EXHIBIT 10.1
EXECUTION COPY
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 28, 2001 is by and between BUCA,
INC., a Minnesota corporation (the "Borrower"), the banks which are signatories
hereto (individually, a "Bank" and, collectively, the "Banks"), BANK OF AMERICA,
N.A., a national banking association ("BofA"), as one of the Banks and as agent
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for the Banks (in such capacity, the "Agent"), FLEET NATIONAL BANK, a national
banking association ("Fleet"), as one of the Banks, and BRANCH BANKING AND TRUST
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COMPANY, a North Carolina banking corporation ("Branch"), as one of the Banks.
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties do hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement the following terms
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shall have the following respective meanings (and such meanings shall be equally
applicable to both the singular and plural form of the terms defined, as the
context may require):
"Adjusted Eurodollar Rate": With respect to each Interest Period
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applicable to a Eurodollar Rate Advance, the rate (rounded upward, if necessary,
to the next one hundredth of one percent) determined by dividing the Eurodollar
Rate for such Interest Period by 1.00 minus the Eurodollar Reserve Percentage.
"Advance": Any portion of the outstanding Revolving Loans by a Bank as to
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which one of the available interest rate options and, if pertinent, an Interest
Period, is applicable. An Advance may be a Eurodollar Rate Advance or a
Reference Rate Advance.
"Advance Date": The date of the making of any Advance hereunder.
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"Affiliate": When used with reference to any Person, (a) each Person that,
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directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person which beneficially owns or holds,
directly or indirectly, five percent or more of any class of voting Equity
Interests of the Person referred to, (c) each Person, five percent or more of
the voting Equity Interest of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's officers,
directors, joint venturers, governors and partners (both general and limited).
The term control (including the terms "controlled by" and "under common control
with") means the possession, directly, of the power to direct or cause the
direction of the management and policies of the Person in question.
"Agent": As defined in the opening paragraph hereof.
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"Annualized EBITDA": For any date of determination, the product of (a)
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EBITDA for the immediately preceding six-fiscal month period, times (b) two.
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"Applicable Fee Percentage": The Applicable Fee Percentage set forth
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in the table below as in effect from time to time determined based on the Cash
Flow Leverage Ratio calculated as of the end of the most recent fiscal quarter
of the Borrower for which the Borrower has furnished the financial statements
and reports required under Section 5.1(a) or 5.1(d), as applicable (adjustments
to the Applicable Fee Percentage to become effective as of the first day of the
month following receipt of the financial statements required under Section
5.1(a) or 5.1(d), as applicable):
Cash Flow Leverage Ratio Applicable Fee Percentage
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Less than or equal to 2.25 0.25%
Greater than 2.25 to 1.00 0.50%
Notwithstanding the foregoing, if the Borrower has not furnished the financial
statements and reports required under Section 5.1(a) or 5.1(d), as applicable,
for any fiscal quarter by the required date, the Applicable Fee Percentage shall
be calculated as if the Cash Flow Leverage Ratio as of the end of such fiscal
quarter was greater than 2.25 to 1.00 for the period from the first day of the
fiscal quarter first occurring after such required date until the first day of
the month following the month in which such financial statements and reports are
delivered.
"Applicable Lending Office": For each Bank and for each type of
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Advance, the office of such Bank identified on the signature pages hereof or
such other domestic or foreign office of such Bank (or of an Affiliate of such
Bank) as such Bank may specify from time to time, by notice given pursuant to
Section 9.4 to the Agent and the Borrower as the office by which its Advances of
such type are to be made and maintained.
"Applicable Margin": Subject to the provisions of 2.5(a), the
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Applicable Margin set forth in the table below as in effect from time to time
determined based on the Cash Flow Leverage Ratio calculated as of the end of the
most recent fiscal quarter of the Borrower for which the Borrower has furnished
the financial statements and reports required under Section 5.1(a) or 5.1(d), as
applicable (adjustments to the Applicable Margin to become effective as of the
first day of the month following receipt of the financial statements required
under Section 5.1(a) or 5.1(d), as applicable):
Reference
Rate Eurodollar
Cash Flow Leverage Ratio Advances Advances
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Less than or equal to 2.25 to 1.00 0.00% 1.500%
Greater than 2.25 to 1.00 0.50% 2.000%
Notwithstanding the foregoing, if the Borrower has not furnished the financial
statements and reports required under Section 5.1(a) or 5.1(d), as applicable,
for any fiscal quarter by the required date, the Applicable Margin shall be
calculated as if the Cash Flow Leverage Ratio as of
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the end of such fiscal quarter was greater than 2.25 to 1.00 for the period from
the first day of the fiscal quarter first occurring after such required date
until the first day of the month following the month in which such financial
statements and reports are delivered.
"Arranger": Banc of America Securities, LLC, in its capacity as lead
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arranger and book manager.
"Average Annual Comparable Restaurant Sales Growth": For any date of
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determination, the percentage annual increase in Total Restaurant Sales for
Comparable Restaurants calculated by comparing (a) Total Restaurant Sales for
Comparable Restaurants for the twelve consecutive fiscal months ended on such
date of determination, to (b) Total Restaurant Sales for Comparable Restaurants
for the 12 consecutive fiscal months ended on the last day of the fiscal month
which ended 12 fiscal months prior to such date of determination, in each case
determined on a consolidated basis in accordance with GAAP.
"Average Restaurant Annual Cash Flow": For any date of determination,
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(a) the sum of (i) the aggregate Restaurant Net Income of the Borrower and the
Subsidiaries for the immediately preceding twelve-fiscal month period, plus (ii)
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Interest Expense, depreciation and amortization, and Corporate Overhead Expense
for the immediately preceding twelve-fiscal month period, plus (iii) Pre-Opening
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Expense, if any, charged to Restaurants for the immediately preceding twelve-
fiscal month period (in an amount not to exceed $200,000 per Restaurant),
divided by (b) the number of Restaurants open during the entire thirteen fiscal
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months prior to such determination date, in each case determined on a
consolidated basis in accordance with GAAP.
"Bank": As defined in the opening paragraph hereof.
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"Board": The Board of Governors of the Federal Reserve System or any
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successor thereto.
"BofA": Bank of America, N.A., a national banking association.
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"Borrower": As defined in the opening paragraph hereof.
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"Borrowing Base": The product of (a) Annualized EBITDA times (b) 2.00.
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"Borrowing Base Deficiency": At the time of any determination, the
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amount, if any, by which Total Revolving Outstandings at such time exceed the
Borrowing Base as determined as of the end of the most recently completed fiscal
month for which the Borrower has furnished the financial statements and reports
required under 5.1(c).
"Branch": Branch Banking and Trust Company, a North Carolina banking
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corporation.
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"Business Day": Any day other than a Saturday, Sunday, or other day
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on which commercial banks are authorized to close under the laws of, or are in
fact closed in, the state where the Agent's office is located.
"Capital Expenditures": For any period, the sum of all amounts that
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would, in accordance with GAAP, be included as additions to property, plant and
equipment on a consolidated statement of cash flows for the Borrower and the
Subsidiaries during such period, in respect of (a) the acquisition,
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds, (b) to the
extent related to and not included in (a) above, materials and contract labor
(excluding expenditures properly chargeable to repairs or maintenance in
accordance with GAAP), and (c) other capital expenditures and other uses
recorded as capital expenditures or similar terms having substantially the same
effect.
"Capitalized Lease": A lease of (or other agreement conveying the
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right to use) real or personal property with respect to which at least a portion
of the rent or other amounts thereon constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations": As to any Person, the obligations of
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such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board), and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Cash Flow Leverage Ratio": For any date of determination, the ratio
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of
(a) the sum (without duplication) of
(i) the aggregate principal amount as of that date of all outstanding
Capitalized Lease Obligations of the Borrower and the Subsidiaries and
that portion of Total Liabilities bearing interest, plus (ii) the
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product of (A) Operating Lease Payments for the immediately preceding
six-fiscal month period, times (B) two, times (C) eight,
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to
(b) the sum of
(i) Annualized EBITDA, plus (ii) the product of (A) Operating Lease
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Payments for the immediately preceding six-fiscal month period, times
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(B) two,
in each case, determined on a consolidated basis in accordance with GAAP.
