Document:

pizza8kex101103111.htm

 

EXHIBIT 10.1

 

AMENDED AND RESTATED LOAN AGREEMENT

 

 

 

Dated as of October 26, 2011

 

between

 

 

PIZZA INN HOLDINGS, INC.,

as Borrower,

 

and

 

AMEGY BANK NATIONAL ASSOCIATION,

as Lender,

 

relating to

 

$2,000,000 Revolving Credit Commitment,

 

$4,000,000 Guidance Loan Commitment, and

 

Assumption of Existing Term Loans

 

 

 

 

 

 

 

 

 

 

i

 

 

  

ii

  

 

 

  

iii

  

 

 

 

AMENDED AND RESTATED LOAN AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement"), dated as of October 26, 2011, is between PIZZA INN HOLDINGS, INC., a Missouri corporation (herein referred to as the "Borrower"), and AMEGY BANK NATIONAL ASSOCIATION (the "Lender").

 

RECITALS:

 

Pizza Inn, Inc., a Missouri corporation ("Prior Borrower"), and the Lender have previously entered into that certain Loan Agreement dated as of January 11, 2010 (as the same has been amended or modified from time to time, the "Existing Loan Agreement"). The Prior Borrower assigns all of its rights and obligations as the borrower under the Existing Loan Agreement and the other Existing Loan Documents to the Borrower, and the Borrower assumes and agrees to accept all such rights and obligations thereunder.

 

Prior Borrower and Borrower each requests, and Lender has agreed, to restructure, amend and restate the Existing Loan Agreement upon and subject to the provisions, terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

Section 1.1 Definitions. As used in this Agreement, all exhibits, appendices and schedules hereto and in any note, certificate, report or other Loan Document made or delivered pursuant to this Agreement, the following terms will have the meanings given such terms in this Section 1.1 or in the provision, section or recital referred to below:

 

"Account Debtor" means a Person who is obligated on or under an Account.

 

"Accounts" means any right of a Person to payment for goods sold or leased or for services rendered, but shall not include interest or service charges.

 

"Advance" means an advance by the Lender to the Borrower pursuant to Article II.

 

"Advance Period" means, with respect to each Location, the period beginning on the Guidance Loan Request Date of the initial Term Advance for such Location through and including the earlier of (a) 120 days after such Guidance Loan Request Date or (b) a date selected by the Borrower.

 

"Advance Request Form" means a certificate, substantially in the form of Exhibit E attached hereto, properly completed and signed by the Borrower and requesting a Revolving Credit Advance or Term Advance, as applicable.

 

 

 

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"Affiliate" means, as to any Person, any other Person (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such Person; (b) that directly or indirectly beneficially owns or holds 20% or more of any class of voting stock of such Person; or (c) 20% or more of the voting stock of which is directly or indirectly beneficially owned or held by the Person in question. The term "control" means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however, in no event shall the Lender be deemed an Affiliate of the Borrower or any of the Borrower's Subsidiaries or Affiliates.

 

"Agreement" has the meaning set forth in the introductory paragraph hereto, as the same may, from time to time, be amended, modified, restated, renewed, waived, supplemented, or otherwise changed, and includes all schedules, exhibits and appendices attached or otherwise identified therewith.

 

"Applicable Rate" means

 

(a) with respect to Revolving Credit Advances, the Base Rate,

 

(b) with respect to any Guidance Loan during the Advance Period applicable thereto, the sum of the Base Rate plus one percent (1.00%),

 

(c) with respect to any Guidance Loan after the expiration of the Advance Period applicable thereto, either, as selected by the Borrower on or before the last day of such Advance Period, (i) the sum of the Base Rate plus one percent (1.00%) or (ii) a fixed rate as determined by Lender in its sole discretion, or

 

(d) with respect to the Existing Term Loans, the sum of the Base Rate plus one percent (1.00%).

 

"Asset Coverage Ratio" means, for the Borrower on a consolidated basis and for any period of determination, the ratio of (a) (i) accounts receivable plus (ii) inventory plus (iii) property, plant and equipment to (b) outstanding Debt.

 

"Balance Sheet Leverage Ratio" means, for the Borrower on a consolidated basis and for any period of determination, the ratio of (a) Total Liabilities to (b) Tangible Net Worth.

 

"Base Rate" means, at any time, the rate of interest per annum then most recently established by the Lender as its base or prime rate, which rate may not be the lowest rate of interest charged by the Lender to its borrowers. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect without notice to the Borrower at the time of such change in the Base Rate. Notwithstanding anything herein to the contrary, the Base Rate shall never be less than 5.00% per annum.

 

"Borrower" means Pizza Inn Holdings, Inc., as successor-in-interest to the Prior Borrower, and all successors and assigns.

 

 

 

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"Borrowing Base" means an amount equal to (a) 80% of Eligible Accounts plus (b) 50% of Eligible Inventory, provided that (x) the aggregate amount of clause (b) shall not exceed $1,000,000 and (y) the aggregate amount of clause (b) shall not exceed clause (a).

 

"Borrowing Base Report" means, as of any date of preparation, a certificate setting forth the Borrowing Base, substantially in the form of Exhibit F attached hereto or as otherwise acceptable to the Lender, prepared by and certified by the chief financial officer or comparable officer of Borrower.

 

"Business Day" means a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Dallas, Texas are authorized or required by law to be closed.

 

"Capital Expenditure" shall mean any expenditure by a Person for (a) an asset which will be used in any year subsequent to the year in which the expenditure is made and which asset is properly classified in relevant financial statements of such Person as equipment, real property, a fixed asset or a similar type of capitalized asset in accordance with GAAP or (b) an asset relating to or acquired in connection with an acquired business, and (c) any and all acquisition costs related to clause (a) or (b) above.

 

"Capitalized Lease Obligation" shall mean the amount of Debt under a lease of Property by a Person that would be shown as a liability on a balance sheet of such Person prepared for financial reporting purposes in accordance with GAAP.

 

"Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive which is generally applicable to national banking associations or other financial institutions (whether or not having the force of law) by any Governmental Authority.

 

"Closing Date" means the date hereof.

 

"Code" means the Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder.

 

"Collateral" has the meaning for such term set forth in Section 4.1.

 

"Compliance Certificate" means a certificate, substantially in the form of Exhibit A  attached hereto or as otherwise acceptable to the Lender, prepared by and executed by the chief financial officer or comparable officer of the Borrower.

 

"Constituent Documents" means (a) in the case of a corporation, its articles or certificate of incorporation and bylaws; (b) in the case of a general partnership, its partnership agreement; (c) in the case of a limited partnership, its certificate of limited partnership and partnership agreement; (d) in the case of a trust, its trust agreement; (e) in the case of a joint venture, its joint venture agreement; (f) in the case of a limited liability company, its articles of organization and

operating agreement or regulations; and (g) in the case of any other entity, its organizational and governance documents and agreements.

 

 

  

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"Debt" means as to any Person at any time (without duplication): (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of Property or services, except trade accounts payable of such Person arising in the ordinary course of business, (d) all Capitalized Lease Obligations of such Person, (e) all Debt or other obligations of others guaranteed by such Person, (f) all obligations secured by a Lien existing on Property owned by such Person, (g) any other obligation for borrowed money or other financial accommodations which in accordance with GAAP would be shown as a liability on the balance sheet of such Person, (h) any repurchase obligation or liability of a Person with respect to Accounts, chattel paper or notes receivable sold by such Person, (i) any liability under a sale and leaseback transaction that is not a Capitalized Lease Obligation, (j) any obligation under any so-called "synthetic leases", (k) all reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers' acceptances, surety or other bonds and similar instruments, (1) any obligations under any swap or hedge agreement, and (m) all liabilities of such Person in respect of unfunded vested benefits under any Plan.

 

"Default" means an Event of Default or the occurrence of an event or condition which with notice or lapse of time or both would become an Event of Default.

 

"Default Rate" means the lesser of (a) the Maximum Lawful Rate or (b) the sum of the Applicable Rate plus 2.00%.

 

"Dispute" means any action, dispute, claim or controversy of any kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or hereafter arising under or in connection with, or in any way pertaining to, this Agreement and each other document, contract and instrument required hereby or now or hereafter delivered to Lender in connection herewith, or any past, present or future extensions of credit and other activities, transactions or obligations of any kind related directly or indirectly to any of the foregoing documents, including without limitation, any of the foregoing arising in connection with the exercise of any self-help, ancillary or other remedies pursuant to any of the foregoing documents.

 

"Dollars" and "$" mean lawful money of the United States of America.

 

"EBITDA" means, for any period of determination, for the Borrower and its Subsidiaries, the sum of consolidated Net Income for such period, as determined in accordance with GAAP, plus (to the extent that such items were deducted in the calculation of consolidated Net Income for the period) the sum of (a) Interest Expense, (b) Taxes, (c) depreciation and (d) amortization.

 

"Eligible Accounts" means, at any time, all Accounts of the Loan Parties created in the ordinary course of business and that satisfy the following conditions:

 

(a) The Account complies with all applicable laws, rules, and regulations, including, without limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z of the Board of Governors of the Federal Reserve System;

 

 

  

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(b) The Account has not been outstanding for more than 60 days past the due date or has not been outstanding for more than 90 days past the original date of invoice;

 

(c) The Account does not represent a commission, and the Account is owed as a result of (i) the sale of goods by a Loan Party in the ordinary course of business and such sale has been consummated and such goods have been shipped and delivered and received by the Account Debtor, or (ii) services performed or to be performed by a Loan Party in the ordinary course of business;

 

(d) The Account arises from an enforceable contract;

 

(e) The Account does not arise from the sale of any good that is on a bill-and-hold, guaranteed sale, sale-or-return, sale on approval, consignment, or any other repurchase or return basis;

 

(f) A Loan Party has good and indefeasible title to the Account and the Account is not subject to any Lien except Liens in favor of the Lender;

 

(g) The Account does not arise out of a contract with or order from an Account Debtor that, by its terms, prohibits or makes void or unenforceable the grant of a security interest by a Loan Party to the Lender in and to such Account;

 

(h) The Account is not subject to any setoff, counterclaim, defense, dispute, recoupment, or adjustment other than normal discounts for prompt payment;

 

(i) The Account Debtor is not insolvent or the subject of any bankruptcy or insolvency proceeding and has not made an assignment for the benefit of creditors, suspended normal business operations, dissolved, liquidated, terminated its existence, ceased to pay its debts as they become due, or suffered a receiver or trustee to be appointed for any of its assets or affairs;

 

(j) The Account is not evidenced by chattel paper or an instrument;

 

(k) No default exists under the Account by any party thereto;

 

(1) The Account Debtor has not returned or refused to retain, or otherwise notified a Loan Party of any dispute concerning, or claimed nonconformity of, any of the goods from the sale of which the Account arose;

 

(m) The Account is not owed by an Affiliate, employee, officer, or director of a Loan Party;

 

(n) The Account is payable in Dollars by the Account Debtor;

 

(o) The Account Debtor is domiciled in the United States of America or if the Account Debtor is domiciled outside of the United States of America, the Accounts of such Account Debtor have been approved by the Lender or are backed by letters of credit in form and substance satisfactory to the Lender;

 

 

  

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(p) Not more than 20% of the aggregate balances then outstanding on Accounts owed by such Account Debtor and its Affiliates to a Loan Party are more than 90 days past the dates of their original invoices;

 

(q) The Account Debtor is any Person other than the United States of America or any state, department, agency, or instrumentality thereof;

 

(r) The aggregate of all Accounts owed by the Account Debtor and its Affiliates to which the Account relates does not exceed 20% of all Accounts owed by all of the Loan Parties' Account Debtors (provided, that if such Accounts exceeds 20% of all Accounts owed by all of the Loan Parties' Account Debtors, such portion of such Accounts not in excess of 20% shall be eligible); and

 

(s) The Account is otherwise acceptable in the reasonable discretion of the Lender; provided that the Lender shall have the right to create and adjust eligibility standards and related reserves with respect to such Account from time to time in its good faith credit judgment.

 

The amount of the Eligible Accounts owed by an Account Debtor to a Loan Party shall be reduced by the amount of all "contra accounts" (not including Accounts owed to any Loan Party by the Lender) and other obligations owed by a Loan Party to such Account Debtor.

 

"Eligible Inventory" means any inventory of the Loan Parties; provided that in no event shall inventory be deemed Eligible Inventory if such inventory fails to comply with any of the following requirements:

 

(a) The Lender has a perfected first priority Lien in such inventory;

 

(b) It consists of inventory, if perishable, which is not beyond the expiration date of such inventory and is less than 60 days old;

 

(c) It consists of inventory which is new, readily usable or marketable by Borrower in the ordinary course of its business and is not comprised of promotional or marketing materials or shipping supplies;

 

(d) It is not defective, obsolete, or should not be properly accounted for as inventory on a Borrower's books in accordance with GAAP;

 

(e) It has not been delivered to and then returned by a customer due to quality issues or any other issues;

 

(f) It is located at a location within the possession or control of Borrower and subject to a landlord's waiver in form and substance satisfactory to Lender, and is located principally within the continental United States;

 

(g) It is not held on consignment; and

 

(h) It is not subject to any licensing or royalty dispute.

 

 

  

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"Environmental Laws" means any and all federal, state, and local laws, regulations, judicial decisions, orders, decrees, plans, rules, permits, licenses, and other governmental restrictions and requirements pertaining to health, safety, or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., as the same may be amended or supplemented from time to time.

 

"Environmental Liabilities" means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs, and expenses, (including, without limitation, all reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement with any Governmental Authority or other Person, arising from environmental, health or safety conditions or the Release or threatened Release of a Hazardous Material into the environment, resulting from the past, present, or future operations of such Person or its Affiliates.

 

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereunder.

 

"ERISA Affiliate" means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Borrower or is under common control (within the meaning of Section 414(c) of the Code) with the Borrower.

 

"Event of Default" has the meaning specified in Section 10.1.

 

"Existing Letters of Credit" means those letters of credit listed on Schedule 1.1. "Existing Loan Agreement" has the meaning specified in the Recitals.

 

"Existing Loan Documents" means the Loan Documents (as defined in the Existing Loan Agreement).

 

"Existing Notes" means the Notes (as defined in the Existing Loan Agreement).

 

"Existing Term Loan" means those certain outstanding Guidance Loans (as defined in the Existing Loan Agreement) listed on Schedule 1.1, made by the Lender to the Prior Borrower pursuant to the Existing Loan Agreement, and assumed by the Borrower pursuant to this Agreement.

 

 

  

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"Existing Term Loan Maturity Date" means with respect to each Existing Term Loan, the maturity date for such Existing Term Loan listed in Section 2.1(c)(iii), or such earlier date on which such Existing Term Loan becomes due and payable as provided in this Agreement.

 

"Fee Letter" means that certain Fee Letter between the Borrower and the Lender dated as of the date hereof.

 

"Fixed Charge Coverage Ratio" means, for the Borrower on a consolidated basis, and on any date of determination, the ratio of (a) the sum of (i) EBITDA plus (ii) Rent Expenses and operating lease payments minus (iii) Non-Financed Capital Expenditures minus (iv) dividends minus (v) the amount paid to purchase any stock or other equity interests in Borrower to (b) the sum of (i) all principal payments made or required to be made on indebtedness during the 12-month period then ending plus (ii) Interest Expense plus (iii) Taxes paid in cash plus (iv) 80% of Rent Expenses, in each case determined for the 12-month period then ending.

 

"Funded Debt" means, as of any date of determination, for any Person at any time, all obligations and liabilities of such Person which should be classified as "funded indebtedness" on a balance sheet of such Person as of such date in accordance with GAAP.

 

"Funded Debt Ratio" means, for the Borrower on a consolidated basis, and on any date of determination,

 

(a) through the fiscal year ending June 24, 2012, the ratio of Funded Debt to the sum of (i) EBITDA, determined for the 12-month period then ending, plus  (ii) $240,000 (which amount represents certain legal fees and settlement expenses paid by the Borrower and its Subsidiaries to which the Lender has previously consented); and

 

(b) after the fiscal year ending June 24, 2012, the ratio of Funded Debt to EBITDA, determined for the 12-month period then ending.

 

"GAAP" means generally accepted accounting principles, applied on a consistent basis, as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a "consistent basis" when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

 

"Governmental Authority" means any nation or government, any state or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.

 

"Guaranty" means any guaranty agreement of the Borrower's Subsidiaries or any other Obligated Party executed in favor of the Lender, in form and substance satisfactory to the Lender, as the same may be amended, restated, supplemented, modified or changed from time to time.

 

 

  

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"Guidance Advance Period" means, with respect to Guidance Loans, the period from the Closing Date through and including October 31, 2012.

 

"Guidance Loan" means, with respect to any Location, a Loan made by the Lender to the Borrower pursuant Section 2.1(b).

 

"Guidance Loan Commitment" means the obligation of the Lender to make Guidance Loans pursuant to Section 2.1(b) in an aggregate principal amount up to but not exceeding Four Million and No/100 Dollars ($4,000,000), subject, however, to termination pursuant to Section 2.1(b) or 10.2.

 

"Guidance Loan Request Date" means, with respect to each Location, the date on which the Borrower requests the first Term Advance for such Location pursuant to Section 2.1(b); provided, however, no Guidance Loan Request Date shall occur after the expiration of the Guidance Advance Period.

 

"Guidance Term Note" means the promissory note of the Borrower payable to the order of the Lender, in substantially the form of Exhibit C hereto or as otherwise acceptable to the Lender, and all amendments, extensions, renewals, replacements, increases and modifications thereof.

 

"Hazardous Material" means any substance, product, waste, pollutant, material, chemical, contaminant, constituent, or other material which is or becomes listed, regulated, or addressed under any Environmental Law, including, without limitation, asbestos, petroleum, and polychlorinated biphenyls.

 

"Interest Expense" means, as of any date of determination, the sum of all required payments of interest under any Debt for the prior 12 month period then ended.

 

"Interest Payment Date" means (a) the last Business Day of each month, (b) with respect to Revolving Credit Advances, the Revolving Maturity Date, (c) with respect to Term Advances, the Term Loan Maturity Date for such Term Advance, and (d) with respect to each Existing Term Loan, the Existing Term Loan Maturity Date for such Existing Term Loan.

 

"LC Commitment" shall mean the commitment of the Lender to issue Letters of Credit pursuant to Section 2.2. The aggregate amount of the LC Commitment shall be $250,000, but in no event shall exceed the Revolving Credit Commitment.

 

"LC Disbursement" shall mean a payment or disbursement made by the Lender pursuant to a Letter of Credit.

 

"LC Exposure" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time.

 

"LC Request" shall mean a request by Borrower in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit G hereto or as otherwise acceptable to the Lender, or such other form as shall be approved by the Lender.

 

 

  

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"Letter of Credit" shall mean any letter of credit or similar instrument issued pursuant to this Agreement for the account of Borrower or one of its Subsidiaries pursuant to Section 2.2 and any Existing Letter of Credit.

 

"Letter of Credit Expiration Date" shall mean the date which is five Business Days prior to the Revolving Maturity Date.

 

"Lien" means any lien, mortgage, security interest, tax lien, pledge, charge, hypothecation, assignment, preference, priority, or other encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or title retention agreement), whether arising by contract, operation of law, or otherwise.

 

"Loan" means an extension of credit by the Lender to the Borrower pursuant to Article II, including but not limited to the Revolving Credit Advances, the Guidance Loans and the Existing Term Loans.

 

"Loan Documents" means this Agreement, the Security Documents, the Notes, the Fee Letter, and all promissory notes, assignments, letters of credit, and other instruments, documents, supplements, and agreements executed and delivered pursuant to or in connection with this Agreement, as such instruments, documents, supplements and agreements may be amended, modified, renewed, restated, extended, supplemented, replaced, consolidated, substituted, or otherwise changed from time to time.

 

"Loan Parties" means the Borrower, its Subsidiaries and their successors and assigns.

 

"Location" means each Pizza Inn® or Pie FiveTM store listed on Schedule 2.1 hereto or such other Locations as may be approved by the Lender from time to time.

 

"Long Term Indebtedness" shall mean, as of any applicable date of determination thereof, all Debt (other than the aggregate outstanding principal balance of all Loans) which should be classified as "funded indebtedness" or "long term indebtedness" on a balance sheet of such Person as of such date in accordance with GAAP.

 

"Material Adverse Effect" means, at any time, (a) a material adverse effect or change on the business, assets, properties, liabilities, results of operations, condition (financial or otherwise), prospects or solvency of the Borrower and its Subsidiaries, taken as a whole, (b) a material adverse effect or change on the ability of any Obligated Party to perform its material obligations under any of the Loan Documents or (c) an adverse effect or change on the legality, binding effect or enforceability of any material provision of any Loan Document or affecting in any material respect the rights and remedies of the Lender thereunder.

 

"Maximum Lawful Rate" means, at any time, the maximum non-usurious rate of interest which may be charged, contracted for, taken, received or reserved by the Lender in accordance with applicable Texas law (or applicable United States federal law to the extent that such law permits Lender to charge, contract for, receive or reserve a greater amount of interest than under Texas law). The Maximum Lawful Rate shall be calculated in a manner that takes into account any and all fees, payments, and other charges in respect of the Loan Documents that constitute interest under applicable law. Each change in any interest rate provided for herein based upon the Maximum Lawful Rate resulting from a change in the Maximum Lawful Rate shall take effect without notice to the Borrower at the time of such change in the Maximum Lawful Rate. For purposes of determining the Maximum Lawful Rate under Texas Law, the applicable rate ceiling shall be the applicable weekly ceiling described in, and computed in accordance with, Chapter 303 of the Texas Finance Code, as the same may be amended.

 

 

  

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"Multiemployer Plan" means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.

 

"Net Income" means, for any period immediately preceding the applicable date of determination, the net income appearing on a consolidated income statement of Borrower and its Subsidiaries, or for purposes of Section 5.2(d) for Pie Five Restaurants, Inc., in each case prepared as of the end of the applicable period of determination in accordance with GAAP.

 

"Non-Financed Capital Expenditures" means the sum of (a) all expenditures to purchase fixed assets and leasehold improvements which are paid (i) in cash or (ii) from proceeds of any Revolving Credit Advances so long as such Revolving Credit Advances are paid within one year of the date of such Advance (or a combination thereof) minus (b) any reimbursements made to the Borrower by a landlord of any location where such leasehold improvements described in clause (a) are located to be applied to Borrower's finish out expenses incurred in connection thereof

 

"Notes" means, collectively, all promissory notes, including but not limited to the Revolving Credit Note, the Guidance Term Note and the Term Note executed at any time by the Borrower and payable to the order of the Lender, as amended, renewed, replaced, extended, supplemented, consolidated, restated, modified, otherwise changed and/or increased from time to time ("Note" means any of such Notes).

 

"Obligated Party" means the Borrower and any other Person who is or becomes party to any agreement that guarantees or secures payment and performance of the Obligations, or any part thereof, grants any Collateral or executes any Loan Document.

 

"Obligations" means all obligations, indebtedness, and liabilities of the Borrower, and any other Obligated Party to the Lender or Affiliates of the Lender, or both, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the obligations, indebtedness, and liabilities under this Agreement, any swap or other hedge agreements maintained with the Lender, the other Loan Documents, any cash management or treasury services agreements and all interest accruing thereon (whether a claim for post-filing or post-petition interest is allowed in any insolvency, reorganization or similar proceeding) and all attorneys' fees and other expenses incurred in the enforcement or collection thereof

 

"Other Taxes" shall have the meaning set forth in Section 3.3(b).

 

"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA.

 

 

  

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"Permitted Liens" shall have the meaning set forth in Section 8.2.

 

"Permitted Restructure" means, collectively, the following events, each to occur on or about the Closing Date: (a) the merger of Pizza Inn Merger Sub, Inc., a Missouri corporation ("Merger Sub"), into Prior Borrower, with Prior Borrower continuing as the surviving corporation; (b) the conversion of each share of common stock of Prior Borrower outstanding immediately prior to the merger into a share of common stock of Borrower; (c) the conversion of each share of common stock of Merger Sub outstanding immediately prior to the merger into a share of common stock of Prior Borrower; (d) the cancellation of all shares of Borrower's common stock outstanding immediately prior to the merger (as a result of the events described in clauses (a) through and including (d) above, Merger Sub will cease to exist as a separate entity, and Prior Borrower will become a direct subsidiary of Borrower); and (e) Prior Borrower will dividend the equity ownership of each of its direct subsidiaries (i.e., Pie Five Pizza Company, Inc. and PIBC Holding, Inc.) upstream to Borrower.

