Document:

Exhibit 10.4

 

STOCKHOLDERS AGREEMENT

 

THIS STOCKHOLDERS AGREEMENT, dated and effective as of the Effective Date, is entered into by and among (i) Shake Shack Inc., a Delaware corporation (the “Company”), (ii) SSE Holdings, LLC, a Delaware limited liability company (“Holdings”), (iii) the persons listed on Schedule 1 attached hereto (together with their Affiliates, collectively, the “Meyer Stockholders”), (iv) the persons listed on Schedule 2 attached hereto (together with their Affiliates and the Meyer Stockholders, collectively, the “Management Stockholders”), (v) the entities listed on Schedule 3 attached hereto (together with their Affiliates, collectively, the “LGP Stockholders”) and (vi) the entities listed on Schedule 4 attached hereto (together with their Affiliates, collectively, the “SEG Stockholders” and, together with the LGP Stockholders and the Management Stockholders, the “Principal Stockholders” and each a “Principal Stockholder”). Capitalized terms used herein without definition shall have the meanings set forth in Section 1.1.

 

W I T N E S S E T H:

 

WHEREAS, the Company, Holdings, the Principal Stockholders and certain other Persons have effected, or will effect in connection with the Closing, a series of reorganization transactions (collectively, the “Reorganization Transactions”);

 

WHEREAS, after giving effect to the Reorganization Transactions, the Principal Stockholders own or will own either (x) shares of the Company’s Class A common stock, par value $0.01 per share (the “Class A Common Stock”) or (y) limited liability company interests in Holdings (“Holdings Units”) and shares of the Company’s Class B common stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), which such Holdings Units, subject to certain restrictions, are redeemable from time to time at the option of the holder thereof for shares of the Class A Common Stock pursuant to the terms of the Third Amended and Restated Limited Liability Company Agreement of Holdings (the “Holdings LLC Agreement”);

 

WHEREAS, on the Effective Date, the Company will have priced an initial public offering of shares of its Class A Common Stock (the “IPO”) pursuant to an Underwriting Agreement dated the Effective Date hereof (the “Underwriting Agreement”);

 

WHEREAS, the parties hereto desire to provide for certain governance rights and other matters, and to set forth the respective rights and obligations of the Principal Stockholders on and after the Effective Date.

 

NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the parties hereto hereby agree as follows:

 

ARTICLE I
 CERTAIN DEFINITIONS

 

SECTION 1.1       Definitions  As used in this Agreement, the following terms shall have the following respective meanings:

 

 

“Affiliate” means, with respect to any specified Person, (a) any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person or (b) in the event that the specified Person is a natural Person, a Member of the Immediate Family of such Person; provided that the Company, Holdings and each of their respective subsidiaries shall not be deemed to be Affiliates of the Principal Stockholders. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Agreement” shall mean this Stockholders Agreement as in effect on the date hereof and as hereafter from time to time amended, modified or supplemented in accordance with the terms hereof.

 

“Board of Directors” shall mean the Board of Directors of the Company.

 

“Board Designees” shall mean the Directors designated by the Principal Stockholders pursuant to Section 2.1.

 

“Class A Common Stock” shall have the meaning set forth in the recitals.

 

“Class B Common Stock” shall have the meaning set forth in the recitals.

 

“Closing” means the closing of the IPO.

 

“Code” shall have the meaning set forth in Section 2.5(b).

 

“Common Stock” shall have the meaning set forth in the recitals.

 

“Company” shall have the meaning set forth in the preamble.

 

“Company Shares” means (i) all shares of Common Stock that are not then subject to vesting (including shares that were at one time subject to vesting to the extent they have vested), (ii) all shares of Common Stock issuable upon exercise, conversion or exchange of any option, warrant or convertible security that are not then subject to vesting (including shares that were at one time subject to vesting to the extent they have vested) (without double counting shares of Class A Common Stock issuable upon redemption of Holdings Units) and (iii) all shares of Common Stock directly or indirectly issued or issuable with respect to the securities referred to in clauses (i) or (ii) above by way of unit or stock dividend or unit or stock split, or in connection with a combination of units or shares, recapitalization, merger, consolidation or other reorganization.

 

“Director” shall mean a member of the Board of Directors.

 

“Effective Date” shall have the meaning set forth in Section 4.12.

 

“Holdings” shall have the meaning set forth in the preamble.

 

“Holdings Units” shall have the meaning set forth in the recitals.

 

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“IPO” shall have the meaning set forth in the recitals.

 

“LGP Designee” shall have the meaning set forth in Section 2.1(c).

 

“LGP Director” shall have the meaning set forth in Section 2.1(a).

 

“LGP Stockholders” shall have the meaning set forth in the preamble.

 

“Loss” or “Losses” shall mean any claims, losses, liabilities, damages, interest, penalties and costs and expenses, including reasonable attorneys’, accountants’ and expert witnesses’ fees, and costs and expenses of investigation and amounts paid in settlement, court costs, and other expenses of litigation, including in respect of enforcement of indemnity rights hereunder (it being understood that Losses shall not include any consequential, special, incidental, indirect or punitive damages).

 

“Management Stockholders” shall have the meaning set forth in the preamble.

 

“Meyer Directors” shall have the meaning set forth in Section 2.1(a).

 

“Meyer Stockholder Designee” shall have the meaning set forth in Section 2.1(b).

 

“Meyer Stockholders” shall have the meaning set forth in the preamble.

 

“Necessary Action” means, with respect to a specified result, all commercially reasonable actions required to cause such result that are within the power of a specified Person, including (i) voting or providing a written consent or proxy with respect to the Company Shares, (ii) causing the adoption of stockholders’ resolutions and amendments to the organizational documents of the Company, (iii) executing agreements and instruments, (iv) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result and (v) causing members of the Board of Directors, subject to any fiduciary duties that such members may have as directors of the Company (including pursuant to Section 2.1(e)), to act in a certain manner, including causing members of the Board of Directors or any nominating or similar committee of the Board of Directors to recommend the appointment of any Board Designees as provided by this Agreement.

 

“Person” shall mean an individual, corporation, company, limited liability company, association, partnership, joint venture, organization, business, trust or any other entity or organization, including a government or any subdivision or agency thereof.

 

“Principal Stockholders” shall have the meaning set forth in the preamble.

 

“Reorganization Transactions” shall have the meaning set forth in the recitals.

 

“S Corporations” shall have the meaning set forth in Section 2.5.

 

“S Corporation Reorganization” shall have the meaning set forth in Section 2.5.

 

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“S Corporation Reorganization Notice” shall have the meaning set forth in Section 2.5.

 

“SEG Designee” shall have the meaning set forth in Section 2.1(d).

 

“SEG Director” shall have the meaning set forth in Section 2.1(a).

 

“SEG Stockholders” shall have the meaning set forth in the preamble.

 

“Stockholder Minimum Threshold” means, with respect to the Meyer Stockholders, a number of shares of Common Stock equal to at least 10% of the outstanding shares of Common Stock owned by the Meyer Stockholders as of the Closing.

 

“Underwriting Agreement” shall have the meaning set forth in the recitals.

 

ARTICLE II
 CORPORATE GOVERNANCE

 

SECTION 2.1       Board of Directors.

 

(a)           Composition of Initial Board.  As of the Effective Date, the Board of Directors shall be comprised of seven (7) directors, (i) five (5) of whom shall be deemed to have been designated by the Meyer Stockholders (each, a “Meyer Director”), (ii) one (1) of whom shall be deemed to have been designated by the LGP Stockholders (the “LGP Director”) and (iii) one (1) of whom shall be deemed to have been designated by the SEG Stockholders (the “SEG Director”).  The foregoing directors shall be divided into three classes of directors, each of whose members shall serve for staggered three-year terms as follows:

 

(i)            the class I directors shall initially include two (2) Meyer Directors and one (1) SEG Director;

 

(ii)           the class II directors shall initially include one (1) Meyer Director and one (1) LGP Director; and

 

(iii)          the class III directors shall initially include two (2) Meyer Directors.

 

The initial term of the class I directors shall expire immediately following the Company’s 2016 annual meeting of stockholders at which directors are elected. The initial term of the class II directors shall expire immediately following the Company’s 2017 annual meeting of stockholders at which directors are elected. The initial term of the class III directors shall expire immediately following the Company’s 2018 annual meeting at which directors are elected.

 

(b)           Meyer Stockholder Representation.  For so long as the Meyer Stockholders hold a number of shares of Common Stock representing at least the percentage of shares of Common Stock held by such Meyer Stockholders as of the Closing shown below, the Company and the Principal Stockholders shall use their reasonable best efforts to include in the slate of nominees recommended by the Board for 

 

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election as directors at each applicable annual or special meeting of stockholders at which directors are to be elected that number of individuals designated by the Meyer Stockholders (each, a “Meyer Stockholder Designee”) that, if elected, will result in the number of Meyer Directors serving on the Board of Directors that is shown below.

 

	
Percentage
    	
 
    	
Number of Directors
    
	
50% or greater
    	
 
    	
5
    
	
Less than 50% but greater than or equal to 25%
    	
 
    	
4
    
	
Less than 25% but greater than or equal to 10%
    	
 
    	
2
    
	
Less than 10% but greater than or equal to 5%
    	
 
    	
1
    
	
Less than 5%
    	
 
    	
0
    

 

Upon any decrease in the number of directors that the Meyer Stockholders are entitled to designate for election to the Board of Directors, the Meyer Stockholders shall use their reasonable best efforts to cause the appropriate number of Meyer Stockholder Designees to offer to tender his or her resignation. Such designees will be to the extent possible evenly distributed among all classes of directors with such designees first being assigned to classes with the longest remaining terms.  If such resignation is then accepted by the Board of Directors, the Company and the Principal Stockholders shall cause the authorized size of the Board of Directors to be reduced accordingly unless the Company with the approval of a majority of the remaining Directors determines not to reduce the authorized size of the Board of Directors.

 

(c)           LGP Stockholder Representation.  For so long as the LGP Stockholders own at least fifty percent (50%) of the number of shares of Common Stock held by the LGP Stockholders as of the Closing, the Company and the Principal Stockholders shall use their reasonable best efforts to include in the slate of nominees recommended by the Board of Directors for election as directors at each applicable annual or special meeting of stockholders at which directors are to be elected one (1) individual designated by the LGP Stockholders (each, an “LGP Designee”). Upon any decrease in the number of directors that the LGP Stockholders are entitled to designate for election to the Board of Directors, the LGP Stockholders shall use their reasonable best efforts to cause the LGP Designee to offer to tender his or her resignation. If such resignation is accepted by the Board of Directors, then the Company and the Principal Stockholders shall cause the authorized size of the Board of Directors to be reduced accordingly unless the Company with the approval of a majority of the remaining Directors determines not to reduce the authorized size of the Board of Directors.

 

(d)           SEG Stockholder Representation.  For so long as the SEG Stockholders own at least fifty percent (50%) of the number of shares of Common Stock held by the SEG Stockholders as of the Closing, the Company and the Principal Stockholders shall use their reasonable best efforts to include in the slate of nominees recommended by the 

 

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Board of Directors for election as directors at each applicable annual or special meeting of stockholders at which directors are to be elected one (1) individual designated by the SEG Stockholders (each, an “SEG Designee”). Upon any decrease in the number of directors that the SEG Stockholders are entitled to designate for election to the Board of Directors, the SEG Stockholders shall use their reasonable best efforts to cause the SEG Designee to offer to tender his or her resignation.  If such resignation is accepted by the Board of Directors, then the Company and the Principal Stockholders shall cause the authorized size of the Board of Directors to be reduced accordingly unless the Company with the approval of a majority of the remaining Directors determines not to reduce the authorized size of the Board of Directors.

 

(e)           Additional Obligations.  An individual designated by a Principal Stockholder for election (including pursuant to Sections 2.1(b), 2.1(c) and 2.1(d)) as a Director shall comply with the requirements of the charter for, and related guidelines of, the Nominating and Corporate Governance Committee.  Notwithstanding anything to the contrary in this Article II, in the event that the Board of Directors determines in good faith, after consultation with outside legal counsel, that its nomination, appointment or election of a particular Board Designee pursuant to this Section 2.1 or Section 2.2 would constitute a breach of its fiduciary duties to the Company’s stockholders or does not otherwise comply with any requirements of the charter for, or related guidelines of, the Nominating and Corporate Governance Committee (provided that any such determination with respect to any Board Designee pursuant to this Section 2.1 shall be made no later than sixty (60) days after the individual’s compliance with the first sentence of this Section 2.1(e)), then the Board of Directors shall inform such Principal Stockholder of such determination in writing and explain in reasonable detail the basis for such determination and shall designate another individual designated for nomination, election or appointment to the Board of Directors by such Principal Stockholder (subject in each case to this Section 2.1(e)), and the Board of Directors and the Company shall take all of the actions required by this Article II with respect to the election of such substitute Board Designee. It is hereby acknowledged and agreed that the fact that a particular Board Designee is an Affiliate, director, professional, partner, member, manager, employee or agent of a Principal Stockholder or is not an independent director shall not in and of itself constitute an acceptable basis for such determination by the Board of Directors.

 

(f)            The independent directors required by the New York Stock Exchange rules shall be the Meyer Directors; provided that, notwithstanding anything to the contrary in this Agreement, if the number of Meyer Directors (less any designees of the Meyer Stockholders who are Meyer or an officer of the Company) are insufficient to satisfy the independence requirements of the New York Stock Exchange rules, the Board of Directors shall take the Necessary Action to expand the number of Directors to the minimum number of Directors needed to comply with such requirements.

 

(g)           Vacancies.  Except as provided in Sections 2.1(b), 2.1(c) and 2.1(d), as applicable, with respect to decreases in ownership of the Principal Stockholders, (i) each Principal Stockholder shall have the exclusive right to request the removal of its Board Designees from the Board of Directors (whether for or without cause), and the Company and the Principal Stockholders shall take all Necessary Action to cause the removal 

 

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(whether for our without cause) of any such Board Designee at the request of the designating Principal Stockholder and (ii) each Principal Stockholder shall have the exclusive right to designate directors for election to the Board of Directors to fill vacancies (for the remainder of the then current term) created by reason of death, disability, removal or resignation of its Board Designees to the Board of Directors, and the Company and the Principal Stockholders shall take all Necessary Action to cause any such vacancies to be filled by replacement directors designated by such designating Principal Stockholder as promptly as reasonably practicable.

 

SECTION 2.2       Committees.  The Meyer Stockholders shall have, to the fullest extent permitted by applicable law, and subject to the requirements of the Charter for the Nominating and Corporate Governance Committee, the right, but not the obligation, to designate a number of members of each committee of the Board of Directors equal to at least: (i) a majority of the members of each committee of the Board of Directors, for so long as the Meyer Stockholders have the ability pursuant to Section 2.1 to designate for nomination at least four (4) Board Designees and (ii) at all other times for so long as the Meyer Stockholders have the ability pursuant to Section 2.1 to designate for nomination at least one (1) Board Designee, one-third (1/3), but in no event fewer than one (1), of the members of each committee of the Board of Directors. For purposes of calculating the number of committee members that the Meyer Stockholders are entitled to designate pursuant to the immediately preceding sentence, any fractional amounts shall automatically be rounded up to the nearest whole number (e.g., one and one quarter (1 1/4) committee members shall equate to two (2) committee members).  For so long as the LGP Stockholders have the ability pursuant to Section 2.1 to designate for nomination one (1) Board Designee, the LGP Stockholders shall have, to the fullest extent permitted by applicable law, and subject to the requirements of the Charter for the Nominating and Corporate Governance Committee, the right, but not the obligation, to designate one (1) member of the compensation committee of the Board of Directors, who initially shall be Jonathan D. Sokoloff.

 

SECTION 2.3       Voting Agreement. Each Principal Stockholder agrees, in person or by proxy, to cast all votes to which such Principal Stockholder is entitled in respect of its Company Shares, whether at any annual or special meeting, by written consent or otherwise, so as to cause to be elected to the Board of Directors those individuals designated in accordance with Section 2.1 and to otherwise effect the intent of this Article II.

 

SECTION 2.4       Company and Holdings Activities; Approvals.  The Company shall not take, and shall cause Holdings not to take, any of the following actions without the approval of the Meyer Stockholders, so long as the Meyer Stockholders maintain the Stockholder Minimum Threshold:

 

(a)           any transactions or series of related transactions, in each case to the extent within the reasonable control of the Company, (i) in which any Person or Persons acquires, directly or indirectly, in excess of 50% of the then outstanding shares of any class of capital stock (or equivalent) of the Company or Holdings (whether by merger, consolidation, sale or transfer of partnership interests, tender offer, exchange offer, reorganization, recapitalization or otherwise) or (ii) following which any Person or 

 

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Persons have the direct or indirect power to elect a majority of the members of the Board of Directors of the Company;

 

(b)           the sale, lease or exchange of all or a substantial amount of the property and assets of the Company, Holdings or any of their subsidiaries, taken as a whole;

 

(c)           the reorganization, recapitalization, liquidation, dissolution or winding-up of the Company, Holdings or any of their subsidiaries;

 

(d)           the hiring or termination of the Chief Executive Officer;

 

(e)           any authorization or issuance of equity securities of the Company or its direct or indirect subsidiaries other than (x) pursuant to any equity incentive plans or arrangements that have been approved by the Board of Directors or (y) upon a redemption of shares of Class B Common Stock together with Holdings Units for shares of Class A Common Stock;

 

(f)            any increase or decrease in the size of the Board of Directors other than in accordance with Article II; or

 

(g)           the approval of any amendment or amendments to the organizational documents of the Company or Holdings.

 

SECTION 2.5       S Corporation Reorganization.

 

(a)           Each of the Company, Holdings and the Principal Stockholders hereby acknowledges and agrees that the Meyer Stockholders shall have the right, exercisable at any time in the Meyer Stockholders’ sole discretion, to cause all of the stock of each of Union Square Cafe Corp. and Gramercy Tavern Cafe Corp. (collectively, the “S Corporations”) to be exchanged for Class A Common Stock of the Company, whether by merger or otherwise, pursuant to a reorganization described in Section 368(a) of the Code  (the “S Corporation Reorganization”). At the election of the Meyer Stockholders, the S Corporation Reorganization shall be structured as a two-step merger (consistent with IRS Revenue Ruling 2001-46, 2001-2 C.B. 321) pursuant to which (i) the Company shall form a wholly-owned merger subsidiary to merge into each S Corporation (the “First Step Mergers”), (ii) in the First Step Mergers, the stock of each S Corporation shall be exchanged for Class A Common Stock of the Company, and (iii) immediately following the First Step Mergers, each surviving S Corporation shall merge into the Company or an entity wholly-owned by the Company that is classified as a disregarded entity of the Company for U.S. federal income tax purposes.

 

(b)           The Meyer Stockholders shall use reasonable best efforts to obtain a private letter ruling from the Internal Revenue Service or a “should” level opinion from a nationally-recognized law or accounting firm, in either case providing that the S Corporation Reorganization qualifies as a “reorganization” as such term is defined in Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). In the event that the Meyer Stockholders cannot obtain the private letter ruling or opinion described in the immediately preceding sentence, the Meyer Stockholders may elect to 

 

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cause the Company to complete an integrated transaction qualifying under Section 351(a) of the Code pursuant to which (i) the Company forms a new wholly-owned corporation (“New Parent”), (ii) New Parent forms a transitory merger subsidiary (“Merger Sub”), (iii) Merger Sub merges into the Company and, in such merger, all of the issued and outstanding shares of corporate stock of the Company are converted into identical shares of New Parent, and (iv) the shareholders of the S Corporations contribute all of the issued and outstanding shares of corporate stock of the S Corporations to New Parent in exchange for Class A Common Stock of New Parent (the “Section 351 Transaction”).  In any S Corporation Reorganization or Section 351 Transaction, the shareholders of each S Corporation shall receive the number of shares of Class A Common Stock of the Company that the applicable S Corporation would be entitled to receive if it redeemed all of its Holdings units held immediately prior to transaction for Class A Common Stock pursuant to the Holdings LLC Agreement.

 

(c)           Upon written notice from the Meyer Stockholders to the Company requesting the consummation of the S Corporation Reorganization or Section 351 Transaction and describing the steps relating thereto (the “Restructuring Notice”), the Company, Holdings and each of the Principal Stockholders agree that each will take all Necessary Actions within its control to cause the S Corporation Reorganization or Section 351 Transaction, as applicable, to be consummated in the manner set forth in the Restructuring Notice and in accordance with this Section 2.5.

 

(d)           If any S Corporation Reorganization or Section 351 Transaction is completed, each of Daniel H. Meyer and the Daniel H. Meyer 2012 Gift Trust U/A/D 10/31/12 shall, severally and not jointly based on its pro rata ownership of the S Corporations as of the Effective Date, indemnify the Company and Holdings, and hold each of them harmless from and against, any and all Losses (including, for the avoidance of doubt, taxes) of the acquired S Corporation or S Corporations with respect to any period (or portion thereof) ending on or prior to the closing date of any S Corporation Reorganization or Section 351 Transaction.

 

SECTION 2.6       Agreement of Company and Holdings.  Each of the Company and Holdings hereby agrees that it will take all Necessary Actions within its control to cause the matters addressed by this Article II to be carried out in accordance with the provisions thereof.  Without limiting the foregoing, the Secretary of each of the Company and of Holdings or, if there be no Secretary, such other officer or employee of the Company or of Holdings as may be fulfilling the duties of the Secretary, shall not record any vote or consent or other action contrary to the terms of this Article II.

 

SECTION 2.7       Restrictions on Other Agreements.  No Principal Stockholder shall grant any proxy or enter into or agree to be bound by any voting trust, agreement or arrangement of any kind with any Person with respect to its Company Shares if and to the extent the terms thereof conflict with the provisions of this Agreement (whether or not such proxy, voting trust, agreements or arrangements are with other Principal Stockholders, holders of Company Shares that are not parties to this Agreement or otherwise).

