-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MyVdaf8+oXAkJuzeNiLJ772PyrrVET/O431ItFgkbIpTU63ve7+f6e4friAxXJ+5 GQ5mPWMX9fETJDESuvx92Q== 0000852772-02-000034.txt : 20021219 0000852772-02-000034.hdr.sgml : 20021219 20021219164247 ACCESSION NUMBER: 0000852772-02-000034 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20021216 ITEM INFORMATION: Other events FILED AS OF DATE: 20021219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENNYS CORP CENTRAL INDEX KEY: 0000852772 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133487402 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18051 FILM NUMBER: 02863387 BUSINESS ADDRESS: STREET 1: 203 E MAIN ST CITY: SPARTANBURG STATE: SC ZIP: 29319 BUSINESS PHONE: 8645978000 MAIL ADDRESS: STREET 1: 203 EAST MAIN STREET CITY: SPARTANBURG STATE: SC ZIP: 29319 FORMER COMPANY: FORMER CONFORMED NAME: TW HOLDINGS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FLAGSTAR COMPANIES INC DATE OF NAME CHANGE: 19930722 FORMER COMPANY: FORMER CONFORMED NAME: ADVANTICA RESTAURANT GROUP INC DATE OF NAME CHANGE: 19980107 8-K 1 newcdtagrmt8k.txt 8-K FOR NEW CREDIT AGREEMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): December 16, 2002 Denny's Corporation (Exact name of registrant as specified in its charter) Delaware 0-18051 13-3487402 - -------------------- --------- ---------------- State or other jurisdiction (Commission File No.) (I.R.S.Employer of incorporation) Identification No.) 203 East Main Street, Spartanburg, SC 29319-9966 - ----------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (864) 597-8000 Item 5. Other Events On December 16, 2002 Denny's Corporation announced that its operating subsidiaries, Denny's, Inc. and Denny's Realty , Inc., had entered into a new $125 million credit agreement to refinance the Company's prior credit facility which was scheduled to expire in January 2003. The new facility will mature on December 20, 2004 and is structured as a senior secured revolving credit facility of which up to $60 million is available for the issuance of letters of credit. The new facility, which is guaranteed by Denny's Corporation and its principal subsidiaries, is generally secured by liens on the same collateral that secured the prior facility as well as first-priority mortgages on 246 owned restaurant properties. For additional information regarding the new credit facility, see the Company's press release, dated December 16, 2002, attached to this current report as Exhibit 99.3. Item 7. Exhibits (c). Listed below are all the Exhibits filed as a part of this Current Report. Exhibit No. Description --- ----------- 99.1 Credit Agreement, dated as of December 16, 2002, among Denny's, Inc. and Denny's Realty, Inc., as borrowers, Denny's Corporation, Denny's Holdings, Inc. and DFO, Inc., as guarantors, the lenders named therein, JPMorgan Chase Bank, as administrative agent, Foothill Capital Corporation, as syndication agent and J.P. Morgan Securities Inc., as sole advisor, lead arranger and bookrunner. 99.2 Guarantee and Collateral Agreement , dated as of December 16, 2002, among Denny's Corporation, Denny's Holdings, Inc. Denny's, Inc., Denny's Realty, Inc., each other subsidiary loan party referenced therein, and JPMorgan Chase, as collateral agent. 99.3 Press Release of Denny's Corporation dated December 16, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DENNY'S CORPORATION Date: December 19, 2002 By: /s/ Rhonda J. Parish -------------------- Rhonda J. Parish Executive Vice President, General Counsel and Secretary EX-99.H 3 creditagreement.txt 8-K ATTACHMENT DEC 02 FOR NEW CREDIT AGREEMENT CREDIT AGREEMENT dated as of December 16, 2002, Among DENNY'S, INC., DENNY'S REALTY, INC., as Borrowers, DENNY'S CORPORATION, DENNY'S HOLDINGS, INC., DFO, INC., as Guarantors, THE LENDERS NAMED HEREIN, JPMORGAN CHASE BANK, as Administrative Agent and FOOTHILL CAPITAL CORPORATION, as Syndication Agent - ------------------------------------------------------------------------------- J.P. MORGAN SECURITIES INC., as Sole Advisor, Sole Lead Arranger and Sole Bookrunner 1 TABLE OF CONTENTS Page ARTICLE I Definitions SECTION 1.01. Defined Terms..................................................1 SECTION 1.02. Classification of Loans and Borrowings........................19 SECTION 1.03. Terms Generally...............................................19 SECTION 1.04. Accounting Terms; GAAP........................................19 ARTICLE II The Credits SECTION 2.01. Commitments...................................................20 SECTION 2.02. Loans.........................................................20 SECTION 2.03. Requests for Borrowings.......................................20 SECTION 2.04. Swingline Loans. SECTION 2.05. [Intentionally Omitted.]......................................22 SECTION 2.06. Letters of Credit.............................................22 SECTION 2.07. Funding of Borrowings.........................................25 SECTION 2.08. Interest Elections............................................25 SECTION 2.09. Termination and Reduction of Commitments......................26 SECTION 2.10. Repayment of Loans; Evidence of Debt..........................27 SECTION 2.11. Prepayment....................................................28 SECTION 2.12. Fees..........................................................28 SECTION 2.13. Interest......................................................29 SECTION 2.14. Alternate Rate of Interest....................................30 SECTION 2.15. Increased Costs...............................................30 SECTION 2.16. Break Funding Payments........................................31 SECTION 2.17. Taxes.........................................................31 SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs....32 SECTION 2.19. Mitigation Obligations; Replacement of Lenders................33 SECTION 2.20. Covenant of Collateral Agent...................................34 ARTICLE III Representations and Warranties SECTION 3.01. Organization; Powers..........................................34 SECTION 3.02. Authorization.................................................34 SECTION 3.03. Enforceability................................................35 SECTION 3.04. Governmental Approvals........................................35 SECTION 3.05. Financial Statements..........................................35 SECTION 3.06. No Material Adverse Change....................................35 SECTION 3.07. Title to Properties; Possession Under Leases..................35 SECTION 3.08. Subsidiaries..................................................36 SECTION 3.09. Litigation; Compliance with Laws..............................36 SECTION 3.10. Agreements....................................................36 SECTION 3.11. Federal Reserve Regulations...................................36 SECTION 3.12. Investment Company Act; Public Utility Holding Company Act....36 SECTION 3.13. Use of Proceeds...............................................36 SECTION 3.14. Tax Returns...................................................37 SECTION 3.15. No Material Misstatements.....................................37 SECTION 3.16. Employee Benefit Plans........................................37 SECTION 3.17. Environmental Matters.........................................37 SECTION 3.18. Insurance.....................................................38 2 SECTION 3.19. Security Documents............................................38 SECTION 3.20. Labor Matters.................................................38 SECTION 3.21. Solvency......................................................39 SECTION 3.22. Intellectual Property.........................................39 ARTICLE IV Conditions of Lending SECTION 4.01. All Credit Events.............................................39 SECTION 4.02. First Credit Event............................................40 ARTICLE V Affirmative Covenants SECTION 5.01. Existence; Businesses and Properties..........................43 SECTION 5.02. Insurance.....................................................43 SECTION 5.03. Obligations and Taxes.........................................43 SECTION 5.04. Financial Statements, Reports, etc............................44 SECTION 5.05. Litigation and Other Notices..................................45 SECTION 5.06. Employee Benefits.............................................45 SECTION 5.07. Maintaining Records; Access to Properties and Inspections.....45 SECTION 5.08. Use of Proceeds...............................................46 SECTION 5.09. Compliance with Environmental Laws............................46 SECTION 5.10. Preparation of Environmental Reports..........................46 SECTION 5.11. Additional Subsidiaries.......................................46 SECTION 5.12. Further Assurances............................................46 SECTION 5.13. Cash Management Arrangements..................................47 SECTION 5.14. Mortgages Not Required at the Closing Date....................47 ARTICLE VI Negative Covenants SECTION 6.01. Indebtedness..................................................47 SECTION 6.02. Liens.........................................................49 SECTION 6.03. Sale and Lease-Back Transactions..............................49 SECTION 6.04. Investments, Loans and Advances...............................50 SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.....50 SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends................................52 SECTION 6.07. Transactions with Affiliates..................................52 SECTION 6.08. Other Indebtedness and Agreements.............................53 SECTION 6.09. Operating Leases..............................................53 SECTION 6.10. Capital Expenditures; Acquisitions............................54 SECTION 6.11. Consolidated Total Debt Ratio.................................54 SECTION 6.12. Consolidated Senior Secured Debt Ratio........................54 SECTION 6.13. Minimum Consolidated EBITDA...................................55 SECTION 6.14. Consolidated Fixed Charge Coverage Ratio......................55 SECTION 6.15. Business of Parent, the Borrowers and the Subsidiaries........55 SECTION 6.16. Fiscal Year...................................................56 SECTION 6.17. Hedging Agreements............................................56 ARTICLE VII Events of Default 3 ARTICLE VIII The Administrative Agent and the Collateral Agent; Syndication Agent ARTICLE IX Miscellaneous SECTION 9.01. Notices.......................................................60 SECTION 9.02. Waivers; Amendments...........................................60 SECTION 9.03. Expenses; Indemnity; Damage Waiver............................61 SECTION 9.04. Successors and Assigns........................................62 SECTION 9.05. Survival......................................................64 SECTION 9.06. Counterparts; Integration; Effectiveness......................64 SECTION 9.07. Severability..................................................64 SECTION 9.08. Right of Setoff...............................................64 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process....65 SECTION 9.10. WAIVER OF JURY TRIAL..........................................65 SECTION 9.12. Confidentiality...............................................65 SECTION 9.13. Interest Rate Limitation......................................66 SECTION 9.14. Irrevocable Proxy.............................................66 SECTION 9.15. Obligations Joint and Several.................................67 Exhibits and Schedules Exhibit A Form of Administrative Questionnaire Exhibit B Form of Assignment and Acceptance Exhibit C-1 Form of Notice of Borrowing Exhibit C-2 Form of Notice of Swingline Borrowing Exhibit D Form of Note Exhibit E Form of Guarantee and Collateral Agreement Exhibit F Form of Mortgage Exhibit G Form of Deed of Trust Exhibit H Form of Opinion of Alston & Bird, LLP Exhibit I Form of Local Counsel Opinion Exhibit J Form of Compliance Certificate Schedule 1.01(a) Mortgaged Properties Schedule 1.01(b) Properties Held for Sale Schedule 2.01 Commitments Schedule 2.06(a) Existing Letters of Credit Schedule 3.07(c) Condemnation Proceedings Schedule 3.07(e) Scheduled Financing Statements Schedule 3.08 Subsidiaries Schedule 3.09 Litigation Schedule 3.17 Environmental Matters Schedule 3.18 Insurance Schedule 3.19(d) Mortgage Filing Offices Schedule 6.01 Indebtedness Schedule 6.02 Liens Schedule 6.04 Existing Investments Schedule 6.06 Agreements Restricting Dividends 1 CREDIT AGREEMENT dated as of December 16, 2002 (this "Agreement"), among DENNY'S, INC., a California corporation, DENNY'S REALTY, INC., a Delaware corporation, (each of the foregoing, individually, a "Borrower" and, jointly and severally, and collectively, the "Borrowers"), DENNY'S CORPORATION, a Delaware corporation ("Parent"), DENNY'S HOLDINGS, INC., a New York corporation ("Denny's Holdings"), DFO, INC., a Delaware corporation, the Lenders (as defined in Article I), JPMORGAN CHASE BANK, a New York banking corporation ("JPMCB"), as issuing bank, as administrative agent (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent") for the Lenders and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), as syndication agent (in such capacity, the "Syndication Agent") for the Lenders. The Borrowers have requested the Lenders to extend credit in the form of Loans (such term and each other capitalized term used but not otherwise defined herein having the meaning given it in Article I) at any time and from time to time prior to the Maturity Date, in an aggregate principal amount at any time outstanding not in excess of the aggregate Commitments at such time minus the aggregate LC Exposure at such time. The Borrowers have requested the Issuing Bank to issue letters of credit at any time and from time to time before the fifth Business Day prior to the Maturity Date, in an aggregate face amount at any time outstanding not in excess of $60,000,000 to support payment obligations incurred in the ordinary course of business by the Borrowers and their respective subsidiaries. The proceeds of the Loans are to be used solely (a) on the Closing Date, to repay or refinance loans under the Credit Agreement dated as of January 7, 1998, as amended or otherwise modified through the date hereof (the "Existing Credit Agreement"), among Denny's, Parent, certain other existing and former subsidiaries of Parent, the lenders party thereto and JPMCB, as administrative agent and collateral agent, (b) on the Closing Date, to pay fees and expenses incurred in connection with the Refinancing and this Agreement and (c) after the Closing Date, for working capital and other general corporate purposes. The Lenders are willing to extend such credit to the Borrowers and the Issuing Bank is willing to issue letters of credit for the account of the Borrowers on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE I Definitions SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below: "ABR Borrowing" shall mean a Borrowing comprised of ABR Loans. "ABR Loan" shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves. "Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit A. 2 "Affiliate" shall mean, when used 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" shall mean the aggregate amount of the Lenders' Credit Exposures. "Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Applicable Percentage" shall mean, with respect to any Lender, the percentage of the Total Commitment represented by such Lender's Commitment. In the event the Commitments shall have expired or been terminated, the Applicable Percentages shall be determined on the basis of the Commitments most recently in effect, giving effect to any assignments. "Applicable Rate" shall mean (a) with respect to any ABR Loan, 4.00% per annum, and (b) with respect to any Eurodollar Loan, 5.00% per annum. "Applicable UCC" shall have the meaning assigned to such term in Section 3.07(e). "Approved Fund" shall mean 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 Lender, an Affiliate of a Lender or an entity or an Affiliate of an entity that administers or manages a Lender. "Asset Sale" shall mean any sale, lease, transfer, assignment or other disposition (by merger or otherwise) of assets (including trademarks and other intangibles), business units, individual business assets or property of Parent, any Borrower or any Subsidiary, including the sale, transfer or disposition of any capital stock or real property, to any person other than Parent, any Borrower or any Subsidiary; provided, however, that neither of the following shall be deemed to be an Asset Sale: (a) the sale of inventory in the ordinary course of business or (b) the sale in the ordinary course of business of damaged, worn-out or obsolete assets that are no longer necessary for the proper conduct of the applicable Borrower's or Subsidiary's business in compliance with Section 6.05(b). "Assigned Claims" shall have the meaning assigned to such term in Section 9.14(b)(i). "Assigning Lender" shall have the meaning assigned to such term in Section 9.14(a). "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit B or such other form as shall be approved by the Administrative Agent. "Availability Period" means the period from and including the Closing Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States of America. 3 "Borrowing" shall mean (a) a group of Revolving Loans of a single Type made by the Lenders on a single date to one or more Borrowers and as to which a single Interest Period is in effect or (b) a Swingline Loan. "Borrowing Request" shall mean a request by one or more Borrowers in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C-1. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in New York City are authorized or required by law to close; provided, however, 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. "Capex Financing" shall mean, with respect to any Consolidated Capital Expenditure, the incurrence by any Borrower or any Subsidiary of any Indebtedness secured (whether such security is limited to principal or otherwise) by a mortgage or other Lien, including any Lien under a Capital Lease Obligation, solely on the asset that is the subject of such Consolidated Capital Expenditure, to the extent that the Net Cash Proceeds of such Indebtedness do not exceed the amount of such Consolidated Capital Expenditure. "Capital Lease Obligations" of any person shall mean 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. "Change in Control" shall mean (a) any person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) shall own, directly or indirectly, beneficially or of record, shares representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Parent, (b) any person (other than Parent or any wholly owned Subsidiary) shall own, directly or indirectly, beneficially or of record any shares of capital stock of (i) any Borrower or (ii) any Subsidiary that owns, directly or indirectly, beneficially or of record, any shares of capital stock of any Borrower; (c) a majority of the seats (other than vacant seats) on the board of directors of Parent shall at any time be occupied by persons who were neither (i) nominated by the board of directors of Parent, nor (ii) appointed by directors so nominated; (d) any change in control (or similar event, however denominated) with respect to Parent or with respect to Denny's Holdings shall occur under and as defined in any indenture or agreement in respect of Indebtedness to which Parent is a party or under the New Senior Notes Documents; or (e) any person or group shall otherwise directly or indirectly Control Parent. "Change in Law" shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation 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. "Charges" shall have the meaning assigned to such term in Section 9.13. "Closing Date" shall mean the date of the first Credit Event. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Collateral" shall mean all the "Collateral" as defined in the Guarantee and Collateral Agreement and shall also include the Mortgaged Properties. "Collateral and Guarantee Requirement" shall mean the requirement that: 4 (a) the Administrative Agent shall have received from each Loan Party either (i) a counterpart of the Guarantee and Collateral Agreement duly executed and delivered on behalf of such Loan Party or (ii) in the case of any person that becomes a Loan Party after the Closing Date, a supplement to the Guarantee and Collateral Agreement, in the form specified therein, duly executed and delivered on behalf of such Loan Party; (b) all outstanding Equity Interests of each Borrower and each Subsidiary owned by or on behalf of any Loan Party shall have been pledged pursuant to the Guarantee and Collateral Agreement (except that the Loan Parties shall not be required to pledge more than 65% of the outstanding voting Equity Interests of any Foreign Subsidiary that is not a Loan Party) and the Administrative Agent shall have received certificates or other instruments representing all such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank; (c) all Indebtedness of Parent, Denny's Holdings, the Borrowers and each Subsidiary that is owing to any Loan Party shall be evidenced by a promissory note and shall have been pledged pursuant to the Guarantee and Collateral Agreement and the Administrative Agent shall have received all such promissory notes, together with instruments of transfer with respect thereto endorsed in blank; (d) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Guarantee and Collateral Agreement and perfect such Liens to the extent required by, and with the priority required by, the Guarantee and Collateral Agreement, shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording; (e) the Administrative Agent shall have received (i) on or prior to the Closing Date, counterparts of Mortgages with respect to substantially all the Mortgaged Properties on such date (and, in any event, with respect to Mortgaged Properties representing at least 90% of the aggregate value of all such Mortgaged Properties) duly executed and completed, in recordable form and delivered by the record owner of such Mortgaged Property; (ii) not later than 60 days after the Closing Date, counterparts of Mortgages with respect to any Mortgaged Properties for which Mortgages were not delivered to the Administrative Agent on or prior to the Closing Date duly executed and completed, in recordable form and delivered by the record owner of such Mortgaged Property; (iii) counterparts of Mortgages with respect to any Mortgaged Properties that are owned by any person that becomes a Loan Party after the Closing Date or that are acquired by a Loan Party after the Closing Date; and (iv) on or prior to receipt of each such counterpart, written instructions from First American Title Insurance Company to the effect that such Mortgage is in proper form for filing in the jurisdictions in which such Mortgage is required to be recorded; (f) the Lenders shall have received an appraisal (to the extent deemed necessary or appropriate by, and satisfactory in form and substance to, the Administrative Agent), from an appraiser satisfactory to such Agent, of each Mortgaged Property, and full appraisal reports with respect to Mortgaged Properties specified by the Administrative Agent, with the number of Mortgaged Properties that are permitted to be specified not to exceed 70 Mortgaged Properties; and (g) each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder. "Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Loans hereunder and participate in Letters of Credit and (if required under Section 2.04(c)) Swingline Loans, all as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed its Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to 5 Section 2.09 or pursuant to Section 2.19 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. "Commitment Reduction Event" shall mean: (a) any Asset Sale; (b) 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 Parent, any Borrower or any Subsidiary, in each case under this clause (b) the Net Cash Proceeds of which exceed $3,000,000; or (c) the issuance by Parent, any Borrower or any Subsidiary of any Equity Interests, or the receipt by Parent, any Borrower or any Subsidiary of any capital contribution, other than (i) any such issuance of Equity Interests to, or receipt of any such capital contribution from, Parent, any Borrower or a Subsidiary and (ii) any such issuance from time to time by Parent of Equity Interests in Parent pursuant to any stock option, equity incentive or similar benefit plan established for employees of Subsidiaries; or (d) the incurrence by Parent, any Borrower or any Subsidiary of any Indebtedness, other than Indebtedness for money borrowed permitted pursuant to Section 6.01. "Concentration Account" shall have the meaning assigned to such term in the Guarantee and Collateral Agreement. "Confidential Information Memorandum" shall mean the Confidential Information Memorandum of the Borrowers dated October, 2002. "Consolidated Capital Expenditures" shall mean, for any period, without duplication, the sum of the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability) by Parent, the Borrowers and the Subsidiaries during such period that, in conformity with GAAP, would be included in "additions to property, plant or equipment" or comparable items reflected in the consolidated statement of cash flows of Parent, the Borrowers and the Subsidiaries for such period, including (a) Capital Lease Obligations and (b) expenditures for equipment that is purchased simultaneously with the trade-in of existing equipment owned by any Borrower or any Subsidiary to the extent of the gross amount of the purchase price less the book value of the equipment being traded in at such time, but excluding (c) interest capitalized during construction and (d) expenditures made in connection with the replacement or restoration of assets, to the extent reimbursed or financed from insurance proceeds paid on account of the loss of or the damage to the assets being replaced or restored, or from awards of compensation arising from the taking by condemnation or eminent domain of such assets being replaced, and net of cash amounts received by the Borrowers and the Subsidiaries from other persons during that period in reimbursement of Consolidated Capital Expenditures made by the Borrowers and the Subsidiaries. "Consolidated Cash Interest Expense" shall mean, for any period, Consolidated Interest Expense minus (a) interest not paid in cash (including amortization of (i) discount and deferred debt expenses and (ii) fees with respect to Interest Rate Protection Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense in accordance with GAAP (including fees and expenses in connection with the Transactions), plus (b) the amortization of the non-cash write-up of indebtedness relating to the fresh-start accounting treatment (in accordance with GAAP) of Parent's consolidated financial statements resulting from the Chapter 11 bankruptcy cases of Parent, Flagstar Corporation and Flagstar Holdings, Inc. and Parent's emergence therefrom. "Consolidated EBITDA" shall mean with respect to Parent, the Borrowers and the Subsidiaries for any period, all as determined in accordance with GAAP on a consolidated basis after eliminating intercompany items, the net income (or net loss) for such period, plus (a) to the extent deducted in computing such net income (or net loss) the sum of (i) depreciation expense, (ii) amortization expense, (iii) other non- cash charges, (iv) net total Federal, state and local income tax expense, (v) Consolidated Interest Expense, 6 (vi) extraordinary losses, (vii) any non-recurring charge or restructuring charge that in accordance with GAAP is excluded from operating income, (viii) the cumulative effect of any change in accounting principles and (ix) any net loss attributable to an Asset Sale minus (b) extraordinary gains minus (c) the amount of cash expended in such period in respect of any amount that, under clause (vii) above, was taken into account in determining Consolidated EBITDA for such or any prior period minus (d) any net gain attributable to an Asset Sale, minus (e) any non-cash amortization credits to net income; provided, however, that after the occurrence of any acquisition of any person by Parent, any Borrower or any Subsidiary, Consolidated EBITDA for each period that includes the date of occurrence of such acquisition will, solely for purposes of determining compliance with Sections 6.11 and 6.12, be determined on a pro forma basis, based on the actual historical results of operations of such person, as if such acquisition had occurred on the first day of such period. "Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of (a) the sum of (i) Consolidated EBITDA for such period and (ii) Consolidated Lease Expense for such period to (b) the sum of (i) Consolidated Cash Interest Expense for such period and (ii) Consolidated Lease Expense for such period. "Consolidated Interest Expense" shall mean, for any period, all interest expense (including the interest component in respect of Capital Lease Obligations), net of interest income, accrued or paid by Parent, the Borrowers and the Subsidiaries during such period in respect of Indebtedness of Parent, the Borrowers and the Subsidiaries, including (a) any amortization of initial debt discount or any fees (including fees with respect to Interest Rate Protection Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense in accordance with GAAP (including fees and expenses in connection with the Transactions), (b) any commitment fees, agent's and other regularly scheduled fees and charges in respect of such Indebtedness, (c) commissions and other fees and charges payable in connection with letters of credit, (d) the net payment, if any, payable in connection with all Interest Rate Protection Agreements and (e) interest capitalized during construction, all determined on a consolidated basis in accordance with GAAP after eliminating all intercompany items. "Consolidated Lease Expense" shall mean, for any period, all payment obligations of Parent, the Borrowers and the Subsidiaries during such period under Operating Leases, as determined on a consolidated basis for Parent, the Borrowers and the Subsidiaries in accordance with GAAP. "Consolidated Senior Secured Debt" shall mean, at any date and without duplication, Consolidated Total Debt at such date minus (a) the aggregate principal amount of Old Senior Notes outstanding on such date, (b) the aggregate principal amount of New Senior Notes outstanding on such date and (c) to the extent included in computing such Consolidated Total Debt, the aggregate amount of other unsecured Indebtedness of Parent at such date on a consolidated basis in accordance with GAAP. "Consolidated Senior Secured Debt Ratio" shall mean, for any period, the ratio of (a) Consolidated Senior Secured Debt on the last day of such period to (b) Consolidated EBITDA for such period. "Consolidated Total Debt" shall mean, at any date and without duplication, the aggregate amount of all Indebtedness (including obligations of the type described in clause (f) of the definition of the term "Indebtedness") of Parent, the Borrowers and the Subsidiaries at such date on a consolidated basis in accordance with GAAP (other than Indebtedness of the type described in clause (g) of the definition of the term "Indebtedness" or Indebtedness of the type referred to in clause (h) or (i) or the final sentence of such definition to the extent that the Indebtedness of the other person referred to in such clause (h) or (i) or such final sentence is Indebtedness of the type referred to in clause (a) or (b) above). "Consolidated Total Debt Ratio" shall mean, for any period, the ratio of (a) Consolidated Total Debt on the last day of such period to (b) Consolidated EBITDA for such period. 7 "Control" shall mean 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 ownership of voting securities, by contract or otherwise, and the terms "Controlling" and "Controlled" shall have meanings correlative thereto. "Credit Event" shall have the meaning assigned to such term in Section 4.01. "Credit Exposure" shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Loans of such Lender, plus the aggregate amount at such time of such Lender's LC Exposure plus the aggregate amount at such time of such Lender's Swingline Exposure. "Default" shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default. "Denny's" shall mean Denny's, Inc., a California corporation and an indirect, wholly owned subsidiary of Parent. "Denny's Holdings" shall have the meaning assigned to such term in the preamble to this Agreement. "Denny's Realty" shall mean Denny's Realty, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of Denny's. "dollars" or "$" shall mean lawful money of the United States of America. "Domestic Subsidiaries" shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia. "environment" shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, the workplace or as otherwise defined in any Environmental Law. "Environmental Claim" shall mean any written accusation, allegation, notice of violation, claim, demand, order, directive, cost recovery action or other cause of action by, or on behalf of, any Governmental Authority or any other person not a party to this Agreement for damages, injunctive or equitable relief, personal injury (including sickness, disease or death), Remedial Action costs, tangible or intangible property damage, natural resource damages, nuisance, pollution, any adverse effect on the environment caused by any Hazardous Material, or for fines, penalties or restrictions, resulting from or based upon (a) the existence, or the continuation of the existence, of a Release (including sudden or non-sudden, accidental or non-accidental Releases), (b) exposure to any Hazardous Material, (c) the presence, use, handling, transportation, storage, treatment or disposal of any Hazardous Material or (d) the violation or alleged violation of any Environmental Law or Environmental Permit. "Environmental Law" shall mean any and all applicable present and future treaties, laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices 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. "Environmental Permit" shall mean any permit, approval, authorization, certificate, license, variance, filing or permission required by or from any Governmental Authority pursuant to any Environmental Law. "Equity Interests" shall mean 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. