities of the
Company held by Executive or any of Executive's transferees permitted hereunder.
All Executive Securities will continue to be Executive Securities in the hands
of any holder other than Executive (except for the Company, the Investors and
the Investors' Affiliates and except for transferees in a Public Sale). Except
as otherwise provided herein, each such other holder of Executive Securities
will succeed to all rights and obligations attributable to Executive as a holder
of Executive Securities hereunder. Executive Securities will also include shares
of the Company's capital stock or other securities of the Company issued with
respect to Executive Securities by way of a stock split, dividend or other
recapitalization or reclassification.
"Fair Market Value" of each Share as of a relevant date means the
average of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed on that date, or,
if there have been no sales or exchange on which the Common Stock is listed on
any day, the average of the highest bid and lowest asked prices on all
nationally-recognized exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, of the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Common
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Common Stock determined in good faith by the Board of Directors of the
Company (the "Board Calculation"). If the Executive disagrees with the Board
Calculation, the Executive may, within 30 days after receipt of the Board
Calculation, deliver a notice (an "Objection Notice") to the Company setting
forth the Executive's calculation of Fair Market Value. The Board and the
Executive will negotiate in good faith to agree on such Fair Market Value, but
if such agreement is not reached within 30 days after the Company has received
the Objection Notice, Fair Market Value shall be determined by an appraiser
selected by the Board, which appraiser shall submit to the Board and the
Executive a report within 30 days of its engagement setting forth such
determination. The determination of such appraiser shall be final and binding
upon all parties. If the Repurchase Option is exercised within 45 days after a
Separation, then Fair Market Value shall be determined as of the date of such
Separation; thereafter, Fair Market Value shall be determined as of the date the
Repurchase Option or Put Notice, as applicable, is exercised. A comparable
process will be employed to determine the Fair Market Value of Preferred Stock.
"Good Reason" has the meaning set forth in the Employment Agreement.
"Original Cost" means, (i) with respect to each share of Common Stock
purchased hereunder or under the Purchase Agreement, $1.00 (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations) and (ii) with respect to each
7
share of Preferred Stock purchased under the Purchase Agreement, $1,000.00 plus
all accrued and unpaid dividends of the Preferred Stock (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations).
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Board pursuant to which the Investors have realized in
cash a return of two or more times the amount of their investment in the
Company.
"Sale of the Company" means any transaction or series of transactions
pursuant to which (A) any Person(s) other than the Investors and their
respective Affiliates in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include any sale
of equity or debt securities by the Company in a private offering to other
investors selected by the Investors; or (B) more than 50% of the assets of the
Company (treating investments in Affiliates as assets for these purposes) is
spun off, split off or otherwise distributed.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Stockholders Agreement" means that certain Stockholders Agreement
dated as of even date hereof among the Company, the Investors, the Executive and
certain other parties.
"Subsidiary" means any entity of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors, or the equivalent governing body, directly or through one or more
subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose
of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
8. Notices. Any notice, consent, waiver and other communications
required or permitted pursuant to the provisions of this Agreement must be in
writing and will be deemed to have been properly given (a) when delivered by
hand; (b) when sent by telecopier (with acknowledgement of complete
transmission), provided that a copy is mailed by U.S. certified mail, return
receipt requested; (c) three (3) days after sent by certified mail, return
receipt
8
requested; or (d) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
telecopier numbers set forth below:
If to the Company:
VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Tel: (312) 255-4800
Fax: (312) 255-4820
If to the Executive
Robert Kaltenbach
5425 S. Jasper Way
Aurora, Colorado 80015
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Fax: (312) 207-6400
Tel: (312) 207-1000
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt of
subsequent notices by giving written notice thereof to the other party in
accordance with this Section 8.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Securities as the
owner of such securities for any purpose.
(b) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
9
(c) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Executive hereby releases the Company and its affiliates and its and their
predecessors from any obligation or liability the Company or any of its
affiliates or its or their predecessors owes or owed to Executive or any of his
affiliates and related persons prior to the date hereof.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns.
(i) All Executive Securities will continue to be
Executive Securities in the hands of any holder other than Executive,
including any of Executive's transferees permitted hereunder or under
the Stockholders Agreement (except for the Company, the Investors and
the Investors' Affiliates and except for transferees in a Public Sale).
Except as otherwise provided herein, each such other holder of
Executive Securities will succeed to all rights and obligations
attributable to Executive as a holder of Executive Securities
hereunder.
(ii) Except as otherwise provided herein, this Agreement
shall bind and inure to the benefit of and be enforceable by Executive,
the Company, the Investors and their respective successors and assigns
(including subsequent holders of Executive Securities); provided that
the rights and obligations of Executive under this Agreement shall not
be assignable except in connection with a permitted transfer of
Executive Securities hereunder.
(iii) Each of the Investors is intended to be a third party
beneficiary of this Agreement and may enforce any rights granted to it
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
Furthermore, Executive and Company agree and consent to submit to personal
jurisdiction in the State of Illinois in any state or federal court of competent
subject matter jurisdiction situated in Cook County, Illinois. Executive and
Company agree that the sole and exclusive venue for any suit arising out of, or
seeking to enforce, the terms of this Agreement shall be in a state or federal
court of competent subject matter jurisdiction situated in Cook County,
Illinois.
10
(g) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive. No cause of conduct or failure or delay in enforcing the provisions
of this Agreement shall affect the validity, binding effect or enforceability of
this Agreement.
(i) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Indemnification and Reimbursement of Payments on Behalf of
Executive. The Company and any Subsidiary shall be entitled to deduct or
withhold from any amounts owing from the Company or any Subsidiary to the
Executive any federal, state, local or foreign withholding taxes, excise taxes,
or employment taxes ("Taxes") imposed with respect to the Executive's
compensation or other payments from the Company or any Subsidiary or the
Executive's ownership interest in the Company, including, but not limited to,
wages, bonuses, dividends, the receipt or exercise of stock options and/or the
receipt or vesting of restricted stock. The Executive shall indemnify the
Company and any Subsidiary for any amounts paid with respect to any such Taxes,
together with any interest, penalties and related expenses thereto.
(k) Termination. This Agreement shall survive the termination of
Executive's employment with the Company or any Subsidiary and shall remain in
full force and effect after such termination.
(l) Generally Accepted Accounting Principles; Adjustments of
Numbers. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with United
States generally accepted accounting principles, consistently applied. All
numbers set forth herein which refer to share prices or amounts will be
appropriately adjusted to reflect stock splits, stock dividends, combinations of
shares, recapitalizations or other similar transactions affecting the subject
class of stock.
(m) Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury of any claim or cause of
action in any legal proceeding arising out of or related to this Agreement or
the transactions or events contemplated hereby or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party
hereto. The parties hereto each agree that any and all such claims and causes of
action shall be tried by a
11
court trial without a jury. Each of the parties hereto further waives any right
to seek to consolidate any such legal proceeding in which a jury trial has been
waived with any other legal proceeding in which a jury trial cannot or has not
been waived.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
as of the date first written above.
VI ACQUISITION CORP.
By: /s/ Debra Koenig
----------------------------
Name: Debra Koenig
Its: Executive Vice President
/s/ Robert Kaltenbach
--------------------------------
ROBERT KALTENBACH
12
EXHIBIT A
ELECTION TO INCLUDE VALUE OF
RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)
The undersigned (the "TAXPAYER") hereby elects pursuant to
Section 83(b) of the Internal Revenue Code to include the restricted property
described below in his gross income for the tax year ending December 31, 2003
and supplies the following information in accordance with the regulations
promulgated thereunder:
1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER
ARE:
Robert Kaltenbach
Social Security # ________
2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING
MADE:
45,000 shares (the "SHARES") of Common Stock, par value $0.01 per
share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY").
3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS JUNE __, 2003.
The taxable year to which this election relates is calendar year 2003.
4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
A. The Shares are not transferable except as permitted by a
Management Agreement. Transferees are generally subject to the same restrictions
as are imposed on their transferors. Certificates representing the Shares
contain legends to give notice of restrictions on transfer.
B. If the Taxpayer ceases to serve as an employee of the Company
for a reason other than cause, prior to certain specified time periods (the last
day of each such period, a "VESTING DATE"), a portion of the Shares will be
subject to repurchase by the Company at the amount the Taxpayer paid for the
Shares (the "PURCHASE PRICE"). On each specified Vesting Date, a portion of the
Shares subject to repurchase at the Purchase Price will lapse and such portion
will then be repurchasable at its fair market value in the event the Taxpayer
ceases to serve as an employee of the Company for a reason other than cause. On
the June __, 2008 Vesting Date, all Shares then will be repurchasable at their
fair market value in the event the Taxpayer ceases to serve as an employee of
the Company for a reason other than cause.
5. FAIR MARKET VALUE:
The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the property with respect to which this election is being made is $1.00 per
Share.
6. AMOUNT PAID FOR PROPERTY:
The amount paid by Taxpayer for said property is $1.00 per Share.
7. FURNISHING STATEMENT TO EMPLOYER:
A copy of this statement has been furnished to the Company.
Dated: June __, 2003
Robert Kaltenbach
This election must be filed with the Internal Revenue Service Center with which
the Taxpayer files his or her Federal income tax returns and must be filed
within thirty (30) days after the date of purchase. This filing should be made
by registered or certified mail, return receipt requested. The taxpayer must
retain two copies of the completed form for filing with his or her Federal and
State tax returns for the current tax year and an additional copy for his or her
records.
2
Exhibit 10.8
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of June 13,
2003, between VI Acquisition Corp., a Delaware corporation (the "Company"), and
Walter van Benthuysen (the "Director").
The Company and Director desire to enter into an agreement pursuant to
which Director will commit to purchase, and the Company will commit to sell, an
aggregate of 11,250 shares of the Company's Common Stock, par value $.0001 per
share (the "Common Stock"). All of such shares of Common Stock are referred to
herein as "Director Shares." Certain definitions are set forth in Section 7 of
this Agreement.
Pursuant to the stock purchase agreement between the Company, the
Investors, certain employees of the Company and others dated as of the date
hereof (the "Purchase Agreement"), Director has also agreed to purchase 8,373
shares of Common Stock and 480 shares of Preferred Stock. Any shares of Common
Stock or Preferred Stock purchased by Director pursuant to the Purchase
Agreement are referred to herein as "Coinvest Shares," and Coinvest Shares,
together with Director Shares, are referred to herein as "Shares".
The parties hereto agree as follows:
1. Director Shares.
(a) Upon execution of this Agreement, Director will purchase, and
the Company will sell, 11,250 shares of Common Stock at a price of $1.00 per
share, the fair market value of the Common Stock on the date hereof. The Company
will deliver to Director the certificates representing such Director Shares, and
Director will deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $11,250.
(b) Within thirty (30) days after each purchase by Director of
Director Shares pursuant to this Agreement, Director will make an effective
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code and the regulations promulgated thereunder in the form of Exhibit A
attached hereto.
(c) In connection with the purchase and sale of the Director
Shares pursuant hereto, Director represents and warrants to the Company that:
(i) The Director Shares to be acquired by Director
pursuant to this Agreement will be acquired for Director's own account
and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities
laws, and the Director Shares will not be disposed of in contravention
of the Securities Act or any applicable state securities laws;
(ii) Director is an outside director of the Company, is
sophisticated in financial matters and is able to evaluate the risks
and benefits of the investment in the Director Shares;
(iii) Director is able to bear the economic risk of his
investment in the Director Shares for an indefinite period of time
because the Director Shares have not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available;
(iv) Director has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Director Shares and has had full access to such other information
concerning the Company as he has requested;
(v) This Agreement and each of the other agreements
contemplated hereby and by the Purchase Agreement to which Director is
a party constitute legal, valid and binding obligations of Director,
enforceable in accordance with their terms, and the execution, delivery
and performance of this Agreement and such other agreements by Director
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Director is a party or any
judgment, order or decree to which Director is subject;
(vi) Director is not a party to or bound by any employment
agreement, consulting agreement, noncompete agreement or
confidentiality agreement which conflicts with the obligations set
forth in this Agreement; and
(vii) Director is a resident of the State of Illinois.
(d) As an inducement for the Company to commit to issue the
Director Shares to Director, and as a condition thereto, Director acknowledges
and agrees that neither any future issuance of capital stock of the Company to
Director nor any provision contained herein or in the Purchase Agreement shall
entitle Director to remain in the service of the Company, or any Subsidiary of
the Company, or affect the right of the Company or any Subsidiary to terminate
Director's services at any time for any reason.
2. Vesting of Shares.
(a) Except as otherwise provided in Section 2(b) below, the
Director Shares purchased hereunder will become vested in accordance with the
following schedule, if as of each such date Director is still serving as a
director of the Company or is otherwise engaged to perform services on behalf of
the Company or any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF
DATE DIRECTOR SHARES TO BE VESTED
---- ----------------------------
1st Anniversary of this Agreement 20%
2nd Anniversary of this Agreement 40%
3rd Anniversary of this Agreement 60%
4th Anniversary of this Agreement 80%
5th Anniversary of this Agreement 100%
2
(b) Notwithstanding the foregoing or anything herein to the
contrary, upon the occurrence of a Sale of the Company, all Director Shares
which have not yet become vested shall become vested at the time of such Sale of
the Company (such portion being referred to herein as the "Accelerated Shares");
provided, however, and subject to and unless otherwise provided for under the
Stockholders Agreement by and among the Company, the Investors, the Director and
certain other parties, that Director shall not Transfer any interest in any
Accelerated Shares unless and until such time as the Investors shall have
received cash dividends or other cash proceeds resulting from any distributions
on or dispositions of any Preferred Stock or Common Stock in an aggregate amount
equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase
price paid by the Investors to the Company for all Preferred Stock, Common Stock
and other equity interests of the Company purchased by the Investors (but not in
any event including amounts committed but not yet contributed to the capital of
the Company). Director Shares which have become vested hereunder are referred to
herein as "Vested Shares," and all other Director Shares are referred to herein
as "Unvested Shares."
(c) The Director Securities shall at all times be subject to such
restrictions or limitations with respect to the Transfer thereof that may be
contained herein or in the Stockholders Agreement or as otherwise provided by
law.
3. Repurchase Option.
(a) In the event Director ceases to be a director of the Company
or to otherwise be engaged by the Company or any Subsidiary for any reason (a
"Separation"), the Shares and all other Director Securities (whether held by
Director or one or more of Director's transferees, other than the Company and
the Investors) will be subject to repurchase, in each case by the Company
pursuant to the terms and conditions set forth in this Section 3 (the
"Repurchase Option").
(b) In the event of a Separation, the Director Shares purchased
hereunder shall be subject to repurchase as follows: (i) the purchase price for
each Unvested Share of Common Stock will be the Director's Original Cost for
such share; and (ii) the purchase price for each Vested Share of Common Stock
will be the Fair Market Value for such share.
(c) In the event of a Separation, the Coinvest Shares purchased
pursuant to the Purchase Agreement, and any other Director Securities not
otherwise described in Section 3(b) above or this Section 3(c), shall be subject
to repurchase as follows: (i) the purchase price for each share of Common Stock
will be the Fair Market Value for such share and (ii) the purchase price for
each share of Preferred Stock will be Director's Original Cost for such share.
(d) In the event of a Separation, the Company may elect to
purchase all or any portion of the Director Securities by delivering written
notice (the "Repurchase Notice") to the holder or holders of the Director
Securities within 60 days after the Separation. The Repurchase Notice will set
forth the number of Unvested Shares, Vested Shares and Coinvest Shares to be
acquired from each holder, the aggregate consideration to be paid for such
securities and the time and place for the closing of the transaction. The number
of each type of securities to be repurchased by the Company shall first be
satisfied to the extent possible from the Director Securities held by Director
at the time of delivery of the Repurchase Notice. If the number of any or all
types of
3
Director Securities then held by Director is less than the total number of such
securities which the Company has elected to purchase, the Company shall purchase
the remaining securities elected to be purchased from the other holder(s) of
Director Securities under this Agreement, pro rata according to the number of
the applicable type of Director Securities held by such other holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest share). The number of Unvested Shares, Vested Shares and Coinvest
Shares to be repurchased hereunder will be allocated among Director and the
other holders of Director Securities (if any) pro rata according to the number
of the applicable type of Director Securities to be purchased from such Person.
(e) If, following a Separation due to the death of the Director,
the Company does not exercise its Repurchase Option as to the Coinvest Shares,
within the period specified in Section 3(d) above, then the estate of the
Director shall have 90 days from the expiration of the Company's 60 day exercise
period to compel the Company to purchase the Coinvest Shares at the lesser of
(i) the Original Cost or (ii) the price determined as set forth in Section 3(c)
above. The estate of the Director shall exercise its right to compel the
repurchase of the Coinvest Shares, if at all, by giving written notice to the
Company within such 90 day period (the "Put Notice").
(f) The closing of the purchase of the Director Securities
pursuant to the Repurchase Option or the Put Notice shall take place on the date
designated by the Company in the Repurchase Notice, or on the date designated by
the estate of the Director in the Put Notice, which date in either such event
shall not be more than 2 months nor less than 5 days after the delivery of such
notice. The Company will pay for the Director Securities to be purchased by it
pursuant to the Repurchase Option or Put Notice by first offsetting amounts
outstanding under any bona fide debts owed by Director to the Company, and will
pay the remainder of the purchase price to the extent reasonably permissible
under the Company's and its Subsidiaries' equity financing agreements and
agreements evidencing indebtedness for borrowed money and to the extent the
Company has the financial wherewithal at the time to make such payments, by a
check or wire transfer of funds and, if not, by a subordinate note or notes,
each on terms acceptable to banks and other financial institutions loaning money
to the Company and its Subsidiaries, payable in up to three substantially equal,
semi-annual installments beginning on the six month anniversary of the closing
of such purchase and bearing interest (payable quarterly) at a rate per annum
equal to the prime rate as published in The Wall Street Journal from time to
time, in the aggregate amount of the purchase price for such securities. The
Company will be entitled to receive customary representations and warranties
from the sellers of Director Securities (including representations and
warranties regarding good title to the Director Securities, the absence of any
liens on such title or other encumbrances with respect to the Transfer of the
Director Securities and the ability of such sellers to consummate the sale).
(g) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Director Securities by the Company shall be
subject to applicable restrictions contained in the Delaware General Corporation
Law and as may be required by other parties in the Company's or any
Subsidiaries' equity financing agreements and agreements evidencing indebtedness
for borrowed money, if any. If any such restrictions prohibit the repurchase of
Director Securities hereunder which the Company is otherwise entitled or
required to make, the Company may make such repurchases as soon as it is
permitted to do so under such restrictions.
4
(h) Notwithstanding anything to the contrary contained in this
Agreement, if Director delivers the notice of objection described in the
definition of Fair Market Value, or if the Fair Market Value of a Share is
otherwise determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board, the Company
shall have the right to revoke its exercise of the Repurchase Option for all or
any portion of the Shares elected to be repurchased by it by delivering notice
of such revocation in writing to the holders of the Shares during (i) the
thirty-day period beginning on the date the Company receives Director's written
notice of objection and (ii) the thirty-day period beginning on the date the
Company is given written notice that the Fair Market Value of a Share was
finally determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board.
4. Restrictions on Transfer of Director Securities.
(a) Transfer of Director Securities. Director shall not Transfer
any interest in any Director Securities, except at such time as the restrictions
herein terminate as provided in Section 4(b) below. Notwithstanding the
foregoing, the restrictions contained in this Section 4 will not apply with
respect to (i) Transfers of shares of Director Securities pursuant to applicable
laws of descent and distribution or (ii) Transfer of shares of Director
Securities among Director's Family Group; provided that in each case such
restrictions will continue to be applicable to the Director Securities
irrespective of any such Transfer. Any transferee of Director Securities
pursuant to a Transfer in accordance with the provisions of this Section 4(a) is
herein referred to as a "Permitted Transferee."
(b) Termination of Restrictions. The restrictions on the Transfer
of Director Securities set forth in this Section 4 will continue with respect to
each Director Security until the earlier of (i) a Qualified Public Offering; or
(ii) a Sale of the Company.
5. Registration. Director understands that the Shares are not
currently being registered under the Securities Act by reason of their
contemplated issuance in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Rule 701
thereof. Director further agrees that he will not sell or otherwise dispose of
the Shares unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered or
qualified or is exempt from registration or qualification under applicable
securities laws of any state. Director understands that a restrictive legend
consistent with the foregoing, and as set forth in Section 6, will be placed on
the certificates evidencing the Shares, and related stop transfer instructions
will be noted in the stock transfer records of the Company and/or its stock
transfer agent for the Shares.
6. Additional Restrictions on Transfer of Director Securities.
(a) Legend. The certificates representing the Director Securities
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF JUNE 13, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED
5
(THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND A DIRECTOR OF THE COMPANY
DATED AS OF JUNE 13, 2003. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) Opinion of Counsel. No holder of Director Securities may
transfer any Director Securities (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such Transfer.
7. Definitions.
"Affiliate" of the Investors means any direct or indirect general or
limited partner or member of an Investor, as applicable, or any employee or
owner thereof, or any other person, entity or investment fund controlling,
controlled by or under common control with an Investor.
"Director's Family Group" means Director's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Director
and/or Director's spouse and/or descendants and any retirement plan for the
Director.
"Director Securities" means the Shares and any other securities of the
Company held by Director or any of Director's transferees permitted hereunder.
All Director Securities will continue to be Director Securities in the hands of
any holder other than Director (except for the Company, the Investors and the
Investors' Affiliates and except for transferees in a Public Sale). Except as
otherwise provided herein, each such other holder of Director Securities will
succeed to all rights and obligations attributable to Director as a holder of
Director Securities hereunder. Director Securities will also include shares of
the Company's capital stock or other securities of the Company issued with
respect to Director Securities by way of a stock split, dividend or other
recapitalization or reclassification.
"Fair Market Value" of each Share as of a relevant date means the
average of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed on that date, or,
if there have been no sales or exchange on which the Common Stock is listed on
any day, the average of the highest bid and lowest asked prices on all
nationally-recognized exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, of the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau
6
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time such Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value will
be the fair value of such Common Stock determined in good faith by the Board of
Directors of the Company (the "Board Calculation"). If the Director disagrees
with the Board Calculation, the Director may, within 30 days after receipt of
the Board Calculation, deliver a notice (an "Objection Notice") to the Company
setting forth the Director's calculation of Fair Market Value. The Board and the
Director will negotiate in good faith to agree on such Fair Market Value, but if
such agreement is not reached within 30 days after the Company has received the
Objection Notice, Fair Market Value shall be determined by an appraiser selected
by the Board, which appraiser shall submit to the Board and the Director a
report within 30 days of its engagement setting forth such determination. The
determination of such appraiser shall be final and binding upon all parties. If
the Repurchase Option is exercised within 45 days after a Separation, then Fair
Market Value shall be determined as of the date of such Separation; thereafter,
Fair Market Value shall be determined as of the date the Repurchase Option or
Put Notice, as applicable, is exercised. A comparable process will be employed
to determine the Fair Market Value of Preferred Stock.
"Investors" means Wind Point Partners IV, L.P., Wind Point Partners V,
L.P., Mid Oaks Investments LLC and AG Edwards & Sons, Inc. and such other
parties as may be designated as "Investors" in the Purchase Agreement.
"Original Cost" means, (i) with respect to each share of Common Stock
purchased hereunder or under the Purchase Agreement, $1.00 (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations) and (ii) with respect to each share of Preferred Stock
purchased under the Purchase Agreement, $1,000.00 plus all accrued and unpaid
dividends of the Preferred Stock (as proportionately adjusted for all subsequent
stock splits, stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means the Company's Series A Preferred Stock, par
value $.0001 per share.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Board pursuant to which the Investors have realized in
cash a return of two or more times the amount of their investment in the
Company.
7
"Sale of the Company" means any transaction or series of transactions
pursuant to which (A) any Person(s) other than the Investors and their
respective Affiliates in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include any sale
of equity or debt securities by the Company in a private offering to other
investors selected by the Investors; or (B) more than 50% of the assets of the
Company (treating investments in Affiliates as assets for these purposes) is
spun off, split off or otherwise distributed.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Stockholders Agreement" means that certain Stockholders Agreement
dated as of even date hereof among the Company, the Investors, the Director and
certain other parties.
"Subsidiary" means any entity of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors, or the equivalent governing body, directly or through one or more
subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose
of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
8. Notices. Any notice, consent, waiver and other communications
required or permitted pursuant to the provisions of this Agreement must be in
writing and will be deemed to have been properly given (a) when delivered by
hand; (b) when sent by telecopier (with acknowledgement of complete
transmission), provided that a copy is mailed by U.S. certified mail, return
receipt requested; (c) three (3) days after sent by certified mail, return
receipt requested; or (d) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
telecopier numbers set forth below:
If to the Company:
VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Walter van Benthuysen
17 Tartan Lakes Court
Westmont, Illinois 60559
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Fax: (312) 207-6400
Tel: (312) 207-1000
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt of
subsequent notices by giving written notice thereof to the other party in
accordance with this Section 8.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Director Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Director Securities as the owner
of such securities for any purpose.
(b) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Director hereby releases the Company and its affiliates and its and their
predecessors from any obligation or liability the Company or any of its
affiliates or its or their predecessors owes or owed to Director or any of his
affiliates and related persons prior to the date hereof.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
9
(e) Successors and Assigns.
(i) All Director Securities will continue to be Director
Securities in the hands of any holder other than Director, including
any of Director's transferees permitted hereunder or under the
Stockholders Agreement (except for the Company, the Investors and the
Investors' Affiliates and except for transferees in a Public Sale).
Except as otherwise provided herein, each such other holder of Director
Securities will succeed to all rights and obligations attributable to
Director as a holder of Director Securities hereunder.
(ii) Except as otherwise provided herein, this Agreement
shall bind and inure to the benefit of and be enforceable by Director,
the Company, the Investors and their respective successors and assigns
(including subsequent holders of Director Securities); provided that
the rights and obligations of Director under this Agreement shall not
be assignable except in connection with a permitted transfer of
Director Securities hereunder.