"Century Bank": Century Bank, a national banking association.
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"Century Bank Letter of Credit": Letter of Credit No. 269, dated
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March 16, 1998 issued by Century Bank for the account of the Borrower in the
face amount of $125,000 and naming Six Point Co., as beneficiary, with an
expiration date of March 13, 2009.
"Change of Control": The first day on which a majority of the members
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of the Board of Directors of the Borrower are not Continuing Directors.
"Continuing Directors" means any member of the Board of Directors of the
Borrower who (i) was a member of such Board on the date of this Agreement, or
(ii) was nominated for election or elected or appointed to such Board by the
Board of Directors of the Borrower at a time when a majority of the Board of
Directors of the Borrower consisted of Continuing Directors.
"Closing Date": August 28, 2001.
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"Code": The Internal Revenue Code of 1986, as amended.
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"Commitments": The Revolving Commitment of each Bank.
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"Comparable Restaurant": Each Restaurant continuously owned and
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operated by the Borrower or a Subsidiary during the 24 fiscal months of the
Borrower prior to the date of determination.
"Compliance Certificate": A certificate in the form of Exhibit
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5.1(e).
"Continent Obligation": With respect to any Person at the time of any
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determination, without duplication, any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in any manner, whether
directly or otherwise: (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any direct or indirect security therefor, (b)
to purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain
working capital, equity capital or other financial statement condition of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
otherwise to protect the owner thereof against loss in respect thereof, or (d)
entered into for the purpose of assuring in any manner the owner of such
Indebtedness of the payment of such Indebtedness or to protect the owner against
loss in respect thereof; provided, that the term "Contingent Obligation" shall
not include endorsements for collection or deposit, in each case in the ordinary
course of business.
"Corporate Overhead Expense": For any month of the Borrower's Fiscal
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Year, all expenses of the Borrower and the Subsidiaries during such period which
are not properly allocable to the restaurants including, but not limited to,
compensation and benefit expenses for corporate staff; rent, occupancy and
telephone expenses for corporate offices; professional fees; travel and
entertainment expense; market-wide advertising expenses; automobile expense; and
other general administrative expenses attributable to corporate functions.
Corporate Overhead
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Expense shall not include depreciation, amortization, interest expense or the
Revolving Commitment Fees.
"Current Liabilities": As of any date, the consolidated current
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liabilities of the Borrower and the Subsidiaries, determined in accordance with
GAAP.
"Default": Any event which, with the giving of notice (whether such
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notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
"Defaulting Bank": At any time, any Bank that, at such time (a) has
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failed to make an Advance required pursuant to the terms of this Agreement,
including the funding of any participation in accordance with the terms of this
Agreement, (b) has failed to pay to the Agent or any Bank an amount owed by such
Bank pursuant to the terms of this Agreement, or (c) has been deemed insolvent
or has become subject to a bankruptcy, receivership or insolvency proceeding, or
to a receiver, trustee or similar official.
"Dollar" and "$": Lawful money of the United States of America.
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"EBIT": For any period of determination, the consolidated net income
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of the Borrower and the Subsidiaries before deductions, without duplication, for
(a) income taxes, and
(b) Interest Expense,
all as determined in accordance with GAAP.
"EBITDA": For any period of determination, the consolidated net
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income of the Borrower and the Subsidiaries, excluding net income from each
Subsidiary to the extent such Subsidiary is restricted in its ability to pay
dividends or other distributions of such net income to the Borrower or another
Subsidiary which is its direct parent, before deductions, without duplication,
for
(a) income taxes,
(b) Interest Expense, and
(c) depreciation and amortization,
all as determined in accordance with GAAP.
"Equity lnterests": Ownership or equity interests (including, without
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limitation, an interest in the profits of any entity) in any corporation,
limited liability company, association, partnership (whether general or
limited), limited liability partnership, joint venture, trust, or business
trust.
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"ERISA": The Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate": Any trade or business (whether or not
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incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Business Day": A Business Day on which dealings in Dollar
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deposits are conducted by and between banks in the interbank Eurodollar market.
"Eurodollar Rate": With respect to each Interest Period applicable to
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a Eurodollar Rate Advance, the average offered rate for deposits in United
States dollars (rounded upward, if necessary, to the nearest 1/100 of 1%) for
delivery of such deposits on the first day of such Interest Period, for the
number of days in such Interest Period, which appears on the Reuters Screen LIBO
page as of 11:00 AM, London time (or such other time as of which such rate
appears) two Eurodollar Business Days prior to the first day of such Interest
Period, or the rate for such deposits determined by the Agent at such time based
on such other published service of general application as shall be selected by
the Agent for such purpose (including without limitation the Telerate page
3750); provided, that in lieu of determining the rate in the foregoing manner,
the Agent may determine the rate based on rates at which Dollar deposits are
offered to the Agent in the interbank Eurodollar market at such time for
delivery in Immediately Available Funds on the first day of such Interest
Period, for the number of days in such interest period, in an amount
approximately equal to the Advance by the Agent to which such Interest Period is
to apply (rounded upward, if necessary, to the nearest 1/100 of 1%). "Reuters
Screen LIBO page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rate Screen (or such other page as may replace the LIBO page on
such service for the purpose of displaying London interbank offered rates of
major banks for Dollar deposits).
"Eurodollar Rate Advance": An Advance with respect to which the
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interest rate is determined by reference to the Adjusted Eurodollar Rate.
"Eurodollar Reserve Percentage": As of any day, that percentage
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(expressed as a decimal) which is in effect on such day, as prescribed by the
Board for determining the maximum reserve requirement (including any basic,
supplemental or emergency reserves) for a member bank of the Federal Reserve
System, with deposits comparable in amount to those held by the Agent, in
respect of "Eurocurrency Liabilities" as such term is defined in Regulation D of
the Board. The rate of interest applicable to any outstanding Eurodollar Rate
Advances shall be adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Excluded Equity Issuances": As defined in Section 2.6(b)(i).
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"Event of Default": Any event described in Section 7.1.
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"Exchange Act": As defined in Section 4.23.
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"Excluded Account": As defined in Section 6.25.
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"Existing Credit Agreement": The Credit Agreement dated as of
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September 27, 1999 between U.S. Bank National Association, as Agent and as a
Bank, Bank of America, N.A., as Co-Agent and as a Bank, and the Borrower, as
amended by that First Amendment to Credit Agreement dated as of October 21,
1999, among U.S. Bank National Association, as Agent and as a Bank, Bank of
America, N.A., as Co-Agent and as a Bank, and BankBoston, N.A., as Co-Agent and
as a Bank, that Second Amendment to Credit Agreement dated as of December 24,
1999, among U.S. Bank National Association, as Agent and as a Bank, Bank of
America, N.A., as Co-Agent and as a Bank, and BankBoston, N.A., as Co-Agent and
as a Bank, that Third Amendment to Credit Agreement dated as of March 3, 2000,
among U.S. Bank National Association, as Agent and as a Bank, Bank of America,
N.A., as Co-Agent and as a Bank, and Fleet National Bank (formerly known as
BankBoston, N.A.), as Co-Agent and as a Bank, that Fourth Amendment to Credit
Agreement dated as of December 7, 2000, among U.S. Bank National Association,
as Agent and as a Bank, Bank of America, N.A., as Co-Agent and as a Bank, Fleet
National Bank (formerly known as BankBoston, N.A.), as Co-Agent and as a Bank,
and Branch Banking and Trust Company, as Co-Agent and a Bank, and that Fifth
Amendment to Credit Agreement dated as of February 9, 2001, among U.S. Bank
National Association, as Agent and as a Bank, Bank of America, N.A., as Co-Agent
and as a Bank, Fleet National Bank (formerly known as BankBoston, N.A.), as Co-
Agent and as a Bank, and Branch Banking and Trust Company, as Co-Agent and a
Bank.
"Existing Indebtedness": All obligations of the Borrower under the
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Existing Credit Agreement and the "Loan Documents" (as defined in the Existing
Credit Agreement).
"Federal Funds Rate": For any day, the rate per annum (rounded
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upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
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such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate charged to BofA on such day on such
transactions as determined by the Agent.