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. 8 "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with Parent or any Borrower, 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. "ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than events the reporting of which has been waived by the PBGC); (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of Parent or any Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt by any Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g) the receipt by any Borrower 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; (h) the occurrence of a "prohibited transaction" with respect to which Parent, any Borrower or any of their respective subsidiaries is a "disqualified person" (within the meaning of Section 4975 of the Code) or with respect to which Parent, any Borrower or any such Subsidiary could otherwise be liable; and (i) any other event or condition with respect to a Plan or Multiemployer Plan that could reasonably be expected to result in liability of Parent or any Borrower. "Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar Loans. "Eurodollar Loan" shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II. "Event of Default" shall have the meaning assigned to such term in Article VII. "Excess Amount" shall have the meaning assigned to such term in Section 9.14(a). "Excess Cash Flow" shall mean, for any fiscal year, the sum (without duplication) of: (a) the consolidated net income (or loss) of the Borrowers and their consolidated subsidiaries for such fiscal year, adjusted to exclude any gains or losses attributable to Commitment Reduction Events; plus (b) depreciation, amortization and other non-cash charges or losses deducted in determining such consolidated net income (or loss) for such fiscal year; plus (c) the amount, if any, by which Net Working Capital decreased during such fiscal year minus (d) the sum of (i) any non-cash gains included in determining such consolidated net income (or loss) for such fiscal year plus (ii) the amount, if any, by which Net Working Capital increased during such fiscal year minus (e) Consolidated Capital Expenditures for such fiscal year (except to the extent attributable to the incurrence of Capital Lease Obligations or otherwise financed by incurring Long-Term Indebtedness); minus 9 (f) the aggregate principal amount of Long-Term Indebtedness repaid or prepaid by the Borrower and its consolidated subsidiaries during such fiscal year, excluding (i) Indebtedness in respect of Revolving Loans and Letters of Credit and (ii) repayments or prepayments of Long-Term Indebtedness financed by incurring other Long-Term Indebtedness. "Excluded Properties" shall mean Properties Held for Sale, provided, however, that after the first anniversary of the Closing Date, Properties Held for Sale that have not been sold or that are not then subject to a bona fide contract of sale shall not be Excluded Properties. "Excluded Taxes" shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located 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 a Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrowers under Section 2.19(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.17(e), except to the extent that such Foreign 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 Borrowers with respect to such withholding tax pursuant to Section 2.17(a). "Existing Credit Agreement" shall have the meaning assigned to such term in the preamble to this Agreement. "Existing Letter of Credit" shall mean each letter of credit previously issued for the account of, or guaranteed by, any Borrower or a Subsidiary that (a) is outstanding on the Closing Date and (b) is listed on Schedule 2.06(a). "Facility Claims" shall have the meaning assigned to such term in Section 9.14(a). "Fair Market Value" shall mean, with respect to any asset, the value of the consideration obtainable in a sale of such asset in the open market at a specific date assuming a sale by a willing seller to a willing purchaser dealing at arm's length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, which value shall, for any asset with a Fair Market Value in excess of $5,000,000, be either (a) the value of such asset as determined in good faith by the Board of Directors of Parent or (b) if such asset shall have been the subject of an appraisal done reasonably contemporaneously by any independent third-party appraiser engaged by any Lender or Loan Party and the basic assumptions underlying such appraisal are reasonable, the value of such asset as stated in such appraisal. "Federal Funds Effective Rate" shall mean, 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 of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Financial Officer" of any corporation shall mean the chief financial officer, principal accounting officer, Treasurer, Assistant Treasurer, or Controller of such corporation. "First-Tier Subsidiaries" shall mean each of Denny's Holdings and each other Subsidiary Loan Party that is not a subsidiary of another subsidiary of Parent. 10 "Foreign Lender" shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrowers are 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" shall mean any Subsidiary that is not a Domestic Subsidiary. "GAAP" shall mean generally accepted accounting principles in the United States of America applied on a consistent basis. "Governmental Authority" shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, 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") shall mean 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 other obligation; provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. "Guarantee and Collateral Agreement" shall mean the Guarantee and Collateral Agreement among Parent, Denny's Holdings, the Borrowers, the Subsidiary Loan Parties and the Administrative Agent, substantially in the form of Exhibit D. "Hazardous Materials" shall mean all explosive or radioactive substances or wastes, hazardous or toxic substances or wastes, pollutants or contaminants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls ("PCBs"), PCB-containing materials or equipment, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Hedging Agreement" shall mean any currency swap agreement, currency future or option contract or other similar agreement or arrangement designed to protect any Loan Party against fluctuations in foreign interest rates and any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate future or option contract, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement. "Indebtedness" of any person shall mean, without duplication, (a) all indebtedness of such person for borrowed money; (b) all indebtedness of such person for the deferred purchase price of property or services (other than property, including inventory, and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business); (c) all obligations of such person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business); (d) all indebtedness of such person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (e) all Capital Lease Obligations of such person; (f) all reimbursement, payment or similar obligations of such person, contingent or otherwise, under acceptance, letter of credit or similar facilities; (g) all obligations of such person in respect of (i) currency swap agreements, currency future or option contracts and other similar agreements designed to hedge against 11 fluctuations in foreign interest rates and (ii) interest rate swap, cap or collar agreements, interest rate future or option contracts and other similar agreements designed to hedge against fluctuations in interest rates; (h) all Guarantees by such person of Indebtedness of others; (i) all Indebtedness referred to in clauses (a) through (h) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contract rights) owned by such person, even though such person has not assumed or become liable for the payment of such Indebtedness; (j) all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit and letters of guaranty; (k) all obligations, contingent or otherwise, of such person in respect of bankers' acceptances; and (l) the non-cash write-up of indebtedness relating to the fresh-start accounting treatment (in accordance with GAAP) of Parent's consolidated financial statements resulting from the Chapter 11 bankruptcy cases of Parent, Flagstar Corporation and Flagstar Holdings, Inc. and Parent's emergence therefrom. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner. "Indemnified Taxes" shall mean Taxes other than Excluded Taxes. "Indemnitee" shall have the meaning assigned to such term in Section 9.03(b). "Information" shall mean all information received from the Borrowers relating to the Borrowers or their business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrowers; provided that, in the case of information received from the Borrowers after the date hereof, such information is clearly identified as confidential at the time of delivery. "Initial Lenders" shall mean JPMCB, Farallon Capital Management, LLC, on behalf of its affiliated managed funds, Foothill Capital Corporation and The Foothill Group, Inc. "Interest Election Request" shall mean a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.08. "Interest Payment Date" shall mean (a) with respect to any ABR Loan, the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period. "Interest Period" shall mean, 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, two, three or six months thereafter, as the Borrower may elect; 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 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 thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "Issuing Bank" shall mean JPMCB, any Affiliate of JPMCB or one or more other issuing banks satisfactory to the Administrative Agent. "JPMCB" shall have the meaning assigned to such term in the preamble to this Agreement. "LC Commitment" shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.06. 12 "LC Disbursement" shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit. "LC Exposure" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all LC Disbursements that have not yet been reimbursed at such time. The LC Exposure of any Lender at any time shall mean its Applicable Percentage of the aggregate LC Exposure at such time. "Lenders" shall mean (a) the financial institutions listed on Schedule 2.01 and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance (in each case, other than any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Acceptance). "Letter of Credit" shall mean any letter of credit (including each Existing Letter of Credit) issued pursuant to Section 2.06. "LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on 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. "Loan Documents" shall mean this Agreement, the Letters of Credit, the Guarantee and Collateral Agreement and the other Security Documents. "Loan Parties" shall mean the Borrowers, Parent, Denny's Holdings and the Subsidiary Loan Parties. "Loans" shall mean the Revolving Loans and the Swingline Loans. "Lockbox Agreement" shall have the meaning assigned to such term in the Guarantee and Collateral Agreement. "Long-Term Indebtedness" shall mean any Indebtedness that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability. "Margin Stock" shall have the meaning assigned to such term in Regulation U. "Material Adverse Effect" shall mean (a) a materially adverse effect on or change in the business, assets, operations, properties, condition (financial or otherwise), liabilities (including potential environmental and employee health and safety liabilities and other contingent liabilities), prospects or material agreements of Parent, the Borrowers and the Subsidiaries, taken as a whole, (b) material impairment of the ability of any Borrower or any other Loan Party to perform any of its obligations under any Loan Document to which it 13 is or will be a party or (c) material impairment of the rights of or benefits available to the Lenders under any Loan Document. "Maturity Date" shall mean December 20, 2004. "Maximum Rate" shall have the meaning assigned to such term in Section 9.13. "Mortgage" shall mean a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Collateral Agent. "Mortgaged Property" shall mean, initially, each parcel of real property and the improvements thereto owned by a Loan Party, and includes each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.11 or 5.12, but excludes the Excluded Properties. "Multiemployer Plan" shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Cash Proceeds" shall mean, with respect to any event, the aggregate amount of cash received from time to time by or on behalf of such person in connection with such transaction after deducting therefrom only (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder's fees and other similar fees and commissions paid by Parent, the Borrowers and the Subsidiaries to third parties (other than Affiliates) in connection therewith, (b) the amount of taxes and other governmental fees and charges, if any, payable in connection with or as a result of such transaction, (c) the amount of any Indebtedness secured by a Lien on the asset that is the subject of an Asset Sale or other disposition (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding) that, by the terms of such transaction, is required to be repaid upon such disposition, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, properly attributable to such transaction or to the asset that is the subject of such Asset Sale or other disposition and are actually paid by such person to a person that is not an Affiliate and (d) in the case of Asset Sales only, an amount of such proceeds equal to the amount of liabilities associated with such asset (including accrued tax liabilities) incurred or retained by the person disposing of such asset as part of such transaction to the extent, and for the period, such liabilities are reserved against in accordance with GAAP or actually paid by such person to a person that is not an Affiliate, provided that such proceeds shall be deemed received by such person as and when such reserves are no longer maintained and such liabilities are not actually so paid by such person. "Net Working Capital" shall mean at any date, (a) the consolidated current assets of the Borrowers and their consolidated subsidiaries as of such date (excluding cash and Permitted Investments) minus (b) the consolidated current liabilities of the Borrowers and their consolidated subsidiaries as of such date (excluding current liabilities in respect of Indebtedness). Net Working Capital at any date may be a positive or negative number. Net Working Capital increases when it becomes more positive or less negative and decreases when it becomes less positive or more negative. "New Senior Notes" shall mean the 12 3/4% Senior Notes Due 2007 of Parent and Denny's Holdings, as joint obligors. "New Senior Notes Documents" shall mean the New Senior Notes, the New Senior Notes Indenture and all material agreements, documents and instruments related thereto, in each case as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "New Senior Notes Indenture" shall mean the Indenture dated as of April 15, 2002, among Parent, Denny's Holdings and U.S. Bank National Association, with respect to the New Senior Notes, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. 14 "Non-Assigning Lender" shall have the meaning assigned to such term in Section 9.14(b)(i). "Old Senior Notes" shall mean Parent's 11-1/4% Senior Notes due 2008. "Old Senior Notes Documents" shall mean the Old Senior Notes, the Old Senior Notes Indenture and all material agreements, documents and instruments related thereto, in each case as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "Old Senior Notes Indenture" shall mean the Indenture dated as of January 7, 1998, between Parent and U.S. Bank Trust, National Association, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "Obligations" shall mean all obligations defined as "Obligations" in the Guarantee and Collateral Agreement. "Operating Leases" shall mean, as applied to any person, any lease (including leases that may be terminated by the lessee at any time) by such person of any property (whether real, personal or mixed) that is not required to be classified and accounted for as a capital lease on such person's balance sheet in accordance with GAAP, other than any such lease under which such person is the lessor. "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 hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. "Participant" shall have the meaning assigned to such term in Section 9.04(c)(i). "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. "Perfection Certificate" shall mean the Perfection Certificate substantially in the form of Annex II to the Guarantee and Collateral Agreement. "Permitted Amendments" means (a) any amendment or supplement to the Old Senior Notes Documents or the New Senior Notes Documents that does not require a waiver or consent of the holders of the Indebtedness evidenced thereby, other than an amendment or supplement that (i) adds, directly or indirectly, any new provision commonly characterized as an affirmative, negative or financial covenant or any new event of default, collateral requirements or repayment requirement (including any put requirement) that relates to any date prior to 91 days after the Maturity Date, (ii) modifies in any manner adverse to the issuer or guarantors thereof any existing provision commonly characterized as an affirmative, negative or financial covenant or any existing event of default, collateral requirement or repayment requirement (including any shortening of any amortization requirement) that relates to any date prior to 91 days after the Maturity Date or (iii) increases the interest rate thereon or modifies in any manner adverse to the issuer or guarantors thereof the time or manner of payment of such interest (including any option or right to pay such interest in kind) or (b) any amendment or supplement (i) to the Old Senior Notes Documents or the New Senior Notes Documents that is prohibited under clause (a) above (other than any amendment or supplement prohibited by subclauses (i), (ii) or (iii) of clause (a) above) or (ii) to any other indenture, instrument or agreement pursuant to which any Indebtedness or preferred stock is outstanding that, in each case, is not materially adverse to the interests of the Lenders. "Permitted Investments" shall mean: (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), in each case maturing within one year from the date of acquisition thereof; 15 (b) without limiting the provisions of paragraph (d) below, investments in commercial paper maturing within 180 days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least "A-1" or the equivalent thereof from Standard & Poor's Ratings Service or of at least "P-1" or the equivalent thereof from Moody's Investors Service, Inc. or investments in other corporate debt securities maturing within one year from the date of the acquisition thereof and having, at such date of acquisition, a rating of at least "A" or the equivalent thereof from Standard & Poor's Rating Service or of at least "A2" or the equivalent thereof from Moody's Investors Service, Inc.; (c) investments in certificates of deposit, bankers' acceptances and time deposits (including Eurodollar time deposits) maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with (i) any domestic office of the Administrative Agent or the bank with whom the Borrowers and the Subsidiaries maintain their cash management system, provided, that if such bank is not a Lender hereunder, such bank shall have entered into an agreement with the Administrative Agent pursuant to which such bank shall have waived all rights of setoff and confirmed that such bank does not have, nor shall it claim, a security interest therein or (ii) any domestic office of any other commercial bank of recognized standing organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $250,000,000 and is the principal banking subsidiary of a bank holding company having a long-term unsecured debt rating of at least "A" or the equivalent thereof from Standard & Poor's Ratings Service or at least "A2" or the equivalent thereof from Moody's Investors Service, Inc.; (d) investments in commercial paper maturing within 180 days from the date of acquisition thereof and issued by (i) the holding company of the Administrative Agent or (ii) the holding company of any other commercial bank of recognized standing organized under the laws of the United States of America or any State thereof that has (A) a combined capital and surplus in excess of $250,000,000 and (B) commercial paper rated at least "A-1" or the equivalent thereof from Standard & Poor's Ratings Service or of at least "P-1" or the equivalent thereof from Moody's Investors Service, Inc.; (e) investments in repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any office of a bank or trust company meeting the qualifications specified in clause (c) above; and (f) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (a) through (e) above. "Permitted Liens" shall mean (a) Liens imposed by law (other than Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (b) statutory and other Liens of landlords, Liens of tenants arising from occupancy rights and statutory Liens of carriers, warehousemen, mechanics, materialmen and other Liens (other than Environmental Liens and any Lien imposed under ERISA) imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (c) Liens (other than any Lien imposed under ERISA) incurred or deposits made in the ordinary course of business (including surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (d) easements (including reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, reservations, encroachments, variations and zoning and other restrictions, charges or encumbrances (whether or not recorded), which do not interfere materially with the ordinary conduct of the business of any Borrower, 16 Parent, Denny's Holdings or any Subsidiary Loan Party, as the case may be, and which do not materially detract from the value of the property to which they attach or materially impair the use thereof to any Borrower, Parent, Denny's Holdings or any Subsidiary Loan Party, as the case may be (any such items described in this clause (d), "Permitted Real Estate Liens"); (e) purchase money Liens upon or in any property acquired or held in the ordinary course of business to secure the purchase price of such property or to secure Indebtedness permitted by Section 6.01(c), provided that any such Liens shall be placed on such property (and the Indebtedness secured by such Liens shall be created) within 180 days following the acquisition of such property, such Liens do not apply to any other property or assets of Parent, any Borrower or any Subsidiary and the Indebtedness secured by such Liens does not exceed 100% of the lesser of the cost or Fair Market Value of such property at the time of acquisition; and (f) extensions, renewals or replacements of any Lien referred to in paragraphs (a) through (e) above, provided that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby. "Permitted Real Estate Liens" shall have the meaning assigned to such term in clause (d) of the definition of "Permitted Liens". "Permitted Senior Notes Exchanges" shall mean (a) the delivery (in one or a series of exchanges) by Parent of notes evidencing obligations of Parent and/or Denny's Holdings to holders of Old Senior Notes in exchange for Old Senior Notes held by such holders; provided that (i) the aggregate amount of interest that will accrue in any period in respect of such notes and Old Senior Notes that will be outstanding immediately after giving effect to the Permitted Senior Notes Exchange shall be less than the aggregate amount of interest that would have accrued in such period in respect of the Old Senior Notes that were outstanding immediately prior to giving effect to the Permitted Senior Notes Exchange (in each case, such interest being the interest that will accrue or would have accrued, as the case may be, pursuant to the terms of the applicable notes), (ii) the aggregate principal amount of Indebtedness evidenced by such notes and the Old Senior Notes immediately after giving effect to the Permitted Senior Notes Exchange shall be less than the aggregate principal amount of Indebtedness evidenced by the Old Senior Notes immediately prior to giving effect to the Permitted Senior Notes Exchange, (iii) before and after giving effect to the Permitted Senior Notes Exchange, no Default or Event of Default shall have occurred and be continuing, (iv) all transactions related to the Permitted Senior Notes Exchange shall be reasonably satisfactory to the Administrative Agent (provided that, in the case of any proposed transaction related to a Permitted Senior Notes Exchange the terms of which are substantially identical to, and differ only in terms that could not be more adverse to the Lenders than, the terms of a previous transaction reasonably satisfactory to the Administrative Agent, Parent shall deliver a certificate to the Administrative Agent certifying that the terms of such proposed transaction are (i) substantially identical to the terms of such previous transaction, (ii) differ only in terms that could not be more adverse to the Lenders than the terms of such previous transaction and (iii) the date of such previous transaction then such proposed transaction shall be deemed reasonably satisfactory to the Administrative Agent), (v) upon the date of consummation of the Permitted Senior Notes Exchange, the Administrative Agent shall have received a certificate of a Financial Officer of Parent dated such date and certifying that consummation of the Permitted Senior Notes Exchange will not result in a default under, a breach of or a termination pursuant to the terms of, any material agreement of Parent or any of the Subsidiaries and (vi) upon the date of consummation of the Permitted Senior Notes Exchange, the Administrative Agent, on behalf of itself, the Lenders and the Issuing Bank, shall have received a favorable written opinion of counsel for Parent and the Borrowers, dated as of such date and subject only to customary exceptions and qualifications, (x) that consummation of the Permitted Senior Notes Exchange will not violate any applicable law, statute, consent decree, rule or regulation or result in a default under, a breach of or a termination pursuant to the terms of, any material agreement of Parent or any of the Subsidiaries and (y) covering such other matters relating to the Permitted Senior Notes Exchange as the Administrative Agent may reasonably request and (b) subsequent to any exchange contemplated by clause (a) above, any surrender of the notes referred to in clause (a) above in exchange for an equal principal amount of senior unsecured notes issued by Parent and Denny's Holdings, pursuant to a registration statement under the Securities Act of 1933, and having terms substantially identical to the terms of the notes issued under clause (a) above. 17 "person" shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof. "Plan" shall mean 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 any 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. "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "Properties Held for Sale" shall mean the 26 parcels of real property and the improvements thereto owned by a Loan Party that contain restaurants that are not operating or are held for sale, which properties are set forth on Schedule 1.01(b). "Refinancing" shall have the meaning assigned to such term in Section 4.02(k). "Register" shall have the meaning given such term in Section 9.04(b). "Regulation U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Reinvestment Assets" shall mean any assets to be employed in the business of any Borrower or Subsidiary Loan Party as conducted on the date hereof. "Related Parties" shall mean, with respect to any person, such person's Affiliates and the respective directors, officers, employees, agents and advisors of such person or such person's Affiliates. "Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating of any Hazardous Material in, into, onto or through the environment. "Remedial Action" shall mean (a) "remedial action" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental Authority to: (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health, welfare or the environment; or (iii) perform studies and investigations in connection with, or as a precondition to, (i) or (ii) above. "Required Lenders" shall mean, at any time, Lenders having Loans, LC Exposure and unused Commitments representing more than 50% of the sum of all Loans outstanding, LC Exposure and unused Commitments at such time. "Responsible Officer" of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement. "Restricted Indebtedness" shall mean Indebtedness of Parent, the Borrowers or any other Subsidiary the payment, prepayment, redemption, repurchase or defeasance of which is restricted under Section 6.08. 18 "Revolving Loans" shall mean the revolving loans made by the Lenders to the Borrowers pursuant to Section 2.01. Each Revolving Loan shall be a Eurodollar Loan or an ABR Loan. "Scheduled Financing Statement" shall have the meaning assigned to such term in Section 3.07(e). "Secured Parties" shall have the meaning assigned to such term in the Guarantee and Collateral Agreement. "Security Documents" shall mean the Mortgages, the Guarantee and Collateral Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.12. "Specified Debt" shall have the meaning assigned to such term in Section 9.14(a). "Statutory Reserves" shall mean 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 percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject with respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities 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. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "subsidiary" shall mean, with respect to any person (herein referred to as the "parent"), any corporation, partnership, association or other business entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Subsidiary" shall mean any subsidiary of Parent. "Subsidiary Loan Party" shall mean each Subsidiary other than a Foreign Subsidiary and other than Advantica Systems, Inc., IM Purchasing, Inc., Flagstar Holdings, Inc. and La Mirada Enterprises No. 1, Inc. "Swingline Exposure" shall mean, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of all Swingline Loans outstanding at such time. "Swingline Lender" shall mean either JPMCB or Foothill, each in its capacity as lender of Swingline Loans hereunder, and "Swingline Lenders" shall mean JPMCB and Foothill, in their capacities as lenders of Swingline Loans. "Swingline Loan" means a Loan made pursuant to Section 2.04. "Syndication Agent" shall have the meaning assigned to such term in the preamble to this Agreement. "Synthetic Purchase Agreement" shall mean any swap, derivative or other agreement or combination of agreements pursuant to which Parent, any Borrower or any other Subsidiary is or may become obligated to make (a) any payment not expressly permitted hereunder (i) in connection with a purchase by any person other than Parent, a Borrower and the other Subsidiaries of any Equity Interests of Parent, a Borrower or any other Subsidiary or (ii) in respect of any Indebtedness or (b) any payment not expressly permitted hereunder 19 the amount of which is determined by reference to (i) the price or value at any time of any Equity Interests of Parent, a Borrower or any other Subsidiary or (ii) Indebtedness; provided that any phantom stock or similar plan providing for payments only to current or former directors, officers or employees of Holdings, the Borrower and the other Subsidiaries (or to their heirs or estates) shall be deemed not to be a Synthetic Purchase Agreement. "Taxes" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "Third-Party Assignment" shall have the meaning assigned to such term in Section 9.14(b)(ii). "Third-Party Assignment Amount" shall have the meaning assigned to such term in Section 9.14(b)(ii). "Third-Party Assignment Notice" shall have the meaning assigned to such term in Section 9.14(b)(ii). "Total Commitment" shall mean, at any time, the aggregate amount of the Commitments, as in effect at such time and which on the Closing Date is $125,000,000. "Transactions" shall have the meaning assigned to such term in Section 3.02. "Trigger Date" shall have the meaning assigned to such term in Section 9.14(b)(i). "Type", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term "Rate" shall consist of the Adjusted LIBO Rate and the Alternate Base Rate. "wholly owned subsidiary" of any person shall mean a subsidiary of such person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity or 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by such person or one or more wholly owned subsidiaries of such person or by such person and one or more wholly owned subsidiaries of such person. "Withdrawal Liability" shall mean 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. SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing"). SECTION 1.03. Terms Generally. The definitions of terms herein 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 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), (b) any reference herein 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 in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and 20 Schedules to, this Agreement 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. Each term used in Section 3.07(e) or 5.12(c) that is defined in the Applicable UCC shall have the meaning assigned to such term in the Applicable UCC. 