(iii) Each of the Investors is intended to be a third party
beneficiary of this Agreement and may enforce any rights granted to it
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
Furthermore, Director and Company agree and consent to submit to personal
jurisdiction in the State of Illinois in any state or federal court of competent
subject matter jurisdiction situated in Cook County, Illinois. Director and
Company agree that the sole and exclusive venue for any suit arising out of, or
seeking to enforce, the terms of this Agreement shall be in a state or federal
court of competent subject matter jurisdiction situated in Cook County,
Illinois.
(g) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Director. No cause of conduct or failure or delay in enforcing the provisions of
this Agreement shall affect the validity, binding effect or enforceability of
this Agreement.
10
(i) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Indemnification and Reimbursement of Payments on Behalf of
Director. The Company and any Subsidiary shall be entitled to deduct or withhold
from any amounts owing from the Company or any Subsidiary to the Director any
federal, state, local or foreign withholding taxes, excise taxes, or employment
taxes ("Taxes") imposed with respect to the Director's compensation or other
payments from the Company or any Subsidiary or the Director's ownership interest
in the Company, including, but not limited to, wages, bonuses, dividends, the
receipt or exercise of stock options and/or the receipt or vesting of restricted
stock. The Director shall indemnify the Company and any Subsidiary for any
amounts paid with respect to any such Taxes, together with any interest,
penalties and related expenses thereto.
(k) Termination. This Agreement shall survive the termination of
Director's services with the Company or any Subsidiary and shall remain in full
force and effect after such termination.
(l) Generally Accepted Accounting Principles; Adjustments of
Numbers. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with United
States generally accepted accounting principles, consistently applied. All
numbers set forth herein which refer to share prices or amounts will be
appropriately adjusted to reflect stock splits, stock dividends, combinations of
shares, recapitalizations or other similar transactions affecting the subject
class of stock.
(m) Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury of any claim or cause of
action in any legal proceeding arising out of or related to this Agreement or
the transactions or events contemplated hereby or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party
hereto. The parties hereto each agree that any and all such claims and causes of
action shall be tried by a court trial without a jury. Each of the parties
hereto further waives any right to seek to consolidate any such legal proceeding
in which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
* * * * *
11
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
as of the date first written above.
VI ACQUISITION CORP.
By: /s/ Debra Koenig
-------------------------------------
Name: Debra Koenig
Its: Executive Vice President
/s/ Walter Van Benthuysen
-------------------------------------
WALTER VAN BENTHUYSEN
12
EXHIBIT A
ELECTION TO INCLUDE VALUE OF
RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)
The undersigned (the "TAXPAYER") hereby elects pursuant to Section
83(b) of the Internal Revenue Code to include the restricted property described
below in his gross income for the tax year ending December 31, 2003 and supplies
the following information in accordance with the regulations promulgated
thereunder:
1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER
ARE:
Walter van Benthuysen
17 Tartan Lakes Court
Westmont, Illinois 60559
Social Security # _______________
2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING
MADE:
11,250 shares (the "SHARES") of Common Stock, par value $0.01 per
share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY").
3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS JUNE __, 2003.
The taxable year to which this election relates is calendar year 2003.
4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
A. The Shares are not transferable except as permitted by a
Management Agreement. Transferees are generally subject to the same restrictions
as are imposed on their transferors. Certificates representing the Shares
contain legends to give notice of restrictions on transfer.
B. If the Taxpayer ceases to serve as a director or other service
provider of the Company prior to certain specified time periods (the last day of
each such period, a "VESTING DATE"), a portion of the Shares will be subject to
repurchase by the Company at the amount the Taxpayer paid for the Shares (the
"PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares
subject to repurchase at the Purchase Price will lapse and such portion will
then be repurchasable at its fair market value in the event the Taxpayer ceases
to serve as a director or other service provided of the Company. On the June __,
2008 Vesting Date, all Shares then will be repurchasable at their fair market
value in the event the Taxpayer ceases to serve as a director or other service
provider of the Company.
5. FAIR MARKET VALUE:
The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the property with respect to which this election is being made is $1.00 per
Share.
13
6. AMOUNT PAID FOR PROPERTY:
The amount paid by Taxpayer for said property is $1.00 per Share.
7. FURNISHING STATEMENT TO EMPLOYER:
A copy of this statement has been furnished to the Company.
Dated: June __, 2003
Walter van Benthuysen
This election must be filed with the Internal Revenue Service Center with which
the Taxpayer files his or her Federal income tax returns and must be filed
within thirty (30) days after the date of purchase. This filing should be made
by registered or certified mail, return receipt requested. The taxpayer must
retain two copies of the completed form for filing with his or her Federal and
State tax returns for the current tax year and an additional copy for his or her
records.
2
Exhibit 10.9
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective June 13, 2003 ("EFFECTIVE DATE") by
and between VI Acquisition Corp., a Delaware corporation (the "COMPANY"), and
Robert Kaltenbach (the "OPTIONEE").
WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement
dated as of the 15th day of April, 2003 (the "PURCHASE AGREEMENT"), by and among
the Company, Midway Investors Holdings, Inc. ("MIDWAY"), the shareholders of
Midway and certain other parties, the Company is acquiring all of the
outstanding equity of Midway (the "TRANSACTION");
WHEREAS, the Optionee will be retained as an employee of the Company or
one of its subsidiaries upon the consummation of the Transaction;
WHEREAS, pursuant to the terms of the Purchase Agreement, the Optionee
has elected to exchange options to purchase shares of Midway's Class A Preferred
Stock, Class C Preferred Stock and Class B Common Stock (as such terms are
defined in the Purchase Agreement) having an aggregate Option Spread (as such
term is defined in the Purchase Agreement) of $447,205, for an option to
purchase shares of the Company's Preferred Stock, and the Company, to create an
incentive for the Optionee, has agreed to grant him an option upon certain terms
and conditions; and
WHEREAS, the grant hereunder shall be independent of any formal stock
option plan to be maintained by the Company.
NOW, THEREFORE, in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:
1. GRANT OF OPTION
The Company grants to the Optionee the right and option (the "OPTION")
to purchase all or any part of an aggregate of 458.57 shares of the
Company's Preferred Stock (the "SHARES") on the terms and conditions
and subject to all the limitations set forth herein. The Optionee
acknowledges that the definitive records pertaining to the grant of
this Option, and exercises of rights hereunder, shall be retained by
the Company. The Option granted herein is intended to be a nonstatutory
option.
2. PURCHASE PRICE
The purchase price of the Shares subject to the Option shall be Twenty
Four and 80/100 Dollars ($24.80) per Share.
3. EXERCISE OF OPTION
Subject to this Agreement, the Option shall be fully vested and
exercisable on the Effective Date.
The Option shall expire on, and shall be exercised (if at all) prior to
the first to occur of:
(a) June 12, 2013;
(b) Ninety (90) days after the date on which the Optionee shall
cease, for any reason or cause whatsoever, and without regard
to such reason or cause (except as set forth in (c) and (d)
below) to be an employee of, or consultant to, the Company or
any affiliate or subsidiary thereof;
(c) The date the Optionee's services are terminated, whether as an
employee or otherwise, if such services are terminated for Due
Cause (as such term is defined in that certain Employment
Agreement executed by and between the Employee and the Company
of even date herewith (the "EMPLOYMENT AGREEMENT")); or
(d) Twelve months from the date the Optionee's services are
terminated, whether as an employee or otherwise, if such
services are terminated as a result of the Optionee's death or
Permanent Disability (as such term is defined in the
Employment Agreement), in which case the Option may be
exercised by the Optionee or his legal representative or
estate within such twelve month period.
4. ISSUANCE OF SHARES
The Option may be exercised in whole or in part (to the extent that it
is exercisable in accordance with its terms) by giving written notice
(or any other approved form of notice) to the Company. Such written
notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being
exercised and shall specify a date (other than a Saturday, Sunday or
legal holiday) not less than five (5) nor more than ten (10) days after
the date of such written notice, as the date on which the Shares will
be purchased, at the principal office of the Company during ordinary
business hours, or at such other hour and place agreed upon by the
Company and the person or persons exercising the Option, and shall
otherwise comply with the terms and conditions of this Agreement. On
the date specified in such written notice (which date may be extended
by the Company if any law or regulation requires the Company to take
any action with respect to the Shares prior to the issuance thereof),
the Company shall accept payment for the Shares and shall deliver to
the Optionee an appropriate certificate or certificates for the Shares
as to which the Option was exercised. The Optionee acknowledges and
agrees that the Shares to be acquired upon exercise of the Option shall
be subject to the Company's Stockholders' Agreement as in effect from
time to time and the Management Agreement, and the issuance of Shares
pursuant to the exercise of this Option shall be expressly conditioned
upon the Optionee's execution of such agreements.
The Option price of any Shares shall be payable at the time of exercise
and shall only be payable through the Optionee's delivery to the
Company of Shares that would otherwise be acquired upon the exercise of
the Option (the "WITHHELD SHARES"). The fair market value of the number
of Shares to be acquired by the Optionee upon exercise of the Option,
net of the Withheld Shares, shall be equal to $447,205 (the "ACQUIRED
SHARES")
2
plus the value of Dividends (as provided for in Article 4 of the
Amended and Restated Certificate of Incorporation of VI Acquisition
Corp.) accrued on the Acquired Shares from the Effective Date.
The Company shall pay all original issue taxes with respect to the
issuance of Shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith. The holder
of this Option shall have the rights of a stockholder only with respect
to those Shares covered by the Option which have been registered in the
holder's name in the share register of the Company upon the due
exercise of the Option.
5. REPRESENTATIONS AND COVENANTS OF THE OPTIONEE
In connection with the grant of the Option hereunder, the Optionee
represents and warrants to the Company that:
(a) The Shares subject to the Option under this Agreement shall be
acquired for the Optionee's own account and not with a view
to, or present intention of, distribution in violation of the
Securities Act of 1933 (the "1933 ACT") or any applicable
state securities laws, and the Shares will not be disposed of
in contravention of the 1933 Act or any applicable state
securities laws.
(b) The Optionee is sophisticated in financial matters and has
been given the opportunity prior to exercise to evaluate the
risks and benefits of the Option and the Shares.
(c) The Optionee acknowledges that he is able to bear the economic
risk of the exercise of the Option for an indefinite period of
time, because the Shares have not been registered under the
1933 Act and, therefore, cannot be resold unless subsequently
registered under the 1933 Act or an exemption from such
registration is available.
(d) The Optionee has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the
grant of the Option and has had full access to such
information concerning the Company as he has requested.
(e) The Optionee has the full right, power and authority to
execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid
and legally binding obligations of the Optionee enforceable
against him in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or
affecting the enforcement of creditors' rights generally, now
or hereafter in effect and subject to the application of
equitable principles and the availability of equitable
remedies.
(f) The Optionee is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body
which would prevent the execution or delivery of this
Agreement by him or the consummation of the transactions
contemplated hereby.
3
(g) The Optionee understands that neither the issuance of the
Option nor any provision contained herein shall entitle the
Optionee to remain in the service of the Company or affect the
Company's right to terminate the Optionee's employment at any
time for any or no reason.
6. REGISTRATION
The Optionee understands that the Shares are not currently being
registered under the 1933 Act by reason of their contemplated issuance
in a transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act pursuant to Section 4(2) thereof. The
Optionee further agrees that he will not sell or otherwise dispose of
the Shares unless such sale or other disposition has been registered or
is exempt from registration under the 1933 Act and has been registered
or qualified or is exempt from registration or qualification under
applicable securities laws of any state. The Optionee understands that
a restrictive legend consistent with the foregoing, and as set forth in
Paragraph 8, will be placed on the certificates evidencing the Shares,
and related stop transfer instructions will be noted in the stock
transfer records of the Company and/or its stock transfer agent for the
Shares.
7. WITHHOLDING
The Company shall have the power and right to deduct or withhold, or
require the Optionee to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes required by law to be withheld
with respect to any grant made under or as a result of this Agreement.
In the alternative, upon any taxable event hereunder, the Optionee may
elect, subject to Company approval, to satisfy the withholding
requirement in whole or in part, by having the Company withhold Shares
that would otherwise be transferred to the Optionee having a fair
market value, on the date the tax is to be determined, equal to the
minimum marginal tax that could be imposed on the transaction. All
elections shall be made in writing and signed by the Optionee.
8. LEGEND
The Optionee shall be bound by the provisions of the following legend
(or similar legend) which shall be endorsed upon the certificate(s)
evidencing the Shares issued pursuant to the grant of the Option
hereunder.
"The shares of stock represented by this certificate have been
acquired for investment and they may not be sold or otherwise
transferred by any person in the absence of an effective
registration statement for the shares under the 1933 Act or an
opinion of counsel satisfactory to the Company that an
exemption is then available."
"The shares of stock represented by this certificate are
subject to the terms and conditions of a certain Stockholders'
Agreement dated as of June 13, 2003, among the Company and
certain of its stockholders, and the terms of the Management
Agreement dated as of June 13, 2003, between the
4
Company and the Optionee. Copies of the Agreements are on file
in the office of the Secretary of the Company. The Agreements
provide, among other things, for restrictions upon the
holder's right to transfer the shares represented hereby, and
for certain prior rights to purchase and certain obligations
to sell the shares of stock evidenced by this certificate at a
designated purchase price determined in accordance with
certain procedures. Any attempted transfer of these shares
other than in compliance with the Agreements shall be void and
of no effect. By accepting the shares of stock evidenced by
this certificate, any permitted transferee agrees to be bound
by all of the terms and conditions of said Agreements."
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
If the outstanding Shares of the Company are changed into or exchanged
for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any reorganization,
merger or consolidation, or if a change is made to the stock of the
Company by reason of any recapitalization, reclassification, change in
par value, stock split, combination of shares or dividends payable in
capital stock, or the like, the Company shall make adjustments to the
Shares granted to, or available for, the Optionee as it may determine
to be appropriate under the circumstances.
10. NON-ASSIGNABILITY
This Option shall not be transferable by the Optionee and shall be
exercisable only by the Optionee, except as this Agreement may
otherwise provide.
11. NOTICES
Any notices required or permitted by the terms of this Agreement shall
be given by registered or certified mail, return receipt requested,
addressed as follows:
To the Company: VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attention: Michael Solot
To the Optionee: Robert Kaltenbach
5425 S. Jasper Way
Aurora, Colorado 80015
or to such other address or addresses of which notice in the same
manner has previously been given. Any such notice shall be deemed to
have been given when mailed in accordance with the foregoing
provisions.
5
12. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware.
13. BINDING EFFECT
This Agreement shall (subject to the provisions of Section 10 hereof)
be binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed on their behalf, by their duly authorized
representatives, effective on the day and year first above written.
VI ACQUISITION CORP. OPTIONEE
By: /s/ Debra Koenig /s/ Robert Kaltenbach
------------------------- ----------------------------
Its: Executive Vice President Robert Kaltenbach
6
Exhibit 10.10
INSTRUCTIONS: PLEASE READ THE ACCOMPANYING LETTER FROM THE
COMPANY CAREFULLY. IF YOU WISH TO EXERCISE YOUR PREEMPTIVE RIGHTS, YOU MUST
COMPLETE AND SIGN THIS SUBSCRIPTION AGREEMENT AND RETURN IT TO: EVELYN C.
ARKEBAUER AT SACHNOFF & WEAVER, LTD., 30 S. WACKER DRIVE, 29TH FLOOR, CHICAGO,
IL 60611. (FAX: (312) 207-1000) NO LATER THAN OCTOBER 13, 2003.
SUBSCRIPTION AGREEMENT
The undersigned has preemptive rights to purchase shares of
Series A Preferred Stock and shares of Common Stock of VI Acquisition Corp., a
Delaware corporation (the "COMPANY"), as described in a letter to the
undersigned from the Company dated September 22, 2003. The undersigned hereby
subscribes for:
(CHOOSE ONE OF THE FOLLOWING OPTIONS:)
X The full amount of the undersigned's preemptive rights: 29.028 shares
of Series Preferred Stock and 629 shares of Common Stock of the
Company, for an aggregate purchase price of $29,657 ($1000.00 per share
of Series A Preferred Stock and $1.00 per share of Common Stock).
[ ] Such lesser amount of Series A Preferred Stock and Common Stock of the
Company as would be represented by an aggregate purchase price of
$_______________. ($1000.00 per share of Series A Preferred Stock and
$1.00 per share of Common Stock, and required ratio that 98.287 cents
of every dollar invested be allocated toward the purchase of preferred
shares and the balance to the purchase of common shares, with all
issued shares rounded to the third decimal place.)
(If no box is checked but this form is signed and returned to company counsel,
the undersigned will be deemed to have subscribed for the full amount of his,
her or its preemptive rights.)
The undersigned hereby represents and warrants to the Company
that (i) he/she/it is purchasing these securities for his/her/its own account,
for investment and not with a view towards their resale; (ii) he/she/it
understands that these securities have not been registered under the Securities
Act of 1933 or any state securities laws, based on exemptions from such laws,
and that these securities may not be sold or otherwise transferred without
registration under or exemption from the provisions of applicable securities
laws, and that a legend to such effect may be placed on the certificate
evidencing these securities referring to these restrictions on transferability
and sale of the securities; and (iii) he/she/it is qualified by previous
experience to evaluate the risks and merits on this investment.
The undersigned agrees to indemnify and hold harmless the
Company, its affiliates, successors, and anyone acting on its behalf from and
against all damages, losses, costs, and expenses (including reasonable
attorneys' fees) which they may incur by reason of the inaccuracy or falsity of
any representation or breach of any warranty made herein or in any document
provided by the undersigned to the Company.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date indicated below and agrees to execute such reasonable
further documentation as may be necessary to effect the foregoing subscription.
MID OAKS INVESTMENTS, LLC
Dated: September 28, 2003 /s/ Wayne Kocourek
---------------------------
By: Wayne Kocourek
Its: Chairman and CEO
(NOTE: Subscription Agreements dated and/or delivered after October 13, 2003
will not be accepted by the Company.)
Accepted:
VI ACQUISITION CORP.
By: /s/ Debra Koenig
---------------------------------
Debra Koenig, Executive Vice President
Dated: November 19, 2003
Exhibit 10.11
INSTRUCTIONS: PLEASE READ THE ACCOMPANYING LETTER FROM THE
COMPANY CAREFULLY. IF YOU WISH TO EXERCISE YOUR PREEMPTIVE RIGHTS, YOU MUST
COMPLETE AND SIGN THIS SUBSCRIPTION AGREEMENT AND RETURN IT TO: EVELYN C.
ARKEBAUER AT SACHNOFF & WEAVER, LTD., 30 S. WACKER DRIVE, 29TH FLOOR, CHICAGO,
IL 60611. (FAX: (312) 207-1000) NO LATER THAN OCTOBER 13, 2003.
SUBSCRIPTION AGREEMENT
The undersigned has preemptive rights to purchase shares of
Series A Preferred Stock and shares of Common Stock of VI Acquisition Corp., a
Delaware corporation (the "COMPANY"), as described in a letter to the
undersigned from the Company dated September 22, 2003. The undersigned hereby
subscribes for:
(CHOOSE ONE OF THE FOLLOWING OPTIONS:)
X The full amount of the undersigned's preemptive rights: 3.325 shares of
Series Preferred Stock and 72 shares of Common Stock of the Company,
for an aggregate purchase price of $3,397 ($1000.00 per share of Series
A Preferred Stock and $1.00 per share of Common Stock).
[ ] Such lesser amount of Series A Preferred Stock and Common Stock of the
Company as would be represented by an aggregate purchase price of
$_______________. ($1000.00 per share of Series A Preferred Stock and
$1.00 per share of Common Stock, and required ratio that 98.287 cents
of every dollar invested be allocated toward the purchase of preferred
shares and the balance to the purchase of common shares, with all
issued shares rounded to the third decimal place.)
(If no box is checked but this form is signed and returned to company counsel,
the undersigned will be deemed to have subscribed for the full amount of his,
her or its preemptive rights.)
The undersigned hereby represents and warrants to the Company
that (i) he/she/it is purchasing these securities for his/her/its own account,
for investment and not with a view towards their resale; (ii) he/she/it
understands that these securities have not been registered under the Securities
Act of 1933 or any state securities laws, based on exemptions from such laws,
and that these securities may not be sold or otherwise transferred without
registration under or exemption from the provisions of applicable securities
laws, and that a legend to such effect may be placed on the certificate
evidencing these securities referring to these restrictions on transferability
and sale of the securities; and (iii) he/she/it is qualified by previous
experience to evaluate the risks and merits on this investment.
The undersigned agrees to indemnify and hold harmless the
Company, its affiliates, successors, and anyone acting on its behalf from and
against all damages, losses, costs, and expenses (including reasonable
attorneys' fees) which they may incur by reason of the inaccuracy or falsity of
any representation or breach of any warranty made herein or in any document
provided by the undersigned to the Company.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date indicated below and agrees to execute such reasonable
further documentation as may be necessary to effect the foregoing subscription.
Dated: September 23, 2003 /s/ Walter Van Benthuysen
------------------------------
Name: Walter Van Benthuysen
(NOTE: Subscription Agreements dated and/or delivered after October 13, 2003
will not be accepted by the Company.)
Accepted:
VI ACQUISITION CORP.
By: /s/ Debra Koenig
---------------------------
Debra Koenig, Executive Vice President
Dated: November 19, 2003
Exhibit 10.12
VI ACQUISITION CORP.
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
This Amended and Restated Subscription Agreement, dated as of
November 19, 2003 is made by and among WIND POINT PARTNERS IV, L.P., WIND POINT
PARTNERS V, L.P. and WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P., each of
which is a Delaware limited partnership, WIND POINT ASSOCIATES IV, LLC, a
Delaware limited liability company (collectively, the "Purchasers"), and VI
ACQUISITION CORP., a Delaware corporation (the "Corporation") and amends,
restates and replaces in its entirety that certain Subscription Agreement, dated
as of July 31, 2003 among the Purchasers and the Corporation.
Each of the Purchasers hereby subscribes for that number of
shares of Common Stock and shares of the Series A Preferred Stock (collectively,
the "Shares") of the Corporation set forth opposite its name on the attached
Exhibit A and each of them hereby agrees to pay to the Corporation the
subscription price of $1.00 per share of Common Stock and $1,000.00 per share of
Series A Preferred Stock representing the aggregate investment purchase price
reflected on Exhibit A.
Each of the Purchasers hereby represents and warrants to the
Corporation that (i) it is purchasing these Shares for its own account, for
investment only and not with a view towards their resale; (ii) it understands
that these Shares have not been registered under the Securities Act of 1933, as
amended or any state securities laws, based on exemptions from such laws, and
that these Shares may not be sold or otherwise transferred without registration
under or exemption from the provisions of applicable securities laws, and that a
legend to such effect may be placed on the certificates evidencing these Shares
referring to these restrictions on transferability and sale of the Shares, and
(iii) it is qualified by previous experience to evaluate the risks and merits of
this investment.
Each of the undersigned hereby agrees to indemnify and hold
harmless the Corporation, its affiliates, successors, and anyone acting on its
behalf from and against all damages, losses, costs, and expenses (including
reasonable attorneys' fees) which they may incur by reason of the inaccuracy or
falsity of any representation or breach of any warranty or covenant made herein
or in any document provided by the undersigned to the Corporation in connection
herewith.
Dated: November 19, 2003
Subscribing Parties:
WIND POINT PARTNERS IV, L.P.,
WIND POINT PARTNERS V, L.P.,
WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P.
WIND POINT ASSOCIATES IV, LLC
[SIGNATURES BEGIN ON FOLLOWING PAGE]
WIND POINT IV EXECUTIVE ADVISOR
PARTNERS, L.P.
By: Wind Point Investors IV, L.P.
Its: General Partner
By: Wind Point Advisors LLC
Its: General Partner
By: /s/ Jeffrey A. Gonyo
------------------------------------------
Name: Jeffrey A. Gonyo
Its: Managing Member
WIND POINT ASSOCIATES IV, LLC
By: Wind Point Investors IV, L.P.
Its: Manager
By: Wind Point Advisors LLC
Its: General Partner
By: /s/ Jeffrey A. Gonyo
------------------------------------------
Name: Jeffrey A. Gonyo
Its: Managing Member
WIND POINT PARTNERS IV, L.P.
By: Wind Point Investors IV, L.P.
Its: General Partner
By: Wind Point Advisors LLC
Its: General Partner
By: /s/ Jeffrey A. Gonyo
------------------------------------------
Name: Jeffrey A. Gonyo
Its: Managing Member
By: /s/ Robert L. Cummings
------------------------------------------
Name: Robert L. Cummings
Its: Managing Member
WIND POINT PARTNERS V, L.P.
By: Wind Point Investors V, L.P.
Its: General Partner
By: Wind Point Advisors LLC
Its: General Partner
By: /s/ Jeffrey A. Gonyo
-----------------------------------------
Name: Jeffrey A. Gonyo
Its: Managing Member
By: /s/ Robert L. Cummings
-----------------------------------------
Name: Robert L. Cummings
Its: Managing Member
Accepted and agreed
as of this 19th day of November, 2003:
SHARES OF SERIES A AGGREGATE PURCHASE
INVESTOR SHARES OF COMMON PREFERRED PRICE
------------------------------- ----------------------------- -------------------------- --------------------
WIND POINT PARTNERS IV, L.P. 1,324 61.075 $ 62,399.00
WIND POINT PARTNERS V, L.P. 3,520 162.331 $165,851.00
WIND POINT IV EXECUTIVE 10 0.459 $ 469.00
ADVISOR PARTNERS, L.P.
WIND POINT ASSOCIATES IV, LLC 5 0.226 $ 231.00
Exhibit 10.13
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of February 12,
2004, between VI Acquisition Corp., a Delaware corporation (the "Company"), and
Anthony Carroll ("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will commit to purchase, and the Company will commit to sell, an
aggregate of 14,295 shares of the Company's Common Stock, par value $.0001 per
share (the "Common Stock"). All of such shares of Common Stock are referred to
herein as "Executive Shares or the "Shares." Certain definitions are set forth
in Section 7 of this Agreement.
The parties hereto agree as follows:
1. Executive Shares.
(a) Upon execution of this Agreement, Executive will purchase, and
the Company will sell, 14,295 shares of Common Stock at a price of $1.00 per
share, the fair market value of the Common Stock on the date hereof. The Company
will deliver to Executive the certificates representing such Executive Shares,
and Executive will deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $14,295.00.