 

"Person" means any individual, corporation, limited liability company, business trust, association, company, partnership, joint venture, Governmental Authority, or other entity, and shall include such Person's heirs, administrators, personal representatives, executors, successors and assigns.

 

"Pie Five EBITDA" means, for any period of determination, for Pie Five Restaurants, Inc., the sum of consolidated Net Income for such period, as determined in accordance with GAAP, plus (to the extent that such items were deducted in the calculation of consolidated Net Income for the period) the sum of (a) Interest Expense, (b) Taxes, (c) depreciation, (d) amortization, (e) corporate overhead expenses and (f) for any calculation of such Pie Five EBITDA that includes any of the three months immediately preceding the date of any Advance the proceeds of which will be used for any Pie FiveTM store, actual pre-opening expenses paid by Pie Five Restaurants, Inc. during such period in an aggregate amount not to exceed $60,000 per Pie FiveTM store.

 

"Plan" means any employee benefit or other plan established or maintained by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.

 

"Principal Office" means the principal office of the Lender, presently located at 2501 North Harwood Street, Suite 1500, Dallas, Texas 75201 or any other location so designated by the Lender.

 

"Prior Borrower" has the meaning specified in the Recitals.

 

"Prohibited Transaction" means any transaction set forth in Section 406 of ERISA or Section 4975 of the Code.

 

"Property" of a Person means any and all property, whether real, personal, tangible, intangible or mixed, of such Person, or any other assets owned, operated or leased by such Person.

 

"Reimbursement Obligations" shall mean Borrower's obligations under Section 2.2(d) to reimburse LC Disbursements.

 

 

  

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"Release" means, as to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, disbursement, leaching, or migration of Hazardous Materials into the indoor or outdoor environment or into or out of Property owned by such Person, including, without limitation, the movement of Hazardous Materials through or in the air, soil, surface water, ground water, or Property.

 

"Remedial Action" means all actions required to (a) clean up, remove, treat, or otherwise address Hazardous Materials in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of Hazardous Materials so that they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care.

 

"Rent Expense" means, during any period of determination, actual rent paid or required to be paid by Borrower prior to any offsets related to deferrals of rental payments or other amounts owed to Borrower that may be available to the Borrower with respect to such rent then due, minus actual collected rental income paid by the sub-lessee to the Borrower on the sublease of property leased by the Borrower.

 

"Reportable Event" means any of the events set forth in Section 4043 of ERISA.

 

"Revolving Credit Advance" means any Advance made by the Lender to the Borrower pursuant to Section 2.1(a).

 

"Revolving Credit Commitment" means the obligation of the Lender to make Revolving Credit Advances pursuant to Section 2.1 in an aggregate principal amount at any time outstanding up to but not exceeding Two Million and No/100 Dollars ($2,000,000), subject, however, to reduction pursuant to Section 2.1(a)(v) or termination pursuant to Section 10.2.

 

"Revolving Credit Note" means the promissory note of the Borrower payable to the order of the Lender, in substantially the form of Exhibit B hereto or as otherwise acceptable to the Lender, and all amendments, extensions, renewals, replacements, increases and modifications thereof.

 

"Revolving Maturity Date" means January 11, 2013, or such earlier date on which the Revolving Credit Commitment terminates and such amounts thereunder become due and payable as provided in this Agreement.

 

"Security Agreement" means any security agreement of the Borrower, its Subsidiaries, or any other Obligated Party executed in favor of the Lender, in form and substance satisfactory to the Lender, as the same may be amended, restated, supplemented, modified, or changed from time to time.

 

"Security Documents" means each and every Security Agreement, Guaranty, pledge, mortgage, deed of trust, deposit account control agreement, intellectual property security agreement, or other collateral security agreement required by or delivered to the Lender from time to time to secure the Obligations or any portion thereof, including all such other documents, agreements, supplements, and instruments executed in connection herewith, all as may be

amended, modified, renewed, restated, extended, supplemented, replaced, consolidated, substituted, or otherwise changed from time to time.

 

 

  

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"Subsidiary" means (a) any corporation of which at least a majority of the outstanding shares of stock having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of its Subsidiaries; and (b) any other entity (i) of which at least a majority of the ownership, equity or voting interest is at the time directly or indirectly owned or controlled by the Borrower and its Subsidiaries and (ii) which is treated as a subsidiary in accordance with GAAP.

 

"Tangible Net Worth" means, as of any date of determination, the aggregate amount of shareholders' equity set forth on the balance sheet of Borrower prepared in accordance with GAAP on a consolidated basis minus all intangible assets of Borrower.

 

"Taxes" means all taxes, levies, assessments, fees, withholdings or other charges at any time imposed by any laws or Governmental Authority.

 

"Term Advance" means any Advance made by the Lender to the Borrower pursuant to Section 2.1(b).

 

"Term Loan Maturity Date" means, with respect to each Guidance Loan, three years from the expiration of the Advance Period for such Location, or such earlier date on which such Guidance Loan becomes due and payable as provided in this Agreement.

 

"Term Note" means the promissory note of the Borrower payable to the order of the Lender, in substantially the form of Exhibit D hereto or as otherwise acceptable to the Lender, and all amendments, extensions, renewals, replacements, increases and modifications thereof.

 

"Total Liabilities" means, as of any date of determination, all liabilities properly reflected on the Borrower's consolidated balance sheet in accordance with GAAP.

 

"UCC" means the Uniform Commercial Code as in effect in the State of Texas.

 

 

"Unused Fee" shall have the meaning set forth in Section 3.4.

 

Section 1.2 Accounting Matters. Any accounting term used in this Agreement or the other Loan Documents shall have, unless otherwise specifically provided therein, the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed, unless otherwise specifically provided therein, in accordance with GAAP consistently applied; provided, that all financial covenants and calculations in the Loan Documents shall be made in accordance with GAAP as in effect on the date of this Agreement unless the Borrower and the Lender shall otherwise specifically agree in writing. That certain items or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing.

 

 

 

  

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Section 1.3Other Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. The words "hereof', "herein", and "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all Article and Section references pertain to this Agreement. Terms used herein that are defined in the UCC, unless otherwise defined herein, shall have the meanings specified in the UCC.

 

ARTICLE II

 

Loan and Advances

 

Section 2.1 The Loans.

 

 (a)Revolving Credit Advances. Subject to the terms and conditions of this Agreement, the Lender agrees to make one or more Revolving Credit Advances to the Borrower from time to time from the date hereof to, but not including, the Revolving Maturity Date in an aggregate principal amount at any time outstanding up to, but not exceeding, the amount of the Revolving Credit Commitment; provided that the aggregate amount of all Revolving Credit Advances plus the LC Exposure at any time outstanding shall not exceed the lesser of (x) Revolving Credit Commitment and (y) the Borrowing Base. Subject to the foregoing limitations, and the other terms and provisions of this Agreement, the Borrower may borrow, repay, and reborrow Revolving Credit Advances hereunder.

 

(i)            The Revolving Credit Note. The obligation of the Borrower to repay the Revolving Credit Advances and interest thereon shall be evidenced by the Revolving Credit Note executed by the Borrower, payable to the order of the Lender, in the maximum principal amount of the Revolving Credit Commitment as originally in effect and dated the date hereof

 

(ii)            Repayment of Revolving Credit Advances. The Borrower shall repay the unpaid principal amount of all Revolving Credit Advances on the Revolving Maturity Date, unless sooner due by reason of acceleration by the Lender as provided in this Agreement.

 

(iii)            Interest on Revolving Credit Advances.   Interest on each Revolving Credit Advance shall be due and payable in arrears on each Interest Payment Date applicable thereto, beginning on October 31, 2011, and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any bankruptcy, insolvency or other similar law.

 

(iv)            Borrowings of Revolving Credit Advances.

 

(A) Each borrowing shall be made upon the Borrower's irrevocable notice to the Lender, which may be given by telephone. Each such notice must be received by the Lender not later than 2:00 p.m. (Dallas, Texas time) on the requested date of any borrowing. Each such telephonic notice must be confirmed promptly by delivery to the Lender of a written Advance Request Form, appropriately completed and signed by the Borrower. Each Advance Request Form (whether telephonic or written) shall specify (i) the requested date of the borrowing (which shall be a Business Day), and (ii) the principal amount of the Revolving Credit Advance to be borrowed.

 

 

  

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(B) Revolving Credit Advances shall be in a minimum amount of $1,000 (or such lesser amount that exhausts any remaining availability under the Revolving Credit Commitment).

 

(C) The Lender shall have no liability to the Borrower for any loss or damage suffered by the Borrower as a result of the Lender's honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically, by facsimile or electronically and purporting to have been sent to the Lender by the Borrower and the Lender shall have no duty to verify the origin of any such communication or the identity or authority of the Person sending it.

 

(D) Upon satisfaction of all applicable conditions, the Lender shall make the proceeds of each Revolving Credit Advance available to the Borrower in accordance with instructions provided to (and reasonably acceptable to) the Lender by the Borrower.

 

(v)     Reduction or Termination of Revolving Credit Commitment. The Borrower shall have the right to terminate in whole or reduce in part the unused portion of the Revolving Credit Commitment upon at least three Business Days prior notice (which notice shall be irrevocable) to the Lender specifying the effective date thereof, whether a termination or reduction is being made, and the amount of any partial reduction, provided that each partial reduction shall be in the amount of $100,000 or an integral multiple thereof and the Borrower shall simultaneously prepay the amount by which (A) the unpaid principal amount of the Revolving Credit Advances exceeds the Revolving Credit Commitment (after giving effect to such notice) plus (B) accrued and unpaid interest on the principal amount so prepaid. The Revolving Credit Commitment may not be reinstated after it has been terminated or reduced.

 

(b)    Guidance Loans. Subject to the terms and conditions of this Agreement, the Lender agrees to make Guidance Loans (which, for the avoidance of doubt, shall consist of all Term Advances made for such Location) to the Borrower from time to time during the Guidance Advance Period in an aggregate principal amount not to exceed the Guidance Loan Commitment. Amounts repaid on Guidance Loans may not be reborrowed. Upon expiration of the Guidance Advance Period, the Guidance Loan Commitment shall automatically terminate. No more than one Guidance Loan shall be extended for any one Location.

 

 

  

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(i)            The Guidance Term Note. The obligation of the Borrower to repay the Guidance Loans and interest thereof shall be evidenced by the Guidance Term Note executed by the Borrower, payable to the order of the Lender, in the principal amount of the Guidance Loan Commitment.

 

(ii)            Term Advances. Subject to the terms and conditions of this Agreement, beginning on the initial Guidance Loan Request Date with respect to a Location, the Lender agrees to make Term Advances for such Location to the Borrower from time to time during the Advance Period. The aggregate principal amount of all Term Advances for all Locations shall not exceed the Guidance Loan Commitment. The principal amount of each Term Advance shall not exceed an amount equal to 65% of the hard cost of any new equipment or leasehold improvements so purchased or acquired by Borrower and to which such Term Advance relates, in each case, as evidenced by invoices and other documentation satisfactory to Bank. Amounts repaid on Term Advances may not be reborrowed.

 

(iii)            Interest on Guidance Loans. Interest on each Guidance Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto, and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any bankruptcy, insolvency or other similar law.

 

(iv)            Amortization of Guidance Loans. The Borrower shall repay the unpaid principal amount of each Guidance Loan in equal 36 consecutive monthly installments in the amount of 1136th of the aggregate principal amount of the Term Advances for such Location outstanding on the expiration of the applicable Advance Period for such Location, commencing upon the last day of the first month after the expiration of the Advance Period for such Location. All outstanding principal and accrued but unpaid interest on each such Guidance Loan shall be due and payable on the Term Loan Maturity Date.

 

(v)            Borrowings of Term Advances.

 

(A) Each borrowing shall be made upon the Borrower's irrevocable notice to the Lender, which may be given by telephone. Each such notice must be received by the Lender not later than 2:00 p.m. on the requested date of any borrowing. Each such telephonic notice must be confirmed promptly by delivery to the Lender of a written Advance Request Form, appropriately completed and signed by the Borrower. Each Advance Request Form (whether telephonic or written) shall specify (i) the requested date of the borrowing (which shall be a Business Day), (ii) the Location for which such borrowing shall be used, (iii) the principal amount of the Term Advance to be borrowed and (iv) copies of all invoices and other documentation reasonably satisfactory to the Lender to be financed by such Term Advance.

 

 

  

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(B) Term Advances shall be in a minimum amount of $50,000 (or such lesser amount that exhausts any remaining availability under the Guidance Loan Commitment).

 

(C) The Lender shall have no liability to the Borrower for any loss ordamage suffered by the Borrower as a result of the Lender's honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically, by facsimile or electronically and purporting to have been sent to the Lender by the Borrower and the Lender shall have no duty to verify the origin of any such communication or the identity or authority of the Person sending it.

 

(D) Upon satisfaction of all applicable conditions, the Lender shall make the proceeds of each Term Advance available to the Borrower in accordance with instructions provided to (and reasonably acceptable to) the Lender by the Borrower.

 

(c) Existing Term Loans. As of the Closing Date, the Borrower hereby assumes the Existing Term Loans pursuant to Section 11.24 of this Agreement. As of the Closing Date, each of the Existing Term Loans shall constitute, for all purposes of this Agreement and the other Loan Documents, Loans issued and outstanding under this Agreement. Amounts advanced and repaid under the Existing Term Loans may not be reborrowed.

 

(i)            The Term Note. The obligation of the Borrower to repay the Existing Term Loans and interest thereon shall be evidenced by the Term Note executed by the Borrower, payable to the order of the Lender, in the amount of the aggregate outstanding principal amount of the Existing Term Loans.

 

(ii)            Interest on Existing Term Loans. Interest on the Existing Term Loans shall be due and payable in arrears on each Interest Payment Date applicable thereto, beginning on October 31, 2011, and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any bankruptcy, insolvency or other similar law.

 

(iii)            Amortization of Existing Term Loans. The Borrower shall repay the unpaid principal amount of each Existing Term Loan in equal consecutive monthly installments, beginning on October 31, 2011, in the amounts set forth below:

 

	
Existing Term

	
Outstanding

	
Monthly

	
Maturity Date:

	
Loan No.:

	
Principal Amount 

on the Closing

	
Principal

Payment

	  

	  	
Date:

	  	  
	
3912717001

	
$183,331.72

	
$9,166.58

	
June 30, 2013

	
3912717002

	
$241,111.04

	
$8,611.12

	
February 23, 2014

	
3912717003

	
$280,000.00

	
$10,000.00

	
March 19, 2014

 

 

  

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All outstanding principal and accrued but unpaid interest on each Existing Term Loan shall be due and payable on the applicable Existing Term Loan Maturity Date.

 

Section 2.2   Letters of Credit.

 

(a)            General. Subject to the terms and conditions set forth herein, Borrower may request the Lender, and the Lender agrees, to issue Letters of Credit for its own account or the account of a Subsidiary in a form reasonably acceptable to the Lender, at any time and from time to time prior to the Revolving Credit Maturity Date (provided that Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary). The Lender shall have no obligation to issue, and Borrower shall not request the issuance of, any Letter of Credit at any time if after giving effect to such issuance, the LC Exposure would exceed the LC Commitment or the sum of the total Revolving Credit Advances plus the LC Exposure would exceed the lesser of (x) Revolving Credit Commitment and (y) the Borrowing Base. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by Borrower to, or entered into by Borrower with, the Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

 

(b)            Request for Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, Borrower shall hand deliver or telecopy an LC Request to the Lender not later than 12:00 p.m., Dallas, Texas time, on the third Business Day preceding the requested date of issuance, amendment, renewal or extension.

 

(i)A request for an initial issuance of a Letter of Credit shall specify

in form and detail reasonably satisfactory to the Lender:

 

(A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day);

 

(B) the face amount thereof;

 

 

  

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(C) the expiry date thereof (which shall not be later than the close of business on the Letter of Credit Expiration Date);

 

(D) the name and address of the beneficiary thereof;

 

(E) whether the Letter of Credit is to be issued for its own account or for the account of one of its Subsidiaries (provided that Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary);

 

(F) the documents to be presented by such beneficiary in connection with any drawing thereunder;

 

(G) the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and

 

(H) such other matters as the Lender may reasonably require.

 

(ii) A request for an amendment, renewal or extension of anyoutstanding Letter of Credit shall specify in form and detail reasonably satisfactory to the Lender:

 

(A) the Letter of Credit to be amended, renewed or extended;

 

(B) the proposed date of amendment, renewal or extension thereof (which shall be a Business Day);

 

(C) the nature of the proposed amendment, renewal or extension; and

 

(D) such other matters as the Lender may reasonably require.

 

If requested by the Lender, Borrower also shall submit a letter of credit application on the Lender's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon issuance, amendment, renewal or extension of each Letter of Credit, Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed the LC Commitment and (ii) the sum of the total Revolving Credit Advances plus the LC Exposure shall not exceed the Revolving Credit Commitment. Unless the Lender shall agree otherwise, no Letter of Credit shall be in an initial amount less than $100,000.

 

(c)   Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date which is one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the Letter of Credit Expiration Date; provided that this paragraph (c) shall not prevent Borrower from obtaining Letters of Credit that provide by their terms that they will automatically be extended for one or more successive periods not to exceed one year each (and, in any case, not to extend beyond the Letter of Credit Expiration Date) unless the Lender elects not to extend for any such additional period by giving notice of such election to the beneficiary at least 30 days prior to the expiry date thereof.

 

 

  

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(d)            Reimbursement. If the Lender shall make any LC Disbursement in respect of a Letter of Credit, Borrower shall reimburse such LC Disbursement by paying to the Lender an amount equal to such LC Disbursement not later than 2:00 p.m., Dallas, Texas time, on the date that such LC Disbursement is made if Borrower shall have received notice of such LC Disbursement prior to 11:00 a.m., Dallas, Texas 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 2:00 p.m., Dallas, Texas time, on the Business Day immediately following the day that Borrower receives such notice; provided that Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.1 that such payment be financed with Revolving Credit Advances in an equivalent amount and, to the extent so financed, Borrower's obligation to make such payment shall be discharged and replaced by the resulting Revolving Credit Advances.

 

(e)            Obligations Absolute. The Reimbursement Obligation of Borrower as provided in Section 2.2(d) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein; (ii) any draft or other document presented under a Letter of Credit being proved to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by the Lender under a Letter of Credit against presentation of a draft or other document that fails to comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.2, constitute a legal or equitable discharge of, or provide a right of setoff against, the obligations of Borrower hereunder; (v) the fact that a Default shall have occurred and be continuing; (vi) any material adverse change in the condition (financial or otherwise), results of operations, assets, liabilities (contingent or otherwise), material agreements, properties, solvency, business, management, prospects or value of the Borrower; or (vii) any other fact, circumstance or event whatsoever. The Lender shall not have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Lender; provided that the foregoing shall not be construed to excuse the Lender from liability to Borrower to the extent of any direct damages (as opposed to consequential, special, punitive or other indirect damages, claims in respect of which are hereby waived by Borrower to the extent permitted by applicable law) suffered by Borrower that are caused by the Lender's (i) failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof or (ii) gross negligence

 

 

  

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or willful misconduct as finally determined in a judgment of a court of competent jurisdiction. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Lender (as finally determined by a court of competent jurisdiction), the Lender shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Lender may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(f)            Disbursement Procedures. The Lender shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Lender shall promptly give written notice to the Borrower of such demand for payment and whether the Lender has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve Borrower of its Reimbursement Obligation to the Lender with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in Section 2.2(d)).

 

(g)            Interim Interest. If the Lender shall make any LC Disbursement, then, unless Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement is made to but excluding the date that Borrower reimburses such LC Disbursement, at the Default Rate.

 

(h)            Other. The Lender shall be under no obligation to issue any Letter of Credit if:

 

(i) any order of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Lender from issuing such Letter of Credit, or any legal requirement applicable to the Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Lender shall prohibit, or request that the Lender refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Lender is not otherwise compensated hereunder) not in effect on the date hereof, or shall impose upon the Lender any unreimbursed loss, cost or expense which was not applicable on the date hereof and which the Lender deems material to it; or

 

(ii) the issuance of such Letter of Credit would violate one or more policies of general application of the Lender.

 

(i)   The Lender shall be under no obligation to amend any Letter of Credit if (A) the Lender would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

 

 

  

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Section 2.3  General Provisions Regarding Interest; Etc.

 

(a)            Notification of Rate. The Lender shall notify the Borrower of any change in the Lender's Base Rate used in determining the Applicable Rate promptly following the public announcement of such change.

 

(b)            Applicable Rate. Subject to the provisions of subsection (c) below, each Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the lesser of (A) the Maximum Lawful Rate and (B) the Applicable Rate.

 

(c)            Default Rate. If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter, upon the giving of prior written notice by Lender to Borrower, bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Furthermore, while any default or event of default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(d)            Maximum Rate Limitations. If at any time the rate of interest applicable to any portion of the Loans would exceed the Maximum Lawful Rate but for the provisions thereof limiting interest to the Maximum Lawful Rate, then any subsequent reduction shall not reduce the rate of interest on the Loans below the Maximum Lawful Rate until the aggregate amount of interest accrued on the Loans equals the aggregate amount of interest which would have accrued on the Loans if the interest rate had not been limited by the Maximum Lawful Rate.

 

(e)            Computations of Rate. All computations of fees and interest for Advances when the Applicable Rate is determined by the Lender's Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year), unless such computation would cause the fees and interest to exceed the Maximum Lawful Rate, in which event, such computation shall be on the basis of a 365 or 366 day year, as applicable. Interest shall accrue on each Loan for the day on which the Loan is made, or any portion thereof, but not for the day on which the Loan or such portion is paid.

 

(f)           Capital Adequacy. If after the date hereof, the Lender shall have determined that any central bank or other Governmental Authority properly authorized to do so has adopted or implemented (and has taken all necessary action to legally adopt or

 

 

  

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implement) any applicable law, rule, or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof, compliance with which by the Lender would have the effect of reducing the rate of return on the Lender's capital as a consequence of its obligations hereunder or the transactions contemplated hereby to a level below that which the Lender could have achieved but for such adoption, implementation, change, or compliance (taking into consideration the Lender's policies with respect to capital adequacy) by an amount deemed by the Lender to be material, then from time to time, within ten Business Days after demand by the Lender, the Borrower shall pay to the Lender (or its parent) such additional amount or amounts as will compensate the Lender for such reduction. The Lender will give the Borrower notice of any event occurring after the date of this Agreement which will entitle the Lender to compensation pursuant to this Section promptly after it obtains knowledge thereof and determines to request such compensation, and no claim by the Lender for compensation under this Section shall in any case be made until such time as the Lender determines that it is legally required to comply with such law, rule, regulations or change thereto giving rise to such claim. A certificate of the Lender claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive, provided that the determination thereof is made on a reasonable basis. In determining such amount or amounts, the Lender may use any reasonable averaging and attribution methods.

 

(g) Increased Costs.

 

(i)            Increased Costs Generally. If any Change in Law shall:

 

(A)    impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Lender (except any reserve requirement contemplated by this Article II);

 

and the result of any of the foregoing shall be to increase the cost to the Lender, or to reduce the amount of any sum received or receivable by the Lender, (whether of principal, interest or any other amount) then, upon request of the Lender, the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered, but only to the extent Lender is assessing and collecting such additional amounts from other borrowers under substantially all other similar credit facilities.

 

(ii)            Capital Requirements. If the Lender determines that any Change in Law affecting the Lender or any Principal Office of the Lender or the Lender's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on the Lender's capital or on the capital of the Lender's holding company, if any, as a consequence of this Agreement, the commitments of the Lender or the. Loans made by the Lender to a level below that which the Lender or the Lender's holding company could have achieved but for such change in law (taking into consideration the Lender's policies and the

 

 

  

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policies of the Lender's holding company with respect to capital adequacy), then from time to time the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender or the Lender's holding company for any such reduction suffered.