"Fiscal Year": The fiscal year of the Borrower, which ends on the
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last Sunday of each December. The fiscal quarters and the fiscal months of the
Borrower through December 31, 2003 are set forth in Schedule 1.1-1.
"Fixed Charge Coverage Ratio": For any date of determination, the
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ratio of
(a) the sum of (i) Annualized EBITDA, plus (ii) the product of (A)
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Operating Lease Payments for the immediately preceding six-fiscal
month period, times (B) two,
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to
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(b) the sum (without duplication) of (i) the product of (A) Interest
Expense for the immediately preceding six-fiscal month period, times
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(B) two, plus (ii) all required principal payments with respect to
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Total Liabilities (including but not limited to all such payments with
respect to Capitalized Lease Obligations of the Borrower and the
Subsidiaries) for the immediately preceding twelve-fiscal month
period, plus (iii) the product of (A) Operating Lease Payments for the
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immediately preceding six-fiscal month period, times (B) two, plus
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(iv) the product of (A) $50,000, and (B) the number of restaurants
operating as of the date of determination, plus (v) the product of (A)
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income taxes of the Borrower and the Subsidiaries accrued for the
immediately preceding six-fiscal month period, times (B) two,
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in each case determined on a consolidated basis in accordance with GAAP.
"Fleet": Fleet National Bank, a national banking association.
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"Foreign Subsidiary": A Subsidiary organized in a jurisdiction other
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than a jurisdiction in the United States of America.
"GAAP": Generally accepted accounting principles set forth in the
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opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of any date of
determination.
"Guarantors": The Persons listed on Schedule l.l-2 or any other
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Subsidiaries who may hereafter guaranty the Obligations.
"Guaranty": Any of the guaranties of any Guarantor in the form of
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Exhibit 1.1-1, as the same may be amended, supplemented, restated or otherwise
modified and in effect from time to time.
"Holding Account": A deposit account belonging to the Agent for the
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benefit of the Banks into which the Borrower may be required to make deposits
pursuant to the provisions of this Agreement, such account to be under the sole
dominion and control of the Agent and not subject to withdrawal by the Borrower,
with any amounts therein to be held for application toward payment of any
outstanding Letters of Credit when drawn upon. The Holding Account shall be a
money market savings account or substantial equivalent (or other appropriate
investment medium as the Borrower may from time to time request and to which the
Agent in its sole discretion shall have consented) and shall bear interest in
accordance with the terms of similar accounts held by the Agent for its
customers.
"Immediately Available Funds": Funds with good value on the day and
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in the city in which payment is received.
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"Indebtedness": With respect to any Person at the time of any
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determination, without duplication: (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid or accrued (other than
trade payables), (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such Person,
(e) all obligations of such Person issued or assumed as the deferred purchase
price of property or services (other than trade payables), (f) all obligations
of others secured by any Lien on property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Capitalized Lease Obligations of such Person, (h) all obligations of such Person
in respect of interest rate protection agreements, (i) all obligations of such
Person, actual or contingent, as an account party in respect of letters of
credit or bankers' acceptances, (j) all Contingent Obligations of such Person,
and (k) all obligations of any partnership or joint venture of a nature
described in clauses (a) through (j) above as to which such Person is or may
become personally liable as a partner or joint venturer.
"Interest/Operating Lease Payments Coverage Ratio": For any date of
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determination, the ratio of
(a) the product of (i) the sum of the following for the immediately
preceding six-fiscal month period (A) EBIT, plus (B) Pre-Opening
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Expense (in an amount not to exceed $200,000 per Restaurant), plus (C)
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Operating Lease Payments, times (ii) two,
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to
(b) the product of (i) the sum of the following for the immediately
preceding six-fiscal month period (A) Interest Expense, plus (B)
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Operating Lease Payments, times (ii) two;
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in each case determined on a consolidated basis in accordance with GAAP.
"Interest Expense": For any period of determination, the aggregate
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consolidated amount, without duplication, of interest accrued in respect of any
Indebtedness of the Borrower and the Subsidiaries, including (a) all but the
principal component of payments in respect of conditional sale contracts,
Capitalized Leases and other title retention agreements, (b) commissions,
discounts and other fees and charges with respect to letters of credit and
bankers' acceptance financings, and (c) net costs under interest rate protection
agreements, in each case determined in accordance with GAAP.
"Interest Period": With respect to each Eurodollar Rate Advance, the
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period commencing on the date of such Advance or on the last day of the
immediately preceding Interest Period, if any, applicable to an outstanding
Advance and ending one, two or three months thereafter, as the Borrower may
elect in the applicable notice of borrowing, continuation or conversion;
provided that:
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(a) Any Interest Period that would otherwise end on a day which is
not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Eurodollar Business Day;
(b) Any Interest Period that begins on the last Eurodollar Business
Day of a calendar month (or a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and
(c) Any Interest Period that would otherwise end after the Revolving
Commitment Ending Date shall end on the Revolving Commitment Ending Date.
"Investment": The acquisition, purchase, making or holding of any
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stock or other security, any loan, advance, contribution to capital or extension
of credit (except for trade and customer accounts receivable for inventory sold
or services rendered in the ordinary course of business and payable in
accordance with customary trade terms), any acquisitions of real or personal
property (other than real and personal property acquired in the ordinary course
of business, including real property and Restaurant equipment acquired in
anticipation of any sale leaseback transaction involving such property) and any
purchase or commitment or option to purchase stock or other debt or equity
securities of or any interest in another Person or any integral part of any
business of another Person or all or substantially all of the assets comprising
any such business or integral part thereof. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Key Employee Share Ownership Plan": A Plan pursuant to which a
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participant would be granted, as or in lieu of salary or bonuses or in exchange
for account balances in nonqualified deferred compensation plans, an option to
purchase from the Borrower certain shares of or interests in mutual funds,
public corporations or other offered Investments.
"LC Bank": BofA or, from time to time, the Bank approved by such
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Bank, the Borrower and the Agent that issues the Letters of Credit, in its
capacity as such issuer.
"Letter of Credit": Any Letter of Credit issued by the LC Bank for
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the account of the Borrower pursuant to the terms of this Agreement.
"Letter of Credit Commitment": $1,000,000.
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"Letter of Credit Fee": As defined in Section 2.8(c).
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"Letter of Credit Obligations": At the time of any determination, the
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aggregate amount available to be drawn on all outstanding Letters of Credit plus
all Unpaid Drawings with respect to any Letter of Credit on such date.
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"Lien": With respect to any Person, any security interest, mortgage,
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pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
Capitalized Lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"Liquor License Entities": As defined in Section 5.15.
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"Loan": The Revolving Loan.
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"Loan Documents": All agreements, instruments and documents
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heretofore, herewith or hereafter executed and delivered by the Borrower or any
Subsidiary pursuant to, or in connection with, this Agreement, including,
without limitation, this Agreement, the Notes and each Security Document,
together with any subordination agreements, powers of attorney, consents,
assignments, contracts, notices, financing statements and any and all other
writings pursuant to or in aid of any of the foregoing.
"Majority Banks": At any time, Banks other than the Defaulting Banks
--------------
whose Revolving Percentages aggregate at least 66% (with Revolving Percentages
being computed without reference to the Revolving Commitment Amounts of
Defaulting Banks).
"Material Adverse Occurrence": Any occurrence of whatsoever nature
---------------------------
(including, without limitation, any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding) which (a) has
materially adversely affected the present, or which is reasonably likely to
materially adversely affect the prospective, financial condition or operations
of the Borrower and the Subsidiaries, taken as a whole, or (b) impairs the
ability of the Borrower or the Subsidiaries, taken as a whole, to perform their
respective obligations under the Loan Documents or any writing executed pursuant
thereto.
"Multiemployer Plan": A multiemployer plan, as such term is defined
------------------
in Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date,
within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of the Borrower or any ERISA Affiliate.
"Net Worth": As of any date of determination, the sum of the amounts
---------
set forth on the consolidated balance sheet of the Borrower as common stock,
preferred stock, additional paid-in capital and retained earnings of the
Borrower and the Subsidiaries (excluding treasury stock), less the book value
set forth on such balance sheet of all intangible assets of the Borrower and its
Subsidiaries, including all such items as goodwill, trademarks, trade names,
service marks, copyrights, patents, licenses, unamortized debt discount and
expenses and the excess of the purchase price of the assets of any business
acquired by the Borrower or any of its Subsidiaries over the book value of such
assets.