 

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ARTICLE III
 REPRESENTATIONS AND WARRANTIES

 

Each of the parties to this Agreement hereby represents and warrants to each other party to this Agreement that as of the date such party executes this Agreement:

 

SECTION 3.1       Existence; Authority; Enforceability.  Such party has the power and authority to enter into this Agreement and to carry out its obligations hereunder.  If such party is an entity, it is duly organized and validly existing under the laws of its jurisdiction of organization, and the execution of this Agreement, and the consummation of the transactions contemplated herein, have been authorized by all necessary action, and no other act or proceeding on its part is necessary to authorize the execution of this Agreement or the consummation of any of the transactions contemplated hereby.  If such party is a natural person, such person has full capacity to contract.  This Agreement has been duly executed by each of the parties hereto and constitutes his or its legal, valid and binding obligation, enforceable against him or it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws relating to or affecting creditors’ rights generally, or by the general principles of equity.  No representation is made by any party with respect to the regulatory effect of this Agreement, and each of the parties has had an opportunity to consult with counsel as to his or its rights and responsibilities under this Agreement.  No party makes any representation to any other party as to future law or regulation or the future interpretation of existing laws or regulations by any governmental authority or self-regulatory organization.

 

SECTION 3.2       Absence of Conflicts.  The execution and delivery by such party of this Agreement and the performance of its obligations hereunder does not and will not (i) conflict with, or result in the breach of, any provision of the constitutive documents of such party, if any; (ii) result in any violation, breach, conflict, default or event of default (or an event which with notice, lapse of time, or both, would constitute a default or event of default), or give rise to any right of acceleration or termination or any additional payment obligation, under the terms of any contract, agreement or permit to which such party is a party or by which such party’s assets or operations are bound or affected; or (iii) violate any law applicable to such party.

 

SECTION 3.3       Consents.  Other than any consents which have already been obtained, no consent, waiver, approval, authorization, exemption, registration, license or declaration is required to be made or obtained by such party in connection with the execution, delivery or performance of this Agreement.

 

ARTICLE IV
 MISCELLANEOUS

 

SECTION 4.1       Termination.  This Agreement shall terminate and be of no further force and effect upon (a) the Principal Stockholders ceasing to own any shares of Common Stock or Holdings Units, (b) the written agreement of the Management Stockholders and either of the LGP Stockholders or the SEG Stockholders to terminate this Agreement or (c) its provisions become illegal or are interpreted by any governmental authority to be illegal, or any exchange on 

 

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which the Company’s Common Shares are traded asserts that its existence will threaten the continued listing of the Company’s Common Shares on such exchange.

 

SECTION 4.2       Successors and Assigns; Beneficiaries.  Except as otherwise provided herein, all of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and permitted assigns of the parties hereto. This Agreement may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void; provided that each Principal Stockholder (from time to time party hereto) shall be entitled to assign (solely in connection with a transfer of Common Stock or Holdings Units) to any of its Affiliates, without such prior written consent, any of its rights and obligations hereunder; provided, further, that any Person (other than an Affiliate) to which a Principal Stockholder (from time to time party hereto) transfers such Common Stock or Holdings Units shall be not be bound by the obligations hereunder, including pursuant to Sections 2.1(b), 2.1(c), 2.1(d) and 2.1(f) or otherwise.

 

SECTION 4.3       Amendment and Modification; Waiver of Compliance.  (a)     This Agreement may be amended only by a written instrument duly executed by the Company, Holdings, the Management Stockholders, the LGP Stockholders and the SEG Stockholders.

 

(b)           Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

 

SECTION 4.4       Notices.  Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile, or first class mail, or by Federal Express, United Parcel Service or other similar courier or other similar means of communication, as follows:

 

(i)            If to the Management Stockholders, addressed to Union Square Hospitality Group, 24 Union Square East, 6th Floor, New York, New York 10003, Attention: Daniel H. Meyer (dmeyer@ushgnyc.com);

 

(ii)           If to the LGP Stockholder, addressed to Green Equity Investors VI, L.P., 11111 Santa Monica Boulevard, Suite 2000, Los Angeles, CA 90025, Attention:  Jonathan D. Sokoloff (Sokoloff@leonardgreen.com) and J. Kristofer Galashan (galashan@leonardgreen.com); and

 

(iii)          If to the SEG Stockholder, addressed to Select Equity Group, L.P., 380 Lafayette Street, New York, NY 10003, Attention: Evan Guillemin (eg@selectequity.com)

 

or, in each case, to such other address or email address as such party may designate in writing to each Principal Stockholder by written notice given in the manner specified herein.

 

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All such communications shall be deemed to have been given, delivered or made when so delivered by hand or sent by facsimile (with confirmed transmission), on the next business day if sent by overnight courier service (with confirmed delivery) or when received if sent by first class mail.

 

SECTION 4.5       Specific Performance.  Each party hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the other parties hereto would be irreparably harmed and could not be made whole by monetary damages.  Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and agrees that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to specific performance of this Agreement without the posting of bond.

 

SECTION 4.6       Entire Agreement.  The provisions of this Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior oral and written agreements and memoranda and undertakings among the parties hereto with regard to such subject matter.

 

SECTION 4.7       Severability.  If any provision of this Agreement, or the application of such provision to any Person or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (i) the remainder of this Agreement shall not be affected thereby, and each other provision hereof shall be valid and enforceable to the fullest extent permitted by law, (ii) as to such Person or circumstance or in such jurisdiction such provision shall be reformed to be valid and enforceable to the fullest extent permitted by law and (iii) the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby.

 

SECTION 4.8       CHOICE OF LAW AND VENUE; WAIVER OF RIGHT TO JURY TRIAL.  THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE.  EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE.  THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OF A DELAWARE FEDERAL OR STATE COURT, OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT, IN ANY OTHER APPROPRIATE JURISDICTION.

 

IN THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS 

 

12

 

AGREEMENT HEREBY (1) AGREE UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY TO INSTITUTE ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN A COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE STATE OF DELAWARE, WHETHER A STATE OR FEDERAL COURT; (2) AGREE THAT IN THE EVENT OF ANY SUCH LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO THE PERSONAL JURISDICTION OF ANY SUCH COURT DESCRIBED IN CLAUSE (1) OF THIS SECTION AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES GOVERNING SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT NOTHING IN THIS SECTION SHALL BE DEEMED TO PREVENT ANY PARTY FROM SEEKING TO REMOVE ANY ACTION TO A FEDERAL COURT IN THE STATE OF DELAWARE); (3) AGREE TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY INCONVENIENT FORUM; (4) AGREE, AFTER CONSULTATION WITH COUNSEL, TO WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT; (5) AGREE TO SERVICE OF PROCESS IN ANY LEGAL PROCEEDING BY MAILING OF COPIES THEREOF TO SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN FOR COMMUNICATIONS TO SUCH PARTY; (6) AGREE THAT ANY SERVICE MADE AS PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (7) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

SECTION 4.9       Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

SECTION 4.10     Further Assurances.  At any time or from time to time after the date hereof, the parties hereto agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as any other party may reasonably request in order to evidence or effectuate the provisions of this Agreement and to otherwise carry out the intent of the parties hereunder.

 

SECTION 4.11     Schedule 13D.  In accordance with the requirements of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and subject to the limitations set forth therein, each Principal Stockholder hereto agrees to file an appropriate Schedule 13D no later than 10 calendar days following the Effective Date.

 

SECTION 4.12     Effectiveness of Agreement.  Upon the Closing, the Agreement shall thereupon be deemed to be effective (such date, the “Effective Date”).  However, to the extent the Closing does not occur, the provisions of this Agreement shall be without any force or effect.

 

*       *       *

 

13

 

IN WITNESS WHEREOF, each of the undersigned has signed this Stockholders Agreement as of the date first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
SHAKE   SHACK INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Randy Garutti
    
	
 
    	
Title:   Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HOLDINGS:
    
	
 
    	
 
    
	
 
    	
SSE   HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Randy Garutti
    
	
 
    	
Title:   Chief Executive Officer
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
MANAGEMENT STOCKHOLDERS:
    
	
 
    	
 
    
	
 
    	
UNION SQURE HOSPITALITY GROUP, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Daniel H. Meyer
    
	
 
    	
Title:   Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
UNION SQUARE CAFE CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  Daniel H. Meyer  
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
GRAMERCY TAVERN CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  Daniel H. Meyer  
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Daniel H.   Meyer
    
	
 
    	
 
    
	
 
    	
DANIEL H. MEYER 2012 GIFT TRUST U/A/D 10/31/12
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack R. Polsky, not individually but solely as Co-Trustee
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Jeffrey   Flug
    
	
 
    	
 
    
	
 
    	
FLUG 2012 GS TRUST U/A/D 9/14/12
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  Sheryl Flug, not individually but solely as   Co-Trustee
    
	
 
    	
 
    
	
 
    	
GULF FIVE LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  Jeff Flug
    
	
 
    	
Title:   Manager
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Richard   Coraine
    
	
 
    	
 
    
	
 
    	
THE RICHARD D. CORAINE 2012 FAMILY TRUST
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  Toni Haida
    
	
 
    	
Title:   Trustee
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
David Swinghamer
    
	
 
    	
 
    
	
 
    	
THE DAVID A. SWINGHAMER GRAT
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   David Swinghamer
    
	
 
    	
Title:   Trustee
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Karen   Kochevar
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Walter   Robb
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Erin   Moran
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Ashley   Campbell
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Randy   Garutti
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE   RANDALL J. GARUTTI 2014 GST TRUST
    
	
 
    	
 
    
	
 
    	
By: J.P.   Morgan Trust Company of Delaware,
   Administrative Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Jeff Uttz
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
ROXANNE   H. FRANK REVOCABLE TRUST DATED 9/30/75
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
RHF-NM   1999 DESCENDANTS TRUST DATED 1/1/2006
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Michael McQuinn
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
MARC   WEISS REVOCABLE TRUST U/A/D 8/11/2003
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Marc Weiss
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
RHF-TM   1999 DESCENDANTS TRUST DATED 1/1/2006
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Michael McQuinn
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
VHP   SPECIAL TRUST FOR JACK DATED 12/31/12
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
JEAN   POLSKY INVESTMENT TRUST DATED 3/21/97
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
JOAN W.   HARRIS REVOCABLE TRUST DATED 4/1/93
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Joan Harris
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
BENJAMIN   HARRIS FAMILY TRUST DATED 12/23/92
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Boardman Lloyd
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
DAVID   HARRIS FAMILY TRUST DATED 12/23/92
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Boardman Lloyd
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
AMY WEISS-MEYER   QUALIFIED MINOR’S TRUST DATED 12/22/05
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
ISAAC   WEISS-MEYER QUALIFIED MINOR’S TRUST DATED 12/22/05
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
HALLIE   MEYER QUALIFIED MINOR’S TRUST DATED 11/23/05
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
GRETCHEN   MEYER QUALIFIED MINOR’S TRUST DATED 11/23/05
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
CHARLES   MEYER QUALIFIED MINOR’S TRUST DATED 11/23/05
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
PEYTON   MEYER QUALIFIED MINOR’S TRUST DATED 11/23/05
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Jack Polsky
    
	
 
    	
Title:   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Beth   Stephens
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Orrin   Devinsky
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Laura   Sloate
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Bert   Vivian
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
 
    
	
 
    	
Jamie   Welch and Fiona Angelini
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
GRANITE   POINT CAPITAL
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: C.   David Bushley
    
	
 
    	
Title:   Chief Operating Officer,
    
	
 
    	
Granite   Point Capital Management,
    
	
 
    	
The   Investment Manager
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
THOMAS   O’NEAL RYDER FAMILY TRUST
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Darlene Ryder
    
	
 
    	
Title:   Trustee
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
ACG SHACK   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   Alliance Consumer Growth LLC, Its Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   Joshua N. Goldin
    
	
 
    	
Title:   Managing Member
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
LGP STOCKHOLDERS:
    
	
 
    	
 
    
	
 
    	
[TO COME]
    

 

[Signature Page to Stockholders Agreement]

 

 

	
 
    	
SEG STOCKHOLDERS:
    
	
 
    	
 
    
	
 
    	
SEG   PARTNERS, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SEG   PARTNERS II, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SEG   PARTNERS OFFSHORE MASTER FUND LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SEGPO   INVESTMENT CORP. LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page to Stockholders Agreement]

 

 

SCHEDULE 1

 

MEYER STOCKHOLDERS

 

Daniel H. Meyer

 

Daniel H. Meyer 2012 Gift Trust U/A/D 10/31/12

 

Union Square Hospitality Group, LLC

 

Union Square Cafe Corp.

 

Gramercy Tavern Corp.

 

 

SCHEDULE 2

 

MANAGEMENT STOCKHOLDERS

 

Jeff Flug

 

Flug 2012 GS Trust U/A/D 9/4/12

 

Gulf Five LLC

 

Randall Garutti

 

The Randall J. Garutti 2014 GST Trust

 

Jeff Uttz

 

David Swinghamer

 

David Swinghamer Grat

 

Richard Coraine

 

Richard D. Coraine 2012 Family Trust

 

Karen Kochevar

 

Erin Moran

 

Ashley Campbell

 

ACG Shack LLC

 

Roxanne H. Frank Revocable Trust

 

RHF-NM Descendants Trust

 

Marc Weiss Revocable Trust U/A/D 8/11/2003

 

RHF-TM Descendants Trust

 

VHP Special Trust for Jack Date 12/31/12

 

Jean Polsky Investment Trust Date 3/21/97

 

Joan Harris Revocable Trust

 

 

Ben Harris Family Trust Date 12/23/92

 

David Harris Family Trust Dated 12/23/92

 

Amy Weiss-Meyer Qualified Minor’s Trust

 

Isaac Weiss-Meyer Qualified Minor’s Trust

 

Hallie Meyer Qualified Minor’s Trust

 

Gretchen Meyer Qualified Minor’s Trust

 

Peyton Meyer Qualified Minor’s Trust

 

Charles Meyer Qualified Minor’s Trust

 

Beth Stephens

 

Orrin Devinsky

 

Laura Sloate

 

Bert Vivian

 

Granite Point Capital

 

 

SCHEDULE 3

 

LGP STOCKHOLDERS(1)

 

Green Equity Investors VI, L.P.

 

Green Equity Investors Side VI, L.P.

 

          Co-Invest LLC

 

 

SCHEDULE 4

 

SEG STOCKHOLDERS

 

SEG Partners, L.P.

 

SEG Partners II, L.P.

 

SEG Partners Offshore Master Fund Ltd.

 

SEGPO Investment Corp. LLCExhibit 10.5

 

L&W Comments - January 15, 2015

 

 

 

THIRD AMENDED AND RESTATED

CREDIT AGREEMENT

 

dated as of

 

January [    ], 2015

 

among

 

SSE HOLDINGS, LLC

 

The Other Loan Parties Party Hereto

 

The Lenders Party Hereto

 

and

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 1.01.
    	
Defined Terms
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 1.02.
    	
Classification of Loans   and Borrowings
    	
25
    
	
 
    	
 
    	
 
    
	
SECTION 1.03.
    	
Terms Generally
    	
25
    
	
 
    	
 
    	
 
    
	
SECTION 1.04.
    	
Accounting Terms; GAAP
    	
25
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
THE CREDITS
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 2.01.
    	
Commitments and Loans
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 2.02.
    	
Loans and Borrowings
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 2.03.
    	
Requests for Borrowings
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 2.04.
    	
Letters of Credit
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 2.05.
    	
Funding of Borrowings
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 2.06.
    	
Interest Elections
    	
32
    
	
 
    	
 
    	
 
    
	
SECTION 2.07.
    	
Termination and   Reduction of Revolving Commitments and LC Sublimit
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 2.08.
    	
Repayment and   Amortization of Loans; Evidence of Debt
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 2.09.
    	
Prepayment of Loans
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 2.10.
    	
Fees
    	
36
    
	
 
    	
 
    	
 
    
	
SECTION 2.11.
    	
Interest
    	
37
    
	
 
    	
 
    	
 
    
	
SECTION 2.12.
    	
Alternate Rate of   Interest
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 2.13.
    	
Increased Costs
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 2.14.
    	
Break Funding Payments
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 2.15.
    	
Taxes
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 2.16.
    	
Payments Generally;   Allocation of Proceeds; Sharing of Set-offs
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 2.17.
    	
Mitigation Obligations;   Replacement of Lenders
    	
46
    
	
 
    	
 
    	
 
    
	
SECTION 2.18.
    	
Defaulting Lenders
    	
46
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
REPRESENTATIONS AND   WARRANTIES
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 3.01.
    	
Organization; Powers
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 3.02.
    	
Authorization;   Enforceability
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 3.03.
    	
Governmental Approvals;   No Conflicts
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 3.04.
    	
No Material Adverse   Change
    	
49
    
				

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 3.05.
    	
Properties
    	
49
    
	
 
    	
 
    	
 
    
	
SECTION 3.06.
    	
Litigation and   Environmental Matters
    	
49
    
	
 
    	
 
    	
 
    
	
SECTION 3.07.
    	
Compliance with Laws   and Agreements
    	
50
    
	
 
    	
 
    	
 
    
	
SECTION 3.08.
    	
Taxes
    	
50
    
	
 
    	
 
    	
 
    
	
SECTION 3.09.
    	
ERISA
    	
50
    
	
 
    	
 
    	
 
    
	
SECTION 3.10.
    	
Disclosure
    	
50
    
	
 
    	
 
    	
 
    
	
SECTION 3.11.
    	
Material Agreements
    	
51
    
	
 
    	
 
    	
 
    
	
SECTION 3.12.
    	
Solvency
    	
51
    
	
 
    	
 
    	
 
    
	
SECTION 3.13.
    	
Insurance
    	
51
    
	
 
    	
 
    	
 
    
	
SECTION 3.14.
    	
Capitalization and   Subsidiaries
    	
51
    
	
 
    	
 
    	
 
    
	
SECTION 3.15.
    	
Security Interest in   Collateral
    	
52
    
	
 
    	
 
    	
 
    
	
SECTION 3.16.
    	
Employment Matters
    	
52
    
	
 
    	
 
    	
 
    
	
SECTION 3.17.
    	
Affiliate Transactions
    	
52
    
	
 
    	
 
    	
 
    
	
SECTION 3.18.
    	
Common Enterprise
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
CONDITIONS
    	
53
    
	
 
    	
 
    	
 
    
	
SECTION 4.01.
    	
Effective Date
    	
53
    
	
 
    	
 
    	
 
    
	
SECTION 4.02.
    	
Delayed Commitment   Effective Date
    	
54
    
	
 
    	
 
    	
 
    
	
SECTION 4.03.
    	
Each Credit Event
    	
54
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
AFFIRMATIVE COVENANTS
    	
55
    
	
 
    	
 
    	
 
    
	
SECTION 5.01.
    	
Financial Statements   and Other Information
    	
55
    
	
 
    	
 
    	
 
    
	
SECTION 5.02.
    	
Notices of Material   Events
    	
56
    
	
 
    	
 
    	
 
    
	
SECTION 5.03.
    	
Existence; Conduct of   Business
    	
57
    
	
 
    	
 
    	
 
    
	
SECTION 5.04.
    	
Payment of Obligations
    	
57
    
	
 
    	
 
    	
 
    
	
SECTION 5.05.
    	
Maintenance of   Properties
    	
57
    
	
 
    	
 
    	
 
    
	
SECTION 5.06.
    	
Books and Records;   Inspection Rights
    	
57
    
	
 
    	
 
    	
 
    
	
SECTION 5.07.
    	
Compliance with Laws
    	
57
    
	
 
    	
 
    	
 
    
	
SECTION 5.08.
    	
Use of Proceeds
    	
58
    
	
 
    	
 
    	
 
    
	
SECTION 5.09.
    	
Insurance
    	
58
    
	
 
    	
 
    	
 
    
	
SECTION 5.10.
    	
Casualty and Condemnation
    	
58
    
	
 
    	
 
    	
 
    
	
SECTION 5.11.
    	
Depository Banks
    	
58
    
				

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 5.12.
    	
Additional Collateral;   Further Assurances
    	
58
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
NEGATIVE COVENANTS
    	
59
    
	
 
    	
 
    	
 
    
	
SECTION 6.01.
    	
Indebtedness
    	
59
    
	
 
    	
 
    	
 
    
	
SECTION 6.02.
    	
Liens
    	
61
    
	
 
    	
 
    	
 
    
	
SECTION 6.03.
    	
Fundamental Changes
    	
62
    
	
 
    	
 
    	
 
    
	
SECTION 6.04.
    	
Investments, Loans,   Advances, Guarantees and Acquisitions
    	
63
    
	
 
    	
 
    	
 
    
	
SECTION 6.05.
    	
Asset Sales
    	
64
    
	
 
    	
 
    	
 
    
	
SECTION 6.06.
    	
Sale and Leaseback   Transactions
    	
65
    
	
 
    	
 
    	
 
    
	
SECTION 6.07.
    	
Swap Agreements
    	
65
    
	
 
    	
 
    	
 
    
	
SECTION 6.08.
    	
Restricted Payments;   Certain Payments of Indebtedness
    	
65
    
	
 
    	
 
    	
 
    
	
SECTION 6.09.
    	
Transactions with   Affiliates
    	
67
    
	
 
    	
 
    	
 
    
	
SECTION 6.10.
    	
Restrictive Agreements
    	
68
    
	
 
    	
 
    	
 
    
	
SECTION 6.11.
    	
Amendment of Material   Documents
    	
68
    
	
 
    	
 
    	
 
    
	
SECTION 6.12.
    	
Fixed Charge Coverage   Ratio
    	
68
    
	
 
    	
 
    	
 
    
	
SECTION 6.13.
    	