 

(iii)            Certificates for Reimbursement. A certificate of the Lender setting forth, in detail, with explanations for the additional amounts, the amount or amounts necessary to compensate the Lender or its holding company, as the case may be, as specified in this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay the Lender the amount shown as due on any such certificate within 10 days after receipt thereof

 

(iv)            Delay in Requests. Failure or delay on the part of the Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of the Lender's right to demand such compensation, provided that the Borrower shall not be required to compensate the Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the change in law giving rise to such increased costs or reductions and of the Lender's intention to claim compensation therefor (except that, if the change in law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

      (h) Survival. All of the Borrower's obligations under Sections 2.2 and 2.3 hereof shall survive termination of the commitments under this Agreement and repayment of all other Obligations hereunder.

 

Section 2.4 Use of Proceeds. The proceeds of the Revolving Credit Advances shall be used by the Borrower for working capital and general corporate purposes in the ordinary course of business. The proceeds of the Term Advances shall be used by Borrower to finance the purchase of equipment and for the construction of leasehold improvements at each Location.

 

Section 2.5 Evidence of Debt. The Loans made by the Lender shall be evidenced by one or more accounts or records maintained by the Lender in the ordinary course of business. The accounts or records maintained by the Lender shall be presumed to be correct absent manifest error of the amount of the Loans made by the Lender to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.

 

ARTICLE III

 

Payments and Fees

 

Section 3.1 Method of Payment. All payments of principal, interest, and other amounts to be made by the Borrower under this Agreement and the other Loan Documents shall be made to the Lender at the Principal Office in Dollars and immediately available funds, without setoff, deduction, or counterclaim, and free and clear of all taxes at the time and in the manner provided in the Notes.

 

 

  

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Section 3.2Prepayments.

 

      (a)Voluntary Prepayments.

 

(i)            Prepayments of Revolving Credit Advances. The Borrower may, upon notice to the Lender, at any time or from time to time voluntarily prepay any Revolving Credit Advance in whole or in part without premium or penalty; provided that, and notwithstanding anything to the contrary contained in this Agreement, such notice must be received by the Lender not later than 2.00 p.m. on the date of prepayment of a Loan. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

 

(ii)            Prepayments of Guidance Loans. The Borrower may, upon notice to the Lender, at any time or from time to time voluntarily prepay any Guidance Loan in whole or in part; provided that, and notwithstanding anything to the contrary contained in this Agreement, such notice must be received by the Lender not later than 2.00 p.m. on the date of prepayment of a Loan. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Prepayments of any Guidance Loan bearing interest based on the Base Rate may be made without premium of penalty. Prepayments of any Guidance Loans bearing interest at a fixed rate pursuant to Section 2.3(b) shall include a prepayment premium (the "Prepayment Premium") as follows:

 

(A) The Prepayment Premium with respect to each scheduled payment of principal of any Guidance Loan being prepaid shall be in an amount equal to the present value, applying the Discount Rate over the number of Interest Payment Dates until the scheduled principal payment date, of:

 

(1) (a) the stated interest rate on the Guidance Term Note, minus (b) the sum of (i) the interest rate on current issue United States Treasury obligations with a maturity date equal to the number of years (or fraction thereof) between the prepayment date and the scheduled principal payment date; such rate, where necessary, will be determined by interpolating between the current issue United States Treasury obligations, and (ii) a spread of 2.00%, multiplied by (c) the amount of the scheduled principal payment, or portion thereof being paid, divided by (d) 12.

 

(2) For purposes of calculating the Prepayment Premium, "Discount Rate" means a rate equal to (a) the sum of (i) the interest rate on

 

 

  

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current issue United States Treasury obligations with a maturity date equal to the number of years (or fraction thereof) between the prepayment date and the scheduled principal payment date; such rate, where necessary, will be determined by interpolating between the current issue United States Treasury obligations, plus (ii) a spread to be determined at the time of prepayment, which spread will be based upon the LIBOR swap market, divided by (b) 12.

 

(B)      If the Prepayment Premium so calculated is a positive amount, then Borrower shall pay such amount to the Lender. If the calculation results in a negative amount, then no Prepayment Premium is due from the Borrower.

 

(iii)            Prepayments of Existing Term Loans. The Borrower may, upon notice to the Lender, at any time or from time to time voluntarily prepay any Existing Term Loan in whole or in part; provided that, and notwithstanding anything to the contrary contained in this Agreement, such notice must be received by the Lender not later than 2:00 p.m. on the date of prepayment of a Loan. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

 

(b)Mandatory Prepayments.

 

(i) The Borrower must pay on DEMAND the amount by which at any time the aggregate amount of all Revolving Credit Advances plus the outstanding LC Exposure at any time outstanding exceeds the lesser of (i) the Revolving Credit Commitment and (ii) the Borrowing Base.

 

(ii) If, at any time after the Closing Date, the Borrower or the Lender receives any net insurance proceeds or net condemnation proceeds from any Collateral, the Borrower shall promptly prepay the Advances by an amount equal to such net insurance proceeds or net condemnation proceeds. Any such mandatory prepayments shall be applied first to the Existing Term Loans pro rata based on the principal amount outstanding and applied in inverse order of maturity, then to the Guidance Loans pro rata based on the principal amount outstanding and applied in inverse order of maturity, then to LC Disbursements for which the Lender has not been reimbursed by the Borrower, then to the Revolving Credit Advances, and then to the Lender as cash collateral up to an amount equal to the aggregate undrawn amount of all outstanding Letters of Credit. Notwithstanding the foregoing, the Borrower shall not be required to make a prepayment pursuant to this clause (ii) with respect to any such casualty or condemnation event if the Borrower may use such proceeds to repair, restore or replace such Collateral so long as the Borrower shall have provided to the Lender within 60 days after such casualty or condemnation event a plan to restore, repair or replace such Collateral to its value immediately preceding such condemnation or casualty event, which plan is reasonably satisfactory to the Lender. Any prepayments hereunder shall be accompanied with accrued and unpaid interest on the amount prepaid to the date of prepayment.

 

 

  

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(iii) Upon the disposition of any assets (other than dispositions of equity interests or dispositions of assets permitted under Sections 8.6 and 8.8), the Borrower shall promptly prepay the Advances by an amount equal to the net cash proceeds of such sale, transfer or other disposition. Any such mandatory prepayments shall be applied first to the Existing Term Loans pro rata based on the principal amount outstanding and applied in inverse order of maturity, then to the Guidance Loans pro rata based on the principal amount outstanding and applied in inverse order of maturity, then to LC Disbursements for which the Lender has not been reimbursed by the Borrower, then to the Revolving Credit Advances, and then to the Lender as cash collateral up to an amount equal to the aggregate undravvn amount of all outstanding Letters of Credit. Any prepayments hereunder shall be accompanied with accrued and unpaid interest on the amount prepaid to the date of prepayment.

 

Section 3.3 Taxes.

 

(a) Any and all payments by the Borrower hereunder or under the Notes shall be made, in accordance with Section 3.1, free and clear of and without deduction for any and all present or future Taxes, excluding, in the case of Lender, taxes imposed on its income, and franchise taxes imposed on Lender, by the jurisdiction under the laws of which Lender is organized or is or should be qualified to do business or any political subdivision thereof and Taxes imposed on its income by the jurisdiction of Lender's lending office or any political subdivision thereof. If Borrower shall be required by law to deduct any Taxes (i.e., Taxes for which Borrower is responsible under the preceding sentence) from or in respect of any sum payable hereunder or under the Note to Lender, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.3) Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

 

(b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the Loan Documents from the execution, delivery, or registration of, or otherwise with respect to, this Agreement or the other Loan Documents (hereinafter referred to as "Other Taxes").

 

(c) Borrower will indemnify Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.3) for which Borrower is liable pursuant to this Section 3.3 paid by Lender (as the case may be) or any liability (including penalties and interest) arising therefrom or with respect thereto. Upon written notice from Lender of a statement setting forth the amounts to be owed hereunder, this

 

 

  

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indemnification shall be made 30 days from the date Lender makes written demand therefor. This indemnity shall survive the termination of this Agreement.

 

(d) Within 30 days after the date of any payment of Taxes, Borrower will furnish to Lender, upon Lender's request, the original or a certified copy of a receipt evidencing payment thereof.

 

(e) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 3.3 shall survive the payment in full of the Obligations.

 

Section 3.4 Unused Fees. An unused fee ("Unused Fee") shall be due and payable in arrears on the last day of each fiscal quarter and on the date on which the Revolving Credit Commitment terminates. The Unused Fee shall be equal to 0.25% times the actual average daily amount by which the Revolving Credit Commitment exceeds the total outstanding amount of Revolving Credit Advances plus the outstanding LC Exposure for the applicable period, prorated for the number of days during such quarter divided by 365 days.

ARTICLE IV

 

Security

 

Section 4.1Collateral. To secure full and complete payment and performance of the Obligations, the Borrower and each of its Subsidiaries shall execute and deliver or cause to be executed and delivered all of the Security Documents required by the Lender covering Collateral described in such Security Documents (which, together with any other collateral described in each Security Agreement, and any other Property which may now or hereafter secure the Obligations or any part thereof, is sometimes herein called the "Collateral"). The Borrower and each of its Subsidiaries shall execute, or cause to be executed and authorize the execution and/or filing thereof by the Lender, such further documents and instruments, including without limitation, Uniform Commercial Code financing statements, as the Lender deems reasonably necessary or desirable to create, evidence, preserve, and perfect its Liens in the Collateral.

 

Section 4.2Setoff. If an Event of Default shall have occurred and be continuing, the Lender shall have the right to set off and apply against the Obligations in such manner as the Lender may determine, at any time and without notice to the Borrower or any other Loan Party, any and all deposits (general or special, time or demand, provisional or final) or other sums at any time credited by or owing from the Lender to the Borrower whether or not the Obligations are then due. As further security for the Obligations, the Borrower hereby grants to the Lender a Lien in all money, instruments, and other Property of the Borrower now or hereafter held by the Lender, including, without limitation, Property held in safekeeping. In addition to the Lender's right of setoff and as further security for the Obligations, the Borrower hereby grants to the Lender a Lien in all deposits (general or special, time or demand, provisional or final) and other accounts of the Borrower now or hereafter on deposit with or held by the Lender and all other sums at any time credited by or owing from the Lender to the Borrower. The rights and remedies of the Lender hereunder are in addition to other rights and remedies (including, without limitation, other rights of setoff) which the Lender may have.

 

 

  

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ARTICLE V

 

Conditions Precedent

 

Section 5.1 Initial Extension of Credit. The obligation of the Lender to make the initial Advance under any Note or issue the initial Letter of Credit is subject to the condition precedent that the Lender shall have received on or before the day of such Advance or issuance of such Letter of Credit all of the following, each dated (unless otherwise indicated) the date hereof, in form and substance satisfactory to the Lender:

 

(a)            Resolutions. Resolutions of the Board of Directors (or other governing body) of each Loan Party certified by the Secretary or an Assistant Secretary (or other custodian of records) of such Loan Party, which authorize the execution, delivery, and performance by such Loan Party, of this Agreement and the other Loan Documents to which such Loan Party is or is to be a party;

 

(b)            Incumbency Certificate. A certificate of incumbency certified by an authorized officer or representative certifying the names of the individuals or other Persons authorized to sign this Agreement and each of the other Loan Documents to which each Loan Party is or is to be a party (including the certificates contemplated herein) on behalf of such Person together with specimen signatures of such Persons;

 

(c)            Constituent Documents. The Constituent Documents for each Loan Party as of a date acceptable to the Lender;

 

(d)            Governmental Certificates. Certificates of the appropriate government officials of the state of incorporation or organization of each Loan Party and each jurisdiction in which each Loan Party is required to do business, as to the existence and good standing of such Loan Party, each dated within thirty (30) days prior to the Closing Date;

 

(e)            Notes. The Notes executed by the Borrower;

 

(f)            Security Documents. The Security Documents executed by the Borrower and other Obligated Parties, including but not limited to delivery of all possessory collateral, including without limitation, any pledged notes, pledged membership interests or pledged stock, together with the undated stock powers endorsed in blank, as applicable;

 

(g)            Insurance Matters.    Copies of insurance certificates describing all insurance policies required by Section 7.5, together with loss payee, additional insured, and lender endorsements in favor of the Lender with respect to all insurance policies covering the Collateral and the Loan Parties;

 

(h)            UCC Searches. The results of Uniform Commercial Code searches showing all financing statements and other documents or instruments on file against each Loan Party in the office of the Secretary of State of such Loan Party's state of

 

 

  

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organization, such searches to be as of a date no more than 30 days prior to the date of the initial Advance;

 

(i)            Opinion of Counsel. An opinion of counsel to the Loan Parties, in form and substance satisfactory to the Lender;

 

(j)            Depository Relationship. Evidence that the Borrower and each of its Subsidiaries shall have completed the process of establishing their primary depository relationship with Lender as set forth in Section 7.12 hereof;

 

(k)            Compliance With Laws. Evidence satisfactory to Lender that each Loan Party is in compliance with all laws and regulations issued by any Governmental Authority, including, without limitation, regulations by or under US Department of Occupational Safety and Health Organization, the Environmental Protection Agency, ERISA and the Financial Institutions Reform Recovery and Enforcement Act;

 

(1) Payment of Fees. The Lender shall have received payment of the fees required to be paid pursuant to the Fee Letter and any other fees required to be paid on or before the Closing Date; and

 

(m) Additional Documentation. The Lender shall have received such additional approvals, opinions, or documents as the Lender or its legal counsel may reasonably request.

 

Section 5.2 All Extensions of Credit. The obligation of the Lender to make any

Advance (including the initial Advance) or issue any Letter of Credit (including the initial Letter of Credit) is subject to the following additional conditions precedent:

 

(a)            Request for Advance or Letter of Credit. The Lender shall have received, in accordance with this Agreement, an Advance Request Form pursuant to the Lender's requirements dated the date of such Advance and executed by an authorized officer of the Borrower or an LC Request pursuant to the Lender's requirements dated the date of the issuance of such Letter of Credit and executed by an authorized officer of the Borrower;

 

(b)            No Default, Material Adverse Effect. No Default or Material Adverse Effect shall have occurred and be continuing, or would result from or after giving effect to such Advance or such Letter of Credit;

 

(c)            Representations and Warranties. All of the representations and warranties contained in Article VI hereof and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance or such Letter of Credit with the same force and effect as if such representations and warranties had been made on and as of such date, except to the extent such representations and warranties speak to a specific date;

 

(d)            Pie Five EBITDA. For any Advance the proceeds of which will be used for any Pie FiveTM Location, Pie Five Restaurants, Inc. must have positive Pie Five

 

 

  

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EBITDA for the three months most recently ended, and the Lender shall have received certification thereof executed by an authorized officer of the Borrower;

 

(e)            Special Condition for all Term Advances. With respect to each Term Advance, the Funded Debt Ratio shall not exceed 1.00 to 1.00 measured as of the end of the fiscal quarter most recently ended, and the Lender shall have received certification thereof executed by an authorized officer of the Borrower; and

 

(f)            Additional Documentation. The Lender shall have received such additional approvals, opinions, or documents as the Lender or its legal counsel may reasonably request.

 

ARTICLE VI

 

Representations and Warranties

 

To induce the Lender to enter into this Agreement, the Borrower represents and warrants to the Lender that:

 

Section 6.1 Organizational Existence. Each Loan Party (a) is a corporation, limited partnership and/or limited liability company duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite power and authority to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to so qualify would have a Material Adverse Effect. Each Loan Party has the power and authority to execute, deliver, and perform its obligations under this Agreement and the other Loan Documents to which it is or may become a party.

 

Section 6.2 Financial Statements; Etc. The Borrower has delivered to the Lender consolidated balance sheets and related statements of income of Borrower as at and for the fiscal year ended June 26, 2011. Such financial statements are true and correct, have been prepared in accordance with GAAP, and fairly present the financial condition of the Borrower as of the respective dates indicated therein and the results of operations for the respective periods indicated therein. Neither the Borrower nor any of its Subsidiaries have any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments, or unrealized or anticipated losses from any unfavorable commitments except as referred to or reflected in such financial statements or arising in the ordinary course of business. There has been no Material Adverse Effect on the Borrower or any of its Subsidiaries since the effective date of the most recent financial statements referred to in this Section. All projections delivered by the Borrower to the Lender have been prepared in good faith, with care and diligence and use assumptions that are reasonable under the circumstances at the time such projections were prepared and delivered to the Lender, and all such assumptions are disclosed in the projections.

 

Section 6.3 Action; No Breach. The execution, delivery, and performance by theBorrower and any other Loan Party of this Agreement and the other Loan Documents to which the Borrower or such other Loan Party is or may become a party and compliance with the terms

 

 

  

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and provisions hereof and thereof have been duly authorized by all requisite action on the part of the Borrower or such Loan Party and do not and will not (a) violate or conflict with, or result in a breach of, or require any consent under (i) Constituent Documents of the Borrower or any of its Subsidiaries, (ii) any applicable law, rule, or regulation or any order, writ, injunction, or decree of any Governmental Authority or arbitrator where the failure to comply is reasonably likely to result in a Material Adverse Effect, or (iii) any material agreement or instrument to which the Borrower or any of its Subsidiaries is a party or by which any of them or any of their Property is bound or subject, or (b) result in the creation or imposition of any Lien upon any of the revenues or assets of the Borrower or any Subsidiary, other than Permitted Liens.

 

Section 6.4Operation of Business. The Borrower and each of its Subsidiaries possess

all licenses, permits, franchises, patents, copyrights, trademarks, and trade names, or rights thereto, necessary to conduct their respective businesses substantially as now conducted and as presently proposed to be conducted, except where the failure to so possess would not have a Material Adverse Effect, and the Borrower and each of its Subsidiaries are not in violation of any valid rights of others with respect to any of the foregoing.

 

Section 6.5 Litigation and Judgments. There is no action, suit, investigation, or

proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of the Borrower, threatened against or affecting Borrower or any of its Subsidiaries, that would, if adversely determined, have a Material Adverse Effect on Borrower or its Subsidiaries. Except as set forth on Schedule 6.5, there are no outstanding judgments against Borrower or any Subsidiary of the Borrower.

 

Section 6.6 Rights in Property; Liens. The Borrower and each of its Subsidiaries have good title to or valid leasehold interests in their respective Property, including the Property reflected in the financial statements described in Section 6.2, and none of the Property of Borrower or any Subsidiary is subject to any Lien, except Permitted Liens.

 

Section 6.7  Enforceability. This Agreement constitutes, and the other Loan Documents to which Borrower or any other Loan Party is party, when delivered, shall constitute legal, valid, and binding obligations of Borrower and such Loan Party, enforceable against Borrower and such Loan Party in accordance with their respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditors' rights.

 

Section 6.8 Approvals. No authorization, approval, or consent of, and no filing or registration with, any Governmental Authority or third party is or will be necessary for the execution, delivery, or performance by the Borrower or any other Loan Party of this Agreement and the other Loan Documents to which Borrower or such Loan Party is or may become a party or the validity or enforceability thereof.

 

Section 6.9 Debt. The Borrower and its Subsidiaries have no Debt, except as permitted in Section 8.1.

 

Section 6.10 Taxes. Except as set forth on Schedule 6.10, the Borrower and each Subsidiary have filed all tax returns (federal, state, and local) required to be filed, including all

 

 

  

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income, franchise, employment, Property, and sales tax returns, and have paid all of their respective liabilities for taxes, assessments, governmental charges, and other levies that are due and payable. The Borrower knows of no pending investigation of Borrower or any Subsidiary by any taxing authority or of any pending but unassessed tax liability of Borrower or any Subsidiary except as set forth on Schedule 6.10.

 

Section 6.11 Use of Proceeds; Margin Securities. Neither the Borrower nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock.

 

Section 6.12 ERISA. Borrower and each Subsidiary are in compliance in all material respects with all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and is continuing with respect to any Plan. No notice of intent to terminate a Plan has been filed, nor has any Plan been terminated. No circumstances exist which constitute grounds entitling the PBGC to institute proceedings to terminate, or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such proceedings. Neither the Borrower nor any ERISA Affiliate has completely or partially withdrawn from a Multiemployer Plan. Borrower and each ERISA Affiliate have met their minimum funding requirements under ERISA with respect to all of their Plans, and the present value of all vested benefits under each Plan do not exceed the fair market value of all Plan assets allocable to such benefits, as determined on the most recent valuation date of the Plan and in accordance with ERISA. Neither Borrower nor any ERISA Affiliate has incurred any liability to the PBGC under ERISA.

 

Section 6.13 Disclosure. No statement, information, report, representation, or warranty made by Borrower in this Agreement or in any other Loan Document or furnished to the Lender in connection with this Agreement or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not materially misleading. There is no fact known to Borrower which has a Material Adverse Effect, or which might in the future have a Material Adverse Effect, on the Borrower or any Subsidiary that has not been disclosed in writing to the Lender.

 

Section 6.14 Subsidiaries, Ventures, Etc. The Borrower has no Subsidiaries or joint ventures or partnerships other than those listed on Schedule 6.14. Schedule 6.14 sets forth the jurisdiction of incorporation or organization of each such Person and the percentage of the Borrower's ownership interest in such Person. All of the outstanding capital stock or other ownership interests of each Person described in Schedule 6.14 has been validly issued, is fully paid, and is nonassessable.

 

Section 6.15 Agreements. Neither Borrower nor any Subsidiary is a party to any indenture, loan, or credit agreement (other than this Agreement), or to any lease or other agreement or instrument, or subject to any charter or corporate or other organizational restriction which could have a Material Adverse Effect on Borrower or any Subsidiary. Neither Borrower nor any Subsidiary is in default in any respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any agreement or instrument material to its business to which it is a party.

 

 

  

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Section 6.16 Compliance with Laws. Neither the Borrower nor any Subsidiary is in violation in any material respect of any law, rule, regulation, order, or decree of any Governmental Authority or arbitrator.

 

Section 6.17 Investment Company Act; Other Regulations. Neither the Borrower nor any Subsidiary is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, the Energy Policy Act of 2005, the Federal Power Act, the Interstate Commerce Act, or any state public utilities code.

 

Section 6.18 Financial Solvency. Both before and after giving effect to all of the transactions contemplated herein, neither the Borrower nor any of its Subsidiaries (a) was or will be "insolvent", as that term is used and defined in Section 101(32) of the United States Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer Act; (b) has unreasonably small capital or is engaged or about to engage in a business or a transaction for which any remaining assets of the Borrower or such Affiliate are unreasonably small; (c) by executing, delivering or performing its obligations under the Loan Documents or other documents to which it is a party or by taking any action with respect thereto, intends to, nor believes that it will, incur debts beyond its ability to pay them as they mature; (d) by executing, delivering or performing its obligations under the Loan Documents or other documents to which it is a party or by taking any action with respect thereto, intends to hinder, delay or defraud either its present or future creditors; and (e) at this time contemplates filing a petition in bankruptcy or for an arrangement or reorganization or similar proceeding under any law of any jurisdiction, nor, to the best knowledge of the Borrower, is the subject of any actual, pending or threatened bankruptcy, insolvency or similar proceedings under any law of any jurisdiction.

 

Section 6.19 Environmental Matters.

 

(a) The Borrower, each Subsidiary, and all of their respective Property, assets, and operations, are in full compliance with all Environmental Laws. The Borrower is not aware of, nor has the Borrower received notice of, any past, present, or future conditions, events, activities, practices, or incidents which may interfere with or prevent the compliance or continued compliance of the Borrower and the Subsidiaries with all Environmental Laws;

 

(b) The Borrower and each Subsidiary have obtained all permits, licenses, and authorizations that are required under applicable Environmental Laws, and all such permits are in good standing and the Borrower and its Subsidiaries are in compliance with all of the terms and conditions of such permits;

 

(c) No Hazardous Materials exist on, about, or within or have been used, generated, stored, transported, disposed of on, or Released from any of the Property or assets of the Borrower or any Subsidiary other than in compliance with Environmental Laws. The use which the Borrower and the Subsidiaries make and intend to make of their respective Property and assets will not result in the use, generation, storage,

 

 

  

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transportation, accumulation, disposal, or Release of any Hazardous Material on, in, or from any of their Property or assets, other than in compliance with Environmental Laws;

 

(d) Neither the Borrower nor any of its Subsidiaries nor any of their respective currently or previously owned or leased Property or operations is subject to any outstanding or threatened order from or agreement with any Governmental Authority or other Person or subject to any judicial or docketed administrative proceeding with respect to (i) failure to comply with Environmental Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities arising from a Release or threatened Release;

 

(e) There are no conditions or circumstances associated with the currently or previously owned or leased Property or operations of Borrower or any of its Subsidiaries that could reasonably be expected to give rise to any Environmental Liabilities;

 

(f) Neither the Borrower nor any of its Subsidiaries is a treatment, storage, or disposal facility requiring a permit under the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., regulations thereunder or any comparable provision of state law. The Borrower and its Subsidiaries are in compliance with all applicable financial responsibility requirements of all Environmental Laws;

 

(g) Neither Borrower nor any of its Subsidiaries has filed or failed to file any notice required under applicable Environmental Law reporting a Release; and

 

(h) No Lien arising under any Environmental Law has attached to any Property or revenues of the Borrower or its Subsidiaries.