"Note": A Revolving Note.
----
"Obligations": The Borrower's obligations in respect of the due and
-----------
punctual payment of principal and interest on the Notes and Unpaid Drawings when
and as due, whether
-12-
by acceleration or otherwise, and all fees (including Revolving Commitment
Fees), expenses, indemnities, reimbursements and other obligations of the
Borrower under this Agreement or any other Loan Document, in all cases whether
now existing or hereafter arising or incurred.
"Operating Lease": Any lease of real or personal property that is not
---------------
a Capitalized Lease.
"Operating Lease Payments": For any period, all payments consisting
------------------------
of monthly base rent and percentage of revenue or earnings made by the Borrower
and the Subsidiaries, on a consolidated basis, during such period under
Operating Leases.
"Partially-Owned Subsidiaries": Subsidiaries in which the Borrower,
----------------------------
directly or through its Subsidiaries, owns less than 100% of the securities or
other Equity Interests having ordinary voting power for the election of the
board of directors or other Persons performing similar functions (other than
qualifying shares or other Equity Interests held by directors or other Persons
performing similar functions) or, in the case of a partnership, less than a 100%
interest in the profits or capital thereof.
"PBGC": The Pension Benefit Guaranty Corporation, established
----
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Person": Any natural person, corporation, partnership, limited
------
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Plan": Each employee benefit plan (whether in existence on the
----
Closing Date or thereafter instituted), as such term is defined in Section 3 of
ERISA, maintained for the benefit of employees, officers or directors of the
Borrower or of any ERISA Affiliate.
"Pledge Agreement": The pledge agreement of the Borrower in the form
----------------
of Exhibit 1.1-2, as the same may be supplemented, amended or otherwise modified
and in effect from time to time.
"Pledge Agreement (Subsidiary)": A pledge agreement of a Subsidiary
-----------------------------
in the form of Exhibit 1.1-3 hereto.
"Pre-Opening Expense": Those expenses identified on the Borrower's
-------------------
consolidated financial statements as "restaurant start-up costs".
"Prohibited Transaction": The respective meanings assigned to such
----------------------
term in Section 4975 of the Code and Section 406 of ERISA, but excluding any
exempt transaction as provided thereunder.
"Public Offering": The closing of a sale by the Borrower for cash of
---------------
any class of stock of the Borrower registered in accordance with the Securities
Act of 1933, as amended.
-13-
"Reference Rate": For any day, a fluctuating rate per annum equal to
--------------
the higher of (a) the Federal Funds Rate in effect for such day plus 1/2 of 1%
----
or (b) the rate of interest in effect for such day as publicly announced from
time to time by BofA as its "prime rate." Such rate is set by BofA based upon
various factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in such rate announced by BofA shall take effect at the opening of business on
the day specified in the public announcement of such change.
"Reference Rate Advance": An Advance with respect to which the
----------------------
interest rate is determined by reference to the Reference Rate.
"Regulatory Change": Any change after the Closing Date in federal,
-----------------
state or foreign laws or regulations or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
including the Bank under any federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reportable Event": A reportable event as defined in Section 4043 of
----------------
ERISA and the regulations issued under such Section, with respect to a Plan
subject to Title IV of ERISA, excluding, however, such events as to which the
PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that
it be notified within 30 days of the occurrence of such event, provided that a
---------
failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any waiver in accordance with Section 412(d) of the Code.
"Restaurant": A restaurant location owned or leased by the Borrower
----------
or any Subsidiary and operated by the Borrower or any Subsidiary as a
restaurant.
"Restaurant Net Income": The net income of a Restaurant determined in
---------------------
accordance with GAAP.
"Restricted Payments": With respect to the Borrower and the
-------------------
Partially-Owned Subsidiaries, collectively, all dividends or other distributions
of any nature (whether in cash, securities or Equity Interests of the Borrower
or the Partially-Owned Subsidiaries, assets or otherwise) on or in respect of,
and all payments on, any class of Equity Interests (including warrants, options
or rights therefor, but excluding Indebtedness which is convertible into any
Equity Interest, including without limitation common or preferred stock, which
is itself not convertible into Indebtedness) issued by the Borrower or any of
the Partially-Owned Subsidiaries, whether such Equity Interests are authorized
or outstanding on the Closing Date or at any time thereafter, and any redemption
or purchase of, or distribution in respect of, any of the foregoing, whether
directly or indirectly, including any Equity Interest of the Borrower or any of
the Partially-Owned Subsidiaries.
-14-
"Revolving Commitment": With respect to a Bank, the agreement of such
--------------------
Bank to make Revolving Loans to the Borrower in an aggregate principal amount
outstanding at any time not to exceed such Bank's Revolving Commitment Amount
upon the terms and subject to the conditions and limitations of this Agreement.
"Revolving Commitment Amount": With respect to a Bank, initially the
---------------------------
amount set forth in Schedule 1.1 hereto, as the same may be reduced from time to
time, or increased, pursuant to Section 2.7.
"Revolving Commitment Ending Date": December 31, 2003.
--------------------------------
"Revolving Commitment Fees": As defined in Section 2.8(b).
-------------------------
"Revolving Loan": As defined in Section 2.1.
--------------
"Revolving Note": A promissory note of the Borrower, as set forth on
--------------
Exhibit 1.1-4, as the same may be amended, restated, or otherwise modified and
in effect from time to time.
"Revolving Percentage": With respect to any Bank, the percentage
--------------------
equivalent of a fraction, the numerator of which is the Revolving Commitment
Amount of such Bank and the denominator of which is the Total Revolving
Commitment Amount.
"Securities Act": As defined in Section 4.23.
--------------
"Security Agreement (Guarantor)": Any of the security agreements of
------------------------------
any Guarantor in the form of Exhibit 1.1-5, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time to time,
provided that, on the Closing Date, BUCA (Wheeling), Inc. shall not be required
--------
to enter into a Security Agreement (Guarantor).
"Security Agreement (Borrower)": The security agreement of the
-----------------------------
Borrower in the form of Exhibit 1.1-6, as the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time.
"Security Documents": The Security Agreement (Borrower), the Pledge
------------------
Agreement, the Trademark Assignment, each Guaranty, each Security Agreement
(Guarantor), each Pledge Agreement (Subsidiary) and all other agreements,
documents and instruments delivered pursuant hereto or thereto or in connection
herewith or therewith creating, perfecting or otherwise providing for any Lien
to secure the Obligations, in each case as amended, supplemented, restated or
otherwise modified and in effect from time to time.
"Stock-Based Incentive Plan": As defined in Section 2.6(b).
--------------------------
"Subordinated Debt": Any Indebtedness of the Borrower or any
-----------------
Subsidiary, now existing or hereafter created, incurred or arising, which
Indebtedness is subordinated in right of payment to the payment of the
Obligations in a manner and to an extent (a) that the Agent and the Majority
Banks have approved in writing prior to the creation of such Indebtedness, or
(b) as
-15-
to any such Indebtedness existing on the date of this Agreement, that the Agent
and the Majority Banks have approved as Subordinated Debt in a writing delivered
by Agent to the Borrower on or prior to the Closing Date.
"Subsidiary": Any corporation or other entity of which Equity
----------
Interests having ordinary voting power for the election of a majority of the
board of directors or other Persons performing similar functions are owned by
the Borrower either directly or through one or more Subsidiaries, and any
partnership if more than a 50% interest in the profits or capital thereof is
owned by the Borrower either directly or through one or more Subsidiaries
(unless such partnership can and does ordinarily take major business actions
without the prior approval of the Borrower or one or more Subsidiaries).
"Termination Date": The earliest of (a) the Revolving Commitment
----------------
Ending Date, (b) the date on which the Commitments are terminated pursuant to
Section 7.2 or (c) the date on which the Total Revolving Commitment Amount is
reduced to zero pursuant to Section 2.7.
"Total Liabilities": At the time of any determination, the amount, on
-----------------
a consolidated basis, of all items of Indebtedness of the Borrower and the
Subsidiaries that would constitute "liabilities" shown on the face of a
consolidated balance sheet of the Borrower prepared in accordance with GAAP.