Funded Net Debt to   EBITDA Ratio
    	
68
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
EVENTS OF DEFAULT
    	
69
    
	
 
    	
 
    	
 
    
	
SECTION 7.01.
    	
Events of Default
    	
69
    
	
 
    	
 
    	
 
    
	
SECTION 7.02.
    	
Cure Right
    	
71
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
THE ADMINISTRATIVE   AGENT
    	
73
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    	
MISCELLANEOUS
    	
75
    
	
 
    	
 
    	
 
    
	
SECTION 9.01.
    	
Notices
    	
75
    
	
 
    	
 
    	
 
    
	
SECTION 9.02.
    	
Waivers; Amendments
    	
77
    
	
 
    	
 
    	
 
    
	
SECTION 9.03.
    	
Expenses; Indemnity;   Damage Waiver
    	
78
    
	
 
    	
 
    	
 
    
	
SECTION 9.04.
    	
Successors and Assigns
    	
80
    
	
 
    	
 
    	
 
    
	
SECTION 9.05.
    	
Survival
    	
84
    
	
 
    	
 
    	
 
    
	
SECTION 9.06.
    	
Counterparts;   Integration; Effectiveness
    	
84
    
	
 
    	
 
    	
 
    
	
SECTION 9.07.
    	
Severability
    	
85
    
	
 
    	
 
    	
 
    
	
SECTION 9.08.
    	
Right of Setoff
    	
85
    
	
 
    	
 
    	
 
    
	
SECTION 9.09.
    	
Governing Law;   Jurisdiction; Consent to Service of Process
    	
85
    
				

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 9.10.
    	
WAIVER OF JURY TRIAL
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 9.11.
    	
Headings
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 9.12.
    	
Confidentiality
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 9.13.
    	
Several Obligations;   Nonreliance; Violation of Law
    	
87
    
	
 
    	
 
    	
 
    
	
SECTION 9.14.
    	
USA PATRIOT Act
    	
87
    
	
 
    	
 
    	
 
    
	
SECTION 9.15.
    	
Disclosure
    	
87
    
	
 
    	
 
    	
 
    
	
SECTION 9.16.
    	
Appointment for   Perfection
    	
87
    
	
 
    	
 
    	
 
    
	
SECTION 9.17.
    	
Interest Rate   Limitation
    	
87
    
	
 
    	
 
    	
 
    
	
ARTICLE X
    	
LOAN GUARANTY
    	
88
    
	
 
    	
 
    	
 
    
	
SECTION 10.01.
    	
Guaranty
    	
88
    
	
 
    	
 
    	
 
    
	
SECTION 10.02.
    	
Guaranty of Payment
    	
88
    
	
 
    	
 
    	
 
    
	
SECTION 10.03.
    	
No Discharge or   Diminishment of Loan Guaranty
    	
88
    
	
 
    	
 
    	
 
    
	
SECTION 10.04.
    	
Defenses Waived
    	
89
    
	
 
    	
 
    	
 
    
	
SECTION 10.05.
    	
Rights of Subrogation
    	
89
    
	
 
    	
 
    	
 
    
	
SECTION 10.06.
    	
Reinstatement; Stay of   Acceleration
    	
90
    
	
 
    	
 
    	
 
    
	
SECTION 10.07.
    	
Information
    	
90
    
	
 
    	
 
    	
 
    
	
SECTION 10.08.
    	
Termination
    	
90
    
	
 
    	
 
    	
 
    
	
SECTION 10.09.
    	
Taxes
    	
90
    
	
 
    	
 
    	
 
    
	
SECTION 10.10.
    	
Maximum Liability
    	
90
    
	
 
    	
 
    	
 
    
	
SECTION 10.11.
    	
Contribution
    	
91
    
	
 
    	
 
    	
 
    
	
SECTION 10.12.
    	
Liability Cumulative
    	
91
    
	
 
    	
 
    	
 
    
	
SECTION 10.13.
    	
Keepwell
    	
92
    
				

 

iv

 

	
SCHEDULES:
    	
 
    
	
 
    	
 
    
	
Schedule 2.01
    	
Revolving Commitment   Schedule
    
	
Schedule 3.05
    	
Properties
    
	
Schedule 3.06
    	
Disclosed Matters
    
	
Schedule 3.13
    	
Insurance
    
	
Schedule 3.14
    	
Capitalization and   Subsidiaries
    
	
Schedule 3.17
    	
Affiliate Transactions
    
	
Schedule 6.01
    	
Existing Indebtedness
    
	
Schedule 6.02
    	
Existing Liens
    
	
Schedule 6.04
    	
Existing Investments
    
	
Schedule 6.10
    	
Existing Restrictions
    
	
 
    	
 
    
	
EXHIBITS:
    	
 
    
	
 
    	
 
    
	
Exhibit A
    	
Form of Assignment   and Assumption
    
	
Exhibit B
    	
Form of Compliance   Certificate
    
	
Exhibit C
    	
Form of Joinder   Agreement
    
	
Exhibit D
    	
Form of Opinion
    

 

v

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of January [    ], 2015 (this “Agreement”), among SSE HOLDINGS, LLC, the other Loan Parties party hereto, the Lenders party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

 

PRELIMINARY STATEMENTS:

 

The Borrower, certain Subsidiaries of the Borrower party thereto, the lenders party thereto (the “Existing Lenders”) and the Administrative Agent are parties to that certain Second Amended and Restated Credit Agreement dated as of April 30, 2014 (as in effect immediately before giving effect to the amendment and restatement contemplated hereby, the “Existing Credit Agreement”).

 

Pursuant to the Existing Credit Agreement, the Existing Lenders agreed to make extensions of credit to the Borrower on the terms and conditions set forth therein, including making loans (the “Existing Loans”) to the Borrower.

 

Whereas, the Borrower has requested that on the Effective Date the Existing Credit Agreement be amended and restated in its entirety to read as provided herein, and the Lenders (including certain of the Existing Lenders) have agreed (subject to the terms of this Agreement) to amend and restate the Existing Credit Agreement on the Effective Date in its entirety to read as set forth in this Agreement, and it has been agreed by the parties to the Existing Credit Agreement that (a) the commitments which the Existing Lenders have agreed to extend to the Borrower under the Existing Credit Agreement shall be extended or advanced upon the amended and restated terms and conditions contained in this Agreement and (b) the Existing Loans and other Secured Obligations (as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement shall be governed by and deemed to be outstanding under the amended and restated terms and conditions contained in this Agreement, with the intent that the terms of this Agreement shall supersede the terms of the Existing Credit Agreement (each of which shall hereafter have no further effect upon the parties thereto, other than for accrued fees and expenses, and indemnification provisions accrued and owing, under the terms of the Existing Credit Agreement on or prior to the Effective Date or arising (in the case of indemnification) under the terms of the Existing Credit Agreement).

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.           Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

 

“Act” has the meaning assigned to such term in Section 9.14.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period or for any CBFR Borrowing, an interest rate per annum (rounded upwards, if necessary,

 

 

to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

 

“Adjusted One Month LIBOR Rate” means, an interest rate per annum equal to the sum of (a) 2.50% per annum plus (b) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day); provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day (without any rounding).

 

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Aggregate Credit Exposure” means, at any time, the aggregate Revolving Credit Exposure of all the Lenders.

 

“Agreement” has the meaning assigned to such term in the Preamble.

 

“Anti-Terrorism Laws” shall mean any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).

 

“Applicable Percentage” means, with respect to any Lender, (a) with respect to Revolving Loans and LC Exposure, (i) prior to the Delayed Commitment Effective Date, if any, a percentage equal to a fraction the numerator of which is such Lender’s Initial Revolving Commitment and the denominator of which is the aggregate Initial Revolving Commitments of all Revolving Lenders (if the Initial Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of the aggregate Revolving Credit Exposures at that time and (ii) on and after the Delayed Commitment Effective Date, if any, a percentage equal to a fraction the numerator of which is such Lender’s Total Revolving Commitment and the denominator of which is the aggregate Total Revolving Commitment of all Revolving Lenders (if the Total Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of the aggregate Revolving Credit Exposures at that time) and (b) with respect to the Aggregate Credit Exposure, a percentage based upon its share of the Aggregate Credit Exposure and the unused Revolving Commitments; provided that in the case of Section 2.18 when a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving Commitment shall be disregarded in the calculation of the percentages set forth in clauses (a) and (b) above.

 

2

 

“Applicable Rate” means, for any day, with respect to any Revolving Loan or any LC Exposure, as the case may be, the applicable margin as of each immediately prior quarter-end based on the Funded Net Debt to EBITDA Ratio as set forth in the table below:

 

	
Funded Net
   Debt to
   EBITDA
   Ratio
    	
 
    	
< 1.00:1.00
    	
 
    	
< 1.50:1.00
   but
   > 1:00:1.00
    	
 
    	
< 2.00:1.00
   but
   > 1:50:1.00
    	
 
    	
< 2.50:1.00
   but
   > 2.00:1.00
    	
 
    	
> 2.50:1.00
    	
 
    
	
CB Floating Rate
    	
 
    	
0.00
    	
%
    	
0.25
    	
%
    	
0.50
    	
%
    	
0.75
    	
%
    	
1.00
    	
%
    
	
Adjusted LIBO   Rate
    	
 
    	
2.50
    	
%
    	
2.75
    	
%
    	
3.00
    	
%
    	
3.25
    	
%
    	
3.50
    	
%
    

 

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

 

“Availability Period” means the period from and including the Effective Date to but excluding the applicable Maturity Date.

 

“Available Revolving Commitment” means, at any time, (a)(i) prior to the Delayed Commitment Effective Date, if any, the Initial Revolving Commitment then in effect and (ii) on and after the Delayed Commitment Effective Date, if any, the Total Revolving Commitment then in effect; minus (b) the Revolving Credit Exposure of all Revolving Lenders at such time.

 

“Banking Services” means each and any of the following bank services provided to any Loan Party by Chase or any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, “commercial credit cards” and purchasing cards), (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

 

“Banking Services Obligations” of the Loan Parties means any and all obligations of the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.

 

3

 

“Bankruptcy Event” means, with respect to any Person, such Person or such Person’s direct or indirect parent company becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Governmental Authority or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm this Agreement or any other contract or agreement made by such Person.

 

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

 

“Board of Directors” means, relative to any Person, (a) in the case of any corporation, its board of directors, (b) in the case of any limited liability company, its board of managers or managing member, (c) in the case of any partnership, the Board of Directors of the general partner of such partnership and (d) in any other case, the functional equivalent of the foregoing.

 

“Borrower” means SSE Holdings, LLC, a Delaware limited liability company.

 

“Borrowing” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03.

 

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures” of any Consolidated Party means, without duplication, any expenditure or commitment to expend money for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on the balance sheet of such Consolidated Party prepared in accordance with GAAP.  For purposes of this definition the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such proceeds, as the case may be.

 

4

 

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate shall never be less than the Adjusted One Month LIBOR Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day).  Any change in the CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

 

“CBFR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the CB Floating Rate.

 

“Change in Control” means the occurrence of any of the following at any time:

 

any:

 

(1)                                 Person or Persons (other than a Permitted Holder), or

 

(2)                                 Persons (other than one or more Permitted Holders) constituting a “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, but excluding any employee benefit plan of such person and its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan),

 

shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Shake Shack and the percentage of aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests of Shake Shack beneficially owned, directly or indirectly, in the aggregate by one or more of the Permitted Holders.

 

“Change in Law” means, (a) the adoption of any law, rule, regulation or treaty (including any rules or regulations issued under or implementing any existing law) after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder, issued in

 

5

 

connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case solely with respect to Basel III, shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

“Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its individual capacity, and its successors.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” has the meaning assigned to such term in the Security Agreement.

 

“Collateral Documents” means, collectively, the Security Agreement and any other documents granting a Lien upon the Collateral as security for payment of the Secured Obligations.

 

“Competitor” means any Person (and any Controlling Affiliate of such Person) that is an owner, operator or manager of a restaurant, catering service or food service.

 

“Consolidated Parties” means collectively, the Loan Parties and their respective subsidiaries.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Cure Payments” means amounts received by and contributed to the Borrower and used to prepay the Loans and to increase EBITDA in connection with Sections 2.09(e), 2.09(f) and 7.02.

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two (2) Business Days after request by a

 

6

 

Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

 

“Delayed Commitment Amount” means an amount of up to $30,000,000.

 

“Delayed Commitment Effective Date” means the date after the Effective Date on which (a) the Administrative Agent receives (i) a request to increase the Initial Revolving Commitments by the amount of the Delayed Commitment Amount and (ii) a certificate delivered pursuant to Section 4.02 certifying that the conditions specified in Section 4.02 have been satisfied (or waived in accordance with Section 9.02), (b) each Lender (in its sole discretion) and the Administrative Agent (in its sole discretion) shall have agreed to such increase, (c) any conditions to such agreements by the Lenders and the Administrative Agent (including the payment of any agreed fees) shall have been satisfied, and (d) the conditions set forth in Sections 4.02 and 4.03 shall have been satisfied as of such date.

 

“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.

 

“Dollars” or “$” refers to lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary that is incorporated under the laws of the United States or its territories or possessions.

 

“EBITDA” means, for any period, the sum of

 

(a)                                 Net Income for such period, plus

 

(b)                                 without duplication and (except with respect to clause (ix) below) to the extent deducted in determining Net Income for such period, the sum of:

 

(i)                                     interest expense for such period and, to the extent not reflected in such interest expense, (A) fees, expenses and charges incurred in respect of financing activities (including commissions, discounts and closing fees) during such period and (B) payments made in respect of hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk during such period;

 

(ii)                                  provision for taxes based on income or profits or capital for such period;

 

(iii)                               all amounts attributable to depreciation and amortization expense for such period;

 

7

 

(iv)                              extraordinary, unusual or non-recurring expenses or charges for such period;

 

(v)                                 non-cash expenses or charges for such period including non-cash rent expense and non-cash compensation expense;

 

(vi)                              fees, costs and expenses incurred in connection with (A) the Transactions consummated on the Effective Date to the extent incurred on or prior to the Effective Date or (B) issuances of equity interests, making Investments, or the incurrence, repayment, amendment or restructuring of Indebtedness, in each case, to the extent permitted to be incurred or made under the Loan Documents;

 

(vii)                           restructuring charges or reserves, whether or not classified as such under GAAP, including severance, relocation costs, and integration and other similar expenses;

 

(viii)                        the amount of any minority interest expense consisting of subsidiary income attributable to minority equity interests of third parties in any non-wholly owned Subsidiary deducted (and not added back) in such period to consolidated net income;

 

(ix)                              the proceeds of any business interruption insurance;

 

(x)                                 the amount of costs relating to pre-opening and opening costs for stores;

 

(xi)                              any Cure Payments and capital contributions and dividends that the Borrower and Loan Parties receive directly or indirectly from (A) a Person that is not a Loan Party or (B) third party holders of Equity Interests of the Loan Parties during such period; and

 

(xii)                           the aggregate amount of costs and expenses actually incurred during such period by the Loan Parties in connection with the Shake Shack IPO, minus

 

(c)                                  without duplication and to the extent included in Net Income, any extraordinary gains and any non-cash items of income for such period, all calculated for the Consolidated Parties after eliminations for intercompany transactions.

 

For the avoidance of doubt, EBITDA for any period, (x) shall include, without duplication, the EBITDA of any Person, property, business or asset acquired or formed by the Borrower or any Loan Party during such period, to the extent (A) such Person becomes a Loan Party, (B) such property, business or asset is owned by a Loan Party and (C) such Person, property or asset is not subsequently sold, transferred, abandoned or otherwise disposed by the Borrower or such Loan Party, and (y) shall exclude the EBITDA of any Person, property, business or asset sold, transferred, abandoned or otherwise disposed by the Borrower or such Loan Party during such period to the extent (A) that such Person sold, transferred, abandoned or

 

8

 

otherwise disposed was a Loan Party and (B) such property, business or asset that was sold, transferred, abandoned or otherwise disposed was owned by a Loan Party.

 

“EBITDAR” means, for any period, (a) EBITDA plus (b) Rentals actually made in cash.

 

“Effective Date” means the date specified by the Borrower in a notice to the Administrative Agent, provided that such specified date shall be the Effective Date only if:

 

(a)                                 such notice is received by the Administrative Agent at least two Business Days prior to such date,

 

(b)                                 such date is on or prior to March 16, 2015,

 

(c)                                  on such date, the aggregate outstanding principal amount of the Existing Loans shall be equal to or less than the aggregate amount of the Initial Revolving Commitments, and,

 

(d)                                 as of such date, each of the conditions precedent set forth in Sections 4.01 and 4.03 shall have been satisfied.

 

“Environmental Laws” means all applicable laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices of violation or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

9

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure with respect to any Plan or Multiemployer Plan to satisfy the minimum finding requirements of Section 412 of the Code or Section 302 of ERISA or, in the case of a Multiemployer Plan, Section 432 of the Code, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan or Multiemployer Plan; (d) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan; (f) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“Excluded Subsidiary” means (a) any Subsidiary that is not directly or indirectly, a wholly owned Domestic Subsidiary of the Borrower, (b) any Foreign Subsidiary and (c) any Immaterial Subsidiary.

 

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) (a) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes or would become effective with respect to such Swap Obligation or (b) in the case of a Swap Obligation that is required to be cleared pursuant to Section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Guarantor is a “financial entity,” as defined in Section 2(h)(7)(C)(i) the Commodity Exchange Act (or any successor provision thereto), at the time the Guarantee of such Guarantor becomes or would become effective with respect to such related Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the applicable Issuing Bank or any other recipient of any payment to be made by or on account of

 

10

 

any obligation of the Borrower or any other Loan Party hereunder or any other Loan Document, (a) taxes imposed on or measured by its net income (however denominated), or franchise taxes imposed in lieu of net income taxes, imposed on it, by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or with which it has any other connection for tax purposes (other than a present or former connection that would not have arisen but for entering into the Loan Documents, receiving any payments under or with respect to the Loan Documents, or enforcing any rights and remedies under the Loan Documents) or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) in the case of a Lender, any U.S. federal withholding tax that is imposed on amounts payable to such Lender at the time such Lender becomes a party hereto (or designates a new lending office) or is attributable to such Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.15(f), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.15(a) (other than pursuant to an assignment request by the Borrower under Section 2.17 hereof), (d) any backup withholding taxes imposed on the Administrative Agent, any Lender, the applicable Issuing Bank or any other recipient of any payment hereunder and (e) any  Taxes which are imposed under FATCA.

 

“Existing Credit Agreement” has the meaning assigned to such term in the Preliminary Statements.

 

“Existing Lenders” has the meaning assigned to such term in the Preliminary Statements.

 

“Existing Loans” has the meaning assigned to such term in the Preliminary Statements.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantially comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements (together with any Law implementing such agreements).

 

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower, in each case, in his or her capacity as such.

 

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“Fixed Charge Coverage Ratio” means, for any period, the ratio of (a) EBITDAR minus the unfinanced (other than with proceeds of the Loans) portion of Maintenance Capital Expenditures to (b) (i) the sum, without duplication, of cash Interest Expense, plus Rentals, plus all principal (excluding (x) any payments on account of any Revolving Loan and (y) prepayments, mandatory or otherwise, under this Agreement or the Existing Credit Agreement) and amortization payments on Funded Debt made during such period, plus Restricted Payments (other than (1) Restricted Payments made for the purpose of paying taxes attributable to the Consolidated Parties, and (2) Restricted Payments made on or about December 31, 2014, in an aggregate amount not in excess of $22,0000,000) paid in cash to any Person that is not a Loan Party, plus Capital Lease Obligation payments, all calculated for the Consolidated Parties after eliminations for intercompany transactions.

 

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Subsidiary” means (a) any direct or indirect subsidiary of the Borrower or any other Loan Party, as applicable, that is organized under the laws of any jurisdiction other than the United States or its territories or possessions and that is treated as a corporation for United States federal income tax purposes and (b) any subsidiary of the Borrower or any other Loan Party, as applicable, that (i) is disregarded as an entity that is separate from its owner for United States federal income tax purposes and (ii) wholly-owns the stock of one or more Foreign Subsidiaries, but only so long as such subsidiary has no assets other than the stock of one or more Foreign Subsidiaries and de minimis other assets.

 

“Funded Debt” means, as of any date of determination, the aggregate principal amount of Indebtedness of the Consolidated Parties outstanding on such date, consisting of (a) Indebtedness for borrowed money (after eliminating intercompany Indebtedness among Loan Parties permitted by this Agreement), (b) Capital Lease Obligations of the Consolidated Parties and (c) debt obligations evidenced by bonds, debentures, promissory notes or similar instruments.

 

“Funded Net Debt to EBITDA Ratio” means, for any date of determination, the ratio of (a) Funded Debt less up to $5,000,000 of the Loan Parties’ cash and Permitted Investments on such date to (b) EBITDA for the period of four consecutive fiscal quarters of the Borrower most recently ended, all calculated for the Consolidated Parties.

 

“Funding Account” means the deposit account of the Borrower that the Borrower shall have notified the Administrative Agent is the account to which the Administrative Agent is authorized by the Borrower to transfer the proceeds of any Borrowings requested or authorized pursuant to this Agreement.

 

“GAAP” means generally accepted accounting principles in the United States of America as are in effect from time to time, subject to the provisions of Section 1.04.

 

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency,

 

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authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the date hereof or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

 

“Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.

 

“Guarantor” means each direct and indirect Domestic Subsidiary (excluding any Excluded Subsidiary) of the Borrower and any other Person who becomes a party to a Loan Guaranty pursuant to a Joinder Agreement or otherwise and its successors and assigns.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other chemicals, materials or substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Immaterial Subsidiary” means any Subsidiary that (a) did not, as of the last day of the fiscal quarter of the Borrower most recently ended for which financial statements are required to be delivered (whether or not such financial statements are actually delivered), have assets with a value in excess of $50,000, and (b) taken together with all Immaterial Subsidiaries as of the last day of the fiscal quarter of the Borrower most recently ended for which financial statements are required to be delivered (whether or not such financial statements are actually delivered), did not have assets with a value in excess of $100,000.