 

Section 6.20 Intellectual Property. Each Loan Party owns, or is licensed to use, all intellectual property necessary to conduct its business as currently conducted except for such intellectual property the failure of which to own or license could not reasonably be expected to have a Material Adverse Effect. Each Loan Party will maintain the patenting and registration of all intellectual property with the United States Patent and Trademark Office, the United States Copyright Office, or other appropriate Governmental Authority and will, promptly patent or register, as the case may be, all new intellectual property and notify the Lender in writing ten Business Days prior to filing any such new patent or registration.

 

ARTICLE VII

 

Affirmative Covenants

 

The Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding or the Lender has any Revolving Credit Commitment or Guidance Loan Commitment hereunder, the Borrower will perform and observe the following positive covenants, unless the Lender shall otherwise consent in writing:

 

Section 7.1Reporting Requirements. The Borrower will furnish to the Lender:

 

(a) Annual Financial Statements. As soon as available, and in any event within 120 days after the end of each fiscal year of the Borrower, beginning with the

 

 

  

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fiscal year ending June 24, 2012, a copy of the annual report compiled by independent certified public accountants of the Borrower and its Subsidiaries for such fiscal year containing, on a consolidated basis, balance sheets and statements of income, retained earnings, and cash flow as at the end of such fiscal year and for the annual period then ended, in each case setting forth in comparative form the figures for the preceding fiscal year, all in reasonable detail certified by the chief financial officer, treasurer or comparable officer of Borrower to have been prepared in accordance with GAAP and to fairly and accurately present (subject to year-end audit adjustments) the financial condition and results of operations of the Borrower and its Subsidiaries, on a consolidated basis, at the date and for the periods indicated therein;

 

(b)            Monthly Financial Statements. As soon as available, and in any event within 30 days after the end of each calendar month, a copy of an unaudited financial report of the Borrower and its Subsidiaries as of the end of such calendar month and for the portion of the fiscal year then ended, containing, on a consolidated basis, balance sheets and statements of income, and retained earnings, all in reasonable detail certified by the chief financial officer, treasurer or comparable officer of Borrower to have been prepared in accordance with GAAP and to fairly and accurately present (subject to year-end audit adjustments) the financial condition and results of operations of the Borrower and its Subsidiaries, on a consolidated basis, at the date and for the periods indicated therein;

 

(c)            Compliance Certificate. Concurrently with the delivery of the financial statements referred to in Section 7.1(a) and 7.1(b), a duly completed Compliance Certificate;

 

(d)            Borrowing Base Report. As soon as available, and in any event within 30 days after the end of each calendar month, a duly completed Borrowing Base Report and, for each Location, a complete list of the value of all inventory held at such Location;

 

(e)            Tax Returns. As soon as available, and in any event within 15 days after the same have been filed, copies of the federal income tax returns filed by the Borrower and its Subsidiaries;

 

(f)            Notice of Litigation. Promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority or arbitrator affecting the Borrower or any Subsidiary which, if determined adversely to the Borrower or such Subsidiary, could have a Material Adverse Effect on the Borrower or such Subsidiary;

 

(g)            Notice of Default. As soon as possible and in any event within ten days after the occurrence of each Default, a written notice setting forth the details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;

 

(h)            ERISA Reports. Promptly after the filing or receipt thereof, copies of all reports, including annual reports, and notices which the Borrower or any Subsidiary files

 

 

 

  

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with or receives from the PBGC or the U.S. Department of Labor under ERISA; and as soon as possible and in any event within five days after Borrower or any Subsidiary knows or has reason to know that any Reportable Event or Prohibited Transaction has occurred with respect to any Plan or that the PBGC or Borrower or any Subsidiary has instituted or will institute proceedings under Title IV of ERISA to terminate any Plan, a certificate of the chief financial officer or comparable officer of the Borrower setting forth the details as to such Reportable Event or Prohibited Transaction or Plan termination and the action that Borrower proposes to take with respect thereto;

 

(i)            Reports to Other Creditors. Promptly after the furnishing thereof, copies of any statement or report furnished to any other party pursuant to the terms of any indenture, loan, or credit or similar agreement and not otherwise required to be furnished to the Lender pursuant to any other clause of this Section;

 

(j)            Notice of Material Adverse Effect. As soon as possible and in any event within five days after the occurrence thereof, written notice of any matter that could have a Material Adverse Effect on the Borrower or any Subsidiary;

 

(k)            SEC Reports. Promptly after filing or receipt thereof, copies of each annual report, proxy or financial statement or other report or communication sent to the shareholders or stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Lender pursuant hereto;

 

(1) Annual Budget. As soon as practicable and in any event within 30 days after approval thereof by the Borrower's Board of Directors, a budget for the Borrower and its Subsidiaries for the ensuing four fiscal quarters, all in reasonable detail certified by the chief financial officer, treasurer or comparable officer of the Borrower that, to the best of such officer's knowledge, such projections are good faith estimates (utilizing reasonable assumptions) of the financial condition and operations of the Borrower and its Subsidiaries for such period; and

 

(m) General Information. Promptly, such other information concerning the Borrower, any Subsidiary or any other Obligated Party as the Lender may from time to time reasonably request.

 

Section 7.2 Maintenance of Existence; Conduct of Business. The Borrower will preserve and maintain, and will cause each Subsidiary to preserve and maintain, its existence (except for mergers and consolidations permitted under Section 8.3) and all of its leases, privileges, licenses, permits, franchises, qualifications, and rights that are necessary or desirable in the ordinary conduct of its business. The Borrower will conduct, and will cause each Subsidiary to conduct, its business in an orderly and efficient manner in accordance with good business practices.

 

 

  

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Section 7.3 Maintenance of Property. The Borrower will maintain, keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve, all of its Property (tangible and intangible) necessary or useful in the proper conduct of its business in good working order and condition, other than damaged or obsolete inventory and equipment.

 

Section 7.4 Taxes and Claims. The Borrower will pay or discharge, and will cause each Subsidiary to pay or discharge, at or before maturity or before becoming delinquent (a) all taxes, levies, assessments, and governmental charges imposed on it or its income or profits or any of its Property, and (b) all lawful claims for labor, material, and supplies, which, if unpaid, might become a Lien upon any of its Property; provided, however, that neither the Borrower nor any Subsidiary shall be required to pay or discharge any tax, levy, assessment, or governmental charge which is being contested in good faith by appropriate proceedings diligently pursued, and for which adequate reserves have been established.

 

Section 7.5 Insurance. The Borrower will maintain, and will cause each of the Subsidiaries to maintain, insurance with financially sound and reputable insurance companies in such amounts and covering such risks as is usually carried by businesses engaged in similar businesses and owning similar Property in the same general areas in which the Borrower and its Subsidiaries operate, provided that in any event the Borrower will maintain and cause each Subsidiary to maintain workmen's compensation insurance, Property insurance and comprehensive general liability insurance reasonably satisfactory to the Lender and naming the Lender as additional insured. Each insurance policy covering the Collateral shall name the Lender as loss payee and shall provide that such policy will not be cancelled or reduced without 30 days prior written notice to the Lender.

 

Section 7.6 Inspection Rights and Field Audits. At any reasonable time and from time to time, upon reasonable notice, the Borrower will permit, and will cause each Subsidiary to permit, representatives of the Lender to examine the Collateral and conduct Collateral audits, to examine, copy, and make extracts from its books and records, to visit and inspect its Property, and to discuss its business, operations, and financial condition with its officers, employees, and independent certified public accountants. In addition, at the request of Lender, the Borrower will permit the Lender to conduct an annual field audit at the Borrower's expense.

 

Section 7.7 Keeping Books and Records. The Borrower will maintain, and will cause each Subsidiary to maintain, proper books of record and account in which full, true, and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its business and activities.

 

Section 7.8 Compliance with Laws. The Borrower will comply, and will cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations, orders, and decrees of any Governmental Authority or arbitrator.

 

Section 7.9 Compliance with Agreements. The Borrower will comply, and will cause each Subsidiary to comply, with all agreements, contracts, and instruments binding on it or affecting its Property or business, except where the failure to comply would not have a Material Adverse Effect.

 

 

  

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Section 7.10 Further Assurances. The Borrower will, and will cause each Subsidiary to, execute and deliver such further agreements and instruments and take such further action as may be requested by the Lender to carry out the provisions and purposes of this Agreement and the other Loan Documents and to create, preserve, and perfect the Liens of the Lender in the Collateral.

 

Section 7.11 ERISA. The Borrower will comply, and will cause each Subsidiary to comply, with all minimum funding requirements, and all other material requirements, of ERISA, if applicable, so as not to give rise to any liability thereunder.

 

Section 7.12 Depository Relationship. To induce the Lender to establish the interest rates provided in the Notes, the Borrower will, and will cause each Subsidiary to, use the Lender as its principal depository bank and the Borrower covenants and agrees to maintain, and will cause each of its Subsidiaries to maintain, the Lender as its principal depository bank, including for the maintenance of business, cash management, operating and administrative deposit accounts for the term hereof

 

Section 7.13 Landlord and Distributor Waivers. As soon as available, and in any event within 60 days after the Closing Date, the Loan Parties will obtain waivers in form and substance satisfactory to the Lender from each landlord for each location of leased property and from each distributor for each distribution location.

 

ARTICLE VIII

 

Negative Covenants

 

The Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding or the Lender has any Revolving Credit Commitment or Guidance Loan Commitment hereunder, the Borrower will perform and observe the following negative covenants, unless the Lender shall otherwise consent in writing:

 

Section 8.1Debt. The Borrower will not incur, create, assume, or permit to exist, and will not permit any Subsidiary to incur, create, assume, or permit to exist, any Debt, except:

 

(a) Debt to the Lender;

 

(b) Existing Debt described on Schedule 8.1 hereto;

 

(c) Debt incurred for leases of equipment in the ordinary course of business, purchase money Debt incurred in the ordinary course of business and additional Debt not otherwise permitted hereunder not to exceed an aggregate combined amount at any time outstanding of $250,000; and

 

(d) Debt owed by the Borrower to a Subsidiary or owed by any Subsidiary to another Subsidiary or the Borrower.

 

 

  

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Section 8.2 Limitation on Liens. The Borrower will not incur, create, assume, or

permit to exist, and will not permit any Subsidiary to incur, create, assume, or permit to exist, any Lien upon any of its Property, assets, or revenues, whether now owned or hereafter acquired, except (collectively referred to as "Permitted Liens"):

 

(a) Liens disclosed on Schedule 8.2 hereto;

 

(b) Liens in favor of the Lender;

 

(c) Encumbrances consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of the Borrower or any Subsidiary to use such assets in their respective businesses, and none of which is violated in any material respect by existing or proposed structures or land use;

 

(d) Liens for taxes, assessments, or other governmental charges which are not delinquent or which are being contested in good faith and for which adequate reserves have been established;

 

(e) Liens of mechanics, materialmen, warehousemen, carriers, or other similar statutory Liens securing obligations that are not yet due and are incurred in the ordinary course of business;

 

(f) Liens of landlords of real property leased by Borrower where the value of Collateral located on such real property has an aggregate value less than $250,000 and any Locations which are financed with a Guidance Loan;

 

(g) Liens resulting from good faith deposits to secure payments of workmen's compensation or other social security programs or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, or contracts (other than for payment of Debt), or leases made in the ordinary course of business; and

 

(h) Purchase money Liens on specific Property to secure Debt used to acquire such Property to the extent permitted in Section 8.1(c).

 

Section 8.3Mergers, Etc. Without prior written consent of the Lender, Borrower will not, and will not permit any Subsidiary to, become a party to a merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets of any Person, or any shares or other evidence of beneficial ownership of any Person, or wind-up, dissolve, or liquidate except (a) that Borrower may merge with any of its Subsidiaries so long as the Borrower is the survivor of such merger, (b) Subsidiaries may be merged with and into each other and (c) the Permitted Restructure.

 

Section 8.4 Restricted Payments. The Borrower will not declare or pay any dividends or make any other payment or distribution (in cash, Property, or obligations) on account of its equity interests, or redeem, purchase, retire, or otherwise acquire any of its equity interests, or permit any of its Subsidiaries to purchase or otherwise acquire any equity interest of the

 

 

  

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Borrower or another Subsidiary, or set apart any money for a sinking or other analogous fund for any dividend or other distribution on its equity interests or for any redemption, purchase, retirement, or other acquisition of any of its equity interests except that (a) the Borrower may redeem, purchase, retire or otherwise acquire any of its equity interests so long as no Default or Event of Default exists at the time thereof or would result therefrom and (b) the Permitted Restructure.

 

Section 8.5 Loans and Investments. The Borrower will not make, and will not permit any Subsidiary to make, any advance, loan, extension of credit, or capital contribution to or investment in, or purchase, or permit any Subsidiary to purchase, any stock, bonds, notes, debentures, or other securities of, any Person, except:

 

(a) Readily marketable direct obligations of the United States of America or any agency thereof with maturities of one year or less from the date of acquisition;

 

(b) Fully insured certificates of deposit with maturities of one year or less from the date of acquisition issued by (i) the Lender or (ii) any commercial bank operating in the United States of America having capital and surplus in excess of $500,000,000;

 

(c) Commercial paper of a domestic issuer if at the time of purchase such paper is rated in one of the two highest rating categories of Standard & Poor's Ratings Group, a division of the McGraw Hill Corporation, or Moody's Investors Service;

 

(d) Investments in Subsidiaries in effect as of the date of this Agreement or permitted by Section 8.14;

 

(e) Money market accounts substantially all of the assets of which are invested in investments of the type described in clauses (a) through (c) above; and

 

(f) Extensions of trade credit in the ordinary course of business consistent with historical practice.

 

Section 8.6 Limitation on Issuance of Equity. The Borrower will not permit any of its Subsidiaries to, at any time issue, sell, assign, or otherwise dispose of (a) any of its equity interests, (b) any securities exchangeable for or convertible into or carrying any rights to acquire any of its equity interests, or (c) any option, warrant, or other right to acquire any of its equity interests.

 

Section 8.7Transactions With Affiliates. The Borrower will not enter into, and will not permit any Subsidiary to enter into, any transaction, including, without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate of the Borrower or such Subsidiary, except (a) transactions among Obligated Parties, and (b) in the ordinary course of and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of the Borrower or such Subsidiary.

 

 

  

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Section 8.8  Disposition of Assets. The Borrower will not sell, lease, assign, transfer, or otherwise dispose of any of its assets, or permit any Subsidiary to do so with any of its assets, except (a) dispositions of inventory in the ordinary course of business or (b) dispositions, for fair value, of damaged, worn-out and obsolete equipment not necessary or useful to the conduct of business.

 

Section 8.9  Sale and Leaseback. The Borrower will not enter into, and will not permit

any Subsidiary to enter into, any arrangement with any Person pursuant to which it leases from such Person real or personal Property that has been or is to be sold or transferred, directly or indirectly, by it to such Person.

 

Section 8.10  Nature of Business. The Borrower will not, and will not permit any Subsidiary to, engage in any business other than the businesses in which they are engaged as of the Closing Date.

 

Section 8.11 Environmental Protection. The Borrower will not, and will not permit any of its Subsidiaries to, (a) use (or permit any tenant to use) any of their respective Property or assets for the handling, processing, storage, transportation, or disposal of any Hazardous Material, (b) generate any Hazardous Material, (c) conduct any activity that is likely to cause a Release or threatened Release of any Hazardous Material, or (d) otherwise conduct any activity or use any of their respective Property or assets in any manner that is likely to violate any Environmental Law or create any Environmental Liabilities for which the Borrower or any of its Subsidiaries would be responsible.

 

Section 8.12 Accounting. The Borrower will not, and will not permit any of its Subsidiaries to, change its fiscal year or make any change (a) in accounting treatment or reporting practices, except as required by GAAP and disclosed to the Lender, or (b) in tax reporting treatment, except as required by law and disclosed to the Lender.

 

Section 8.13 No Negative Pledge. The Borrower will not, and will not permit any Subsidiary to, enter into or permit to exist any arrangement or agreement, other than pursuant to this Agreement or any other Loan Document, which directly or indirectly prohibits the Borrower or any Subsidiary from creating or incurring a Lien on any of its assets.

 

Section 8.14 Additional Subsidiaries. The Borrower will not, and will not permit any Subsidiary to, form or acquire any Subsidiary not listed on Schedule 6.14 unless the Borrower provides (a) an executed joinder agreement to the Guaranty for such new Subsidiary in form and substance satisfactory to the Lender and (b) an executed supplement to the Security Agreement for such new Subsidiary in form and substance satisfactory to the Lender.

 

ARTICLE IX

 

Financial Covenants

 

The Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding or the Lender has any Revolving Credit Commitment or Guidance Loan Commitment hereunder, the Borrower will, at all times, observe and perform the following financial covenants, unless the Lender shall otherwise consent in writing.

 

 

  

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Section 9.1Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed Charge Coverage Ratio, tested at the end of each fiscal quarter, to be less than 1.25 to 1.00.

 

Section 9.2 Balance Sheet Leverage Ratio. The Borrower shall not permit the Balance Sheet Leverage Ratio to exceed 2.50 to 1.00, tested at the end of each fiscal quarter.

 

Section 9.3Asset Coverage Ratio. The Borrower shall not permit the Asset Coverage Ratio to be less than 1.25 to 1.00, tested at the end of each fiscal quarter.

 

Section 9.4 Funded Debt Ratio. The Borrower shall not permit the Funded Debt Ratio to exceed 1.00 to 1.00, tested at the end of each fiscal quarter.

 

ARTICLE X

 

Default

 

Section 10.1 Events of Default. Each of the following shall be deemed an "Event of Default":

 

(a) The Borrower shall fail to pay (i) the principal of any Obligation when due or declared due and (ii) with respect to Obligations other than principal, when due or declared due and such failure continues for five days.

 

(b) Any representation or warranty made or deemed made by the Borrower, any Subsidiary, or any Obligated Party (or any of their respective officers) in any Loan Document or in any certificate, report, notice, or financial statement furnished at any time in connection with this Agreement shall be false, misleading, or erroneous in any material respect when made or deemed to have been made.

 

(c) The Borrower, any Subsidiary, or any Obligated Party shall fail to perform, observe, or comply with any covenant, agreement, or term contained in Sections 2.3, 7.1, 7.5, 7.6, 7.12, 7.13 and Articles VIII and IX and such failure shall continue uncured for a period of five days.

 

(d) The Borrower, any Subsidiary, or any Obligated Party shall fail to perform, observe, or comply with any covenant, agreement, or term contained in any Loan Document (other than those specified in clauses (a), (b) and (c) of this Section), and, if such failure can be cured, such failure shall continue uncured for a period of 30 days after the earlier of (i) the Borrower, any Subsidiary, or any Obligated Party obtains knowledge thereof, or (ii) written notice thereof having been given to the Borrower, any Subsidiary, or any Obligated Party.

 

(e) The Borrower, any Subsidiary, or any Obligated Party shall commence a voluntary proceeding seeking liquidation, reorganization, or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official of it or a substantial part of its Property or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case

 

 

  

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or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing.

 

(f) The Borrower, any Subsidiary, or any Obligated Party shall fail to pay when due any principal of or interest on any Debt (other than the Obligations), or the maturity of any such Debt shall have been accelerated, or any such Debt shall have been required to be prepaid prior to the stated maturity thereof, or any event shall have occurred that permits (or, with the giving of notice or lapse of time or both, would permit) any holder or holders of such Debt or any Person acting on behalf of such holder or holders to accelerate the maturity thereof or require any such prepayment.

 

(g) This Agreement or any other Loan Document shall cease to be in full force and effect or shall be declared null and void or the validity or enforceability thereof shall be contested or challenged by the Borrower, any Subsidiary, any Obligated Party or any of their respective shareholders, or the Borrower, any Subsidiary, or any Obligated Party shall deny that it has any further liability or obligation under any of the Loan Documents, or any Lien created by the Loan Documents shall for any reason cease to be a valid, first priority perfected Lien upon any of the Collateral purported to be covered thereby.

 

(h) Any of the following events shall occur or exist with respect to the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iv) any event or circumstance that might constitute grounds entitling the PBGC to institute proceedings under Section 4042 of ERISA for the termination of, or for the appointment of a trustee to administer, any Plan, or the institution by the PBGC of any such proceedings; or (v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization, insolvency, or termination of any Multiemployer Plan; and in each case above, such event or condition, together with all other events or conditions, if any, have subjected or could in the reasonable opinion of the Lender subject the Borrower to any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in the aggregate exceed or could reasonably be expected to exceed $50,000.

 

(i) The Borrower, any Subsidiary, or any Obligated Party, or any of their Property, revenues, or assets, shall become subject to an order of forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the same shall not have been discharged within 30 days from the date of entry thereof.

 

(j) An involuntary proceeding shall be commenced against the Borrower, any Subsidiary, or any Obligated Party seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official for it or a substantial part of its Property, and such involuntary proceeding shall remain undismissed and unstayed for a period of 60 days.

 

 

  

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(k) The Borrower, any Subsidiary or any Obligated Party shall fail todischarge within a period of 60 days after the commencement thereof any attachment, sequestration, or similar proceeding or proceedings involving an aggregate amount in excess of $500,000 against any of its assets or Property.

 

(1) A final judgment or judgments for the payment of money in excess of $500,000 in the aggregate and not covered by insurance shall be rendered by a court or courts against the Borrower, any Subsidiary, or any Obligated Party and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and the Borrower or the relevant Subsidiary or Obligated Party shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal.

 

Section 10.2 Remedies Upon Default. If any Event of Default shall occur and be continuing, the Lender may without notice terminate the Revolving Credit Commitment and the Guidance Loan Commitment and declare the Obligations or any part thereof to be immediately due and payable, and the same shall thereupon become immediately due and payable, without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of an Event of Default under Section 10.1(e) or Section 10.1(j), the Revolving Credit Commitment and the Guidance Loan Commitment shall automatically terminate, and the Obligations shall become immediately due and payable without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by the Borrower. If any Event of Default shall occur and be continuing, the Lender may exercise all rights and remedies available to it in law or in equity, under the Loan Documents, or otherwise.

 

Section 10.3 Performance by the Lender. If the Borrower shall fail to perform any covenant or agreement contained in any of the Loan Documents, the Lender may perform or attempt to perform such covenant or agreement on behalf of the Borrower. In such event, the Borrower shall, at the request of the Lender, promptly pay any amount expended by the Lender in connection with such performance or attempted performance to the Lender, together with interest thereon at the Default Rate from and including the date of such expenditure to but excluding the date such expenditure is paid in full. Notwithstanding the foregoing, it is expressly agreed that the Lender shall not have any liability or responsibility for the performance of any obligation of the Borrower under this Agreement or any other Loan Document.

 

ARTICLE XI

 

Miscellaneous

 

Section 11.1 Expenses. The Borrower hereby agrees to pay on demand: (a) all costs and expenses of the Lender in connection with the preparation, negotiation, execution, and delivery of any and all amendments, modifications, renewals, extensions, and supplements of this Agreement and the other Loan Documents, including, without limitation, the reasonable fees

 

 

  

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and expenses of legal counsel, advisors, consultants, and auditors for the Lender, (b) all costs and expenses of the Lender in connection with any Default and the enforcement of this Agreement or any other Loan Document, including, without limitation, the fees and expenses of legal counsel, advisors, consultants, and auditors for the Lender, (c) all transfer, stamp, documentary, or other similar taxes, assessments, or charges levied by any Governmental Authority in respect of this Agreement or any of the other Loan Documents, (d) all costs, expenses, assessments, and other charges incurred in connection with any filing, registration, recording, or perfection of any security interest or Lien contemplated by this Agreement or any other Loan Document, and (e) all other costs and expenses incurred by the Lender after the date hereof in connection with this Agreement or any other Loan Document, any litigation, dispute, suit, proceeding or action; the enforcement of its rights and remedies, protection of its interests in bankruptcy, insolvency or other legal proceedings, including, without limitation, all costs, expenses, and other charges incurred in connection with evaluating, observing, collecting, examining, auditing, appraising, selling, liquidating, or otherwise disposing of the Collateral or other assets of the Borrower.