"Total Restaurant Sales": The net sales of the Borrower and the
----------------------
Subsidiaries arising out of the operation of Restaurants, determined on a
consolidated basis in accordance with GAAP.
"Total Revolving Commitment Amount": The sum of the Revolving
---------------------------------
Commitment Amounts.
"Total Revolving Outstandings": As of any date of determination, the
----------------------------
sum of (a) the aggregate unpaid principal balances of the Advances evidenced by
the Revolving Notes outstanding on such date, plus (b) the aggregate maximum
----
amount of Letter of Credit Obligations outstanding on such date.
"Trademark Assignment": The Collateral Assignment of Trademarks by
--------------------
the Borrower in the form of Exhibit 1.1-7, as the same may be supplemented,
amended, or otherwise in effect from time to time.
"Unpaid Drawings": As defined in Section 2.12.
---------------
"Unused Revolving Commitment": As of any date of determination, the
---------------------------
amount by which the Total Revolving Commitment Amount exceeds the Total
Revolving Outstandings on such date.
"USBNA": U.S. Bank National Association, a national banking
-----
association.
-16-
"USBNA Letter of Credit": Irrevocable Letter of Credit No.
----------------------
SLCMMSP01274, dated December 12, 2000 issued by USBNA for the account of the
Borrower in the face amount of $390,000 and naming Royal Insurance Company, on
behalf of itself and its affiliated companies, as beneficiary, with an
expiration date of December 12, 2001.
"Wholly Owned Subsidiaries": Subsidiaries which are not Partially-
-------------------------
Owned Subsidiaries.
Section 1.2 Accounting Terms and Calculations. Except as may be
---------------------------------
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless the Borrower and the Agent and the Majority Banks agree in
writing on an adjustment to such computation or determination to account for
such change in GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
---------------------------
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
Section 1.4 Other Definitional Terms. The words "hereof", "herein"
------------------------
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase "and/or".
All incorporation by reference of covenants, terms, definitions or other
provisions from other agreements are incorporated into this Agreement as if such
provisions were fully set forth herein, include all necessary definitions and
related provisions from such other agreements, and shall survive any termination
of such other agreements until the obligations of the Borrower under this
Agreement and the Notes are irrevocably paid in full, all Letters of Credit have
expired without renewal or been returned to the Agent, and the commitments of
the Banks to advance funds to the Borrower are terminated.
ARTICLE II
TERMS OF THE CREDIT FACILITIES
Part A - Terms of Lending
-------------------------
Section 2.1 Lending Commitments.
-------------------
(a) Revolving Credit. On the terms and subject to the
----------------
conditions hereof, each Bank severally agrees to make a loan (the
"Revolving Loan") to the Borrower on a revolving basis available as
Advances at any time and from time to time from the Closing Date until the
Termination Date, during which period the Borrower may
-17-
borrow, repay and reborrow in accordance with the provisions hereof,
provided, that (i) no Revolving Loan will be made by a Bank in any amount
--------
which, after giving effect thereto, would cause the unpaid principal amount
of outstanding Advances by such Bank to at any time exceed the Revolving
Commitment Amount of such Bank, (ii) at no time shall the Total Revolving
Outstandings exceed the Borrowing Base, and (iii) for a period of 30
consecutive calendar days during each Fiscal Year, starting with Fiscal
Year beginning January 2001, the Borrower shall pay on the principal of the
Revolving Loans an amount sufficient to cause the outstanding principal
balance of the Revolving Loans to be reduced to zero for each day of such
30 consecutive day period.
Advances hereunder shall be made by the several Banks ratably in the
proportion of their respective Revolving Commitment Amounts. Advances may
be obtained and maintained, at the election of the Borrower but subject to
the limitations hereof, as Reference Rate Advances or Eurodollar Rate
Advances.
(b) Letters of Credit. On the terms and subject to the
-----------------
conditions hereof, the Agent agrees to issue Letters of Credit to support
the Borrower's business operations.
Section 2.2 Procedure for Loans. Any request by the Borrower for an
-------------------
Advance on the Revolving Loan hereunder shall be in writing or by telephone and
must be given so as to be received by the Agent not later than 12:00 noon
(Chicago time) three Eurodollar Business Days prior to the requested Advance
Date if the Revolving Loans (or any portion thereof) are requested as Eurodollar
Rate Advances and not later than 12:00 noon (Chicago time) on the requested
Advance Date if the Advances are requested as Reference Rate Advances. Each
request for an Advance hereunder shall be irrevocable and shall be deemed a
representation by the Borrower that on the requested Advance Date and after
giving effect to the requested Advance the applicable conditions specified in
Article III have been and will be satisfied. Each request for an Advance
hereunder shall specify (a) the requested Advance Date and (b) the amount of the
Advance which shall be in a minimum amount of $500,000 in the aggregate for all
Banks, (c) whether such Advances are to be funded as Reference Rate Advances or
Eurodollar Rate Advances (and, if such Advances are to be made with more than
one applicable interest rate choice, specifying the amount to which each
interest rate choice is applicable) and (d) in the case of Eurodollar Rate
Advances, the duration of the initial Interest Period applicable thereto. The
Agent may rely on any telephone request for an Advance hereunder which it
believes in good faith to be genuine; and the Borrower hereby waives the right
to dispute the Agent's record of the terms of such telephone request. The Agent
shall promptly notify each other Bank of the receipt of such request, the
matters specified therein, and of such Bank's ratable share of the requested
Advances, each Bank shall provide its share of the requested Advances to the
Agent in Immediately Available Funds not later than 2:00 p.m., (Chicago time) on
the requested Advance Date. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
available to the Borrower at the Agent's principal office in Chicago, Illinois
in Immediately Available Funds not later than 5:00 p.m. (Chicago time) on the
requested Advance Date the amount of the requested Advances. If the Agent has
made an Advance to the Borrower on behalf of a Bank but has not received the
amount of such Advance from such Bank by the time herein required, such Bank
shall pay interest to the Agent on the
-18-
amount so advanced at the overnight Federal Funds rate from the date of such
Advance to the date funds are received by the Agent from such Bank, such
interest to be payable with such remittance from such Bank of the principal
amount of such Advance (provided, however, that the Agent shall not make any
Advance on behalf of a Bank if the Agent has received prior notice from such
Bank that it will not make such Advance). If the Agent does not receive payment
from such Bank by the next Business Day after the date of any Advance, the Agent
shall be entitled to recover such Advance, with interest thereon at the rate (or
rates) then applicable to the such Advance, on demand, from the Borrower,
without prejudice to the Agent's and the Borrower's rights against such Bank. If
such Bank pays the Agent the amount herein required with interest at the
overnight Federal Funds rate before the Agent has recovered from the Borrower,
such Bank shall be entitled to the interest payable by the Borrower with respect
to the Advance in question accruing from the date the Agent made such Advance.
Section 2.3 Notes. The Advances of each Bank shall be evidenced by a
-----
single Revolving Note payable to the order of such Bank in a principal amount
equal to such Bank's Revolving Commitment Amount. Upon receipt of each Bank's
Note from the Borrower, the Agent shall mail such Note to such Bank. Each Bank
shall enter in its records the amount of the various Advances made, converted or
continued and the payments made thereon, and each Bank is authorized by the
Borrower to enter into its records, a record of such Advances and payments;
provided, however that the failure by any Bank to make any such entry or any
error in making such entry shall not limit or otherwise affect the obligation of
the Borrower hereunder and on the Notes, and, in all events, the principal
amounts owing by the Borrower in respect of the Revolving Note payable to the
order of each Bank shall be the aggregate amount of all Advances made by such
Bank with respect to its Revolving Commitment, less all payments of principal
thereof made by the Borrower. The records of the Banks shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on the Notes and
the amount available for draw under the Letter of Credit Commitment,
respectively.