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all

 

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obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable, trade payables and accrued expenses in respect of each such payable, in each case incurred in the ordinary course of business and paid within 120 days of such incurrence), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (and that the amount of such Indebtedness shall be deemed equal to the lesser of (x) the fair market value of such property or (y) the outstanding principal amount of such Indebtedness), (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty (other than to the extent cash collateralized), (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (j) obligations under any liquidated earn-out and (k) any other Off-Balance Sheet Liability.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes” means Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document.

 

“Ineligible Assignee” has the meaning assigned to it in Section 9.04(b).

 

“Initial Revolving Commitment” means, with respect to each Lender and prior to the Delayed Commitment Effective Date, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum possible aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be reduced from time to time pursuant to Section 2.07.  The initial amount of each Lender’s Initial Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Initial Revolving Commitment, as applicable.  The initial aggregate amount of the Lenders’ Initial Revolving Commitments is twenty million dollars ($20,000,000).

 

“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.06.

 

“Interest Expense” means, with reference to any period, total interest expense (including that attributable to Capital Lease Obligations) of the Consolidated Parties for such period with respect to all outstanding Indebtedness of the Consolidated Parties (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP), calculated after eliminations for intercompany transactions.

 

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“Interest Payment Date” means (a) with respect to any CBFR Loan, the first Business Day of each calendar month and the Maturity Date and (b) with respect to any Eurodollar Loan, the last day of the Interest Period and the Maturity Date.

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one month thereafter; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“IRS” means the United States Internal Revenue Service.

 

“Issuing Bank” means Chase, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.04.  The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“Joinder Agreement” has the meaning assigned to such term in Section 5.12.

 

“Law” means any law, rule, regulations, code, ordinance, order or decree issued or promulgated by any Governmental Authority

 

“LC Collateral Account” has the meaning assigned to such term in Section 2.04(j).

 

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

 

“LC Sublimit” means $10,000,000.

 

“Lender Party” means the Administrative Agent, each Issuing Bank or any other Lender.

 

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“Lenders” means the Persons listed on the Schedule 2.01, and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit” means any standby letter of credit issued pursuant to this Agreement.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, a rate per annum equal to (a) the BBA Interest Settlement Rate per annum at which deposits in Dollars are offered in London, England to prime banks in the London Interbank Market for such Interest Period as displayed on the Reuters LIBOR01 Page as of 11:00 a.m. (London time) two (2) Business Days before the first day of such Interest Period or (b) if the rate described in clause (a) does not appear on Reuters LIBOR01 Page on any relevant date of determination, the average of the rates at which Dollar deposits with a maturity equal to the applicable Interest Period are offered to the lending office of the Administrative Agent in immediately available funds in the London Interbank Market for Eurodollars at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

“LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of the Borrower, dated as of the Effective Date.

 

“Loan Documents” means this Agreement, any promissory notes issued pursuant to the Agreement, any Letter of Credit applications, the Collateral Documents, the Loan Guaranty and all other agreements, instruments, documents and certificates identified in Sections 4.01, 4.02 and 4.03 executed and delivered to, or in favor of, the Administrative Agent or any Lender and including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or any Lender in connection with the Agreement or the transactions contemplated thereby.  Any reference in the Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

 

“Loan Guaranty” means Article X of this Agreement and any other guaranty of the Secured Obligations now or hereafter delivered to the Administrative Agent.

 

“Loan Parties” means the Borrower, each Guarantor and any other Person who becomes a party to this Agreement pursuant to a Joinder Agreement and their successors and assigns.

 

“Loans” means the loans and advances made by the Lenders pursuant to this Agreement.

 

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“Maintenance Capital Expenditures”� means, with respect to any Consolidated Party, Capital Expenditures made in the ordinary course of business to repair, replace or otherwise maintain fixed or capital assets of such Person (and, for the avoidance of doubt, shall not include any Capital Expenditure in connection with the initial build-out of any restaurant or unit).

 

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of the Borrower and the other Loan Parties taken as a whole, (b) the ability of the Loan Parties to perform any of their respective obligations under the Loan Documents to which it is a party, (c) the Collateral, or the Administrative Agent’s Liens (on behalf of itself and the Lenders) on the Collateral or the priority of such Liens, or (d) the rights of or benefits available to the Lender Parties under the Loan Documents.

 

“Material Indebtedness” means any item of Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Loan Parties in an aggregate principal amount exceeding $3,500,000.  For purposes of determining Material Indebtedness, the “obligations” of any Loan Party in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date” means, with respect to (a) Revolving Loans, (i) five (5) years after the Effective Date or (ii) any earlier date on which the Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof and (b) Letters of Credit (i) five (5) years after the Effective Date or (ii) any earlier date on which the LC Sublimit is to zero or otherwise terminated pursuant to the terms hereof.

 

“Maximum Liability” has the meaning assigned to such term in Section 10.10.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Income” means, for any period, the net income (or loss) of the Consolidated Parties calculated after eliminations for intercompany transactions; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Loan Party or a Subsidiary of a Loan Party or is merged into or consolidated with a Loan Party or a Subsidiary of a Loan Party, (b) the income (or deficit) of any Person (other than a Subsidiary of a Loan Party) in which a Loan Party has an ownership interest, except to the extent that any such income is actually received by such Loan Party in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of a Loan Party to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

 

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a

 

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note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, and the costs, commissions, premiums, and to the extent applicable, underwriting discounts, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year (or years, as the case may be) and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer).

 

“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).

 

“Non-Paying Guarantor” has the meaning assigned to such term in Section 10.11.

 

“Obligated Party” has the meaning assigned to such term in Section 10.02.

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Loan Parties to the Lenders or to any Lender, the Administrative Agent, the Issuing Bank or any indemnified party arising under the Loan Documents; provided that the definition of “Obligations” shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, as applicable) any Excluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.

 

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered into by such Person, or (c) any indebtedness, liability or obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person (other than operating leases).

 

“Organizational Documents” means in respect of any Person (a) that is a corporation, its articles of incorporation, by-laws and any shareholder’s agreement (or similar constituent document) governing the Equity Interests (voting or otherwise) of such Person, (b) that is a limited liability company, its certificate of formation and operating agreement (or similar constituent document) and (c) that is a partnership, its certificate of formation and partnership agreement (or similar constituent document).

 

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made

 

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hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement, excluding any such taxes resulting from an assignment by any Lender pursuant to Section 9.04 hereof.

 

“Participant” has the meaning set forth in Section 9.04(c)(i).

 

“Participant Register” has the meaning set forth in Section 9.04(c)(i).

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Encumbrances” means:

 

(a)                                 Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.04;

 

(b)                                 carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04;

 

(c)                                  pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

(d)                                 deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

(e)                                  judgment Liens in respect of judgments that do not constitute an Event of Default under Section 7.01(k);

 

(f)                                   easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

 

(g)                                  pledges and deposits in the ordinary course of business securing the financing of the insurance premiums under insurance policies, payable to insurance carriers that provide insurance to the Loan Parties;

 

(h)                                 Liens encumbering customary initial deposits in respect of brokerage accounts incurred in the ordinary course of business;

 

(i)                                     ground leases in respect of real property on which facilities owned or leased by the Borrower or any of its Subsidiaries are located;

 

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(j)                                    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(k)                                 rights of set-off of a customary nature or bankers’ Liens on amounts on deposit, whether arising by contract or law, incurred in the ordinary course of business; and

 

(l)                                     Liens arising from precautionary Uniform Commercial Code financing statement or similar filings made in respect of operating leases.

 

“Permitted Equity Issuance” means (a) with respect to any Loan Party or any Subsidiary, any issuance of Equity Interests by such Loan Party or Subsidiary, the proceeds of which are used by such Loan Party to (i) open and operate additional restaurants that are substantially similar to existing restaurants owned by such Loan Party or Subsidiary, (ii) invest in (A) joint ventures or other Persons, or (B) acquire assets that are used or are useful in the business of the Borrower, any Loan Party or any Subsidiary, (b) any issuance of Equity Interests pursuant to any management, director and/or employee stock ownership or benefit plan, key employee stock ownership plan or stock subscription agreement, (c) any issuance of Equity Interests of any Loan Party to new members or shareholders of such Loan Party in connection with the replacement of members or shareholders in compliance with the Organizational Documents of such Loan Party and (d) any issuance of Equity Interests by any Loan Party to any other Loan Party.

 

“Permitted Investments” means:

 

(a)                                 direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

 

(b)                                 investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

 

(c)                                  investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

 

(d)                                 fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

 

(e)                                  money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii)

 

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are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

 

“Permitted Holder” means [USHG, Green Equity Investors VI, L.P., Green Equity Investors Side VI, L.P., LGP Malted Coinvest LLC, Daniel Meyer, SEG Partners, L.P., SEG Partners Offshore Master Fund, Ltd., ACG Shack LLC and Jeff Flug].(1)

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Prepayment Event” means:

 

(a)                                 any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Loan Party with a fair value immediately prior to such event equal to or greater than $2,000,000; or

 

(b)                                 the incurrence by any Loan Party of any Indebtedness, other than Indebtedness permitted under Section 6.01 or permitted by the Required Lenders pursuant to Section 9.02.

 

“Prime Rate” means the rate of interest per annum publicly announced from time to time by Chase as its prime rate in effect at its offices located at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes or would become effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Register” has the meaning assigned to such term in Section 9.04.

 

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

 

(1) To be confirmed.

 

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“Rentals” means, with reference to any period, the aggregate fixed amounts payable by the Consolidated Parties under any operating lease, calculated after eliminations for intercompany transactions.

 

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposure and unused Commitments representing more than 50.0% of the sum of the Aggregate Credit Exposure and unused Revolving Commitments at such time.

 

“Requirement of Law” means, as to any Person, the Certificate of Incorporation and By-Laws or other equivalent organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower.

 

“Revolving Commitment” means, with respect to each Lender, (a) prior to the Delayed Commitment Effective Date, if any, such Lender’s Initial Revolving Commitment then in effect and (b) on and after the Delayed Commitment Effective Date, if any, such Lender’s Total Revolving Commitment then in effect.  The initial amount of each Lender’s applicable Revolving Commitment is set forth on the Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable.

 

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure at such time.

 

“Revolving Lender” means, as of any date of determination, a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Credit Exposure.

 

“Revolving Loan” means, collectively, (a) the loans deemed to be extended by the Revolving Lenders to the Borrower on the Effective Date pursuant to Section 2.01(a)(i) and (b) any loan made pursuant to Section 2.01(a)(ii).

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

 

“Secured Obligations” means all Obligations, together with all (a) Banking Services Obligations and (b) Swap Obligations owing to one or more Lenders or their respective Affiliates; provided that at or prior to the time that any transaction relating to such Swap Obligation is executed, the Lender party thereto (other than Chase) shall have delivered written

 

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notice to the Administrative Agent that such a transaction has been entered into and that it constitutes a Secured Obligation entitled to the benefits of the Collateral Documents.

 

“Security Agreement” means (a) that certain Second Amended and Restated Security Agreement, dated as of February 18, 2014, between the Loan Parties and the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, and (b) any other pledge or security agreement entered into, after the date of this Agreement, by any other Loan Party (as required by this Agreement or any other Loan Document) or any other Person, as the same may be amended, restated or otherwise modified from time to time.

 

“Shake Shack” means Shake Shack Inc., a Delaware corporation.

 

“Shake Shack IPO” means an initial public offering of the class A common stock of Shake Shack.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentage shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person the payment of which is subordinated to payment of the Secured Obligations to the written satisfaction of the Administrative Agent.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any direct or indirect subsidiary of the Borrower or any other Loan Party, as applicable.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or

 

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more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.

 

“Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.

 

“Tax Receivable Agreement” means the Tax Receivable Agreement, dated the Effective Date, among Shake Shack and other members of the Borrower.

 

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges  imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Total Revolving Commitment” means, with respect to each Lender and on and after the Delayed Commitment Effective Date, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum possible aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be reduced from time to time pursuant to (a) Section 2.07 and (b) assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s Total Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Total Revolving Commitment, as applicable.  The initial aggregate amount of the Lenders’ Total Revolving Commitments is the Initial Revolving Commitment plus the Delayed Commitment Amount; provided that such amount shall be reduced Dollar for Dollar to the extent of any reduction of the Initial Revolving Commitment pursuant to Section 2.07.

 

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing and conversion of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the CB Floating Rate.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.

 

“Unliquidated Obligations” means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature or unliquidated at such time, including any Secured Obligation that is an obligation in connection with the Secured Obligations: (a) to reimburse a

 

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bank for drawings not yet made under a letter of credit issued by it; (b) (including any guarantee) that is contingent in nature at such time; or (c) to provide collateral to secure any of the foregoing types of obligations.

 

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.15(f)(ii)(A)(iii).

 

“USHG” means Union Square Hospitality Group, LLC, a New York limited liability company.

 

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

“Withholding Agent” means the Borrower and the Administrative Agent.

 

SECTION 1.02.           Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”).  Borrowings also may be classified and referred to by Type (e.g., a “Eurodollar Borrowing”).

 

SECTION 1.03.           Terms Generally.  The definitions of terms herein and in each other Loan Document shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein or therein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference herein or therein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement or such other Loan Document in its entirety and not to any particular provision hereof or thereof, (d) all references herein or therein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement or such other Loan Document and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

SECTION 1.04.           Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the

 

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application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until  such notice shall have been withdrawn or such provision  amended in accordance herewith.  Solely for the purposes of the calculation of, and compliance with, the financial covenants contained herein, “GAAP” shall exclude the effects of Accounting Standards Codification 825-10-25.  Notwithstanding anything in this Agreement to the contrary, any change in GAAP occurring after the date hereof that would require operating leases to be treated similarly to capital leases shall not be given effect in the definition of EBITDA or Indebtedness or any related definitions or in the computation of, and compliance with the financial covenants contained herein or in any other Loan Document.

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01.           Commitments and Loans.

 

(a)                                 As of the Effective Date, each of the parties hereto acknowledges and agrees that the Revolving Loans (as defined in the Existing Credit Agreement) outstanding as of the Effective Date shall be deemed to be Revolving Loans for all purposes under this Agreement and the other Loan Documents.

 

(b)                                 Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period with respect to Revolving Loans in an aggregate principal amount that will not result in (i) prior to the Delayed Commitment Effective Date, if any, (A) such Lender’s Revolving Credit Exposure exceeding such Lender’s Initial Revolving Commitment or (B) the total Revolving Credit Exposures exceeding the sum of the aggregate Initial Revolving Commitments of all Revolving Lenders or (ii) on and after the Delayed Commitment Effective Date, if any, (A) such Lender’s Revolving Credit Exposure exceeding such Lender’s Total Revolving Commitment or (B) the total Revolving Credit Exposures exceeding the sum of the Total Revolving Commitments of all Revolving Lenders.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.02.           Loans and Borrowings.  (a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Revolving Commitments.

 

(b)                                 Subject to Section 2.12, each Borrowing shall be comprised entirely of CBFR Loans or Eurodollar Loans as the Borrower may request in accordance herewith; provided that all Borrowings made on the Effective Date must be made as CBFR Borrowings, but, in each case, may be converted into Eurodollar Borrowings in accordance with Section 2.06.  Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

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(c)                                  At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000.  At the time that each CBFR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000; provided that a CBFR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the aggregate Initial Revolving Commitments or, if applicable, the aggregate Total Revolving Commitments then in effect or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(e).  Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 3 Eurodollar Borrowings outstanding with respect to Revolving Loans.

 

(d)                                 Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

 

SECTION 2.03.           Requests for Borrowings.  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request either in writing (delivered by hand or facsimile or by electronic mail in .pdf format) in a form approved by the Administrative Agent and signed by the Borrower or by telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m., New York time, three Business Days before the date of the proposed Borrowing or (b) in the case of a CBFR Borrowing, not later than noon, New York time, on the date of the proposed Borrowing; provided that any such notice of a CBFR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(e) may be given not later than 9:00 a.m., New York time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.01:

 

(i)                                     the aggregate amount of the requested Borrowing and a breakdown of the separate wires comprising such Borrowing;

 

(ii)                                  the date of such Borrowing, which shall be a Business Day;

 

(iii)                               whether such Borrowing is to be a CBFR Borrowing or a Eurodollar Borrowing; and

 

(iv)                              in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period.”

 

If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be a CBFR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request

 

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in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.04.           Letters of Credit.  (a) General.  Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period with respect to Letters of Credit.  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 the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

 

(b)                                 Notice of 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), the Borrower shall hand deliver or facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (prior to 9:00 am, New York time, at least three Business Days prior to the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’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 the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension the LC Exposure shall not exceed the LC Sublimit and the total Revolving Credit Exposures shall not exceed the aggregate Initial Revolving Commitments or, if applicable, the aggregate Total Revolving Commitments then in effect.

 

(c)                                  Expiration Date.  Each Letter of Credit shall expire (or be subject to termination by notice from the Issuing Bank to the beneficiary thereof) at or prior to the close of business on the earlier of (i) the date 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 date that is five Business Days prior to the Maturity Date with respect to Letters of Credit.

 

(d)                                 Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC

 

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Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Reimbursement.  If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 11:00 a.m., New York time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 9:00 a.m., New York time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 11:00 a.m., New York time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 9:00 a.m., New York time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with a CBFR Revolving Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting CBFR Revolving Borrowing.  If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of CBFR Revolving Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

 

(f)                                   Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the

 

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Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  Neither the Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)                                  Disbursement Procedures.  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by facsimile) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

 

(h)                                 Interim Interest.  If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to CBFR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.11(d) shall apply.  Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

 

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(i)                                     Replacement of the Issuing Bank.  The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Revolving Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.10(b).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

(j)                                    Cash Collateralization.  If any Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required  Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in cash equal to 105% of the LC Exposure as of such date plus accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII.  Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account and the Borrower hereby grants the Administrative Agent a security interest in the LC Collateral Account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Secured Obligations.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of a Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all such Defaults have been cured or waived.

 

SECTION 2.05.           Funding of Borrowings.  (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York time, to the account of the Administrative Agent most recently

 

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designated by it for such purpose by notice to the Lenders in an amount equal to such Lender’s Applicable Percentage.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to the Funding Account; provided that CBFR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.04(e) shall be remitted by the Administrative Agent to the Issuing Bank.

 

(b)                                 Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to CBFR Loans.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.06.           Interest Elections.  (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request (it being understood that the only Interest Period available to the Borrower is a period of one month’s duration).  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

 

(b)                                 To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

 

(c)                                  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

 

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(i)                                     the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)                                  the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)                               whether the resulting Borrowing is to be a CBFR Borrowing or a Eurodollar Borrowing; and

 

(iv)                              if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period” (it being understood that the only Interest Period available to the Borrower a period of one month’s duration).

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

(d)                                 Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)                                  If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a CBFR Borrowing.  Notwithstanding any contrary provision hereof, if a Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as a Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to a CBFR Borrowing at the end of the Interest Period applicable thereto.

 

SECTION 2.07.           Termination and Reduction of Revolving Commitments and LC Sublimit.

 

(a)                                 Unless previously terminated, the LC Sublimit and all other Revolving Commitments shall terminate on the Maturity Date.

 

(b)                                 The Borrower may at any time terminate the Revolving Commitments upon (i) the payment in full of all outstanding Loans, together with accrued and unpaid interest thereon and on any Letters of Credit, (ii) the cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, the furnishing to the Administrative Agent of a cash deposit (or at the discretion of the Administrative Agent a back up standby letter of credit satisfactory to the Administrative Agent) equal to 105% of the LC Exposure as of such

 

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date), (iii) the payment in full of the accrued and unpaid fees, and (iv) the payment in full of all reimbursable expenses and other Obligations together with accrued and unpaid interest thereon.

 

(c)                                  The Borrower may from time to time reduce the Initial Revolving Commitments or, if applicable, the Total Revolving Commitments, in each case, without premium or penalty; provided that (i) each reduction of any Revolving Commitment shall be in an amount that is an integral multiple of $1,000,000 and (ii) the Borrower shall not reduce any such Revolving Commitment if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.09, the sum of the Revolving Credit Exposures would exceed aggregate Initial Revolving Commitments or, if applicable, the Total Revolving Commitments.

 

(d)                                 The Borrower shall notify the Administrative Agent of any election to terminate or reduce any Revolving Commitment under clause (b) or (c) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of any Revolving Commitment delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of any Revolving Commitment shall be permanent.  Each reduction of any Revolving Commitment shall be made ratably among the Lenders in accordance with their respective Revolving Commitments.  Any reduction of the Initial Revolving Commitments shall automatically reduce the Total Revolving Commitments in the amount of such reduction notwithstanding that such reduction to the Initial Revolving Commitments may occur prior to the Delayed Commitment Effective Date.

 

SECTION 2.08.           Repayment and Amortization of Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date with respect to Revolving Loans.

 

(b)                                 Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(c)                                  Pursuant to Section 9.04(b)(iii), the Administrative Agent shall maintain the Register in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

(d)                                 The entries made in the accounts and the Register maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative

 

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Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(e)                                  Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

SECTION 2.09.           Prepayment of Loans.  (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (g) of this Section.

 

(b)                                 In the event and on such occasion that the total Revolving Credit Exposure exceeds the aggregate Revolving Commitments then in effect, the Borrower shall prepay the Revolving Loans and/or LC Exposure in an aggregate amount equal to such excess.