 

Section 11.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTY OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE CONTRIBUTORY OR ORDINARY NEGLIGENCE OF SUCH PERSON; PROVIDED, HOWEVER, NO PERSON SHALL BE INDEMNIFIED HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

Section 11.3 Limitation of Liability. Neither the Lender nor any Affiliate, officer, director, employee, attorney, or agent of the Lender shall have any liability with respect to, and the Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any

 

 

  

Page 47

  

 

special, indirect, incidental, or consequential damages suffered or incurred by the Borrower in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. The Borrower hereby waives, releases, and agrees not to sue the Lender or any of the Lender's Affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents.

 

Section 11.4 No Duty. All attorneys, accountants, appraisers, and other professional Persons and consultants retained by the Lender shall have the right to act exclusively in the interest of the Lender and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Borrower, its Subsidiaries, any of their shareholders or any other Person.

 

Section 11.5 Lender Not Fiduciary. The relationship between the Borrower and the Lender is solely that of debtor and creditor, and the Lender has no fiduciary or other special relationship with the Borrower, and no term or condition of any of the Loan Documents shall be construed so as to deem the relationship between the Borrower and the Lender to be other than that of debtor and creditor.

 

Section 11.6 Equitable Relief The Borrower recognizes that in the event the Borrower fails to pay, perform, observe, or discharge any or all of the Obligations, any remedy at law may prove to be inadequate relief to the Lender. The Borrower therefore agrees that the Lender, if the Lender so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

 

Section 11.7 No Waiver; Cumulative Remedies. No failure on the part of the Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies provided for in this Agreement and the other Loan Documents are cumulative and not exclusive of any rights and remedies provided by law.

 

Section 11.8 Successors and Assigns. This Agreement is binding upon and shall inure to the benefit of the Lender and the Borrower and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender.

 

Section 11.9 Survival. All representations and warranties made in this Agreement or any other Loan Document or in any document, statement, or certificate furnished in connection with this Agreement shall survive the execution and delivery of this Agreement and the other Loan Documents, and no investigation by the Lender or any closing shall affect the representations and warranties or the right of the Lender to rely upon them. Without prejudice to the survival of any other obligation of the Borrower hereunder, the obligations of the Borrower

 

 

  

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under Sections 11.1, 11.2 and 11.3 shall survive repayment of the Obligations and termination of the Revolving Credit Commitment and the Guidance Loan Commitment.

 

Section 11.10 ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR REVOLVING CREDIT COMMITMENTS, GUIDANCE LOAN COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement and the other Loan Documents to which the Borrower is a party may be amended or waived only by an instrument in writing signed by the Borrower and the Lender.

 

Section 11.11 Notices. All notices and other communications provided for in this Agreement and the other Loan Documents to which the Borrower or any Subsidiary is a party shall be given or made by telex, telegraph, telecopy, cable, or in writing and telexed, telecopied, telegraphed, cabled, mailed by certified mail return receipt requested, or delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof; or, as to any party, at such other address as shall be designated by such party in a notice to the other party given in accordance with this Section. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telex or telecopy, subject to telephone confirmation of receipt, or delivered to the telegraph or cable office, subject to telephone confirmation of receipt, or when personally delivered or, in the case of a mailed notice, when duly deposited in the mails, in each case given or addressed as aforesaid; provided, however, notices to the Lender pursuant to Article II shall not be effective until received by the Lender.

 

Section 11.12 Governing Law; Venue; Service of Process. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and the applicable laws of the United States of America. This Agreement has been entered into in Dallas County, Texas, and it shall be performable for all purposes in Dallas County, Texas. Any action or proceeding against the Borrower under or in connection with any of the Loan Documents may be brought in any state or federal court in Dallas County, Texas. The Borrower hereby irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and (b) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in any such court or that any such court is an inconvenient forum. The Borrower agrees that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified or determined in accordance with the provisions of Section 11.11. Nothing herein or in any of the other Loan Documents shall affect the right of the Lender to serve process in any other manner permitted by law or shall limit the right of the Lender to bring any action or proceeding against the Borrower or with respect to any of its Property in courts in other jurisdictions. Any action or proceeding by the Borrower against the Lender shall be brought only in a court located in Dallas County, Texas.

 

 

  

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Section 11.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original (including facsimile copies), but all of which together shall constitute one and the same instrument.

 

Section 11.14 Severability. Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision held to be invalid or illegal.

 

Section 11.15 Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

Section 11.16 Participations; Etc. The Lender shall have the right at any time and from time to time to grant participations in, and sell and transfer, the Obligations and the Loan Documents. Each actual or proposed participant or assignee, as the case may be, shall be entitled, subject to the provisions of Section 11.21 hereof, to receive all information received by the Lender regarding the Borrower, its Subsidiaries, and any other Obligated Party.

 

Section 11.17 Construction. The Borrower and the Lender acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel.

 

Section 11.18 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default if such action is taken or such condition exists.

 

Section 11.19 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

 

Section 11.20 Maximum Interest Rate. No provision of this Agreement or any other Loan Document shall require the payment or the collection of interest in excess of the Maximum Lawful Rate. If any excess of interest in such respect is hereby provided for, or shall be adjudicated to be so provided, in any Loan Document or otherwise in connection with this loan transaction, the provisions of this Section shall govern and prevail and neither the Borrower nor the sureties, guarantors, successors, or assigns of the Borrower shall be obligated to pay the excess amount of such interest or any other excess sum paid for the use, forbearance, or detention of sums loaned pursuant hereto. In the event the Lender ever receives, collects, or applies as interest any such sum, such amount which would be in excess of the Maximum Lawful Rate shall be applied as a payment and reduction of the principal of the indebtedness

 

 

  

Page 50

  

 

evidenced by the Notes, as determined by the Lender; and, if the principal of the Notes have been paid in full, any remaining excess shall forthwith be paid to the Borrower. In determining whether or not the interest paid or payable exceeds the Maximum Lawful Rate, the Borrower and the Lender shall, to the extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the indebtedness evidenced by the Notes so that interest for the entire term does not exceed the Maximum Lawful Rate.

 

Section 11.21 Confidentiality. The Lender agrees to keep confidential all non-public information provided to it by or on behalf of the Borrower or any of the Subsidiaries pursuant to this Agreement or any other Loan Document; provided that nothing herein shall prevent any Lender from disclosing any such information (i) to any assignee or participant or prospective transferee, if such transferee has agreed in writing to be bound by this Section 11.21, (ii) to its employees, directors, agents, attorneys, accountants and other professional advisors, (iii) as may be required or appropriate in any report, statement or testimony submitted to any Governmental Authority having or claiming jurisdiction over the Lender (including the Board and the Federal Deposit Insurance Corporation or any similar organization, whether in the United States or elsewhere, and their respective successors), (iv) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any requirement of law, (vi) which has been publicly disclosed other than in breach of this Agreement, or (vii) in connection with the exercise of any remedy hereunder. Subject to the proviso set forth in the immediately preceding sentence, the Lender agrees that such non-public information shall be used and disclosed only in connection with the Lender's administration of the Advances under this Agreement and will not be furnished or otherwise made available to other departments or operations of the Lender.

 

Section 11.22 USA PATRIOT ACT NOTIFICATION. The following notification is provided to the Borrower and its Subsidiaries pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each Person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for the Borrower and its Subsidiaries: When the Borrower or any Subsidiary opens an account, if the Borrower or such Subsidiary is an individual, the Lender will ask for the Borrower's or such Subsidiary's name, taxpayer identification number, residential address, date of birth, and other information that will allow the Lender to identify the Borrower or such Subsidiary, and if the Borrower or such Subsidiary is not an individual, the Lender will ask for the Borrower's or such Subsidiary's name, taxpayer identification number, business address, and other information that will allow the Lender to identify such Borrower or such Subsidiary. The Lender may also ask, if the Borrower or such Subsidiary is an individual, to see the Borrower's or such Subsidiary's driver's license or other identifying documents, and if the Borrower or such Subsidiary is not an individual, to see the Borrower's or such Subsidiary's legal organizational documents or other identifying documents.

 

 

  

Page 51

  

 

Section 11.23 Amendment and Restatement. This Agreement amends and restates in its entirety the Existing Loan Agreement. The execution of this Agreement and the other Loan Documents executed in connection herewith does not extinguish the indebtedness outstanding in connection with the Existing Loan Agreement nor does it constitute a novation with respect to such indebtedness.

 

Section 11.24 Assignment and Assumption.

 

(a)            Assumption of Obligations; Rights of Lender. The Prior Borrower hereby assigns to Borrower, and Borrower covenants, promises and agrees that Borrower unconditionally assumes and is bound by, all terms, conditions, duties, indemnities, obligations, liabilities, provisions, and covenants of the Existing Loan Documents as if Borrower had been the original maker of the Existing Notes and an original party to the other Existing Loan Documents, and Borrower shall pay all sums to be paid and otherwise perform each and every obligation to be performed by the Prior Borrower in accordance with the terms and conditions of the Existing Loan Documents, such terms and conditions to remain as originally written and as subsequently modified.

 

(b)            Affirmation by Borrower. Borrower agrees that the Loan Documents are and shall be and remain in full force and effect, enforceable in accordance with their terms. Borrower shall be wholly personally liable for the payment of all sums and the performance of every obligation required under the Loan Documents.

 

(c)            Acknowledgment by Borrower. Except as otherwise specified herein, the terms and provisions hereof shall in no manner impair, limit, restrict or otherwise affect the obligations of Borrower or any third party to the Lender, as evidenced by the Existing Loan Documents. Prior Borrower and Borrower hereby acknowledge, agree and represent that, from and after the Closing Date, (i) there are no claims or offsets against, or recoupments, adjustments, defenses or counterclaims to, the terms or provisions of the Existing Loan Documents or the Loan Documents, and the other obligations created or evidenced by the Existing Loan Documents or the Loan Documents; and (ii) neither Prior Borrower nor Borrower has any claims, offsets, defenses or counterclaims arising from any of the Lender's acts or omissions with respect to the Collateral, the Existing Loan Documents or the Loan Documents or the Lender's performance under the Existing Loan Documents or the Loan Documents. To the extent Borrower or the Prior Borrower now has, or in the future possesses, any claims, offsets, defenses or counterclaims against Lender or the repayment of all or a portion of the Obligations arising out of acts or omissions occurring on or before the Closing Date, whether known or unknown, fixed or contingent, same are hereby forever irrevocably waived and released in their entirety.

 

[Remainder of Page Intentionally Left Blank. Signature Pages to Follow.]

 

 

  

Page 52exhibit4245.htm

Exhibit 4.245

 

 

 

 

 

NOTE PURCHASE AGREEMENT

(3.21% RENTAL CAR ASSET BACKED NOTES, SERIES 2011-2)

 

 

among

 

 

RENTAL CAR FINANCE CORP.,

as Seller,

 

 

DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.,

as Master Servicer,

 

 

WELLS FARGO BANK, N.A.,

as Initial Note Purchaser,

 

 

and

 

 

THE NOTE PURCHASERS FROM TIME TO TIME PARTY HERETO

 

 

dated as of October 26, 2011

 

 

 

 

  

  

 

  

TABLE OF CONTENTS

 

Page

 

 

	

ARTICLE I. DEFINITIONS 

	
2

 

	
  

	
Section 1.01

	
Certain Defined Terms 

	
2

	
  

	
Section 1.02

	
Other Definitional Provisions 

	
4

 

	

ARTICLE II. INCREASED COSTS; FUNDING LOSSES; AND TAXES 

	
5

 

	
  

	
Section 2.01

	
Increased Capital Costs 

	
5

	
  

	
Section 2.02

	
Increased or Reduced Costs, etc. 

	
5

	
  

	
Section 2.03

	
Taxes 

	
6

	
  

	
Section 2.04

	
Indenture Carrying Charges 

	
7

	
  

	
Section 2.05

	
Redemption for Increased Costs or Taxes. 

	
7

 

	

ARTICLE III. CLOSING 

	
7

 

	
  

	
Section 3.01

	
Purchase, Sale and Delivery 

	
7

	
  

	
Section 3.02

	
Closing 

	
8

	
  

	
Section 3.03

	
Transactions Effected at the Closing 

	
8

 

	

ARTICLE IV. CONDITIONS PRECEDENT 

	
8

 

	
  

	
Section 4.01

	
Conditions Precedent to the Closing 

	
8

 

	

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF RCFC 

	
11

 

	
  

	
Section 5.01

	
Related Documents 

	
11

	
  

	
Section 5.02

	
Authority, etc. 

	
11

	
  

	
Section 5.03

	
Series 2011-2 Notes 

	
11

	
  

	
Section 5.04

	
Litigation 

	
12

	
  

	
Section 5.05

	
The Group VIII Collateral 

	
12

	
  

	
Section 5.06

	
Taxes, etc. 

	
12

	
  

	
Section 5.07

	
Authorization 

	
12

	
  

	
Section 5.08

	
Financial Condition of RCFC 

	
12

	
  

	
Section 5.09

	
Securities Act 

	
12

	
  

	
Section 5.10

	
Investment Company Act 

	
12

	
  

	
Section 5.11

	
Full Disclosure 

	
12

	
  

	
Section 5.12

	
Amortization Events 

	
13

	
  

	
Section 5.13

	
Related Documents 

	
13

 

	

ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF DTAG 

	
13

 

	
  

	
Section 6.01

	
Master Lease 

	
13

	
  

	
Section 6.02

	
Authority, etc. 

	
13

	
  

	
Section 6.03

	
Litigation 

	
14

	
  

	
Section 6.04

	
Taxes, etc. 

	
14

	
  

	
Section 6.05

	
Financial Condition of DTAG 

	
14

	
  

	
Section 6.06

	
Full Disclosure 

	
14

 

  

i

  

 

	
  

	
Section 6.07

	
Financial Statements 

	
15

 

	

ARTICLE VII. REPRESENTATIONS, WARRANTIES AND COVENANTS WITH RESPECT TO THE NOTE PURCHASERS

	
15

 

	
  

	
Section 7.01

	
Securities Act 

	
15

 

	

ARTICLE VIII. COVENANTS OF RCFC AND DTAG

	
16

 

	
  

	
Section 8.01

	
Access to Information 

	
16

	
  

	
Section 8.02

	
Security Interests; Further Assurances 

	
17

	
  

	
Section 8.03

	
Covenants 

	
17

	
  

	
Section 8.04

	
Amendments. 

	
17

	
  

	
Section 8.05

	
Information from DTAG 

	
18

	
  

	
Section 8.06

	
Principal Office 

	
18

	
  

	
Section 8.07

	
Cash Audits 

	
18

	
  

	
Section 8.08

	
Margin Stock 

	
18

	
  

	
Section 8.09

	
Back-up Disposition Agent Agreement 

	
19

	
  

	
Section 8.10

	
Independent Directors 

	
19

	
  

	
Section 8.11

	
Fleet Report 

	
19

	
  

	
Section 8.12

	
Monthly Vehicle Statements 

	
19

	
  

	
Section 8.13

	
Weekly Vehicle Statements 

	
19

	
  

	
Section 8.14

	
Demand Note 

	
19

	
  

	
Section 8.15

	
Title Audit 

	
19

	
  

	
Section 8.16

	
Non-Program Vehicle Report 

	
20

	
  

	
Section 8.17

	
Rating of Series 2011-2 Notes 

	
20

 

	

ARTICLE IX. ADDITIONAL COVENANTS

	
20

 

	
  

	
Section 9.01

	
Legal Conditions to Closing 

	
20

	
  

	
Section 9.02

	
Expenses 

	
20

	
  

	
Section 9.03

	
Consents, etc. 

	
20

	
  

	
Section 9.04

	
Third-Party Market Value 

	
20

 

	

ARTICLE X. INDEMNIFICATION

	
21

 

	
  

	
Section 10.01

	
Indemnification. 

	
21

	
  

	
Section 10.02

	
Procedure 

	
22

	
  

	
Section 10.03

	
Defense of Claims 

	
22

	
  

	
Section 10.04

	
Costs, Expenses and Increased Costs under Agreement 

	
22

 

	

ARTICLE XI. MISCELLANEOUS

	
23

 

	
  

	
Section 11.01

	
Amendments. 

	
23

	
  

	
Section 11.02

	
Notices 

	
23

	
  

	
Section 11.03

	
No Waiver; Remedies 

	
24

	
  

	
Section 11.04

	
Binding Effect; Assignability 

	
24

	
  

	
Section 11.05

	
GOVERNING LAW 

	
25

	
  

	
Section 11.06

	
No Proceedings 

	
25

	
  

	
Section 11.07

	
Execution in Counterparts 

	
25

 

  

ii

  

 

	
  

	
Section 11.08

	
No Recourse 

	
25

	
  

	
Section 11.09

	
Limited Recourse 

	
26

	
  

	
Section 11.10

	
Term; Survival 

	
26

	
  

	
Section 11.11

	
Tax Characterization 

	
26

	
  

	
Section 11.12

	
Severability; Series 2011-2 Note Rate Limitation. 

	
26

	
  

	
Section 11.13

	
Headings 

	
27

	
  

	
Section 11.14

	
Submission to Jurisdiction 

	
27

	
  

	
Section 11.15

	
Characterization as Related Document; Entire Agreement 

	
27

	
  

	
Section 11.16

	
Confidentiality. 

	
28

EXHIBIT A                          Form of Assignment and Assumption Agreement

EXHIBIT B                           Form of Master Termination Agreement

 

SCHEDULE I                        Addresses for Notice

SCHEDULE II                       Litigation Claims

  

iii

  

NOTE PURCHASE AGREEMENT

 

This NOTE PURCHASE AGREEMENT, dated as of October 26, 2011 (as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), is made among RENTAL CAR FINANCE CORP., an Oklahoma corporation (“RCFC”), DOLLAR THRIFTY AUTOMOTIVE GROUP, INC., a Delaware corporation (“DTAG” or, in its capacity as master servicer under the Master Lease referred to below, the “Master Servicer”), WELLS FARGO BANK, N.A., a national banking association (the “Initial Note Purchaser”), and the other note purchasers from time to time party hereto (such note purchasers and the Initial Note Purchaser, collectively, the “Note Purchasers”).

 

BACKGROUND

 

1.           Contemporaneously with the execution and delivery of this Agreement, RCFC is entering into the Series 2011-2 Supplement, dated as of even date herewith (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof, the “Series 2011-2 Supplement”), between RCFC, as Issuer, and Deutsche Bank Trust Company Americas, a New York banking corporation, as the Trustee (in such capacity, together with its successors in trust in such capacity, the “Trustee”), to the Amended and Restated Base Indenture, dated as of February 14, 2007 (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof, the “Base Indenture” and, together with the Series 2011-2 Supplement, the “Series 2011-2 Indenture”), between RCFC and the Trustee.  RCFC previously entered into (a) the Master Motor Vehicle Lease and Servicing Agreement (Group VIII), dated as of July 28, 2011 (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof, the “Master Lease”), among RCFC, as lessor, the parties identified therein as the Lessees and Servicers, those additional Permitted Lessees from time to time becoming Lessees and Servicers thereunder, and DTAG, as Guarantor and Master Servicer, and (b) certain Related Documents (such term, as with the other capitalized terms used herein, shall have the meaning assigned thereto in Section 1.01 hereof) in connection with the Group VIII Collateral to which RCFC is a party.  Pursuant to the Series 2011-2 Supplement, RCFC will issue the 3.21% Rental Car Asset Backed Notes, Series 2011-2 (the “Series 2011-2 Notes”) in an aggregate principal amount of $400,000,000.

 

2.           RCFC wishes to issue the Series 2011-2 Notes in favor of the Initial Note Purchaser and to obtain the agreement of the Initial Note Purchaser to purchase the Series 2011-2 Notes.  Subject to the terms and conditions of this Agreement, the Initial Note Purchaser is willing to purchase the Series 2011-2 Notes.  DTAG has joined in this Agreement to confirm and make certain representations, warranties and covenants for the benefit of the Note Purchasers.

 

NOW THEREFORE, in consideration of the premises and of the agreements herein contained, and for due and adequate consideration, which the parties hereto hereby acknowledge, the parties hereto hereby agree as follows:

 

  

  

  

ARTICLE I.

DEFINITIONS

 

Section 1.01 Certain Defined Terms.  As used in this Agreement and unless the context requires a different meaning, capitalized terms used but not defined herein (including the preamble and the recitals hereto) shall have the meanings assigned to such terms in (i) the Series 2011-2 Supplement and (ii) the Definitions List attached to the Base Indenture as Schedule 1 thereto (as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms of the Base Indenture, the “Definitions List”); provided, that if any capitalized term used but not defined herein has a meaning assigned to such term in the Series 2011-2 Supplement and the Definitions List, then the meaning assigned to such term in the Series 2011-2 Supplement shall apply herein.  All references to (i) any agreement shall include amendments, restatements, modifications and supplements thereto, (ii) any applicable law or specific provision thereof shall include amendments, supplements and successors thereto, and (iii) any Person shall include such Person’s successors and permitted assigns and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities, in each case except as otherwise provided herein.

 

In addition, the following terms shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural form of such terms and to the masculine as well as the feminine and neuter genders of such terms:

 

“Additional Amounts” means all amounts owed by RCFC, without duplication, pursuant to Sections 2.01, 2.02 and 2.03 and Article X hereof.

 

“Applicable Indemnifying Party” has the meaning specified in Section 10.02 hereof.

 

“Assignment and Assumption Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit A.

 

“Base Indenture” has the meaning set forth in the recitals hereto.

 

“Change in Law” means (a) any law, rule or regulation or any change therein or in the interpretation or application thereof (whether or not having the force of law), in each case adopted, issued or occurring after the Series 2011-2 Closing Date or (b) any request, guideline or directive (whether or not have the force of law) from any Governmental Authority or any arbitrator or any accounting board or authority (whether or not part of government) which is responsible for the establishment or interpretation of national or international accounting principles, in each case whether foreign or domestic (each an “Official Body”) charged with the administration, interpretation or application thereof, made, issued or occurring after the Series 2011-2 Closing Date.

 

“Closing” has the meaning specified in Section 3.02 hereof.

 

“Commission” has the meaning specified in Section 7.01 hereof.

 

  

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“Confidential Information” means information that RCFC, DTAG or the applicable Lessee furnishes to any Note Purchaser (or its agents or representatives), but does not include any such information (i) that is or becomes generally available to the public other than as a result of a disclosure by such Note Purchaser or other Person to which such Note Purchaser delivered such information, (ii) that was in the possession of such Note Purchaser prior to its being furnished to such Note Purchaser by RCFC, DTAG or the applicable Lessee or (iii) that is or becomes available to a Note Purchaser from a source other than RCFC, DTAG or the applicable Lessee; provided, that with respect to clauses (ii) and (iii) such source is not (1) bound by a confidentiality agreement with RCFC, DTAG or the applicable Lessee, as the case may be, or (2) otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation.

 

“Controlling Noteholder” has the meaning set forth in the Series 2011-2 Supplement.

 

“DTAG” has the meaning set forth in the preamble hereto.

 

“Flooring Audit” has the meaning set forth in Section 8.01(c) hereof.

 

“Governmental Actions” means any and all consents, approvals, permits, orders, authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations, declarations or filings with, any Governmental Authority required under any Governmental Rules.

 

“Governmental Authority” means any Federal, state, local or foreign court or governmental department, commission, board, bureau, agency, authority, instrumentality or other administrative or regulatory body.

 

“Governmental Rules” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.

 

“Indemnified Party” means any Note Purchaser or any of its officers, directors, employees, agents, representatives or Affiliates.