(b) Within thirty (30) days after the purchase by Executive of
Executive Shares pursuant to this Agreement, Executive will make an effective
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code and the regulations promulgated thereunder in the form of Exhibit A
attached hereto.
(c) In connection with the purchase and sale of the Executive
Shares pursuant hereto, Executive represents and warrants to the Company that:
(i) The Executive Shares to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own account
and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities
laws, and the Executive Shares will not be disposed of in contravention
of the Securities Act or any applicable state securities laws;
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks
and benefits of the investment in the Executive Shares;
(iii) Executive is able to bear the economic risk of his
investment in the Executive Shares for an indefinite period of time
because the Executive Shares have not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available;
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Executive Shares and has had full access to such other information
concerning the Company as he has requested;
(v) This Agreement and each of the other agreements
contemplated hereby to which Executive is a party constitute legal,
valid and binding obligations of Executive, enforceable in accordance
with their terms, and the execution, delivery and performance of this
Agreement and such other agreements by Executive does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which Executive is a party or any judgment, order or
decree to which Executive is subject;
(vi) Executive is not a party to or bound by any other
employment agreement, noncompete agreement or confidentiality agreement
which conflicts with the obligations set forth in this Agreement or in
the Employment Agreement; and
(vii) Executive is a resident of the State of Colorado.
(d) As an inducement for the Company to commit to issue the
Executive Shares to Executive, and as a condition thereto, Executive
acknowledges and agrees that neither any future issuance of capital stock of the
Company to Executive nor any provision contained herein shall entitle Executive
to remain in the employment of the Company, or any Subsidiary of the Company, or
affect the right of the Company or any Subsidiary to terminate Executive's
employment at any time for any reason, subject to the terms and conditions of
the Employment Agreement.
2. Vesting of Shares.
(a) Except as otherwise provided in Section 2(b) below, the
Executive Shares purchased hereunder will become vested in accordance with the
following schedule, if as of each such date Executive is still employed by the
Company or any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF
DATE EXECUTIVE SHARES TO BE VESTED
---- -----------------------------
1st Anniversary of this Agreement 20%
2nd Anniversary of this Agreement 40%
3rd Anniversary of this Agreement 60%
4th Anniversary of this Agreement 80%
5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the
contrary, upon the occurrence of a Sale of the Company, all Executive Shares
which have not yet become vested shall become vested at the time of such Sale of
the Company (such portion being referred to herein as the "Accelerated Shares");
provided, however, and subject to and unless otherwise provided for under the
Stockholders Agreement by and among the Company, the Investors, the Executive
and certain other parties, that Executive shall not Transfer any interest in any
Accelerated Shares unless and until such time as the Investors shall have
received cash dividends
2
or other cash proceeds resulting from any distributions on or dispositions of
any Preferred Stock or Common Stock in an aggregate amount equal to the product
of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the
Investors to the Company for all Preferred Stock, Common Stock and other equity
interests of the Company purchased by the Investors (but not in any event
including amounts committed but not yet contributed to the capital of the
Company). Executive Shares which have become vested hereunder are referred to
herein as "Vested Shares," and all other Executive Shares are referred to herein
as "Unvested Shares."
(c) The Executive Securities shall at all times be subject to such
restrictions or limitations with respect to the Transfer thereof that may be
contained herein or in the Stockholders Agreement or as otherwise provided by
law.
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company or
any Subsidiary for any reason (a "Separation"), the Shares and all other
Executive Securities (whether held by Executive or one or more of Executive's
transferees, other than the Company and the Investors) will be subject to
repurchase, in each case by the Company pursuant to the terms and conditions set
forth in this Section 3 (the "Repurchase Option").
(b) In the event of a Separation, the Executive Shares purchased
hereunder shall be subject to repurchase as follows: (i) the purchase price for
each Unvested Share of Common Stock will be the Executive's Original Cost for
such share; provided, that if Executive's employment is terminated by the
Company or a Subsidiary with Due Cause or by the Executive without Good Reason,
then the purchase price for each Unvested Share of Common Stock will be the
lesser of (a) Executive's Original Cost for such share and (b) the Fair Market
Value for such share, and (ii) the purchase price for each Vested Share of
Common Stock will be the Fair Market Value for such share; provided that if
Executive's employment is terminated by the Company or a Subsidiary with Due
Cause or by the Executive without Good Reason, then the purchase price for each
Vested Share of Common Stock will be the lesser of (a) Executive's Original Cost
for such share and (b) the Fair Market Value for such share.
(c) In the event of a Separation, any other Executive Securities
not otherwise described in Section 3(b) above shall be subject to repurchase as
follows: (i) the purchase price for each share of Common Stock will be the Fair
Market Value for such share and (ii) the purchase price for each share of
Preferred Stock will be Executive's Original Cost for such share.
(d) In the event of a Separation, the Company may elect to
purchase all or any portion of the Executive Securities by delivering written
notice (the "Repurchase Notice") to the holder or holders of the Executive
Securities within 60 days after the Separation. The Repurchase Notice will set
forth the number of Unvested Shares and Vested Shares to be acquired from each
holder, the aggregate consideration to be paid for such securities and the time
and place for the closing of the transaction. The number of each type of
securities to be repurchased by the Company shall first be satisfied to the
extent possible from the Executive Securities held by Executive at the time of
delivery of the Repurchase Notice. If the number of any or all types of
Executive Securities then held by Executive is less than the total number of
such securities which the Company has elected to purchase, the Company shall
purchase the remaining securities
3
elected to be purchased from the other holder(s) of Executive Securities under
this Agreement, pro rata according to the number of the applicable type of
Executive Securities held by such other holder(s) at the time of delivery of
such Repurchase Notice (determined as nearly as practicable to the nearest
share). The number of Unvested Shares and Vested Shares to be repurchased
hereunder will be allocated among Executive and the other holders of Executive
Securities (if any) pro rata according to the number of the applicable type of
Executive Securities to be purchased from such Person.
(e) The closing of the purchase of the Executive Securities
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice, which date shall not be more than 2 months nor
less than 5 days after the delivery of such notice. The Company will pay for the
Executive Securities to be purchased by it pursuant to the Repurchase Option by
first offsetting amounts outstanding under any bona fide debts owed by Executive
to the Company and will pay the remainder of the purchase price to the extent
reasonably permissible under the Company's and its Subsidiaries' equity
financing agreements and agreements evidencing indebtedness for borrowed money
and to the extent the Company has the financial wherewithal at the time to make
such payments, by a check or wire transfer of funds and, if not, by a
subordinate note or notes, each on terms acceptable to banks and other financial
institutions loaning money to the Company and its Subsidiaries, payable in up to
three substantially equal, semi-annual installments beginning on the six month
anniversary of the closing of such purchase and bearing interest (payable
quarterly) at a rate per annum equal to the prime rate as published in The Wall
Street Journal from time to time, in the aggregate amount of the purchase price
for such securities. The Company will be entitled to receive customary
representations and warranties from the sellers of Executive Securities
(including representations and warranties regarding good title to the Executive
Securities, the absence of any liens on such title or other encumbrances with
respect to the Transfer of the Executive Securities and the ability of such
sellers to consummate the sale).
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Securities by the Company shall be
subject to applicable restrictions contained in the Delaware General Corporation
Law and as may be required by other parties in the Company's or any
Subsidiaries' equity financing agreements and agreements evidencing indebtedness
for borrowed money, if any. If any such restrictions prohibit the repurchase of
Executive Securities hereunder which the Company is otherwise entitled or
required to make, the Company may make such repurchases as soon as it is
permitted to do so under such restrictions.
(g) Notwithstanding anything to the contrary contained in this
Agreement, if Executive delivers the notice of objection described in the
definition of Fair Market Value, or if the Fair Market Value of a Share is
otherwise determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board, the Company
shall have the right to revoke its exercise of the Repurchase Option for all or
any portion of the Shares elected to be repurchased by it by delivering notice
of such revocation in writing to the holders of the Shares during (i) the
thirty-day period beginning on the date the Company receives Executive's written
notice of objection and (ii) the thirty-day period beginning on the date the
Company is given written notice that the Fair Market Value of a Share was
finally determined to be an amount more than 10% greater than the per share
repurchase price for such Shares originally determined by the Board.
4
4. Restrictions on Transfer of Executive Securities.
(a) Transfer of Executive Securities. Executive shall not Transfer
any interest in any Executive Securities, except at such time as the
restrictions herein terminate as provided in Section 4(b) below. Notwithstanding
the foregoing, the restrictions contained in this Section 4 will not apply with
respect to (i) Transfers of shares of Executive Securities pursuant to
applicable laws of descent and distribution or (ii) Transfer of shares of
Executive Securities among Executive's Family Group; provided that in each case
such restrictions will continue to be applicable to the Executive Securities
irrespective of any such Transfer. Any transferee of Executive Securities
pursuant to a Transfer in accordance with the provisions of this Section 4(a) is
herein referred to as a "Permitted Transferee." In addition to and without
limitation on the operation of this Section 4, Executive acknowledges that the
Stockholders Agreement separately imposes restrictions on the Transfer of the
Shares.
(b) Termination of Restrictions. The restrictions on the Transfer
of Executive Securities set forth in this Section 4 will continue with respect
to each Executive Security until the earlier of (i) a Qualified Public Offering;
or (ii) a Sale of the Company.
5. Registration. Executive understands that the Shares are not
currently being registered under the Securities Act by reason of their
contemplated issuance in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Rule 701
thereof. Executive further agrees that he will not sell or otherwise dispose of
the Shares unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered or
qualified or is exempt from registration or qualification under applicable
securities laws of any state. Executive understands that a restrictive legend
consistent with the foregoing, and as set forth in Section 6, will be placed on
the certificates evidencing the Shares, and related stop transfer instructions
will be noted in the stock transfer records of the Company and/or its stock
transfer agent for the Shares.
6. Additional Restrictions on Transfer of Executive Securities.
(a) Legend. The certificates representing the Executive Securities
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
AS OF FEBRUARY 20, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET
FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF
THE COMPANY DATED AS OF FEBRUARY 20, 2004. A COPY OF SUCH AGREEMENT MAY
BE OBTAINED BY THE
5
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) Opinion of Counsel. No holder of Executive Securities may
transfer any Executive Securities (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such Transfer.
7. Definitions.
"Affiliate" of the Investors means any direct or indirect general or
limited partner or member of an Investor, as applicable, or any employee or
owner thereof, or any other person, entity or investment fund controlling,
controlled by or under common control with an Investor.
"Due Cause" has the meaning set forth in the Employment Agreement.
"Employment Agreement" means that certain Employment Agreement of even
date herewith between VICORP Restaurants, Inc. and the Executive.
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants and any retirement plan for the
Executive.
"Executive Securities" means the Shares and any other securities of the
Company held by Executive or any of Executive's transferees permitted hereunder.
All Executive Securities will continue to be Executive Securities in the hands
of any holder other than Executive (except for the Company, the Investors and
the Investors' Affiliates and except for transferees in a Public Sale). Except
as otherwise provided herein, each such other holder of Executive Securities
will succeed to all rights and obligations attributable to Executive as a holder
of Executive Securities hereunder. Executive Securities will also include shares
of the Company's capital stock or other securities of the Company issued with
respect to Executive Securities by way of a stock split, dividend or other
recapitalization or reclassification.
"Fair Market Value" of each Share as of a relevant date means the
average of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed on that date, or,
if there have been no sales or exchange on which the Common Stock is listed on
any day, the average of the highest bid and lowest asked prices on all
nationally-recognized exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, of the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Common
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Common Stock determined in good faith by the
6
Board of Directors of the Company (the "Board Calculation"). If the Executive
disagrees with the Board Calculation, the Executive may, within 30 days after
receipt of the Board Calculation, deliver a notice (an "Objection Notice") to
the Company setting forth the Executive's calculation of Fair Market Value. The
Board and the Executive will negotiate in good faith to agree on such Fair
Market Value, but if such agreement is not reached within 30 days after the
Company has received the Objection Notice, Fair Market Value shall be determined
by an appraiser selected by the Board, which appraiser shall submit to the Board
and the Executive a report within 30 days of its engagement setting forth such
determination. The determination of such appraiser shall be final and binding
upon all parties. The expenses of such appraiser shall be borne by the Executive
unless the appraiser's valuation is more than 10% greater than the amount
determined by the Board of Directors, in which case, the costs of the appraiser
shall be borne by the Company. If the Repurchase Option is exercised within 45
days after a Separation, then Fair Market Value shall be determined as of the
date of such Separation; thereafter, Fair Market Value shall be determined as of
the date the Repurchase Option is exercised. A comparable process will be
employed to determine the Fair Market Value of Preferred Stock.
"Good Reason" has the meaning set forth in the Employment Agreement.
"Investors" has the meaning set forth in the Stockholders Agreement.
"Original Cost" means, (i) with respect to each share of Common Stock
purchased hereunder, $1.00 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations) and (ii) with respect to
each share of Preferred Stock, the price paid for such Preferred Stock, plus all
accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted
for all subsequent stock splits, stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means preferred stock issued by the Company.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Board of Directors pursuant to which the Investors have
realized in cash a return of two or more times the amount of their investment in
the Company.
"Sale of the Company" means any transaction or series of transactions
pursuant to which (A) any Person(s) other than the Investors and their
respective Affiliates in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement,
7
proxy, power of attorney or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis; provided that the term
"Sale of the Company" shall not include any sale of equity or debt securities by
the Company in a private offering to other investors selected by the Investors;
or (B) more than 50% of the assets of the Company (treating investments in
Affiliates as assets for these purposes) is spun off, split off or otherwise
distributed.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Stockholders Agreement" means that certain Stockholders Agreement
dated June 13, 2003 among the Company, the Investors, and certain other parties,
and joined by the Executive of even date herewith.
"Subsidiary" means any entity of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors, or the equivalent governing body, directly or through one or more
subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose
of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
8. Notices. Any notice, consent, waiver and other communications required or
permitted pursuant to the provisions of this Agreement must be in writing and
will be deemed to have been properly given (a) when delivered by hand; (b) when
sent by telecopier (with acknowledgement of complete transmission), provided
that a copy is mailed by U.S. certified mail, return receipt requested; (c)
three (3) days after sent by certified mail, return receipt requested; or (d)
one (1) day after deposit with a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers set
forth below:
If to the Company:
VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Tel: (312) 255-4800
Fax: (312) 255-4820
If to the Executive:
Anthony Carroll
8
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Fax: (312) 207-6400
Tel: (312) 207-1000
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt of
subsequent notices by giving written notice thereof to the other party in
accordance with this Section 8.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be null and void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Executive Securities as
the owner of such securities for any purpose.
(b) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Executive hereby releases the Company and its affiliates and its and their
predecessors from any obligation or liability the Company or any of its
affiliates or its or their predecessors owes or owed to Executive or any of his
affiliates and related persons prior to the date hereof.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns.
(i) All Executive Securities will continue to be
Executive Securities in the hands of any holder other than Executive,
including any of Executive's transferees permitted hereunder or under
the Stockholders Agreement (except for the Company, the Investors and
the Investors' Affiliates and except for transferees in a Public Sale).
Except as otherwise provided herein, each such other holder of
Executive Securities will
9
succeed to all rights and obligations attributable to Executive as a
holder of Executive Securities hereunder.
(ii) Except as otherwise provided herein, this Agreement
shall bind and inure to the benefit of and be enforceable by Executive,
the Company, the Investors and their respective successors and assigns
(including subsequent holders of Executive Securities); provided that
the rights and obligations of Executive under this Agreement shall not
be assignable except in connection with a permitted transfer of
Executive Securities hereunder.
(iii) Each of the Investors is intended to be a third party
beneficiary of this Agreement and may enforce any rights granted to it
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
Furthermore, Executive and Company agree and consent to submit to personal
jurisdiction in the State of Illinois in any state or federal court of competent
subject matter jurisdiction situated in Cook County, Illinois. Executive and
Company agree that the sole and exclusive venue for any suit arising out of, or
seeking to enforce, the terms of this Agreement shall be in a state or federal
court of competent subject matter jurisdiction situated in Cook County,
Illinois.
(g) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive. No cause of conduct or failure or delay in enforcing the provisions
of this Agreement shall affect the validity, binding effect or enforceability of
this Agreement.
(i) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
10
(j) Indemnification and Reimbursement of Payments on Behalf of
Executive. The Company and any Subsidiary shall be entitled to deduct or
withhold from any amounts owing from the Company or any Subsidiary to the
Executive any federal, state, local or foreign withholding taxes, excise taxes,
or employment taxes ("Taxes") imposed with respect to the Executive's
compensation or other payments from the Company or any Subsidiary or the
Executive's ownership interest in the Company, including, but not limited to,
wages, bonuses, dividends, the receipt or exercise of stock options and/or the
receipt or vesting of restricted stock. The Executive shall indemnify the
Company and any Subsidiary for any amounts paid with respect to any such Taxes,
together with any interest, penalties and related expenses thereto.
(k) Termination. This Agreement shall survive the termination of
Executive's employment with the Company or any Subsidiary and shall remain in
full force and effect after such termination.
(l) Generally Accepted Accounting Principles; Adjustments of
Numbers. Where any accounting determination or calculation is required to be
made under this Agreement or the exhibits hereto, such determination or
calculation (unless otherwise provided) shall be made in accordance with United
States generally accepted accounting principles, consistently applied. All
numbers set forth herein which refer to share prices or amounts will be
appropriately adjusted to reflect stock splits, stock dividends, combinations of
shares, recapitalizations or other similar transactions affecting the subject
class of stock.
(m) Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury of any claim or cause of
action in any legal proceeding arising out of or related to this Agreement or
the transactions or events contemplated hereby or any course of conduct, course
of dealing, statements (whether verbal or written) or actions of any party
hereto. The parties hereto each agree that any and all such claims and causes of
action shall be tried by a court trial without a jury. Each of the parties
hereto further waives any right to seek to consolidate any such legal proceeding
in which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
* * * * *
11
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
as of the date first written above.
VI ACQUISITION CORP.
By: /s/ Debra Koenig
------------------------
Name: Debra Koenig
Its: Executive Vice President
/s/ Anthony Carroll
----------------------------
ANTHONY CARROLL
12
EXHIBIT A
ELECTION TO INCLUDE VALUE OF
RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)
The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b)
of the Internal Revenue Code to include the restricted property described below
in his gross income for the tax year ending December 31, 2004 and supplies the
following information in accordance with the regulations promulgated thereunder:
1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE:
Anthony Carroll
Social Security # _______________
2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE:
14,295 shares (the "SHARES") of Common Stock, par value $0.0001 per share,
of VI Acquisition Corp., a Delaware corporation (the "COMPANY").
3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS FEBRUARY 20, 2004.
The taxable year to which this election relates is calendar year 2004.
4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
A. The Shares are not transferable except as permitted by a Management
Agreement. Transferees are generally subject to the same restrictions as are
imposed on their transferors. Certificates representing the Shares contain
legends to give notice of restrictions on transfer.
B. If the Taxpayer ceases to serve as an employee of the Company or a
subsidiary, prior to certain specified time periods (the last day of each such
period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase
by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE
PRICE"). In certain circumstances (termination for cause, or resignation without
good reason), the Purchase Price may be lowered to fair market value if that is
less than the amount the Taxpayer paid for the Shares. On each specified Vesting
Date, a portion of the Shares subject to repurchase at the Purchase Price will
lapse and such portion will then be repurchasable at its fair market value in
the event the Taxpayer ceases to serve as an employee of the Company (for a
reason other than cause or resignation without good reason, in either case in
which the Purchase Price may be lowered to the amount the Taxpayer paid for the
Shares). On February 20, 2009, which is the last Vesting Date, all Shares then
will be repurchasable at their fair market value in the event the Taxpayer
ceases to serve as an employee of the Company (for a reason other than cause or
resignation without good reason, in either case in which the Purchase Price may
be lowered to the amount the Taxpayer paid for the Shares).
5. FAIR MARKET VALUE:
The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the property with respect to which this election is being made is $1.00 per
Share.
6. AMOUNT PAID FOR PROPERTY:
The amount paid by Taxpayer for said property is $1.00 per Share.
7. FURNISHING STATEMENT TO EMPLOYER:
A copy of this statement has been furnished to the Company.
Dated: February 20, 2004
Anthony Carroll
This election must be filed with the Internal Revenue Service Center with which
the Taxpayer files his or her Federal income tax returns and must be filed
within thirty (30) days after the date of purchase. This filing should be made
by registered or certified mail, return receipt requested. The taxpayer must
retain two copies of the completed form for filing with his or her Federal and
State tax returns for the current tax year and an additional copy for his or her
records.
2
Exhibit 10.14
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of February 20,
2004, between VI Acquisition Corp., a Delaware corporation (the "Company"), and
Debra Koenig ("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will commit to purchase, and the Company will commit to sell, an
aggregate of 3,575 shares of the Company's Common Stock, par value $.0001 per
share (the "Common Stock"). All of such shares of Common Stock are referred to
herein as "Executive Shares or the "Shares." Certain definitions are set forth
in Section 7 of this Agreement.
The parties hereto agree as follows:
1. Executive Shares.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 3,575 shares of Common Stock at a price of $1.00 per share,
the fair market value of the Common Stock on the date hereof. The Company will
deliver to Executive the certificates representing such Executive Shares, and
Executive will deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $3,575.00.
(b) Within thirty (30) days after the purchase by Executive of Executive
Shares pursuant to this Agreement, Executive will make an effective election
with the Internal Revenue Service under Section 83(b) of the Internal Revenue
Code and the regulations promulgated thereunder in the form of Exhibit A
attached hereto.
(c) In connection with the purchase and sale of the Executive Shares
pursuant hereto, Executive represents and warrants to the Company that:
(i) The Executive Shares to be acquired by Executive pursuant to
this Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the Executive
Shares will not be disposed of in contravention of the Securities Act or
any applicable state securities laws;
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Shares;
(iii) Executive is able to bear the economic risk of his investment
in the Executive Shares for an indefinite period of time because the
Executive Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available;
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the
Executive Shares and has had full access to such other information
concerning the Company as he has requested;
(v) This Agreement and each of the other agreements contemplated
hereby to which Executive is a party constitute legal, valid and binding
obligations of Executive, enforceable in accordance with their terms, and
the execution, delivery and performance of this Agreement and such other
agreements by Executive does not and will not conflict with, violate or
cause a breach of any agreement, contract or instrument to which Executive
is a party or any judgment, order or decree to which Executive is subject;
(vi) Executive is not a party to or bound by any other employment
agreement, noncompete agreement or confidentiality agreement which
conflicts with the obligations set forth in this Agreement or in the
Employment Agreement; and
(vii) Executive is a resident of the State of Colorado.
(d) As an inducement for the Company to commit to issue the Executive
Shares to Executive, and as a condition thereto, Executive acknowledges and
agrees that neither any future issuance of capital stock of the Company to
Executive nor any provision contained herein shall entitle Executive to remain
in the employment of the Company, or any Subsidiary of the Company, or affect
the right of the Company or any Subsidiary to terminate Executive's employment
at any time for any reason, subject to the terms and conditions of the
Employment Agreement.
2. Vesting of Shares.
(a) Except as otherwise provided in Section 2(b) below, the Executive
Shares purchased hereunder will become vested in accordance with the following
schedule, if as of each such date Executive is still employed by the Company or
any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF
DATE EXECUTIVE SHARES TO BE VESTED
---- -----------------------------
1st Anniversary of this Agreement 20%
2nd Anniversary of this Agreement 40%
3rd Anniversary of this Agreement 60%
4th Anniversary of this Agreement 80%
5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon
the occurrence of a Sale of the Company, all Executive Shares which have not yet
become vested shall become vested at the time of such Sale of the Company (such
portion being referred to herein as the "Accelerated Shares"); provided,
however, and subject to and unless otherwise provided for under the Stockholders
Agreement by and among the Company, the Investors, the Executive and certain
other parties, that Executive shall not Transfer any interest in any Accelerated
Shares unless and until such time as the Investors shall have received cash
dividends
2
or other cash proceeds resulting from any distributions on or dispositions of
any Preferred Stock or Common Stock in an aggregate amount equal to the product
of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the
Investors to the Company for all Preferred Stock, Common Stock and other equity
interests of the Company purchased by the Investors (but not in any event
including amounts committed but not yet contributed to the capital of the
Company). Executive Shares which have become vested hereunder are referred to
herein as "Vested Shares," and all other Executive Shares are referred to herein
as "Unvested Shares."
(c) The Executive Securities shall at all times be subject to such
restrictions or limitations with respect to the Transfer thereof that may be
contained herein or in the Stockholders Agreement or as otherwise provided by
law.
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company or any
Subsidiary for any reason (a "Separation"), the Shares and all other Executive
Securities (whether held by Executive or one or more of Executive's transferees,
other than the Company and the Investors) will be subject to repurchase, in each
case by the Company pursuant to the terms and conditions set forth in this
Section 3 (the "Repurchase Option").
(b) In the event of a Separation, the Executive Shares purchased hereunder
shall be subject to repurchase as follows: (i) the purchase price for each
Unvested Share of Common Stock will be the Executive's Original Cost for such
share; provided, that if Executive's employment is terminated by the Company or
a Subsidiary with Due Cause or by the Executive without Good Reason, then the
purchase price for each Unvested Share of Common Stock will be the lesser of (a)
Executive's Original Cost for such share and (b) the Fair Market Value for such
share, and (ii) the purchase price for each Vested Share of Common Stock will be
the Fair Market Value for such share; provided that if Executive's employment is
terminated by the Company or a Subsidiary with Due Cause or by the Executive
without Good Reason, then the purchase price for each Vested Share of Common
Stock will be the lesser of (a) Executive's Original Cost for such share and (b)
the Fair Market Value for such share.
(c) In the event of a Separation, any other Executive Securities not
otherwise described in Section 3(b) above shall be subject to repurchase as
follows: (i) the purchase price for each share of Common Stock will be the Fair
Market Value for such share and (ii) the purchase price for each share of
Preferred Stock will be Executive's Original Cost for such share.