 

(c)                                  In the event and on each occasion that any Net Proceeds are received by or on behalf of any Loan Party in respect of any Prepayment Event, such Loan Party shall, within one (1) Business Day after such Net Proceeds are received by such Loan Party, prepay the Obligations as set forth in Section 2.09(d) below in an aggregate amount equal to  in the case of all Prepayment Events, 100% of such Net Proceeds; provided that, in the case of any event described in clause (a) of the definition of the term “Prepayment Event”, if the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer stating that the Loan Parties intend to commit the Net Proceeds from such event (or the portion thereof specified in such certificate), within 180 days after receipt of such Net Proceeds, towards the acquisition (or replacement or reconstruction) of real property, equipment or other tangible assets (excluding inventory) to be used (or be useful) in the business of the Loan Parties, then no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds specified in such certificate; provided further that to the extent any such Net Proceeds (or portion thereof) therefrom have not been so committed by the end of such 180-day period, a prepayment shall be required at such time in an amount equal to such Net Proceeds that have not been so committed.

 

(d)                                 All amounts paid or to be paid pursuant to Section 2.09(c) shall be applied, first to prepay the Revolving Loans and second to cash collateralize each Letter of Credit then outstanding; provided that the portion of the Net Proceeds described in Section 2.09(c) shall be limited to the percentage of the ownership interest in such Loan Party held by the Borrower and any other Loan Party in the aggregate immediately prior to such Prepayment Event without giving any effect to any changes of such ownership interest in connection with such Prepayment Event.

 

(e)                                  In the event, and on each occasion, that the Borrower is not in compliance with the Fixed Charge Coverage Ratio covenant set forth in Section 6.12 as of the last day of any fiscal quarter, the Borrower may, at its option, prepay the Loans in accordance with this Section

 

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2.09(e) and Section 7.02 with the proceeds of a Cure Payment in an amount sufficient to cause the Borrower to be in compliance with the Fixed Charge Coverage Ratio when the amount of such Cure Payment is added to the EBITDA of the Borrower; provided that the Borrower shall be permitted to delay such prepayment until the Borrower receives (or has been deemed to receive) proceeds of any Cure Payment.  Any proceeds received or deemed to be received pursuant to this Section 2.09(e) and Section 7.02 shall be used to repay the Revolving Loans and shall be added to the Borrower’s EBITDA in accordance with Section 7.02.

 

(f)                                   In the event, and on each occasion, that the Borrower is not in compliance with the Funded Net Debt to EBITDA Ratio covenant set forth in Section 6.13 as of the last day of any fiscal quarter, the Borrower may, at its option, prepay the Loans in accordance with this Section 2.09(f) and Section 7.02 with the proceeds of a Cure Payment in an amount sufficient to cause the Borrower to be in compliance with the Funded Net Debt to EBITDA Ratio, when the amount of such Cure Payment is added to the EBITDA of the Borrower and applied to reduce Indebtedness; provided that the Borrower shall be permitted to delay such prepayment until the Borrower receives (or has been deemed to receive) proceeds of any Cure Payment.  Any proceeds received or deemed to be received pursuant to this Section 2.09(f) and Section 7.02 shall be used to repay the Revolving Loans and shall be added to the Borrower’s EBITDA in accordance with Section 7.02.

 

(g)                                  The Borrower shall notify the Administrative Agent by telephone (confirmed by facsimile) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 10:00 a.m., New York time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an Revolving Borrowing, not later than 10:00 a.m., New York time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.07, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.07.  Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Revolving Borrowing shall be applied ratably to the Revolving Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.11.

 

SECTION 2.10.           Fees.

 

(a)                                 The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which, during all times that

 

(i)                                     the Revolving Commitment is $10,000,000 or less, shall accrue at an annual rate of ten (10) basis points,

 

(ii)                                  the Revolving Commitment is greater than $10,000,000 but less than $30,000,000, shall accrue at a rate of twenty (20) basis points, and

 

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(iii)                               the Revolving Commitment is $30,000,000 or greater, shall accrue at a rate of thirty (30) basis points,

 

in each case, on the average daily amount of the Available Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the Maturity Date.  Accrued commitment fees shall be payable in arrears on (a) the first Business Day of each calendar month commencing on the first such date to occur after the Effective Date and (b) the Maturity Date.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.

 

(b)                                 The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Rate on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the Maturity Date and the date on which such Revolving Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the Maturity Date and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of each calendar month shall be payable on the first Business Day of each calendar month following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the Maturity Date and any such fees accruing after the Maturity Date shall be payable on demand.  Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.

 

(c)                                  The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

 

(d)                                 All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders.  Fees paid shall not be refundable under any circumstances.

 

SECTION 2.11.           Interest.  (a) The Loans comprising each CBFR Borrowing shall bear interest at the CB Floating Rate plus the Applicable Rate.

 

(b)                                 The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

 

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(c)                                  Notwithstanding the foregoing, during the occurrence and continuance of an Event of Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 9.02 requiring the consent of “each Lender affected thereby” for reductions in interest rates), declare that (i) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder.

 

(d)                                 Accrued interest on each Loan (for CBFR Loans, accrued through the last day of the prior calendar month) shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of a CBFR Revolving Loan prior to the end of the Availability Period with respect to Revolving Loans), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(e)                                  All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the CB Floating Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed.  The applicable CB Floating Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

SECTION 2.12.           Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)                                 the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

 

(b)                                 the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as a CBFR Borrowing.

 

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SECTION 2.13.                                   Increased Costs.  (a) If any Change in Law shall:

 

(i)                                     impose, modify or deem applicable any reserve, special deposit or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

 

(ii)                                  impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense (other than Indemnified Taxes or Excluded Taxes) affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)                                 If any Lender or the Issuing Bank determines (which determination shall be made in good faith (and not on an arbitrary or capricious basis) and consistent with similarly situated customers of the applicable Lender or the Issuing Bank under agreements having provisions similar to this Section 2.13 after consideration of such factors as such Lender or the Issuing Bank then reasonably determines to be relevant) that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

 

(c)                                  A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

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(d)                                 Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

SECTION 2.14.           Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.07 and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.17, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

SECTION 2.15.           Taxes.

 

(a)                                 Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if a Withholding Agent shall be required by applicable Law to withhold or deduct any Indemnified Taxes and any Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Withholding Agent shall make such deductions and

 

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(iii) such Withholding Agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Law.

 

(b)                                 Payment of Other Taxes by the Borrower.  Without limiting the provisions of Section 2.15(a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law.

 

(c)                                  Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent, each Lender and the applicable Issuing Bank, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15) paid by the Administrative Agent, such Lender or the applicable Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, except to the extent any such Taxes arise as a result of the gross negligence or willful misconduct of the Administrative Agent or any Lender.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the applicable Issuing Bank (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the applicable Issuing Bank, shall be conclusive as to amount absent manifest error.

 

(d)                                 Indemnification by the Lenders.  Each Lender shall severally indemnify the Administrative Agent for any Taxes (but, in the case of any Indemnified Taxes, only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so) attributable to such Lender that are paid or payable by the Administrative Agent in connection with any Loan Document and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  The indemnity under this Section 2.15(d) shall be paid within ten (10) days after the Administrative Agent delivers to the applicable Lender a certificate stating the amount of Taxes so paid or payable by the Administrative Agent.  Such certificate shall be conclusive of the amount so paid or payable absent manifest error.

 

(e)                                  Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(f)                                   Status of Lenders.  (i)  Any Lender that is entitled to an exemption from or reduction of withholding tax under the Law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding.  Notwithstanding the submission of such

 

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documentation claiming a reduced rate of or exemption from U.S. withholding tax, the Administrative Agent shall be entitled to withhold United States federal income taxes at the full statutory withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7T(b) of the United States Income Tax Regulations.  Further, the Administrative Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations against any claims and demands of any Lender or assignee or participant of a Lender for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Code.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

(ii)                                  Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States of America:

 

(A)                               any Foreign Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(i)                     two (2) duly completed and executed valid originals of IRS Form W-8BEN or W-8BEN-E, as applicable, claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,

 

(ii)                  two (2) duly completed and executed valid originals of IRS Form W-8ECI,

 

(iii)               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) an original certificate substantially in the form of Exhibit [   ]-1 to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) two (2) duly completed and executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable,

 

(iv)              in the case of a Foreign Lender that is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8 BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit [   ]-2 or Exhibit [   ]-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is classified as a partnership for U.S. federal income tax purposes and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit [   ]-4 on behalf of each such direct and indirect partner.

 

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(v)                 any other form prescribed by applicable Law and reasonably requested by the Borrower as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed and executed together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower to determine the withholding or deduction required to be made; or

 

(B)                               To the extent that any Lender is not a Foreign Lender, such Lender shall submit to the Administrative Agent two (2) duly completed and executed originals of an IRS Form W-9 or any other form prescribed by applicable Law demonstrating that such Lender is not a Foreign Lender.

 

(iii)                               Without limiting the generality of the first paragraph of this Section 2.15(f) and in addition to any requirements described in the second paragraph of this Section 2.15(f), if a payment made to a Foreign Lender hereunder or under any other Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Foreign Lender, as the case may be, were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable, or in any agreement or request entered into or issued pursuant to such sections), such Foreign Lender shall deliver to the Borrower and to the Administrative Agent, at the time or times prescribed by Law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation, certifications or other information prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation, certifications or other information reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower or the Administrative Agent to comply with its obligations under FATCA, to determine that such Foreign Lender has complied with its obligations under FATCA or to determine the amount to deduct and withhold from such payment.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent if such Lender is legally unable to update such form or certification.

 

(g)                                  Treatment of Certain Refunds.  If the Administrative Agent, a Lender or the applicable Issuing Bank determines, in its sole discretion, that it has received a refund (or credit in lieu of a refund) of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund or credit (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund or credit); net of all out-of-pocket expenses of the Administrative Agent, such Lender or the applicable Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit), provided that the Borrower, upon the request of the Administrative Agent, such Lender or the applicable Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or

 

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the applicable Issuing Bank in the event the Administrative Agent, such Lender or the applicable Issuing Bank is required to repay such refund to such Governmental Authority.  This Section shall not be construed to require the Administrative Agent, any Lender or the applicable Issuing Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

SECTION 2.16.           Payments Generally; Allocation of Proceeds; Sharing of Set-offs.  (a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise) prior to 2:00 p.m., New York time, on the date when due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in Dollars.

 

(b)                                 Any proceeds of Collateral received by the Administrative Agent (i) not constituting either (A) a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Borrower) or (B) a mandatory prepayment (which shall be applied in accordance with Section 2.09) or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, such funds shall be applied ratably first, to pay any fees, indemnities, or expense reimbursements including amounts then due to the Administrative Agent and the Issuing Bank from the Borrower (other than in connection with Banking Services or Swap Obligations), second, to pay any fees or expense reimbursements then due to the Lenders from the Borrower (other than in connection with Banking Services or Swap Obligations, third, to pay interest then due and payable on the Loans ratably, fourth, ratably to prepay principal on the Loans and unreimbursed LC Disbursements ratably (and to payment of any amounts owing with respect to Banking Services and Swap Obligations), fifth, to pay an amount to the Administrative Agent equal to one hundred five percent (105%) of the aggregate undrawn face amount of all outstanding Letters of Credit and the aggregate amount of any unpaid LC Disbursements, to be held as cash collateral for such Obligations, and sixth, to the payment of any other Secured Obligation due to the Administrative Agent or any Lender by the Borrower.  Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrower, or unless a Default is in existence, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any Eurodollar Loan, except (a) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the event, and only to the extent, that there are no outstanding CBFR Loans and, in any such event, the Borrower shall pay the break funding payment required in accordance with Section 2.14.  The Administrative Agent and

 

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the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.

 

(c)                                  At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a request by the Borrower pursuant to Section 2.03 or a deemed request as provided in this Section or may be deducted from any deposit account of the Borrower maintained with the Administrative Agent.  The Borrower hereby irrevocably authorizes (i) the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agrees that all such amounts charged shall constitute Loans and that all such Borrowings shall be deemed to have been requested pursuant to Section 2.03 and (ii) the Administrative Agent to charge any deposit account of the Borrower maintained with the Administrative Agent for each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.

 

(d)                                 If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(e)                                  If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim

 

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with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

 

(f)                                   Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

(g)                                  If any Lender shall fail to make any payment required to be made by it hereunder, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations hereunder until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and apply any such amounts to, any future funding obligations of such Lender hereunder; application of amounts pursuant to (i) and (ii) above shall be made in such order as may be determined by the Administrative Agent in its discretion.”

 

SECTION 2.17.           Mitigation Obligations; Replacement of Lenders.

 

(a)                                 If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)                                 If any Lender requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, or if any Lender becomes a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent and the

 

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Issuing Bank, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

SECTION 2.18.           Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)                                 fees shall cease to accrue on the unfunded portion of any Revolving Commitment of such Defaulting Lender pursuant to Section 2.10(a);

 

(b)                                 the Revolving Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided that any amendment, waiver or other modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender disproportionately when compared to the other affected Lenders, or increases or extends the Revolving Commitment of such Defaulting Lender, shall require the consent of such Defaulting Lender;

 

(c)                                  if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:

 

(i)                                     all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent that (A) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the total of all non-Defaulting Lenders’ then applicable Revolving Commitments and (B) the conditions set forth in Section 4.03 are satisfied at such time; and

 

(ii)                                  if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent cash collateralize for the benefit of the Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.04(j) for so long as such LC Exposure is outstanding;

 

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(iii)                               if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.10(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)                              if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.10(a) and Section 2.10(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

 

(v)                                 if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, commitment fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Revolving Commitment that was utilized by such LC Exposure) and all letter of credit fees payable under Section 2.10(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and

 

(d)                                 so long as such Lender is a Defaulting Lender, the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Revolving Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.18(c), and participating interests in any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.18(c)(i) (and such Defaulting Lender shall not participate therein).  No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender.

 

If (a) a Bankruptcy Event with respect to a parent of any Lender shall occur following the date hereof and for so long as such event shall continue or (b) the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Issuing Bank shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Issuing Bank to defease any risk to it in respect of such Lender hereunder.

 

In the event that the Administrative Agent, the Borrower and the Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LC Exposure of the other Lenders shall be readjusted to reflect the inclusion of such Lender’s then applicable Revolving Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party represents and warrants to the Lenders that:

 

SECTION 3.01.           Organization; Powers.  Each of the Loan Parties and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to qualify or be in good standing in such jurisdiction could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.02.           Authorization; Enforceability.  (a) The Transactions are within each Loan Party’s organizational powers and have been duly authorized by all necessary organizational actions and, if required, actions by equity holders.

 

(b)                                 The Loan Documents to which each Loan Party is a party have been duly executed and delivered by such Loan Party and constitute a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

SECTION 3.03.           Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violate any Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any of its Subsidiaries or any of their respective assets, or give rise to a right thereunder to require any payment to be made by any Loan Party or any of its Subsidiaries, except for such violations or defaults that could not reasonably be expected to have a Material Adverse Effect and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any of its Subsidiaries, except Liens permitted under Section 6.02.

 

SECTION 3.04.           No Material Adverse Change.  No event, change or condition has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect, since December 31, 2012.

 

SECTION 3.05.           Properties.  (a) As of the date of this Agreement, Schedule 3.05 sets forth the address of each parcel of real property that is owned or leased by each Loan Party.  Each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any party to any such lease or sublease exists, other than such defaults that would not result in a termination of such lease or sublease or could not reasonably be expected to have a Material Adverse Effect.  Each of the Loan Parties and its

 

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Subsidiaries has good and indefeasible title to, or valid leasehold interests in, all its real and material personal property, free of all Liens other than those permitted by Section 6.02.

 

(b)                                 Each Loan Party and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property necessary and material to the conduct of the business of the relevant Loan Parties as currently conducted, a correct and complete list of which, as of the date of this Agreement, is set forth on Schedule 3.05, and to the knowledge of each Loan Party and its Subsidiaries, the use thereof by the Loan Parties and its Subsidiaries does not infringe in any material respect upon the rights of any other Person, and except as set forth in Schedule 3.05, the Loan Parties’ rights thereto are not subject to any licensing agreement or similar arrangement.

 

SECTION 3.06.           Litigation and Environmental Matters.  (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Loan Party, threatened against or affecting the Loan Parties or any of their Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Transactions.

 

(b)                                 Except for the Disclosed Matters (i) no Loan Party nor any of its Subsidiaries has received written notice of any material claim with respect to any Environmental Liability which is pending and unresolved or that has been resolved within the past six months or has actual knowledge of any basis for any material Environmental Liability and (ii) except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, no Loan Party nor any of its Subsidiaries (1) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law or (2) has become subject to any Environmental Liability which is pending and unresolved or that has been resolved within the past six months.

 

SECTION 3.07.           Compliance with Laws and Agreements.  Each Loan Party and its Subsidiaries, is in compliance with all Requirements of Law applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  No Default has occurred and is continuing.

 

SECTION 3.08.           Taxes.  Each Loan Party and its Subsidiaries,  has timely filed or caused to be filed all federal and state income tax returns and all other material tax returns and reports required to have been filed and has paid or caused to be paid all federal and state income Taxes and, in the case of each Loan Party and its Subsidiaries, all other material Taxes required to have been paid by it, except, in each case, Taxes that are being contested in good faith by appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set aside on its books adequate reserves.  No tax Liens have been filed and no claims are being asserted with respect to any such taxes.

 

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SECTION 3.09.           ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  Except to the extent that the following could not reasonably be expected to materially and adversely affect the Loan Parties, taken as a whole, the present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan.

 

SECTION 3.10.           Disclosure.  The Loan Parties have disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  All information (other than financial information and projections (the “Projections”) and information of a general economic nature and general information about the Borrower’s or it’s subsidiaries’ industry) that has been or will be made available to the Administrative Agent or the Lenders by any Loan Party or any representative thereof is or will be, when furnished, when taken as a whole, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made after giving effect to all updates from time to time.  The Projections that have been or will be made available to the Administrative Agent or the Lenders by any Loan Party or any representative thereof have been or will be prepared in good faith and based upon assumptions that are believed by the Loan Parties to be reasonable at the time such Projections were prepared (it being the understanding that the projections, by their nature, are inherently uncertain and no assurances are being given that the results reflected in the Projections will be achieved).

 

SECTION 3.11.           Material Agreements.  No Loan Party is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any material agreement to which it is a party or (ii) any agreement or instrument evidencing or governing Indebtedness that could reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.12.           Solvency.  (a) Immediately after the consummation of the Transactions to occur on the Effective Date and the Delayed Commitment Effective Date, as applicable, (i) the fair value of the assets of each Loan Party will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted after the Effective Date and the Delayed Commitment Effective Date, as applicable.  The amount of contingent liabilities at any time shall be computed as the amount

 

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that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

(b)                                 No Loan Party intends to, or will permit any of its Subsidiaries to, and no Loan Party believes that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.

 

SECTION 3.13.           Insurance.  Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of the Loan Parties and the Subsidiaries as of the Effective Date.  As of the Effective Date and the Delayed Commitment Effective Date, as applicable, all premiums due and owing in respect of such insurance have been paid.  The Borrower believes that the insurance maintained by or on behalf of the Borrower and each Loan Party is adequate.  Each other Loan Party believes that the insurance maintained by or on behalf of such Loan Party is adequate.

 

SECTION 3.14.           Capitalization and Subsidiaries.  Schedule 3.14 sets forth as of the Effective Date (a) a correct and complete list of the name and relationship to the Borrower of each and all of the Loan Parties and their respective Subsidiaries, (b) a true and complete listing of each class of each of each Loan Party’s authorized Equity Interests, of which all of such issued Equity Interests are validly issued, outstanding, fully paid and non-assessable (to the extent such concepts are applicable to such Equity Interests), and owned beneficially and of record by the Persons identified on Schedule 3.14, and (c) the type of entity of each Loan Party and each of its Subsidiaries.  All of the issued and outstanding Equity Interests owned by any Loan Party has been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and is fully paid and non-assessable.

 

SECTION 3.15.           Security Interest in Collateral.  The provisions of this Agreement and the other Loan Documents create legal and valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, and such Liens constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) Permitted Encumbrances, to the extent any such Permitted Encumbrances would have priority over the Liens in favor of the Administrative Agent pursuant to any applicable law and (b) Liens perfected only by possession (including possession of any certificate of title) to the extent the Administrative Agent has not obtained or does not maintain possession of such Collateral.

 

SECTION 3.16.           Employment Matters.  As of the Effective Date and the Delayed Commitment Effective Date, as applicable, there are no strikes, lockouts or slowdowns against any Loan Party or any Subsidiary thereof pending or, to the knowledge of any Loan Party, threatened that could reasonably be expected to result in a Material Adverse Effect.  The hours worked by and payments made to employees of the Loan Parties and the Subsidiaries thereof have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters that could reasonably be expected to have a Material Adverse Effect.  All material payments due from any Loan Party or any Subsidiary, or

 

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for which any claim may be made against any Loan Party or any Subsidiary thereof, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Loan Party or such Subsidiary thereof (in accordance with GAAP).

 

SECTION 3.17.           Affiliate Transactions.  Except as set forth on Schedule 3.17, as of the date of this Agreement, there are no existing agreements, arrangements, understandings, or transactions between any Loan Party, and any of the officers, members, managers, directors, stockholders, other interest holders or Affiliates (other than Subsidiaries and other Loan Parties) of any Loan Party or any members of their respective immediate families, other than (i) agreements, arrangements, understandings or transactions with such parties that are entered into on fair and reasonable terms substantially as favorable to such Loan Party as would be obtainable by such Loan Party in an arm’s length transaction with a Person (other than any of the foregoing) and (ii) the payment of any management, monitoring, consulting and advisory fees and related expenses to the Borrower by any Loan Party permitted under this Agreement.

 

SECTION 3.18.           Common Enterprise.  Each Loan Party expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (i) successful operations of each of the Loan Parties and (ii) the credit extended by the Lenders to the Borrower hereunder, both in their separate capacities and, as applicable, as members of the group of companies.  Each Loan Party has determined that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, will be of direct and indirect benefit to such Loan Party, and is in its best interest.