Section 2.4 Conversions and Continuations. On the terms and subject
-----------------------------
to the limitations hereof, the Borrower shall have the option at any time and
from time to time to convert all or any portion of the Advances into Reference
Rate Advances or Eurodollar Rate Advances, or to continue a Eurodollar Rate
Advance as such; provided, however that a Eurodollar Rate Advance may be
converted or continued only on the last day of the Interest Period applicable
thereto and no Advance may be converted to or continued as a Eurodollar Rate
Advance if a Default or Event of Default has occurred and is continuing on the
proposed date of continuation or conversion. Advances may be converted to, or
continued as, Eurodollar Rate Advances only in integral multiples, as to the
aggregate amount of the Advances of all Banks so converted or continued, of
$500,000. The Borrower shall give the Agent written notice of any continuation
or conversion of any Advances and such notice must be given so as to be received
by the Agent not later than 12:00 noon (Chicago time) three Eurodollar Business
Days prior to requested date of conversion or continuation in the case of the
continuation of, or conversion to, Eurodollar Rate Advances and on the date of
the requested conversion in the case of conversion to Reference Rate Advances.
Each such notice shall specify (a) the amount to be continued or converted, (b)
the date for the continuation or conversion (which must be (i) the last day of
the preceding Interest Period for any continuation or conversion of Eurodollar
Rate Advances, and (ii) a Eurodollar Business Day in the case of continuations
as or conversions to Eurodollar Rate
-19-
Advances and a Business Day in the case of conversions to Reference Rate
Advances), and (c) in the case of conversions to or continuations as Eurodollar
Rate Advances, the Interest Period applicable thereto. Any notice given by the
Borrower under this Section shall be irrevocable. If the Borrower shall fail to
notify the Agent of the continuation of any Eurodollar Rate Advances within the
time required by this Section, such Advances shall, on the last day of the
Interest Period applicable thereto, automatically be converted into Reference
Rate Advances of the same principal amount. All conversions and continuation of
Advances must be made uniformly and ratably among the Banks. (E.g., when
continuing a two-month Eurodollar Rate Advance of one Bank to a three-month
Eurodollar Rate Advance, the Borrower must simultaneously continue all two-month
Eurodollar Rate Advances of all Banks having Interest Periods ending on the date
of continuation as three-month Eurodollar Rate Advances.)
Section 2.5 Interest Rates, Interest Payments and Default Interest.
------------------------------------------------------
(a) The Advances. Interest shall accrue and be payable on the
------------
Revolving Loans as follows:
(i) Subject to paragraphs (iii) and (iv) below, each
Eurodollar Rate Advance shall bear interest on the unpaid
principal amount thereof during the Interest Period applicable
thereto at a rate per annum equal to the sum of (A) the Adjusted
Eurodollar Rate for such Interest Period, plus (B) the Applicable
-----
Margin.
(ii) Subject to paragraphs (iii) and (iv) below, each
Reference Rate Advance shall bear interest on the unpaid
principal amount thereof at a varying rate per annum equal to the
sum of (A) the Reference Rate, plus (B) the Applicable Margin.
-----
(iii) Subject to paragraph (iv) below, in the event any
Advance remains outstanding for a period of more than 210 days or
in the event any Advance made on or prior to June 30, 2003
remains outstanding after June 30, 2003, each Advance shall, at
the option of the Majority Banks and upon written notice to the
Borrower, bear interest on the unpaid principal amount thereof
from the end of such 210-day period or from July 1, 2003, as the
case may be, at a rate per annum equal to the sum of the rate
applicable to such Advance but for the provisions of this clause
(iii), plus 0.50%; provided that in the event any Advance that
----- --------
remains outstanding for a period of more than 210 days continues
to remain outstanding for an additional 60 day period, such rate
shall be increased by 0.25%, and shall continue to be increased
by 0.25% for each subsequent 60 day period such Advance remains
outstanding (with each such increase to be effective as of the
end of such 60 day period); provided further that upon the
--------
payment in full of any Advance that remains outstanding for a
period of more than 210 days the rate applicable to each Advance
but for the provisions of this clause (iii) shall be reinstated
if such payment in full is made on or prior to
-20-
June 30, 2003 and no other Advance is then outstanding for a
period of more than 210 days.
(iv) Upon the occurrence and during the continuance of any
Event of Default, each Advance shall, at the option of the
Majority Banks and upon written notice to the Borrower, bear
interest on the unpaid principal amount thereof at a rate per
annum equal to the sum of the rate applicable to such Advance but
for the provisions of this clause (iv), plus 2.0%.
-----
(v) Interest shall be payable (A) with respect to each
Eurodollar Rate Advance, on the last day of the Interest Period
applicable thereto; (B) with respect to any Reference Rate
Advance, on the first day of each month; (C) with respect to all
Advances, upon any permitted prepayment (on the amount prepaid),
and (D) with respect to all Advances, on the Termination Date;
provided that interest under Section 2.4 (a) (iv) shall be
payable on demand.
(b) Lawful Interest. In no contingency or event whatsoever shall
---------------
the interest rate charged pursuant to the terms of this Agreement exceed
the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In
the event that such a court determines that the Bank has received interest
hereunder in excess of the highest applicable rate, the Bank shall promptly
refund such excess interest to the Borrower as required by such court.
Section 2.6 Prepayments.
-----------
(a) Mandatory Payments. If at any time a Borrowing Base
------------------
Deficiency exists, the Borrower shall immediately pay on the principal of
the Advances an amount equal to such Borrowing Base Deficiency. Any such
payments shall be applied first against Reference Rate Advances and then to
Eurodollar Rate Advances in order starting with the Eurodollar Rate
Advances having the shortest time to the end of the applicable Interest
Period. Amounts paid on the Advances under this paragraph (a) shall be for
the account of each Bank in proportion to its share of outstanding
Advances. If, after paying all outstanding Advances, a Borrowing Base
Deficiency still exists, the Borrower shall pay into the Holding Account an
amount equal to the amount of the remaining Borrowing Base Deficiency.
(b) Other Mandatory Prepayments.
---------------------------
(i) Within one Business Day following the receipt thereof,
the Borrower shall prepay to the Agent for the account of the
Banks an amount equal to 100% of all cash proceeds from the
issuance of Indebtedness (other than Indebtedness permitted by
subsections (a) through (e) and (g) through (i) of Section 6.13
hereof) or Equity Interests (other than Excluded Equity
Issuances) by the Borrower or any
-21-
Subsidiary, net of the actual cash expenses paid or, with the
prior written approval of the Majority Banks (which shall not be
unreasonably withheld), to be paid by any Borrower or any
Subsidiary in connection with such issuance (to the extent such
amount is necessary to reduce the aggregate unpaid principal
balance of the Advances to $0). Any such prepayments shall be
applied in the same manner as repayments under clause (ii) of
this Section 2.6(b). As used herein "Excluded Equity Issuances"
shall mean (A) any issuances of common stock of the Borrower
under, or upon the exercise of options granted under, the
Borrower's 1996 Stock Incentive Plan, as amended, Stock Option
Plan for Nonemployee Directors, as amended, and 2000 Stock
Incentive Plan, as amended, or, with the prior written consent of
the Majority Banks (which shall not be unreasonably withheld),
any other stock-based incentive plan or arrangement for
directors, officers or employees of or consultants to the
Borrower or any of its Subsidiaries (collectively, the "Stock-
Based Incentive Plans"), (B) any issuances of common stock of the
Borrower upon the exercise of options granted to landlords of the
Borrower or any of its Subsidiaries, (C) any issuances of Equity
Interests of any Subsidiary to the Borrower or any other
Subsidiary, and (D) any issuances of common stock of the Borrower
under the BUCA, Inc. Employee Stock Purchase Plan, as amended,
maintained by the Borrower.
(ii) If at any time Total Revolving Outstandings exceed the
Total Revolving Commitment Amount, the Borrower shall immediately
repay to the Agent for the account of the Banks the amount of
such excess. Any such payments shall be applied first against
Reference Rate Advances and then to Eurodollar Rate Advances in
order starting with the Eurodollar Rate Advances having the
shortest time to the end of the applicable Interest Period. If,
after payment of all outstanding Advances, the Total Revolving
Outstandings still exceed the Total Revolving Commitment Amount,
the remaining amount paid by the Borrower shall be placed in the
Holding Account.