 

“Ineligible Assignee/Participant” means any Person, including such Person’s Affiliates or franchisees, that is directly or indirectly engaged in the vehicle rental industry; provided, that, for the avoidance of doubt, a person that provides financing to a Person engaged in the vehicle rental industry shall not be considered to be directly or indirectly engaged in the vehicle rental industry as a result of such financing for purposes of this definition.

 

“Initial Note Purchaser” has the meaning set forth in the preamble hereto.

 

“Margin Stock” means “margin stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System, as amended from time to time.

 

“Master Lease” has the meaning set forth in the recitals hereto.

 

  

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“Master Servicer” has the meaning set forth in the preamble hereto.

 

“Note Purchasers” has the meaning set forth in the preamble hereto.

 

“RCFC” has the meaning set forth in the preamble hereto.

 

“Series 2010-2 Note Purchase Agreement” means the Note Purchase Agreement in respect of Rental Car Asset Backed Variable Funding Notes, Series 2010-2 (as amended, supplemented, restated or otherwise modified through the date hereof) dated as of June 17, 2010 among RCFC, as Seller, DTAG, as Master Servicer, Wells Fargo Bank, N.A., as Initial Note Purchaser and the Note Purchasers from time to time party thereto.

 

“Series 2010-2 Supplement” means the Series 2010-2 Supplement (as amended, supplemented, restated or otherwise modified through the date hereof) dated as of June 17, 2010 between RCFC, as Issuer and Deutsche Bank Trust Company Americas, as Trustee to the Base Indenture.

 

“Series 2011-2 Indenture” has the meaning set forth in the recitals hereto.

 

“Series 2011-2 Notes” has the meaning set forth in the recitals hereto.

 

“Series 2011-2 Supplement” has the meaning set forth in the recitals hereto.

 

“Series Documents” means the Series 2011-2 Indenture, the Master Collateral Agency Agreement (to the extent relating to Group VIII Collateral), this Agreement, the Master Lease and any other Related Document.

 

“Servicer Audit Report” means a report by a firm of certified public accountants indicating that such firm has examined the most recently delivered Monthly Noteholders’ Statement and expressing such firm’s opinion that (a) the data reported, and calculations set forth, in such Monthly Noteholders’ Statement are the data required to be reported, and the calculations required to be made, in accordance with the terms of the Series 2011-2 Supplement and the other Related Documents and (b) the data reported in such Monthly Noteholders’ Statement accurately reflects the data contained in the Master Servicer’s systems and other applicable source records.

 

“Third Party Claim” has the meaning specified in Section 10.02 hereof.

 

“Trustee” has the meaning set forth in the recitals hereto.

 

Section 1.02 Other Definitional Provisions.

 

(a) As used herein and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in Section 1.01, and accounting terms partially defined in Section 1.01 to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles.  To the extent that the definitions of accounting terms herein are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained herein shall control.

 

  

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(b) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, subsection, Schedule and Exhibit references contained in this Agreement are references to Sections, subsections, the Schedules and Exhibits in or to this Agreement unless otherwise specified.

 

ARTICLE II.

INCREASED COSTS; FUNDING LOSSES; AND TAXES

 

Section 2.01 Increased Capital Costs.

 

(a) If any Change in Law affects or would affect the amount of capital required or reasonably expected to be maintained by a Note Purchaser or any Person controlling a Note Purchaser and such Note Purchaser reasonably determines (in its sole and absolute discretion) that the rate of return on its or such controlling Person’s capital as a consequence of ownership of the Series 2011-2 Notes is reduced to a level below that which such Note Purchaser or such controlling Person would have achieved but for the occurrence of any such circumstance, then, in any such case after notice from time to time by such Note Purchaser to RCFC, RCFC shall in accordance with the Series 2011-2 Indenture and Section 2.04 hereof pay to such Note Purchaser such additional amount or amounts sufficient to compensate such Note Purchaser or such controlling Person for such reduction in rate of return.  In determining such additional amount, such Note Purchaser may use any method of averaging and attribution that it (in its reasonable discretion) shall deem applicable so long as it applies such method to other similar transactions.

 

(b) Any demand for payment of increased costs pursuant to Section 2.01(a) shall include a certificate setting forth in reasonable detail the computation of such increased costs and specifying the basis therefor and such other information as may be reasonably requested by RCFC.  In the absence of manifest error, such certificate shall be conclusive and binding for all purposes.  Each Note Purchaser shall use reasonable efforts to mitigate the effect upon RCFC of any such increased costs or capital requirements; provided, that it shall not be obligated to take any action that it determines would be disadvantageous to it or inconsistent with its policies.

 

Section 2.02 Increased or Reduced Costs, etc.  RCFC agrees to reimburse each Note Purchaser for any increase in the cost of, or any reduction in the amount of any sum receivable by such Note Purchaser, including reductions in the rate of return on such Note Purchaser’s capital, in respect of the Series 2011-2 Notes that arise in connection with any Change in Law, except for any Changes in Law with respect to increased capital costs and except for any taxes that are governed by Sections 2.01 and 2.03, respectively.  Each such demand shall be provided to RCFC in writing and shall state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate the Note Purchaser for such increased cost or reduced amount or return.  Such additional amounts shall be payable by RCFC to the Note Purchaser in accordance with the Series 2011-2 Indenture and Section 2.04 hereof, and such notice shall, in the absence of manifest error, be conclusive and binding on RCFC.

 

  

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Section 2.03 Taxes.  All payments by RCFC of principal of, and interest on, the Series 2011-2 Notes and all other amounts payable hereunder (including fees) to or on behalf of any Note Purchaser shall be made free and clear of and without deduction for any present or future income, excise, documentary, property, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding in the case of any Note Purchaser (w) net income, franchise or similar taxes (including branch profits taxes or alternative minimum tax) imposed or levied on the Note Purchaser as a result of a connection between the Note Purchaser and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Note Purchaser having executed, delivered or performed its obligations or received a payment under, or enforced by, this Agreement), (x) any United States backup withholding tax and (y) with respect to any Note Purchaser organized under the laws of a jurisdiction other than the United States (“Foreign Affected Person”), any withholding tax that is imposed on amounts payable to the Foreign Affected Person at the time the Foreign Affected Person becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Affected Person (or its assignor, if any) was already entitled, at the time of the designation of the new lending office (or assignment), to receive additional amounts from RCFC with respect to withholding tax (such non-excluded items being called “Taxes”).

 

Moreover, if any Taxes are directly asserted against any Note Purchaser with respect to any payment received by such Note Purchaser or its agent from RCFC, such Note Purchaser or its agent may pay such Taxes and RCFC will after receipt of written notice stating the amount of such Taxes pay in accordance with the Series 2011-2 Indenture and Section 2.04 hereof such additional amounts (including any penalties, interest or expenses) as are necessary in order that the net amount received by such Note Purchaser after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Person would have received had such Taxes not been asserted.

 

If RCFC fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to a Note Purchaser or its agent the required receipts or other required documentary evidence, RCFC shall indemnify such Note Purchaser and its agent for any incremental Taxes, interest or penalties that may become payable by such Note Purchaser or its agent as a result of any such failure.  For purposes of this Section 2.03, any payment made by RCFC to an agent of a Note Purchaser shall be deemed a payment made by RCFC directly to such Note Purchaser.

 

Upon the request of RCFC, each Foreign Affected Person shall execute and deliver to RCFC, prior to the initial due date of any payments to it under the Series 2011-2 Notes and hereunder and to the extent permissible under then current law, and on or about the first scheduled payment date in each calendar year thereafter, one or more (as RCFC may reasonably request) United States Internal Revenue Service Forms W-8BEN, Forms W-8ECI or Forms W-9, or successor applicable forms, or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Foreign Affected Person is exempt from withholding or deduction of Taxes.  Each Foreign Affected Person shall (and shall cause other persons acting on its behalf to) take any action (including entering into any agreement with the Internal Revenue Service) and comply with any information gathering and reporting requirements, in each case, that are required to obtain the maximum available exemption from any U.S. federal withholding taxes that is available to payments received by or on behalf of such Foreign Affected Person. 

 

  

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RCFC shall not, however, be required to pay any increased amount under this Section 2.03 to any Note Purchaser that is organized under the laws of a jurisdiction other than the United States if such Note Purchaser fails to comply with the requirements set forth in this paragraph.

 

If a Note Purchaser determines, in its sole discretion, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.03, it shall pay over such refund to RCFC (but only to the extent of indemnity payments made, or additional amounts paid under this Section 2.03 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses of such Note Purchaser and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that RCFC, upon the request of such Note Purchaser, agrees to repay (in accordance with the Series 2011-2 Indenture and Section 2.04 hereof) the amount paid over to RCFC (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Note Purchaser in the event such Note Purchaser is required to repay such refund to such Governmental Authority.  This Section 2.03 shall not be construed to require a Note Purchaser to make available its tax returns (or any other information relating to its taxes which it deems confidential) to RCFC or any other Person.

 

Section 2.04 Indenture Carrying Charges.  Notwithstanding anything to the contrary contained herein, any amounts payable by RCFC under Sections 2.01, 2.02, 2.03 and Article X shall constitute Carrying Charges within the meaning of the Series 2011-2 Supplement.  Except as otherwise expressly specified herein, any such amounts shall be payable by RCFC to the relevant Note Purchaser or Note Purchasers on the first Payment Date falling at least 20 days (or, solely in the case of amounts payable pursuant to Article X hereof, on the Payment Date falling in the next calendar month) after the date of RCFC’s receipt of the applicable notice or invoice provided in accordance with the terms hereof in respect of such amount.

 

Section 2.05 Redemption for Increased Costs or Taxes.  If any amounts become payable by RCFC to a Note Purchaser (or a Participant pursuant to Section 11.04(c)) under Sections 2.01, 2.02 or 2.03, the Series 2011-2 Notes held by such Note Purchaser (or in which such Participant has a participating interest) shall become subject to optional redemption, in whole but not in part, by RCFC at its option, upon notice to the Note Purchaser holding such Series 2011-2 Notes provided not less than three Business Days prior to the applicable Payment Date and otherwise in accordance with the procedures set forth in Section 5.3(b) and (c) of the Base Indenture, on the first, second or third Payment Date on or after each date on which RCFC receives a notice from the related Note Purchaser that any such amounts are payable.  The redemption price for any such Series 2011-2 Notes shall be as provided in Section 8.1 of the Series 2011-2 Supplement.

 

ARTICLE III.

CLOSING

 

Section 3.01 Purchase, Sale and Delivery.  On the basis of the representations, warranties and agreements in this Agreement, but subject to the terms and conditions in this Agreement, RCFC agrees to sell to the Initial Note Purchaser, and the Initial Note Purchaser agrees to purchase from RCFC, the Series 2011-2 Notes.  The Series 2011-2 Notes purchased by the Initial Note Purchaser will be initially registered in the name of Wells Fargo Bank, N.A.

 

  

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Section 3.02 Closing.  The closing (the “Closing”) of the purchase and sale of the Initial Series 2011-2 Note shall take place at the offices of Latham & Watkins LLP in New York, New York on the Series 2011-2 Closing Date, or if the conditions to closing set forth in Article IV of this Agreement shall not have been satisfied or waived by such date, as soon as practicable after such conditions shall have been satisfied or waived, or at such other time, date and place as the parties shall agree upon.

 

Section 3.03 Transactions Effected at the Closing.  At the Closing (a) upon satisfying the conditions precedent set forth in Section 4.01, payment for the Series 2011-2 Notes shall be made by the Initial Note Purchaser on the Series 2011-2 Closing Date in Federal (same day) funds by wire transfer to an account previously designated to the Initial Note Purchaser by RCFC; and (b) RCFC shall instruct the Trustee to authenticate and deliver the Series 2011-2 Notes to the Initial Note Purchaser.

 

ARTICLE IV.

CONDITIONS PRECEDENT

 

Section 4.01 Conditions Precedent to the Closing.  The obligation of the Initial Note Purchaser to purchase the Series 2011-2 Notes is subject to the satisfaction of the following conditions on or prior to the Series 2011-2 Closing Date (any or all of which may be waived by the Initial Note Purchaser in its sole discretion):

 

(a) Corporate Documents.  The Initial Note Purchaser shall have received copies of (i) the Certificate of Incorporation and By-Laws of RCFC, DTAG and DTG Operations, (ii) board of directors resolutions of RCFC, DTAG and DTG Operations with respect to the transactions contemplated by the Series Documents, and (iii) incumbency certificate of RCFC, DTAG and DTG Operations, each certified by appropriate corporate authorities.

 

(b) Opinions of Counsel to RCFC, DTAG and DTG Operations.  Counsel to RCFC, DTAG and DTG Operations shall have delivered to the Initial Note Purchaser favorable opinions, dated the date hereof and reasonably satisfactory in form and substance to the Initial Note Purchaser and its counsel, covering due authorization, enforceability, true lease and non-consolidation, perfection and priority matters, debt for tax and such other matters as the Initial Note Purchaser shall reasonably request.

 

(c) Opinion of Counsel to the Trustee.  Counsel to the Trustee shall have delivered to the Initial Note Purchaser a favorable opinion, dated the date hereof and reasonably satisfactory in form and substance to the Initial Note Purchaser and its counsel.

 

(d) Uniform Commercial Code Filings.  The Initial Note Purchaser shall have received Uniform Commercial Code financing statements, in proper form for filing, as may be necessary to perfect or evidence the assignment by RCFC to the Trustee of its interests in the Group VIII Collateral, the proceeds thereof and the security interests granted pursuant to the Series 2011-2 Indenture and the Master Collateral Agency Agreement.

 

  

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(e) Documents.  The Initial Note Purchaser shall have received a duly executed Series 2011-2 Note in its name and a duly executed counterpart of each of the Series Documents and each and every document or certification delivered by any party pursuant to Section 2.2 of the Base Indenture or this Agreement, and each such document shall be in full force and effect.

 

(f) Approvals and Consents.  All Governmental Actions of all Governmental Authorities required to be obtained or made by RCFC, DTAG or DTG Operations with respect to the transactions contemplated by the Series Documents and the other documents related thereto shall have been obtained or made.

 

(g) Performance by RCFC, DTAG and DTG Operations.  All the terms, covenants, agreements and conditions of the Series Documents to which they are parties to be complied with and performed by RCFC, DTAG, DTG Operations and any other Permitted Lessee that is then a Lessee under the Master Lease on or before the Series 2011-2 Closing Date shall have been complied with and performed in all material respects.

 

(h) Representations and Warranties.  Each of the representations and warranties of RCFC, DTAG, DTG Operations and any other Permitted Lessee that is then a Lessee under the Master Lease made in the Series Documents to which they are parties shall be true and correct in all material respects as of the Series 2011-2 Closing Date (except to the extent they expressly relate to an earlier or later time).

 

(i) No Actions or Proceedings.  No action, suit, proceeding or investigation by or before any Governmental Authority shall have been instituted to restrain or prohibit the consummation of, or to invalidate, the transactions contemplated by the Series Documents and the documents related thereto in any material respect.

 

(j) Credit Enhancement.  The sum of (i) the Series 2011-2 Letter of Credit Amount, (ii) the Series 2011-2 Cash Liquidity Amount and (iii) the Series 2011-2 Available Subordinated Amount shall be in an amount at least equal to the Series 2011-2 Minimum Enhancement Amount.

 

(k) Minimum Series 2011-2 Letter of Credit Amount.  The Series 2011-2 Letter of Credit Amount shall at least equal the Series 2011-2 Minimum Letter of Credit Amount.

 

(l) Opinion of Counsel to the Letter of Credit Provider. Counsel to the Series 2011-2 Letter of Credit Provider shall have delivered to the Initial Note Purchaser favorable opinions as to the validity and enforceability of the Series 2011-2 Letter of Credit as of the Series 2011-2 Closing Date.

 

(m) Reports.  The Initial Note Purchaser shall have received copies of the most recent Monthly Noteholders’ Statement provided to the Trustee pursuant to Section 5.4 of the Base Indenture and the most recent Monthly Vehicle Statement provided to RCFC pursuant to Section 24.4(f) of the Master Lease.

 

  

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(n) Series Documents.  The Series Documents shall be in full force and effect and, as of the Series 2011-2 Closing Date, all conditions to the issuance of the Series 2011-2 Notes under Section 2.2 of the Base Indenture shall have been satisfied.

 

(o) Revolving Period; Amortization Events.  The Series 2011-2 Revolving Period shall not have ended, and with respect to any Group VIII Series of Notes no Amortization Event, Liquidation Event of Default, Limited Liquidation Event of Default or Potential Amortization Event, shall have occurred and be continuing or shall result from the issuance of the Series 2011-2 Notes.

 

(p) Maximum Percentages.  The percentage of Group VIII Vehicles (i) manufactured by each Eligible Manufacturer shall not exceed the Maximum Manufacturer Percentage of Vehicles set forth next to such Eligible Manufacturer’s name on Schedule 1 of the Series 2011-2 Supplement and (ii) constituting Program Vehicles shall not exceed the Maximum Program Percentage.

 

(q) Series 2010-2 Notes.  The “Series 2010-2 Invested Amount” (under and as defined in the Series 2010-2 Supplement) shall be zero and RCFC, DTAG, the Initial Note Purchaser and the other parties to the transaction documents in respect of the Series 2010-2 Notes shall have entered into a master termination agreement substantially in the form attached hereto as Exhibit B, providing that concurrent with and effective upon the purchase of the Series 2011-2 Notes by the Initial Note Purchaser on the Series 2011-2 Closing Date, (i) the “Series 2010-2 Maximum Invested Amount” and the “Note Purchaser Funding Limit” of each “Note Purchaser” (in each case, under and as defined in the Series 2010-2 Note Purchase Agreement or the Series 2010-2 Supplement, as applicable) shall irrevocably be reduced to zero, (ii) the Series 2010-2 Note Purchase Agreement, the Fee Letters (as defined in the Series 2010-2 Note Purchase Agreement) and the other transaction documents in respect of the Series 2010-2 Notes shall be terminated and (iii) all Series 2010-2 Notes shall be cancelled.

 

(r) Closing Certificate.  The Initial Note Purchaser shall have received a certificate or certificates signed by the President or any Vice President and a principal financial or accounting officer (which may be the same person) of each of RCFC and DTAG, dated the Series 2011-2 Closing Date, in which such officers shall state that, to the best of their knowledge: (i) each of the representations and warranties of RCFC, DTAG, DTG Operations and any other Permitted Lessee that is then a Lessee under the Master Lease made in the Series Documents to which they are parties shall be true and correct in all material respects as of the Series 2011-2 Closing Date (except to the extent they expressly relate to an earlier or later time); (ii) all the terms, covenants, agreements and conditions of the Series Documents to which they are parties to be complied with and performed by RCFC, DTAG, DTG Operations and any other Permitted Lessee that is then a Lessee under the Master Lease on or before the Series 2011-2 Closing Date shall have been complied with and performed in all material respects; and (iii) subsequent to June 30, 2011, there has not been any material adverse change in the general affairs, business, properties, key personnel, capitalization, condition (financial or otherwise) or results of operation of RCFC and DTAG, except as set forth in any filings made by DTAG with the U.S. Securities and Exchange Commission.

 

  

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ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF RCFC

 

RCFC hereby makes the following representations and warranties to the Initial Note Purchaser, as of the Series 2011-2 Closing Date (except to the extent they expressly relate to an earlier or later time or expressly set forth in this Article V), and RCFC acknowledges and agrees that each Note Purchaser shall have relied on such representations and warranties in purchasing the Series 2011-2 Notes.

 

Section 5.01 Related Documents.  The representations and warranties of RCFC set forth in the Base Indenture and any other Related Document are true and correct in all material respects.

 

Section 5.02 Authority, etc.

 

(a) RCFC has been duly organized and is validly existing and in good standing as a corporation under the laws of the State of Oklahoma, with corporate power and authority to own its properties and to transact the business in which it is now engaged, and RCFC is duly qualified to do business and is in good standing (or is exempt from such requirements) in each State of the United States where the nature of its business requires it to be so qualified unless the failure to be so qualified and in good standing would not have a material adverse effect on the interests of the Note Purchasers.

 

(b) The issuance, sale, assignment and conveyance of the Series 2011-2 Notes, the performance of RCFC’s obligations under this Agreement and the other Series Documents to which it is a party and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than any Lien created by the Series Documents) upon any of the property or assets of RCFC pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is bound or to which any of its property or assets is subject, nor will such action result in any violation of the provisions of its Certificate of Incorporation or By-Laws or any Governmental Rule applicable to RCFC.

 

(c) No Governmental Action which has not been obtained or made by RCFC is required to be obtained or made by RCFC in connection with the execution and delivery of the Series 2011-2 Notes or any of the Series Documents to which it is a party by RCFC or the consummation by RCFC of the transactions contemplated hereby or thereby.

 

(d) Each of the Series Documents to which it is a party has been duly authorized, executed and delivered by RCFC, and is the valid and legally binding obligation of RCFC, enforceable against RCFC in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.

 

Section 5.03 Series 2011-2 Notes.  The Series 2011-2 Notes have been duly and validly authorized by RCFC, and, when executed and authenticated in accordance with the terms of the Series 2011-2 Indenture, and delivered to and paid for in accordance with this Agreement, will be duly and validly issued and outstanding and will be entitled to the benefits of the Series 2011-2 Indenture.

 

  

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Section 5.04 Litigation.  There is no pending or, to RCFC’s knowledge, threatened action, suit or proceeding by or against RCFC before any Governmental Authority or any arbitrator (i) with respect to the Group VIII Collateral, any Series Document, the Series 2011-2 Notes or any of the transactions contemplated herein or therein, or (ii) with respect to RCFC which, in the case of any such action, suit or proceeding with respect to RCFC, if adversely determined, would have a material adverse effect on the ability of RCFC to perform its obligations hereunder or thereunder.

 

Section 5.05 The Group VIII Collateral.  The Trustee or the Master Collateral Agent, as applicable, has a first priority perfected security interest in the Group VIII Collateral free and clear of all Liens, except for Liens permitted under Section 7.15 of the Base Indenture.

 

Section 5.06 Taxes, etc.  Any taxes, fees and other charges of Governmental Authorities applicable to RCFC, except for franchise or income taxes, in connection with the execution, delivery and performance by RCFC of the Series Documents to which it is a party or otherwise applicable to RCFC in connection with the transactions contemplated herein or therein have been paid or will be paid by RCFC on or prior to the Series 2011-2 Closing Date, to the extent then due.

 

Section 5.07 Authorization. RCFC has authorized the Trustee to authenticate and deliver the Series 2011-2 Notes to the Initial Note Purchaser.

 

Section 5.08 Financial Condition of RCFC.  RCFC is not insolvent or the subject of any voluntary or involuntary bankruptcy proceeding.

 

Section 5.09 Securities Act.  Assuming the accuracy of the representations of the Initial Note Purchaser set forth in Section 7.01 and compliance with the provisions of Section 7.01 and assuming there has been no general solicitation or general advertising within the meaning of the Securities Act, the offer and sale of the Series 2011-2 Notes by RCFC to the Initial Note Purchaser pursuant to and in the manner contemplated by this Agreement is a transaction exempt from the registration requirements of the Securities Act, and the Base Indenture is not required to be qualified under the Trust Indenture Act.

 

Section 5.10 Investment Company Act. RCFC is not an “investment company” or controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 5.11 Full Disclosure.  No written information furnished or to be furnished by RCFC or any of its agents or representatives to the Initial Note Purchaser for purposes of or in connection with this Agreement, including, without limitation, any information relating to the Group VIII Collateral is or shall be inaccurate in any material respect, or contains or shall contain any material misstatement of fact, or omits or shall omit to state a material fact necessary to make the statements contained therein not misleading, in each case as of the date such information was or shall be stated or certified; provided, that with respect to any projections or forecasts heretofore or hereafter furnished by or on behalf of RCFC, RCFC represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time such information was prepared.

 

  

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Section 5.12 Amortization Events.  No Amortization Event, Liquidation Event of Default, Limited Liquidation Event of Default or Potential Amortization Event has occurred and is continuing with respect to any Group VIII Series of Notes.

 

Section 5.13 Related Documents.  RCFC has furnished to the Initial Note Purchaser true, accurate and complete copies of all other Related Documents to which it is a party as of the Series 2011-2 Closing Date, all of which Related Documents are in full force and effect as of the Series 2011-2 Closing Date and reflect all amendments or modifications as of such date.