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01.           Effective Date.  This Agreement shall become effective on the Effective Date, subject to the satisfaction (or waiver in accordance with Section 9.02) of the following conditions:

 

(a)                                 Credit Agreement and Loan Documents.  The Administrative Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include facsimile transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents and such other certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including any promissory notes requested by a Lender pursuant to Section 2.08(e) payable to the order of each such requesting Lender.

 

(b)                                 Closing Certificates; Certified Certificate of Incorporation; Good Standing Certificates.  The Administrative Agent shall have received (i) each Loan Party, dated the Effective Date and executed by its Secretary, Assistant Secretary or other officer of such Loan Party sufficiently familiar with the books and records of such Loan Party, which shall (A) certify

 

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the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear the signatures of the Financial Officers and any other officers of such Loan Party, as applicable, authorized to sign the Loan Documents to which it is a party, and (C) contain appropriate attachments, including the certificate or articles of incorporation or organization of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party, as applicable, a true and correct copy of its by-laws or operating, management or partnership agreement (including the LLC Agreement), and a true and correct copy of the Tax Receivable Agreement, and (ii) a good standing certificate for each Loan Party from its jurisdiction of organization.

 

(c)                                  [Opinion.  The Administrative Agent shall have received an opinion of Latham & Watkins LLP, special counsel to the Loan Parties, substantially in the form of Exhibit D].(2)

 

(d)                                 No Default Certificate.  The Administrative Agent shall have received a certificate, signed by the chief financial officer of the Borrower and each other Loan Party, on the initial Borrowing date (i) stating that no Default has occurred and is continuing and (ii) stating that the representations and warranties contained in Article III are true and correct in all material respects as of such date (or if any representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

 

(e)                                  Expenses.  The Lenders and the Administrative Agent shall have received all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Effective Date.  All such amounts will be paid with proceeds of Loans made on the Effective Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Effective Date.

 

(f)                                   Solvency.  The Administrative Agent shall have received a solvency certificate from a Financial Officer.

 

(g)                                  Shake Shack IPO.  The Shake Shack IPO shall have been consummated.

 

(h)                                 Other Documents.  The Administrative Agent shall have received such other documents as the Administrative Agent, the Issuing Bank, any Lender or their respective counsel may have reasonably requested.

 

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.

 

SECTION 4.02.           Delayed Commitment Effective Date.  The obligations of the Lenders to increase the Initial Revolving Commitment by the Delayed Commitment Amount shall be subject to the conditions that (a) the Delayed Commitment Effective Date shall have occurred, and (a) no Default shall have occurred and be continuing.

 

SECTION 4.03.           Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing or increase the Initial Revolving Commitment by the Delayed

 

(2)  To be determined.

 

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Commitment Amount on the Delayed Commitment Effective Date, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

 

(a)                                 The representations and warranties of each Loan Party set forth in Article III of this Agreement shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (except, in each case, for a representation or warranty expressly stated to have been made as of a specific date, which representation or warranty shall be true and correct in all material respects as of such specific date).

 

(b)                                 At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

 

(c)                                  After giving effect to any Borrowing or the issuance of any Letter of Credit, the Revolving Credit Exposure of all Revolving Lenders does not exceed the lesser of (i) the Revolving Available Amount and (ii) the Revolving Commitment then in effect.

 

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Until the Revolving Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full (other than Unliquidated Obligations) and all Letters of Credit shall have expired or terminated (or have been cash collateralized in accordance with the provisions hereof) and all LC Disbursements shall have been reimbursed, each Loan Party executing this Agreement covenants and agrees, jointly and severally with all of the Loan Parties, with the Lenders that:

 

SECTION 5.01.           Financial Statements and Other Information.  The Borrower will furnish to the Administrative Agent and each Lender:

 

(a)                                 within 120 days after the end of each fiscal year of the Borrower, the audited consolidated and unaudited consolidating balance sheet and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by independent public accountants of national standing or otherwise reasonably acceptable to the Administrative Agent and certified by a Financial Officer of the Borrower to the effect that such consolidated and consolidating financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated and consolidating basis in accordance with GAAP consistently applied;

 

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(b)                                 within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, the consolidated (and, if such fiscal quarter is the second fiscal quarter of such fiscal year, the consolidating) balance sheet and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Loan Parties on a consolidated (and consolidating, if applicable) basis in accordance with GAAP consistently applied;

 

(c)                                  concurrently with any delivery of financial statements under clause (a) above, a certificate of a Financial Officer of the Borrower in substantially the form of Exhibit B (i) certifying that such financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated and consolidating basis in accordance with GAAP consistently applied, (ii) certifying as to whether a Default has occurred and is continuing and, if a Default has occurred and is continuing, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.12 and (iv) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

 

(d)                                 within 90 days after the end of each fiscal year of the Borrower, a detailed annual budget for each of the twelve fiscal months of the fiscal year following such fiscal year then ended of the Borrower and its Subsidiaries on a consolidated basis, including forecasts prepared by management of the Borrower, in form and substance consistent with past and practice, of consolidated financial statements of the Borrower and its Subsidiaries on a monthly basis for such fiscal year (including the fiscal year in which the Maturity Date occurs); and

 

(e)                                  promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request (and the disclosure of which would not violate applicable Law or breach any obligation binding on the Borrower or such Subsidiary to keep such information confidential, would not require the disclosure of information subject to a legal privilege or would disclose a trade secret (not related to financial matters)).

 

Notwithstanding the foregoing, the obligations in Section 5.1(a) and Section 5.1(b) may be satisfied by furnishing, at the option of the Borrower, the applicable financial statements of Shake Shack, provided that (i) such information is accompanied by consolidating information (which need not be audited) that explains in reasonable detail the differences between the information relating to Shake Shack, on the one hand, and the information relating to Holdings and the Restricted Holdings Subsidiaries on a standalone basis, on the other hand and (ii) Shake Shack does not have any material assets or liabilities other than the Equity Interests in the Borrower.

 

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SECTION 5.02.           Notices of Material Events.  The Borrower will furnish to the Administrative Agent reasonably prompt, and in any event within five (5) Business Days of a Responsible Officer having knowledge thereof, written notice of the following:

 

(a)                                 the occurrence of any Default that is continuing;

 

(b)                                 receipt of any notice of any governmental investigation or any litigation or proceeding commenced or threatened against any Loan Party that (i) seeks damages in excess of $3,000,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its assets, (iv) alleges criminal misconduct by any Loan Party, (v) alleges the violation of any law regarding, or seeks remedies in connection with, any Environmental Laws, (vi) contests any tax, fee, assessment, or other governmental charge in excess of $3,000,000, or (vii) involves any product recall;

 

(c)                                  the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Loan Parties in an aggregate amount exceeding $3,000,000; and

 

(d)                                 any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto (provided that the disclosure of which would not violate applicable Law or breach any obligation binding on the Borrower or such Subsidiary to keep such information confidential, would not require the disclosure of information subject to a legal privilege or would disclose a trade secret (not related to financial matters))..

 

SECTION 5.03.           Existence; Conduct of Business.  Each Loan Party will, and will cause each of its Subsidiaries to, (a) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, qualifications, licenses, permits, franchises, governmental authorizations, intellectual property rights, licenses and permits material to the conduct of its business, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 and (b) carry on and conduct its business in substantially the same fields of enterprise as it is presently conducted.

 

SECTION 5.04.           Payment of Taxes.  Each Loan Party will, and will cause each of its Subsidiaries to, pay or discharge all Taxes before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) such liabilities would not result in aggregate liabilities in excess of $3,000,000.

 

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SECTION 5.05.           Maintenance of Properties.  Each Loan Party will, and will cause each of its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

 

SECTION 5.06.           Books and Records; Inspection Rights.  Each Loan Party will, and will cause each of its Subsidiaries to, (i) keep proper books of record and account in which full, true and correct entries in all material respects are made of all material dealings and transactions in relation to its business and activities and (ii) permit any representatives designated by the Administrative Agent or any Lender (including employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers and appraisers retained by the Administrative Agent), upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that if no Event of Default has occurred and is continuing, the Borrower and the Loan Parties shall only be required to reimburse the Administrative Agent for the costs of one such inspection per calendar year.  The Loan Parties acknowledge that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to the Loan Parties’ assets for internal use by the Administrative Agent and the Lenders.  Notwithstanding the foregoing, nothing in this Section 5.06 shall require any disclosure (i) which would violate applicable Law or breach any obligation binding on the Borrower or such Subsidiary to keep such information confidential, (ii) would require the disclosure of information subject to a legal privilege or (ii) would disclose a trade secret (not related to financial matters)).

 

SECTION 5.07.           Compliance with Laws.  Each Loan Party will, and will cause each of its Subsidiaries to, comply with all Requirements of Law applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.08.           Use of Proceeds.  The proceeds of the Loans will be used only to pay fees and expenses related to the Transactions consummated on the Effective Date and the Delayed Commitment Effective Date, as applicable, and to be consummated under this Agreement and for working capital and general corporate purposes of the Loan Parties, including to finance new store openings and other transactions permitted by the Loan Documents.  No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.

 

SECTION 5.09.           Insurance.  Each Loan Party will, and will cause each of its Subsidiaries to, maintain with financially sound and reputable carriers having a financial strength rating of at least A- by A.M. Best Company (a) insurance in such amounts (with no greater risk retention) and against such risks and such other hazards, as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations, and (b) all insurance required pursuant to the Collateral Documents.

 

SECTION 5.10.           Casualty and Condemnation.  The Borrower (a) will furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or other insured

 

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damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement and the Collateral Documents

 

SECTION 5.11.           Depository Banks.  Each Loan Party will maintain its material deposit accounts for the conduct of its business with the Administrative Agent or another commercial bank which has entered into a deposit account control agreement or securities account control agreement (other than with respect to payroll accounts, benefit accounts, withholding tax accounts or fiduciary accounts), in each case, in form and substance reasonably satisfactory to the Administrative Agent.

 

SECTION 5.12.           Additional Collateral; Further Assurances.  (a) Subject to applicable law, each Loan Party shall, within 30 days of such formation or acquisition or the date such Immaterial Subsidiary becomes a Material Subsidiary, cause each of its Subsidiaries (other than an Excluded Subsidiary) formed or acquired after the date of this Agreement and each Immaterial Subsidiary that subsequently becomes a Material Subsidiary and is not otherwise an Excluded Subsidiary, in each case, in accordance with the terms of this Agreement to become a Loan Party by executing the Joinder Agreement set forth as Exhibit C hereto (the “Joinder Agreement”). Upon execution and delivery thereof, each such Subsidiary (i) shall automatically become a Guarantor hereunder and thereupon shall have all of the rights, benefits, duties, and obligations in such capacity under the Loan Documents and (ii) will grant Liens to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, in any property of such Loan Party which constitutes Collateral, including any parcel of real property located in the U.S. owned by any Loan Party.

 

(b)                                 Each Loan Party will cause to be subject at all times to a perfected Lien in favor of the Administrative Agent in accordance with the terms and conditions of the Collateral Documents: (i) 100% of the issued and outstanding Equity Interests of each of its Domestic Subsidiaries that is not a Foreign Subsidiary and (ii) 65% of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary.

 

(c)                                  The Borrower agrees that if (i) the Administrative Agent notifies the Borrower that as a result of a Change in Law there is a reason to believe that more than 65% of the Equity Interests of any Foreign Subsidiary directly owned by the Borrower or any Domestic Subsidiary would be permitted to be pledged and subject to a perfected Lien in favor of the Administrative Agent in accordance with the terms and conditions of the Collateral Documents with no resulting “deemed dividend” under Section 956 of the Code and (ii) subsequent to the receipt of such notice, the Borrower reasonably determines (in consultation with its counsel and other tax advisors) that more than 65% of the Equity Interests of such a Foreign Subsidiary would be permitted to be pledged and subject to a perfected Lien in favor of the Administrative Agent in accordance with the terms and conditions of the Collateral Documents without such a “deemed dividend” under Section 956 of the Code or other possible tax consequences that are adverse to

 

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it, then the Borrower shall and shall cause each such Subsidiary to pledge such greater percentage of Equity Interests entitled to vote to be subject to a perfected Lien in favor of the Administrative Agent in accordance with the terms and conditions of the Collateral Documents.

 

(d)                                 Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to, execute and deliver, or cause to be executed and delivered, to the Administrative Agent such documents, agreements and instruments, and will take or cause to be taken such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and such other actions or deliveries of the type required by Section 4.01, as applicable), which may be required by law or which the Administrative Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents and to ensure perfection and priority of the Liens created or intended to be created by the Collateral Documents, all at the expense of the Loan Parties.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

Until the Revolving Commitments have expired or terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document have been paid in full (other than Unliquidated Obligations) and all Letters of Credit have expired or terminated (or have been cash collateralized in accordance with the provisions hereof) and all LC Disbursements shall have been reimbursed, the Loan Parties covenant and agree, jointly and severally, with the Lenders that:

 

SECTION 6.01.           Indebtedness.  No Loan Party will, nor will it permit any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness, except:

 

(a)                                 the Secured Obligations;

 

(b)                                 Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals, refinancings and replacements of any such Indebtedness in accordance with clause (f) hereof;

 

(c)                                  Indebtedness of any Loan Party to any other Loan Party, provided that Indebtedness of the Borrower to any Loan Party shall be subordinated to the Secured Obligations on terms reasonably satisfactory to the Administrative Agent;

 

(d)                                 Guarantees by any Loan Party of Indebtedness of any other Loan Party, provided that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01 and (ii) Guarantees permitted under this clause (d) shall be subordinated to the Secured Obligations of the applicable Subsidiary on the same terms as the Indebtedness so Guaranteed is subordinated to the Secured Obligations;

 

(e)                                  Indebtedness of any Loan Party incurred to finance the acquisition, construction or improvement of any fixed or capital assets (whether or not constituting purchase money Indebtedness), including Capital Lease Obligations and any Indebtedness assumed in connection

 

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with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness in accordance with clause (f) hereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (e) shall not exceed $6,000,000 at any time outstanding;

 

(f)                                   Indebtedness which represents an extension, refinancing, or renewal of any of the Indebtedness described in clauses (b) and (e) hereof; provided that, with respect to clause (b) hereof (i) the principal amount or interest rate of such Indebtedness is not increased, and (ii) the terms of any such extension, refinancing, or renewal are not less favorable to the obligor thereunder than the original terms of such Indebtedness; and provided further that with respect to clauses (b) and (e) hereof (iii) any Liens securing such Indebtedness are not extended to any additional property of any Loan Party, (iv) no Loan Party that is not originally obligated with respect to repayment of such Indebtedness is required to become obligated with respect thereto, (iv) such extension, refinancing or renewal does not result in a shortening of the average weighted maturity of the Indebtedness so extended, refinanced or renewed, and (v) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Secured Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Administrative Agent and the Lenders as those that were applicable to the refinanced, renewed, or extended Indebtedness;

 

(g)                                  Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;

 

(h)                                 Indebtedness of any Loan Party in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business;

 

(i)                                     Indebtedness of any Loan Party in respect of netting services, overdraft protections and otherwise in connection with deposit accounts in the ordinary course of business;

 

(j)                                    unsecured Indebtedness of any Loan Party in respect of obligations of any Loan Party to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided that such obligations are incurred in the ordinary course of business;

 

(k)                                 Indebtedness of any Loan Party consisting of (i) obligations to pay insurance premiums or (ii) take or pay obligations contained in supply agreements, in each case arising in the ordinary course of business;

 

(l)                                     Indebtedness arising from agreements of any Loan Party or any Subsidiary providing for indemnification, adjustment of purchase price or similar obligations in each case

 

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entered into in connection with any Acquisition, other investment or Asset Sale permitted under Sections 6.03, 6.04 and 6.05, as applicable;

 

(m)                             Swap Agreements and commodity hedging agreements, in each case, entered into to protect against fluctuations in interest rates, foreign currency exchange rates or commodity prices and not for speculative purposes;

 

(n)                                 Indebtedness representing deferred compensation to officers, directors or employees of any Loan Party (or any of its Subsidiaries) incurred in the ordinary course of business;

 

(o)                                 Indebtedness in respect of import indemnities or similar instruments in each case provided in the ordinary course of business;

 

(p)                                 Indebtedness permitted as investments under Section 6.04; and

 

(q)                                 other unsecured Indebtedness in an aggregate principal amount not exceeding $6,250,000 at any time outstanding.

 

SECTION 6.02.           Liens.  No Loan Party will, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

 

(a)                                 Liens created pursuant to any Loan Document;

 

(b)                                 Permitted Encumbrances;

 

(c)                                  any Lien on any property or asset of any Loan Party existing on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof (or any extension, refinancing or renewal of such obligations permitted in accordance with Section 6.01(f));

 

(d)                                 Liens on fixed or capital assets acquired, constructed or improved by the any Loan Party; provided that (i) such security interests secure Indebtedness permitted by clause (e) of Section 6.01, (ii) such security interests and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of any Loan Party;

 

(e)                                  any Lien existing on any property or asset prior to the acquisition thereof by any Loan Party or existing on any property or asset of any Person that becomes a Loan Party after the date hereof prior to the time such Person becomes a Loan Party; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Loan Party, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Loan Party and (iii) such Lien shall secure only those obligations (as such obligations may be

 

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extended, refinanced or renewed in accordance with Section 6.01(f)) which it secures on the date of such acquisition or the date such Person becomes a Loan Party, as the case may be;

 

(f)                                   Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the Uniform Commercial Code in effect in the relevant jurisdiction covering only the items being collected upon;

 

(g)                                  Liens arising out of sale and leaseback transactions permitted by Section 6.06; and

 

(h)                                 other Liens securing obligations of the Borrower and its Subsidiaries not exceeding $5,000,000 in the aggregate outstanding at any time.

 

SECTION 6.03.           Fundamental Changes.  (a) No Loan Party will, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing (i) any Loan Party (or any of its Subsidiaries) may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Loan Party (other than the Borrower) or any of its Subsidiaries may merge into any Loan Party in a transaction in which the surviving entity is a Loan Party, (iii) any Subsidiary of a Loan Party may merge into any other Subsidiary of a Loan Party, so long as if any such Subsidiary is a Loan Party such Loan Party shall be the surviving entity and (iv) any Loan Party may liquidate or dissolve any unprofitable and immaterial Subsidiary in the ordinary course of business.

 

(b)                                 No Loan Party will, nor will it permit any of its Subsidiaries to, engage in any business other than businesses of the type conducted by the Loan Parties and such Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

 

SECTION 6.04.           Investments, Loans, Advances, Guarantees and Acquisitions.  No Loan Party will, nor will it permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a Loan Party and a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (whether through purchase of assets, merger or otherwise), except:

 

(a)                                 Permitted Investments;

 

(b)                                 investments in existence on the date of this Agreement and described in Schedule 6.04 (or any extension, refinancing or renewal of such investments, so long as the aggregate amount of all investments pursuant to this clause (b) is not increased at any time above the amount of such investments existing on the date hereof;

 

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(c)                                  investments by each Loan Party or any Subsidiary in Equity Interests in other Loan Parties, provided that any such Equity Interests held by a Loan Party, shall be pledged pursuant to, and only to the extent required under, the Security Agreement;

 

(d)                                 loans or advances made by any Loan Party (or any of its Subsidiaries) to any other Loan Party permitted by Section 6.01(c);

 

(e)                                  Indebtedness permitted by Section 6.01;

 

(f)                                   loans or advances made by a Loan Party to its officers and employees on an arms-length basis in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation costs and similar purposes up to a maximum of $312,500 to any officer or employee and up to a maximum of $1,250,000 in the aggregate at any one time outstanding;

 

(g)                                  investments in the form of Swap Agreements permitted by Section 6.07;

 

(h)                                 investments in connection with any Permitted Equity Issuance;

 

(i)                                     investments received in connection with the dispositions of assets permitted by Section 6.05;

 

(j)                                    investments in joint ventures and unconsolidated subsidiaries useful in the business of the Loan Parties; provided that such investments are made (i) with the proceeds of equity investments in the Loan Parties by Persons who are not Loan Parties or (ii) in cash in amounts not to exceed $9,375,000 in the aggregate (calculated based on the date such investment was made);

 

(k)                                 investments constituting deposits described in clauses (c) and (d) of the definition of the term “Permitted Encumbrances”;

 

(l)                                     loans to employees or officers of any Loan Party (or any of its Subsidiaries) in connection with such Person’s purchase of Equity Interests or options to purchase Equity Interests in any Loan Party up to a maximum of $187,500 to any employee or officer and up to a maximum of $937,500 in the aggregate at any one time outstanding;

 

(m)                             investments made to repurchase or retire Equity Interests of any Loan Party permitted under Section 6.08;

 

(n)                                 advances of payroll to employees of any Loan Party in the ordinary course of business;

 

(o)                                 investments to the extent that payment for such investments is made with Equity Interests;

 

(p)                                 investments received in connection with the bankruptcy or reorganization of suppliers or customers and in settlement of delinquent obligations of, and other disputes with,

 

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customers arising in the ordinary course of business or upon foreclosure with respect to any secured investment or other transfer of title with respect to any secured investment;

 

(q)                                 loans and advances to any direct or indirect parent of the Borrower in lieu of, and not in excess of the amount of, dividends to the extent permitted to be made to such parent in accordance with Section 6.08;

 

(r)                                    Guarantees by a Loan Party entered into in connection with real property leases or subleases entered into by any other Loan Party; and

 

(s)                                   investments by any Loan Party in Persons not to exceed $4,687,500 at any time outstanding plus capital contributions and dividends that the Borrower and Loan Parties receive directly or indirectly from (i) a Person that is not a Loan Party or (ii) third party holders of Equity Interests of the Loan Parties.