(c) Optional Prepayments. The Borrower may prepay the Reference
--------------------
Rate Advances, in whole or in part, at any time, without premium or
penalty. The Borrower may prepay Eurodollar Rate Advances, in whole or in
part, at any time; provided that, upon such prepayment, the Borrower shall
--------
pay to the Banks the amounts, if any, required pursuant to Section 2.24
hereof. Any such prepayment must be accompanied by accrued and unpaid
interest on the amount prepaid. Each partial prepayment shall be in an
aggregate amount for all the Banks of $100,000 or, if more, an integral
multiple thereof. Amounts paid (unless following an acceleration or upon
termination of the Revolving Commitments in whole) on the Revolving Loans
under this Section 2.6 may be reborrowed upon the terms and subject to the
conditions and limitations of this Agreement. Amounts paid or prepaid on
the Advances under this paragraph (c) shall be for the account of each Bank
in proportion to its shares of outstanding Advances.
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Section 2.7 Reduction and Increase of the Total Revolving Commitment
--------------------------------------------------------
Amount or Termination of Commitments.
------------------------------------
(a) Optional Reduction of the Total Revolving Commitment Amount
-----------------------------------------------------------
or Termination of Commitments. The Borrower may, at any time, upon not
-----------------------------
less than three (3) Business Days prior written notice to the Agent, reduce
the Total Revolving Commitment Amount, with any such reduction in a minimum
amount of $500,000 or, if more, in an integral multiple of $100,000;
provided, however, that the Borrower may not at any time reduce the Total
Revolving Commitment Amount below the then aggregate unpaid principal
balance of the Revolving Notes. The Borrower may, at any time, upon not
less than three (3) Business Days prior written notice to the Agent,
terminate the Commitments in their entirety. Upon termination of the
Commitments pursuant to this Section, the Borrower shall pay to the Banks
the full amount of all outstanding Advances evidenced by the Revolving
Notes, all accrued and unpaid interest thereon, all unpaid Revolving
Commitment Fees accrued to the date of such termination under Section
2.8(b) and, subject to Section 2.11 hereof, all other unpaid Obligations of
the Borrower to the Banks and the Agent hereunder with respect to the
Commitments. Upon the date on which the Commitments have been terminated,
the Borrower shall have paid to the Banks all unpaid Obligations of the
Borrower to the Banks and the Agent.
(b) Mandatory Reduction of the Total Revolving Commitment
-----------------------------------------------------
Amount. The Revolving Commitment Amounts, at the Agent's discretion, shall
------
be permanently reduced (ratably according to the Banks then respective
Revolving Percentages) on each date of receipt by the Borrower or any
Subsidiary of any cash proceeds (including cash payments received by way of
deferred payment of principal of a note or an installment receivable and
the cash realization of any non-cash proceeds) from the sale or disposition
of assets by the Borrower or any Subsidiary not otherwise permitted by
Section 6.2 hereof and sold with the consent of the Agent by the amount of
such cash proceeds, net of the actual cash expenses and taxes paid or, with
the prior written approval of the Agent (which shall not be unreasonably
withheld), to be paid by the Borrower or any Subsidiary in connection with
such sale or disposition; provided that no such reduction shall occur to
--------
the extent such proceeds are, with the prior written approval of Agent
(which shall not be unreasonably withheld), reinvested or to be reinvested
within sixty (60) days by the Borrower or a Subsidiary in the development
of a new Restaurant or the maintenance or operation of an existing
Restaurant.
(c) Optional Increase of the Total Revolving Commitment Amount.
----------------------------------------------------------
(i) The Borrower may request that the Banks increase the
Total Revolving Commitment Amount by $5,000,000 (the "Additional
Commitment Amount") by providing written notice of such request
to the Agent; provided, that (A) such request shall be made not
--------
later than 365 days following the Closing Date and (B) no Default
or Event of Default exists. Upon receipt of such request, the
Agent shall promptly notify each Bank of such request. Each Bank
shall have the option, in its sole and
-23-
complete discretion, to subscribe for its proportionate share of
the Additional Commitment Amount according to its then-existing
Revolving Percentage (each, an "Increased Commitment"). Each Bank
shall notify the Agent within 10 Business Days after the giving
of the Agent's notice if it wishes to subscribe to its Increased
Commitment. Any Bank that fails to so notify the Agent shall be
deemed to have declined to subscribe to an Increased Commitment.
On the first Business Day after the expiration of such 10
Business Day period, the Agent shall advise the Borrower and the
Banks in writing of the affirmative response it received from the
Banks (the "Increased Commitment Notice").
(ii) In the event the aggregate Increased Commitments
are less than the Additional Commitment Amount (the difference
between the aggregate Increased Commitments and the Additional
Commitment Amount being herein called the "Remaining Additional
Commitment"), each Bank shall have the option to increase its
Increased Commitment to the extent necessary to cause the
aggregate Increased Commitments to equal the Additional
Commitment Amount. Such option shall be exercised by sending a
notice of new Increased Commitment to the Agent no later than
five Business Days after receipt of the Increased Commitment
Notice. On the first Business Day after the expiration of such
five Business Day period, the Agent shall provide written notice
to the Borrower and the Banks of any new Increased Commitment
(the "Additional Commitment Notice"). If, after the exercise of
such option, a Remaining Additional Commitment still exists, a
new commercial bank or banks selected by the Borrower and
reasonably satisfactory to the Majority Banks (the "Additional
Bank") may agree to assume the Remaining Additional Commitment.
Upon (A) the execution by such Additional Bank of original
counterparts of this Agreement, (B) delivery of such signed
counterparts to the Agent and the Borrower, and (C) the execution
and delivery by the Borrower of a Note reflecting the Remaining
Additional Commitment assumed by such Additional Bank, such
Additional Bank shall for all purposes become a "Bank" hereunder.
(iii) Within five days of receipt of the Additional
Commitment Notice (or the Increased Commitment Notice if, at the
time it is given, there is no Remaining Additional Commitment),
the Borrower shall execute and deliver to each Bank increasing
its Revolving Commitment Amount a new Note to reflect such Bank's
increased Revolving Commitment Amount (after giving effect to
such Bank's Increased Commitment) and each Bank receiving such
new Note shall cancel and return to the Borrower the pre-existing
Note held by such Bank.
Section 2.8 Fees.
----
-24-
(a) Fees. The Borrower shall pay to the Agent on the Closing
----
Date the fees set forth in a separate letter agreement between the Agent
and the Borrower.
(b) Revolving Commitment Fees.
-------------------------
(i) The Borrower shall pay to the Agent, for the ratable
benefit of the Banks, fees (the "Revolving Commitment Fees") in
an amount equal to the product of (i) the Applicable Fee
Percentage times (ii) the average daily Unused Revolving
Commitment for the period from the Closing Date to the
Termination Date. Such Revolving Commitment Fees are payable in
arrears quarterly on the first day of each April, July, October
and January, commencing on the first such date after the Closing
Date, and on the Termination Date.
(ii) In the event any Advance remains outstanding for a
period of more than 210 days or in the event an Advance made on
or prior to June 30, 2003 remains outstanding after June 30,
2003, the Borrower shall pay to the Agent, for the ratable
benefit of the Banks, a fee equal to the product of (x) 0.500%
times (y) the average daily Total Revolving Outstandings for (A)
in the case of an Advance outstanding for a period of more than
210 days, the 210 day period ending on such date or (B) in the
case of an Advance made on or prior to June 30, 2003 that remains
outstanding after June 30, 2003, the period from the date of such
Advance to July 1, 2003; provided that no more than one fee shall
--------
be payable under this clause (ii) during the term of this
Agreement. Such fee shall be due and payable on the first day
following such 210 day period or on July 1, 2003, as the case may
be.
(c) Letter of Credit Fees. For each Letter of Credit issued, the
---------------------
Borrower shall pay to the Agent for the account of the Banks a fee (the
"Letter of Credit Fee") in an amount determined by applying a per annum
rate of 2.00% to the amount available to be drawn under such Letter of
Credit from time to time for the period from the date of issuance of such
Letter of Credit to the expiration of such Letter of Credit. Such fee
shall be payable in arrears quarterly on the first day of each April, July,
October and January, commencing with the first such date after the issuance
of such Letter of Credit, and on the expiration date of the Letter of
Credit. In addition to the Letter of Credit Fees, the Borrower shall pay
to the LC Bank, on demand, all issuance, amendment, drawing and other fees
regularly charged by the LC Bank to its letter of credit customers as shown
as of the Closing Date on Schedule 2.8, as the same may change from time to
time, and all reasonable out-of-pocket expenses incurred by the LC Bank in
connection with the issuance, amendment, administration or payment of any
Letter of Credit.