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 Borrowers notify the Administrative Agent that the Borrowers request 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 Borrowers 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 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. ARTICLE II The Credits SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans to any Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender's Credit Exposure exceeding such Lender's Commitment or (b) the sum of the Aggregate Credit Exposure exceeding the Total Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans. SECTION 2.02. Loans. (a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the applicable Borrower may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. 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 applicable Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR 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 an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(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 five Eurodollar Borrowings outstanding. Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $500,000. (d) Notwithstanding any other provision of this Agreement, no Borrower shall 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. 21 SECTION 2.03. Requests for Borrowings. To request a Borrowing (other than of a Swingline Loan), the applicable Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00, noon, New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00, noon, New York City time, one Business Day before the date of the proposed Borrowing; provided, that any such notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later than 10:00 a.m., New York City 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 telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) the identity of the Borrower in respect of such Borrowing; (ii) the aggregate amount of the requested Borrowing; (iii) the date of such Borrowing, which shall be a Business Day; (iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (v) 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"; and (vi) to the extent applicable, the location and number of the applicable Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section (and in any event not later than 5:00 p.m., New York City time, one Business Day before the date of the proposed Borrowing other than an ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e)), the Administrative Agent shall notify in writing 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. Swingline Loans. (a) Subject to the terms and conditions set forth herein, each Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $10,000,000, (ii) the Aggregate Credit Exposure exceeding the Total Commitment or (iii) the aggregate principal amount of outstanding Swingline Loans made by such Swingline Lender as to which the Lenders have not acquired participations pursuant to Section 2.04(c) exceeding such Swingline Lender's unused Commitment; provided that a Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans. (b) To request a Swingline Loan, the applicable Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the identity of the Borrower, the requested date (which shall be a Business Day), the amount of the requested Swingline Loan, the Swingline Lender to be used and, to the extent applicable, the location and number of the applicable Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07. The Administrative Agent will promptly (and in any event not later than 1:30 p.m., New York City time, on the date of a proposed Swingline Loan) notify in writing such Swingline Lender that any such notice has been received from such Borrower and shall advise whether any of the limits set forth in 22 Section 2.04(a) would be exceeded as a result of such requested Swingline Loan. If such Swingline Lender has received notice of such request in accordance with this Section 2.04(b) and the conditions to such Swingline Lender's agreement to make Swingline Loans have been satisfied, such Swingline Lender shall make the Swingline Loan available to such Borrower (i) if such Swingline Lender is the Administrative Agent, by means of a credit to the account of such Borrower specified in the second sentence of Section 2.07(a) with such Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan and (ii) if such Swingline Lender is not the Administrative Agent, by wire transfer of immediately available funds to the account specified in the second sentence of Section 2.07(a) of such Borrower with the Administrative Agent (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the Issuing Bank) on the requested date of such Swingline Loan. (c) A Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans made by such Swingline Lender outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the applicable Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to such Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrowers of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to such Swingline Lender. Any amounts received by a Swingline Lender from a Borrower (or other party on behalf of a Borrower) in respect of a Swingline Loan after receipt by such Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lenders, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrowers of any default in the payment thereof. SECTION 2.05. [Intentionally Omitted.] SECTION 2.06. Letters of Credit. (a) General. Upon the satisfaction (or waiver in accordance with Section 9.02) of the conditions specified in Section 4.01 on the Closing Date, each Existing Letter of Credit will automatically, without any action on the part of any person, be deemed to be a Letter of Credit issued hereunder for the account of the applicable Borrower for all purposes of this Agreement and the other Loan Documents. Subject to the terms and conditions set forth herein, a 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. 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 a Borrower to, or entered into by such Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. 23 (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), a Borrower shall hand deliver or telecopy (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 (reasonably in advance of 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, such 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 (i) the LC Exposure shall not exceed $60,000,000 and (ii) the Aggregate Credit Exposure shall not exceed the Total Commitment. (c) Expiration Date. Each Letter of Credit shall expire 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. (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 Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit (including each Existing 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 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 Disbursement made by the Issuing Bank and not reimbursed by the applicable Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the applicable Borrower for any reason. Each 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 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 Borrowers shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the Borrowers shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrowers prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the Borrowers receive such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that such Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided, that if such LC Disbursement is not less than $500,000, the applicable Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrowers' obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing or Swingline Loan. If the Borrowers fail to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrowers in respect thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the 24 Borrowers, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrowers pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that 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 Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrowers of their obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The obligation of the Borrowers 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 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 Borrowers' obligations hereunder. Neither the Administrative Agent, the 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 a Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by such 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 wilful 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 Borrowers by telephone (confirmed by telecopy) 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 Borrowers of their obligations to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement. (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrowers 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 Borrowers reimburse such LC Disbursement, at the rate per annum then applicable to ABR Loans; provided, that if the Borrowers fail to reimburse such LC Disbursement when 25 due pursuant to paragraph (e) of this Section, then Section 2.13(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 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. (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrowers, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(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 Event of Default shall occur and be continuing, on the Business Day that the Borrowers receive notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus any 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 a Borrower described in clause (g) or (h) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Obligations. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such 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 Borrowers' 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 Borrowers for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greater than 50% of the total LC Exposure), shall be applied to satisfy other Obligations. If the Borrowers are required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrowers within three Business Days after all Events of Default have been cured or waived. SECTION 2.07. 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 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the applicable Borrower by promptly crediting the amounts so received, in like funds, to (i) prior to the date on which the Lockbox Agreement is entered into, an account of such Borrower maintained with the Administrative Agent in New York City and designated by such Borrower in the applicable Borrowing Request and (ii) thereafter, the Concentration Account; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank. 26 (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 its sole discretion, in reliance upon such assumption, make available to the applicable 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 Borrowers 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 such 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 such Borrower, the interest rate applicable to ABR 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 2.08. Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the applicable Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The applicable 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. This Section shall not apply to Borrowings of Swingline Loans, which may not be converted or continued. (b) To make an election pursuant to this Section, the applicable 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 such Borrower was requesting a 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 telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the applicable Borrower. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02: (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 an ABR 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". If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration. 27 (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 applicable Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar 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 an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrowers, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.09. Termination and Reduction of Commitments. (a) The Commitments and the LC Commitment shall automatically terminate on the Maturity Date. (b) In the event and on such occasion that any Net Cash Proceeds are received by or on behalf of Parent, any Borrower or any Subsidiary in respect of any Commitment Reduction Event, the Commitments shall be reduced on the third Business Day following the occurrence of such Commitment Reduction Event by an amount equal to 100% of the Net Cash Proceeds received with respect to such Commitment Reduction Event, provided, that any Net Cash Proceeds from an Asset Sale that is a Commitment Reduction Event shall not be applied to reduce the Commitments in accordance with this Section 2.09(b) until the aggregate amount of Net Cash Proceeds not yet applied in accordance with this Section 2.09(b) exceeds $1,000,000, at which time all such Net Cash Proceeds shall be so applied. Notwithstanding the foregoing, in the case of any event described in clause (a) of the definition of the term "Commitment Reduction Event" that, when combined with all other such events, results in aggregate Net Cash Proceeds of not more than $20,000,000, if the Borrower applies the Net Cash Proceeds from such event (or a portion thereof) within 270 days after receipt of such Net Cash Proceeds to acquire Reinvestment Assets, then no reduction of the Commitments shall be required pursuant to this Section 2.09(b) in respect of such amount except to the extent of any such Net Cash Proceeds therefrom that have not been so applied by the end of such 270-day period, at which time a reduction of the Commitments shall be required in an amount equal to such Net Cash Proceeds that have not been so applied. Parent shall deliver to the Administrative Agent a certificate of a Financial Officer promptly (and in any event within two Business Days) following receipt of any Net Cash Proceeds of an Asset Sale that is a Commitment Reduction Event for which a reduction of the Commitments is required pursuant to this Section 2.09(b) setting forth a reasonably detailed calculation of the amount of such Net Cash Proceeds. (c) Following the end of each fiscal year of the Borrowers commencing with the fiscal year ending December 24, 2003, the Commitments shall be reduced in an aggregate amount equal to (i) until such time as the Total Commitment is less than or equal to $100,000,000, 100% of Excess Cash Flow for such fiscal year and (ii) thereafter, 75% of Excess Cash Flow for such fiscal year. Reductions in the Commitments pursuant to this paragraph shall become effective on the date on which financial statements are delivered pursuant to Section 5.04 with respect to the fiscal year for which Excess Cash Flow is being calculated (and in any event no later than 90 days after the end of such fiscal year). (d) Subject to adjustment pursuant to paragraph (e), the Commitments shall be reduced on each date set forth below by the aggregate amount set forth opposite such date: Date Amount September 30, 2003 $2,000,000 December 31, 2003 $2,000,000 March 31, 2004 $3,000,000 June 30, 2004 $3,000,000 September 30, 2004 $5,000,000 28 (e) Any reduction of the Commitments pursuant to Section 2.09(b) or 2.09(c) shall reduce scheduled reductions of Commitments to be made pursuant to paragraph (d) ratably. (f) Upon at least three Business Days' prior irrevocable written or telecopy notice to the Administrative Agent, the Borrowers may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided, however, that (i) each partial reduction of the Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000 and (ii) the Total Commitment shall not be reduced to an amount that is less than the Aggregate Credit Exposure at the time. (g) Each reduction in the Commitments hereunder shall be made ratably among the Lenders in accordance with their respective Commitments. SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby unconditionally promise to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to each Swingline Lender the then unpaid principal amount of each Swingline Loan made by such Swingline Lender on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided, that on each date that a Revolving Loan is made, the Borrowers shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers 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) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and 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 Borrowers 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 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 Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers 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 applicable Borrower shall prepare, execute and deliver to such Lender a promissory note, substantially in the form of Exhibit D, payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns). 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 2.11. Prepayment. (a) The Borrowers shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part (i) with respect to Eurodollar Borrowings, upon at least three Business Days' prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Administrative Agent before 12:00 noon, New York City time or (ii) with respect to ABR Borrowings, upon prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) on or prior to the date of prepayment to the Administrative Agent before 12:00 noon, New York City time; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $100,000 and not less than (A) $5,000,000 in the case of Eurodollar Borrowings or (B) $500,000 in the case of ABR Borrowings. 29 (b) In the event of any termination of all the Commitments, the Borrowers shall prepay all outstanding Borrowings and replace or cash collateralize all outstanding Letters of Credit on the date of such termination. In the event of any partial reduction of the Commitments, then (i) at or prior to the effective date of such reduction, the Administrative Agent shall notify the Borrowers and the Lenders of the Aggregate Credit Exposure after giving effect thereto and (ii) if the Aggregate Credit Exposure would exceed the Total Commitment after giving effect to such reduction, then the Borrowers shall, on the date of such reduction and in an amount sufficient to eliminate such excess, first, prepay the then outstanding Swingline Loans (if any), second, Revolving Loans (if any) and, third, to the extent of any remaining excess (after the prepayment of Revolving Loans and Swingline Loans), replace outstanding Letters of Credit or deposit an amount in cash in a cash collateral account established with the Collateral Agent for the benefit of the Secured Parties on the same terms as those set forth in Section 2.06(j). (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrowers to prepay such Borrowing by the amount stated therein on the date stated therein. All prepayments under this Section 2.11 shall be subject to Section 2.16 but otherwise without premium or penalty. All prepayments under this Section 2.11 shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment. SECTION 2.12. Fees. (a) The Borrowers agree to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at a rate of 1.00% per annum on the daily unused amount of the Commitment of such Lender during the period from and including the Closing Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof. 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 (including the first day but excluding the last day). For purposes of computing commitment fees, a Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose). (b) The Borrowers agree to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to such Lender's participations in Letters of Credit, which shall accrue at a rate per annum equal to the same Applicable Rate as interest on Eurodollar Loans 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 Closing Date to but excluding the later of the date on which such Lender's Commitment terminates and the date on which such 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 Closing Date to but excluding the later of the date of termination of the Commitments 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 March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within five 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 (including the first day but excluding the last day). (c) The Borrowers agree to pay to each Initial Lender, for the account of such Initial Lender, fees payable in the amounts and at the times separately agreed upon between the Borrowers and such Initial Lender. 30 (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 facility fees and participation fees, to the Lenders, except that the fees payable to an Initial Lender pursuant to Section 2.12(c) shall be paid directly to such Initial Lender. Fees paid shall not be refundable under any circumstances. SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base 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. (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrowers hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section. (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) 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 an ABR Loan prior to the end of the Availability Period), 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 Alternate Base Rate at times when the Alternate Base Rate is based on the Prime 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 (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.14. 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 for such Interest Period; or (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate 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 Borrowers and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrowers 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 Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted. SECTION 2.15. Increased Costs. (a) If any Change in Law shall: > 31 (i) impose, modify or deem applicable any reserve, special deposit or similar requirement 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 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 Borrowers 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 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 Borrowers 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 Borrowers and shall be conclusive absent manifest error. The Borrowers 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. (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 Borrowers 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 Borrowers 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 2.16. 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, 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 Borrowers pursuant to Section 2.19, then, in any such event, the Borrowers 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 32 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 Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of the Borrowers hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if a Borrower 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 Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrowers shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrowers hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) 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. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Borrower to a Governmental Authority, such 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. (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrowers (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrowers as will permit such payments to be made without withholding or at a reduced rate. (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section 2.17, it shall pay over such refund to the Borrowers (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrowers, upon the request of the Administrative Agent or such Lender, agree to repay the amount paid over to any Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental 33 Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrowers or any other person. SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) Each Loan Party shall make each payment required to be made by them hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) or under any other Loan Document prior to 12:00 noon, New York City 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 or either Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 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) 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. (c) 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 Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans 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 Revolving Loans and participations in LC Disbursements and Swingline Loans 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 Revolving Loans and participations in LC Disbursements and Swingline Loans; 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 Borrowers 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 Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrowers consent to the foregoing and agree, to the extent they may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrowers rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrowers in the amount of such participation. This Section 2.18(c) is expressly subject to the provision of Section 9.08 requiring the consent of all Lenders prior to any Lender, the Administrative Agent or the Collateral Agent exercising any right of set-off. (d) Unless the Administrative Agent shall have received notice from the Borrowers prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank 34 hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in its sole discretion, 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 Borrowers have 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. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.06(d) or (e), 2.07(b) or 2.18(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, 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 2.15 or 2.17, 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 Borrowers hereby agree 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 2.15, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrowers may, at their 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 Borrowers shall have received the prior written consent of the Administrative Agent, 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 and Swingline Loans, 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 Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, 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 Borrowers to require such assignment and delegation cease to apply. SECTION 2.20. Covenant of Collateral Agent. (a) In connection with any permitted Asset Sale and promptly following the reasonable written request of Parent or a Borrower, the Collateral Agent will execute and deliver documents prepared by Parent or a Borrower and appropriate under local law, to release the lien of any mortgage, filing under the Uniform Commercial Code of the applicable state or other security interest arising under any Loan Document, as to any asset to be sold under a permitted Asset Sale. (b) Promptly following the written reasonable request of Parent or a Borrower from time to time, Collateral Agent will execute and deliver documents: (i) to consent to, or subordinate the lien of any mortgage, filing under the Uniform Commercial Code of the applicable state, or other security interest arising under any Loan Document to, any Permitted Real Estate Lien that Parent or such Borrower determines, in 35 the exercise of its reasonable business judgment, is in the interest of Parent or such Borrower's business on any Mortgaged Property and (ii) required in connection with the subdivision of any Mortgaged Property. ARTICLE III Representations and Warranties Each of Parent, Denny's Holdings, and the Borrowers represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders that: SECTION 3.01. Organization; Powers. Each of Parent, the Borrowers and the Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated hereby to which it is or will be a party and, in the case of the Borrowers, to borrow hereunder. SECTION 3.02. Authorization. The execution, delivery and performance by each Loan Party of each of the Loan Documents, the borrowings hereunder and the Refinancing (collectively, the "Transactions") (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of Parent, any Borrower or any Subsidiary, (B) any order of any Governmental Authority or (C) any provision of any indenture, agreement or other instrument to which Parent, any Borrower or any Subsidiary is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by Parent, any Borrower or any Subsidiary (other than any Lien created hereunder or under the Security Documents). SECTION 3.03. Enforceability. This Agreement has been duly executed and delivered by Parent, Denny's Holdings and each Borrower and constitutes, and each other Loan Document when executed and delivered by each Loan Party party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms. SECTION 3.04. Governmental Approvals. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, except for (a) the filing of Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the Mortgages and (c) such as have been made or obtained and are in full force and effect. SECTION 3.05. Financial Statements. Parent has heretofore furnished to the Lenders its consolidated balance sheets and statements of income and changes in financial condition (i) as of and for the fiscal year ended December 26, 2001, which in the case of such consolidated statements have been audited by and accompanied by the opinion of Deloitte & Touche, LLP, independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended September 25, 2002, certified by its chief financial officer. Such financial statements present fairly the financial condition and results of operations and cash flows of Parent and the consolidated Subsidiaries as of such dates and for such periods. Such balance sheets and the notes thereto disclose, as and to the extent required by GAAP, all material liabilities, 36 direct or contingent, of Parent and the consolidated Subsidiaries as of the dates thereof and, as of such dates, there were no other material liabilities, direct or contingent, of Parent or the Subsidiaries, except as disclosed in the Confidential Information Memorandum. The financial statements referred to in this Section 3.05 were prepared in accordance with GAAP applied on a consistent basis. SECTION 3.06. No Material Adverse Change. There has been no material adverse change in the business, assets, operations, properties, condition (financial or otherwise) liabilities (including potential environmental and employee health and safety liabilities and other contingent liabilities), prospects or material agreements of Parent, the Borrowers and the Subsidiaries, taken as a whole, since December 26, 2001. SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of Parent, the Borrowers and the Subsidiaries has good and marketable title to, or valid leasehold interests in, all its material properties and assets (including the Mortgaged Properties), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes. All such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02. (b) Each of Parent, the Borrowers and the Subsidiaries has complied with all obligations under all material leases to which it is a party and all such leases are in full force and effect. Each of Parent, the Borrowers and the Subsidiaries enjoys peaceful and undisturbed possession under all such material leases, subject to the rights of subtenants and assignees, as applicable. (c) Except as set forth on Schedule 3.07(c), none of the Loan Parties has received any notice of, or has any knowledge of, any pending or contemplated condemnation proceeding affecting the Mortgaged Property or any sale or disposition thereof in lieu of condemnation. (d) None of Parent, the Borrowers or the Subsidiaries is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein. (e) Upon the filing of a properly authorized termination statement under Article 9 of the Uniform Commercial Code of the applicable state (the "Applicable UCC") in respect of each financing statement set forth on or attached to Schedule 3.07(e) (each, a "Scheduled Financing Statement") in the applicable filing office, such Scheduled Financing Statement will cease to be effective. All obligations purported to be secured by the Scheduled Financing Statements have been paid in full or otherwise extinguished (including as set forth in the payoff letter to State Street Bank & Trust attached to Schedule 3.07(e)), and there is no obligation or commitment to make an advance, incur an obligation or otherwise give value secured by the collateral covered by any Scheduled Financing Statement. SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date a list of all Subsidiaries and the percentage ownership interest of Parent, any Borrower or any Subsidiary therein. The Equity Interests so indicated on Schedule 3.08 are fully paid and non-assessable and are owned by Parent, a Borrower or a Subsidiary free and clear of all Liens. SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth on Schedule 3.09, there are not any actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of Parent or any Borrower, threatened against or affecting Parent, any Borrower or any Subsidiary or any business, property or rights of any such person (i) that involve any Loan Document or the Transactions or (ii) that have had or are reasonably likely to have, either individually or in the aggregate, a Material Adverse Effect. (b) None of Parent, the Borrowers or any of the Subsidiaries or any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental 37 Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect. (c) Certificates of occupancy and permits are in effect for the Mortgaged Properties. SECTION 3.10. Agreements. (a) None of Parent, the Borrowers or any Subsidiary is a party to any agreement or instrument or subject to any corporate restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect. (b) None of Parent, the Borrowers or any Subsidiary is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect. SECTION 3.11. Federal Reserve Regulations. (a) None of Parent, the Borrowers or any of the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation U or Regulation X. SECTION 3.12. Investment Company Act; Public Utility Holding Company Act. None of Parent, the Borrowers or any Subsidiary is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.13. Use of Proceeds. The Borrowers will use the proceeds of the Loans and will request the issuance of Letters of Credit only for the purposes specified in the preamble to this Agreement. SECTION 3.14. Tax Returns. Each of Parent, the Borrowers and the Subsidiaries has filed or caused to be filed all Federal, state, local and foreign tax returns or materials required to have been filed by it (except for any non-material state, local or foreign returns) and has paid or caused to be paid all taxes due and payable by it and all assessments received by it, except taxes that are being contested in good faith by appropriate proceedings and for which Parent, the Borrowers or such Subsidiary, as applicable, shall have set aside on its books adequate reserves. SECTION 3.15. No Material Misstatements. None of (a) the Confidential Information Memorandum or (b) any other information, report, financial statement, exhibit or schedule furnished by or on behalf of Parent or the Borrowers to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto, taken as a whole together with any other information (including the Confidential Information Memorandum) so furnished, contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading, provided that to the extent that such information was subsequently replaced, prior to the date hereof, by other information expressly correcting such earlier information (and the Administrative Agent and Lenders were expressly informed by or on behalf of Parent or the Borrowers that such other information was correcting such earlier information), the foregoing representation does not apply to such earlier information. SECTION 3.16. Employee Benefit Plans. Each of Parent, the Borrowers and their ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably 38 expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in material liability of Parent, the Borrowers or any of their ERISA Affiliates. The present value of all benefit liabilities under each Plan (based on those assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed by more than $5,000,000 the fair market value of the assets of such Plan (assuming the accrual of contributions for the current or immediately preceding Plan year not yet due), and the present value of all benefit liabilities of all underfunded Plans (based on those assumptions used to fund each such Plan) did not, as of the last annual valuation dates applicable thereto, exceed by more than $5,000,000 the fair market value of the assets (assuming the accrual of contributions for the current or immediately preceding Plan year not yet due) of all such underfunded Plans. SECTION 3.17. Environmental Matters. Except as set forth in Schedule 3.17: (a) The properties owned or operated by Parent, the Borrowers and the Subsidiaries (the "Properties") do not contain any Hazardous Materials in amounts or concentrations which (i) constitute, or constituted a violation of, (ii) require Remedial Action under, or (iii) could otherwise give rise to liability under, Environmental Laws, which violations, Remedial Actions and liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; (b) The Properties and all operations of Parent, the Borrowers and the Subsidiaries are in compliance, and in the last five years have been in compliance, with all Environmental Laws, and all necessary Environmental Permits have been obtained and are in effect, except to the extent that such non-compliance or failure to obtain any necessary permits, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; (c) There have been no Releases or threatened Releases at, from, under or proximate to the Properties or otherwise in connection with the operations of Parent, the Borrowers or the Subsidiaries, which Releases or threatened Releases, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; (d) None of Parent, the Borrowers or any of the Subsidiaries has received any notice of an Environmental Claim in connection with the Properties or the operations of Parent, the Borrowers or the Subsidiaries or with regard to any person whose liabilities for environmental matters Parent, the Borrowers or the Subsidiaries has retained or assumed, in whole or in part, contractually, by operation of law or otherwise, which, in the aggregate, could reasonably be expected to result in a Material Adverse Effect, nor do Parent, the Borrowers or the Subsidiaries have reason to believe that any such notice will be received or is being threatened; and (e) Hazardous Materials have not been transported from the Properties, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Properties in a manner that could give rise to liability under any Environmental Law, nor have Parent, the Borrowers or the Subsidiaries retained or assumed any liability, contractually, by operation of law or otherwise, with respect to the generation, treatment, storage or disposal of Hazardous Materials, which transportation, generation, treatment, storage or disposal, or retained or assumed liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct description of all insurance maintained by Parent or any Borrower or by Parent or any Borrower for the Subsidiaries as of the date hereof and the Closing Date. As of each such date, such insurance is in full force and effect and all premiums have been duly paid. Parent, the Borrowers and the Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice. SECTION 3.19. Security Documents. (a) The Guarantee and Collateral Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Pledged Collateral (as defined in the Guarantee and Collateral Agreement) and, when the Pledged Collateral is delivered to the Collateral Agent, the Guarantee and Collateral Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and 39 interest of the pledgors thereunder in such Pledged Collateral, in each case prior and superior in right to any other person. (b) The Guarantee and Collateral Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Guarantee and Collateral Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule 6 to the Perfection Certificate, the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property, (as defined in the Guarantee and Collateral Agreement) in which a lien, pursuant to applicable law, may only be perfected by a filing with the United States Patent and Trademark Office or the United States Copyright Office), as to which perfection is effected through the filing of such financing statements, in each case prior and superior in right to any other person, other than with respect to Liens expressly permitted by Section 6.02. (c) When the Guarantee and Collateral Agreement is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Intellectual Property (as defined in the Guarantee and Collateral Agreement) in which a lien, pursuant to applicable law, may only be perfected by a filing with the United States Patent and Trademark Office or the United States Copyright Office), in each case prior and superior in right to any other person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a lien on registered trademarks, trademark applications and copyrights acquired by the grantors after the date hereof). (d) Each Mortgage is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when filed in the offices specified on Schedule 3.19(d) with respect thereto, each Mortgage shall constitute a fully perfected Lien on, and security interest, in the Mortgaged Property thereunder and the proceeds thereof, in each case prior and superior in right to any other person, other than with respect to the rights of persons pursuant to Liens expressly permitted by Section 6.02. SECTION 3.20. Labor Matters. As of the date hereof and the Closing Date, there are no strikes, lockouts or slowdowns against Parent, any Borrower or any Subsidiary pending or, to the knowledge of Parent or any Borrower, threatened. The hours worked by and payments made to employees of Parent, each Borrower and each Subsidiary 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 (except for any violations that, individually or in the aggregate, would not be material). All payments due from Parent, any Borrower or any Subsidiary, or for which any claim may be made against Parent, any Borrower or such Subsidiary, on account of wages and employee health and welfare insurance and other benefits (except for any payments or claims that, individually or in the aggregate, if not paid, would not be material), have been paid or accrued as a liability on the books of Parent, any Borrower or such Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Parent, any Borrower or any Subsidiary is bound. SECTION 3.21. Solvency. Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Loan made on the Closing Date and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) in each case the present fair saleable value of (i) the property of each Borrower and (ii) the business of Parent and the Subsidiary Loan Parties, taken as a whole, will be greater than the amount that will be required to pay its probable liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) 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 (d) each Loan Party will not have 40 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 following the Closing Date. SECTION 3.22. Intellectual Property. Each of Parent, the Borrowers and the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by Parent, the Borrowers and the Subsidiaries does not infringe upon the rights of any other person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. ARTICLE IV Conditions of Lending The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions: SECTION 4.01. All Credit Events. The obligations of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit (each such event being called a "Credit Event"), is subject to the satisfaction of the following conditions: (a) The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) and, in the case of a Swingline Loan, the Swingline Lender shall have been advised in writing of such Borrowing Request for a Swingline Loan as required by Section 2.04(b) or, in the case of the issuance of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of such Letter of Credit as required by Section 2.06. (b) The representations and warranties set forth in Article III shall be true and correct on and as of the date of such Credit Event with the same effect as though made on and as of such date (before and after giving effect to such Borrowing or issuance and to the application of the proceeds therefrom), except to the extent such representations and warranties expressly relate to an earlier date, including those with a corresponding schedule, in which case the representations and warranties that expressly relate to an earlier date shall have been true and correct as of such earlier date. (c) The Borrowers and each other Loan Party shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Credit Event, no Event of Default or Default shall have occurred and be continuing. Each Credit Event shall be deemed to constitute a representation and warranty by Parent and each Borrower on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.01. SECTION 4.02. First Credit Event. On the Closing Date: (a) The Administrative Agent shall have received, on behalf of itself, the Lenders and the Issuing Bank, a favorable written opinion of Alston & Bird, LLP, counsel for Parent, Denny's Holdings and the Borrowers, substantially as set forth in Exhibit H, (A) dated the Closing Date, (B) addressed to the Issuing Bank, the Administrative Agent, the Collateral Agent and the Lenders and (C) covering such other matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and Parent and the Borrowers hereby request such counsel to deliver such opinions. 41 (b) All legal matters incident to this Agreement, the Borrowings and extensions of credit hereunder and the other Loan Documents shall be satisfactory to the Lenders, to the Issuing Bank and to Cravath, Swaine & Moore, counsel for the Administrative Agent. (c) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (ii) above; and (iv) such other documents as the Lenders, the Issuing Bank or Cravath, Swaine & Moore, counsel for the Administrative Agent, may reasonably request. (d) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer of Parent, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01. (e) The Administrative Agent and the Initial Lenders shall have received all fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers hereunder or under any other Loan Document. (f) The Collateral and Guarantee Requirement shall have been satisfied and the Administrative Agent shall have received a completed Perfection Certificate dated the Closing Date and signed by an executive officer or Financial Officer of the Borrower, together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 6.02 or have been released. (g) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance satisfactory to the Administrative Agent. (h) The Administrative Agent shall have received a Borrowing Request pursuant to Section 2.03(b). (i) After giving effect to the consummation of the Transactions and the other transactions contemplated hereby, Parent and the Subsidiaries shall have no outstanding Indebtedness or preferred stock other than (i) the loans and other extensions of credit under this Agreement, (ii) the 42 Old Senior Notes, (iii) the New Senior Notes and (iv) other Indebtedness permitted under Section 6.01(a), which is set forth in Schedule 6.01. The amounts, terms and conditions of all Indebtedness and Capital Lease Obligations to remain outstanding after the Closing Date (including terms and conditions relating to the interest rate, fees, amortization, maturity, prepayment requirements, mandatory call or redemption features, sinking funds, security, subordination (if any), covenants, events of default and remedies) shall be satisfactory in all respects to the Lenders. (j) All requisite Governmental Authorities and third parties shall have approved or consented to the transactions contemplated hereby to the extent required or deemed advisable by the Administrative Agent and its counsel (and such approvals shall be in full force and effect) and there shall be no action, actual or threatened, before any Governmental Authority, court or arbitrator that (a) has a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the transactions contemplated hereby or (b) if adversely determined, could reasonably be expected to result in a Material Adverse Effect. (k) Substantially simultaneously with or prior to the initial Credit Event, (a) the principal of and interest on all loans outstanding under, and all other amounts due with respect to, the Existing Credit Agreement shall have been repaid in full, (b) all commitments to lend under the Existing Credit Agreement shall have been permanently terminated, (c) all obligations under or relating to the Existing Credit Agreement and all security interests related thereto shall have been discharged and (d) the Administrative Agent shall have received satisfactory evidence of such repayment, termination and discharge (the actions referred to in clauses (a), (b) and (c) above, the "Refinancing"). (l) The Lenders shall have received unaudited consolidated and consolidating balance sheets and related statements of income, stockholders' equity and cash flows for the Borrowers for the fiscal quarter ending September 30, 2002, which financial statements shall not be materially inconsistent with the financial statements or forecasts previously provided to the Lenders. (m) The Lenders shall have received a detailed business plan with financial projections of the Borrower and its subsidiaries for fiscal years 2002 through 2004, in form and substance satisfactory to the Administrative Agent. (n) The Administrative Agent shall be reasonably satisfied with all of Parent's and the Subsidiaries' material agreements and other arrangements with their suppliers (including, without limitation, the terms of sale and any financing arrangements with such suppliers), service providers and franchisees after giving effect to the Refinancing. (o) The Lenders shall be reasonably satisfied as to the amount and nature of capital expenditures required or expected to be made by Parent and the Subsidiaries between the date hereof and the Maturity Date and Parent's plans with respect to the funding of such expenditures. (p) The Lenders shall be reasonably satisfied as to the amount and nature of any contingent liabilities (including but not limited to environmental and employee health and safety exposures to which Parent and the Subsidiaries may be subject), after giving effect to the Refinancing and with the plans of the Borrowers with respect thereto, and, to the extent requested by the Administrative Agent, the Lenders shall have received environmental assessments satisfactory to the Administrative Agent from an environmental consulting firm satisfactory to the Administrative Agent with respect to the Mortgaged Properties. (q) There shall be no litigation, arbitration or administrative proceeding or consent decree that would reasonably be expected to have a material adverse effect on the business, assets, operations, properties, condition (financial or otherwise), prospects or material agreements of Parent and the Subsidiaries, taken as a whole, or on the ability of the parties to consummate the Refinancing or the other transactions contemplated hereby. 43 (r) The Lenders shall be reasonably satisfied in all respects with the tax position and the contingent tax liabilities of, and with any tax sharing agreements among Parent, Denny's Holdings, the Borrowers and their respective subsidiaries after giving effect to the Refinancing and the other transactions contemplated hereby, and with the plans of the Borrower with respect thereto. (s) The Initial Lenders shall be reasonably satisfied with the liquidity, and sufficiency of amounts available under this Agreement to meet the ongoing working capital and other cash requirements, of Parent and its subsidiaries following the consummation of the Refinancing and the other transactions contemplated hereby. (t) The Lenders shall have received a solvency certificate, in form and substance and from an officer of each of the Borrowers reasonably satisfactory to the Initial Lenders, together with such other evidence reasonably requested by the Lenders, confirming the solvency of such Borrower and its subsidiaries after giving effect to the Refinancing and the other transactions contemplated hereby. (u) The Lenders shall have received an appraisal (to the extent deemed necessary or appropriate by, and satisfactory in form and substance to, the Administrative Agent), from an appraiser satisfactory to the Administrative Agent, of each Mortgaged Property, and full appraisal reports with respect to 70 Mortgaged Properties to be specified by the Administrative Agent. (v) The Consolidated EBITDA of Parent and the Subsidiaries for the most recently completed four-fiscal-quarter period ended at least 30 days prior to the Closing Date shall be at least $120,000,000. (w) The Lenders shall have received the certificate of a Financial Officer that the Consolidated EBITDA of Parent and the Subsidiaries for each fiscal month after the most recent 2002 fiscal quarter for which unaudited financial statements were received by the Lenders and ended prior to the date of the initial Credit Event is not materially inconsistent with the forecast for any such month previously provided to the Initial Lenders. (x) The Administrative Agent shall have received (a) written instructions from First American Title Insurance Company to the effect that the Mortgages that are required to be delivered on the Closing Date are in proper form for filing in the jurisdictions in which such Mortgages are required to be recorded and (b) legal opinions from local counsel satisfactory to the Administrative Agent to the effect that such Mortgages are sufficient to perfect the liens purported to be created by such Mortgages with respect to Mortgaged Properties representing at least 60% of the value of all the Mortgaged Properties. (y) The consummation of the Refinancing and the other transactions contemplated hereby shall not (a) violate any applicable law, statute, consent decree, rule or regulation or (b) conflict with, or result in a default or event of default under, any material agreement of Parent or any of its subsidiaries, and the Administrative Agent shall have received one or more legal opinions to such effect, satisfactory to the Administrative Agent, from counsel to Borrowers satisfactory to the Administrative Agent. (z) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. 44 ARTICLE V Affirmative Covenants Each of Parent, Denny's Holdings and the Borrowers, covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, each of Parent, Denny's Holdings, and the Borrowers will, and will cause each of the Subsidiaries to: SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05. (b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; maintain and operate such business in substantially the manner in which it is presently conducted and operated; comply in all material respects with all applicable laws, rules, regulations (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting the Mortgaged Properties) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted; and at all times maintain and preserve all property material to the conduct of such business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times. SECTION 5.02. Insurance. Maintain with responsible and reputable insurance companies or associations insurance in such amounts and covering such risks as is consistent with prudent business practice for comparable companies in the industry or as otherwise are acceptable to the Administrative Agent in its discretion and such additional insurance as is required by applicable law; provided, however, that Parent, the Borrowers and the Subsidiaries may self-insure, pursuant to policies adopted by the Board of Directors of Parent and reviewed at least once annually, to the extent determined in good faith by senior management of Parent to be consistent with prudent business practice, in the best interest of Parent, the Borrowers and the Subsidiaries and not materially adverse to the rights and interests of the Lenders under this Agreement and the other Loan Documents. SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other obligations promptly and in accordance with their terms and pay and discharge promptly when due all taxes, assessments and govern mental charges or levies (other than any tax, assessment or governmental charge or levy in an amount less than $250,000, provided that the failure to pay or discharge the same, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect) imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise (other than any claim for an amount less than $250,000, provided that the failure to pay or discharge the same, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect) that, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and Parent and such Borrower, as applicable, shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien and, in the case of the Mortgaged Properties, there is no risk of forfeiture of such property. 45 SECTION 5.04. Financial Statements, Reports, etc. In the case of Parent, furnish to the Administrative Agent: (a) within 90 days (or such shorter period as the Securities and Exchange Commission shall specify for the filing of Annual Reports on Form 10-K) after the end of each fiscal year, its consolidated and consolidating balance sheets and related statements of operations, stockholders' equity and cash flows showing the financial condition of Parent and the consolidated Subsidiaries as of the close of such fiscal year and the results of its operations and the operations of such Subsidiaries during such year, all audited by Deloitte & Touche LLP or other independent public accountants of recognized national standing acceptable to the Required Lenders and accompanied by an opinion of such accountants (which shall not be qualified in any material respect) to the effect that such consolidated financial statements fairly present the financial condition and results of operations of Parent and the consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days (or such shorter period as the Securities and Exchange Commission shall specify for the filing of Quarterly Reports on Form 10-Q), after the end of each of the first three fiscal quarters of each fiscal year its consolidated and consolidating balance sheets and related statements of operations, stockholders' equity and cash flows showing the financial condition of Parent and the consolidated Subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such Subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, all certified by one of its Financial Officers as fairly presenting the financial condition and results of operations of Parent and the consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments; (c) within 60 days after the end of the last fiscal month of each fiscal year, 45 days after the end of the third, sixth and ninth fiscal months of each fiscal year, and 35 days after the end of each other fiscal month, its consolidated and consolidating balance sheets and related statements of operations and stockholders' equity and consolidated cash flows showing the financial condition of Parent and the consolidated Subsidiaries as of the close of such month and the results of its operations, the operations of such Subsidiaries during such month and the then elapsed portion of the fiscal year and the monthly management reports that have been provided historically by Parent with such financial statements, all certified by one of its Financial Officers as fairly presenting the financial condition and results of operations of Parent and the consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments; (d) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a certificate of the accounting firm or Financial Officer, substantially as set forth in Exhibit J, (i) opining on or certifying such statements (which certificate, when furnished by an accounting firm, may be limited to accounting matters and disclaim responsibility for legal interpretations) and certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (ii) setting forth (A) the amount of Net Cash Proceeds (w) received from each Asset Sale, the Net Cash Proceeds from which are to be applied to acquire Reinvestment Assets pursuant to Section 2.09(b), (x) the date of such Asset Sale, (y) the amount of such Net Cash Proceeds applied to acquire Reinvestment Assets during such period and the nature of such Reinvestment Assets (if any) and (z) the amount of such Net Cash Proceeds required to be applied to reduce the commitments as set forth in Section 2.09(b) and (B) reasonably detailed calculations demonstrating compliance with Sections 6.10, 6.11, 6.12, 6.13 and 6.14; (e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by Parent or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions 46 of said Commission, or with any national securities exchange, or distributed to its shareholders, as the case may be; (f) within 10 days of a request by the Administrative Agent from time to time, such information as Parent has regarding the holders of the New Senior Notes and the Old Senior Notes; (g) not later than March 31, 2003, (i) projections prepared by the management of Parent of statements concerning selected financial data (consisting of net sales, earnings before interest and taxes, working capital items, capital expenditures and depreciation), balance sheets, income statements and cash flow statements, on a quarterly basis, for fiscal years 2003 and 2004 and, on an annual basis, for fiscal year 2005 and (ii) any revisions to the business plan and financial projections of the Borrowers and their subsidiaries for fiscal years 2003 and 2004 specified in Section 4.02(m); and (h) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of Parent, any Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request. SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative Agent, the Issuing Bank and each Lender prompt written notice of the following: (a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto; (b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against Parent, any Borrower or any Subsidiary that could reasonably be expected to result in a Material Adverse Effect; and (c) any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect. SECTION 5.06. Employee Benefits. (a) Comply in all material respects with the applicable provisions of ERISA and the Code and (b) furnish to the Administrative Agent as soon as possible after, and in any event within 30 days after any Responsible Officer of Parent or any Borrower or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event, could reasonably be expected to result in liability of Parent or any Subsidiary in an aggregate amount exceeding $5,000,000 or requiring payments exceeding $1,000,000 in any year, a statement of a Financial Officer of Parent setting forth details as to such ERISA Event and the action, if any, that Parent proposes to take with respect thereto. SECTION 5.07. Maintaining Records; Access to Properties and Inspections. Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law are made of all dealings and transactions in relation to its business and activities and permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the properties of Parent, any Borrower or any Subsidiary at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances and condition of Parent, any Borrower or any Subsidiary with the officers thereof and independent accountants therefor. SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes set forth in the preamble to this Agreement. 