 

SECTION 6.05.           Asset Sales.  No Loan Party will, nor will it permit any Subsidiary to (x) sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it, except:

 

(a)                                 sales, transfers and dispositions of (i) inventory in the ordinary course of business and (ii) used, obsolete, worn out or surplus equipment or property in the ordinary course of business;

 

(b)                                 sales, transfers and dispositions among the Loan Parties (including dispositions permitted by Section 6.03);

 

(c)                                  sales, transfers and dispositions of Permitted Investments and other investments permitted by clause (h) of Section 6.04;

 

(d)                                 sale and leaseback transactions permitted by Section 6.06;

 

(e)                                  sales by domestic subsidiaries of intellectual property rights and licenses to foreign subsidiaries;

 

(f)                                   leases, subleases, licenses or sublicenses of real or personal property (including intellectual property) in the ordinary course of business and consistent with past practice;

 

(g)                                  dispositions or use of cash and Permitted Investments in the ordinary course of business and consistent with past practice;

 

(h)                                 dispositions resulting from any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower (or any of its Subsidiaries);

 

(i)                                     sales, transfers and other dispositions of assets (other than Equity Interests in a Subsidiary unless all Equity Interests in such Subsidiary are sold) that are not permitted by any other paragraph of this Section, provided that the aggregate fair market value of all assets sold,

 

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transferred or otherwise disposed of in reliance upon this paragraph (i) shall not exceed $5,000,000 during any fiscal year of the Borrower;

 

(j)                                    sales, transfers and other dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, or (ii) the proceeds of such disposition are promptly applied to the purchase price of such replacement property; and

 

(k)                                 sales, transfers and other dispositions of investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture arrangements and similar binding arrangements.

 

SECTION 6.06.           Sale and Leaseback Transactions.  No Loan Party will, nor will it permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except for any such sale of any fixed or capital assets by the Borrower (or any of its Subsidiaries) that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within 90 days after the Borrower or such Subsidiary acquires or completes the construction of such fixed or capital asset.

 

SECTION 6.07.           Swap Agreements.  No Loan Party will, nor will it permit any  Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Borrower (or any of its Subsidiaries) has actual exposure (other than those in respect of Equity Interests of the Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower (or any of its Subsidiaries).

 

SECTION 6.08.           Restricted Payments; Certain Payments of Indebtedness.  (a) No Loan Party will, nor will it permit any Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except

 

(i)                                     each Loan Party and each of their respective Subsidiaries may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its preferred stock, payable solely in additional shares of such preferred stock or in shares of its common stock,

 

(ii)                                  each Loan Party may pay dividends or make distributions to its direct or indirect shareholders/members to pay their assumed state, local and United States federal income tax liabilities attributable to such Loan Party’s (or, without duplication, such Loan Party’s Subsidiaries) income and gain, with such taxes being calculated for all such shareholders/members at a rate not to exceed the highest combined federal, state, and local tax rate applicable to any such shareholder/member, whether to a corporation or

 

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individual, whichever is higher and, in the case of distributions to Shake Shack, without regard to any adjustments under Section 743(b) of the Code,

 

(iii)                               each Loan Party (other than the Borrower) may (x) pay management, consulting and advisory fees to the Borrower and (y) pay dividends or make distributions to its shareholders or members,

 

(iv)                              any Loan Party (or any of its Subsidiaries) may redeem in whole or in party any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions or issuances of new Equity Interests,

 

(v)                                 any Loan Party (or any of its Subsidiaries) may (or may make dividends to permit any direct or indirect parent thereof to) repurchase or retire shares of its (or such parent’s) Equity Interests held by officers, directors, employees and members of any Loan Party (or any of its Subsidiaries) (or any spouse, former spouse, successor, executor, administrator, heir, legatee or distributee of any of the foregoing), so long as such repurchase or retirement is pursuant to, and in accordance with the terms of, any management, director and/or employee equity or stock option or benefit plans, stock subscription agreements, the Organizational Document of any Loan Party, or any agreement between any employee, officer or director of any Loan Party and any Loan Party,

 

(vi)                              each Loan Party may redeem in whole or in part any of its Equity Interests,

 

(vii)                           the Borrower may (x) reimburse Shake Shack for its expenses incurred on behalf of the Borrower to the extent provided in Section 6.06 of the LLC Agreement, and (y) make indemnification payments pursuant to Section 7.04 of the LLC Agreement, and

 

(viii)                        the Borrower may make distributions to Shake Shack to the extent necessary to enable Shake Shack to (x) pay “Cash Settlements” pursuant to Article XI of the LLC Agreement, and (y), without duplication as to clause (ii) of this Section 6.08(a),  make “Tax Benefit Payments” pursuant to Article III of the Tax Receivable Agreement;

 

provided that (1) any dividend or distribution permitted by clause (v) to a Person that is not a Loan Party and (2) any transaction contemplated by clause (v) or (vi) above are subject to the following conditions (subject to Section 7.02) (x) no Event of Default then exists or would result therefrom and (y) the Borrower has delivered to the Administrative Agent, at least 10 Business Days prior to such Restricted Payment, a certificate of a Responsible Financial Officer of the Borrower demonstrating pro forma compliance with Section 6.12, both before and after giving effect to such Restricted Payment.

 

(b)                                 No Loan Party will, nor will it permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any funded Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any

 

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sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any funded Indebtedness, except:

 

(i)                                     payment of Indebtedness created under the Loan Documents;

 

(ii)                                  payment of regularly scheduled interest and principal payments as and when due in respect of any Indebtedness, other than payments in respect of the Subordinated Indebtedness prohibited by the subordination provisions thereof;

 

(iii)                               refinancings of Indebtedness to the extent permitted by Section 6.01;

 

(iv)                              payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; and

 

(v)                                 payments of Indebtedness not to exceed $2,000,000 in the aggregate per fiscal year.

 

SECTION 6.09.           Transactions with Affiliates.  No Loan Party will, nor will it permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions that (i) are in the ordinary course of business and (ii) are at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and any Subsidiary that is a Loan Party not involving any other Affiliate, (c) any investment permitted by Sections 6.04(c) or 6.04(d), (d) any Indebtedness permitted under Section 6.01(c), (e) any Restricted Payment permitted by Section 6.08, (f) loans or advances to employees permitted under Section 6.04, (g) any transaction permitted under Section 6.05(e), (h) the payment of reasonable fees to directors of the Borrower, the Loan Parties or any of their respective Subsidiaries who are not employees of the Borrower, the Loan Parties, or any of their respective Subsidiaries, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Borrower or its Subsidiaries in the ordinary course of business, (i) any issuances of securities or other payments, compensation awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership plans approved by the Borrower’s Board of Directors, and (j) the payment of management, consulting and advisory fees to the Borrower.

 

SECTION 6.10.           Restrictive Agreements.  No Loan Party will, nor will it permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such Loan Party or any of its Subsidiaries to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Loan Party to make or repay loans or advances to the Borrower or any other Loan Party or to Guarantee Indebtedness of the Borrower or any other Loan Party or to pay management, consulting or advisory fees to the Borrower; provided that (i) the foregoing shall not apply to restrictions and conditions:

 

(i)                                     imposed by law, any Loan Document or any Organizational Document of any Loan Party;

 

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(ii)                                  existing on the date hereof and identified on Schedule 6.10 (but shall not apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition);

 

(iii)                               arise in connection with any disposition permitted under Section 6.05;

 

(iv)                              clause (a) of the foregoing shall not apply to customary provisions restricting subletting or assignment of any lease governing a leasehold interest of a Loan Party or Subsidiary;

 

(v)                                 clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by Sections 6.01(d), (e) or (f) or 6.02(d) or (e) if such restrictions or conditions apply only to the property or assets securing such Indebtedness; and

 

(vi)                              clause (a) of the foregoing shall not apply to customary provisions in leases, joint venture agreements or other agreement entered into in the ordinary course of business and consistent with past practice restricting the assignment thereof.

 

SECTION 6.11.           Amendment of Material Documents.  No Loan Party will, nor will it permit any of its Subsidiaries to, amend, modify or waive any of its rights under (a)  agreement relating to any Subordinated Indebtedness, (b) its Organizational Documents (including the LLC Agreement), or (c) the Tax Receivable Agreement, in each case, to the extent any such amendment, modification or waiver would be materially adverse to the Lenders.

 

SECTION 6.12.           Fixed Charge Coverage Ratio.  The Borrower will not permit the Fixed Charge Coverage Ratio determined for any period of four consecutive fiscal quarters ending on the last day of each fiscal quarter (after giving effect to any Cure Payments pursuant to Section 7.02) to be less than 1.20:1.

 

SECTION 6.13.           Funded Net Debt to EBITDA Ratio.  The Borrower will not permit the Funded Net Debt to EBITDA Ratio determined for any period of four consecutive fiscal quarters ending on the last day of each fiscal quarter (after giving effect to any Cure Payments pursuant to Section 7.02) to exceed 3.00:1.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

SECTION 7.01.           Events of Default.  If any of the following events (“Events of Default”) shall occur:

 

(a)                                 the Borrower shall fail to pay (i) any principal of any Loan, (ii) any reimbursement obligation in respect of any LC Disbursement or (iii) within 3 Business Days of the date that the same shall become due and payable, any interest on any Loan, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

 

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(b)                                 the Borrower shall fail to pay any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and within 5 Business Days of the date that the same shall become due and payable;

 

(c)                                  any representation or warranty made or deemed made by or on behalf of any Loan Party or any Subsidiary in or in connection with this Agreement or any Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished to the Administrative Agent pursuant to or in connection with this Agreement or any Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, shall prove to have been materially incorrect when made or deemed made;

 

(d)                                 any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), 5.03 (with respect to a Loan Party’s existence), 5.08 or 5.12 or in Article VI;

 

(e)                                  any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those which constitute a default under another Section of this Article), and such failure shall continue unremedied for a period of (i) 5 days after the earlier of knowledge of such breach or notice thereof from the Administrative Agent (which notice will be given at the request of any Lender) if such breach relates to terms or provisions of Section 5.01, 5.02 (other than Section 5.02(a)), 5.03 through 5.07, 5.09, 5.10 or 5.11 of this Agreement or (ii) 15 days after the earlier of knowledge of such breach or notice thereof from the Administrative Agent (which notice will be given at the request of any Lender) if such breach relates to terms or provisions of any other Section of this Agreement;

 

(f)                                   any Loan Party or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (subject to any grace or cure periods set forth in the terms of such Material Indebtedness);

 

(g)                                  any event or condition occurs and continues that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

 

(h)                                 an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of a Loan Party or any Subsidiary of any Loan Party or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any Subsidiary of any Loan Party or for a substantial part of its assets, and,

 

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in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(i)                                     any Loan Party or any Subsidiary of any Loan Party shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Loan Party or Subsidiary of any Loan Party or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

 

(j)                                    any Loan Party or any Subsidiary of any Loan Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

 

(k)                                 one or more judgments for the payment of money in an aggregate amount in excess of $3,500,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) shall be rendered against any Loan Party, any Subsidiary of any Loan Party or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Loan Party or any Subsidiary of any Loan Party to enforce any such judgment or any Loan Party or any Subsidiary of any Loan Party shall fail within 30 days to discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in good faith by proper proceedings diligently pursued;

 

(l)                                     an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect;

 

(m)                             a Change in Control shall occur;

 

(n)                                 the occurrence of any “default”, as defined in any Loan Document (other than this Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period of grace therein provided;

 

(o)                                 other than pursuant to the terms of the Loan Documents, any Loan Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Loan Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of the Loan Guaranty, to which it is a party, or any Guarantor shall deny that it has any further liability under the Loan Guaranty, to which it is a party, or shall give notice to such effect;

 

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(p)                                 other than as a result of any action by the Administrative Agent, any Collateral Document shall for any reason fail to create a valid and perfected first priority security interest in any Collateral purported to be covered thereby, except as permitted by the terms of any Collateral Document, or any Collateral Document shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Collateral Document; or

 

(q)                                 any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Loan Party shall challenge the enforceability of any Loan Document or shall assert in writing that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms);

 

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:  (i) terminate the Revolving Commitments, and thereupon the Revolving Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Revolving Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.  Upon the occurrence and the continuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC.

 

SECTION 7.02.           Cure Right.

 

(a)                                 Notwithstanding anything to the contrary contained in Sections 5.09, 5.12, 6.12 and 6.13 (and the definitions related thereto) or Section 7.01 (with respect to such Section and definitions), in the event of any Event of Default arising from the breach of the Fixed Charge Coverage Ratio covenant set forth in Section 6.12 and/or the Funded Net Debt to EBITDA Ratio covenant set forth in Section 6.13 as of the last day of any fiscal quarter (prior to giving effect to any Cure Payment), and until the expiration of the eighth (8th) day after the date of the delivery of (i) in the case of any fiscal quarter ending in June, the quarterly report in Section 5.01(b) and (ii) in the case of the fiscal quarter ending in December, the annual report in Section 5.01(a), cash contributions may be made to the Borrower, within one (1) Business Day after the expiration of such period, in an amount which, when added to the Borrower’s EBITDA (and, in the case of the Funded Net Debt to EBITDA Ratio, applied to reduce Indebtedness) for the four

 

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quarter period ending on the last day of the fiscal quarter in which such breach occurred, will result in the Borrower being in compliance with the Fixed Charge Coverage Ratio and/or the Funded Net Debt to EBITDA Ratio, as applicable, for such period.

 

(b)                                 The Borrower shall not be permitted to exercise the right to cure set forth in clause (a) of this Section 7.02 more than six (6) times over the term of this Agreement.

 

(c)                                  The Administrative Agent and the Lenders agree that until the expiration of the periods set forth in Section 7.02(a), neither the Administrative Agent nor the Lenders shall exercise any rights or remedies with respect to any Event of Default arising from the breach of the Fixed Charge Coverage Ratio covenant set forth in Section 6.12 and/or the Funded Net Debt to EBITDA Ratio covenant set forth in Section 6.13, as applicable, as of the last day of any fiscal quarter (prior to giving effect to any Cure Payment), but the Administrative Agent and the Lenders reserve the right to exercise any such rights or remedies if such Event of Default continues to exist following the expiration of such period.

 

(d)                                 The parties hereby acknowledge that this Section 7.02 or any Cure Payment received (or deemed to be received) by the Borrower pursuant to this Section 7.02 shall not:

 

(i)                                     be relied on for purposes of calculating any financial ratios other than as applicable to Sections 5.09, 5.12, 6.12 and 6.13, including any calculation for the purpose of determining any basket or threshold in this Agreement;

 

(ii)                                  result in any adjustment to the Fixed Charge Coverage Ratio for the purpose of determining the Borrower’s compliance with the Fixed Charge Coverage Ratio for the purposes set forth in Sections 6.08(a)(iv) and (vi), other than the adjustment to the Fixed Charge Coverage Ratio referred to in the immediately preceding clause (i); or

 

(iii)                               be used to determine the permissibility of a transaction or other action under the Loan Documents where such permissibility was (or may have been) contingent on pro forma compliance with the Fixed Charge Coverage Ratio.

 

(e)                                  If, after giving effect to the foregoing recalculations, the Borrower shall then be in compliance with the requirements of the Fixed Charge Coverage Ratio and/or the Funded Net Debt to EBITDA Ratio, as applicable, the Borrower shall be deemed to have satisfied the requirements of such financial covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of such financial covenant that had occurred shall be deemed cured for the purposes of this Agreement (and, for the avoidance of doubt, no default interest shall be paid in connection with any such cure).

 

(f)                                   To the extent that a Cure Payment is received and included in the calculation of EBITDA for any applicable fiscal quarter pursuant to this Section, such Cure Payment shall be deemed to be EBITDA for purposes of determining compliance with any covenant contained herein for subsequent periods that include such fiscal quarter.

 

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ARTICLE VIII

 

THE ADMINISTRATIVE AGENT

 

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

 

The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Loan Parties or any Subsidiary of a Loan Party or other Affiliate thereof as if it were not the Administrative Agent hereunder.

 

The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

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The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.  Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a commercial bank or an Affiliate of any such commercial bank.  Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the Administrative Agent’s resignation hereunder, the provisions of this Article, Section 2.16(d) and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.

 

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Each Lender hereby agrees that (a) it has requested a copy of each Report prepared by or on behalf of the Administrative Agent; (b) the Administrative Agent (i) makes no representation or warranty, express or implied, as to the completeness or accuracy of any Report or any of the information contained therein or any inaccuracy or omission contained in or relating to a Report and (ii) shall not be liable for any information contained in any Report; (c) the Reports are not comprehensive audits or examinations, and that any Person performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel and that the Administrative Agent undertakes no obligation to update, correct or supplement the Reports; (d) it will keep all Reports confidential and strictly for its internal use, not share the Report with any Loan Party or any other Person except as otherwise permitted pursuant to this Agreement; and (e) without limiting the generality of any other indemnification provision contained in this Agreement, it will pay and protect, and indemnify, defend, and hold the Administrative Agent and any such other Person preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including reasonable attorney fees) incurred by as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.           Notices.  (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

 

(i)                                     if to any Loan Party, to the Borrower at:

 

SSE Holdings, LLC
 24 Union Square East, 6th Floor
 New York, New York  10003
 Attention:  Ron Palmese (rpalmese@shakeshack.com); 
 Jeff Uttz (juttz@shakeshack.com)
 Facsimile No: (212) 228-3622

 

(ii)                                  if to the Administrative Agent or the Issuing Bank, to JPMorgan Chase Bank, N.A. at:

 

JPMorgan Chase Bank, N.A.
 270 Park Avenue 
 41st Floor 
 New York, New York  10017
 Attention: James McDonnell
 Facsimile No: (646) 534-2239

 

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(iii)                               if to any other Lender, to it at its address or facsimile number set forth in its Administrative Questionnaire.

 

All such notices and other communications (i) sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received or (ii) sent by facsimile shall be deemed to have been given when sent, provided that if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient.

 

(b)                                 Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications (including e-mail and internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II or to compliance and no Event of Default certificates delivered pursuant to Section 5.01(c) unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower (on behalf of the Loan Parties) may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. All such notices and other communications (i) sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if not given during the normal business hours of the recipient, such notice or communication shall be deemed to have been given at the opening of business on the next Business Day for the recipient, and (ii) posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (b)(i) of notification that such notice or communication is available and identifying the website address therefor.

 

(c)                                  Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

 

SECTION 9.02.           Waivers; Amendments.  (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under any other Loan Document are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

 

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(b)                                 Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except (i) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or, (ii) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Revolving Commitment of any Lender without the written consent of such Lender, (ii) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce or forgive any interest or fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone any scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any date for the payment of any interest, fees or other Obligations payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Revolving Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.16(b) or (d) in a manner that would alter the manner in which payments are shared, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender, (vi) change Section 2.18, without the consent of each Lender (other than any Defaulting Lender), (vii) release any Guarantor from its obligation under its Loan Guaranty (except as otherwise permitted herein or in the other Loan Documents), without the written consent of each Lender, or (viii) except as provided in clauses (d) and (e) of this Section or in any Collateral Document, release all or substantially all of the Collateral, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank hereunder without the prior written consent of the Administrative Agent or the Issuing Bank, as the case may be (it being understood that any change to Section 2.17 shall require the consent of the Administrative Agent and the Issuing Bank).  The Administrative Agent may also amend Schedule 2.01 to reflect assignments entered into pursuant to Section 9.04

 

(c)                                  The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in its sole discretion, to release any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the termination of all Revolving Commitments, payment and satisfaction in full in cash of all Secured Obligations (other than Unliquidated  Obligations), and the cash collateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender, (ii) constituting property being sold or disposed of if the Loan Party disposing of such property certifies to the Administrative Agent that the sale or disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate, without further inquiry), and to the extent that the property being sold or disposed of constitutes 100% of the Equity Interest of a Subsidiary, the Administrative Agent is authorized to release any Loan Guaranty provided by such Subsidiary, (iii) constituting property leased to a Loan Party under a lease which has expired or been terminated in a transaction permitted under this Agreement, or (iv) as required to effect any sale or other disposition of such Collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII.  Except as provided in the preceding sentence, the Administrative Agent will not release any Liens on Collateral without

 

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the prior written authorization of the Required Lenders.  Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

 

(d)                                 If, in connection with any proposed amendment, waiver or consent  requiring the consent of “each Lender” or “each Lender affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of clause (b) of Section 9.04, and (ii) the Borrower shall pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting Lender under Sections 2.13 and 2.15, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 2.14 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender.

 

SECTION 9.03.           Expenses; Indemnity; Damage Waiver.  (a) The Borrower shall pay (i) all reasonable documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of one counsel (other than the allocated costs of internal counsel) for the Administrative Agent, in connection with the syndication and distribution (including, without limitation, via the internet or through a service such as Intralinks) of the credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions of the Loan Documents (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable, documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement, collection or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during  any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. Expenses being reimbursed by the Borrower under this Section include, without limiting the generality of the foregoing, costs and expenses incurred in connection with:

 

(i)                                     background checks regarding senior management and/or key investors, as deemed necessary or appropriate in the sole discretion of the Administrative Agent;

 

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(ii)                                  taxes, fees and other charges for (A) Lien and title searches and title insurance and (B) recording any mortgages, filing financing statements and continuations, and other actions to perfect, protect, and continue the Administrative Agent’s Liens;

 

(iii)                               sums paid or incurred to take any action required of any Loan Party under the Loan Documents that such Loan Party fails to pay or take; and

 

(iv)                              forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining the accounts and lock boxes, and costs and expenses of preserving and protecting the Collateral.

 

All of the foregoing costs and expenses may be charged to the Borrower as Revolving Loans or to another deposit account at any time prior to the Maturity Date, all as described in Section 2.17(c).

 

(b)                                 The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related expenses, including the fees, charges and disbursements of any counsel (other than the allocated costs of internal counsel) for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of the Loan Documents or any agreement or instrument contemplated thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, (iv) the failure of the Borrower to deliver to the Administrative Agent the required receipts or other required documentary evidence with respect to a payment made by the Borrower for Taxes pursuant to Section 2.15, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee; provided further that this Section 9.03(b) shall not apply with respect to Taxes other than Taxes that represent losses, claims , damages, etc. arising from any non-Tax claim.