(d) In the event of a Separation, the Company may elect to purchase all or
any portion of the Executive Securities by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Executive Securities within
60 days after the Separation. The Repurchase Notice will set forth the number of
Unvested Shares and Vested Shares to be acquired from each holder, the aggregate
consideration to be paid for such securities and the time and place for the
closing of the transaction. The number of each type of securities to be
repurchased by the Company shall first be satisfied to the extent possible from
the Executive Securities held by Executive at the time of delivery of the
Repurchase Notice. If the number of any or all types of Executive Securities
then held by Executive is less than the total number of such securities which
the Company has elected to purchase, the Company shall purchase the remaining
securities
3
elected to be purchased from the other holder(s) of Executive Securities under
this Agreement, pro rata according to the number of the applicable type of
Executive Securities held by such other holder(s) at the time of delivery of
such Repurchase Notice (determined as nearly as practicable to the nearest
share). The number of Unvested Shares and Vested Shares to be repurchased
hereunder will be allocated among Executive and the other holders of Executive
Securities (if any) pro rata according to the number of the applicable type of
Executive Securities to be purchased from such Person.
(e) The closing of the purchase of the Executive Securities pursuant to
the Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice, which date shall not be more than 2 months nor less than
5 days after the delivery of such notice. The Company will pay for the Executive
Securities to be purchased by it pursuant to the Repurchase Option by first
offsetting amounts outstanding under any bona fide debts owed by Executive to
the Company and will pay the remainder of the purchase price to the extent
reasonably permissible under the Company's and its Subsidiaries' equity
financing agreements and agreements evidencing indebtedness for borrowed money
and to the extent the Company has the financial wherewithal at the time to make
such payments, by a check or wire transfer of funds and, if not, by a
subordinate note or notes, each on terms acceptable to banks and other financial
institutions loaning money to the Company and its Subsidiaries, payable in up to
three substantially equal, semi-annual installments beginning on the six month
anniversary of the closing of such purchase and bearing interest (payable
quarterly) at a rate per annum equal to the prime rate as published in The Wall
Street Journal from time to time, in the aggregate amount of the purchase price
for such securities. The Company will be entitled to receive customary
representations and warranties from the sellers of Executive Securities
(including representations and warranties regarding good title to the Executive
Securities, the absence of any liens on such title or other encumbrances with
respect to the Transfer of the Executive Securities and the ability of such
sellers to consummate the sale).
(f) Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Executive Securities by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and as
may be required by other parties in the Company's or any Subsidiaries' equity
financing agreements and agreements evidencing indebtedness for borrowed money,
if any. If any such restrictions prohibit the repurchase of Executive Securities
hereunder which the Company is otherwise entitled or required to make, the
Company may make such repurchases as soon as it is permitted to do so under such
restrictions.
(g) Notwithstanding anything to the contrary contained in this Agreement,
if Executive delivers the notice of objection described in the definition of
Fair Market Value, or if the Fair Market Value of a Share is otherwise
determined to be an amount more than 10% greater than the per share repurchase
price for such Shares originally determined by the Board, the Company shall have
the right to revoke its exercise of the Repurchase Option for all or any portion
of the Shares elected to be repurchased by it by delivering notice of such
revocation in writing to the holders of the Shares during (i) the thirty-day
period beginning on the date the Company receives Executive's written notice of
objection and (ii) the thirty-day period beginning on the date the Company is
given written notice that the Fair Market Value of a Share was finally
determined to be an amount more than 10% greater than the per share repurchase
price for such Shares originally determined by the Board.
4
4. Restrictions on Transfer of Executive Securities.
(a) Transfer of Executive Securities. Executive shall not Transfer any
interest in any Executive Securities, except at such time as the restrictions
herein terminate as provided in Section 4(b) below. Notwithstanding the
foregoing, the restrictions contained in this Section 4 will not apply with
respect to (i) Transfers of shares of Executive Securities pursuant to
applicable laws of descent and distribution or (ii) Transfer of shares of
Executive Securities among Executive's Family Group; provided that in each case
such restrictions will continue to be applicable to the Executive Securities
irrespective of any such Transfer. Any transferee of Executive Securities
pursuant to a Transfer in accordance with the provisions of this Section 4(a) is
herein referred to as a "Permitted Transferee." In addition to and without
limitation on the operation of this Section 4, Executive acknowledges that the
Stockholders Agreement separately imposes restrictions on the Transfer of the
Shares.
(b) Termination of Restrictions. The restrictions on the Transfer of
Executive Securities set forth in this Section 4 will continue with respect to
each Executive Security until the earlier of (i) a Qualified Public Offering; or
(ii) a Sale of the Company.
5. Registration. Executive understands that the Shares are not currently
being registered under the Securities Act by reason of their contemplated
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act pursuant to Rule 701 thereof. Executive
further agrees that he will not sell or otherwise dispose of the Shares unless
such sale or other disposition has been registered or is exempt from
registration under the Securities Act and has been registered or qualified or is
exempt from registration or qualification under applicable securities laws of
any state. Executive understands that a restrictive legend consistent with the
foregoing, and as set forth in Section 6, will be placed on the certificates
evidencing the Shares, and related stop transfer instructions will be noted in
the stock transfer records of the Company and/or its stock transfer agent for
the Shares.
6. Additional Restrictions on Transfer of Executive Securities.
(a) Legend. The certificates representing the Executive Securities will
bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF FEBRUARY 20, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY
DATED AS OF FEBRUARY 20, 2004. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE
5
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) Opinion of Counsel. No holder of Executive Securities may transfer any
Executive Securities (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel (reasonably acceptable in form and substance to the Company) that
neither registration nor qualification under the Securities Act and applicable
state securities laws is required in connection with such Transfer.
7. Definitions.
"Affiliate" of the Investors means any direct or indirect general or
limited partner or member of an Investor, as applicable, or any employee or
owner thereof, or any other person, entity or investment fund controlling,
controlled by or under common control with an Investor.
"Due Cause" has the meaning set forth in the Employment Agreement.
"Employment Agreement" means that certain Employment Agreement of even
date herewith between VICORP Restaurants, Inc. and the Executive.
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants and any retirement plan for the
Executive.
"Executive Securities" means the Shares and any other securities of the
Company held by Executive or any of Executive's transferees permitted hereunder.
All Executive Securities will continue to be Executive Securities in the hands
of any holder other than Executive (except for the Company, the Investors and
the Investors' Affiliates and except for transferees in a Public Sale). Except
as otherwise provided herein, each such other holder of Executive Securities
will succeed to all rights and obligations attributable to Executive as a holder
of Executive Securities hereunder. Executive Securities will also include shares
of the Company's capital stock or other securities of the Company issued with
respect to Executive Securities by way of a stock split, dividend or other
recapitalization or reclassification.
"Fair Market Value" of each Share as of a relevant date means the average
of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed on that date, or,
if there have been no sales or exchange on which the Common Stock is listed on
any day, the average of the highest bid and lowest asked prices on all
nationally-recognized exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, of the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Common
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Common Stock determined in good faith by the
6
Board of Directors of the Company (the "Board Calculation"). If the Executive
disagrees with the Board Calculation, the Executive may, within 30 days after
receipt of the Board Calculation, deliver a notice (an "Objection Notice") to
the Company setting forth the Executive's calculation of Fair Market Value. The
Board and the Executive will negotiate in good faith to agree on such Fair
Market Value, but if such agreement is not reached within 30 days after the
Company has received the Objection Notice, Fair Market Value shall be determined
by an appraiser selected by the Board, which appraiser shall submit to the Board
and the Executive a report within 30 days of its engagement setting forth such
determination. The determination of such appraiser shall be final and binding
upon all parties. The expenses of such appraiser shall be borne by the Executive
unless the appraiser's valuation is more than 10% greater than the amount
determined by the Board of Directors, in which case, the costs of the appraiser
shall be borne by the Company. If the Repurchase Option is exercised within 45
days after a Separation, then Fair Market Value shall be determined as of the
date of such Separation; thereafter, Fair Market Value shall be determined as of
the date the Repurchase Option is exercised. A comparable process will be
employed to determine the Fair Market Value of Preferred Stock.
"Good Reason" has the meaning set forth in the Employment Agreement.
"Investors" has the meaning set forth in the Stockholders Agreement.
"Original Cost" means, (i) with respect to each share of Common Stock
purchased hereunder, $1.00 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations) and (ii) with respect to
each share of Preferred Stock, the price paid for such Preferred Stock, plus all
accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted
for all subsequent stock splits, stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
"Preferred Stock" means preferred stock issued by the Company.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Board of Directors pursuant to which the Investors have
realized in cash a return of two or more times the amount of their investment in
the Company.
"Sale of the Company" means any transaction or series of transactions
pursuant to which (A) any Person(s) other than the Investors and their
respective Affiliates in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement,
7
proxy, power of attorney or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis; provided that the term
"Sale of the Company" shall not include any sale of equity or debt securities by
the Company in a private offering to other investors selected by the Investors;
or (B) more than 50% of the assets of the Company (treating investments in
Affiliates as assets for these purposes) is spun off, split off or otherwise
distributed.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholders Agreement" means that certain Stockholders Agreement dated
June 13, 2003 among the Company, the Investors, and certain other parties, and
joined by the Executive of even date herewith.
"Subsidiary" means any entity of which the Company owns securities having
a majority of the ordinary voting power in electing the board of directors, or
the equivalent governing body, directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
8. Notices. Any notice, consent, waiver and other communications required
or permitted pursuant to the provisions of this Agreement must be in writing and
will be deemed to have been properly given (a) when delivered by hand; (b) when
sent by telecopier (with acknowledgement of complete transmission), provided
that a copy is mailed by U.S. certified mail, return receipt requested; (c)
three (3) days after sent by certified mail, return receipt requested; or (d)
one (1) day after deposit with a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers set
forth below:
If to the Company:
VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Tel: (312) 255-4800
Fax: (312) 255-4820
If to the Executive:
Debra Koenig
8
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Fax: (312) 207-6400
Tel: (312) 207-1000
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt of
subsequent notices by giving written notice thereof to the other party in
accordance with this Section 8.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Securities in violation of any provision of this
Agreement shall be null and void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Executive Securities as
the owner of such securities for any purpose.
(b) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly referred
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Executive hereby releases the Company and its affiliates and its and their
predecessors from any obligation or liability the Company or any of its
affiliates or its or their predecessors owes or owed to Executive or any of his
affiliates and related persons prior to the date hereof.
(d) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(e) Successors and Assigns.
(i) All Executive Securities will continue to be Executive
Securities in the hands of any holder other than Executive, including any
of Executive's transferees permitted hereunder or under the Stockholders
Agreement (except for the Company, the Investors and the Investors'
Affiliates and except for transferees in a Public Sale). Except as
otherwise provided herein, each such other holder of Executive Securities
will
9
succeed to all rights and obligations attributable to Executive as a
holder of Executive Securities hereunder.
(ii) Except as otherwise provided herein, this Agreement shall bind
and inure to the benefit of and be enforceable by Executive, the Company,
the Investors and their respective successors and assigns (including
subsequent holders of Executive Securities); provided that the rights and
obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Securities
hereunder.
(iii) Each of the Investors is intended to be a third party
beneficiary of this Agreement and may enforce any rights granted to it
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
Furthermore, Executive and Company agree and consent to submit to personal
jurisdiction in the State of Illinois in any state or federal court of competent
subject matter jurisdiction situated in Cook County, Illinois. Executive and
Company agree that the sole and exclusive venue for any suit arising out of, or
seeking to enforce, the terms of this Agreement shall be in a state or federal
court of competent subject matter jurisdiction situated in Cook County,
Illinois.
(g) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company and Executive. No
cause of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
(i) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
10
(j) Indemnification and Reimbursement of Payments on Behalf of Executive.
The Company and any Subsidiary shall be entitled to deduct or withhold from any
amounts owing from the Company or any Subsidiary to the Executive any federal,
state, local or foreign withholding taxes, excise taxes, or employment taxes
("Taxes") imposed with respect to the Executive's compensation or other payments
from the Company or any Subsidiary or the Executive's ownership interest in the
Company, including, but not limited to, wages, bonuses, dividends, the receipt
or exercise of stock options and/or the receipt or vesting of restricted stock.
The Executive shall indemnify the Company and any Subsidiary for any amounts
paid with respect to any such Taxes, together with any interest, penalties and
related expenses thereto.
(k) Termination. This Agreement shall survive the termination of
Executive's employment with the Company or any Subsidiary and shall remain in
full force and effect after such termination.
(l) Generally Accepted Accounting Principles; Adjustments of Numbers.
Where any accounting determination or calculation is required to be made under
this Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with United States generally
accepted accounting principles, consistently applied. All numbers set forth
herein which refer to share prices or amounts will be appropriately adjusted to
reflect stock splits, stock dividends, combinations of shares, recapitalizations
or other similar transactions affecting the subject class of stock.
(m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury of any claim or cause of action in any
legal proceeding arising out of or related to this Agreement or the transactions
or events contemplated hereby or any course of conduct, course of dealing,
statements (whether verbal or written) or actions of any party hereto. The
parties hereto each agree that any and all such claims and causes of action
shall be tried by a court trial without a jury. Each of the parties hereto
further waives any right to seek to consolidate any such legal proceeding in
which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
* * * * *
11
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
as of the date first written above.
VI ACQUISITION CORP.
By: /s/ Walter Van Benthuysen
----------------------------
Name: Walter Van Benthuysen
Its: Chairman
/s/ Debra Koenig
----------------------------------
DEBRA KOENIG
12
EXHIBIT A
ELECTION TO INCLUDE VALUE OF
RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)
The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b)
of the Internal Revenue Code to include the restricted property described below
in his gross income for the tax year ending December 31, 2004 and supplies the
following information in accordance with the regulations promulgated thereunder:
1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE:
Debra Koenig
Social Security # __________________
2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE:
3,575 shares (the "SHARES") of Common Stock, par value $0.0001 per share,
of VI Acquisition Corp., a Delaware corporation (the "COMPANY").
3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS FEBRUARY 20, 2004.
The taxable year to which this election relates is calendar year 2004.
4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
A. The Shares are not transferable except as permitted by a Management
Agreement. Transferees are generally subject to the same restrictions as are
imposed on their transferors. Certificates representing the Shares contain
legends to give notice of restrictions on transfer.
B. If the Taxpayer ceases to serve as an employee of the Company or a
subsidiary, prior to certain specified time periods (the last day of each such
period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase
by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE
PRICE"). In certain circumstances (termination for cause, or resignation without
good reason), the Purchase Price may be lowered to fair market value if that is
less than the amount the Taxpayer paid for the Shares. On each specified Vesting
Date, a portion of the Shares subject to repurchase at the Purchase Price will
lapse and such portion will then be repurchasable at its fair market value in
the event the Taxpayer ceases to serve as an employee of the Company (for a
reason other than cause or resignation without good reason, in either case in
which the Purchase Price may be lowered to the amount the Taxpayer paid for the
Shares). On February 20, 2009, which is the last Vesting Date, all Shares then
will be repurchasable at their fair market value in the event the Taxpayer
ceases to serve as an employee of the Company (for a reason other than cause or
resignation without good reason, in either case in which the Purchase Price may
be lowered to the amount the Taxpayer paid for the Shares).
5. FAIR MARKET VALUE:
The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the property with respect to which this election is being made is $1.00 per
Share.
6. AMOUNT PAID FOR PROPERTY:
The amount paid by Taxpayer for said property is $1.00 per Share.
7. FURNISHING STATEMENT TO EMPLOYER:
A copy of this statement has been furnished to the Company.
Dated: February 20, 2004
Debra Koenig
This election must be filed with the Internal Revenue Service Center with which
the Taxpayer files his or her Federal income tax returns and must be filed
within thirty (30) days after the date of purchase. This filing should be made
by registered or certified mail, return receipt requested. The taxpayer must
retain two copies of the completed form for filing with his or her Federal and
State tax returns for the current tax year and an additional copy for his or her
records.
2
Exhibit 10.15
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of March 11, 2004,
between VI Acquisition Corp., a Delaware corporation (the "Company"), and Walter
van Benthuysen (the "Director").
The Company and Director desire to enter into an agreement pursuant to
which Director will commit to purchase, and the Company will commit to sell, an
aggregate of 10,000 shares of the Company's Common Stock, par value $.0001 per
share (the "Common Stock"). All of such shares of Common Stock are referred to
herein as "Director Shares." Certain definitions are set forth in Section 7 of
this Agreement.
The parties hereto agree as follows:
1. Director Shares.
(a) Upon execution of this Agreement, Director will purchase, and the
Company will sell, 10,000 shares of Common Stock at a price of $1.00 per share,
the fair market value of the Common Stock on the date hereof. The Company will
deliver to Director the certificates representing such Director Shares, and
Director will deliver to the Company a cashier's or certified check or wire
transfer of funds in the aggregate amount of $10,000.
(b) Within thirty (30) days after each purchase by Director of Director
Shares pursuant to this Agreement, Director will make an effective election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue Code
and the regulations promulgated thereunder in the form of Exhibit A attached
hereto.
(c) In connection with the purchase and sale of the Director Shares
pursuant hereto, Director represents and warrants to the Company that:
(i) The Director Shares to be acquired by Director pursuant to this
Agreement will be acquired for Director's own account and not with a view
to, or intention of, distribution thereof in violation of the Securities
Act, or any applicable state securities laws, and the Director Shares will
not be disposed of in contravention of the Securities Act or any
applicable state securities laws;
(ii) Director is an outside director of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Director Shares;
(iii) Director is able to bear the economic risk of his investment
in the Director Shares for an indefinite period of time because the
Director Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available;
(iv) Director has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the
Director Shares and has had full access to such other information
concerning the Company as he has requested;
(v) This Agreement and each of the other agreements contemplated
hereby to which Director is a party constitute legal, valid and binding
obligations of Director, enforceable in accordance with their terms, and
the execution, delivery and performance of this Agreement and such other
agreements by Director does not and will not conflict with, violate or
cause a breach of any agreement, contract or instrument to which Director
is a party or any judgment, order or decree to which Director is subject;
(vi) Director is not a party to or bound by any employment
agreement, consulting agreement, noncompete agreement or confidentiality
agreement which conflicts with the obligations set forth in this
Agreement; and
(vii) Director is a resident of the State of Illinois.
(d) As an inducement for the Company to commit to issue the Director
Shares to Director, and as a condition thereto, Director acknowledges and agrees
that neither any future issuance of capital stock of the Company to Director nor
any provision contained herein shall entitle Director to remain in the service
of the Company, or any Subsidiary of the Company, or affect the right of the
Company or any Subsidiary to terminate Director's services at any time for any
reason.
2. Vesting of Shares.
(a) Except as otherwise provided in Section 2(b) below, the Director
Shares purchased hereunder will become vested in accordance with the following
schedule, if as of each such date Director is still serving as a director of the
Company or is otherwise engaged to perform services on behalf of the Company or
any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF
DATE DIRECTOR SHARES TO BE VESTED
---- ----------------------------
1st Anniversary of this Agreement 20%
2nd Anniversary of this Agreement 40%
3rd Anniversary of this Agreement 60%
4th Anniversary of this Agreement 80%
5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon
the occurrence of a Sale of the Company, all Director Shares which have not yet
become vested shall become vested at the time of such Sale of the Company (such
portion being referred to herein as the "Accelerated Shares"); provided,
however, and subject to and unless otherwise provided for under the Stockholders
Agreement by and among the Company, the Investors, the Director and certain
other parties, that Director shall not Transfer any interest in any Accelerated
Shares unless and until such time as the Investors shall have received cash
dividends or other cash
2
proceeds resulting from any distributions on or dispositions of any Preferred
Stock or Common Stock in an aggregate amount equal to the product of (i) two
(2), multiplied by (ii) the aggregate purchase price paid by the Investors to
the Company for all Preferred Stock, Common Stock and other equity interests of
the Company purchased by the Investors (but not in any event including amounts
committed but not yet contributed to the capital of the Company). Director
Shares which have become vested hereunder are referred to herein as "Vested
Shares," and all other Director Shares are referred to herein as "Unvested
Shares."
(c) The Director Securities shall at all times be subject to such
restrictions or limitations with respect to the Transfer thereof that may be
contained herein or in the Stockholders Agreement or as otherwise provided by
law.
3. Repurchase Option.
(a) In the event Director ceases to be a director of the Company or to
otherwise be engaged by the Company or any Subsidiary for any reason (a
"Separation"), the Shares and all other Director Securities (whether held by
Director or one or more of Director's transferees, other than the Company and
the Investors) will be subject to repurchase, in each case by the Company
pursuant to the terms and conditions set forth in this Section 3 (the
"Repurchase Option").
(b) In the event of a Separation, the Director Shares purchased hereunder
shall be subject to repurchase as follows: (i) the purchase price for each
Unvested Share of Common Stock will be the Director's Original Cost for such
share; and (ii) the purchase price for each Vested Share of Common Stock will be
the Fair Market Value for such share.
(c) In the event of a Separation, any other Director Securities not
otherwise described in Section 3(b) above, shall be subject to repurchase as
follows: (i) the purchase price for each share of Common Stock will be the Fair
Market Value for such share and (ii) the purchase price for each share of
Preferred Stock will be Director's Original Cost for such share.
(d) In the event of a Separation, the Company may elect to purchase all or
any portion of the Director Securities by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Director Securities within
60 days after the Separation. The Repurchase Notice will set forth the number of
Unvested Shares and Vested Shares to be acquired from each holder, the aggregate
consideration to be paid for such securities and the time and place for the
closing of the transaction. The number of each type of securities to be
repurchased by the Company shall first be satisfied to the extent possible from
the Director Securities held by Director at the time of delivery of the
Repurchase Notice. If the number of any or all types of Director Securities then
held by Director is less than the total number of such securities which the
Company has elected to purchase, the Company shall purchase the remaining
securities elected to be purchased from the other holder(s) of Director
Securities under this Agreement, pro rata according to the number of the
applicable type of Director Securities held by such other holder(s) at the time
of delivery of such Repurchase Notice (determined as nearly as practicable to
the nearest share). The number of Unvested Shares and Vested Shares to be
repurchased hereunder will be allocated among Director and the other holders of
Director Securities (if any) pro rata
3
according to the number of the applicable type of Director Securities to be
purchased from such Person.
(e) The closing of the purchase of the Director Securities pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice, which date shall not be more than 2 months nor less than 5
days after the delivery of such notice. The Company will pay for the Director
Securities to be purchased by it pursuant to the Repurchase Option by first
offsetting amounts outstanding under any bona fide debts owed by Director to the
Company, and will pay the remainder of the purchase price to the extent
reasonably permissible under the Company's and its Subsidiaries' equity
financing agreements and agreements evidencing indebtedness for borrowed money
and to the extent the Company has the financial wherewithal at the time to make
such payments, by a check or wire transfer of funds and, if not, by a
subordinate note or notes, each on terms acceptable to banks and other financial
institutions loaning money to the Company and its Subsidiaries, payable in up to
three substantially equal, semi-annual installments beginning on the six month
anniversary of the closing of such purchase and bearing interest (payable
quarterly) at a rate per annum equal to the prime rate as published in The Wall
Street Journal from time to time, in the aggregate amount of the purchase price
for such securities. The Company will be entitled to receive customary
representations and warranties from the sellers of Director Securities
(including representations and warranties regarding good title to the Director
Securities, the absence of any liens on such title or other encumbrances with
respect to the Transfer of the Director Securities and the ability of such
sellers to consummate the sale).
(f) Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Director Securities by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and as
may be required by other parties in the Company's or any Subsidiaries' equity
financing agreements and agreements evidencing indebtedness for borrowed money,
if any. If any such restrictions prohibit the repurchase of Director Securities
hereunder which the Company is otherwise entitled or required to make, the
Company may make such repurchases as soon as it is permitted to do so under such
restrictions.
(g) Notwithstanding anything to the contrary contained in this Agreement,
if Director delivers the notice of objection described in the definition of Fair
Market Value, or if the Fair Market Value of a Share is otherwise determined to
be an amount more than 10% greater than the per share repurchase price for such
Shares originally determined by the Board, the Company shall have the right to
revoke its exercise of the Repurchase Option for all or any portion of the
Shares elected to be repurchased by it by delivering notice of such revocation
in writing to the holders of the Shares during (i) the thirty-day period
beginning on the date the Company receives Director's written notice of
objection and (ii) the thirty-day period beginning on the date the Company is
given written notice that the Fair Market Value of a Share was finally
determined to be an amount more than 10% greater than the per share repurchase
price for such Shares originally determined by the Board.
4. Restrictions on Transfer of Director Securities.
(a) Transfer of Director Securities. Director shall not Transfer any
interest in any Director Securities, except at such time as the restrictions
herein terminate as provided in Section
4
4(b) below. Notwithstanding the foregoing, the restrictions contained in this
Section 4 will not apply with respect to (i) Transfers of shares of Director
Securities pursuant to applicable laws of descent and distribution or (ii)
Transfer of shares of Director Securities among Director's Family Group;
provided that in each case such restrictions will continue to be applicable to
the Director Securities irrespective of any such Transfer. Any transferee of
Director Securities pursuant to a Transfer in accordance with the provisions of
this Section 4(a) is herein referred to as a "Permitted Transferee."
(b) Termination of Restrictions. The restrictions on the Transfer of
Director Securities set forth in this Section 4 will continue with respect to
each Director Security until the earlier of (i) a Qualified Public Offering; or
(ii) a Sale of the Company.
5. Registration. Director understands that the Shares are not currently
being registered under the Securities Act by reason of their contemplated
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act pursuant to Rule 701 thereof. Director
further agrees that he will not sell or otherwise dispose of the Shares unless
such sale or other disposition has been registered or is exempt from
registration under the Securities Act and has been registered or qualified or is
exempt from registration or qualification under applicable securities laws of
any state. Director understands that a restrictive legend consistent with the
foregoing, and as set forth in Section 6, will be placed on the certificates
evidencing the Shares, and related stop transfer instructions will be noted in
the stock transfer records of the Company and/or its stock transfer agent for
the Shares.