 

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF DTAG

 

DTAG hereby makes the following representations and warranties to the Initial Note Purchaser as of the Series 2011-2 Closing Date (except to the extent they expressly relate to an earlier or later time or expressly set forth in this Article VI), and RCFC acknowledges and agrees that each Note Purchaser shall have relied on such representations and warranties in purchasing the Series 2011-2 Notes.

 

Section 6.01 Master Lease.  Each representation and warranty of DTAG set forth in the Master Lease and each other Related Document to which it is a party (including any representations and warranties made by it as Master Servicer) is true and correct in all material respects.

 

Section 6.02 Authority, etc.

 

(a) Each of DTAG, DTG Operations and any other Permitted Lessee that is then a Lessee under the Master Lease has been duly organized and is validly existing and in good standing as a corporation under the laws of the jurisdiction of its incorporation, with corporate power and authority to own its properties and to transact the business in which it is now engaged, and each of DTAG, DTG Operations and any such Permitted Lessee is duly qualified to do business and is in good standing (or is exempt from such requirements) in each State of the United States where the nature of its business requires it to be so qualified unless the failure to be so qualified and in good standing would not have a material adverse effect on the interests of the Initial Note Purchaser.

 

(b) The performance of the obligations of each of DTAG, DTG Operations and any other Permitted Lessee that is then a Lessee under the Master Lease under the Series Documents to which any of them is a party and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than any Lien created by the Series Documents) upon any of the property or assets of DTAG, DTG Operations or any such Permitted Lessee pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it or any of its Affiliates is bound or to which any of its property or assets is subject, nor will such action result in any violation of the provisions of its Certificate of Incorporation or By-Laws or any Governmental Rule applicable to DTAG, DTG Operations or any such Permitted Lessee.

 

  

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(c) No Governmental Action which has not been obtained or made by DTAG, DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease is required to be obtained or made by DTAG, DTG Operations or any such Permitted Lessee in connection with any of the Series Documents to which any of them is a party.

 

(d) Each of the Series Documents to which any of them is a party has been duly authorized, executed and delivered by DTAG, DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease, and is the valid and legally binding obligation of DTAG, DTG Operations or any such Permitted Lessee, as the case may be, enforceable against DTAG, DTG Operations or any such Permitted Lessee, as the case may be, in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.

 

Section 6.03 Litigation.  Except as set forth in Schedule II hereto, there is no pending or, to the knowledge of DTAG, threatened action, suit or proceeding by or against DTAG, DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease before any Governmental Authority or any arbitrator (i) with respect to any Series Document or any of the transactions contemplated herein or therein, or (ii) with respect to DTAG, DTG Operations or any such Permitted Lessee, which, in the case of any such action, suit or proceeding with respect to DTAG, DTG Operations or any such Permitted Lessee, if adversely determined, would have a material adverse effect on the ability of DTAG, DTG Operations or any such Permitted Lessee to perform its obligations hereunder or thereunder.

 

Section 6.04 Taxes, etc.  Any taxes, fees and other charges of Governmental Authorities applicable to DTAG, DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease, except for franchise or income taxes, in connection with the execution, delivery and performance by DTAG, DTG Operations or any such Permitted Lessee of the Series Documents to which any of them is a party or otherwise applicable to DTAG, DTG Operations or any such Permitted Lessee in connection with the transactions contemplated herein or therein have been paid or will be paid by DTAG, DTG Operations or any such Permitted Lessee, as the case may be, at or prior to the Series 2011-2 Closing Date, to the extent then due.

 

Section 6.05 Financial Condition of DTAG.  None of DTAG, DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease is insolvent or the subject of any insolvency proceeding.

 

Section 6.06 Full Disclosure.  No written information furnished or to be furnished by DTAG, DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease or their respective agents or representatives to the Initial Note Purchaser for purposes of or in connection with the Series Documents is or shall be inaccurate in any material respect, or contains or shall contain any material misstatement of fact, or omits or shall omit to state a material fact necessary to make the statements contained therein not misleading, in each case as of the date such information was or shall be stated or certified; provided that with respect to any projections or forecasts heretofore or hereafter furnished by or on behalf of DTAG, DTG Operations or any such Permitted Lessee, DTAG represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time such information was prepared.

 

  

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Section 6.07 Financial Statements.  The audited consolidated balance sheet of Dollar Thrifty Automotive Group, Inc. and its Subsidiaries as of December 31, 2010 and the related statements of income, stockholders equity and cash flows for the year ending on such date (the “Financial Statements”), have been prepared in accordance with GAAP and present fairly in all material respects the consolidated financial position of Dollar Thrifty Automotive Group, Inc. and its Subsidiaries as of the date thereof and the consolidated results of their operations for the periods covered thereby.

ARTICLE VII.

REPRESENTATIONS, WARRANTIES AND COVENANTS

WITH RESPECT TO THE NOTE PURCHASERS

 

Each Note Purchaser hereby makes the following representations, warranties and covenants to RCFC and DTAG, as of the Series 2011-2 Closing Date, in the case of the Initial Note Purchaser, or as of the date of the related Assignment and Assumption Agreement, in the case of each other Note Purchaser, and each Note Purchaser acknowledges and agrees that RCFC and DTAG shall have relied upon such representations, warranties and covenants in entering into this Agreement and in consummating the transactions contemplated by this Agreement (including the issuance of the Series 2011-2 Notes).

 

Section 7.01 Securities Act.  The Series 2011-2 Notes acquired by any Note Purchaser pursuant to this Agreement will be acquired for investment only and not with a view to any distribution, resale or other transfer thereof, except as contemplated by the next sentence.  No Note Purchaser shall sell or offer to sell or otherwise transfer its interest in any Series 2011-2 Note acquired by it, except (A) in accordance with the Series 2011-2 Indenture and this Agreement and (B) (i) to RCFC or (ii) in a transaction exempt from the registration requirements of the Securities Act and applicable state securities or “blue sky” laws, to a Person who such Note Purchaser reasonably believes is a qualified institutional buyer (within the meaning thereof in Rule 144A under the Securities Act) that is aware that the resale or other transfer is being made in reliance upon Rule 144A.  Each Note Purchaser acknowledges that it has no right to require RCFC to register under the Securities Act, or any other securities law, any Series 2011-2 Note to be acquired by any Note Purchaser pursuant to this Agreement.  Each Note Purchaser shall comply with all applicable federal and state securities laws in connection with any subsequent resale of the Series 2011-2 Notes.

 

Each Note Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Series 2011-2 Notes and each Note Purchaser is able to bear the economic risk of such investment.  Each Note Purchaser understands and acknowledges that an offering memorandum concerning the Series 2011-2 Notes is not being prepared and each Note Purchaser has reviewed the Base Indenture and other Series Documents (including the schedules and exhibits thereto) and has had the opportunity to perform due diligence with respect thereto and to ask questions of and receive answers from RCFC and its representatives concerning RCFC, the Group VIII Collateral, the Series Documents and the Series 2011-2 Notes.  

 

  

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Each Note Purchaser that is purchasing or has purchased, as applicable, Series 2011-2 Notes or an interest therein from RCFC is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act.  Each Note Purchaser is a “qualified institutional buyer” within the meaning of Rule 144A promulgated by the Commission under the Securities Act.  Each Note Purchaser is purchasing the Series 2011-2 Notes for its own account for investment purposes only and not with a view to distribution, subject, nevertheless, to the understanding that the disposition of its property shall at all times be and remain within its control and be in accordance with the provisions of this Section 7.01.

 

Each Note Purchaser understands that the offering and sale of the Series 2011-2 Notes have not been and will not be registered under the Securities Act, and have not and will not be registered or qualified under any applicable “blue sky” or state securities law, and that the offering and sale of the Series 2011-2 Notes have not been reviewed by, passed on or submitted to the Commission or any other Governmental Authority.  Each Note Purchaser understands that the Series 2011-2 Notes will bear the legend set out in the form of Series 2011-2 Notes attached as Exhibit A to the Series 2011-2 Supplement and be subject to the restrictions on transfer described in such legend.

 

ARTICLE VIII.

COVENANTS OF RCFC AND DTAG

 

Section 8.01 Access to Information.

 

(a) So long as any Series 2011-2 Note remains outstanding, RCFC and DTAG will, at any time from time to time during regular business hours with reasonable advance notice to RCFC or DTAG, as the case may be, permit the Controlling Noteholder, or its agents or representatives, to access the offices of the Master Servicer, any Lessee, DTAG or RCFC (i) to examine, inspect, audit, make copies of and abstracts from all books and records and documentation (including, without limitation, the Monthly Noteholders’ Statements) relating to the Group VIII Collateral and to discuss the affairs, finances and accounts with their officers, directors, employees and independent public accountants and on such other terms as are provided to the Trustee under Section 7.8 of the Base Indenture, (ii) to visit the offices and properties of the Master Servicer, any Lessee, DTAG or RCFC for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to the Group VIII Collateral, or the administration and performance of the Series 2011-2 Indenture and the other Series Documents, with any of the officers or employees of the Master Servicer, any Lessee, DTAG and/or RCFC, as applicable, having knowledge of such matters, (iii) in connection with any Servicer Audit Report and the related examination as set forth in clause (b) below and (iv) in connection with any Flooring Audit and the related examination as set forth in clause (c) below.

 

(b) Upon reasonable advance notice to DTAG and RCFC, the Controlling Noteholder may, at its sole cost and expense, select a firm of independent certified public accountants, which firm shall be reasonably acceptable to DTAG and may be the accountants of DTAG, and cause such firm to audit the servicing of the Group VIII Collateral by the Master Servicer and the performance of the Group VIII Collateral and to deliver to the Note Purchasers a Servicer Audit Report 

 

  

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(in form reasonably acceptable to the Controlling Noteholder) twice per calendar year; provided, that after the occurrence and during the continuance of a Potential Amortization Event or an Amortization Event, such request for a Servicer Audit Report may be made at any time upon reasonable advance notice without limitation as to frequency and such Servicer Audit Reports shall be at RCFC’s sole cost and expense.

 

(c) Twice per calendar year, upon reasonable advance notice to DTAG and each Lessee, the Controlling Noteholder may, at its sole cost and expense, visit the offices, properties and/or selected rental locations of each Lessee for purposes of inspecting the Group VIII Vehicles at such offices, properties and/or rental locations (in each case, a “Flooring Audit”); provided, that after the occurrence and during the continuance of a Potential Amortization Event or an Amortization Event, such request for a Flooring Audit may be made at any time upon reasonable advance notice without limitation as to frequency and such Flooring Audits shall be at RCFC’s sole cost and expense.  In connection with each such Flooring Audit, DTAG shall provide the Controlling Noteholder with (i) a list of all Group VIII Vehicles at such offices, properties and/or rental locations and (ii) access to each such Group VIII Vehicle for purposes of a physical inspection (or, if at the time of such Flooring Audit, any Group VIII Vehicle is either rented by a customer or undergoing maintenance, access to the related rental agreement or maintenance agreement, respectively).

 

Section 8.02 Security Interests; Further Assurances.  RCFC and DTAG shall take all action necessary to maintain the Trustee’s first priority perfected security interest for the benefit of the Group VIII Noteholders in the Group VIII Collateral granted pursuant to Section 3.1 of the Base Indenture, Section 3.1 of the Series 2011-2 Supplement and Section 2.1 of the Master Collateral Agency Agreement.  RCFC and DTAG agree to take any and all acts and to execute any and all further instruments necessary or reasonably requested by the Controlling Noteholder, the Trustee or the Master Collateral Agent to more fully effect the purposes of this Agreement.

 

Section 8.03 Covenants.  RCFC and DTAG shall duly observe and perform, and cause the Lessees to duly observe and perform, each of their respective covenants set forth in the Series Documents to which they are parties.

 

Section 8.04 Amendments.

 

(a) Neither RCFC nor DTAG shall make, or permit the Lessees to make, except as contemplated by Section 3.2(a) of the Base Indenture with respect to the Master Lease or clauses (c) through (h) of Section 11.1 of the Base Indenture, any amendment, modification or change to, or provide any waiver under, any Series Document to which they are party (other than this Agreement or the Series 2011-2 Series Supplement) with respect to the Series 2011-2 Notes or the Group VIII Collateral or otherwise relating to or affecting the rights of the Series 2011-2 Noteholders or, except in respect of any increase or decrease in the stated amount thereof or as otherwise expressly contemplated under Section 4.16 of the Series 2011-2 Supplement, to the Series 2011-2 Letter of Credit, without the prior written consent of the Series 2011-2 Required Noteholders, which consent shall not be unreasonably withheld, conditioned or delayed; it being agreed, for the avoidance of doubt, that this Section 8.04(a) shall not apply to the issuance as contemplated in Section 11.1(a) of the Base Indenture of any new Series of Notes.

 

  

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(b) RCFC shall not amend any of its organizational documents, including its Certificate of Incorporation, without the prior written consent of the Series 2011-2 Required Noteholders and otherwise in accordance with Section 7.22 of the Base Indenture.

 

Section 8.05 Information from DTAG.  So long as the Series 2011-2 Notes remain outstanding, DTAG shall furnish the following to the Controlling Noteholder:

 

(a) a copy of each certificate, opinion, report, statement, notice or other communication (other than investment instructions) relating to the Series 2011-2 Notes or the Group VIII Collateral or otherwise relating to or affecting the rights of the Series 2011-2 Noteholders which the Series Documents require to be furnished by or on behalf of DTAG or RCFC to the Trustee or the Rating Agencies under any Series Document, concurrently therewith, and promptly after receipt thereof, a copy of each notice, demand or other communication relating to the Series 2011-2 Notes or the Group VIII Collateral or otherwise relating to or affecting the rights of the Series 2011-2 Noteholders received by or on behalf of DTAG or RCFC under any Series Document;

 

(b) such other information (including financial information), documents, records or reports respecting the Group VIII Collateral, RCFC or the Master Servicer as the Controlling Noteholder may from time to time reasonably request; and

 

(c) promptly upon becoming aware of any Potential Amortization Event, Amortization Event, Potential Lease Event of Default or Lease Event of Default, written notice thereof.

 

Section 8.06 Principal Office.  RCFC shall not, nor shall RCFC or DTAG permit DTG Operations or any other Permitted Lessee that is then a Lessee under the Master Lease to, change the location of their respective principal office without 60 days prior notice to the Controlling Noteholder and otherwise in compliance with the Series Documents to which they are party.

 

Section 8.07 Cash Audits.  At any time and from time to time, following reasonable prior notice from the Controlling Noteholder, RCFC and DTAG shall cooperate with the Controlling Noteholder or its agents or representatives (including any independent public accounting firm or other third party auditors) in conducting a review of any 10 Business Days selected by the Controlling Noteholder (or its representatives or agents) and at the Controlling Noteholder’s sole cost and expense, confirming (i) the information contained in the Daily Report for each such day and (ii) that the Collections described in each such Daily Report for each such day were applied correctly in accordance with Article 4 of the Series 2011-2 Supplement (a “Cash Audit”); provided, that such Cash Audits shall be at RCFC’s sole cost and expense after the occurrence and during the continuance of an Amortization Event or Potential Amortization Event with respect to the Series 2011-2 Notes.

 

Section 8.08 Margin Stock.  RCFC and DTAG shall not permit (a) any part of the proceeds of the sale of the Series 2011-2 Notes to be (x) used to purchase or carry any Margin Stock or (y) loaned to others for the purpose of purchasing or carrying any Margin Stock or (b) any amounts owed with respect to the Series 2011-2 Notes to be secured, directly or indirectly, by any Margin Stock.

 

  

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Section 8.09 Back-up Disposition Agent Agreement.  Neither RCFC nor DTAG shall amend the Back-Up Disposition Agent Agreement or the Back-up Servicing Agreement in a manner that materially adversely affects the Series 2011-2 Noteholders, as determined by the Series 2011-2 Required Noteholders in their sole discretion, without the prior written consent of the Series 2011-2 Required Noteholders.

 

Section 8.10 Independent Directors.  RCFC shall not (a) remove any independent director of RCFC, without (i) delivering an Officers’ Certificate to the Trustee certifying that the replacement independent director of RCFC satisfies the requirements of its Certificate of Incorporation or Bylaws and (ii) obtaining the prior written consent of the Series 2011-2 Required Noteholders (not to be unreasonably withheld, conditioned or delayed), in each case, no later than 10 Business Days prior to the effectiveness of such removal, or (b) replace any independent director of RCFC unless (i) it has obtained the prior written consent of the Series 2011-2 Required Noteholders (not to be unreasonably withheld, conditioned or delayed) or (ii) such replacement independent director is an officer, director or employee of an entity that provides, in the ordinary course of its business, advisory, management or placement services to issuers of securitization or structured finance instruments, agreements or securities and otherwise meets the requirements of its organizational documents.

 

Section 8.11 Fleet Report.  RCFC shall, within 45 days following the end of each calendar quarter, provide or cause to be provided to the Trustee and the Note Purchasers a report containing the information set forth in, and substantially in the form of, Exhibit C to the Master Collateral Agency Agreement (a “Fleet Report”).

 

Section 8.12 Monthly Vehicle Statements.  On each Reporting Date, promptly after the receipt thereof, RCFC shall furnish or cause to be furnished to the Note Purchasers the “Monthly Vehicle Statement” provided pursuant to Section 24.4(f) of the Master Lease.

 

Section 8.13 Weekly Vehicle Statements.  The Master Servicer, for so long as a Liquidation Event of Default or a Limited Liquidation Event of Default for any Series of Notes is continuing, upon request by the Controlling Noteholder, shall, within 2 Business Days following the end of each calendar week, furnish or cause to be furnished to the Note Purchasers a report (which may be on a diskette or other electronic medium) that contains the same data set forth in a “Monthly Vehicle Statement” provided pursuant to Section 24.4(f) of the Master Lease, but determined on a weekly basis.

 

Section 8.14 Demand Note.  RCFC shall not, without the prior written consent of the Series 2011-2 Required Noteholders, reduce the principal amount of the Demand Note below the principal amount thereof as of the Series 2011-2 Closing Date.

 

Section 8.15 Title Audit.  The Controlling Noteholder may, or may cause a nationally recognized firm of independent accountants to, at the Controlling Noteholder’s sole cost and expense, from time to time and with reasonable advance notice to the Master Servicer, perform certain agreed upon procedures on a statistical sample of the Certificates of Title of the Group VIII Vehicles designed to provide, to a certain specified confidence level, confirmation that such Vehicles are titled in the name of Rental Car Finance Corp. and the Certificates of Title indicate a first lien in the name of the Master Collateral Agent.

 

  

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Section 8.16 Non-Program Vehicle Report.  Concurrently with the furnishing thereof to the recipients specified in the Master Lease, the Master Servicer shall furnish or cause to be furnished to the Controlling Noteholder the “Non-Program Vehicle Report” provided pursuant to Section 24.4(h) of the Master Lease.

 

Section 8.17 Rating of Series 2011-2 Notes.  At any time and from time to time after the Series 2011-2 Closing Date, following at least 30 days’ prior notice from the Controlling Noteholder, RCFC and DTAG shall provide reasonable cooperation to the Controlling Noteholder or its agents or representatives in obtaining a rating on the Series 2011-2 Notes from one or more nationally recognized statistical ratings organizations selected by the Controlling Noteholder by providing reasonable assistance with data and other information requests of the Controlling Noteholder or any such ratings organization in respect of RCFC, DTAG or the Group VIII Collateral; provided, that such data or other information requested has been customarily provided by RCFC or DTAG to rating organizations in the past and is in RCFC or DTAG’s possession or could be obtained and/or prepared by RCFC or DTAG without undue hardship or material expense; provided, further, that the cost and expense of obtaining any such rating shall be borne solely by the Controlling Noteholder.

 

ARTICLE IX.

ADDITIONAL COVENANTS

 

Section 9.01 Legal Conditions to Closing.  The parties hereto shall take all reasonable action necessary to obtain (and shall cooperate with one another in obtaining) any consent, authorization, permit, license, franchise, order or approval of, or any exemption by, any Governmental Authority or any other Person, required to be obtained or made by it in connection with the closing of the transactions contemplated by this Agreement.

 

Section 9.02 Expenses.  All costs and expenses (including reasonable fees and expenses of counsel to the Initial Note Purchaser) incurred in connection with the preparation, execution and delivery of this Agreement and the other Series Documents up to $150,000 (except such cap shall not apply to such fees and expenses of counsel to the Initial Note Purchaser) shall (as between RCFC and the Initial Note Purchaser) be paid by RCFC.

 

Section 9.03 Consents, etc.  Each Note Purchaser agrees not to unreasonably withhold, condition or delay its consent to any amendment or other matter requiring consent of the Series 2011-2 Noteholders under a provision of any Series Document to the extent that such provision specifies that such consent is not to be unreasonably withheld, conditioned or delayed.

 

Section 9.04 Third-Party Market Value.  The Controlling Noteholder agrees to comply with Section 8.9 of the Series 2011-2 Supplement.

 

  

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ARTICLE X.

INDEMNIFICATION

 

Section 10.01 Indemnification.

 

(a) In consideration of the execution and delivery of this Agreement (or an Assignment and Assumption Agreement in connection herewith) by the Note Purchasers, RCFC hereby indemnifies and holds the Indemnified Parties harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and reasonable expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought and including, without limitation, any liability in connection with the offering and sale of the Series 2011-2 Notes), including reasonable attorneys’ fees and disbursements (collectively, the “Indemnified Liabilities”), incurred by the Indemnified Parties or any of them (whether in prosecuting or defending against such actions, suits or claims) as a result of, or arising out of, or relating to:

 

(i) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Series 2011-2 Notes; or

 

(ii) the entering into and performance of this Agreement and any other Series Document by any of the Indemnified Parties; or

 

(iii) any breach by RCFC of any representation, warranty or covenant in this Agreement, any other Series Document to which it is a party or in any certificate or other written material delivered pursuant hereto or thereto; in each case as such Indemnified Liabilities are incurred, payable promptly upon request.

 

(b) In consideration of the execution and delivery of this Agreement (or an Assignment and Assumption Agreement in connection herewith) by the Note Purchasers, DTAG hereby indemnifies and holds the Indemnified Parties harmless from and against any and all Indemnified Liabilities incurred by the Indemnified Parties or any of them (whether in prosecuting or defending against such actions, suits or claims) as a result of, or arising out of, or relating to any breach of any representation, warranty or covenant of DTAG in this Agreement, any Series Document to which it is a party or in any certificate or other written material delivered pursuant hereto, as such Indemnified Liabilities are incurred, payable promptly upon request.

 

(c) Notwithstanding the indemnities set forth in Section 10.01(a) and (b) above, in no event shall any Indemnified Party be entitled to any indemnity or claim with respect to actions, causes of action, suits, costs, expenses, liabilities, damages or losses (i) resulting from (A) the disposition price or market value of Group VIII Vehicles, (B) performance of the Group VIII Collateral securing the Series 2011-2 Notes or the value, performance, market fluctuations or similar market or investment risks associated with ownership of the Series 2011-2 Notes (including, without limitation, those associated with the pledge, transfer or assignment thereof), (ii) which are the subject of Sections 2.01, 2.02 or 2.03 hereof, or (ii) arising from such Indemnified Party’s own gross negligence, willful misconduct or such Indemnified Party’s breach of Article VII hereof or any transfer restrictions set forth in the Series 2011-2 Notes.  

 

  

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If and to the extent that the foregoing undertaking may be unenforceable for any reason, each of DTAG and RCFC hereby agrees to make the maximum contribution owed by it under this Section 10.01 to the payment and satisfaction of each of the Indemnified Liabilities owed by it under this Section 10.01 and which is permissible under applicable law.

 

Section 10.02 Procedure.  In order for an Indemnified Party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of, or involving a claim made by any Person against the Indemnified Party (a “Third Party Claim”), such Indemnified Party must notify DTAG or RCFC, as applicable (the “Applicable Indemnifying Party”), in writing of the Third Party Claim within a reasonable time after receipt by such Indemnified Party of written notice of the Third Party Claim unless the Applicable Indemnifying Party shall have previously obtained actual knowledge thereof.  Thereafter, the Indemnified Party shall deliver to the Applicable Indemnifying Party, within a reasonable time after the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to the Third Party Claim.