 

(c)                                  To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent or the Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent or the Issuing Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the

 

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unreimbursed expense or indemnified loss, claim, damage, penalty, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Issuing Bank in its capacity as such.

 

(d)                                 To the extent permitted by applicable law, no Loan Party shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

 

(e)                                  All amounts due under this Section shall be payable promptly after written demand therefor.

 

SECTION 9.04.           Successors and Assigns.  (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)                                 (i)                                     Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Assignee) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld; provided that failure to consent to the assignment to a Competitor shall not be deemed to be unreasonably withheld) of:

 

(A)                               the Borrower, provided that, the Borrower shall be deemed to have consented to an assignment unless it shall have objected thereto by written notice to the Administrative Agent within seven (7) Business Days after having received notice thereof; provided further that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;

 

(B)                               the Administrative Agent; and

 

(C)                               the Issuing Bank.

 

(ii)                                  Assignments shall be subject to the following additional conditions:

 

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(A)                               except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Revolving Commitment or Loans of any Class, the amount of the Revolving Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $500,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

 

(B)                               each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Revolving Commitments or Loans;

 

(C)                               the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

 

(D)                               the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower, the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

 

For the purposes of this Section 9.04(b), the term  “Ineligible Assignee” has the following meaning:

 

“Ineligible Assignee” means (a) a natural person, (b) company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof; provided that, such company, investment vehicle or trust shall not constitute an Ineligible Assignee if it (x) has not been established for the primary purpose of acquiring any Loans or Revolving Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business; provided that upon the occurrence of an Event of Default, any Person (other than a Lender) shall be an Ineligible Assignees if after giving effect any proposed assignment to such Person, such Person would hold more than 25% of the then outstanding Revolving Credit Exposure or Revolving Commitments, as the case may be, (c) any Defaulting Lender or (d) a Competitor; provided that (i) a Competitor shall only be an Ineligible Assignee so long as no Event of Default pursuant to Section 7.01(h), (i) or (j) has occurred and (ii) in the case of any other Event of Default not specified in clause (i) that has occurred and is

 

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continuing, a Competitor shall not be deemed an Ineligible Assignee if (x) a Lender desiring to sell, assign or participate all or any portion of its Revolving Commitments and then outstanding Loans to a Competitor, notifies the Borrower (after the occurrence and during the continuance of such Event of Default) in writing of its intent to sell, assign or participate such Revolving Commitments and Loans to a Competitor and the terms pursuant to which such Competitor is willing to participate in such sale, assignment or participation and (y) within 60 days of receiving such notice, the Borrower has not identified a Person willing to acquire all such Revolving Commitments and Loans specified in the notice on the terms specified in the notice.

 

(iii)                               Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

 

(iv)                              The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Commitment of, and principal amount and stated interest of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(v)                                 Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.04, 2.05, 2.16 or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all

 

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accrued interest thereon.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

 

(c)                                  (i)                                     Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (other than a Competitor that is an Ineligible Assignee) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Revolving Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant.  The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15  (subject to the requirements and limitations therein, including the requirements under Section 2.15(f) (it being understood that the documentation required under Section 2.15(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.15(f), 2.16 and 2.17 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.13 or 2.15, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.16(c) as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Revolving Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such Revolving Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(d)                                 Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this

 

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Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 9.05.           Survival.  All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments  delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Revolving Commitments have not expired or terminated.  The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Revolving Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06.           Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 9.07.           Severability.  Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

SECTION 9.08.           Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or any

 

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Guarantor against any of and all the Secured Obligations held by such Lender, irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although such obligations may be unmatured.  The applicable Lender shall notify the Borrower and the Administrative Agent of such set-off or application, provided that any failure to give or any delay in giving such notice shall not affect the validity of any such set-off or application under this Section.  The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.09.           Governing Law; Jurisdiction; Consent to Service of Process.  (a) The Loan Documents (other than those containing a contrary express choice of law provision) shall be governed by and construed in accordance with laws of the State of New York, but giving effect to federal laws applicable to national banks.

 

(b)                                 Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any U.S. Federal or New York State court sitting in New York, New York in any action or proceeding arising out of or relating to any Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

 

(c)                                  Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)                                 Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

SECTION 9.10.           WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE

 

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THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.           Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.           Confidentiality.  Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by Requirement of Law or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Loan Parties and their obligations, (g) with the consent of any Loan Party, (h) to holders of Equity Interests in any Loan Party, or (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis from a source other than any Loan Party.  For the purposes of this Section, “Information” means all information received from the any Loan Party relating to any Loan party or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis prior to disclosure by such Loan Party; provided that, in the case of information received from any Loan Party after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

SECTION 9.13.           Several Obligations; Nonreliance; Violation of Law.  The respective obligations of the Lenders hereunder are several and not joint and the failure of any Lender to make any Loan or perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. Each Lender hereby represents that it is not relying on or looking to any margin stock for the repayment of the Borrowings provided for herein.  Anything contained in this Agreement to the contrary notwithstanding, neither the Issuing Bank nor any Lender shall be obligated to extend credit to the Borrower in violation of any Requirement of Law.

 

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SECTION 9.14.           USA PATRIOT Act.  Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

 

SECTION 9.15.           Disclosure.  Each Loan Party and each Lender hereby acknowledges and agrees that the Administrative Agent and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with any of the Loan Parties and their respective Affiliates.

 

SECTION 9.16.           Appointment for Perfection.  Each Lender hereby appoints each other Lender as its agent for the purpose of perfecting Liens, for the benefit of the Administrative Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC or any other applicable law can be perfected only by possession.  Should any Lender (other than the Administrative Agent) obtain possession of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.

 

SECTION 9.17.           Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

 

ARTICLE X

 

LOAN GUARANTY

 

SECTION 10.01.    Guaranty.  Each Guarantor hereby agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to the Lenders, the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of the Secured Obligations plus all costs and expenses including, without limitation, all court costs and attorneys’ and paralegals’ fees (including allocated costs of in-house counsel and paralegals) and expenses paid or incurred by the Administrative Agent, the Issuing Bank and the Lenders in endeavoring to collect all or any part of the Secured Obligations from, or in prosecuting any action against, the Borrower, any Guarantor or any other guarantor of all or any

 

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part of the Secured Obligations (such costs and expenses, together with the Secured Obligations, collectively the “Guaranteed Obligations”).  To the extent permitted by applicable law, each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on behalf of any domestic or foreign branch or Affiliate of any Lender that extended any portion of the Guaranteed Obligations.

 

SECTION 10.02.    Guaranty of Payment.  This Loan Guaranty is a guaranty of payment and not of collection. Each Guarantor waives any right to require the Administrative Agent, the Issuing Bank or any Lender to sue the Borrower, any Guarantor, any other guarantor, or any other Person obligated for all or any part of the Guaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce its payment against any collateral securing all or any part of the Guaranteed Obligations.

 

SECTION 10.03.    No Discharge or Diminishment of Loan Guaranty.  (a) Except as otherwise provided for herein or in any other Loan Document, the obligations of each Guarantor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations), including:  (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of the Borrower or any other guarantor of or other Person liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Obligated Party, or their assets or any resulting release or discharge of any obligation of any Obligated Party; or (iv) the existence of any claim, setoff or other rights which any other Guarantor may have at any time against any Obligated Party, the Administrative Agent, the Issuing Bank, any Lender, or any other Person, whether in connection herewith or in any unrelated transactions.

 

(b)                                 The obligations of each Guarantor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed Obligations or any part thereof.

 

(c)                                  Further, the obligations of any Guarantor hereunder are not discharged or impaired or otherwise affected by: (i) the failure of the Administrative Agent, the Issuing Bank or any Lender to assert any claim or demand or to enforce any remedy with respect to all or any part of the Guaranteed Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any indirect or direct security for the obligations of the Borrower for all or any part of the Guaranteed Obligations or any obligations of any other guarantor of or other Person liable for any of the Guaranteed Obligations; (iv) any action or failure to act by the Administrative Agent, the Issuing Bank or any Lender with respect to any collateral securing any part of the Guaranteed Obligations; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Guaranteed Obligations, or any other circumstance,

 

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act, omission or delay that might in any manner or to any extent vary the risk of such Guarantor or that would otherwise operate as a discharge of any other Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed Obligations).

 

SECTION 10.04.    Defenses Waived.  To the fullest extent permitted by applicable law, each Guarantor hereby waives any defense based on or arising out of any defense of the Borrower or any other Guarantor or the unenforceability of all or any part of the Guaranteed Obligations from any cause, or the cessation from any cause of the liability of the Borrower or any other Guarantor, other than the indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Obligated Party, or any other Person.  Each Guarantor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations hereunder.  The Administrative Agent may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any Obligated Party or exercise any other right or remedy available to it against any Obligated Party, without affecting or impairing in any way the liability of such Guarantor under this Loan Guaranty except to the extent the Guaranteed Obligations have been fully and indefeasibly paid in cash.  To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any other Guarantor against any Obligated Party or any security.

 

SECTION 10.05.    Rights of Subrogation.  No Guarantor will assert any right, claim or cause of action, including, without limitation, a claim of subrogation, contribution or indemnification that it has against any Obligated Party, or any collateral, until the Loan Parties and the other Guarantors have fully performed all their obligations to the Administrative Agent, the Issuing Bank and the Lenders.

 

SECTION 10.06.    Reinstatement; Stay of Acceleration.  If at any time any payment of any portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, or reorganization of the Borrower or otherwise, each Guarantor’s obligations under this Loan Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not the Administrative Agent, the Issuing Bank and the Lenders are in possession of this Loan Guaranty. If acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Guaranteed Obligations shall nonetheless be payable by the Guarantors forthwith on demand by the Lender.

 

SECTION 10.07.    Information.  Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the

 

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nature, scope and extent of the risks that each Guarantor assumes and incurs under this Loan Guaranty, and agrees that neither the Administrative Agent, the Issuing Bank nor any Lender shall have any duty to advise any Guarantor of information known to it regarding those circumstances or risks.

 

SECTION 10.08.    Termination.  The Lenders may continue to make loans or extend credit to the Borrower based on this Loan Guaranty until five days after it receives written notice of termination from any Guarantor.  Notwithstanding receipt of any such notice, each Guarantor will continue to be liable to the Lenders for any Guaranteed Obligations created, assumed or committed to prior to the fifth day after receipt of the notice, and all subsequent renewals, extensions, modifications and amendments with respect to, or substitutions for, all or any part of that Guaranteed Obligations.

 

SECTION 10.09.    Taxes.  All payments of the Guaranteed Obligations will be made by each Guarantor free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if any Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Guarantor shall make such deductions and (iii) such Guarantor shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

SECTION 10.10.    Maximum Liability.  The provisions of this Loan Guaranty are severable, and in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under this Loan Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty to the contrary, the amount of such liability shall, without any further action by any Guarantor or the Lenders, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”.  This Section with respect to the Maximum Liability of each Guarantor is intended solely to preserve the rights of the Lenders to the maximum extent not subject to avoidance under applicable law, and no Guarantor nor any other Person or entity shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable under applicable law.  Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of each Guarantor without impairing this Loan Guaranty or affecting the rights and remedies of the Lenders hereunder, provided that, nothing in this sentence shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

 

SECTION 10.11.    Contribution.  In the event any Guarantor (a “Paying Guarantor”) shall make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations under this Loan Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying

 

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Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Percentage” of such payment or payments made, or losses suffered, by such Paying Guarantor.  For purposes of this Article X, each Non-Paying Guarantor’s “Applicable Percentage” with respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or loss was made by reference to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all monies received by such Non-Paying Guarantor from the Borrower after the date hereof (whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of all Guarantors hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Guarantor, the aggregate amount of all monies received by such Guarantors from the Borrower after the date hereof (whether by loan, capital infusion or by other means).  Nothing in this provision shall affect any Guarantor’s several liability for the entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum Liability).  Each of the Guarantors covenants and agrees that its right to receive any contribution under this Loan Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in full in cash of the Guaranteed Obligations.  This provision is for the benefit of both the Administrative Agent, the Issuing Bank, the Lenders and the Guarantors and may be enforced by any one, or more, or all of them in accordance with the terms hereof.

 

SECTION 10.12.    Liability Cumulative.  The liability of each Guarantor as a Guarantor under this Article X is in addition to and shall be cumulative with all liabilities of each Loan Party to the Administrative Agent, the Issuing Bank and the Lenders under this Agreement and the other Loan Documents to which such Loan Party is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

SECTION 10.13.    Keepwell.  Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Guarantee in respect of Swap Obligations; provided that each Qualified ECP Guarantor shall only be liable under this Section 10.13 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 8.5 or otherwise under this Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Guarantor under this Section 10.13 shall remain in full force and effect until a discharge of its Guarantee hereunder.  Each Qualified ECP Guarantor intends that this Section 10.13 constitute, and this Section 10.13 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

	
 
    	
SSE HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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CUSTARD’S FIRST STAND, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE   SHACK 18TH STREET NW WASHINGTON D.C. LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE SHACK 102 NORTH END AVE   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE SHACK 152 E 86 LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE SHACK 300 WEST 44TH   STREET LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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Third Amended and Restated Credit Agreement

 

 

	
 
    	
SHAKE SHACK 366 COLUMBUS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE SHACK 1111 LINCOLN ROAD   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE SHACK CORAL GABLES, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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SHAKE SHACK ENTERPRISES, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK ENTERPRISES   INTERNATIONAL, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK FULTON STREET   BROOKLYN LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Third Amended and Restated Credit Agreement

 

 

	
 
    	
SHAKE SHACK GRAND CENTRAL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK NEW HAVEN LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE   SHACK SANSOM STREET PHILADELPHIA LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK WESTBURY LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SSE IP, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK DOMESTIC LICENSING   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Third Amended and Restated Credit Agreement

 

 

	
 
    	
SHAKE SHACK WESTPORT LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK BOSTON CHESTNUT   HILL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK BOCA RATON LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK 800 F STREET LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK KING OF PRUSSIA LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK PARAMUS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Third Amended and Restated Credit Agreement

 

 

	
 
    	
SHAKE   SHACK UNIVERSITY CITY PHILADELPHIA LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK HARVARD SQUARE   BOSTON LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK MIDDLE EAST LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK RUSSIA LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK TURKEY LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
SHAKE SHACK UNITED KINGDOM LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Third Amended and Restated Credit Agreement

 

 

	
 
    	
UNION SQUARE HOSPITALITY GROUP,   LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Third Amended and Restated Credit Agreement

 

 

SCHEDULE 2.01

 

Revolving Commitment Schedule

 

	
Lender
    	
 
    	
Initial Revolving
   Commitment
    	
 
    	
Total Revolving
   Commitment
    	
 
    
	
JPMorgan Chase Bank, N.A.
    	
 
    	
$
    	
20,000,000
    	
 
    	
$
    	
50,000,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
$
    	
20,000,000
    	
 
    	
$
    	
50,000,000
    	
 
    

 

Third Amended and Restated Credit Agreement

 

 

EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

	
1.
    	
Assignor:
    	
 
    
	
 
    	
 
    	
 
    
	
2.
    	
Assignee:
    	
 
    
	
 
    	
 
    	
[and is an Affiliate/Approved Fund of [identify Lender][a Competitor or Controlling Affiliate of   a Competitor of a Loan Party](3)]
    
	
 
    	
 
    	
 
    
	
3.
    	
Borrower(s):
    	
 
    
	
 
    	
 
    	
 
    
	
4.
    	
Administrative Agent:
    	
JPMorgan Chase Bank, N.A., as the administrative   agent under the Credit Agreement
    

 

(3)                                 Select as applicable.

 

 

	
5.
    	
Credit Agreement:
    	
The Third Amended and Restated Credit Agreement dated   as of the Effective Date (as defined therein) among SSE HOLDINGS, LLC, the   other Loan Parties party thereto, the Lenders parties thereto and JPMORGAN   CHASE BANK, N.A., as Administrative Agent
    
	
 
    	
 
    	
 
    
	
6.
    	
Assigned Interest:
    	
 
    

 

	
Facility Assigned(4)
    	
 
    	
Aggregate Amount of
   Revolving
   Commitment/Loans
   for all Lenders
    	
 
    	
Amount of Revolving
   Commitment/Loans
   Assigned
    	
 
    	
Percentage Assigned
   of Revolving
   Commitment/Loans(5)
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    
	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    

 

Effective Date:                                    , 20       [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire in which the Assignee designates one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower, the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

	
 
    	
ASSIGNOR
    
	
 
    	
 
    
	
 
    	
[NAME   OF ASSIGNOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ASSIGNEE
    
	
 
    	
 
    
	
 
    	
[NAME   OF ASSIGNEE]
    

 

(4)                                 Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. “Revolving Commitment,” “Term Loan Commitment,” etc.)

(5)                                 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Title:
    

 

 

	
[Consented   to and](6) Accepted:
    	
 
    
	
 
    	
 
    
	
JPMORGAN   CHASE BANK, N.A., as
    	
 
    
	
  Administrative   Agent
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[Consented   to:](7)
    	
 
    
	
 
    	
 
    
	
SSE   HOLDINGS, LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

(6)                                 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

(7)                                 To be added only if the consent of the Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of the Credit Agreement.

 

 

ANNEX 1

 

[                                    ](8)

 

STANDARD TERMS AND CONDITIONS FOR
 ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any Lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, (v) it [is][is not] a Competitor or a Controlling Affiliate of a Competitor of a Loan Party and (vi) if it is a Foreign Lender(9), attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

(8)                                 Describe Credit Agreement at option of Administrative Agent.

(9)                                 The concept of  “Foreign Lender” should be conformed to the section in the Credit Agreement governing withholding taxes and gross-up.

 

 

2.  Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

3.  General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.

 

Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

To:                             The Lenders parties to the
 Credit Agreement Described Below

 

This Compliance Certificate is furnished pursuant to that certain Third Amended and Restated Credit Agreement dated as of the Effective Date (as amended, modified, renewed or extended from time to time, the “Agreement”) among SSE Holdings, LLC (the “Borrower”), the other Loan Parties, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders and as the Issuing Bank.  Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.                                      I am the duly elected [·] of the Borrower;

 

2.                                      I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Loan Parties during the accounting period covered by the attached financial statements and such financial statements present fairly in all material respects the financial condition and results of operations of the Loan Parties on a consolidated basis in accordance with GAAP consistently applied;

 

3.                                      The examinations described in paragraph 2 did not disclose, except as set forth below, and I have no knowledge of (i) the existence of any condition or event which constitutes a Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate or (ii) any change in GAAP or in the application thereof that has occurred since the date of the audited financial statements referred to in Section 5.01 of the Agreement;

 

4.                                      I hereby certify that no Loan Party has changed (i) its name, (ii) its chief executive office, (iii) principal place of business, (iv) the type of entity it is or (v) its state of incorporation or organization without having given the Agent the notice required by Section 4.15 of the Security Agreement; and

 

5.                                      Schedule I attached hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct.

 

Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i) nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event or (i) the change in GAAP or the application thereof and the effect of such change on the attached financial statements:

 

 

The foregoing certifications, together with the computations set forth in Schedule I and Schedule II hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of                         .

 

	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
					

 

 

SCHEDULE I

 

Compliance as of                   ,          with
 Provisions of and of
 the Agreement

 

 

EXHIBIT C

 

JOINDER AGREEMENT

 

THIS JOINDER AGREEMENT (this “Agreement”), dated as of                     ,         , 20    , is entered into between                                                                 , a                                    (the “New Subsidiary”) and JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent (the “Administrative Agent”) under that certain Third Amended and Restated Credit Agreement, dated as of the Effective Date among SSE HOLDINGS, LLC (the “Borrower”), the Loan Parties party thereto, the Lenders party thereto and the Administrative Agent (as the same may be amended, modified, extended or restated from time to time, the “Credit Agreement”).  All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Credit Agreement.

 

The New Subsidiary and the Administrative Agent, for the benefit of the Lenders, hereby agree as follows:

 

1.                                      The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and a “Guarantor” for all purposes of the Credit Agreement and shall have all of the obligations of a Loan Party and a Guarantor thereunder as if it had executed the Credit Agreement.  The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Credit Agreement, including without limitation (a) all of the representations and warranties of the Loan Parties set forth in Article III of the Credit Agreement, *[and]* (b) all of the covenants set forth in Articles V and VI of the Credit Agreement *[and (c) all of the guaranty obligations set forth in Article X of the Credit Agreement.  Without limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary, subject to the limitations set forth in Section 10.10 of the Credit Agreement, hereby guarantees, jointly and severally with the other Guarantors, to the Administrative Agent and the Lenders, as provided in Article X of the Credit Agreement, the prompt payment and performance of the Guaranteed Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof and agrees that if any of the Guaranteed Obligations are not paid or performed in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and severally together with the other Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal.]*  *[The New Subsidiary has delivered to the Administrative Agent an executed Loan Guaranty.]*

 

2.                                      If required, the New Subsidiary is, simultaneously with the execution of this Agreement, executing and delivering such Collateral Documents (and such other documents and instruments) as requested by the Administrative Agent in accordance with the Credit Agreement.

 

 

3.                                      The address of the New Subsidiary for purposes of Section 9.01 of the Credit Agreement is as follows:

 

 

4.                                      The New Subsidiary hereby waives acceptance by the Administrative Agent and the Lenders of the guaranty by the New Subsidiary upon the execution of this Agreement by the New Subsidiary.

 

5.                                      This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

 

6.                                      THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its authorized officer, and the Administrative Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written.

 

	
 
    	
[NEW   SUBSIDIARY]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Acknowledged   and accepted:
    
	
 
    	
 
    
	
 
    	
JPMORGAN   CHASE BANK, N.A., as Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}]]