6. Additional Restrictions on Transfer of Director Securities.
(a) Legend. The certificates representing the Director Securities will
bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF MARCH 11, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND A DIRECTOR OF THE COMPANY
DATED AS OF MARCH 11, 2004. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) Opinion of Counsel. No holder of Director Securities may transfer any
Director Securities (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel (reasonably acceptable in form
5
and substance to the Company) that neither registration nor qualification under
the Securities Act and applicable state securities laws is required in
connection with such Transfer.
7. Definitions.
"Affiliate" of the Investors means any direct or indirect general or
limited partner or member of an Investor, as applicable, or any employee or
owner thereof, or any other person, entity or investment fund controlling,
controlled by or under common control with an Investor.
"Director's Family Group" means Director's spouse and descendants (whether
natural or adopted), any trust solely for the benefit of Director and/or
Director's spouse and/or descendants and any retirement plan for the Director.
"Director Securities" means the Shares and any other securities of the
Company held by Director or any of Director's transferees permitted hereunder.
All Director Securities will continue to be Director Securities in the hands of
any holder other than Director (except for the Company, the Investors and the
Investors' Affiliates and except for transferees in a Public Sale). Except as
otherwise provided herein, each such other holder of Director Securities will
succeed to all rights and obligations attributable to Director as a holder of
Director Securities hereunder. Director Securities will also include shares of
the Company's capital stock or other securities of the Company issued with
respect to Director Securities by way of a stock split, dividend or other
recapitalization or reclassification.
"Fair Market Value" of each Share as of a relevant date means the average
of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed on that date, or,
if there have been no sales or exchange on which the Common Stock is listed on
any day, the average of the highest bid and lowest asked prices on all
nationally-recognized exchanges at the end of such day, or, if on any day such
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any
day such Common Stock is not quoted in the NASDAQ System, of the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Common
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Common Stock determined in good faith by the Board of Directors of the
Company (the "Board Calculation"). If the Director disagrees with the Board
Calculation, the Director may, within 30 days after receipt of the Board
Calculation, deliver a notice (an "Objection Notice") to the Company setting
forth the Director's calculation of Fair Market Value. The Board and the
Director will negotiate in good faith to agree on such Fair Market Value, but if
such agreement is not reached within 30 days after the Company has received the
Objection Notice, Fair Market Value shall be determined by an appraiser selected
by the Board, which appraiser shall submit to the Board and the Director a
report within 30 days of its engagement setting forth such determination. The
determination of such appraiser shall be final and binding upon all parties. If
the Repurchase Option is exercised within 45 days after a Separation, then Fair
Market Value shall be determined as of the date of such Separation;
6
thereafter, Fair Market Value shall be determined as of the date the Repurchase
Option is exercised. A comparable process will be employed to determine the Fair
Market Value of Preferred Stock.
"Investors" has the meaning set forth in the Stockholders Agreement.
"Original Cost" means, (i) with respect to each share of Common Stock
purchased hereunder, $1.00 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations) and (ii) with respect to
each share of Preferred Stock purchased under the Purchase Agreement, $1,000.00
plus all accrued and unpaid dividends of the Preferred Stock (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations).
"Person" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
"Preferred Stock" means preferred stock issued by the Company.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock approved by the Board of Directors pursuant to which the Investors have
realized in cash a return of two or more times the amount of their investment in
the Company.
"Sale of the Company" means any transaction or series of transactions
pursuant to which (A) any Person(s) other than the Investors and their
respective Affiliates in the aggregate acquire(s) (i) capital stock of the
Company possessing the voting power (other than voting rights accruing only in
the event of a default, breach or event of noncompliance) to elect a majority of
the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include any sale
of equity or debt securities by the Company in a private offering to other
investors selected by the Investors; or (B) more than 50% of the assets of the
Company (treating investments in Affiliates as assets for these purposes) is
spun off, split off or otherwise distributed.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholders Agreement" means that certain Stockholders Agreement dated
June 13, 2003 among the Company, the Investors, the Director and certain other
parties.
7
"Subsidiary" means any entity of which the Company owns securities having
a majority of the ordinary voting power in electing the board of directors, or
the equivalent governing body, directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
8. Notices. Any notice, consent, waiver and other communications required
or permitted pursuant to the provisions of this Agreement must be in writing and
will be deemed to have been properly given (a) when delivered by hand; (b) when
sent by telecopier (with acknowledgement of complete transmission), provided
that a copy is mailed by U.S. certified mail, return receipt requested; (c)
three (3) days after sent by certified mail, return receipt requested; or (d)
one (1) day after deposit with a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers set
forth below:
If to the Company:
VI Acquisition Corp.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Tel: (312) 255-4800
Fax: (312) 255-4820
If to the Director
Walter van Benthuysen
17 Tartan Lakes Court
Westmont, Illinois 60559
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Fax: (312) 207-6400
Tel: (312) 207-1000
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt of
subsequent notices by giving written notice thereof to the other party in
accordance with this Section 8.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Director Securities in violation of any provision of this
Agreement shall be void, and the
8
Company shall not record such Transfer on its books or treat any purported
transferee of such Director Securities as the owner of such securities for any
purpose.
(b) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents expressly referred
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Director hereby releases the Company and its affiliates and its and their
predecessors from any obligation or liability the Company or any of its
affiliates or its or their predecessors owes or owed to Director or any of his
affiliates and related persons prior to the date hereof.
(d) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(e) Successors and Assigns.
(i) All Director Securities will continue to be Director Securities
in the hands of any holder other than Director, including any of
Director's transferees permitted hereunder or under the Stockholders
Agreement (except for the Company, the Investors and the Investors'
Affiliates and except for transferees in a Public Sale). Except as
otherwise provided herein, each such other holder of Director Securities
will succeed to all rights and obligations attributable to Director as a
holder of Director Securities hereunder.
(ii) Except as otherwise provided herein, this Agreement shall bind
and inure to the benefit of and be enforceable by Director, the Company,
the Investors and their respective successors and assigns (including
subsequent holders of Director Securities); provided that the rights and
obligations of Director under this Agreement shall not be assignable
except in connection with a permitted transfer of Director Securities
hereunder.
(iii) Each of the Investors is intended to be a third party
beneficiary of this Agreement and may enforce any rights granted to it
hereunder.
(f) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Illinois,
9
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois. Furthermore, Director and Company agree and consent to submit to
personal jurisdiction in the State of Illinois in any state or federal court of
competent subject matter jurisdiction situated in Cook County, Illinois.
Director and Company agree that the sole and exclusive venue for any suit
arising out of, or seeking to enforce, the terms of this Agreement shall be in a
state or federal court of competent subject matter jurisdiction situated in Cook
County, Illinois.
(g) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company and Director. No
cause of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
(i) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Indemnification and Reimbursement of Payments on Behalf of Director.
The Company and any Subsidiary shall be entitled to deduct or withhold from any
amounts owing from the Company or any Subsidiary to the Director any federal,
state, local or foreign withholding taxes, excise taxes, or employment taxes
("Taxes") imposed with respect to the Director's compensation or other payments
from the Company or any Subsidiary or the Director's ownership interest in the
Company, including, but not limited to, wages, bonuses, dividends, the receipt
or exercise of stock options and/or the receipt or vesting of restricted stock.
The Director shall indemnify the Company and any Subsidiary for any amounts paid
with respect to any such Taxes, together with any interest, penalties and
related expenses thereto.
(k) Termination. This Agreement shall survive the termination of
Director's services with the Company or any Subsidiary and shall remain in full
force and effect after such termination.
(l) Generally Accepted Accounting Principles; Adjustments of Numbers.
Where any accounting determination or calculation is required to be made under
this Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with United States generally
accepted accounting principles, consistently applied.
10
All numbers set forth herein which refer to share prices or amounts will be
appropriately adjusted to reflect stock splits, stock dividends, combinations of
shares, recapitalizations or other similar transactions affecting the subject
class of stock.
(m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury of any claim or cause of action in any
legal proceeding arising out of or related to this Agreement or the transactions
or events contemplated hereby or any course of conduct, course of dealing,
statements (whether verbal or written) or actions of any party hereto. The
parties hereto each agree that any and all such claims and causes of action
shall be tried by a court trial without a jury. Each of the parties hereto
further waives any right to seek to consolidate any such legal proceeding in
which a jury trial has been waived with any other legal proceeding in which a
jury trial cannot or has not been waived.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
as of the date first written above.
VI ACQUISITION CORP.
By: /s/ Debra Koenig
----------------------
Name: Debra Koenig
Its: Executive Vice President
/s/ Walter Van Benthuysen
-----------------------------
WALTER VAN BENTHUYSEN
11
ELECTION TO INCLUDE VALUE OF
RESTRICTED PROPERTY IN GROSS INCOME
IN YEAR OF TRANSFER UNDER CODE SECTION 83(b)
The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b)
of the Internal Revenue Code to include the restricted property described below
in his gross income for the tax year ending December 31, 2004 and supplies the
following information in accordance with the regulations promulgated thereunder:
1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE:
Walter van Benthuysen
17 Tartan Lakes Court
Westmont, Illinois 60559
Social Security # _______________
2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE:
10,000 shares (the "SHARES") of Common Stock, par value $0.0001 per share,
of VI Acquisition Corp., a Delaware corporation (the "COMPANY").
3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS MARCH 11, 2004.
The taxable year to which this election relates is calendar year 2004.
4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS:
A. The Shares are not transferable except as permitted by a Management
Agreement. Transferees are generally subject to the same restrictions as are
imposed on their transferors. Certificates representing the Shares contain
legends to give notice of restrictions on transfer.
B. If the Taxpayer ceases to serve as a director or other service provider
of the Company prior to certain specified time periods (the last day of each
such period, a "VESTING DATE"), a portion of the Shares will be subject to
repurchase by the Company at the amount the Taxpayer paid for the Shares (the
"PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares
subject to repurchase at the Purchase Price will lapse and such portion will
then be repurchasable at its fair market value in the event the Taxpayer ceases
to serve as a director or other service provided of the Company. On the February
20, 2009 Vesting Date, all Shares then will be repurchasable at their fair
market value in the event the Taxpayer ceases to serve as a director or other
service provider of the Company.
5. FAIR MARKET VALUE:
The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will never lapse)
of the property with respect to which this election is being made is $1.00 per
Share.
6. AMOUNT PAID FOR PROPERTY:
The amount paid by Taxpayer for said property is $1.00 per Share.
7. FURNISHING STATEMENT TO EMPLOYER:
A copy of this statement has been furnished to the Company.
Dated: March 11, 2004
Walter van Benthuysen
This election must be filed with the Internal Revenue Service Center with which
the Taxpayer files his or her Federal income tax returns and must be filed
within thirty (30) days after the date of purchase. This filing should be made
by registered or certified mail, return receipt requested. The taxpayer must
retain two copies of the completed form for filing with his or her Federal and
State tax returns for the current tax year and an additional copy for his or her
records.
2
Exhibit 10.16
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "EMPLOYMENT AGREEMENT") is made this 13th
day of June, 2003 by and between VICORP RESTAURANTS, INC., a Colorado
corporation (the "COMPANY"), and DEBRA KOENIG ("EXECUTIVE").
WHEREAS, the Company and its subsidiaries are engaged in the business of
(i) operating and managing family dining restaurants and enterprises and (ii)
conducting such other activities as are undertaken from time to time by the
Company, VI Acquisition Corp., a Delaware corporation (the "PARENT"), and each
of their subsidiaries as a result of future acquisitions, or otherwise
(collectively, the "BUSINESS");
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, as the Chief Executive Officer of the Company; and
WHEREAS, the Company and Executive desire to enter into this Employment
Agreement to evidence the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises in this Employment Agreement, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief
Executive Officer of the Company, and Executive hereby agrees to accept such
employment and agrees to act as Chief Executive Officer of the Company, all in
accordance with the terms and conditions of this Employment Agreement. In
addition to the foregoing, the Company agrees that, as soon as practicable on or
after the execution of this Employment Agreement, the Executive will be elected
as a Director of the Company. Executive hereby represents and warrants that
neither Executive's entry into this Employment Agreement nor Executive's
performance of Executive's obligations hereunder will conflict with or result in
a breach of the terms, conditions or provisions of any other agreement or
obligation of any nature to which Executive is a party or by which Executive is
bound, including, without limitation, any development agreement, non-competition
agreement or confidentiality agreement entered into by Executive.
2. TERM OF EMPLOYMENT AND AUTOMATIC RENEWAL. The term of Executive's
employment under this Employment Agreement will commence on the date of this
Employment Agreement and will continue until the third (3rd) anniversary of the
date of this Employment Agreement (the "INITIAL EMPLOYMENT PERIOD"). THE INITIAL
EMPLOYMENT PERIOD AND ANY RENEWAL EMPLOYMENT PERIOD (AS DEFINED HEREIN) SHALL
AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED
HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (EACH, A "RENEWAL EMPLOYMENT PERIOD"),
UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT
PERIOD OR ANY RENEWAL EMPLOYMENT PERIOD, AS THE CASE MAY BE, EITHER PARTY SHALL
GIVE WRITTEN NOTICE TO THE OTHER PARTY OF ITS ELECTION TO TERMINATE THIS
EMPLOYMENT AGREEMENT. The Initial Employment Period and the Renewal Employment
Periods are hereinafter referred to as the
"EMPLOYMENT PERIOD." Notwithstanding anything to the contrary contained herein,
the Employment Period is subject to earlier termination pursuant to SECTION 11
below.
3. POSITION AND RESPONSIBILITIES. Executive shall report to and be subject
to the direction of the Board of Directors of the Company (the "BOARD").
Executive shall perform and discharge such duties and responsibilities for the
Company as the Board may from time to time reasonably assign Executive, provided
such duties and responsibilities are consistent with the position of a Chief
Executive Officer. Subject to the foregoing, Executive understands and
acknowledges that such duties shall be subject to revision and modification by
the Company's Board upon reasonable notice to Executive. During the Employment
Period, Executive shall devote Executive's full business time, attention, skill
and efforts to the performance of Executive's duties herein, and shall perform
the duties and carry out the responsibilities assigned to Executive, to the best
of Executive's ability, in a diligent, trustworthy and businesslike manner for
the purpose of advancing the Company. Executive acknowledges that Executive's
duties and responsibilities will require Executive's full-time business efforts
and agrees that during the Employment Period, Executive will not engage in any
outside business activities that conflict with her obligations under this
Employment Agreement.
4. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company shall pay
to Executive a base salary at the rate of $484,380 per year (the "BASE SALARY"),
less applicable tax withholding, subject to increase from time to time, solely
at the Company's discretion, payable at the Company's regular employee payroll
intervals. Executive's performance shall be reviewed annually and the Base
Salary may be increased at the Company's sole discretion.
(b) DISCRETIONARY BONUS. During the Employment Period, Executive
shall be eligible to earn an annual bonus targeted at fifty percent (50%) of her
Base Salary upon the achievement of the annual budget, which budget shall be
determined by the Board in its sole discretion. Bonus amounts in excess of fifty
percent (50%) of Executive's Base Salary may be paid to the Executive if the
annual performance goals for a particular year are exceeded, as determined in
the sole discretion of the Board.
(c) STOCK. Pursuant to a stock purchase agreement (the "STOCK
PURCHASE AGREEMENT") to be entered into among Parent, the Executive, the
Investors (as defined therein) and certain other executives of the Company,
Executive will purchase certain shares of common stock and preferred stock of
Parent (collectively, the "EXECUTIVE STOCK"), which shares of Executive Stock
shall be subject to certain vesting, repurchase and other obligations and
restrictions set forth in that certain senior management agreement to be entered
into between Parent and the Executive (the "MANAGEMENT AGREEMENT") and that
certain stockholders agreement to be entered into among Parent, Executive, the
Investors and certain other shareholders of Parent (the "STOCKHOLDERS
AGREEMENT").
5. BENEFIT PLANS. During the Employment Period, Executive will be entitled
to receive traditional employment benefits comparable to those provided to other
senior executive officers of the Company (subject to any applicable waiting
periods, eligibility requirements, or
2
other restrictions), which benefits may include insurance (medical, dental,
life, disability), retirement plans and profit sharing plans.
6. EXPENSES. The Company, in accordance with policies and practices
established by the Board from time to time, will pay or reimburse Executive for
all expenses (including travel and cell phone expenses) reasonably incurred by
Executive during the Employment Period in connection with the performance of
Executive's duties under this Employment Agreement, provided that Executive
shall provide to the Company documentation or evidence of expenses for which
Executive seeks reimbursement. In addition, upon the delivery by Executive to
the Company of a detailed description of such expenses, the Company agrees to
reimburse Executive for the following reasonable relocation expenses actually
incurred in connection with the Executive's relocation to the Denver, Colorado
metropolitan area:
(i) all transfer fees and sales commissions incurred in
connection with the sale of Executive's current home in Illinois;
(ii) reasonable legal fees incurred in connection with the
sale of Executive's current home in Illinois, and purchase of
Executive's new home in Colorado;
(iii) all closing fees (including points on Executive's
mortgage) incurred in connection with the purchase of Executive's
new home in Colorado;
(iv) reasonable travel, lodging and dining expenses incurred
by Executive and her spouse in connection with a reasonable number
of house-hunting trips to Colorado;
(v) reasonable moving expenses for the belongings of Executive
and her family incurred in connection with the purchase of
Executive's new home in Colorado; and
(vi) reasonable temporary housing in Colorado, if needed, up
to a maximum of five (5) months.
7. VACATION. Executive shall be entitled to vacation at the rate of four
(4) weeks per year to be accrued and taken in accordance with the Company's
vacation policy from time to time in effect. Vacation which is accrued but not
used in a given year will be forfeited as of the end of that year.
8. CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT. On the date
hereof, Executive shall execute a confidentiality, inventions and
non-solicitation agreement, in the form of EXHIBIT A attached hereto and made a
part hereof (the "CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT").
9. RESTRICTIVE COVENANTS.
(a) EXECUTIVE'S ACKNOWLEDGMENT. Executive acknowledges that: (i)
Parent and the Company are and will be engaged in the Business during the
Employment Period and
3
thereafter; (ii) Parent and the Company are and will be actively engaged in the
Business throughout the world; (iii) Executive is one of a limited number of
persons who will be developing the Business; (iv) Executive will continue to
occupy a position of trust and confidence with the Company after the date of
this Employment Agreement and during the Employment Period Executive will
continue to become familiar with Parent's and the Company's and each of their
subsidiaries' and portfolio companies (collectively, the "GROUP") trade secrets
and with other proprietary and confidential information concerning the Group and
the Business (and the other businesses of the Group); (v) the agreements and
covenants contained in this SECTION 9 are essential to protect the Group and the
goodwill of the Business and are a condition precedent to the Company entering
into this Employment Agreement; (vi) Executive's employment with the Company has
special, unique and extraordinary value to the Company and Parent and the
Company would be irreparably damaged if Executive were to provide services to
any person or entity in violation of the provisions of this Employment
Agreement; and (vii) Executive has means to support Executive and Executive's
dependents other than by engaging in the Business, and the provisions of this
SECTION 9 will not impair such ability.
(b) RESTRICTIONS. Executive will not, during the Restricted Period
(as defined below), anywhere in North America (the "RESTRICTED TERRITORY"),
directly or indirectly (whether as an owner, partner, shareholder, agent,
officer, director, employee, independent contractor, consultant, or otherwise)
own, operate, manage, control, invest in, perform services for, or engage or
participate in any manner in, or render services to (alone or in association
with any person or entity) or otherwise assist any person or entity in, the
following entities, or in any entity or entities directly or indirectly related
to the following entities: Bob Evans'; IHOP; Denny's; Perkin's; Marie Calendar;
Mimi's; and Cracker Barrel.
The term "RESTRICTED PERIOD" means the period of time from the date of
this Employment Agreement until one (1) year after the termination for any
reason of Executive's employment relationship with the Group or any successor
thereto (whether pursuant to a written agreement or otherwise, including any
Renewal Employment Period under this Employment Agreement). The Restricted
Period shall be extended for a period equal to any time period that Executive is
in violation of SECTION 9. Nothing contained in SECTION 9(B) above shall be
construed to prevent Executive from investing in the stock of any competing
corporation listed on a national securities exchange or traded in the
over-the-counter market, but only if Executive is not involved in the business
of said corporation and if Executive and Executive's associates (as such term is
defined in Regulation 14(A) promulgated under the Securities Exchange Act of
1934, as in effect on the date hereof), collectively, do not own more than an
aggregate of one percent (1%) of the stock of such corporation.
(c) SCOPE/SEVERABILITY. The parties acknowledge that the business of
Parent and the Company is and will be national in scope and thus the covenants
in this SECTION 9 would be ineffective if the covenants were to be limited to a
particular geographic area. If any court of competent jurisdiction at any time
deems the Restricted Period unreasonably lengthy, or the Restricted Territory
unreasonably extensive, or any of the covenants set forth in this SECTION 9 not
fully enforceable, the other provisions of this SECTION 9, and this Employment
Agreement in general, will nevertheless stand and to the full extent consistent
with law continue in full force and effect, and it is the intention and desire
of the parties that the court treat any provisions of this Employment Agreement
which are not fully enforceable as having been modified to the
4
extent deemed necessary by the court to render them reasonable and enforceable
and that the court enforce them to such extent (for example, that the Restricted
Period be deemed to be the longest period permissible by law, but not in excess
of the length provided for in SECTION 9(B), and the Restricted Territory be
deemed to comprise the largest territory permissible by law under the
circumstances but not in excess of the territory provided for in SECTION 9(b)).
10. EQUITABLE REMEDIES. Executive acknowledges and agrees that the
agreements and covenants set forth in the Confidentiality, Inventions and
Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement are
reasonable and necessary for the protection of Parent's and the Company's
business interests, that irreparable injury will result to Parent and the
Company if Executive breaches any of the terms of said covenants, and that in
the event of Executive's breach of any such covenants, Parent and the Company
will have no adequate remedy at law. Executive accordingly agrees that, in the
event of any breach by Executive of any of said covenants, Parent and the
Company will be entitled to immediate injunctive and other equitable relief,
without the necessity of showing actual monetary damages. Nothing in this
SECTION 10 will be construed as prohibiting Parent or the Company from pursuing
any other remedies available to them for such breach or threatened breach,
including the recovery of any damages that they are able to prove.
11. TERMINATION. Notwithstanding anything in SECTION 2 of this Agreement
to the contrary, Executive's services shall terminate upon the first to occur of
the following events:
(a) DEATH. The Employment Period will terminate immediately upon the
death of Executive. If the Employment Period is terminated pursuant to this
SECTION 11(A), the Company shall have no further obligation to Executive (or her
estate) except for salary and benefits accrued through the date of termination.
(b) DUE CAUSE. The Company may terminate the Employment Period
immediately upon written notice to Executive for Due Cause. The following events
will be deemed to constitute "DUE CAUSE":
(i) Executive's breach of any of Executive's obligations under the
Confidentiality, Inventions and Non-Solicitation Agreement,
the Stock Purchase Agreement, the Management Agreement or the
Stockholders Agreement; or
(ii) Executive's neglect of, willful misconduct in connection with
the performance of, or refusal to perform Executive's duties
in accordance with SECTION 3 of this Employment Agreement,
which, in the case of neglect or refusal to perform, has not
been cured to the Company's good faith satisfaction within
thirty (30) days after Executive has been provided written
notice of the same and the corrective action required by the
Company; or
(iii) Executive's engagement in any conduct which injures in a
material respect the integrity or reputation of the Company or
which impugns Executive's
5
own integrity or reputation so as to cause Executive to be
unfit to act in the capacity of Chief Executive Officer of the
Company; or
(iv) the Board's good faith determination that Executive has
committed an act or acts constituting a felony, or has
committed any other intentional act involving dishonesty or
fraud against the Company.
If the Employment Period is terminated pursuant to this SECTION 11(b), the
Company shall have no further obligation to Executive except for salary and
benefits accrued through the date of termination.
(c) PERMANENT DISABILITY. The Company may terminate the Employment
Period upon the Permanent Disability (as defined below) of the Executive. For
purposes of this Employment Agreement, the term "PERMANENT DISABILITY" shall
mean that Executive is entitled to benefits under the Company's long-term
disability plan, or if no such plan exists, if the Executive is unable to
perform, by reason of physical or mental incapacity, the essential functions of
her position for ninety (90) or more days in any one hundred twenty (120) day
period. The Board shall determine, according to the facts then available,
whether and when a Permanent Disability has occurred. Such determination shall
not be arbitrary or unreasonable.
(d) TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. The Company may
terminate the Employment Period without Due Cause upon thirty (30) days' prior
written notice. If the Employment Period is terminated pursuant to this SECTION
11(d), then Executive will be entitled to receive as severance pay, the
continuation of her Base Salary at the annual rate then in effect for a period
of twelve (12) months following the termination of her employment (the
"SEVERANCE PERIOD"), payable in accordance with the Company's payroll policy
from time to time in effect. Upon a termination under this SECTION 11(d), the
Company may elect, within thirty (30) days of the termination of the Employment
Period, to extend the duration of the Restricted Period for up to an additional
twelve (12) month period by so notifying Executive. If the Company elects to
extend the Restricted Period, the amount of severance pay shall be increased by
one-twelfth (1/12) of her Base Salary, at the annual rate then in effect, for
each month by which the Restricted Period is extended. In addition, if the
Executive elects COBRA continuation coverage, the Company shall pay for such
coverage through the Severance Period at the same rate as it pays for health
insurance coverage for its active employees (with the Executive required to pay
for any employee paid portion of such coverage). Nothing herein provided,
however, shall be construed to extend the period of time over which such COBRA
continuation coverage otherwise may be provided to the Executive and/or her
dependents. Notwithstanding the above, Executive shall receive such amounts only
if Executive is not in material breach of any of the provisions of the
Confidentiality, Inventions and Non-Solicitation Agreement and SECTION 9 of this
Employment Agreement and has complied with SECTION 11(f) of this Employment
Agreement.