47 SECTION 5.09. Compliance with Environmental Laws. Comply, and cause all lessees and other persons occupying its Properties to comply, in all material respects with all Environmental Laws and Environmental Permits applicable to its operations and Properties; obtain and renew all material Environmental Permits necessary for its operations and Properties; and conduct any Remedial Action in accordance with Environmental Laws; provided, however, that none of Parent, the Borrowers or any of the Subsidiaries shall be required to undertake any Remedial Action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances. SECTION 5.10. Preparation of Environmental Reports. (a) If a Default caused by reason of a breach of Section 3.17 or 5.09 shall have occurred and be continuing, at the request of the Required Lenders through the Administrative Agent, provide to the Lenders within 60 days after such request, at the expense of the Borrowers, an environmental site assessment report for the Properties which are the subject of such Default prepared by an environmental consulting firm acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or Remedial Action which any Loan Party could be reasonably expected to be legally obligated to undertake in connection with such properties. (b) Where there is a reasonable basis to believe that Hazardous Materials may be present on a Mortgaged Property or that the value of a Mortgaged Property may be materially impaired as a result thereof, provide Phase I reports from an environmental consulting firm satisfactory to the Administrative Agent with respect to the affected Mortgaged Properties specified by the Administrative Agent in such request within 60 days of such request. SECTION 5.11. Additional Subsidiaries. If any additional Subsidiary is formed or acquired after the Closing Date, within three Business Days after such Subsidiary is formed or acquired, notify the Administrative Agent and the Lenders thereof and cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary (if it is a Subsidiary Loan Party) and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party. SECTION 5.12. Further Assurances. (a) Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), which may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties and provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents. (b) Notify the Administrative Agent and the Lenders of the acquisition of any material assets (including any real property or improvements thereto or any interest therein) acquired by the Borrower or any Subsidiary Loan Party after the Closing Date (other than assets constituting Collateral under the Guarantee and Collateral Agreement that become subject to the Lien of the Guarantee and Collateral Agreement upon acquisition thereof), and, if requested by the Administrative Agent or the Required Lenders, Parent and the Borrowers cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Loan Parties. (c)(i) Deliver in accordance with Section 9-513(c) of the Applicable UCC an authenticated demand to each secured party listed on any Scheduled Financing Statement for a termination statement in respect of each Scheduled Financing Statement which relates to such secured party not later than 15 Business Days after the date of delivery to Denny's by counsel to the administrative agent of complete copies of the Scheduled Financing Statements, (ii) promptly upon receipt thereof from any such secured party, file in the applicable filing office each termination statement in respect of a Scheduled Financing Statement, (iii) in the 48 event that the relevant secured party has not sent a termination statement with respect to a Scheduled Financing Statement in response to the delivery of a demand to such secured party pursuant to clause (i), prepare and file in accordance with Section 9-509(d)(2) of the Applicable UCC with the applicable filing office a termination statement with respect to such Scheduled Financing Statement not later than 90 days after the delivery to such secured party of a demand pursuant to clause (i), (iv) provide to the Administrative Agent copies of an acknowledgment copy of a termination statement with respect to each Scheduled Financing Statement not later than 120 days after the date of the delivery of the demand in respect of such Scheduled Financing Statement pursuant to clause (i) above and (v) promptly provide to the Administrative Agent copies of all demands made, and all termination statements received or filed, pursuant to this clause (c) and copies of all correspondence relating to any of the foregoing. SECTION 5.13. Cash Management Arrangements. As and to the extent provided in the Guarantee and Collateral Agreement, within 60 days of the Closing Date establish and maintain, cash management procedures, including restricted and concentration accounts, satisfactory to the Administrative Agent and enter into control agreements for the benefit of the Collateral Agent and the Administrative Agent, in form and substance satisfactory to the Administrative Agent, with respect to those deposit and investment accounts of Parent and its subsidiaries designated by the Administrative Agent. SECTION 5.14. Mortgages Not Required at the Closing Date. (a) Not later than 60 days after the Closing Date, counterparts of Mortgages with respect to any Mortgaged Properties for which Mortgages were not delivered on or prior to the Closing Date duly executed and completed, in recordable form and delivered by the record owner of such Mortgaged Property. (b) Deliver to the Administrative Agent, counterparts of duly executed Mortgages with respect to any Property Held for Sale that ceases to be an Excluded Property within five Business Days of such Property Held for Sale ceasing to be an Excluded Property. ARTICLE VI Negative Covenants Each of Parent, Denny's Holdings, and the Borrowers covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, neither Parent nor Denny's Holdings nor the Borrowers will, nor will they cause or permit any of the Subsidiaries to: SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any Indebtedness, except: (a) Indebtedness existing on the date hereof and set forth in Schedule 6.01; (b) Indebtedness arising hereunder or pursuant to a Permitted Senior Notes Exchange or evidenced by (i) the Loan Documents, (ii) the Old Senior Notes Documents or (iii) the New Senior Notes Documents, provided that Indebtedness evidenced by the New Senior Notes shall be incurred only pursuant to Permitted Senior Notes Exchanges; (c) Indebtedness incurred by Parent, any Borrower or any Subsidiary Loan Party subsequent to the Closing Date secured by purchase money Liens in an aggregate amount not to exceed $5,000,000 at any one time outstanding; 49 (d) Subject to Section 6.10, Capex Financings and Indebtedness incurred in connection with investments permitted under Section 6.04(j) in an aggregate amount not to exceed $10,000,000; (e) Subject to Section 6.10, and in addition to Indebtedness permitted under Section 6.01(d), Capital Lease Obligations entered into after the date hereof of which a general description is contained in the Confidential Information Memorandum in an aggregate amount not to exceed $20,000,000; (f) Indebtedness arising under (i) any purchasing card program established to enable headquarters and field staff of Parent or any Subsidiary Loan Party to purchase goods and supplies from vendors and (ii) any travel and entertainment card program established to enable headquarters and field staff of Parent or any Subsidiary Loan Party to make payments for expenses incurred related to travel and entertainment, provided that the aggregate amount of such Indebtedness shall not exceed $1,000,000 at any time outstanding; (g) Indebtedness arising from investments among Parent, any Borrower and any Subsidiary Loan Party that are permitted hereunder; (h) Indebtedness owed to JPMCB or any of its banking Affiliates in respect of any overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearing house transfers of funds, provided that the aggregate principal amount of such Indebtedness shall not exceed $40,000,000 at any one time outstanding; (i) in the case of Parent, any Borrower or Subsidiary Loan Party (other than a First-Tier Subsidiary): (A) all interest, fees, reimbursement and indemnification amounts, and all other accruals and obligations under the Indebtedness described in Section 6.01(a) and renewals, extensions, modifications or refinancings of such Indebtedness, provided that such renewals, extensions, modifications and refinancings (i) do not increase the outstanding principal amount of the Indebtedness being renewed, extended, modified or refinanced, or shorten the maturity thereof to a date earlier than one year after the Maturity Date, and (ii) are otherwise on terms consistent with prudent business practice and then prevailing market practices and prices in the applicable geographic area; and (B) additional unsecured Indebtedness not otherwise permitted by this Section 6.01 aggregating not more than $10,000,000 in principal amount at any one time outstanding; and (j) Indebtedness of Denny's Holdings issued to (i) Farallon or an Affiliate of Farallon in an aggregate principal amount not to exceed $25,000,000 and (ii) any third party (other than (x) Farallon or an Affiliate of Farallon and (y) any Lender or an Affiliate of any Lender) reasonably satisfactory to the Administrative Agent in an aggregate principal amount not to exceed $25,000,000; provided, that, in either case, (A) unless such Indebtedness consists of notes issued by Parent and Denny's Holdings and has terms (other than interest rate) identical to the terms of the New Senior Notes, any subsequent holder of such Indebtedness shall be reasonably satisfactory to the Administrative Agent, (B) such Indebtedness has a final maturity at least six months after the Maturity Date, (C) such Indebtedness does not amortize prior to its final maturity, (D) such Indebtedness is unsecured and has no credit support (whether in the form of a Guarantee or otherwise) from any Subsidiary other than Denny's Holdings, (E) the proceeds of such Indebtedness are applied contemporaneously with such incurrence solely to (x) repurchase Old Senior Notes in a principal amount that is greater than the principal amount of such Indebtedness or (y) permanently repay Loans (with a concurrent reduction in the Commitments), (F) if the proceeds of such Indebtedness are used to repurchase Old Senior Notes, the interest expense (including any accretion of principal) attributable to such Indebtedness shall be less than the interest expense attributable to the Old Senior Notes repurchased with the proceeds of such Indebtedness, (G) at the time of such 50 issuance, no Default or Event of Default shall have occurred and be continuing and no Default or Event of Default will result from such issuance or the application of the proceeds thereof and (H) the documentation governing such Indebtedness contains terms (including terms relating to fees, prepayment requirements, mandatory redemption features, covenants, events of default and remedies) that are less restrictive of Parent and the Subsidiaries than the terms of this Agreement, and such terms and all other transactions related to such incurrence shall otherwise be reasonably satisfactory to the Administrative Agent, provided further that if such Indebtedness consists of notes issued by Parent and Denny's Holdings that have terms (other than interest rate) identical to the terms of the New Senior Notes and bear interest at a fixed rate that is equal either to (1) the interest rate applicable to the New Senior Notes outstanding on October 29, 2002 or (2) a market rate at the time of the issuance thereof, then the requirements of this clause (H) shall be deemed satisfied as to such Indebtedness. SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person, including any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except: (a) Liens on property or assets of the Borrowers and Subsidiaries existing on the date hereof and set forth in Schedule 6.02, provided that such Liens shall secure only those obligations which they secure on the date hereof, and with respect to Liens existing on the property of the Borrowers or Subsidiary Loan Parties (other than the First-Tier Subsidiaries), extensions, renewals, refinancings or replacements thereof; provided, however, that no such extensions, renewals refinancings or replacements will extend to or cover any property not theretofore subject to the Lien being extended, renewed, refinanced or replaced; and provided further that the Borrowers and Subsidiary Loan Parties (other than the First-Tier Subsidiaries) may substitute for the property subject to any such Lien other property with substantially the same Fair Market Value and not otherwise subject to the Lien of a Loan Document, so long as the property for which such substitution is made is fully and effectively released from such Lien; (b) any Lien created pursuant to any Indebtedness permitted under Section 6.01(b)(i), (c), (d) and (e); (c) Permitted Liens; (d) Liens in favor of the Administrative Agent, Collateral Agent and the Lenders; and (e) unperfected Liens on property of the Borrowers or Subsidiary Loan Parties (other than First-Tier Subsidiaries) in favor of other Borrowers or Subsidiary Loan Parties (other than First-Tier Subsidiaries) arising in connection with intercompany transactions among Borrowers or Subsidiary Loan Parties. SECTION 6.03. Sale and Lease-Back Transactions. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer (other than pursuant to Section 6.05(c)) 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 which it intends to use for substantially the same purpose or purposes as the property being sold or transferred; provided, however, that Parent, any Borrower or any Subsidiary may enter into such a transaction provided that the Fair Market Value of all property sold or transferred pursuant to such transactions shall not exceed in the aggregate $5,000,000. 51 SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire any capital stock, 52 evidences of indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment or any other interest in, any other person, except: 53 (a) investments by Parent, the Borrowers or the Subsidiaries existing on the date hereof in the capital stock of their respective subsidiaries and investments existing on the date hereof and set forth in Schedule 6.04; (b) Permitted Investments; (c) subject to Section 6.15(a), advances and loans made by any Subsidiary to Parent in the ordinary course of business and (i) advances and loans made by any Subsidiary to and (ii) investments made by any Subsidiary in any other Subsidiary that is a Borrower or a Subsidiary Loan Party in the ordinary course of business; (d) advances and loans made by Parent to any Borrower in the ordinary course of business so long as no Default or Event of Default shall have occurred and be continuing; (e) investments by any Borrower or any Subsidiary (other than First-Tier Subsidiaries) made pursuant to joint venture or franchise arrangements entered into in accordance with prudent business practice and in an aggregate amount of not more than $2,500,000 at any one time outstanding; (f) non-cash consideration received from any sale, lease, transfer or other disposition of assets permitted under Section 6.05; (g) loans or advances to employees made in the ordinary course of business consistent with prudent business practice and in an aggregate amount not to exceed $1,000,000 at any one time outstanding; (h) investments by Parent and Denny's Holdings in Old Senior Notes to the extent permitted by Section 6.08(a); (i) additional investments not otherwise permitted by this Section 6.04 in an aggregate amount not to exceed $3,000,000; and (j) subject to Section 6.10, acquisitions of properties and related assets by means of investments in new operations, properties or franchises through the purchase or other acquisition of assets of any person or stock of new Subsidiary Loan Parties where any Borrower or any Subsidiary Loan Party making such purchase or acquisition determines in its prudent business judgment that such purchase or acquisition would be beneficial in lieu of making Consolidated Capital Expenditures. SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions. Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any substantial part of its assets (whether now owned or hereafter acquired) or any capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other person, except that: (a) Parent, any Borrower or any Subsidiary Loan Party may purchase and sell inventory, fixtures and equipment in the ordinary course of business; (b) Parent, any Borrower or any Subsidiary Loan Party may sell or otherwise dispose of obsolete or worn out property, in each case in the ordinary course of business and consistent with past practice, provided that the aggregate Fair Market Value of all such assets disposed of pursuant to this clause (b) in any fiscal year shall not exceed $5,000,000; (c) Parent, any Borrower or any Subsidiary Loan Party may exchange real property, fixtures and improvements for other real property, fixtures and improvements, provided that any 54 consideration (other than real property, fixtures and improvements) received by any Loan Party in connection with such exchanges is received by such Loan Party in cash; (d) subject to Section 6.15, any Subsidiary may sell, transfer or otherwise dispose of any of its assets to any Subsidiary Loan Party; (e) dispositions of the Excluded Properties or other dispositions of all or any portion of the assets constituting the restaurants of Denny's Holdings and its subsidiaries (other than sales, but not licenses, of Trademarks (as defined in the Guarantee and Collateral Agreement)), in each case for consideration determined by the senior management of Parent to be equal to the Fair Market Value of the assets disposed of, provided that the aggregate Fair Market Value of the assets (other than Excluded Properties) disposed of pursuant to this subsection shall not exceed $10,000,000 in any fiscal year; (f) Parent, any Borrower or any Subsidiary Loan Party may sell, transfer or otherwise dispose of underperforming restaurants (as determined in the good faith judgment of Parent) for consideration determined by the board of directors of the person that owns such restaurants (which board of directors shall include members of senior management of Parent) to be equal to the Fair Market Value of the restaurants sold, transferred or otherwise disposed of, provided that the aggregate Fair Market Value of all assets disposed of pursuant to this clause (f) shall not exceed $5,000,000 in any fiscal year; (g) any Subsidiary Loan Party (other than a First-Tier Subsidiary) may (i) merge or consolidate with or transfer all or substantially all of its assets to any other Subsidiary Loan Party; (h) Denny's or any of its subsidiaries may (i) sell or transfer the rights to operate restaurants under the Denny's name as franchisees (but not the restaurant buildings themselves (the "Retained Denny's Restaurants") or the land on which such restaurants are located (the "Retained Denny's Land")) to franchisees of Denny's (the "Denny's Franchisees") generally in accordance with Parent's October 2002 Business Plan for cash consideration equal to the Fair Market Value of such rights and (ii) may lease or sublease the Retained Denny's Restaurants and the Retained Denny's Land to the Denny's Franchisees that operate such Retained Denny's Restaurants pursuant to operating leases or subleases on terms determined in good faith by Denny's or the applicable Subsidiary to be market terms at the time such leases or subleases are entered into, provided that (i) such Retained Denny's Restaurants continue to be operated by such Denny's Franchisees under the Denny's name for so long as Parent's senior management reasonably believes such continued operation is in the best interest of Parent and (ii) such sales, and such leases or subleases, do not violate, conflict with, result in the breach of or constitute a default under any provision of, or give rise to any right to terminate, any indenture, agreement or other instrument to which Parent, any Borrower or any Subsidiary is a party; (i) Borrower may sell, transfer or otherwise dispose of Properties Held for Sale to an unaffiliated third party; and (j) any Borrower or any Subsidiary Loan Party other than a First-Tier Subsidiary may effect any transaction permitted by Section 6.04(j). provided, however, that any sale, transfer, exchange or other disposition of assets (x) permitted by clause (b), (c), (e) or (i) above shall not be permitted unless such disposition is for Fair Market Value and (y) for gross consideration in excess of (A) $100,000 for any individual sale, transfer, exchange or other disposition and (B) $500,000 for all such sales, transfers, exchanges or other dispositions permitted by clause (b), (e), (f) or (i) shall not be permitted unless such disposition is for at least 60% cash consideration and all noncash consideration received in respect thereof shall be in the form of a note, an asset or such other form as shall be reasonably satisfactory to the Administrative Agent; and provided further that any transaction permitted 55 by clause (c), (e), (f) or (g) above shall not be permitted unless at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing. SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its capital stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any shares of any class of its capital stock or set aside any amount for any such purpose; provided, however, that (i) subject to Section 6.15, any Subsidiary may declare and pay dividends or make other distributions to Parent, to the Borrowers or to the Subsidiary Loan Parties, and (ii) Parent may declare and distribute to its stockholders a dividend comprised of rights to purchase preferred stock and/or common stock of Parent, provided that (A) such rights are issued and distributed to Parent's stockholders pursuant to the Rights Agreement, dated as of December 15, 1998, between Denny's and Continental Stock Transfer and Trust Company, as Rights Agent and (B) no Default or Event of Default shall have occurred or be continuing or would result therefrom. (b) Permit any Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such subsidiary to (i) pay any dividends or make any other distributions on its capital stock or any other interest or (ii) make or repay any loans or advances to Parent, any Borrower, any Subsidiary or the parent of such Subsidiary (subclauses (i) and (ii) above are collectively referred to as an "Upstream Payment") except for such encumbrances or restrictions existing under or by reason of (A) applicable law, (B) this Agreement, any other Loan Document or any other agreement entered into hereunder or thereunder or as contemplated hereby or thereby, (C) the Old Senior Notes Documents, (D) customary provisions restricting (1) subletting or assignment of any lease governing a leasehold interest of Parent or any of the Subsidiaries, (2) the transfer of intellectual property rights held by Parent or any of the Subsidiaries through license agreements with the owners of such rights and (3) the assignment of supply contracts, (E) any instrument governing Indebtedness permitted under Section 6.01 of a person acquired by any Borrower or Subsidiary (other than a First-Tier Subsidiary) after the date hereof, provided that (1) such instrument was in existence at the time of such acquisition and was not created in contemplation of or in connection with such acquisition, (2) the officers of Parent reasonably believe at the time of such acquisition that the terms of such instrument will not encumber or restrict the ability of such acquired person to make an Upstream Payment and (3) such instrument contains no express encumbrances or restrictions on the ability of such acquired person to make an Upstream Payment, (F) the New Senior Notes Documents or (G) Indebtedness and other contractual obligations of Parent or any of the Subsidiaries existing on the Closing Date and set forth on Schedule 6.06 and any amendment, modification, renewal, extension, replacement, refinancing or refunding thereof permitted under the terms of this Agreement, provided that the encumbrances and restrictions contained in any such amendment, modification, renewal, extension, replacement, refinancing or refunding are in the aggregate no less favorable in all material respects to the Lenders. (c) Enter into, or be party to, or make any payment under, any Synthetic Purchase Agreement unless (i) in the case of any Synthetic Purchase Agreement related to any capital stock, the payments required to be made by Parent, the Borrowers and the other Subsidiaries are limited to the amount permitted to be paid under Section 6.06(a) (and such payments shall be deemed made pursuant to the applicable clause of Section 6.06(a)), (ii) in the case of any Synthetic Purchase Agreement related to any Restricted Indebtedness, the payments required to be made by Parent, the Borrowers and the other Subsidiaries thereunder are limited to the amount permitted to be paid under Section 6.08(a) (and such payments shall be deemed made pursuant to the applicable clause of Section 6.08(a)) and (iii) in the case of any Synthetic Purchase Agreement, the obligations of Parent, the Borrowers and the other Subsidiaries thereunder are subordinated to the Senior Obligations on terms satisfactory to the Required Lenders. SECTION 6.07. Transactions with Affiliates. Sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates except, (i) for Permitted Senior Notes Exchanges and the consummation of the transactions contemplated thereby and (ii) that Parent, any Borrower or any Subsidiary may engage in any of the 56 foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to Parent, such Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties; provided that Parent may issue and distribute to its stockholders that are Affiliates rights to purchase preferred stock and/or common stock of Parent to the extent that such rights are permitted to be issued and distributed to Parent's stockholders pursuant to Section 6.06(a)(iii). SECTION 6.08. Other Indebtedness and Agreements. (a) Make any voluntary or optional payments, prepayments or redemptions of principal or premium or voluntarily repurchase, acquire or retire for value prior to the stated maturity with respect to Indebtedness (other than Indebtedness arising under the Loan Documents); provided that: (i) Parent and Denny's Holdings shall be permitted to acquire voluntarily (A) Old Senior Notes pursuant to clause (a) of the definition of the term "Permitted Senior Notes Exchanges" and (B) New Senior Notes pursuant to clause (b) of the definition of the term "Permitted Senior Notes Exchanges"; (ii) Parent and Denny's Holdings shall be permitted to acquire voluntarily Old Senior Notes with the proceeds of Indebtedness incurred pursuant to Section 6.01(h); and (iii) Parent, any Borrower and any Subsidiary Loan Party shall have the right to prepay secured Indebtedness up to an aggregate amount of $5,000,000; provided further that such payments shall be permitted to retire Indebtedness to the extent required under a "due on sale" clause applicable to any disposition of assets permitted under Section 6.05; (b) Except for Permitted Amendments, permit, or permit any Subsidiary to permit, any waiver, supplement, modification, amendment, termination or release of the Old Senior Notes Documents, the New Senior Notes Documents or any indenture, instrument or agreement pursuant to which any Indebtedness or preferred stock is outstanding; and (c) If, as a result of the receipt of any cash proceeds by Parent or any Subsidiary in connection with an Asset Sale or any loss, damage or destruction, to the extent covered by insurance, of assets, business units, individual business assets or property, Denny's Holdings or Parent would be required by the terms of the New Senior Notes Indenture or the Old Senior Notes Indenture to make an offer to repurchase New Senior Notes or Old Senior Notes, respectively, prior to the respective maturity dates of such Notes, then Parent shall or shall cause one or more of the Subsidiaries to invest such cash proceeds in assets or businesses of Parent or the Subsidiaries in a manner that is permitted by the other provisions of this Agreement and that will eliminate any requirement under the New Senior Notes Indenture or the Old Senior Notes Indenture to offer to repurchase, New Senior Notes or Old Senior Notes, respectively. Any such investment shall be made prior to the first day on which Denny's Holdings or Parent, as the case may be, would be required to commence a tender offer to repurchase with such cash proceeds, New Senior Notes or Old Senior Notes, under the New Senior Notes Indenture or Old Senior Notes Indenture, respectively. SECTION 6.09. Operating Leases. Permit the aggregate amount of payments under Operating Leases of Parent, any Borrower or any Subsidiary to be in excess of the fair rental value of the properties subject to such Operating Leases. 57 SECTION 6.10. Capital Expenditures; Acquisitions. (a) Incur Consolidated Capital Expenditures and make acquisitions of properties or related assets pursuant to Section 6.04(j) in excess of, for any fiscal year ending on or about any date set forth below, the amount set forth below opposite such date: Maximum Consolidated Fiscal Year Capital Expenditures and Acquisitions 2002 $ 45,000,000 2003 $ 45,000,000 2004 $ 60,000,000 (b) Notwithstanding anything to the contrary contained in Section 6.10(a), the lesser of (i) any amount permitted under Section 6.10(a) in any given year that is not expended in such year and (ii) 25% of the amount permitted under Section 6.10(a) in such year may be carried forward to the succeeding fiscal year, provided, that in any fiscal year, amounts permitted under Section 6.10(a) shall be applied towards Consolidated Capital Expenditures before any amount permitted under this Section 6.10(b) shall be so applied. (c) Notwithstanding anything to the contrary contained in Sections 6.10(a) and Section 6.10(b), not more than $45,000,000 (plus any amount carried forward from fiscal year 2003 pursuant to 6.10(b)) of Consolidated Capital Expenditures and acquisitions of properties or related assets pursuant to 6.04(j) during the 2004 fiscal year may be funded from sources other than Indebtedness permitted to be incurred under Section 6.01. SECTION 6.11. Consolidated Total Debt Ratio. Permit the Consolidated Total Debt Ratio for any period of four consecutive fiscal quarters ending on or about any date set forth below to be greater than the ratio set forth below opposite such date: Date Ratio March 31, 2003 6.25 to 1.00 June 30, 2003 6.25 to 1.00 September 30, 2003 6.25 to 1.00 December 31, 2003 6.25 to 1.00 March 31, 2004 5.90 to 1.00 June 30, 2004 5.90 to 1.00 September 30, 2004 5.75 to 1.00 Following consummation of the Permitted Senior Notes Exchanges, each of the ratios set forth in the table above shall be adjusted to equal the difference (rounded to the nearest hundredth) between (a) such ratio as set forth in the table and (b) (i) the quotient obtained by dividing (A) the aggregate amount of the reduction in Consolidated Total Debt (net of transaction expenses and taxes, in each case resulting from consummation of the Permitted Senior Notes Exchanges) resulting from consummation of the Permitted Senior Notes Exchanges by (B) $1,000,000, multiplied by (ii) 0.0078. SECTION 6.12. Consolidated Senior Secured Debt Ratio. Permit the Consolidated Senior Secured Debt Ratio for any period of four consecutive fiscal quarters ending on or about any date set forth below to be greater than the ratio set forth below opposite such date: Date Ratio March 31, 2003, and thereafter 1.50 to 1.00 58 SECTION 6.13. Minimum Consolidated EBITDA. Permit the Consolidated EBITDA for any period of four consecutive fiscal quarters ending on or about any date set forth below to be less than the amount set forth below opposite such date: Date Amount March 31, 2003 $105,000,000 June 30, 2003 $105,000,000 September 30, 2003 $105,000,000 December 31, 2003 $110,000,000 March 31, 2004 $110,000,000 June 30, 2004 $110,000,000 September 30, 2004 $115,000,000 SECTION 6.14. Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters ending on or about any date set forth below to be less than the ratio set forth opposite such date: Date Ratio March 31, 2003 1.25 to 1.00 June 30, 2003 1.25 to 1.00 September 30, 2003 1.25 to 1.00 December 31, 2003 1.25 to 1.00 March 31, 2004 1.30 to 1.00 June 30, 2004 1.30 to 1.00 September 30, 2004 1.35 to 1.00 SECTION 6.15. Business of Parent, the Borrowers and the Subsidiaries. (a) In the case of Parent, conduct any business or enter into any transaction inconsistent with its status as a holding company, or permit a First-Tier Subsidiary to conduct any business or enter into any transaction inconsistent with such First-Tier Subsidiary's status as a holding company, (b) engage at any time in any business or business activity other than the conduct of restaurant operations and other business currently conducted by it and business activities reasonably incidental thereto or (c) in the case of Denny's Realty, engage in any business other than the acquisition, leasing and financing of real property, improvements and personalty comprising restaurants and other activities incident to, connected with or necessary or convenient to the foregoing. Parent shall not (i) own or acquire any assets other than Old Senior Notes acquired by Parent or contributed to Parent pursuant to Permitted Senior Notes Exchanges, shares of capital stock of Parent's subsidiaries, assets owned by Parent on June 20, 2000, other assets acquired by Parent after such date in the ordinary course of Parent's business, cash and Permitted Investments, provided that the amount of such cash, together with the Fair Market Value of such Permitted Investments, shall not at any time exceed $250,000 other than on any day on which (1) any payment is due in respect of the Old Senior Notes (and no Default or Event of Default shall have occurred and be continuing), (2) Parent is making any payment to purchase Old Senior Notes pursuant to Section 6.08(a)(ii), (3) any payment to be made by Parent is due in respect of the New Senior Notes (and no Default or Event of Default shall have occurred and be continuing) or (4) any payment is due in respect of any liabilities referred to below in clause (ii)(B) or (C), in which event Parent may, during such day, hold additional cash in an amount up to the aggregate amount of such payment to enable Parent to make such payment) or (ii) incur any liabilities (other than (A) liabilities under the Old Senior Notes Indenture, the New Senior Notes Indenture and the Loan Documents, (B) liabilities imposed by law, including tax liabilities, and (C) other liabilities incidental to its existence and permitted business and activities). Parent shall not permit Denny's Holdings to (and Denny's Holdings shall not) (i) own or acquire any assets (other than Old Senior Notes acquired pursuant to Permitted Senior Notes Exchanges, shares of capital stock of Denny's Holdings' subsidiaries, the shares of Simeus Holdings Inc. listed on Schedule 6.04, cash and Permitted Investments, provided that the amount of such cash, together with the Fair Market Value of such Permitted Investments, 59 shall not at any time exceed $50,000 other than on any day on which (1) any payment to be made by Denny's Holdings is due in respect of the New Senior Notes (and no Default or Event of Default shall have occurred and be continuing) or (2) any payment is due in respect of any liabilities referred to in clause (ii)(B) or (C), in which event Denny's Holdings may during such day hold additional cash in an amount up to the aggregate amount of such payment to enable Denny's Holdings to make such payment) or (ii) incur any liabilities (other than (A) liabilities under the Loan Documents or the New Senior Notes Documents, (B) liabilities imposed by law, including tax liabilities, and (C) other liabilities incidental to its existence and permitted business and activities). (b) The Borrowers will not, and Parent, Denny's Holdings, and the Borrowers will not permit the Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrowers and the Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto. SECTION 6.16. Fiscal Year. Change the end of its fiscal year from the last Wednesday before December 31 in each year to any other date. SECTION 6.17. Hedging Agreements. Enter into any Hedging Agreement. ARTICLE VII Events of Default In case of the happening of any of the following events ("Events of Default"): (a) any representation or warranty made or deemed made or in connection with any Loan Document or the borrowings or issuances of Letters of Credit hereunder, shall prove to have been false or misleading in any respect when so made, deemed made or furnished, or any material representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; (c) default shall be made in the payment of any interest on any Loan or any fee or LC Disbursement or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days; (d) default shall be made in the due observance or performance by Parent, any Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.01(a), 5.02, 5.03, 5.05, 5.08, 5.10(b), 5.12(c) or 5.14 or in Article VI; (e) default shall be made in the due observance or performance by Parent, any Borrower or any Subsidiary of any covenant, condition or agreement contained in any Loan Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of more than 10 days; 60 (f) Parent, any Borrower or any Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness in a principal amount in excess of $10,000,000, when and as the same shall become due and payable, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebted ness to become due prior to its stated maturity; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Parent, any Borrower or any Subsidiary, or of a substantial part of the property or assets of Parent, any Borrower or any Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Parent, any Borrower or any Subsidiary or for a substantial part of the property or assets of Parent, any Borrower or any Subsidiary or (iii) the winding-up or liquidation of Parent, any Borrower or any Subsidiary; and such proceeding or petition shall continue undismissed for 30 days or an order or decree approving or ordering any of the foregoing shall be entered; (h) Parent, any Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Parent, any Borrower or any Subsidiary or for a substantial part of the property or assets of Parent, any Borrower or any Subsidiary, (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, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing; (i) one or more judgments for the payment of money in an aggregate amount in excess of $5,000,000 shall be rendered against Parent, any Borrower, any Subsidiary 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 levy upon assets or properties of Parent, any Borrower or any Subsidiary to enforce any such judgment; (j) any non-monetary judgment or order shall be rendered against Parent, any Borrower or any Subsidiary that is reasonably likely to have a Material Adverse Effect and either (x) enforcement proceedings shall have been commenced by any person upon such judgment or order and a stay of such enforcement proceedings shall not be in effect or (y) there shall be any period of 20 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of Parent, any Borrower and its ERISA Affiliates in an aggregate amount exceeding $5,000,000 or requires payments exceeding $1,000,000 in any year; (l) (i) any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the Collateral covered thereby, except to the extent that any such loss of perfection or priority results 61 from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Guarantee and Collateral Agreement or, subject to compliance by the Loan Parties with Sections 5.11, 5.12 and 5.14 hereof and with the other Loan Documents, any other action or inaction of the Collateral Agent with respect to any of its obligations or duties under this Agreement or any other Loan Document and except to the extent that such loss is covered by a lender's title insurance policy and the related insurer promptly after such loss shall have acknowledged in writing that such loss is covered by such title insurance policy or (ii) any Guarantee purported to be created by any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and enforceable obligation of the applicable Loan Party; or (m) there shall have occurred a Change in Control; then, and in every such event (other than an event with respect to Parent or any Borrower described in paragraph (g) or (h) above), 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 Borrowers, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of Parent or any Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by Parent and the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to Parent or any Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of Parent or any Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by Parent and the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding. ARTICLE VIII The Administrative Agent and the Collateral Agent; Syndication 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 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 Parent, the Borrowers or any Subsidiary 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 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 62 Parent, the Borrowers or any of the 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 wilful misconduct. The Administrative Agent shall not be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by Parent, the Borrowers 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 thereunder or in connection therewith, (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, or (v) 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. 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 each 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 the Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrowers. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrowers, 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 bank with an office in New York, New York, or an Affiliate of any such 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 Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the Administrative Agent's resignation hereunder, the provisions of this Article 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. The Syndication Agent shall not have any duties or obligations except those expressly set forth in this Agreement (if any). 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, 63 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. 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 telecopy, as follows: (i) if to the Borrowers, Parent, Denny's Holdings or DFO, Inc., to it at 203 East Main Street, Spartanburg, South Carolina 29319, Attention of Treasurer (Telecopy No. (864) 597-8216); (ii) if to the Administrative Agent or the Issuing Bank, to JPMorgan Chase Bank, Loan and Agency Services Group, 101111 Fannin, 69, Houston, Texas, Attention of Cherry Arnaez (Telecopy No. (713) 750-2782), with a copy to JPMorgan Chase Bank, 270 Park Avenue, New York 10017, Attention of Barry Bergman (Telecopy No. (212) 270-5646); and (iii) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or a Borrower (on behalf of the other Borrower, Parent and Denny's Holdings) 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. (c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. 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 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 Collateral Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by a Borrower, Parent or Denny's Holdings 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. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances. 64 (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers, Parent, Denny's Holdings and the Required Lenders or by the Borrowers, Parent, Denny's Holdings and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) change, except as permitted hereunder, the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or clause (i) of the first sentence of Section 9.04(a) or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender, (vi) release all or any substantial part of the Collateral (other than in connection with any sale of Collateral permitted by this Agreement) or (viii) release Parent or any Subsidiary from its Guarantee under the Guarantee and Collateral Agreement (except as expressly provided in the Guarantee and Collateral Agreement or (ix) change the provision of Section 9.08 requiring the consent of all Lenders prior to the exercise of a right of set-off by any Lender, the Administrative Agent or the Collateral Agent, or any similar provision in any Loan Document; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank or a Swingline Lender hereunder without the prior written consent of the Administrative Agent or the Issuing Bank or such Swingline Lender, as the case may be. SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers agree to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, Farallon and Foothill, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, counsel for Farallon and counsel for Foothill, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable 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 or protection of its rights in connection with this Agreement, 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. (b) The Borrowers shall indemnify the Administrative Agent, the Collateral 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, liabilities and related expenses, including the reasonable fees, charges and disbursements of any 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 this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder 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 a Borrower or any of the Subsidiaries, or any Environmental Liability related in any way to a Borrower or any of the Subsidiaries or (iv) 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 65 not, as to any Indemnitee, be available to the extent that such losses, claims, damages, 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 wilful misconduct of such Indemnitee. (c) To the extent that the Borrowers fail 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 (and without affecting any Borrower's obligations to pay such amounts), 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 unreimbursed expense or indemnified loss, claim, damage, 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, the Borrowers shall not 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 on 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) a 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 a 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 assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of: (A) the Borrowers; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or any Federal Reserve Bank or, if an Event of Default under clause (a), (b), (g) or (h) of Article VII has occurred and is continuing, any other assignee; and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of a Commitment to an assignee that is a Lender with a Commitment immediately prior to giving effect to such assignment. (ii) Assignments shall be subject to the following additional conditions: (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 Commitment, the amount of the Commitment 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 $2,250,000 unless the Borrowers and the Administrative Agent 66 otherwise consent; provided that no such consent of the Borrowers shall be required if an Event of Default under clause (a), (b), (g) or (h) of Article VII 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; (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. (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 2.15, 2.16, 2.17 and 9.03, as well as to any fees accrued for its account and not yet paid). 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 9.04. (iv) The Administrative Agent, acting for this purpose as an agent of the Borrowers, 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 Commitment of, and principal amount 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 Borrowers, 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 Borrowers, 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. 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 Borrowers, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its 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) Parent, Denny's Holdings, the Borrowers, 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 clause (i), (ii), (iii) or (vi) of the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this Section, 67 the Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. 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 that such Participant agrees to be bound by and subject to Sections 2.18(c) and 9.08 as though it were a Lender. (ii) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the prior written consent of the Borrowers. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 2.17(e) as though it were a Lender. (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 any pledge or assignment to secure obligations to a Federal Reserve Bank, and this 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 Parent, Denny's Holdings and the Borrowers herein, in the other Loan Documents, and in the certificates or other instruments delivered in connection with or pursuant to this Agreement and the other Loan Documents shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement 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 Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 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 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 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 4.02, 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 telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.07. Severability. Any provision of this Agreement 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 hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. 68 SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each of the Administrative Agent, the Collateral Agent and each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, (i) to effect an administrative hold with respect to any and all deposits at any time held and (ii) only if expressly consented to in writing by all Lenders (which consent may not be unreasonably withheld 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 a Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of the Administrative Agent, the Collateral Agent and each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such party may have. SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York. (b) Each of the Borrowers, Parent and Denny's Holdings each hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, 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 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 against the Borrowers, Parent or Denny's Holdings or their respective properties in the courts of any jurisdiction. (c) Each of the Borrowers, Parent and Denny's Holdings each 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 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 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 OR THE TRANSACTIONS CONTEMPLATED HEREBY (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 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. 69 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 applicable laws or regulations 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, under any other Loan Document or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, or any other Loan Document, (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 any Borrower and its obligations, (g) with the consent of the Borrowers or (h) 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 nonconfidential basis from a source other than the Borrowers. 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. 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. SECTION 9.14. Irrevocable Proxy. (a) Subject to the conditions contained in the last sentence of this Section 9.14(a), each Lender (i) agrees to vote (in the same manner proportionally as all such claims under this Agreement that are not voted pursuant to this Section 9.14(a)) in any bankruptcy or similar proceedings with respect to Parent or any of the Subsidiaries the portion of such Lender's claims against Parent and the Subsidiaries arising under this Agreement ("Facility Claims") that exceed 20% of the aggregate amount of all the Lenders' Facility Claims (such excess amount, the "Excess Amount") and (ii) in that connection, grants to the Administrative Agent an irrevocable proxy, coupled with an interest, to vote such Facility Claims in the proportional manner described above; provided that the foregoing proxy shall not apply to any Assigned Claims. Each Lender whose Facility Claims (prior to giving effect to the assignments of such Lender's Facility Claims contemplated by Section 9.14(b)(i)) exceed 20% of the aggregate amount of all the Lenders' Facility Claims shall be referred to herein as an "Assigning Lender". The voting agreement and irrevocable proxy granted under this Section 9.14(a) shall automatically become effective with respect to such Lender if, and remain effective for so long as, such Lender (or, with respect to any Lenders other than The Foothill Group, Inc. or Foothill, any Affiliate of such Lender) holds (i) if such Lender is not Farallon or an Affiliate of Farallon, any record or beneficial interest in Indebtedness of Denny's Holdings or Parent permitted under Section 6.01(j) or any Old Senior Notes or New Senior Notes ("Specified Debt") or (ii) if such Lender is Farallon or an Affiliate of Farallon, record or beneficial ownership of Specified Debt in an aggregate amount of greater than or equal to $30,000,000. (b) (i) Each Lender agrees that, subject to the conditions set forth in the last sentence of Section 9.14(a), upon the delivery by the Administrative Agent of a notice to all Lenders pursuant to this clause (b)(i) following the occurrence of an Event of Default specified in clause (g) or (h) of Article VII, each Assigning Lender shall be deemed to have assigned as of the date of such notice (a "Trigger Date") to each Lender that 70 is not an Assigning Lender (each, a "Non-Assigning Lender") an amount of such Assigning Lender's Facility Claims equal to such Non-Assigning Lender's pro rata share (based on the Credit Exposure on such Trigger Date (immediately prior to giving effect to such assignments) of the Non-Assigning Lenders) of the Excess Amount with respect to such Assigning Lender (such assigned Facility Claims for so long as they are held by a Lender that is not an Assigning Lender, "Assigned Claims") solely in consideration for a promise by each Non-Assigning Lender promptly to deliver to each Assigning Lender any money or property received on or after such Trigger Date by such Non-Assigning Lender in respect of Assigned Claims relating to such Assigning Lender assigned on such Trigger Date, which money or property shall be delivered in the form in which it is received by such Non-Assigning Lender and without interest. (ii) Each Lender agrees that, upon delivery of a notice (a "Third-Party Assignment Notice") by an Assigning Lender to the Administrative Agent of an intention of such Assigning Lender to assign pursuant to Section 9.04 all or a portion of such Assigning Lender's Facility Claims (which Third-Party Assignment Notice shall specify the amount of such Facility Claims to be assigned (such amount, the "Third-Party Assignment Amount") and the proposed assignee thereof) to a third party that is not an Affiliate of such Assigning Lender or another Assigning Lender pursuant to a bona fide assignment (such an assignment, a "Third-Party Assignment"), each Lender holding Assigned Claims relating to such Assigning Lender shall be deemed to have assigned to such Assigning Lender, effective immediately prior to the effectiveness of such Third-Party Assignment under Section 9.04, such Assigned Claims or, if less, such Lender's pro rata share (based on the aggregate amount of the Assigned Claims relating to such Assigning Lender held by such Lenders) of the Third-Party Assignment Amount solely in consideration for the termination of such Lender's obligations pursuant to clause (b)(i) and, to the extent applicable, any obligations assumed by such Lender pursuant to clause (b)(iii) in respect of the Assigned Claims deemed assigned pursuant to this sentence. The Administrative Agent agrees promptly to give notice of each Third-Party Assignment Notice to each Lender that holds Assigned Claims relating to the Assigning Lender that delivered such Third-Party Assignment Notice. (iii) Each Lender agrees that upon any assignment by it of all or any part of its Facility Claims (other than Assigned Claims) pursuant to Section 9.04, a pro rata portion (based on the proportion of such Lender's Credit Exposure being assigned thereby) of the Assigned Claims relating to each Assigning Lender held by such Lender immediately prior to the effectiveness of such assignment pursuant to Section 9.04 shall be deemed upon effectiveness of such assignment to have been assigned to the assignee specified in the applicable Assignment and Assumption solely in consideration for the assumption by such assignee of such Lender's obligations pursuant to clause (b)(i) and, to the extent applicable, any obligations assumed by such Lender pursuant to this clause (b)(iii) in respect of such pro rata portion of such Assigned Claims. Each Lender agrees that Assigned Claims may not be assigned or otherwise disposed of other than pursuant to this Section 9.14(b) or Section 9.14(c). (c) Upon delivery by the Administrative Agent to an Assigning Lender (with a copy to each of the other Lenders) of a notice pursuant to this Section 9.14(c), each Lender holding Assigned Claims relating to such Assigning Lender shall be deemed as of the date of such notice to have assigned all such Assigned Claims to such Assigning Lender and such Lender's obligations pursuant to clause (b)(i) and, to the extent applicable, any obligations assumed by such Lender pursuant to this clause (b)(iii), in each case relating to such Assigned Claims shall automatically terminate as of such date. Upon the receipt of notice from an Assigning Lender of the failure of one of the conditions contained in the last sentence of Section 9.14(a) to be satisfied with respect to such Assigning Lender, the Administrative Agent shall promptly deliver the notice specified in the first sentence of this Section 9.14(c) with respect to such Assigning Lender. (d) Each Lender agrees to take, and to cause its Affiliates to take, such other actions reasonably required by the Administrative Agent to effectuate the intent of this Section 9.14. (e) Except for the recordation in the Register by the Administrative Agent of each deemed assignment pursuant to this Section 9.14, Section 9.04 shall not apply to any deemed assignment pursuant to this Section 9.14. 71 SECTION 9.15. Obligations Joint and Several. (a) Each Borrower agrees that it shall, jointly with each other Borrower and severally, be liable for all the Obligations. Each Borrower further agrees that the Obligations of any other Borrower may be extended and renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its agreement hereunder notwithstanding any extension or renewal of any Obligation of any other Borrower. Upon payment by a Borrower of any sums as provided above, all rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. 72 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. DENNY'S, INC., by /s/ Kenneth E. Jones -------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer DENNY'S REALTY, INC., by /s/ Kenneth E. Jones -------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer DENNY'S CORPORATION, by /s/ Kenneth E. Jones -------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer DENNY'S HOLDINGS, INC., by /s/ James H. Allyn ------------------ Name: James H. Allyn Title: Secretary/ Vice President DFO, INC., by /s/ Kenneth E. Jones ------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer JPMORGAN CHASE BANK, individually and as Administrative Agent, Collateral Agent and Issuing Bank, by /s/ Gary L. Spevack ------------------ Name: Gary L. Spevack Title: Vice President JPMorgan Chase Bank 73 FOOTHILL CAPITAL CORPORATION, individually and as Syndication Agent, by /s/ Amelie Yehnos ---------------- Name: Amelie Yehnos Title: Vice President THE FOOTHILL GROUP, INC., by /s/ Jeff Nikora -------------- Name: Jeff Nikora Title: Executive Vice President 74 CIT GROUP/BUSINESS CREDIT, INC., by /s/ James A. Brennan, Jr. ------------------------ Name: James A. Brennan, Jr. Title: Vice President 75 TRANSAMERICA BUSINESS CAPITAL CORPORATION, by /s/ Robert Capasso ------------------ Name: Robert Capasso Title: SVP 76 FARALLON DINING INVESTORS III, LLC by FARALLON CAPITAL MANAGEMENT, L.L.C., by /s/ William I. Mellin --------------------- Name: William I. Mellin Title: Managing Member EX-99.H 4 guarantee.txt 8-K ATTACHMENT NEW CREDIT AGREEMENT DEC 02 1 - -------------------------------------------------------------------------------- GUARANTEE AND COLLATERAL AGREEMENT dated as of December 16, 2002, among DENNY'S CORPORATION, DENNY'S HOLDINGS, INC., DENNY'S, INC., DENNY'S REALTY, INC., each other Subsidiary Loan Party and JPMORGAN CHASE BANK, as Collateral Agent - -------------------------------------------------------------------------------- 2 Table of Contents Page ARTICLE I Definitions SECTION 1.01. Credit Agreement...............................................1 ---------------- SECTION 1.02. Other Defined Terms............................................2 ------------------- ARTICLE II Guarantee SECTION 2.01. Guarantee......................................................7 SECTION 2.02. Guarantee of Payment...........................................7 -------------------- SECTION 2.03. No Limitations, Etc............................................7 -------------------- SECTION 2.04. Reinstatement.................................................11 ------------- SECTION 2.05. Agreement To Pay; Subrogation.................................11 ----------------------------- SECTION 2.06. Information............................................. .....11 ----------- ARTICLE III Pledge of Securities SECTION 3.01. Pledge........................................................12 ------ SECTION 3.02. Delivery of the Pledged Collateral............................13 ---------------------------------- SECTION 3.03. Representations, Warranties and -------------------------------- Covenants...............................................13 --------- SECTION 3.04. Certification of Limited Liability Company ------------------------------------------- and Limited Partnership Interests.......................15 --------------------------------- SECTION 3.05. Registration in Nominee Name; ------------------------------ Denominations...........................................15 ------------- SECTION 3.06. Voting Rights; Dividends and ----------------------------- Interest, etc...........................................15 ------------- ARTICLE IV Security Interests in Personal Property SECTION 4.01. Security Interest.............................................17 ----------------- SECTION 4.02. Representations and Warranties................................19 ------------------------------ SECTION 4.03. Covenants.....................................................22 --------- SECTION 4.04. Other Actions.................................................27 ------------- SECTION 4.05. Covenants Regarding Patent, Trademark and ------------------------------------------ Copyright Collateral....................................32 -------------------- 2 ARTICLE V Remedies SECTION 5.01. Remedies Upon Default.........................................34 --------------------- SECTION 5.02. Application of Proceeds.......................................36 ----------------------- SECTION 5.03. Grant of License to Use Intellectual ------------------------------------- Property.................................37 -------- SECTION 5.04. Securities Act, etc...........................................38 -------------------- ARTICLE VI Indemnity, Subrogation and Subordination SECTION 6.01. Indemnity and Subrogation.....................................40 ------------------------- SECTION 6.02. Contribution and Subrogation..................................40 ---------------------------- SECTION 6.03. Subordination.................................................41 ------------- ARTICLE VII Miscellaneous SECTION 7.01. Notices.......................................................41 ------- SECTION 7.02. Security Interest Absolute....................................41 -------------------------- SECTION 7.03. Survival of Agreement.........................................42 --------------------- SECTION 7.04. Binding Effect; Several Agreement.............................42 --------------------------------- SECTION 7.05. Successors and Assigns........................................42 ---------------------- SECTION 7.06. Collateral Agent's Fees and Expenses; ------------------------------------- Indemnification.........................................43 --------------- SECTION 7.07. Collateral Agent Appointed --------------------------- Attorney-in-Fact........................................43 ---------------- SECTION 7.08. GOVERNING LAW.................................................44 ------------- SECTION 7.09. Waivers; Amendment............................................45 ------------------ SECTION 7.10. WAIVER OF JURY TRIAL..........................................45 -------------------- SECTION 7.11. Severability..................................................46 ------------ SECTION 7.12. Counterparts..................................................46 ------------ SECTION 7.13. Headings......................................................46 -------- SECTION 7.14. Jurisdiction; Consent to Service -------------------------------- of Process..............................................46 ---------- SECTION 7.15. Termination or Release........................................47 ---------------------- SECTION 7.16. Additional Subsidiaries.......................................48 ----------------------- SECTION 7.17. Right of Setoff...............................................48 --------------- 3 Schedules - --------- Schedule I Subsidiary Loan Parties Schedule II Capital Stock; Debt Securities Schedule III Intellectual Property Schedule IV Insurance Requirements Exhibits - -------- Exhibit I Form of Supplement to the Guarantee and Collateral Agreement Exhibit II Form of Perfection Certificate Exhibit III Form Of Deposit Account Control Agreement 1 GUARANTEE AND COLLATERAL AGREEMENT dated as of December 16, 2002 (this "Agreement"), among Denny's, Inc., a California corporation, and --------- Denny's Realty, Inc., a Delaware corporation (each of the foregoing individually, a "Borrower" and collectively, the "Borrowers"), Denny's ------- --------- Corporation, a Delaware corporation ("Parent"), Denny's Holdings, Inc., a New ------ York corporation, each other Subsidiary Loan Party (as defined in the Credit Agreement) and JPMORGAN CHASE BANK, a New York banking corporation ("JPMCB"), ----- as Collateral Agent (in such capacity, the "Collateral Agent") for the ---------------- Secured Parties (as defined below). Reference is made to the Credit Agreement dated as of December 16, 2002 (as amended, supplemented, waived or otherwise modified from time to time, the "Credit Agreement"), among the Borrowers, Parent, Denny's Holdings, ---------------- Inc., a New York corporation ("Denny's Holdings"), and DFO, Inc., a Delaware ---------------- corporation, as Guarantors, the Lenders party thereto (the "Lenders"), JPMCB, as ------- Administrative Agent and Foothill Capital Corporation, a California corporation ("Foothill"), as Syndication Agent. The Lenders have agreed to extend credit to -------- the Borrowers subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Parent and the Subsidiary Loan Parties are affiliates of the Borrowers, will derive substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows: ARTICLE I Definitions ----------- SECTION 1.01. Credit Agreement. ---------------- (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Credit Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings specified therein; the term "instrument" shall have the meaning specified in Article 9 of the New York UCC. 2 (b) The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Agreement. SECTION 1.02. Other Defined Terms. -------------------- As used in this Agreement, the following terms have the meanings specified below: "Account Debtor" -------------- means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account. "Article 9 Collateral" -------------------- has the meaning assigned to such term in Section 4.01. "Claiming Guarantor" ------------------ has the meaning assigned to such term in Section 6.02. "Collateral" ---------- means Article 9 Collateral and Pledged Collateral. "Concentration Account" --------------------- means the cash collateral account established at the office of JPMCB located at 270 Park Avenue, New York, NY 10017, in the name of the Collateral Agent, Account No. 323-089257. "Contributing Guarantor" ---------------------- has the meaning assigned to such term in Section 6.02. "Copyright License" ----------------- means any written agreement, now or hereafter in effect, granting any right to any third party under any copyright now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting any right to any Grantor under any copyright now or hereafter owned by any third party, and all rights of any Grantor under any such agreement. "Copyrights" ---------- means all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise; and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including those listed on Schedule III. "Credit Agreement" ---------------- has the meaning assigned to such term in the preliminary statement of this Agreement. 