 

Section 10.03 Defense of Claims.  If a Third Party Claim is made against an Indemnified Party, (a) the Applicable Indemnifying Party will be entitled to participate in the defense thereof and, (b) if it so chooses, to assume the defense thereof with counsel selected by the Applicable Indemnifying Party, provided that in connection with such assumption such counsel is not reasonably objected to by the Indemnified Party.  Should the Applicable Indemnifying Party so elect to assume the defense of a Third Party Claim, the Applicable Indemnifying Party will not be liable to the Indemnified Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof.  If the Applicable Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnified Party shall (i) cooperate in all reasonable respects with the Applicable Indemnifying Party in connection with such defense and (ii) not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Applicable Indemnifying Party’s prior written consent, as the case may be.  If the Applicable Indemnifying Party shall assume the defense of any Third Party Claim, the Indemnified Party shall be entitled to participate in (but not control) such defense with its own counsel at its own expense.  If the Applicable Indemnifying Party does not assume the defense of any such Third Party Claim, the Indemnified Party may defend the same in such manner as it may deem appropriate, including settling such claim or litigation with the prior written consent of the Applicable Indemnifying Party and upon any such settlement consented to by the Applicable Indemnifying Party, the Applicable Indemnifying Party will promptly reimburse the Indemnified Party therefor upon written request.  Notwithstanding anything contained in this Agreement to the contrary, no Applicable Indemnifying Party shall be entitled to assume the defense of any part of a Third Party Claim that seeks a temporary restraining order, injunction or other equitable relief or relief for other than money damages against the Indemnified Party.

 

Section 10.04 Costs, Expenses and Increased Costs under Agreement

 

(a) RCFC shall be obligated to pay to each Note Purchaser as contemplated by Section 2.04, after receipt of a reasonably detailed written notice, 

 

  

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(i) all reasonable costs and expenses in connection with the preparation, execution and delivery of any requested amendments, waivers or consents relating to this Agreement or the other Series Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Note Purchasers, with respect thereto and with respect to advising the Note Purchasers as to their respective rights and remedies under this Agreement and the other documents delivered hereunder or in connection herewith and (ii) all costs and expenses, if any, in connection with the enforcement of this Agreement and the other documents delivered hereunder or in connection herewith.

 

(b) Subject to Section 11.09, RCFC shall remain obligated to pay to the applicable Note Purchasers in accordance with the Series 2011-2 Supplement, the amount of any Additional Amounts payable to them to the extent not paid when otherwise required on a Payment Date pursuant to Section 4.7 of the Series 2011-2 Supplement.

 

ARTICLE XI.

MISCELLANEOUS

 

Section 11.01 Amendments.  No amendment to or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed by the Master Servicer, RCFC, and the Series 2011-2 Required Noteholders; provided, however, that any such amendment or waiver of any provision of this Agreement shall be subject to the consent of each Note Purchaser to the extent that the approval of such amendment or waiver requires the consent of each affected Noteholder under Section 11.2 of the Base Indenture.  Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  RCFC shall provide Standard & Poor’s Rating Services with written notice of any amendment to this Agreement if Standard & Poor’s Ratings Services is then rating any Series of Notes.

 

Section 11.02 Notices.

 

(a)           Any instruction, notice or communication provided for hereunder is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the other’s address set forth in Schedule I hereto or at such other address as shall be designated by such party in a written notice to the other parties hereto.  All notices to the Trustee shall be made in accordance with Section 12.1 of the Base Indenture.

 

(b)           Any notice (i) given in person shall be deemed delivered on the date of delivery of such notice, (ii) given by first class mail shall be deemed given five (5) days after the date that such notice is mailed, (iii) delivered by telecopier shall be deemed given on the date of delivery of such notice, and (iv) delivered by overnight air courier shall be deemed delivered one Business Day after the date that such notice is delivered to such overnight courier.  In the case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made that is satisfactory to the Series 2011-2 Required Noteholders shall constitute a sufficient notification for every purpose hereunder.

 

  

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(c)           Where this Agreement provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.

 

Section 11.03 No Waiver; Remedies.  No failure on the part of any party hereto to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

Section 11.04 Binding Effect; Assignability.  Subject to Sections 11.04(b) and 11.04(c), this Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns (including any subsequent Holders of the Series 2011-2 Notes); provided, however, that neither RCFC nor DTAG shall have the right to assign its rights hereunder or any interest herein (voluntarily, by operation of law or otherwise) without the prior written consent of the Note Purchasers; provided, that nothing herein shall prevent RCFC from assigning its rights to the Trustee under the Base Indenture and the Series 2011-2 Supplement.  Nothing expressed herein is intended or shall be construed to give any Person other than the Persons referred to in the preceding sentence any legal or equitable right, remedy or claim under or in respect of this Agreement.

 

(b) Any Note Purchaser may assign all or a portion of the Series 2011-2 Notes held by it, together with its related rights and obligations under this Agreement and any other Related Documents to one or more Persons in accordance with Section 7.01; provided, that a Note Purchaser shall not be permitted to assign any of its rights or obligations under this Agreement and the related Series 2011-2 Notes to any Ineligible Assignee/Participant; provided, further, that in no event shall there be more than ten Note Purchasers at any time.  The parties to each such permitted assignment shall execute and promptly deliver an Assignment and Assumption Agreement to RCFC.  From and after the effective date of such Assignment and Assumption Agreement, the assigning Note Purchaser shall be relieved of its rights and obligations hereunder to the extent so assigned.  Notwithstanding anything to the contrary contained herein, to the extent that any such assignment would, at the time of such assignment, result in increased costs under Sections 2.01, 2.02 or 2.03 from those being charged by the respective assigning Note Purchaser prior to such assignment, then RCFC shall not be obligated to pay such increased costs (although RCFC, in accordance with and pursuant to other provisions of this Agreement shall be obligated to pay any other increased costs of the type covered by any such Section resulting from changes after the date of the respective assignment).

 

(c) The Initial Note Purchaser may, in accordance with applicable law, at any time sell to one or more of its Affiliates (each, a “Participant”) participating interests in all or a portion of its rights and obligations under this Agreement and the Series 2011-2 Notes pursuant to documentation in form and substance satisfactory to the Initial Note Purchaser and the related Participant; provided, that the Initial Note Purchaser shall not be permitted to sell any participating interest in all or any portion of its rights or obligations under this Agreement and the related Series 2011-2 Notes to any Ineligible Assignee/Participant.  Notwithstanding any such sale by the Initial Note Purchaser of a participating interest to a Participant, (i)(x) such Initial Note Purchaser’s rights and obligations under this Agreement shall remain unchanged, 

 

  

24

  

 

(y) such Initial Note Purchaser shall remain solely responsible for the performance thereof, and (z) RCFC and the other parties hereto shall continue to deal solely and directly with such Initial Note Purchaser in connection with this Agreement and (ii) the Initial Note Purchaser shall not sell any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement, the Base Indenture, the Series 2011-2 Supplement or any Related Document, except to the extent that the approval of such amendment, consent or waiver requires the consent of each affected Noteholder under Section 11.2 of the Base Indenture.  RCFC also agrees that each Participant shall be entitled to the benefits of Sections 2.01, 2.02 and 2.03 hereof; provided, however, that all amounts payable by RCFC to any such Participant shall be limited to the amounts which would have been payable to the Initial Note Purchaser selling such participating interest had such interest not been sold and, with respect to amounts due pursuant to Section 2.03, only to the extent such Participant shall have complied with the provisions of Section 2.03 as if such Participant were the Initial Note Purchaser.

 

Section 11.05 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

Section 11.06 No Proceedings.  Each of the parties hereto hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of any Series 2011-2 Notes issued by RCFC pursuant to the Base Indenture, it will not institute against, or join with any other Person in instituting against, RCFC, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any Federal or state bankruptcy or similar law, all as more particularly set forth in Section 12.15 of the Base Indenture and subject to any retained rights set forth therein; provided, however, that nothing in this Section 11.06 shall constitute a waiver of any right to indemnification, reimbursement or other payment from RCFC pursuant to this Agreement or the Series 2011-2 Indenture.  If any party hereto takes action in violation of this Section 11.06, RCFC agrees that it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such a petition by any such Person against RCFC or the commencement of such action and raise the defense that such Person has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.  The provisions of this Section 11.06 shall survive the termination of this Agreement.  Nothing contained herein shall preclude participation by any party hereto in assertion or defense of its claims in any such proceeding involving RCFC.

 

Section 11.07 Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

 

Section 11.08 No Recourse.  The obligations of any Note Purchaser under this Agreement, or any other agreement, instrument, document or certificate executed and delivered by or issued by such Note Purchaser or any officer thereof are solely the corporate, partnership or limited liability company obligations of such Note Purchaser.  

 

  

25

  

 

No recourse shall be had for payment of any fee or other obligation or claim arising out of or relating to this Agreement or any other agreement, instrument, document or certificate executed and delivered or issued by such Note Purchaser or any officer thereof in connection therewith, against any stockholder, limited partner, member, employee, officer, director or incorporator of such Note Purchaser.

 

Section 11.09 Limited Recourse.  The obligations of RCFC under this Agreement and the other Series Documents to which it is a party are solely the corporate obligations of RCFC.  No recourse shall be had for the payment of any fee or other obligation or claim arising out of or relating to this Agreement or the other Series Documents or any other agreement, instrument, document or certificate executed and delivered or issued by RCFC or by any stockholder, officer, director or employee thereof in connection herewith or therewith, against any stockholder, employee, officer or director of RCFC.  Notwithstanding anything herein to the contrary, each of the parties hereto agrees that amounts owed to them by RCFC under the Series Documents to which RCFC is a party shall be payable solely from amounts that become available for payment pursuant to the Series 2011-2 Indenture.

 

Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement, (i) RCFC shall have no liability for any obligation of DTAG or for any claim against DTAG, and (ii) DTAG shall have no liability for any obligation of RCFC or for any claim against RCFC.

 

Section 11.10 Term; Survival.

 

(a) This Agreement shall create and constitute the continuing obligation of the parties hereto in accordance with its terms and shall remain in full force and effect until such time as all amounts payable with respect to the Series 2011-2 Notes shall have been paid in full, at which time this Agreement shall terminate except as otherwise provided in Section 11.10(b).

 

(b) All covenants and indemnification contained in Article X and Sections 11.06, 11.08 and 11.09 of this Agreement shall survive the sale, transfer or repayment of the Series 2011-2 Notes.

 

Section 11.11 Tax Characterization.  Each party to this Agreement (a) acknowledges that it is the intent of the parties to this Agreement that, for accounting purposes and for all federal, state and local income and franchise tax purposes, the Series 2011-2 Notes will be treated as evidence of indebtedness issued by RCFC, (b) agrees to treat the Series 2011-2 Notes for all such purposes as indebtedness and (c) agrees that the provisions of the Related Documents shall be construed to further these intentions.

 

Section 11.12 Severability; Series 2011-2 Note Rate Limitation.

 

(a) If any one or more of the covenants, agreements, provisions or terms of this Agreement shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Series 2011-2 Notes.

 

  

26

  

 

(b) Notwithstanding anything in this Agreement, the other Series Documents or any Series 2011-2 Note to the contrary, if at any time the Series 2011-2 Note Rate with respect to a Series 2011-2 Note, together with all fees, charges and other amounts which are treated as interest on such Series 2011-2 Note, under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by such Series 2011-2 Noteholder in accordance with the terms of this Agreement, the other Series Documents or such Series 2011-2 Note, then the Series 2011-2 Note Rate, together with all Charges payable in respect of such Series 2011-2 Note, shall be limited to the Maximum Rate and, to the extent lawful, the Series 2011-2 Note Rate and Charges that would have been payable in respect of such Series 2011-2 Note, but were not payable as a result of the operation of this Section, shall be cumulated and such cumulated amounts shall be payable to the applicable Series 2011-2 Noteholder in later periods to the extent such payment would not cause the then current Series 2011-2 Note Rate and then current Charges together with such cumulated amounts to exceed the Maximum Rate until such cumulated amount shall have been received by such Series 2011-2 Noteholder.

 

Section 11.13 Headings.  The headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.

 

Section 11.14 Submission to Jurisdiction.  Each of the parties hereto hereby irrevocably and unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement, any other Series Document, any Series 2011-2 Note or the other documents executed and delivered in connection herewith or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

 

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address determined in accordance with Section 11.02; and

 

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction.

 

Section 11.15 Characterization as Related Document; Entire Agreement.  This Agreement shall be deemed to be a Related Document for all purposes of the Series 2011-2 Indenture and the other Related Documents.  This Agreement, together with the Series 2011-2 Indenture, the agreements delivered pursuant to Article IV and the other Related Documents, including the exhibits and schedules thereto, contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all previous oral statements and other writings with respect thereto.

 

  

27

  

 

Section 11.16 Confidentiality.

 

(a) Each Note Purchaser hereby agrees that neither it (nor its agents or representatives) shall disclose the terms and conditions of the Series Documents or any Confidential Information to any Person without the prior written consent of DTAG, RCFC and the applicable Lessee.  Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit any Note Purchaser from (i) disclosing any and all information that is or becomes publicly known through no fault of a Note Purchaser (including a breach of this Section 11.16), (ii) disclosure of any and all information (which makes reference to RCFC or this transaction) obtained by any Note Purchaser from sources (other than RCFC) that to the knowledge of such Note Purchaser are not subject to a confidentiality obligation with RCFC, DTAG or the applicable Lessee, as the case may be, (iii) disclosing any and all information (A) if required to do so by any applicable statute, law, rule or regulation or judicial process, (B) to any government agency or regulatory body having or claiming authority to regulate or oversee any aspects of a Note Purchaser’s business or that of its Affiliates, (C) pursuant to any subpoena (or similar legal process), civil investigative demand or similar demand or request of any court, administrative order or decree, governmental or regulatory authority or self-regulatory authority organization, arbitrator or arbitration to which any Note Purchaser or an Affiliate or an officer, director or employee thereof is a party, (D) to any other Note Purchaser, (E) to actual or prospective assignees and participants meeting the requirements of Sections 11.04(b) or 11.04(c), as applicable, who agree to be bound by the provisions of this Section 11.16(a), (F) to any Affiliate of such Note Purchaser and its officers, directors, employees, agents and advisors (including, without limitation, legal counsel and accountants) having a need to know the same, provided that such Note Purchaser advises such recipient of the confidential nature of the information being disclosed, (G) to any independent or internal auditor, agent, employee, attorney or professional advisor of such Note Purchaser having a need to know the same, provided that such Note Purchaser advises such recipient of the confidential nature of the information being disclosed, (H) in the course of litigation with DTAG, RCFC or the applicable Lessee or (I) to any Person to the extent such Note Purchaser reasonably determines such disclosure is necessary or appropriate in connection with the enforcement or for the defense of the rights and remedies under the Series 2011-2 Notes, the Series 2011-2 Indenture or any other Related Document or (iv) any other disclosure authorized by RCFC in advance in writing.

 

(b) Neither RCFC nor DTAG shall, nor shall RCFC or DTAG permit its Affiliates to, disclose, (x) the terms and conditions of this Agreement to anyone not a party hereto (other than a party or prospective party to a Permitted Change in Control Transaction) or (y) any other non-public information with respect to the Note Purchasers and their respective businesses obtained by RCFC, DTAG or their respective Affiliates in connection with the structuring, negotiating and execution of the transactions contemplated herein; provided, however, that RCFC, DTAG and their respective Affiliates may disclose this Agreement and such non-public information: (i) to their respective officers, directors, employees, agents, auditors, legal counsel and other advisers; (ii) if requested, to any Rating Agency which rates any Series of Notes issued under the Base Indenture; 

 

  

28

  

 

(iii) as may be required by any law, rule or regulation; (iv) as may be required by any direction, request or order of any judicial, arbitral, administrative or regulatory authority or proceedings; and (v) to such Persons as may be approved in writing by the Series 2011-2 Required Noteholders.

 

[SIGNATURES FOLLOW]

 

 

 

  

29

  

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duty authorized, as of the date first above written.

 

	
  

	
RENTAL CAR FINANCE CORP.

 

 

By:  _____________________________________

Name:

Title:

 

 

	
  

	
DOLLAR THRIFTY AUTOMOTIVE GROUP, 

   INC.

 

 

By:  _____________________________________

Name:

Title:

 

 

  

S-1

  

 

WELLS FARGO BANK, N.A., as the Initial Note 

Purchaser

 

 

By:  _____________________________________

Name:

Title:

 

  

S-2

  

EXHIBIT A

 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

This ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of [    ], is made among [] (the “Transferor”), each purchaser listed as an Acquiring Purchaser on the signature pages hereof (each, an “Acquiring Purchaser”) and Rental Car Finance Corp., an Oklahoma corporation (“RCFC”).

 

W I T N E S S E T H:

 

WHEREAS, this Assignment and Assumption Agreement is being executed and delivered in accordance with Section 11.04 of the Note Purchase Agreement, dated as of October 26, 2011 (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the “Series 2011-2 Note Purchase Agreement”; capitalized terms used but not defined herein have the meanings given therein), among RCFC, Dollar Thrifty Automotive Group, Inc., a Delaware corporation (“DTAG” or, in its capacity as master servicer under the Master Lease referred to below, the “Master Servicer”), the Initial Note Purchaser party thereto and the note purchasers from time to time party thereto;

 

WHEREAS, each Acquiring Purchaser (if it is not already an existing Note Purchaser) wishes to become a Note Purchaser party to the Series 2011-2 Note Purchase Agreement; and

 

WHEREAS, the Transferor is selling and assigning to each Acquiring Purchaser, its rights and obligations under the Series 2011-2 Note Purchase Agreement, the Series 2011-2 Notes and the other Related Documents;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

Upon the execution and delivery of this Assignment and Assumption Agreement by each Acquiring Purchaser, the Transferor and RCFC (the date of such execution and delivery, the “Transfer Date”), each Acquiring Purchaser shall be a Note Purchaser party to the Series 2011-2 Note Purchase Agreement for all purposes thereof.

 

The Transferor acknowledges receipt from each Acquiring Purchaser of an amount equal to the purchase price, as agreed between the Transferor and such Acquiring Purchaser, of the portion being purchased by such Acquiring Purchaser (such Acquiring Purchaser’s “Purchased Percentage”) of the Transferor’s rights and obligations under the Series 2011-2 Note Purchase Agreement, the Series 2011-2 Notes and the other Related Documents as set forth on Annex I hereto.  The Transferor hereby irrevocably sells, assigns and transfers to each Acquiring Purchaser, without recourse, representation or warranty except as provided herein, and each Acquiring Purchaser hereby irrevocably purchases, takes and assumes from the Transferor, such Acquiring Purchaser’s Purchased Percentage of the Transferor’s rights and obligations under the Series 2011-2 Note Purchase Agreement as set forth on Annex I hereto.

 

  

Exhibit A - 1

  

 

From and after the Transfer Date, amounts that would otherwise be payable to or for the account of the Transferor pursuant to the Series 2011-2 Supplement or the Series 2011-2 Note Purchase Agreement shall, instead, be payable to or for the account of the Transferor and/or the Acquiring Purchasers, as the case may be, in accordance with their respective interests as reflected in this Assignment and Assumption Agreement, whether such amounts have accrued prior to the Transfer Date or accrue subsequent to the Transfer Date.

 

Each of the parties to this Assignment and Assumption Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment and Assumption Agreement.

 

By executing and delivering this Assignment and Assumption Agreement, the Transferor and each Acquiring Purchaser confirm to and agree with each other and the Acquiring Purchasers as follows:  (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, the Transferor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Series 2011-2 Supplement or the Series 2011-2 Note Purchase Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Series 2011-2 Indenture, the Series 2011-2 Notes, the other Series Documents or any instrument or document furnished pursuant thereto; (ii) the Transferor makes no representation or warranty and assumes no responsibility with respect to the financial condition of RCFC or the performance or observance by RCFC of any of RCFC’s obligations under the Series 2011-2 Indenture, the other Series Documents or any other instrument or document furnished pursuant hereto; (iii) each Acquiring Purchaser confirms that it has received a copy of the Series 2011-2 Indenture, the Series 2011-2 Note Purchase Agreement and such other Series Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption Agreement; (iv) each Acquiring Purchaser will, independently and without reliance upon the Transferor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Series 2011-2 Note Purchase Agreement; and (v) each Acquiring Purchaser agrees for the benefit of the Transferor and RCFC that it will perform in accordance with its terms all of the obligations which by the terms of the Series 2011-2 Note Purchase Agreement are required to be performed by it as a Note Purchaser thereunder.  Each Acquiring Purchaser hereby represents and warrants to RCFC that the representations and warranties contained in Section 7.01 of the Series 2011-2 Note Purchase Agreement are true and correct with respect to such Acquiring Purchaser on and as of the date hereof and such Acquiring Purchaser shall be deemed to have made such representations and warranties contained in Section 7.01 of the Series 2011-2 Note Purchase Agreement on and as of the date hereof and shall comply with the covenants and agreements contained in Section 7.01 of the Series 2011-2 Note Purchase Agreement applicable to Note Purchasers.

 

Annex I hereto sets forth the portion of the Series 2011-2 Invested Amount of the Transferor and each Acquiring Purchaser (immediately prior to and after giving effect to the transfers effected hereby) as well as administrative information with respect to each Acquiring Purchaser.

 

  

Exhibit A - 2

  

 

This Assignment and Assumption Agreement and all matters arising under or in any manner relating to this Assignment and Assumption Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the New York General Obligations Law), and the obligations, rights and remedies of the parties hereto shall be determined in accordance with such law.

 

 

  

Exhibit A - 3

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption Agreement to be executed by their respective duly authorized officers as of the date first set forth above.

 

 

	
  

	

[           ], as Transferor

 

 

	
  

	
By:______________________________

	
  

	
Title:

 

 

	
  

	
By:______________________________

	
  

	
Title:

 

 

	
  

	

[           ], as Acquiring Purchaser

 

 

	
  

	
By:______________________________

	
  

	
Title:

 

 

  

Exhibit A - 4

  

 

CONSENTED AND ACKNOWLEDGED:

 

RENTAL CAR FINANCE CORP.

 

By: _______________________________

Title:

 

  

Exhibit A - 5

  

ANNEX I

LIST OF ADDRESSES FOR NOTICES

AND PORTION OF

SERIES 2011-2 INVESTED AMOUNT

 

Purchased Percentage: [     ]

 

 

[TRANSFEROR]

 

Address:                      [           ]

Attention: [                      ]

Telephone: [                     ]

Facsimile: [                       ]

 

 

Prior portion of Series 2011-2 Invested Amount held:                                                                                                [______]

 

Revised portion of Series 2011-2 Invested Amount held:                                                                                          [______]

 

 

 

[ACQUIRING PURCHASER]

 

Address:                      [           ]

Attention: [                      ]

Telephone: [                    ]

Facsimile: [                       ]

 

 

Prior portion of Series 2011-2 Invested Amount held:                                                                                                [______]

 

Revised portion of Series 2011-2 Invested Amount held:                                                                                          [______]

 

 

  

Exhibit A - 6

  

EXHIBIT B

 

FORM OF MASTER TERMINATION AGREEMENT

 

 

  

Exhibit B - 1

  

 

SCHEDULE I

 

ADDRESSES FOR NOTICE

 

In the case of RCFC:

 

Rental Car Finance Corp.

5330 East 31st Street

Tulsa, Oklahoma 74135

Attention:  H. Clifford Buster III

Facsimile:  (918) 669-2970

In the case of the Master Servicer:

 

Dollar Thrifty Automotive Group, Inc.

5330 East 31st Street

Tulsa, Oklahoma 74135

Attention:  H. Clifford Buster III

Facsimile:  (918) 669-2970

In the case of the Initial Note Purchaser:

 

Wells Fargo Bank, N.A.

MAC U1803-011

102 W. Main Street, 1st Floor

Emmett, Idaho 83617-2936

Attention:  Barbara Nau, Vice President

Facsimile:  (208) 477-2105

with a copy to:

Wells Fargo Bank, Law Department

MAC A0194-263

45 Fremont Street, 26th Floor

San Francisco, CA 94105

Attention: Penny Shepherd

 

  

Schedule II - 2

  

 

SCHEDULE II

 

LITIGATION CLAIMS

 

None, other than those set forth in Dollar Thrifty Automotive Group, Inc.’s (i) Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and (ii) Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2011 and June 30, 2011.

 

 

 

  

Schedule II - 1

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