(e) VOLUNTARY RESIGNATION BY EXECUTIVE. Executive may terminate the
Employment Period at any time for any reason upon thirty (30) days' prior
written notice. If the Employment Period is terminated pursuant to this SECTION
11(e), the Company shall have no further obligation to Executive except for
salary and benefits accrued through the date of termination; provided, however,
that if Executive is terminating the Employment Period for
6
Good Reason (as defined below), then Executive will be entitled to receive the
severance benefits on the terms and subject to all of the conditions and rights
as described in SECTION 11(d). The following events will be deemed "GOOD REASON"
for which Executive may terminate the Employment Period and receive the
severance payments set forth in SECTION 11(d):
(i) a material diminution of the Executive's duties,
responsibilities, position or title after notice to the
Company and a thirty (30) day opportunity to cure; or
(ii) any material breach of this Employment Agreement on the part
of the Company (including, but not limited to, any decrease in
the Base Salary without the consent of the Executive, or
relocation of Executive's place of employment to a location
that is greater than fifty (50) miles from the Denver,
Colorado metropolitan area), after notice to the Board, and a
thirty (30) day opportunity to cure; provided, however, that
Executive is not in material breach of any of the terms of
this Employment Agreement.
(f) GENERAL RELEASE. The receipt of any payment as set forth in
SECTIONS 11(d)-(e) above shall be contingent upon Executive's execution of an
agreement acceptable to the Company that (i) waives any rights the Executive may
otherwise have against the Company and its Affiliates, (ii) releases the Company
and its Affiliates from actions, suits, claims, proceedings and demands related
to the period of employment and/or the termination of employment, and (iii)
contains certain other standard obligations which shall be set forth at the time
of the termination. For purposes of this Employment Agreement, the term
"AFFILIATES" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1404 of
the Code.
(g) SURVIVAL. Termination of the Employment Period in accordance
with this SECTION 11, or expiration of the Employment Period, will not affect
the provisions of this Employment Agreement that survive such termination,
including, without limitation, the provisions in the Confidentiality, Inventions
and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement,
and will not limit either party's ability to pursue remedies at law or equity.
12. ATTORNEY'S FEES. If either party prevails in a legal or arbitration
action to enforce or protect its rights under this Employment Agreement, then
that party shall be entitled to recover reasonable attorneys' fees, costs, and
expenses, in addition to all other relief, including but not limited to damages
and injunctive relief.
13. EXECUTIVE ASSISTANCE. Both during and after Executive's employment
with the Company, Executive shall, upon reasonable notice, furnish the Company
with such information as may be in Executive's possession or control, and
cooperate with the Company, as the Company may reasonably request (with due
consideration to Executive's business activities and obligations after the
Employment Period), in connection with any litigation, claim, or other dispute
in which the Company or any of its Affiliates is or may become a party. The
Company
7
shall reimburse Executive for all reasonable out-of-pocket expenses incurred by
Executive in fulfilling Executive's obligations under this SECTION 13 and shall
provide Executive, if the obligation occurs after the Employment Period, with a
reasonable per diem allowance.
14. EFFECT OF PRIOR AGREEMENTS. This Employment Agreement, the Management
Agreement, the Stockholders Agreement, the Stock Purchase Agreement and the
Confidentiality, Inventions and Non-Solicitation Agreement contain the entire
understanding between Parent, the Company and Executive relating to the subject
matter hereof and supersede any prior employment agreement between Executive,
Parent and the Company or other agreement relating to the subject matter hereof
between Parent, the Company and Executive. Executive agrees and acknowledges
that she is entitled to no benefits or compensation and has no other rights
against the Company, the Parent, and their Affiliates, except as otherwise set
forth in this Employment Agreement and, to the extent any such benefits,
compensation or rights are owed to him, expressly waives such benefits,
compensation and rights.
15. MODIFICATION AND WAIVER. This Employment Agreement may not be modified
or amended, nor may any provisions of this Employment Agreement be waived,
except by an instrument in writing signed by the parties. No written waiver will
be deemed to be a continuing waiver unless specifically stated therein, and each
such waiver will operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or as to
any act other than that specifically waived.
16. SEVERABILITY. If, for any reason, any provision of this Employment
Agreement is held invalid, such invalidity will not affect any other provision
of this Employment Agreement, and each provision will to the full extent
consistent with law continue in full force and effect. If any provision of this
Employment Agreement is held invalid in part, such invalidity will in no way
affect the rest of such provision, and the rest of such provision, together with
all other provisions of this Employment Agreement, will, to the full extent
consistent with law, continue in full force and effect.
17. NOTICES. Any notice, consent, waiver and other communications required
or permitted pursuant to the provisions of this Employment Agreement must be in
writing and will be deemed to have been properly given (a) when delivered by
hand; (b) when sent by telecopier (with acknowledgment of complete
transmission), provided that a copy is mailed by U.S. certified mail, return
receipt requested; (c) three (3) days after sent by certified mail, return
receipt requested; or (d) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
telecopier numbers set forth below:
If to the Company:
VICORP Restaurants, Inc.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Fax: (312) 255-4820
8
With a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt
of subsequent notices by giving written notice thereof to the other party in
accordance with this SECTION 17.
18. THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties to this Employment Agreement and their respective
permitted successors and assigns, any rights or remedies under or by reason of
this Employment Agreement.
19. HEADINGS. The headings and other captions in this Employment Agreement
are included solely for convenience of reference and will not control the
meaning and interpretation of any provision of this Employment Agreement.
20. GOVERNING LAW; ARBITRATION. This Employment Agreement has been
executed in the State of Illinois, and its validity, interpretation,
performance, and enforcement will be governed by the laws of such state, except
with respect to conflicts of laws principles. Except for disputes arising out of
an alleged violation of the Restrictive Covenants set forth in the
Confidentiality, Inventions and Non-Solicitation AGREEMENT and in SECTION 9 of
this Employment Agreement, any controversy or claim arising out of or relating
to any provision of this Employment Agreement or any other document or agreement
referred to herein shall be resolved by arbitration. The arbitration process
shall be instigated by either party giving written notice to the other of the
desire for arbitration and the factual allegations underlying the basis for the
dispute. The arbitration shall be conducted by such alternative dispute
resolution service as is agreed to by the parties, or, failing such agreement
within thirty (30) days after such dispute arises, by arbitrators selected as
described below in accordance with the rules and procedures established by the
American Arbitration Association. Only a person who is a practicing lawyer
admitted to a state bar may serve as an arbitrator. Each party shall select one
arbitrator, and those arbitrators shall choose a third arbitrator; these
arbitrators shall constitute the panel. The American Arbitration Association
rules for employment arbitration shall control any discovery conducted in
connection with the arbitration. The expenses of arbitration (other than
attorneys' fees) shall be shared as determined by arbitration. Each side to the
claim or controversy shall pay their own attorneys' fees. Any result reached by
the panel shall be binding on all parties to the arbitration, and no appeal may
be taken. It is agreed that any party to any award rendered in such
9
arbitration proceeding may seek a judgment upon the award and that judgment may
be entered thereon by any court having jurisdiction. The arbitration shall be
conducted in the State of Colorado.
21. NON-ASSIGNABILITY/BINDING EFFECT. The Executive acknowledges that the
services to be rendered by him are unique and personal. Accordingly, the
Executive may not assign any of her rights or delegate any of her duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.
22. NO STRICT CONSTRUCTION. The language used in this Employment Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any person.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW]
10
IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be
executed by its duly authorized officer and Executive has signed this Employment
Agreement, as of the date first above written.
VICORP RESTAURANTS, INC.
By: /s/ Walter Van Benthuysen
-------------------------------
Its: Chairman
CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT
In consideration of employment by VICORP Restaurants, Inc., a Colorado
corporation, its successors or assigns (the "COMPANY") of Debra Koenig
("EXECUTIVE"), it is understood and agreed as follows:
1. CONFIDENTIAL INFORMATION.
(a) Executive acknowledges that the Confidential Information (as defined
below) constitutes a protectible business interest of the Company
and its parent [VI ACQUISITION CORP.], a Delaware corporation
("PARENT") and covenants and agrees that at all times during the
period of Executive's employment, and at all times after termination
of such employment, Executive will not, directly or indirectly,
disclose, furnish, make available or utilize any Confidential
Information other than in the course of performing duties as an
employee of the Company. Executive will abide by Company policies
and rules as may be established from time to time by it for the
protection of its Confidential Information. Executive agrees that in
the course of employment with the Company Executive will not bring
to the Company's offices nor use, disclose to the Company, or induce
the Company to use, any confidential information or documents
belonging to others. Executive's obligations under this SECTION 1.a.
with respect to particular Confidential Information will survive
expiration or termination of this Confidentiality, Inventions and
Non-Solicitation Agreement (this "AGREEMENT"), and Executive's
employment with the Company, and will terminate only at such time
(if any) as the Confidential Information in question becomes
generally known to the public other than through a breach of
Executive's obligations under this Agreement.
(b) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" means
any and all confidential, proprietary or trade secret information,
whether disclosed, directly or indirectly, verbally, in writing or
by any other means in tangible or intangible form, including that
which is conceived or developed by Executive, applicable to or in
any way related to: (i) the present or future business of Parent,
the Company or any of their Affiliates (as defined below); (ii) the
research and development of Parent, the Company or any of their
Affiliates; or (iii) the business of any client or vendor of Parent,
the Company or any of their Affiliates. Such Confidential
Information includes the following property or information of
Parent, the Company and their Affiliates, by way of example and
without limitation, trade secrets, processes, formulas, data,
program documentation, customer lists, designs, drawings,
algorithms, source code, object code, know-how, improvements,
inventions, licenses, techniques, all plans or strategies for
marketing, development and pricing, business plans, financial
statements, profit margins and all information concerning existing
or potential clients, suppliers or vendors. Confidential Information
of Parent and the Company also means all similar information
disclosed to Parent or the Company by third parties which is
subject to confidentiality obligations. The term "AFFILIATES" means
(i) all persons or entities controlling, controlled by or under
common control with, Parent and/or the Company, (ii) all companies
or entities in which Parent or the Company own an equity interest
and (iii) all predecessors, successors and assigns of the those
Affiliates identified in (i) and (ii).
2. RETURN OF MATERIALS. Upon termination of employment with the Company, and
regardless of the reason for such termination, Executive will leave with, or
promptly return to, the Company all documents, records, notebooks, magnetic
tapes, disks or other materials, including all copies, in Executive's possession
or control which contain Confidential Information or any other information
concerning Parent, the Company, any of their Affiliates or any of their
respective products, services or clients, whether prepared by the Executive or
others.
3. INVENTIONS AS SOLE PROPERTY OF THE COMPANY.
(a) Executive covenants and agrees that all Inventions (as defined
below) shall be the sole and exclusive property of the Company.
(b) As used in this Agreement, the term "INVENTIONS" means any and all
inventions, developments, discoveries, improvements, works of
authorship, concepts or ideas, or expressions thereof, whether or
not subject to patents, copyright, trademark, trade secret
protection or other intellectual property right protection (in the
United States or elsewhere), and whether or not reduced to practice,
conceived or developed by Executive while employed with the Company
or within one (1) year following termination of such employment
which relate to or result from the actual or anticipated business,
work, research or investigation of Parent, the Company or any of
their Affiliates or which are suggested by or result from any task
assigned to or performed by Executive for Parent, the Company or any
of their Affiliates.
(c) Executive acknowledges that all original works of authorship which
are made by her (solely or jointly) are works made for hire under
the United States Copyright Act (17 U.S.C., et seq.).
(d) Executive agrees to promptly disclose to the Company all Inventions,
all original works of authorship and all work product relating
thereto. This disclosure will include complete and accurate copies
of all source code, object code or machine-readable copies,
documentation, work notes, flow-charts, diagrams, test data,
reports, samples and other tangible evidence or results
(collectively, "TANGIBLE EMBODIMENTS") of such Inventions, works of
authorship and work product. All Tangible Embodiments of any
Invention, work of authorship or work product related thereto will
be deemed to have been assigned to the Company as a result of the
act of expressing any Invention or work of authorship therein.
(e) Executive hereby assigns to the Company (together with the right to
prosecute or sue for infringements or other violations of the same)
the entire worldwide right, title and interest to any such
Inventions or works made for hire, and Executive
2
agrees to perform, during and after employment, all acts deemed
necessary or desirable by the Company to permit and assist it, at
the Company's expense, in registering, recording, obtaining,
maintaining, defending, enforcing and assigning Inventions or works
made for hire in any and all countries. Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers
and agents as Executive's agents and attorneys-in-fact to act for
and in Executive's behalf and instead of Executive, to execute and
file any documents and to do all other lawfully permitted acts to
further the above purposes with the same legal force and effect as
if executed by Executive; this designation and appointment
constitutes an irrevocable power of attorney and is coupled with an
interest.
(f) Without limiting the generality of any other provision of this
SECTION 3, Executive hereby authorizes the Company and each of its
Affiliates (and their respective successors) to make any desired
changes to any part of any Invention, to combine it with other
materials in any manner desired, and to withhold Executive's
identity in connection with any distribution or use thereof alone or
in combination with other materials.
(g) Pursuant to the Illinois Employee Patent Act, Public Act 83-493,
this Agreement does not apply to any invention for which no
equipment, supplies, facility or trade secret information of Parent
or the Company was used and which was developed entirely on
Executive's own time, unless (1) the invention relates (a) to the
business of Parent or the Company or (b) to Parent's or the
Company's actual demonstrably anticipated research or development;
or (2) the invention results from any work performed by Executive
for Parent or the Company.
(h) The obligations of Executive set forth in this SECTION 3 (including,
but not limited to, the assignment obligations) will continue beyond
the termination of Executive's employment with respect to Inventions
conceived or made by Executive alone or in concert with others
during Executive's employment with the Company and during the one
(1) year thereafter, whether pursuant to this Agreement or
otherwise. These obligations will be binding upon Executive and
Executive's executors, administrators and other representatives.
4. LIST OF PRIOR INVENTIONS. All Inventions which Executive has made prior to
employment by the Company are excluded from the scope of this Agreement.
As a matter of record, Executive has set forth on ANNEX I hereto a
complete list of those Inventions which might relate to Parent's or the
Company's business and which have been made by Executive prior to
employment with the Company. Executive represents that such list is
complete. If no list is attached, Executive represents that there are no
prior Inventions.
3
5. NON-SOLICITATION.
(a) Executive will not, during the term of Executive's employment with
the Company and for two (2) years thereafter (the "RESTRICTED
PERIOD") (whether as an owner, partner, shareholder, agent, officer,
director, employee, independent contractor, consultant, or
otherwise) with or through any individual or entity:
i. employ, engage or explicitly solicit for employment
any individual who is, or was at any time during the
twelve-month period immediately prior to the termination of
Executive's employment with the Company for any reason, an
employee of Parent, the Company or any of their Affiliates or
otherwise seek to adversely influence or alter such
individual's relationship with Parent, the Company or any of
their Affiliates; or
ii. explicitly solicit or encourage any individual or
entity that is, or was during the twelve-month period
immediately prior to the termination of Executive's employment
with the Company for any reason, a customer or vendor of
Parent or the Company to terminate or otherwise alter her, her
or its relationship with Parent or the Company.
(b) The Restricted Period shall be extended for a period equal to any
time period that Executive is in violation of this SECTION 5.
6. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements
and covenants set forth in this Agreement are reasonable and necessary for
the protection of Parent's and the Company's business interests, that
irreparable injury will result to Parent and the Company if Executive
breaches any of the terms of said covenants, and that in the event of
Executive's actual or threatened breach of any such covenants, Parent and
the Company will have no adequate remedy at law. Executive accordingly
agrees that, in the event of any actual or threatened breach by Executive
of any of said covenants, Parent and the Company will be entitled to
immediate injunctive and other equitable relief, without posting bond or
other security and without the necessity of showing actual monetary
damages. Nothing in this SECTION 6 will be construed as prohibiting Parent
or the Company from pursuing any other remedies available to them for such
breach or threatened breach, including the recovery of any damages that
they are able to prove.
7. NO RIGHT TO EMPLOYMENT. No provision of this Agreement shall give
Executive any right to continue in the employ of the Company or any of its
Affiliates, create any inference as to the length of employment of
Executive, affect the right of the Company or its Affiliates to terminate
the employment of Executive, with or without cause, or give Executive any
right to participate in any Executive welfare or benefit plan or other
program of the Company or any of its Affiliates.
8. MODIFICATION AND WAIVER. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties. No term or
condition of this Agreement will be deemed to have been waived, except by
written instrument of the party charged with such waiver. No such written
waiver will be deemed to be a continuing waiver
4
unless specifically stated therein, and each such waiver will operate only
as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other
than that specifically waived.
9. SEVERABILITY. Executive acknowledges that the agreements and covenants
contained in this Agreement are essential to protect Parent, the Company
and their goodwill. Each of the covenants in this Agreement will be
construed as independent of any other covenants or other provisions of
this Agreement. It is the intention and desire of the parties that the
court treat any provisions of this Agreement which are not fully
enforceable as having been modified to the extent deemed necessary by the
court to render them reasonable and enforceable and that the court enforce
them to such extent.
10. NOTICES. Any notice, consent, waiver and other communications required or
permitted pursuant to the provisions of this Agreement must be in writing
and will be deemed to have been properly given (a) when delivered by hand;
(b) when sent by telecopier (with acknowledgment of complete
transmission), provided that a copy is mailed by U.S. certified mail,
return receipt requested; (c) three (3) days after sent by certified mail,
return receipt requested; or (d) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case to the
appropriate addresses and telecopier numbers set forth below:
If to the Company:
VICORP Restaurants, Inc.
c/o Wind Point Partners
Suite 3700
676 N. Michigan Avenue
Chicago, IL 60611
Attn: Michael Solot
Fax: (312) 255-4820
With a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn.: Seth M. Hemming, Esq.
Each party will be entitled to specify a different address for the receipt
of subsequent notices by giving written notice thereof to the other party
in accordance with this SECTION 10.
11. HEADINGS. The headings and other captions in this Agreement are included
solely for convenience of reference and will not control the meaning and
interpretation of any provision of this Agreement.
12. GOVERNING LAW. This Agreement has been executed in the State of Illinois,
and its validity, interpretation, performance, and enforcement will be
governed by the laws of such state, except with respect to conflicts of
laws principles.
13. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of Executive, the Company, and their respective successors and
permitted assigns. The Company will be entitled to assign its rights and
duties under this Agreement provided that the Company will remain liable
to Executive should such assignee fail to perform its obligations under
this Agreement.
14. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any person.
6
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and Executive has signed this Agreement, as of
the date written below.
By: /s/ Walter Van Benthuysen
---------------------------------------
Its: Chairman
7
Exhibit 10.17
[LETTERHEAD OF VICORP]
Ms. Debra Koenig
VICORP Restaurants, Inc.
400 West 48th Avenue
Denver, Colorado 80216
Re: AMENDMENT TO EMPLOYMENT AGREEMENT
Dear Debra:
This letter confirms our agreement to decrease the "Base Salary" set forth
under Section 4(a) of your Employment Agreement dated June 13, 2003 (the
"EMPLOYMENT AGREEMENT"), from $484,380 to $400,000 in exchange for your right to
purchase an additional 3,575 shares of the common stock of VI Acquisition Corp.
The change described herein shall be effective January 1, 2004. All other terms
of your Employment Agreement shall be unaffected by this letter and shall remain
in full force and effect.
Please ratify and confirm your agreement to the change described above by
signing on the space provided below and returning this letter to me.
/s/ Walter Van Benthuysen
--------------------------------------
Walter Van Benthuysen
As Chairman
Ratified and confirmed this
15th day of March, 2004.
This EMPLOYMENT AGREEMENT (this "EMPLOYMENT AGREEMENT") is made this 13th
day of June, 2003 by and between VICORP RESTAURANTS, INC., a Colorado
corporation (the "COMPANY"), and ROBERT KALTENBACH ("EXECUTIVE").
WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement,
dated as of the 15th day of April, 2003, by and among VI Acquisition Corp., a
Delaware corporation (the "PARENT"), Midway Investors Holdings, Inc., a Delaware
corporation ("MIDWAY"), the shareholders of Midway (including the Executive) and
certain other parties (the "SALES AGREEMENT"), the Parent is acquiring all of
the outstanding equity of Midway (the "TRANSACTION");
WHEREAS, the Company is a wholly owned subsidiary of Midway and the
Executive is currently employed by the Company;
WHEREAS, the Company and its subsidiaries are engaged in the business of
(i) operating and managing family dining restaurants and enterprises and (ii)
conducting such other activities as are undertaken from time to time by the
Company, its Parent, and each of their subsidiaries as a result of future
acquisitions, or otherwise (collectively, the "BUSINESS");
WHEREAS, the Company desires to continue to employ Executive, and
Executive desires to continue to be employed by the Company, as the Chief
Operating Officer of the Company; and
WHEREAS, the Company and Executive desire to enter into this Employment
Agreement to evidence the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises in this Employment Agreement, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief
Operating Officer of the Company, and Executive hereby agrees to accept such
employment and agrees to act as Chief Operating Officer of the Company, all in
accordance with the terms and conditions of this Employment Agreement. Executive
hereby represents and warrants that neither Executive's entry into this
Employment Agreement nor Executive's performance of Executive's obligations
hereunder will conflict with or result in a breach of the terms, conditions or
provisions of any other agreement or obligation of any nature to which Executive
is a party or by which Executive is bound, including, without limitation, any
development agreement, non-competition agreement or confidentiality agreement
entered into by Executive.
2. TERM OF EMPLOYMENT AND AUTOMATIC RENEWAL. The term of Executive's
employment under this Employment Agreement will commence on the date of this
Employment Agreement and will continue until the third (3rd) anniversary of the
date of this Employment Agreement (the "INITIAL EMPLOYMENT PERIOD"). THE INITIAL
EMPLOYMENT PERIOD AND ANY RENEWAL EMPLOYMENT PERIOD (AS DEFINED HEREIN) SHALL
AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED
HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (EACH, A "RENEWAL EMPLOYMENT PERIOD"),
UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT
PERIOD OR ANY RENEWAL EMPLOYMENT PERIOD, AS THE CASE MAY BE, EITHER PARTY SHALL
GIVE WRITTEN NOTICE TO THE OTHER PARTY OF ITS ELECTION TO TERMINATE THIS
EMPLOYMENT AGREEMENT. The Initial Employment Period and the Renewal Employment
Periods are hereinafter referred to as the "EMPLOYMENT PERIOD." Notwithstanding
anything to the contrary contained herein, the Employment Period is subject to
earlier termination pursuant to SECTION 11 below.
3. POSITION AND RESPONSIBILITIES. Executive shall report to and be subject
to the direction of the Chief Executive Officer of the Company. Executive shall
perform and discharge such duties and responsibilities for the Company as the
Chief Executive Officer may from time to time reasonably assign Executive.
Executive understands and acknowledges that such duties and responsibilities
shall be subject to revision and modification by the Company's Board of
Directors (the "BOARD") upon reasonable notice to Executive. The Company
understands and acknowledges that any material diminution in such duties and
responsibilities, or in Executive's position or title, shall constitute "Good
Reason," as used in SECTION 11 below. During the Employment Period, Executive
shall devote Executive's full business time, attention, skill and efforts to the
performance of Executive's duties herein. Executive acknowledges that
Executive's duties and responsibilities will require Executive's full-time
business efforts and agrees that during the Employment Period, Executive will
not engage in any outside business activities that conflict with his obligations
under this Employment Agreement.
4. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company shall pay
to Executive a base salary at the rate of $430,560 per year (the "BASE SALARY"),
less applicable tax withholding, subject to increase from time to time, payable
at the Company's regular employee payroll intervals. Executive's performance
shall be reviewed annually and the Base Salary may be increased at the Board's
sole discretion, based upon Executive's performance.
(b) DISCRETIONARY BONUS. During the Employment Period, Executive
shall be eligible to earn an annual bonus targeted at fifty percent (50%) of his
Base Salary upon the achievement of the annual budget, such budget to be
determined by the Board in its sole discretion. A bonus program shall be
implemented which shall set forth eligibility to earn bonuses in amounts greater
than, or less than, fifty percent (50%) of Executive's Base Salary, if the
annual performance goals for a particular year are either exceeded or not met in
full.
(c) STOCK. Pursuant to a stock purchase agreement (the "STOCK
PURCHASE AGREEMENT") to be entered into among Parent, the Executive, the
Investors (as defined therein) and certain other executives of the Company,
Executive will purchase certain shares of common stock and preferred stock of
Parent (collectively, the "EXECUTIVE STOCK"), and/or receive an option to
purchase certain of such shares, which shares of Executive Stock shall be
subject to certain vesting, repurchase and other obligations and restrictions
set forth in that certain senior
2
management agreement to be entered into between Parent and the Executive (the
"MANAGEMENT AGREEMENT"), that certain stockholders agreement to be entered into
among Parent, Executive, the Investors and certain other shareholders of Parent
(the "STOCKHOLDERS AGREEMENT"), and that certain Nonstatutory Stock Option
Agreement (the "OPTION AGREEMENT").
5. BENEFIT PLANS. During the Employment Period, Executive will be entitled
to receive the same employment benefits provided to other senior executive
officers of the Company (subject to any applicable waiting periods, eligibility
requirements, or other restrictions), which benefits, in the aggregate, shall be
substantially similar in value to the benefits currently being provided to the
Executive.
6. EXPENSES. The Company, in accordance with its policies and practices
established from time to time, will pay or reimburse Executive for all expenses
(including travel and cell phone expenses) reasonably incurred by Executive
during the Employment Period in connection with the performance of Executive's
duties under this Employment Agreement, provided that Executive shall provide to
the Company documentation or evidence of expenses for which Executive seeks
reimbursement.
7. VACATION. Executive shall be entitled to vacation at the rate of four
(4) weeks per year to be accrued and taken in accordance with the Company's
vacation policy from time to time in effect. Vacation which is accrued but not
used in a given year will be forfeited as of the end of that year.
8. CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT. On the date
hereof, Executive shall execute a confidentiality, inventions and
non-solicitation agreement, in the form of EXHIBIT A attached hereto and made a
part hereof (the "CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT").
9. RESTRICTIVE COVENANTS. Executive agrees and acknowledges that he is and
shall be bound by certain covenants and restrictions set forth in the Sales
Agreement, which relate to his ability to engage in competitive activities
against the Parent and/or the Company both during the Employment Period and for
a period thereafter (the "NON-COMPETITION COVENANTS"). The terms of the
Non-Competition Covenants are expressly incorporated herein by reference.