3 "Deposit Account Bank" -------------------- has the meaning assigned to such term in Section 4.04(b). "Deposit Account Control Agreement" --------------------------------- means an agreement substantially in the form of Exhibit III, or any other form approved by the Collateral Agent, among a Grantor, the Collateral Agent and a Sub-Agent. "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 of whatever nature and rights, warrants or options to acquire any of the foregoing. "Federal Securities Laws" ----------------------- has the meaning assigned to such term in Section 5.04. "General Fund Account" -------------------- means the general fund account established at the office of JPMCB located at 270 Park Avenue, New York, NY 10017, in the name of Denny's Corporation, Account No. 323-073360. "General Intangibles" ------------------- means all "General Intangibles" as defined in the New York UCC, including all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, including corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements, Franchise Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts. "Grantors" -------- means Parent, the Borrowers and the Subsidiary Loan Parties. "Guarantors" ---------- means Parent, the Borrowers and the Subsidiary Loan Parties. "Intellectual Property" --------------------- means all intellectual and similar property of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, domain names, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments 4 or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing. "Investment Property" ------------------- means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract or commodity account, provided, that for -------- purposes of this Agreement, the capital stock of Simeus Holdings, Inc. owned by Denny's Holdings and scheduled on Schedule 6.04 to the Credit Agreement shall not be Investment Property. "License" ------- means any Patent License, Trademark License, Copyright License or other license or sublicense agreement to which any Grantor is a party, other than those license or sublicense agreements (a) in existence on the date hereof and listed on Schedule V and (b) entered into after the date hereof, in each case that by their terms prohibit a grant of a security interest by such Grantor as licensee thereunder provided, that (i) in the case of clause (b), such Grantor has used -------- commercially reasonable efforts to prevent the inclusion of such a prohibition over such license or sublicense and (ii) in the case of any licenses or sublicenses excluded pursuant to clauses (a) and (b), such licenses or sublicenses, individually or in the aggregate, are not material to the business of such Grantor. For the avoidance of doubt, any money or property received in respect of any license that is not a License shall not be excluded from the Collateral solely as a result of the exclusion of such license from the Collateral. "Loan Document Obligations" ------------------------- means (a) the due and punctual payment by the Borrowers of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrowers under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations of the Borrowers to any of the Secured Parties under the Credit Agreement and each of the other Loan Documents, including obligations to pay fees, expense and reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, 5 insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrowers under or pursuant to the Credit Agreement and each of the other Loan Documents and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents. "New York UCC" ------------ means the Uniform Commercial Code as from time to time in effect in the State of New York. "Obligations" ----------- means (a) Loan Document Obligations, (b) the due and punctual payment and performance of all obligations of each Loan Party under each Hedging Agreement that, in either case, if and to the extent permitted by the Credit Agreement (i) is in effect on the Closing Date with a counterparty that is a Lender or an Affiliate of a Lender as of the Closing Date or (ii) is entered into after the Closing Date with any counterparty that is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is entered into and (c) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to the Administrative Agent or any of its Affiliates and arising from treasury, depositary and cash management services in connection with any automated clearinghouse transfers of funds. "Patent License" -------------- means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement. "Patents" ------- means all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in any other country, including those listed on Schedule III; and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, 6 including the right to make, use and/or sell the inventions disclosed or claimed therein. "Perfection Certificate" ---------------------- means a certificate substantially in the form of Exhibit II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Financial Officer and the chief legal officer of Parent. "Pledged Collateral" ------------------ has the meaning assigned to such term in Section 3.01. "Pledged Debt Securities" ----------------------- has the meaning assigned to such term in Section 3.01. "Pledged Securities" ------------------ means any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral. "Pledged Stock" ------------- has the meaning assigned to such term in Section 3.01. "Secured Parties" --------------- means (a) the Lenders, (b) the Swingline Lenders, (c) the Administrative Agent (and any Affiliate of the Administrative Agent to which any obligation referred to in clause (c) of the definition of the term "Obligations" is owed), (d) the Issuing Bank, (e) each counterparty to any Hedging Agreement entered into with a Loan Party the obligations under which constitute Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and assigns of each of the foregoing. "Security Interest" ----------------- has the meaning assigned to such term in Section 4.01. "Sub-Agent" --------- means a financial institution that has delivered to the Collateral Agent an executed Deposit Account Control Agreement. "Trademark License" ----------------- means any written agreement, now or hereafter in effect, granting to any third party any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement. 7 "Trademarks" ---------- means all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III; (b) all goodwill associated therewith or symbolized thereby; and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill. ARTICLE II Guarantee --------- SECTION 2.01. Guarantee. --------- Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Each Guarantor waives presentment to, demand of payment from and protest to the Borrowers or any other Loan Party of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. SECTION 2.02. Guarantee of Payment. -------------------- Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrowers or any other Person. SECTION 2.03. No Limitations, Etc. -------------------- (a) Except for termination of a Guarantor's obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, 8 limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Administrative Agent, the Collateral Agent or any other Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement; (iii) the failure to perfect any security interest in, or the release of, any security held by the Collateral Agent or any other Secured Party for the Obligations; (iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations; or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). Each Guarantor expressly authorizes the Secured Parties to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder. (b) (i) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of the Borrowers or any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrowers or any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations. The Collateral Agent may, at its election, foreclose on any security held by it by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrowers or any other Loan Party or exercise any other right or remedy available to them against the Borrowers or any other Loan Party, without affecting or impairing in any 9 way the liability of any Guarantor hereunder except to the extent the Obligations have been fully and indefeasibly paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Borrowers or any other Loan Party, as the case may be, or any security. Each Guarantor waives any right it may have to require the Collateral Agent or the Lenders to proceed against any Borrower or any other Guarantor, proceed against or exhaust any security held from any Borrower or any other Guarantor, or pursue any other remedy in their respective power to pursue, as well as any defense based on any claim that Guarantor's obligations exceed or are more burdensome than those of any Borrower. To the extent that the laws of the State of California may be deemed to apply to the Guarantees, the rights which each Guarantor hereby waives include all rights of subordination, reimbursement, indemnification and contribution and any other rights and defenses that are or may become available to such Guarantor by reason of Section 2787 to 2855, inclusive, of the California Civil Code; provided that these waivers shall not limit the express rights of the Guarantors that are set forth in Sections 6.01 and 6.02 hereof. Each Guarantor understands and acknowledges that if the Collateral Agent forecloses judicially or nonjudicially against any real property security for the Obligations, such foreclosure could impair or destroy any right or ability that any Guarantor may have to seek reimbursement, contribution or indemnification for any amounts paid by such Guarantor under its Guarantee. To the extent that the laws of the State of California may be deemed to apply to the Guarantees, each Guarantor further understands and acknowledges that, in the absence of this waiver, such potential impairment or destruction of the Guarantor's rights, if any, may entitle the Guarantor to assert a defense to its Guarantee based on California Code of Civil Procedure ss.580d as interpreted in Union Bank v. Gradsky, (1968) 265 CA 2d 40, 71 CR 64, on the grounds, among --------------------- others, that a lender should be estopped from pursuing a guarantor when the lender's election to foreclose has impaired or destroyed the guarantor's rights of subrogation, reimbursement, contribution or indemnification rights. By execution of this Agreement, each Guarantor intentionally, freely, irrevocably, and unconditionally: (A) waives and relinquishes that defense and agrees that such Guarantor will be liable under its Guarantee even though the 10 Collateral Agent had foreclosed judicially or nonjudicially against any real or personal property collateral for the Obligations or any of the Guarantees; and (B) agrees that such Guarantor will not assert that defense in any action or proceeding which the Collateral Agent or the Lenders may commence to enforce its Guarantee. Without limiting the foregoing, each Guarantor waives all rights and defenses arising out of an election of remedies by the Collateral Agent or the Lenders, even though that election of remedies, such as nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Guarantor's rights of subrogation and reimbursement against the principal or another Guarantor by the operation of Section 580d of the California Code of Civil Procedure. To the extent that the laws of the State of California may be deemed to apply to the Guarantees, each Guarantor intentionally, freely, irrevocably and unconditionally waives and relinquishes all rights which may be available to it under any provision of California law or under any California judicial decision, including Section 580a and 726(b) of the California Code of Civil Procedure, to seek to limit the amount of any deficiency judgment or other judgment which may be obtained against such Guarantor under its Guarantee to not more than the amount by which the unpaid Obligations guaranteed hereby exceed the fair market value or fair value of any real or personal property securing said Obligations, including, without limitation, all rights to an appraisement of, judicial or other hearing on, or other determination of the value of said property. (v) To the extent that the laws of the State of California may be deemed to apply to the Guarantees, and without limiting any of the other waivers and provisions set forth herein, if the debt of any Borrower or another Guarantor's Guarantee is secured by real property, each Guarantor hereby intentionally, freely, irrevocably and unconditionally waives all rights and defenses that Guarantor may have because the debt of such Borrower or another Guarantor's Guarantee is secured by real property; this means, among other things: (A) the Collateral Agent and the Lenders may collect from that Guarantor without first foreclosing on any real or personal property collateral pledged by any Borrower or another Guarantor; (B) the amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is determined to be worth more than the sale price; and (C) the Collateral Agent and the Lenders may collect from that Guarantor even if the Collateral Agent, by foreclosing on the real property collateral, has destroyed 11 any right the Guarantor may have to collect from such Borrower or another Guarantor. This is an unconditional and irrevocable waiver of any rights and defenses that such Guarantor may have under circumstances where the debt of any Borrower or another Guarantor's Guarantee is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. SECTION 2.04. Reinstatement. -------------- Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Administrative Agent or any other Secured Party upon the bankruptcy or reorganization of the Borrowers, any other Loan Party or otherwise. SECTION 2.05. Agreement To Pay; Subrogation. ----------------------------- In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrowers or any other Loan Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against the Borrowers or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI. SECTION 2.06. Information. ----------- Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrowers' and each other Loan Party's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks. 12 ARTICLE III Pledge of Securities -------------------- SECTION 3.01. Pledge. ------ As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in all of such Grantor's right, title and interest in, to and under (a) the shares of capital stock and other Equity Interests owned by it and listed on Schedule II and any other Equity Interests obtained in the future by such Grantor and the certificates representing all such Equity Interests (the "Pledged Stock"); ------------- provided that the Pledged Stock shall not include (i) more than 65% of the - -------- issued and outstanding voting Equity Interests of any Foreign Subsidiary to the extent the pledge of any greater percentage would result in adverse tax consequences to Parent, (ii) to the extent applicable law requires that a subsidiary of such Grantor issue directors' qualifying shares, such qualifying shares or (iii) any Equity Interests received by Denny's Holdings in respect of shares of Series A Cumulative Convertible Preferred Stock of Simeus Holdings, Inc. to the extent that on the date such Equity Interests are received the Equity Rights Agreement entered into as of August 30, 2001, by and among Simeus Holdings, Inc. and Denny's Holdings restricts the pledge of such Equity Interest; (b)(i) the debt securities listed opposite the name of such Grantor on Schedule II, (ii) any debt securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments, if any, evidencing such debt securities (the "Pledged Debt Securities"); (c) all other property ----------------------- that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 3.01; (d) subject to Section 3.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the s ecurities referred to in clauses (a) and (b) above and the property referred to in clause (c) above; (e) subject to Section 3.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the "Pledged Collateral"). ------- ---------- 13 TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, forever; subject, however, to the ---------------- terms, covenants and conditions hereinafter set forth. SECTION 3.02. Delivery of the Pledged Collateral. ----------------------------------- (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities. (b) Each Grantor will cause any Indebtedness for borrowed money owed to such Grantor by any Person to be evidenced by a duly executed promissory note that is pledged and delivered to the Collateral Agent pursuant to the terms hereof. (c) Upon delivery to the Collateral Agent, (i) any Pledged Securities shall be accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property composing part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which schedule shall be attached hereto as Schedule II and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered. SECTION 3.03. Representations, Warranties and ------------------------------- Covenants. The Grantors jointly and severally represent, - ---------- warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that: (a) Schedule II correctly sets forth the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by such Pledged Stock and includes all Equity Interests, debt securities and promissory notes required to be pledged hereunder in order to satisfy the Collateral and Guarantee Requirement; 14 (b) the Pledged Stock and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable (ii) in the case of Pledged Debt Securities other than Pledged Debt Securities issued by Parent, any Borrower or any other Subsidiary, to the knowledge of the Grantor pledging any such Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof and (iii) in the case of Pledged Debt Securities issued by Parent, any Borrower or any other Subsidiary, are legal, valid and binding obligations of the issuer thereof; (c) except for the security interests granted hereunder, each Grantor (i) is and, subject to any transfers made in compliance with the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule II as owned by such Grantor, (ii) holds the same free and clear of all Liens, other than Liens created by this Agreement and Permitted Liens, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens created by this Agreement and Permitted Liens and (iv) will defend its title or interest hereto or therein against any and all Liens (other than Liens created by this Agreement and Permitted Liens), however arising, of all Persons; (d) except for restrictions and limitations imposed by the Loan Documents, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder; (e) each Grantor has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated; (f) no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect); 15 (g) by virtue of the execution and delivery by the Grantors of this Agreement, when any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement, the Collateral Agent will obtain a legal, valid and perfected first priority lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations; and (h) the pledge effected hereby is effective to vest in the Collateral Agent, for the ratable benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein. SECTION 3.04. Certification of Limited Liability Company and ---------------------------------------------- Limited Partnership Interests. - ----------------------------- Each interest in any limited liability company or limited partnership controlled by any Grantor and pledged hereunder shall be represented by a certificate, shall be a "security" within the meaning of Article 8 of the New York UCC and shall be governed by Article 8 of the New York UCC. SECTION 3.05. Registration in Nominee Name; Denominations. -------------------------------------------- The Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent. Each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor. The Collateral Agent shall at all times have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement. SECTION 3.06. Voting Rights; Dividends and Interest, etc. ------------------------------------------- a) Unless and until an Event of Default shall have occurred and be continuing: (i) Each Grantor shall be entitled to exercise any all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided that such rights and powers shall not be exercised -------- in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Securities, the rights and 16 remedies of any of the Collateral Agent or the other Secured Parties under this Agreement, the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same. (ii) The Collateral Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above and to receive the cash dividends it is entitled to receive pursuant to subparagraph (iii) below. (iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws; provided that any noncash -------- dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement). (b) Upon the occurrence and during the continuance of an Event of Default, all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such < 17 dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. After all Events of Default have been cured or waived and the Borrowers have delivered to the Collateral Agent a certificate to that effect, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account. (c) Upon the occurrence and during the continuance of an Event of Default, all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Collateral - -------- Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived and the Borrowers have delivered to the Collateral Agent a certificate to that effect, each Grantor will have the right to exercise the voting and consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above. ARTICLE IV Security Interests in Personal Property --------------------------------------- SECTION 4.01. Security Interest. ------------------ (a) As security for the payment or performance, as the case may be, 18 in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest (the "Security Interest") in all right, title and interest in or to any and all ----------------- of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the "Article 9 --------- Collateral"): - ---------- (i) all Accounts; (ii) all Chattel Paper; (iii) all cash and Deposit Accounts; (iv) all Documents; (v) all Equipment; (vi) all General Intangibles; (vii) all Instruments; (viii) all inventory (ix) all Investment Property; (x) all Letter-of-credit rights; (xi) all books and records pertaining to the Article 9 Collateral; and (xiii) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing. (b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (i) whether such Grantor is an organization, the type of organization and any 19 organizational identification number issued to such Grantor, (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates and (iii) a description of collateral that describes such property in any other manner as the Collateral Agent may reasonably determine is necessary or advisable to ensure the perfection of the security interest in the Article 9 Collateral granted to the Collateral Agent, including describing such property as "all assets" or "all property". Each Grantor agrees to provide such information to the Collateral Agent promptly upon request. Each Grantor also ratifies its authorization for the Collateral Agent to file in any relevant jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof. The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party. (c) The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral. SECTION 4.02. Representations and Warranties. ------------------------------- The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that: (a) Each Grantor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than any consent or approval that has been obtained and is in full force and effect. 20 (b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name of each Grantor, is correct and complete as of the Closing Date. Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Article 9 Collateral have been prepared by the Collateral Agent based upon the information provided to the Collateral Agent in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule 6 to the Perfection Certificate (or specified by notice from the Borrowers to the Collateral Agent after the Closing Date in the case of filings, recordings or registrations required by Section 5.12 or 5.14 of the Credit Agreement), and constitute all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in Article 9 Collateral consisting of United States Patents, Trademarks and Copyrights) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements or amendments. Each Grantor represents and warrants that a fully executed agreement in the form hereof containing a description of all Article 9 Collateral consisting of Intellectual Property with respect to United States registered Patents (and Patents for which United States registration applications are pending), United States registered Trademarks (and Trademarks for which United States registration applications are pending) and United States registered Copyrights (and Copyrights for which United States registration applications are pending) has been delivered to the Collateral Agent for recording with the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations thereunder, as applicable, and 21 otherwise as may be required pursuant to the laws of any other applicable jurisdiction and reasonably requested by the Collateral Agent, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Article 9 Collateral consisting of such Intellectual Property in which a security interest may be perfected by recording with the United States Patent and Trademark Office and the United States Copyright Office, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or registration or application for registration thereof) acquired or developed after the date hereof). (c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Obligations, (ii) subject to the filings described in Section 4.02(b), a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) a security interest that shall be perfected in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, and otherwise as may be required pursuant to the laws of any other applicable jurisdiction. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens expressly permitted to be prior to the Security Interest pursuant to Section 6.02 of the Credit Agreement. (d) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, other than Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor 22 assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (iii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement. (e) None of the Grantors holds any Commercial Tort Claim as of the Closing Date except as indicated on the Perfection Certificate. (f) All Accounts have been originated by the Grantors and all Inventory has been acquired by the Grantors in the ordinary course of business. SECTION 4.03. Covenants. --------- (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change (i) in its corporate name, (ii) in the location of any office in which it maintains books or records relating to Article 9 Collateral owned by it or any office or facility at which Article 9 Collateral owned by it is located (including the establishment of any new such office or facility), (iii) in its identity or type of organization or corporate structure, (iv) in its Federal Taxpayer Identification Number or organizational identification number or (v) in its jurisdiction of organization. Each Grantor agrees promptly to provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the immediately preceding sentence. Each Grantor agrees not to effect or permit any change referred to in the first sentence of this paragraph (a) unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Article 9 Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Article 9 Collateral owned or held by such Grantor is damaged or destroyed. (b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Article 9 Collateral owned by it as is 23 consistent with its current practices and in accordance with reasonably prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include complete accounting records indicating all payments and proceeds received with respect to any part of the Article 9 Collateral, and, at such time or times as the Collateral Agent may reasonably request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail satisfactory to the Collateral Agent showing the identity, amount and location of any and all Article 9 Collateral. (c) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a) of the Credit Agreement, the Borrower shall deliver to the Collateral Agent a certificate executed by a Financial Officer and the chief legal officer of the Borrower (i) setting forth the information required pursuant to Schedule 6 of the Perfection Certificate or confirming that there has been no change in such information since the date of such certificate or the date of the most recent certificate delivered pursuant to this Section 4.03(c) and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) of this Section 4.03(c) to the extent necessary to protect and perfect the Security Interest for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). Each certificate delivered pursuant to this Section 4.03(c) shall identify in the format of Schedule III to this Agreement all Intellectual Property of any Grantor in existence on the date thereof and not then listed on such Schedules or previously so identified to the Collateral Agent. (d) Each Grantor shall, at its own expense, take any and all actions necessary to defend title to the Article 9 Collateral against all Persons and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien not expressly permitted to be prior to the Security Interest pursuant to Section 6.02 of the Credit Agreement. 24 (e) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be immediately pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent. Without limiting the generality of the foregoing, each Grantor hereby authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule III or adding additional schedules hereto to specifically identify any asset or item that may constitute Copyrights, Licenses, Patents or Trademarks; provided that any -------- Grantor shall have the right, exercisable within 10 days after it has been notified by the Collateral Agent of the specific identification of such Article 9 Collateral, to advise the Collateral Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Article 9 Collateral. Each Grantor agrees that it will use its commercially reasonable efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct with respect to such Article 9 Collateral within 30 days after the date it has been notified by the Collateral Agent of the specific identification of such Article 9 Collateral. (f) The Collateral Agent and such Persons as the Collateral Agent may reasonably designate shall have the right, at the Grantors' own cost and expense, to inspect the Article 9 Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Article 9 Collateral is located, at reasonable times and intervals during normal business hours upon reasonable advance notice to the respective Grantor, to discuss the Grantors' affairs with the officers of the Grantors and their independent accountants and to verify under reasonable procedures, in accordance with Section 5.07 of the Credit Agreement, the validity, amount, quality, quantity, value, condition and status of, or any other 25 matter relating to, the Article 9 Collateral, including, in the case of Accounts or Article 9 Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such Article 9 Collateral for the purpose of making such a verification. Subject to Section 9.12 of the Credit Agreement, the Collateral Agent shall have the right to share any information it gains from such inspection or verification with any Secured Party. (g) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided, however, that nothing in -------- this Section 4.03(g) shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents. (h) If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent to the extent permitted by any contracts or arrangements to which such property is subject. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest. (i) Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance. 26 (j) None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral, except as expressly permitted by the Credit Agreement. None of the Grantors shall make or permit to be made any transfer of the Article 9 Collateral and each Grantor shall remain at all times in possession of the Article 9 Collateral owned by it, except that (i) Inventory may be sold in the ordinary course of business and (ii) unless and until the Collateral Agent shall notify the Grantors that an Event of Default shall have occurred and be continuing and that during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Article 9 Collateral (which notice may be given by telephone if promptly confirmed in writing), the Grantors may use and dispose of the Article 9 Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Credit Agreement or any other Loan Document. Without limiting the generality of the foregoing, each Grantor agrees that it shall not permit any Inventory to be in the possession or control of any warehouseman, bailee, agent or processor at any time unless such warehouseman, bailee, agent or processor shall have been notified of the Security Interest and shall have acknowledged in writing, in form and substance reasonably satisfactory to the Collateral Agent, that such warehouseman, agent, bailee or processor holds the Inventory for the benefit of the Collateral Agent subject to the Security Interest and shall act upon the instructions of the Collateral Agent without further consent from the Grantor, and that such warehouseman, bailee, agent or processor further agrees to waive and release any Lien held by it with respect to such Inventory, whether arising by operation of law or otherwise; provided that such written -------- acknowledgment shall not be required until the fair market value of all Inventory in such possesion or under such control exceeds $1,000,000 in aggregate amount. (k) None of the Grantors will, without the Collateral Agent's prior written consent, grant any extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with its current practices and in accordance with reasonably prudent and standard practice used in industries that are the same as or similar to those in which such Grantor is engaged. 27 (l) The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance with the requirements set forth in Schedule IV hereto and Section 5.02 of the Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in connection with this Section 4.03(l), including reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby. (m) Each Grantor shall maintain, in form and manner reasonably satisfactory to the Collateral Agent, its Chattel Paper and its books, records and documents evidencing or pertaining thereto with an appropriate reference to the fact that such Chattel Paper has been assigned to the Collateral Agent for the benefit of the Secured Parties and that the Collateral Agent has a security interest therein. SECTION 4.04. Other Actions. ------------- In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent's security interest in the Article 9 Collateral, each Grantor agrees, in each case at such Grantor's own expense, to take the following actions with respect to the following Article 9 Collateral: (a) Instruments and Tangible Chattel Paper. If --------------------------------------- any Grantor shall at any time hold or acquire any Instruments or Tangible Chattel Paper, such Grantor shall forthwith endorse, assign and deliver the same to 28 the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request. (b) Deposit Accounts. ---------------- (i) Each Grantor shall pay or cause to be paid, at or prior to the end of each Business Day, (x) to the Collateral Agent for deposit in a Concentration Account or (y) to a bank with which such Grantor maintains a deposit account (a "Deposit Account Bank") for deposit in such deposit account (A) all Proceeds of Collateral in which a security interest is granted hereunder and (B) all other cash of such Grantor. (ii) (x) For deposit accounts holding in the aggregate at least 80% of all amounts held by all Grantors in all deposit accounts that are maintained as of the Closing Date, the applicable Grantors shall execute and deliver, and cause the Deposit Account Bank in which any such deposit account is maintained to execute and deliver, Deposit Account Control Agreements and (y) for all deposit accounts that the Grantors at any time open after the Closing Date, the applicable Grantors shall execute and deliver, and use their best efforts to cause the Deposit Account Bank in which any such deposit account is maintained to execute and deliver, a Deposit Account Control Agreement, provided, that the Grantors -------- shall not permit the aggregate amount held in any deposit account opened after the Closing Date for which the Deposit Account Bank has not executed and delivered a Deposit Account Control Agreement to exceed $10,000. The Grantors shall not permit the aggregate amounts held in accounts for which no Control Agreement has been executed by the Deposit Account Bank and delivered to the Administrative Agent to exceed $500,000. The provisions of this clause (ii) shall not apply to (A) any Concentration Account and (B) any Deposit Account Bank for which the Collateral Agent is the depositary bank. (iii) Each Grantor shall instruct the Deposit Account Banks with which such Grantor maintains deposit accounts (whether or not any such Deposit Account Bank has a Deposit Account Control Agreement) to pay to the Collateral Agent for deposit in a Concentration Account, at the end of 29 each Business Day, in same day funds, an amount equal to the balance of such deposit accounts. (iv) The Concentration Account shall be under the sole dominion and control of the Collateral Agent. Each Grantor acknowledges and agrees that such Grantor has no right of withdrawal from the Concentration Account. So long as no Event of Default has occurred and is continuing, the Collateral Agent shall promptly remit any funds on deposit in the Concentration Account to the General Fund Account and Parent shall have the right, at any time and from time to time, to withdraw such amounts from the General Fund Account that, in the exercise of its prudent business judgment, it shall deem to be necessary or advisable for the conduct of its business operations in the ordinary course. (v) Effective upon notice to the Grantors from the Collateral Agent after the occurrence and during the continuance of an Event of Default (which notice may be given by telephone if promptly confirmed in writing), the Concentration Account will, without any further action on the part of any Grantor or the Collateral Agent, convert into a closed lockbox account under the sole dominion and control of the Collateral Agent in which funds are held subject to the rights of the Collateral Agent hereunder. (vi) Each Grantor acknowledges and agrees that (x) the funds on deposit in the deposit accounts (including in the Concentration Account) shall continue to be collateral security for all the Obligations and (y) upon the occurrence and during the continuance of an Event of Default and if expressly consented to in writing by all Lenders (which consent may not be unreasonably withheld), the funds on deposit in such deposit accounts (including in the Concentration Account) shall be applied as provided in Section 5.02. Each Grantor irrevocably authorizes the Collateral Agent to (A) notify each Sub-Agent of the occurrence of an Event of Default and (B) following the occurrence of an Event of Default and if expressly consented to in writing by all Lenders (which consent may not be unreasonably withheld), instruct each Sub-Agent to apply the funds on deposit in such deposit account in accordance with Section 5.02. Each Grantor hereby 30 agrees to irrevocably direct each Sub-Agent to comply with the instructions of the Collateral Agent with respect to the relevant deposit account without further consent from the Grantor or any other Person. (c) Investment Property. ------------------- Except to the extent otherwise provided in Article III, if any Grantor shall at any time hold or acquire any Certificated Securities, such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time specify. If any securities now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall immediately notify the Collateral Agent thereof and, at the Collateral Agent's request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Collateral Agent to become the registered owner of the securities. If any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by any Grantor are held by such Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall immediately notify the Collateral Agent thereof and, at the Collateral Agent's request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (A) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from the Collateral Agent to such securities intermediary as to such securities or other investment property or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Collateral Agent to such commodity intermediary, in each case without further consent of any Grantor or such nominee, or (B) in the case of Financial Assets or other Investment Property held through a securities intermediary, arrange for the Collateral Agent to become the entitlement holder with respect to such investment property, with the Grantor being permitted, only with the consent of the Collateral Agent, to exercise rights to withdraw or otherwise deal with such investment property. The 31 Collateral Agent agrees with each of the Grantors that the Collateral Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing or, after giving effect to any such investment and withdrawal rights, would occur. The provisions of this paragraph (c) shall not apply to any financial assets credited to a securities account for which the Collateral Agent is the securities intermediary. (d) Electronic Chattel Paper and Transferable Records. ------------------------------------------------- If any Grantor at any time holds or acquires an interest in any Electronic Chattel Paper or any "transferable record", as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof and, at the request of the Collateral Agent, shall take such action as the Collateral Agent may reasonably request to vest in the Collateral Agent control under New York UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent's loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record. (e) Letter-of-Credit Rights. ------------------------ If any Grantor is at any time a beneficiary under a letter of credit now or hereafter issued in favor of such Grantor, such 32 Grantor shall promptly notify the Collateral Agent thereof and, at the request and option of the Collateral Agent, such Grantor shall, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under the letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of the letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be paid to the applicable Grantor unless an Event of Default has occurred or is continuing. (f) Commercial Tort Claims. ---------------------- If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated to exceed $1,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and grant to the Collateral Agent in writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent. SECTION 4.05. Covenants Regarding Patent, Trademark and ----------------------------------------- Copyright Collateral. - -------------------- (a) Each Grantor agrees that it will not do any act or omit to do any act (and will exercise commercially reasonable efforts to prevent its licensees from doing any act or omitting to do any act) whereby any Patent that is material to the conduct of such Grantor's business may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws. (b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor's business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third-party rights. 33 (c) Each Grantor (either itself or through its licensees or its sublicensees) will, for each work covered by a Copyright material to the conduct of such Grantor's business, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws. (d) Each Grantor shall notify the Collateral Agent immediately if it knows or has reason to know that any Patent, Trademark or Copyright material to the conduct of such Grantor's business may become abandoned, lost or dedicated to the public, or of any materially adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor's ownership of any such Patent, Trademark or Copyright, its right to register the same or its right to keep and maintain the same. (e) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for any Patent or for the registration of any Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, unless it promptly informs the Collateral Agent thereof, and, upon the request of the Collateral Agent, executes and delivers any and all agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral Agent's security interest in such Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable. (f) Each Grantor will take all necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of such Grantor's 34 business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancelation proceedings against third parties. (g) In the event that any Grantor has reason to believe that any Article 9 Collateral consisting of a material Patent, Trademark or Copyright has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor shall promptly notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Article 9 Collateral. (h) Upon and during the continuance of an Event of Default, each Grantor shall use commercially reasonable efforts to obtain all requisite consents or approvals from the licensor under each Copyright License, Patent License or Trademark License to effect the assignment of all such Grantor's right, title and interest thereunder to the Collateral Agent or its designee. ARTICLE V Remedies -------- SECTION 5.01. Remedies Upon Default. --------------------- Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantors to the Collateral Agent or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained); and (b) with or without legal process and with or without prior notice or demand for 35 performance, to take possession of the Article 9 Collateral and without liability for trespass to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale of Collateral the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives and releases (to the extent permitted by law) all rights of redemption, stay, valuation and appraisal that such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Collateral Agent shall give the applicable Grantors 10 days' written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent's intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall 36 determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section 5.01, any Secured Party may bid for or purchase for cash, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. SECTION 5.02. Application of Proceeds. ------------------------ The Collateral Agent shall apply the proceeds of any collection or sale of Collateral, as well as any Collateral consisting of cash, as follows: 37 FIRST, to the payment of all costs and expenses incurred by the Administrative Agent and the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent or the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document; SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and THIRD, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the purchase money by the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. SECTION 5.03. Grant of License to Use Intellectual Property. --------------------------------------------- For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the 38 compilation or printout thereof. The use of such license by the Collateral Agent may be exercised, at the option of the Collateral Agent, upon the occurrence and during the continuation of an Event of Default; provided that any license, -------- sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default. SECTION 5.04. Securities Act, etc. -------------------- In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal ------- Securities Laws") with respect to any disposition of the Pledged Collateral - --------------- permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem 39 reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells. SECTION 5.05. Registration, etc. ----------------- Each Grantor agrees that, upon the occurrence and during the continuance of an Event of Default, if for any reason the Collateral Agent desires to sell any of the Pledged Collateral at a public sale, it will, at any time and from time to time, upon the written request of the Collateral Agent, use its commercially reasonable efforts to take or to cause the issuer of such Pledged Collateral to take such action and prepare, distribute and/or file such documents, as are required or advisable in the reasonable opinion of counsel for the Collateral Agent to permit the public sale of such Pledged Collateral. Each Grantor further agrees to indemnify, defend and hold harmless the Administrative Agent, the Collateral Agent, each other Secured Party, any underwriter and their respective officers, directors, affiliates and controlling persons from and against all loss, liability, expenses, costs of counsel (including, without limitation, reasonable fees and expenses to the Collateral Agent of legal counsel), and claims (including the costs of investigation) that they may incur insofar as such loss, liability, expense or claim arises out of or is based upon any alleged untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or in any notification or offering circular, or arises out of or is based upon any alleged omission to state a material fact required to be stated therein or necessary to make the statements in any thereof not misleading, except insofar as the same may have been caused by any untrue statement or omission based upon information furnished in writing to such Grantor or the issuer of such Pledged Collateral by the Collateral Agent or any other Secured Party expressly for use therein. Each Grantor further agrees, upon such written request referred to above, to use its commercially reasonable efforts to qualify, file or register, or cause the issuer of such Pledged Collateral to qualify, file or register, any of the Pledged Collateral under the Blue Sky or other securities laws of such states as may be requested by the Collateral Agent and keep effective, or cause to be kept effective, all such qualifications, filings or registrations. Each Grantor will bear all costs and expenses of carrying out its obligations under this Section 5.05. Each Grantor acknowledges that 40 there is no adequate remedy at law for failure by it to comply with the provisions of this Section 5.05 and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section 5.05 may be specifically enforced. ARTICLE VI Indemnity, Subrogation and Subordination ---------------------------------------- SECTION 6.01. Indemnity and Subrogation. -------------------------- In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), the Borrowers agree that (a) in the event a payment shall be made by any Guarantor under this Agreement in respect of any Obligation, the Borrowers shall, jointly and severally, indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part an Obligation, the Borrowers shall, jointly and severally, indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold. SECTION 6.02. Contribution and Subrogation. ---------------------------- Each Guarantor (a "Contributing Guarantor") agrees (subject to Section 6.03) ---------------------- that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Obligation or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Obligation owed to any Secured Party and such other Guarantor (the "Claiming Guarantor") shall not have been ------------------ fully indemnified by the Borrowers as provided in Section 6.01, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 7.16, the date of the supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the rights of such 41 Claiming Guarantor under Section 6.01 to the extent of such payment. SECTION 6.03. Subordination. ------------- (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. No failure on the part of any Borrower or any Guarantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder. (b) Each Guarantor hereby agrees that all Indebtedness and other monetary obligations owed by it to any other Guarantor or any Subsidiary shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. ARTICLE VII Miscellaneous ------------- SECTION 7.01. Notices. ------- All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Loan Party shall be given to it in care of the Borrowers as provided in Section 9.01 of the Credit Agreement. SECTION 7.02. Security Interest Absolute. -------------------------- All rights of the Collateral Agent hereunder, the Security Interest, the security interest in the Pledged Collateral and all obligations of each Grantor and Guarantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or 42 waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor or Guarantor in respect of the Obligations or this Agreement. SECTION 7.03. Survival of Agreement. ---------------------- All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the execution and delivery of the Loan Documents and the making of any Loans and the issuance of any Letters of Credit, regardless of any investigation made by any Lender or on its behalf and notwithstanding that the Administrative Agent, the Collateral 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 under the Credit Agreement, 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 any Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. SECTION 7.04. Binding Effect; Several Agreement. --------------------------------- This Agreement shall become effective as to any Loan Party when a counterpart hereof executed on behalf of such Loan Party shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Loan Party and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Loan Party, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, except that no Loan Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Loan Party and may be amended, modified, supplemented, waived or released with respect to any Loan Party without the approval of any other Loan Party and without affecting the obligations of any other Loan Party hereunder. SECTION 7.05. Successors and Assigns. ----------------------- Whenever in this Agreement any of the parties hereto is referred to, 43 such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns. SECTION 7.06. Collateral Agent's Fees and Expenses; ------------------------------------ Indemnification. - --------------- (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 9.03 of the Credit Agreement. (b) Without limitation of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Collateral Agent and the other Indemnitees (as defined in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any claim, litigation, investigation or proceeding relating hereto, or to the Collateral, whether or not 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, 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 wilful misconduct of such Indemnitee. (c) Any such amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 7.06 shall be payable on written demand therefor. SECTION 7.07. Collateral Agent Appointed -------------------------- Attorney-in-Fact. - ----------------- Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement 44 and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent's name or in the name of such Grantor: (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (h) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct. SECTION 7.08. GOVERNING LAW. -------------- THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS 45 AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 7.09. Waivers; Amendment. ------------------ (a) No failure or delay by the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in exercising any right, power or remedy hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy, or any abandonment or discontinuance of steps to enforce such a right, power or remedy, preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights, powers and remedies of the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights, powers or remedies that they would otherwise have. No waiver of any provision of this Agreement 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 7.09, 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 the issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement. SECTION 7.10. 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 HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF 46 ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE 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 7.10. SECTION 7.11. Severability. ------------ Any provision of this Agreement 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 in such jurisdiction of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 7.12. Counterparts. ------------ 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, and shall become effective as provided in Section 7.04. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. SECTION 7.13. Headings. --------- Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 7.14 Jurisdiction; Consent to Service of Process. -------------------------------------------- (a) Each of the Loan Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, 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 47 extent permitted by law, 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 Collateral 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 Grantor or Guarantor, or its proper ties, in the courts of any jurisdiction. (b) Each of the Loan Parties hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that 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 (a) of this Section 7.14. 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. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.01. 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 7.15. Termination or Release. ---------------------- (a) This Agreement, the guarantees made herein, the Security Interest and all other security interests granted hereby shall terminate when all the Loan Document Obligations have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the LC Exposure has been reduced to zero and the Issuing Bank has no further obligations to issue Letters of Credit under the Credit Agreement. (b) A Subsidiary Loan Party shall automatically be released from its obligations hereunder and the security interests in the Collateral of such Subsidiary Loan Party shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary of the Parent; provided that the -------- Required Lenders shall have consented to such transaction (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise. 48 (c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the Credit Agreement to any Person that is not a Grantor, or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.02 of the Credit Agreement, the security interest in such Collateral shall be automatically released, provided that the Proceeds resulting from such sale or other transfer shall be included in the Collateral. (d) In connection with any termination or release pursuant to paragraph (a), (b) or (c) of this Section 7.15, the Collateral Agent shall execute and deliver to any Grantor at such Grantor's expense all documents that such Grantor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 7.15 shall be without recourse to or warranty by the Collateral Agent. SECTION 7.16. Additional Subsidiaries. ----------------------- Pursuant to Section 5.11 of the Credit Agreement, each Subsidiary of a Loan Party that was not in existence or not a Subsidiary on the date of the Credit Agreement and is not a Foreign Subsidiary is required to enter into this Agreement as a Subsidiary Loan Party upon becoming such a Subsidiary. Upon execution and delivery by the Collateral Agent and a Subsidiary of an instrument in the form of Exhibit I hereto, such Subsidiary shall become a Subsidiary Loan Party hereunder with the same force and effect as if originally named as a Subsidiary Loan Party herein. The execution and delivery of any such instrument shall not require the consent of any other Loan Party hereunder. The rights and obligations of each Loan Party hereunder shall remain in full force and effect notwithstanding the addition of any new Loan Party as a party to this Agreement. SECTION 7.17. Right of Setoff. ---------------- Subject to Section 9.08 of the Credit Agreement, 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 any Subsidiary Loan Party against any of and all the obligations of such Subsidiary Loan Party now or hereafter existing under this Agreement owed to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. 49 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. DENNY'S CORPORATION, by /s/ Kenneth E. Jones -------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer DENNY'S, INC., by /s/ Kenneth E. Jones ------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer DENNY'S REALTY, INC., by /s/ Kenneth E. Jones ------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer DENNY'S HOLDINGS, INC., by /s/ James H. Allyn ------------------ Name: James H. Allyn Title: Secretary/ Vice-President DFO, INC., by /s/ Kenneth E. Jones ------------------- Name: Kenneth E. Jones Title: Vice President and Treasurer JPMORGAN CHASE BANK, as Collateral Agent, by /s/ Gary L. Spevack ------------------ Name: Gary L. Spevack Title: JP Morgan Chase Bank 50 EX-99 5 pressrelease.txt PRESS RELEASE ANNOUNCING NEW CREDIT AGREEMENT - ------------------------------------------------------------------------------- Investor Contact: Ken Jones 864-597-8658 Media Contact: Debbie Atkins 864-597-8361 DENNY'S ANNOUNCES REFINANCING OF CREDIT FACILITY SPARTANBURG, S.C., December 16, 2002 -- Denny's Corporation (OTCBB: DNYY) today announced that its operating subsidiaries, Denny's Inc. and Denny's Realty, Inc., have entered into a new $125.0 million credit agreement to refinance the previous agreement which was scheduled to expire in January 2003. The new facility will mature on December 20, 2004 and is structured as a senior secured revolving credit facility of which up to $60.0 million is available for the issuance of letters of credit. The new facility will be used for working capital needs, capital expenditures and other general corporate purposes. The new facility is guaranteed by Denny's Corporation and its subsidiaries and is generally secured by liens on the same collateral that secured the previous facility. In addition, the new facility is secured by first-priority mortgages on 246 owned restaurant properties. J.P. Morgan Securities Inc. acted as lead arranger and Foothill Capital Corporation acted as syndication agent for the new facility. JPMorgan Chase Bank will serve as administrative agent and collateral agent. Denny's is America's largest full-service family restaurant chain, operating directly and through franchisees approximately 1,700 Denny's restaurants in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. For further information on the Company, including news releases, links to SEC filings and other financial information, please visit the Denny's website at www.dennys.com. Certain matters discussed in this release may constitute forward looking statements involving risks, uncertainties, and other factors that may cause the actual performance of Denny's Corporation, its subsidiaries and underlying restaurants to be materially different from the performance indicated or implied by such statements. Factors that could cause actual performance to differ materially from the performance indicated by such statements include, among others: the Company's ability to maintain continuity of operations; thecompetitive pressures from within the restaurant industry; the level of success of the Company's operating initiatives and advertising and promotional efforts; adverse publicity; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy, particularly at the retail level; and other factors from time to time set forth in the Company's SEC reports, including but not limited to the discussion in Management's Discussion and Analysis and the risks identified in Exhibit 99 contained in the Company's Annual Report on Form 10-K for the year ended December 26, 2001 (and in the Company's subsequent quarterly reports on Form 10-Q). -----END PRIVACY-ENHANCED MESSAGE-----