10. EQUITABLE REMEDIES. Executive acknowledges and agrees that the
agreements and covenants set forth in the Confidentiality, Inventions and
Non-Solicitation Agreement and referenced in SECTION 9 of this Employment
Agreement are reasonable and necessary for the protection of Parent's and the
Company's business interests, that irreparable injury may result to Parent and
the Company if Executive breaches any of the terms of said covenants, and that
in the event of Executive's breach of any such covenants, Parent and the Company
will have no adequate remedy at law. Executive accordingly agrees that, in the
event of any breach by Executive of any of said covenants, Parent and the
Company will be entitled to immediate injunctive and other equitable relief, and
without the necessity of showing actual monetary damages. Nothing in this
SECTION 10 will be construed as prohibiting Parent or the Company from pursuing
any other remedies available to them for such breach or threatened breach,
including the recovery of any damages that they are able to prove.
3
11. TERMINATION. Notwithstanding anything in SECTION 2 of this Agreement
to the contrary, Executive's services shall terminate, and the Employment Period
shall end, upon the first to occur of the following events:
(a) DEATH. The Employment Period will terminate immediately upon the
death of Executive. If the Employment Period is terminated pursuant to this
SECTION 11(a), the Company shall have no further obligation to Executive (or his
estate) except for salary and benefits accrued through the date of termination.
(b) DUE CAUSE. The Company may terminate the Employment Period
immediately upon written notice to Executive for Due Cause. The following events
will be deemed to constitute "DUE CAUSE":
(i) Executive's breach of any of the material terms of Executive's
Confidentiality, Inventions and Non-Solicitation Agreement,
the Sales Agreement, the Stock Purchase Agreement, the
Management Agreement or the Stockholders Agreement; or
(ii) Executive's neglect of, willful misconduct in connection with
the performance of, or refusal to perform Executive's duties
in accordance with SECTION 3 of this Employment Agreement,
which, in the case of neglect or refusal to perform, has not
been cured to the Company's good faith satisfaction within
thirty (30) days after Executive has been provided notice of
the same; or
(iii) Executive's engagement in any conduct which injures in a
material respect the integrity or reputation of the Company or
which impugns Executive's own integrity or reputation so as to
cause Executive to be unfit to act in the capacity of Chief
Operating Officer of the Company; or
(iv) the Executive's commission of any act or acts constituting a
felony, or other act or acts involving dishonesty or fraud
against the Company.
If the Employment Period is terminated pursuant to this SECTION 11(b), the
Company shall have no further obligation to Executive under this Agreement
except for salary and benefits accrued through the date of termination.
(c) PERMANENT DISABILITY. The Company may terminate the Employment
Period upon the Permanent Disability (as defined below) of the Executive. For
purposes of this Employment Agreement, the term "PERMANENT DISABILITY" shall
mean that Executive is unable to perform, by reason of physical or mental
incapacity, his or her duties and responsibilities for ninety (90) or more days
in any one hundred twenty (120) day period.
(d) TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. The Company may
terminate the Employment Period without Due Cause upon thirty (30) days' prior
written notice. If the Employment Period is terminated pursuant to this SECTION
11(d), then Executive will be
4
entitled to receive as severance pay, an amount equal to Five Hundred Thousand
Dollars ($500,000) as reduced by applicable withholding tax, payable in equal
monthly installments for a period of twelve (12) months following his employment
termination (the "SEVERANCE PERIOD"); provided, however, the Company may elect,
within thirty (30) days of the termination of the Employment Period, to extend
the duration of the Non-Competition Covenants for up to an additional twelve
(12) month period by so notifying Executive. If the Company elects to extend the
Non-Competition Covenants, the amount of severance pay shall be increased by
$41,666.67 for each month by which the Non-Competition Covenants are extended.
In addition, if the Executive elects COBRA continuation coverage, the Company
shall pay for such coverage through the Severance Period at the same rate as it
pays for health insurance coverage for its active employees (with the Executive
required to pay for any employee paid portion of such coverage). Nothing herein
provided, however, shall be construed to extend the period of time over which
such COBRA continuation coverage otherwise may be provided to the Executive
and/or his dependents. Notwithstanding the above, Executive shall receive such
amounts only if Executive is not in material breach of any of the provisions of
the Confidentiality, Inventions and Non-Solicitation Agreement and SECTION 9 of
this Employment Agreement and has complied with SECTION 11(f) of this Employment
Agreement.
(e) VOLUNTARY RESIGNATION BY EXECUTIVE. Executive may terminate the
Employment Period at any time for any reason upon thirty (30) days' prior
written notice. If the Employment Period is terminated pursuant to this SECTION
11(e), the Company shall have no further obligation to Executive except for
salary and benefits accrued through the date of termination; provided, however,
that if Executive is terminating the Employment Period for Good Reason (as
defined below), then Executive will be entitled to receive the severance
benefits on the terms and subject to all of the conditions and rights as
described in SECTION 11(d). The following events will be deemed "GOOD REASON"
for which Executive may terminate the Employment Period and receive the
severance payments set forth in SECTION 11(d):
(i) a material diminution of the Executive's duties,
responsibilities, position or title after notice to the
Company and a thirty (30) day opportunity to cure; or
(ii) any material breach of this Employment Agreement on the part
of the Company (including, but not limited to, any decrease in
the Base Salary without the consent of the Executive, or
relocation of Executive's place of employment to a location
that is greater than fifty (50) miles from the Denver,
Colorado metropolitan area), after notice to the Board, and a
thirty (30) day opportunity to cure; provided, however, that
Executive is not in material breach of any of the terms of
this Employment Agreement.
(f) GENERAL RELEASE. The receipt of any payment as set forth in
SECTIONS 11(d)-(e) above shall be contingent upon Executive's execution of an
agreement acceptable to the Company that (i) waives any rights the Executive may
otherwise have against the Company and its Affiliates, and (ii) releases the
Company and its Affiliates from actions, suits, claims, proceedings and demands
related to the period of employment and/or the termination of employment. For
purposes of this Employment Agreement, the term "AFFILIATES" means any
5
individual, corporation, partnership, association, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company including, without
limitation, any member of an affiliated group of which the Company is a common
parent corporation as provided in Section 1404 of the Code.
(g) SURVIVAL. Termination of the Employment Period in accordance
with this SECTION 11, or expiration of the Employment Period, will not affect
the provisions of this Employment Agreement that survive such termination,
including, without limitation, the provisions in the Confidentiality, Inventions
and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement,
and will not limit either party's ability to pursue remedies at law or equity.
12. EXECUTIVE ASSISTANCE. Both during and after Executive's employment
with the Company, Executive shall, upon reasonable notice, furnish the Company
with such information as may be in Executive's possession or control, and
cooperate with the Company, as the Company may reasonably request (with due
consideration to Executive's business activities and obligations after the
Employment Period), in connection with any litigation, claim, or other dispute
in which the Company or any of its Affiliates is or may become a party. The
Company shall reimburse Executive for all reasonable out-of-pocket expenses
incurred by Executive in fulfilling Executive's obligations under this SECTION
12.
13. EFFECT OF PRIOR AGREEMENTS. This Employment Agreement, the Management
Agreement, the Sales Agreement, the Stockholders Agreement, the Stock Purchase
Agreement, the Option Agreement and the Confidentiality, Inventions and
Non-Solicitation Agreement contain the entire understanding between Parent, the
Company and Executive relating to the subject matter hereof and supersede any
prior employment agreement between Executive, Parent and the Company or other
agreement relating to the subject matter hereof between Parent, the Company and
Executive. Executive agrees and acknowledges that he is entitled to no benefits
or compensation and has no other rights against the Company, the Parent, and
their Affiliates, except as otherwise set forth in this Employment Agreement
and, to the extent any such benefits, compensation or rights are owed to him,
expressly waives such benefits, compensation and rights.
14. MODIFICATION AND WAIVER. This Employment Agreement may not be modified
or amended, nor may any provisions of this Employment Agreement be waived,
except by an instrument in writing signed by the parties. No written waiver will
be deemed to be a continuing waiver unless specifically stated therein, and each
such waiver will operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or as to
any act other than that specifically waived.
15. SEVERABILITY. If, for any reason, any provision of this Employment
Agreement is held invalid, such invalidity will not affect any other provision
of this Employment Agreement, and each provision will to the full extent
consistent with law continue in full force and effect. If any provision of this
Employment Agreement is held invalid in part, such invalidity will in no way
affect the rest of such provision, and the rest of such provision, together with
all other
6
provisions of this Employment Agreement, will, to the full extent consistent
with law, continue in full force and effect.
16. NOTICES. Any notice, consent, waiver and other communications required
or permitted pursuant to the provisions of this Employment Agreement must be in
writing and will be deemed to have been properly given (a) when delivered by
hand; (b) when sent by telecopier (with acknowledgment of complete
transmission), provided that a copy is mailed by U.S. certified mail, return
receipt requested; (c) three (3) days after sent by certified mail, return
receipt requested; or (d) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
telecopier numbers set forth below:
If to the Company:
VICORP Restaurants, Inc.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Fax: (312) 255-4820
With a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Seth M. Hemming, Esq.
Fax: (312) 207-6400
If to Executive:
Robert Kaltenbach
5425 S. Jasper Way
Aurora, Colorado 80015
Each party will be entitled to specify a different address for the receipt
of subsequent notices by giving written notice thereof to the other party in
accordance with this SECTION 17.
17. THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties to this Employment Agreement and their respective
permitted successors and assigns, any rights or remedies under or by reason of
this Employment Agreement.
18. HEADINGS. The headings and other captions in this Employment Agreement
are included solely for convenience of reference and will not control the
meaning and interpretation of any provision of this Employment Agreement.
7
19. GOVERNING LAW; ARBITRATION. This Employment Agreement has been
executed in the State of Illinois, and its validity, interpretation,
performance, and enforcement will be governed by the laws of such state, except
with respect to conflicts of laws principles. Except for disputes arising out of
an alleged violation of the Restrictive Covenants set forth in the
Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of
this Employment Agreement, any controversy or claim arising out of or relating
to any provision of this Employment Agreement or any other document or agreement
referred to herein shall be resolved by arbitration. The arbitration process
shall be instigated by either party giving written notice to the other of the
desire for arbitration and the factual allegations underlying the basis for the
dispute. The arbitration shall be conducted by such alternative dispute
resolution service as is agreed to by the parties, or, failing such agreement
within thirty (30) days after such dispute arises, by arbitrators selected as
described below in accordance with the rules and procedures established by the
American Arbitration Association. Only a person who is a practicing lawyer
admitted to a state bar may serve as an arbitrator. Each party shall select one
arbitrator, and those arbitrators shall choose a third arbitrator; these
arbitrators shall constitute the panel. The American Arbitration Association
rules for employment arbitration shall control any discovery conducted in
connection with the arbitration. The expenses of arbitration (other than
attorneys' fees) shall be shared as determined by arbitration. Each side to the
claim or controversy shall pay their own attorneys' fees. Any result reached by
the panel shall be binding on all parties to the arbitration, and no appeal may
be taken. It is agreed that any party to any award rendered in such arbitration
proceeding may seek a judgment upon the award and that judgment may be entered
thereon by any court having jurisdiction. The arbitration shall be conducted in
the State of Colorado.
20. NON-ASSIGNABILITY/BINDING EFFECT. The Executive acknowledges that the
services to be rendered by him are unique and personal. Accordingly, the
Executive may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.
21. NO STRICT CONSTRUCTION. The language used in this Employment Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any person.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW]
8
IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be
executed by its duly authorized officer and Executive has signed this Employment
Agreement, as of the date first above written.
/s/ Robert Kaltenbach
--------------------------------------------
Robert Kaltenbach
9
EXHIBIT A
CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT
In consideration of employment by VICORP Restaurants, Inc., a Colorado
corporation, its successors or assigns (the "COMPANY") of Robert Kaltenbach
("EXECUTIVE"), it is understood and agreed as follows:
1. CONFIDENTIAL INFORMATION.
(a) Executive acknowledges that the Confidential Information (as defined
below) constitutes a protectible business interest of the Company
and its parent VI Acquisition Corp., a Delaware corporation
("PARENT") and covenants and agrees that at all times during the
period of Executive's employment, and at all times after termination
of such employment, Executive will not, directly or indirectly,
disclose, furnish, make available or utilize any Confidential
Information other than in the course of performing duties as an
employee of the Company. Executive will abide by Company policies
and rules as may be established from time to time by it for the
protection of its Confidential Information. Executive agrees that in
the course of employment with the Company Executive will not bring
to the Company's offices nor use, disclose to the Company, or induce
the Company to use, any confidential information or documents
belonging to others. Executive's obligations under this SECTION 1.a.
with respect to particular Confidential Information will survive
expiration or termination of this Confidentiality, Inventions and
Non-Solicitation Agreement (this "Agreement"), and Executive's
employment with the Company, and will terminate only at such time
(if any) as the Confidential Information in question becomes
generally known to the public other than through a breach of
Executive's obligations under this Agreement.
(b) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" means
any and all confidential, proprietary or trade secret information,
whether disclosed, directly or indirectly, verbally, in writing or
by any other means in tangible or intangible form, including that
which is conceived or developed by Executive, applicable to or in
any way related to: (i) the present or future business of Parent,
the Company or any of their Affiliates (as defined below); (ii) the
research and development of Parent, the Company or any of their
Affiliates; or (iii) the business of any client or vendor of Parent,
the Company or any of their Affiliates. Such Confidential
Information includes the following property or information of
Parent, the Company and their Affiliates, by way of example and
without limitation, trade secrets, processes, formulas, data,
program documentation, customer lists, designs, drawings,
algorithms, source code, object code, know-how, improvements,
inventions, licenses, techniques, all plans or strategies for
marketing, development and pricing, business plans, financial
statements, profit margins and all information concerning existing
or potential clients, suppliers or vendors. Confidential Information
of Parent and the Company also means all similar information
disclosed to Parent or the Company by third parties which is
subject to confidentiality obligations. The term "AFFILIATES" means
(i) all persons or entities controlling, controlled by or under
common control with, Parent and/or the Company, (ii) all companies
or entities in which Parent or the Company own an equity interest
and (iii) all predecessors, successors and assigns of the those
Affiliates identified in (i) and (ii).
2. RETURN OF MATERIALS. Upon termination of employment with the Company, and
regardless of the reason for such termination, Executive will leave with, or
promptly return to, the Company all documents, records, notebooks, magnetic
tapes, disks or other materials, including all copies, in Executive's possession
or control which contain Confidential Information or any other information
concerning Parent, the Company, any of their Affiliates or any of their
respective products, services or clients, whether prepared by the Executive or
others.
3. INVENTIONS AS SOLE PROPERTY OF THE COMPANY.
(a) Executive covenants and agrees that all Inventions (as defined
below) shall be the sole and exclusive property of the Company.
(b) As used in this Agreement, the term "INVENTIONS" means any and all
inventions, developments, discoveries, improvements, works of
authorship, concepts or ideas, or expressions thereof, whether or
not subject to patents, copyright, trademark, trade secret
protection or other intellectual property right protection (in the
United States or elsewhere), and whether or not reduced to practice,
conceived or developed by Executive while employed with the Company
or within one (1) year following termination of such employment
which relate to or result from the actual or anticipated business,
work, research or investigation of Parent, the Company or any of
their Affiliates or which are suggested by or result from any task
assigned to or performed by Executive for Parent, the Company or any
of their Affiliates.
(c) Executive acknowledges that all original works of authorship which
are made by him or her (solely or jointly) are works made for hire
under the United States Copyright Act (17 U.S.C., et seq.).
(d) Executive agrees to promptly disclose to the Company all Inventions,
all original works of authorship and all work product relating
thereto. This disclosure will include complete and accurate copies
of all source code, object code or machine-readable copies,
documentation, work notes, flow-charts, diagrams, test data,
reports, samples and other tangible evidence or results
(collectively, "TANGIBLE EMBODIMENTS") of such Inventions, works of
authorship and work product. All Tangible Embodiments of any
Invention, work of authorship or work product related thereto will
be deemed to have been assigned to the Company as a result of the
act of expressing any Invention or work of authorship therein.
(e) Executive hereby assigns to the Company (together with the right to
prosecute or sue for infringements or other violations of the same)
the entire worldwide right, title and interest to any such
Inventions or works made for hire, and Executive
2
agrees to perform, during and after employment, all acts deemed
necessary or desirable by the Company to permit and assist it, at
the Company's expense, in registering, recording, obtaining,
maintaining, defending, enforcing and assigning Inventions or works
made for hire in any and all countries. Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers
and agents as Executive's agents and attorneys-in-fact to act for
and in Executive's behalf and instead of Executive, to execute and
file any documents and to do all other lawfully permitted acts to
further the above purposes with the same legal force and effect as
if executed by Executive; this designation and appointment
constitutes an irrevocable power of attorney and is coupled with an
interest.
(f) Without limiting the generality of any other provision of this
SECTION 3, Executive hereby authorizes the Company and each of its
Affiliates (and their respective successors) to make any desired
changes to any part of any Invention, to combine it with other
materials in any manner desired, and to withhold Executive's
identity in connection with any distribution or use thereof alone or
in combination with other materials.
(g) Pursuant to the Illinois Employee Patent Act, Public Act 83-493,
this Agreement does not apply to any invention for which no
equipment, supplies, facility or trade secret information of Parent
or the Company was used and which was developed entirely on
Executive's own time, unless (1) the invention relates (a) to the
business of Parent or the Company or (b) to Parent's or the
Company's actual demonstrably anticipated research or development;
or (2) the invention results from any work performed by Executive
for Parent or the Company.
(h) The obligations of Executive set forth in this SECTION 3 (including,
but not limited to, the assignment obligations) will continue beyond
the termination of Executive's employment with respect to Inventions
conceived or made by Executive alone or in concert with others
during Executive's employment with the Company and during the one
(1) year thereafter, whether pursuant to this Agreement or
otherwise. These obligations will be binding upon Executive and
Executive's executors, administrators and other representatives.
4. LIST OF PRIOR INVENTIONS. All Inventions which Executive has made prior to
employment by the Company are excluded from the scope of this Agreement.
As a matter of record, Executive has set forth on ANNEX I hereto a
complete list of those Inventions which might relate to Parent's or the
Company's business and which have been made by Executive prior to
employment with the Company. Executive represents that such list is
complete. If no list is attached, Executive represents that there are no
prior Inventions.
5. NON-SOLICITATION.
(a) Executive will not, during the term of Executive's employment with
the Company and for two (2) years thereafter (the "RESTRICTED
PERIOD") (whether as an owner,
3
partner, shareholder, agent, officer, director, employee,
independent contractor, consultant, or otherwise) with or through
any individual or entity:
i. employ, engage or explicitly solicit for employment
any individual who is, or was at any time during the
twelve-month period immediately prior to the termination of
Executive's employment with the Company for any reason, an
employee of Parent, the Company or any of their Affiliates or
otherwise seek to adversely influence or alter such
individual's relationship with Parent, the Company or any of
their Affiliates; or
ii. explicitly solicit or encourage any individual or
entity that is, or was during the twelve-month period
immediately prior to the termination of Executive's employment
with the Company for any reason, a customer or vendor of
Parent or the Company to terminate or otherwise alter his, her
or its relationship with Parent or the Company.
(b) The Restricted Period shall be extended for a period equal to any
time period that Executive is in violation of this SECTION 5.
6. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements
and covenants set forth in this Agreement are reasonable and necessary for
the protection of Parent's and the Company's business interests, that
irreparable injury will result to Parent and the Company if Executive
breaches any of the terms of said covenants, and that in the event of
Executive's actual or threatened breach of any such covenants, Parent and
the Company will have no adequate remedy at law. Executive accordingly
agrees that, in the event of any actual or threatened breach by Executive
of any of said covenants, Parent and the Company will be entitled to
immediate injunctive and other equitable relief, without posting bond or
other security and without the necessity of showing actual monetary
damages. Nothing in this SECTION 6 will be construed as prohibiting Parent
or the Company from pursuing any other remedies available to them for such
breach or threatened breach, including the recovery of any damages that
they are able to prove.
7. NO RIGHT TO EMPLOYMENT. No provision of this Agreement shall give
Executive any right to continue in the employ of the Company or any of its
Affiliates, create any inference as to the length of employment of
Executive, affect the right of the Company or its Affiliates to terminate
the employment of Executive, with or without cause, or give Executive any
right to participate in any Executive welfare or benefit plan or other
program of the Company or any of its Affiliates.
8. MODIFICATION AND WAIVER. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties. No term or
condition of this Agreement will be deemed to have been waived, except by
written instrument of the party charged with such waiver. No such written
waiver will be deemed to be a continuing waiver unless specifically stated
therein, and each such waiver will operate only as to the specific
4
term or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically
waived.
9. SEVERABILITY. Executive acknowledges that the agreements and covenants
contained in this Agreement are essential to protect Parent, the Company
and their goodwill. Each of the covenants in this Agreement will be
construed as independent of any other covenants or other provisions of
this Agreement. It is the intention and desire of the parties that the
court treat any provisions of this Agreement which are not fully
enforceable as having been modified to the extent deemed necessary by the
court to render them reasonable and enforceable and that the court enforce
them to such extent.
10. NOTICES. Any notice, consent, waiver and other communications required or
permitted pursuant to the provisions of this Agreement must be in writing
and will be deemed to have been properly given (a) when delivered by hand;
(b) when sent by telecopier (with acknowledgment of complete
transmission), provided that a copy is mailed by U.S. certified mail,
return receipt requested; (c) three (3) days after sent by certified mail,
return receipt requested; or (d) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case to the
appropriate addresses and telecopier numbers set forth below:
If to the Company:
VICORP Restaurants, Inc.
c/o Wind Point Partners
Suite 3700
676 North Michigan Avenue
Chicago, Illinois 60611
Attn: Michael Solot
Fax: (312) 255-4820
With a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Seth M. Hemming, Esq.
Fax: (312) 207-6400
If to Executive:
Robert Kaltenbach
5
Each party will be entitled to specify a different address for the receipt
of subsequent notices by giving written notice thereof to the other party
in accordance with this SECTION 10.
11. HEADINGS. The headings and other captions in this Agreement are included
solely for convenience of reference and will not control the meaning and
interpretation of any provision of this Agreement.
12. GOVERNING LAW. This Agreement has been executed in the State of Illinois,
and its validity, interpretation, performance, and enforcement will be
governed by the laws of such state, except with respect to conflicts of
laws principles.
13. BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of Executive, the Company, and their respective successors and
permitted assigns. The Company will be entitled to assign its rights and
duties under this Agreement provided that the Company will remain liable
to Executive should such assignee fail to perform its obligations under
this Agreement.
14. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any person.
6
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and Executive has signed this Agreement, as of
the date written below.
EXECUTIVE:
Date: June 13, 2003 /s/ Robert Kaltenbach
-----------------------------------------
Robert Kaltenbach
This EMPLOYMENT AGREEMENT (this "EMPLOYMENT AGREEMENT") is made this 12th
day of February, 2004 by and between VICORP RESTAURANTS, INC., a Colorado
corporation (the "COMPANY"), and ANTHONY CARROLL ("EXECUTIVE").
WHEREAS, the Company and its subsidiaries are engaged in the business of
(i) operating and managing family dining restaurants and enterprises and (ii)
conducting such other activities as are undertaken from time to time by the
Company, VI Acquisition Corp., a Delaware corporation (the "PARENT"), and each
of their subsidiaries as a result of future acquisitions, or otherwise
(collectively, the "BUSINESS");
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, as the Chief Financial Officer of the Company; and
WHEREAS, the Company and Executive desire to enter into this Employment
Agreement to evidence the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises in this Employment Agreement, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief
Financial Officer of the Company, and Executive hereby agrees to accept such
employment and agrees to act as Chief Financial Officer of the Company, all in
accordance with the terms and conditions of this Employment Agreement. Executive
hereby represents and warrants that neither Executive's entry into this
Employment Agreement nor Executive's performance of Executive's obligations
hereunder will conflict with or result in a breach of the terms, conditions or
provisions of any other agreement or obligation of any nature to which Executive
is a party or by which Executive is bound, including, without limitation, any
development agreement, non-competition agreement or confidentiality agreement
entered into by Executive.
2. TERM OF EMPLOYMENT AND AUTOMATIC RENEWAL. The term of Executive's
employment under this Employment Agreement will commence on the date of this
Employment Agreement and will continue until the third (3rd) anniversary of the
date of this Employment Agreement (the "INITIAL EMPLOYMENT PERIOD"). THE INITIAL
EMPLOYMENT PERIOD AND ANY RENEWAL EMPLOYMENT PERIOD (AS DEFINED HEREIN) SHALL
AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED
HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (EACH, A "RENEWAL EMPLOYMENT PERIOD"),
UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT
PERIOD OR ANY RENEWAL EMPLOYMENT PERIOD, AS THE CASE MAY BE, EITHER PARTY SHALL
GIVE WRITTEN NOTICE TO THE OTHER PARTY OF ITS ELECTION TO TERMINATE THIS
EMPLOYMENT AGREEMENT. The Initial Employment Period and the Renewal Employment
Periods are hereinafter referred to as the "EMPLOYMENT PERIOD." Notwithstanding
anything to the contrary contained herein, the Employment Period is subject to
earlier termination pursuant to SECTION 11 below.
3. POSITION AND RESPONSIBILITIES. Executive shall report to and be
subject to the direction of the Chief Executive Officer of the Company.
Executive shall perform and discharge such duties and responsibilities for the
Company as the Chief Executive Officer may from time to time reasonably assign
Executive. Executive understands and acknowledges that such duties shall be
subject to revision and modification by the Chief Executive Officer upon
reasonable notice to Executive. During the Employment Period, Executive shall
devote Executive's full business time, attention, skill and efforts to the
performance of Executive's duties herein, and shall perform the duties and carry
out the responsibilities assigned to Executive, to the best of Executive's
ability, in a diligent, trustworthy and businesslike manner for the purpose of
advancing the Company. Executive acknowledges that Executive's duties and
responsibilities will require Executive's full-time business efforts and agrees
that during the Employment Period, Executive will not engage in any outside
business activities that conflict with his obligations under this Employment
Agreement.
4. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Company shall
pay to Executive a base salary at the rate of $200,000 per year (the "BASE
SALARY"), less applicable tax withholding, payable at the Company's regular
employee payroll intervals. Executive's performance shall be reviewed annually
and the Base Salary may be increased at the Company's sole discretion.
(b) DISCRETIONARY BONUS. During the Employment Period, Executive
shall be eligible to earn an annual bonus targeted at forty percent (40%) of his
Base Salary upon the achievement of the annual budget and certain personal
goals, which budget and goals shall be determined by the Board in its sole
discretion.
(c) STOCK. Pursuant to that certain senior management agreement to
be entered into between Parent and the Executive (the "MANAGEMENT AGREEMENT"),
the Executive will purchase certain shares of common stock of Parent (the
"EXECUTIVE STOCK"), which shares of Executive Stock shall be subject to certain
vesting, repurchase and other obligations and restrictions set forth in the
Management Agreement, the Registration Rights Agreement and that certain
stockholders agreement entered into among Parent, Executive, the Investors (as
defined in a stock purchase agreement among Parent, Investors and certain
executives of the Company) and certain other shareholders of Parent (the
"STOCKHOLDERS AGREEMENT").
5. BENEFIT PLANS. During the Employment Period, Executive will be
entitled to receive the same employment benefits provided to other senior
executive officers of the Company (subject to any applicable waiting periods,
eligibility requirements, or other restrictions), which benefits may include
insurance (medical, dental, life, disability), retirement plans and profit
sharing plans.
6. EXPENSES. The Company, in accordance with policies and practices
established from time to time, will pay or reimburse Executive for all expenses
(including travel and cell phone expenses) reasonably incurred by Executive
during the Employment Period in connection with the performance of Executive's
duties under this Employment Agreement, provided that Executive shall provide to
the Company documentation or evidence of expenses for which Executive seeks
reimbursement. In addition, upon the delivery by Executive to the Company of
2
a detailed description of such expenses, the Company agrees to reimburse
Executive for the following reasonable relocation expenses actually incurred in
connection with the Executive's relocation to the Denver, Colorado metropolitan
area:
(i) all transfer fees and broker fees incurred in connection
with the sale of Executive's current home;
(ii) reasonable moving expenses (including transportation of
automobiles to Colorado) for the belongings of Executive and his
family incurred in connection with the purchase of Executive's new
home in Colorado;
(iii) reasonable travel, lodging and dining expenses incurred
by Executive and his spouse in connection with two (2) house hunting
trips to Colorado; and
(iv) temporary housing in Colorado, if needed, up to a
maximum of three (3) months.
In addition to the foregoing, the Company shall pay the Executive a relocation
bonus of Five Thousand Dollars ($5,000.00) to cover any incidental relocation
expenses not otherwise covered herein, to be paid in a single sum on or about
the Executive's first day of employment.
7. VACATION. Executive shall be entitled to vacation at the rate of
four (4) weeks per year to be accrued and taken in accordance with the Company's
vacation policy from time to time in effect. Vacation which is accrued but not
used in a given year will be forfeited as of the end of that year.
8. CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT. On the
date hereof, Executive shall execute a confidentiality, inventions and
non-solicitation agreement, in the form of EXHIBIT A attached hereto and made a
part hereof (the "CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT").
9. RESTRICTIVE COVENANTS.
(a) EXECUTIVE'S ACKNOWLEDGMENT. Executive acknowledges that: (i)
Parent and the Company are and will be engaged in the Business during the
Employment Period and thereafter; (ii) Parent and the Company are and will be
actively engaged in the Business throughout the world; (iii) Executive is one of
a limited number of persons who will be developing the Business; (iv) Executive
will occupy a position of trust and confidence with the Company after the date
of this Employment Agreement and during the Employment Period Executive will
become familiar with Parent's and the Company's and each of their subsidiaries'
and portfolio companies (collectively, the "GROUP") trade secrets and with other
proprietary and confidential information concerning the Group and the Business
(and the other businesses of the Group); (v) the agreements and covenants
contained in this SECTION 9 are essential to protect the Group and the goodwill
of the Business and are a condition precedent to the Company entering into this
Employment Agreement; (vi) Executive's employment with the Company has special,
unique and extraordinary value to the Company and Parent and the Company would
be
3
irreparably damaged if Executive were to provide services to any person or
entity in violation of the provisions of this Employment Agreement; and (vii)
Executive has means to support Executive and Executive's dependents other than
by engaging in the Business, and the provisions of this SECTION 9 will not
impair such ability.
(b) RESTRICTIONS. Executive will not, during the Restricted Period
(as defined below), anywhere in North America (the "RESTRICTED TERRITORY"),
directly or indirectly (whether as an owner, partner, shareholder, agent,
officer, director, employee, independent contractor, consultant, or otherwise)
own, operate, manage, control, invest in, perform services for, or engage or
participate in any manner in, or render services to (alone or in association
with any person or entity) or otherwise assist any person or entity in, the
following entities, or in any entity or entities directly or indirectly related
to the following entities: Bob Evans'; IHOP; Denny's; Perkin's; Marie Calendar;
Mimi's; and Cracker Barrel.
The term "RESTRICTED PERIOD" means the period of time from the date of
this Employment Agreement until one (1) year after the termination for any
reason of Executive's employment relationship with the Group or any successor
thereto (whether pursuant to a written agreement or otherwise, including any
Renewal Employment Period under this Employment Agreement). The Restricted
Period shall be extended for a period equal to any time period that Executive is
in violation of SECTION 9. Nothing contained in SECTION 9(b) above shall be
construed to prevent Executive from investing in the stock of any competing
corporation listed on a national securities exchange or traded in the
over-the-counter market, but only if Executive is not involved in the business
of said corporation and if Executive and Executive's associates (as such term is
defined in Regulation 14(A) promulgated under the Securities Exchange Act of
1934, as in effect on the date hereof), collectively, do not own more than an
aggregate of one percent (1%) of the stock of such corporation.
(c) SCOPE/SEVERABILITY. The parties acknowledge that the business
of Parent and the Company is and will be national in scope and thus the
covenants in this SECTION 9 would be ineffective if the covenants were to be
limited to a particular geographic area. If any court of competent jurisdiction
at any time deems the Restricted Period unreasonably lengthy, or the Restricted
Territory unreasonably extensive, or any of the covenants set forth in this
SECTION 9 not fully enforceable, the other provisions of this SECTION 9, and
this Employment Agreement in general, will nevertheless stand and to the full
extent consistent with law continue in full force and effect, and it is the
intention and desire of the parties that the court treat any provisions of this
Employment Agreement which are not fully enforceable as having been modified to
the extent deemed necessary by the court to render them reasonable and
enforceable and that the court enforce them to such extent (for example, that
the Restricted Period be deemed to be the longest period permissible by law, but
not in excess of the length provided for in SECTION 9(B), and the Restricted
Territory be deemed to comprise the largest territory permissible by law under
the circumstances but not in excess of the territory provided for in SECTION
9(b)).
10. EQUITABLE REMEDIES. Executive acknowledges and agrees that the
agreements and covenants set forth in the Confidentiality, Inventions and
Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement are
reasonable and necessary for the protection of Parent's and the Company's
business interests, that irreparable injury will result to Parent and the
Company if Executive breaches any of the terms of said covenants, and that in
the event of
4
Executive's actual or threatened breach of any such covenants, Parent and the
Company will have no adequate remedy at law. Executive accordingly agrees that,
in the event of any actual or threatened breach by Executive of any of said
covenants, Parent and the Company will be entitled to immediate injunctive and
other equitable relief, without bond and without the necessity of showing actual
monetary damages. Nothing in this SECTION 10 will be construed as prohibiting
Parent or the Company from pursuing any other remedies available to them for
such breach or threatened breach, including the recovery of any damages that
they are able to prove.
11. TERMINATION. Notwithstanding anything in SECTION 2 of this
Employment Agreement to the contrary, Executive's services shall terminate upon
the first to occur of the following events:
(a) DEATH. The Employment Period will terminate immediately upon
the death of Executive. If the Employment Period is terminated pursuant to this
SECTION 11(a), the Company shall have no further obligation to Executive (or his
estate) except for Base Salary and benefits accrued through the date of
termination.
(b) DUE CAUSE. The Company may terminate the Employment Period
immediately upon written notice to Executive for Due Cause. The following events
will be deemed to constitute "DUE CAUSE":
(i) Executive's breach of any of Executive's obligations under the
Confidentiality, Inventions and Non-Solicitation Agreement,
this Employment Agreement, the Management Agreement, the
Registration Rights Agreement or the Stockholders Agreement;
or
(ii) Executive's neglect of, willful misconduct in connection with
the performance of, or refusal to perform Executive's duties
in accordance with SECTION 3 of this Employment Agreement,
which, in the case of neglect or refusal to perform, has not
been cured to the Company's good faith satisfaction within
thirty (30) days after Executive has been provided written
notice of the same and the corrective action required by the
Company; or
(iii) Executive's engagement in any conduct which injures the
integrity or reputation of the Company or which impugns
Executive's own integrity or reputation so as to cause
Executive to be unfit to act in the capacity of Chief
Financial Officer of the Company; or
(iv) the Executive's commission of an act or acts constituting a
felony, or any other act or acts involving dishonesty,
disloyalty or fraud against the Company.
If the Employment Period is terminated pursuant to this SECTION 11(b), the
Company shall have no further obligation to Executive except for Base Salary and
benefits accrued through the date of termination.
5
(c) PERMANENT DISABILITY. The Company may terminate the Employment
Period upon the Permanent Disability (as defined below) of the Executive. For
purposes of this Employment Agreement, the term "PERMANENT DISABILITY" shall
mean that Executive is entitled to benefits under the Company's long-term
disability plan, or if no such plan exists, if the Executive is unable to
perform, by reason of physical or mental incapacity, the essential functions of
his position for ninety (90) or more days in any one hundred twenty (120) day
period. If the Employment Period is terminated pursuant to this SECTION 11(c),
the Company shall have no further obligations to Executive except for Base
Salary and benefits accrued through the date of termination.
(d) TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. The Company may
terminate the Employment Period without Due Cause upon thirty (30) days' prior
written notice. If the Employment Period is terminated pursuant to this SECTION
11(d), then Executive will be entitled to receive as severance pay the
continuation of his Base Salary at the annual rate then in effect for a period
of one month for each month in which the Executive was employed by the Company
(up to a maximum of twelve (12) months) following the termination of his
employment (the "SEVERANCE PERIOD"), payable in accordance with the Company's
payroll policy from time to time in effect. Upon a termination under this
SECTION 11(d), the Company may elect, within thirty (30) days of the termination
of the Employment Period, to extend the duration of the Restricted Period for up
to an additional twelve (12) month period by so notifying Executive. If the
Company elects to extend the Restricted Period, the amount of severance pay
shall be increased by one-twelfth (1/12) of his Base Salary, at the annual rate
then in effect, for each month by which the Restricted Period is extended. In
addition, if the Executive elects COBRA continuation coverage, the Company shall
pay for such coverage through the Severance Period at the same rate as it pays
for health insurance coverage for its active employees (with the Executive
required to pay for any employee paid portion of such coverage). Nothing herein
provided, however, shall be construed to extend the period of time over which
such COBRA continuation coverage otherwise may be provided to the Executive
and/or her dependents. Notwithstanding the above, Executive shall receive such
amounts only if Executive is not in material breach of any of the provisions of
the Confidentiality, Inventions and Non-Solicitation Agreement and SECTION 9 of
this Employment Agreement and has complied with SECTION 11(f) of this Employment
Agreement.
(e) VOLUNTARY RESIGNATION BY EXECUTIVE. Executive may terminate
the Employment Period at any time for any reason upon thirty (30) days' prior
written notice. If the Employment Period is terminated pursuant to this SECTION
11(e), the Company shall have no further obligation to Executive except for Base
Salary and benefits accrued through the date of termination; provided, however,
that if Executive is terminating the Employment Period for Good Reason (as
defined below), then Executive will be entitled to receive the severance
benefits on the terms and subject to all of the conditions and rights as
described in SECTION 11(d). The following events will be deemed "GOOD REASON"
for which Executive may terminate the Employment Period and receive the
severance payments set forth in SECTION 11(d):
(i) a material diminution of the Executive's duties,
responsibilities, position or title after notice to the
Company and a thirty (30) day opportunity to cure; or
6
(ii) any material breach of this Employment Agreement on the part
of the Company (including, but not limited to, any decrease in
the Base Salary without the consent of the Executive), after
notice to the Chief Executive Officer, and a thirty (30) day
opportunity to cure; provided, however, that Executive is not
in material breach of any of the terms of this Employment
Agreement.
(f) GENERAL RELEASE. The receipt of any payment as set forth in
SECTIONS 11(d)-(e) above shall be contingent upon Executive's execution of an
agreement acceptable to the Company that (i) waives any rights the Executive may
otherwise have against the Company and its Affiliates, (ii) releases the Company
and its Affiliates from actions, suits, claims, proceedings and demands related
to the period of employment and/or the termination of employment, and (iii)
contains certain other standard obligations which shall be set forth at the time
of the termination. For purposes of this Employment Agreement, the term
"AFFILIATES" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1404 of
the Code.
(g) SURVIVAL. Termination of the Employment Period in accordance
with this SECTION 11, or expiration of the Employment Period, will not affect
the provisions of this Employment Agreement that survive such termination,
including, without limitation, the provisions in the Confidentiality, Inventions
and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement,
and will not limit either party's ability to pursue remedies at law or equity.
12. EXECUTIVE ASSISTANCE. Both during and after Executive's employment
with the Company, Executive shall, upon reasonable notice, furnish the Company
with such information as may be in Executive's possession or control, and
cooperate with the Company, as the Company may reasonably request (with due
consideration to Executive's business activities and obligations after the
Employment Period), in connection with any litigation, claim, or other dispute
in which the Company or any of its Affiliates is or may become a party. The
Company shall reimburse Executive for all reasonable out-of-pocket expenses
incurred by Executive in fulfilling Executive's obligations under this SECTION
12.
13. EFFECT OF PRIOR AGREEMENTS. This Employment Agreement, the
Management Agreement, the Stockholders Agreement, the Registration Rights
Agreement and the Confidentiality, Inventions and Non-Solicitation Agreement
contain the entire understanding among Parent, the Company and Executive
relating to the subject matter hereof and supersede any prior employment
agreement among Executive, Parent and the Company or other agreement relating to
the subject matter hereof between Parent, the Company and Executive. Executive
agrees and acknowledges that he is entitled to no benefits or compensation and
has no other rights against the Company, the Parent, and their Affiliates,
except as otherwise set forth in this Employment Agreement and, to the extent
any such benefits, compensation or rights are owed to him, expressly waives such
benefits, compensation and rights.
7
14. MODIFICATION AND WAIVER. This Employment Agreement may not be
modified or amended, nor may any provisions of this Employment Agreement be
waived, except by an instrument in writing signed by the parties. No written
waiver will be deemed to be a continuing waiver unless specifically stated
therein, and each such waiver will operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for
the future or as to any act other than that specifically waived.
15. SEVERABILITY. If, for any reason, any provision of this Employment
Agreement is held invalid, such invalidity will not affect any other provision
of this Employment Agreement, and each provision will to the full extent
consistent with law continue in full force and effect. If any provision of this
Employment Agreement is held invalid in part, such invalidity will in no way
affect the rest of such provision, and the rest of such provision, together with
all other provisions of this Employment Agreement, will, to the full extent
consistent with law, continue in full force and effect.
16. NOTICES. Any notice, consent, waiver and other communications
required or permitted pursuant to the provisions of this Employment Agreement
must be in writing and will be deemed to have been properly given (a) when
delivered by hand; (b) when sent by telecopier (with acknowledgment of complete
transmission), provided that a copy is mailed by U.S. certified mail, return
receipt requested; (c) three (3) days after sent by certified mail, return
receipt requested; or (d) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case to the appropriate addresses and
telecopier numbers set forth below:
If to the Company:
VICORP Restaurants, Inc. VICORP Restaurants, Inc.
c/o Wind Point Partners 400 West 48th Avenue
Suite 3700 Denver, Colorado 80216
676 North Michigan Avenue Attn: Debra Koenig
Chicago, Illinois 60611 Fax: (303) 672-2606
Attn: Michael Solot
Fax: (312) 255-4820
With a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Seth M. Hemming, Esq.
Fax: (312) 207-6400
If to Executive:
Anthony Carroll
88 Fearing Road
Hingham, MA 02043
8
Each party will be entitled to specify a different address for the receipt
of subsequent notices by giving written notice thereof to the other party in
accordance with this SECTION 16.
17. THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties to this Employment Agreement and their respective
permitted successors and assigns, any rights or remedies under or by reason of
this Employment Agreement.
18. HEADINGS. The headings and other captions in this Employment
Agreement are included solely for convenience of reference and will not control
the meaning and interpretation of any provision of this Employment Agreement.
19. GOVERNING LAW; ARBITRATION. This Employment Agreement has been
executed in the State of Illinois, and its validity, interpretation,
performance, and enforcement will be governed by the laws of such state, except
with respect to conflicts of laws principles. Except for disputes arising out of
an alleged violation of the Restrictive Covenants set forth in the
Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of
this Employment Agreement, any controversy or claim arising out of or relating
to any provision of this Employment Agreement or any other document or agreement
referred to herein shall be resolved by arbitration. The arbitration process
shall be instigated by either party giving written notice to the other of the
desire for arbitration and the factual allegations underlying the basis for the
dispute. The arbitration shall be conducted by such alternative dispute
resolution service as is agreed to by the parties, or, failing such agreement
within thirty (30) days after such dispute arises, by arbitrators selected as
described below in accordance with the rules and procedures established by the
American Arbitration Association. Only a person who is a practicing lawyer
admitted to a state bar may serve as an arbitrator. Each party shall select one
arbitrator, and those arbitrators shall choose a third arbitrator; these
arbitrators shall constitute the panel. The American Arbitration Association
rules for employment arbitration shall control any discovery conducted in
connection with the arbitration. The expenses of arbitration (other than
attorneys' fees) shall be shared as determined by arbitration. Each side to the
claim or controversy shall pay their own attorneys' fees. Any result reached by
the panel shall be binding on all parties to the arbitration, and no appeal may
be taken. It is agreed that any party to any award rendered in such arbitration
proceeding may seek a judgment upon the award and that judgment may be entered
thereon by any court having jurisdiction. The arbitration shall be conducted in
the State of Colorado.
20. NON-ASSIGNABILITY/BINDING EFFECT. The Executive acknowledges that
the services to be rendered by him are unique and personal. Accordingly, the
Executive may not assign any of her rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.
21. NO STRICT CONSTRUCTION. The language used in this Employment
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any person.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW]
9
IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be
executed by its duly authorized officer and Executive has signed this Employment
Agreement, as of the date first above written.
/s/ Anthony Carroll
---------------------------------------
ANTHONY CARROLL
10
EXHIBIT A
CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT
In consideration of employment by VICORP Restaurants, Inc., a Colorado
corporation, its successors or assigns (the "COMPANY") of Anthony Carroll
("EXECUTIVE"), it is understood and agreed as follows:
1. CONFIDENTIAL INFORMATION.
(a) Executive acknowledges that the Confidential Information (as defined
below) constitutes a protectible business interest of the Company
and its parent VI Acquisition Corp., a Delaware corporation
("PARENT") and covenants and agrees that at all times during the
period of Executive's employment, and at all times after termination
of such employment, Executive will not, directly or indirectly,
disclose, furnish, make available or utilize any Confidential
Information other than in the course of performing duties as an
employee of the Company. Executive will abide by Company policies
and rules as may be established from time to time by it for the
protection of its Confidential Information. Executive agrees that in
the course of employment with the Company Executive will not bring
to the Company's offices nor use, disclose to the Company, or induce
the Company to use, any confidential information or documents
belonging to others. Executive's obligations under this SECTION 1.a.
with respect to particular Confidential Information will survive
expiration or termination of this Confidentiality, Inventions and
Non-Solicitation Agreement (this "AGREEMENT"), and Executive's
employment with the Company, and will terminate only at such time
(if any) as the Confidential Information in question becomes
generally known to the public other than through a breach of
Executive's obligations under this Agreement.
(b) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" means
any and all confidential, proprietary or trade secret information,
whether disclosed, directly or indirectly, verbally, in writing or
by any other means in tangible or intangible form, including that
which is conceived or developed by Executive, applicable to or in
any way related to: (i) the present or future business of Parent,
the Company or any of their Affiliates (as defined below); (ii) the
research and development of Parent, the Company or any of their
Affiliates; or (iii) the business of any client or vendor of Parent,
the Company or any of their Affiliates. Such Confidential
Information includes the following property or information of
Parent, the Company and their Affiliates, by way of example and
without limitation: trade secrets, processes, formulas, data,
program documentation, customer lists, designs, drawings,
algorithms, source code, object code, know-how, improvements,
inventions, licenses, techniques, all plans or strategies for
marketing, development and pricing, business plans, financial
statements, profit margins and all information concerning existing
or potential clients, suppliers or vendors. Confidential Information
of Parent and the Company also means all similar information
disclosed to Parent or the Company by third parties which is
subject to confidentiality obligations. The term "AFFILIATES" means
(i) all persons or entities controlling, controlled by or under
common control with, Parent and/or the Company, (ii) all companies
or entities in which Parent or the Company own an equity interest
and (iii) all predecessors, successors and assigns of the those
Affiliates identified in (i) and (ii).
2. RETURN OF MATERIALS. Upon termination of employment with the Company, and
regardless of the reason for such termination, Executive will leave with, or
promptly return to, the Company all documents, records, notebooks, magnetic
tapes, disks or other materials, including all copies, in Executive's possession
or control which contain Confidential Information or any other information
concerning Parent, the Company, any of their Affiliates or any of their
respective products, services or clients, whether prepared by the Executive or
others.
3. INVENTIONS AS SOLE PROPERTY OF THE COMPANY.
(a) Executive covenants and agrees that all Inventions (as defined
below) shall be the sole and exclusive property of the Company.
(b) As used in this Agreement, the term "INVENTIONS" means any and all
inventions, developments, discoveries, improvements, works of
authorship, concepts or ideas, or expressions thereof, whether or
not subject to patents, copyright, trademark, trade secret
protection or other intellectual property right protection (in the
United States or elsewhere), and whether or not reduced to practice,
conceived or developed by Executive while employed with the Company
or within one (1) year following termination of such employment
which relate to or result from the actual or anticipated business,
work, research or investigation of Parent, the Company or any of
their Affiliates or which are suggested by or result from any task
assigned to or performed by Executive for Parent, the Company or any
of their Affiliates.
(c) Executive acknowledges that all original works of authorship which
are made by her (solely or jointly) are works made for hire under
the United States Copyright Act (17 U.S.C., et seq.).
(d) Executive agrees to promptly disclose to the Company all Inventions,
all original works of authorship and all work product relating
thereto. This disclosure will include complete and accurate copies
of all source code, object code or machine-readable copies,
documentation, work notes, flow-charts, diagrams, test data,
reports, samples and other tangible evidence or results
(collectively, "TANGIBLE EMBODIMENTS") of such Inventions, works of
authorship and work product. All Tangible Embodiments of any
Invention, work of authorship or work product related thereto will
be deemed to have been assigned to the Company as a result of the
act of expressing any Invention or work of authorship therein.
(e) Executive hereby assigns to the Company (together with the right to
prosecute or sue for infringements or other violations of the same)
the entire worldwide right, title and interest to any such
Inventions or works made for hire, and Executive
2
agrees to perform, during and after employment, all acts deemed
necessary or desirable by the Company to permit and assist it, at
the Company's expense, in registering, recording, obtaining,
maintaining, defending, enforcing and assigning Inventions or works
made for hire in any and all countries. Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers
and agents as Executive's agents and attorneys-in-fact to act for
and in Executive's behalf and instead of Executive, to execute and
file any documents and to do all other lawfully permitted acts to
further the above purposes with the same legal force and effect as
if executed by Executive; this designation and appointment
constitutes an irrevocable power of attorney and is coupled with an
interest.
(f) Without limiting the generality of any other provision of this
SECTION 3, Executive hereby authorizes the Company and each of its
Affiliates (and their respective successors) to make any desired
changes to any part of any Invention, to combine it with other
materials in any manner desired, and to withhold Executive's
identity in connection with any distribution or use thereof alone or
in combination with other materials.
(g) Pursuant to the Illinois Employee Patent Act, Public Act 83-493,
this Agreement does not apply to any invention for which no
equipment, supplies, facility or trade secret information of Parent
or the Company was used and which was developed entirely on
Executive's own time, unless (1) the invention relates (a) to the
business of Parent or the Company or (b) to Parent's or the
Company's actual demonstrably anticipated research or development;
or (2) the invention results from any work performed by Executive
for Parent or the Company.
(h) The obligations of Executive set forth in this SECTION 3 (including,
but not limited to, the assignment obligations) will continue beyond
the termination of Executive's employment with respect to Inventions
conceived or made by Executive alone or in concert with others
during Executive's employment with the Company and during the one
(1) year thereafter, whether pursuant to this Agreement or
otherwise. These obligations will be binding upon Executive and
Executive's executors, administrators and other representatives.
4. LIST OF PRIOR INVENTIONS. All Inventions which Executive has made prior to
employment by the Company are excluded from the scope of this Agreement.
As a matter of record, Executive has set forth on ANNEX I hereto a
complete list of those Inventions which might relate to Parent's or the
Company's business and which have been made by Executive prior to
employment with the Company. Executive represents that such list is
complete. If no list is attached, Executive represents that there are no
prior Inventions.
5. NON-SOLICITATION.
(a) Executive will not, during the term of Executive's employment with
the Company and for two (2) years thereafter (the "RESTRICTED
PERIOD") (whether as an owner,
3
partner, shareholder, agent, officer, director, employee,
independent contractor, consultant, or otherwise) with or through
any individual or entity:
i. employ, engage or explicitly solicit for
employment any individual who is, or was at any time during
the twelve-month period immediately prior to the termination
of Executive's employment with the Company for any reason, an
employee of Parent, the Company or any of their Affiliates or
otherwise seek to adversely influence or alter such
individual's relationship with Parent, the Company or any of
their Affiliates; or
ii. explicitly solicit or encourage any individual or
entity that is, or was during the twelve-month period
immediately prior to the termin
Next Section
Previous Section