Part B - Terms of the Letter of Credit Facility
-----------------------------------------------
Section 2.9 Letters of Credit. Upon the terms and subject to the
-----------------
conditions of this Agreement, the LC Bank agrees to issue Letters of Credit for
the account of the Borrower
-25-
from time to time between the Closing Date and the Termination Date in such
amounts as the Borrower shall request up to an aggregate amount at any time
outstanding not exceeding the Letter of Credit Commitment; provided that no
Letter of Credit will be issued in any amount which, after giving effect to such
issuance, would cause Total Revolving Outstandings to exceed (a) the Total
Revolving Commitment Amount or (b) the Borrowing Base.
Section 2.10 Procedures for Letters of Credit. Each request for a
--------------------------------
Letter of Credit shall be made by the Borrower in writing, by telex, facsimile
transmission or electronic conveyance received by the Agent and the LC Bank by
12:00 noon, Chicago time, on a Business Day which is not less than three
Business Days preceding the requested date of issuance (which shall also be a
Business Day). Each request for a Letter of Credit shall be deemed a
representation by the Borrower that on the date of issuance of such Letter of
Credit, and after giving effect thereto, the applicable conditions specified in
Article III have been and will be satisfied. The LC Bank may require that such
request be made on such letter of credit application and reimbursement agreement
form as the LC Bank may from time to time specify, along with satisfactory
evidence of the authority and incumbency of the officials of the Borrower making
such request. The Agent shall promptly notify the other Banks of the receipt of
the request and the matters specified therein. On the date of each issuance of
a Letter of Credit the Agent shall send notice to the other Banks of such
issuance, accompanied by a copy of the Letter or Letters of Credit so issued.
Section 2.11 Terms of Letters of Credit. Letters of Credit shall be
--------------------------
issued in support of obligations of the Borrower or any of its Subsidiaries.
All Letters of Credit must expire not later than 364 days from the date of
issuance (subject to renewal). As to each Letter of Credit that will be
outstanding as of the Revolving Commitment Ending Date or as of the termination
of the Commitments pursuant to Section 2.7, no further renewal of any such
Letter of Credit shall occur, and the Borrower shall provide on or before the
Revolving Commitment Ending Date or the date of such termination, as the case
may be, (i) cash collateral in an amount reasonably satisfactory to the LC Bank,
or (ii) one or more irrevocable letters of credit in form and substance, and
issued by a bank, reasonably satisfactory to the LC Bank pursuant to which the
LC Bank is entitled to recover the maximum amount at any time payable under such
Letter of Credit, plus all costs and fees then or thereafter payable with
respect to such Letter of Credit under the terms of this Agreement.
Section 2.12 Agreement to Repay Letter of Credit. If the LC Bank has
-----------------------------------
received documents purporting to draw under a Letter of Credit that the LC Bank
believes conform to the requirements of the Letter of Credit, or if the LC Bank
has decided that it will comply with the Borrower's written or oral request or
authorization to pay a drawing on any Letter of Credit that the LC Bank does not
believe conforms to the requirements of the subject Letter of Credit, it will
notify the Borrower of that fact. The Borrower shall reimburse the LC Bank by
10:00 a.m. (Chicago time) on the day on which such drawing is to be paid in
Immediately Available Funds in an amount equal to the amount of such drawing.
Any amount by which the Borrower has failed to reimburse the LC Bank for the
full amount of such drawing by 10:00 a.m. on the date on which the LC Bank in
its notice indicated that it would pay such drawing, until reimbursed from the
proceeds of an Advance pursuant to Section 2.15 or out of funds available in the
Holding Account, is an "Unpaid Drawing".
-26-
Section 2.13 Obligations Absolute. The obligation of the Borrower
--------------------
under Section 2.12 to repay the LC Bank for any amount drawn on any Letter of
Credit and to repay the Banks for any Advances made under Section 2.15 to cover
Unpaid Drawings shall be absolute, unconditional and irrevocable, shall continue
for so long as any Letter of Credit is outstanding notwithstanding any
termination of this Agreement, and shall be paid strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including without
limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of
Credit;
(b) The existence of any claim, setoff, defense or other
right which the Borrower may have or claim at any time against any
beneficiary, transferee or holder of any Letter of Credit (or any Person
for whom any such beneficiary, transferee or holder may be acting), the
Agent, the LC Bank or any Bank or any other Person, whether in connection
with a Letter of Credit, this Agreement, the transactions contemplated
hereby, or any unrelated transaction; or
(c) Any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever.
Neither the Agent, the LC Bank nor any Bank nor the officers, directors or
employees of any thereof shall be liable or responsible for, and the obligations
of the Borrower to the Agent, the LC Bank and the Banks shall not be impaired
by:
(i) The use which may be made of any Letter of Credit,
or for any acts or omissions of any beneficiary, transferee or
holder thereof in connection therewith;
(ii) The validity, sufficiency or genuineness of
documents, or of any endorsements thereon, even if such documents
or endorsements should, in fact, prove to be in any or all
respects invalid, insufficient, fraudulent or forged;
(iii) The acceptance by the LC Bank of documents that
appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to
the contrary; or
(iv) Any other action of the LC Bank in making or
failing to make payment under any Letter of Credit if in good
faith and in conformity with U.S. or foreign laws, regulations or
customs applicable thereto.
Notwithstanding the foregoing, the Borrower shall have a claim against the LC
Bank, and the LC Bank shall be liable to the Borrower, to the extent, but only
to the extent, of any direct, as
-27-
opposed to consequential, damages suffered by the Borrower or any Subsidiary
which the Borrower proves were caused by the LC Bank's willful misconduct or
gross negligence in determining whether documents presented under any Letter of
Credit comply with the terms thereof.
Section 2.14 Increased Cost for Letters of Credit. If any Regulatory
------------------------------------
Change shall either (a) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against Letters of Credit issued by the
LC Bank, or (b) shall impose on the LC Bank any other conditions affecting this
Agreement or any Letter of Credit; and the result of any of the foregoing is to
increase the cost to the LC Bank of issuing or maintaining any Letter of Credit,
or reduce the amount of any sum received or receivable by the LC Bank hereunder,
then, within 30 days after written notice and demand from the LC Bank (which
written notice and demand shall be given by the LC Bank promptly after it
determines such increased cost or reduction), the Borrower shall pay to the LC
Bank the additional amount or amounts as will compensate the LC Bank for such
increased cost or reduction. If the LC Bank fails to give such notice and
demand within 45 days after it obtains knowledge of such an event, the LC Bank
shall, with respect to compensation payable pursuant to this Section, only be
entitled to payment under this Section for costs incurred from and after the
date 45 days prior to the date that the LC Bank does give such notice. A
certificate submitted to the Borrower by the LC Bank setting forth the basis for
the determination of such additional amount or amounts necessary to compensate
the LC Bank as aforesaid shall be conclusive and binding on the Borrower absent
error.
Section 2.15 Loans to Cover Unpaid Drawings. Whenever any Unpaid
------------------------------
Drawing exists for which there are not then funds in the Holding Account to
cover the same, the Agent shall give the other Banks notice to that effect,
specifying the amount thereof, in which event each Bank is authorized (and the
Borrower does here so authorize each Bank) to, and shall, make an Advance (as a
Reference Rate Advance) to the Borrower in an amount equal to such Bank's
Revolving Percentage of the amount of the Unpaid Drawing. The Agent shall
notify each Bank by 11:00 AM (Chicago time) on the date such Unpaid Drawing
occurs of the amount of the Revolving Loan to be made by such Bank. Notices
received after such time shall be deemed to have been received on the next
Business Day. Each Bank shall then make such Revolving Loan (regardless of
noncompliance with the applicable conditions precedent specified in Article III
hereof and regardless of whether an Event of Default then exists) and each Bank
shall provide the Agent with the proceeds of such Revolving Loan in Immediately
Available Funds, at the office of the Agent, not later than 2:00 PM (Chicago
time) on the day on which such Bank received such notice (or, in the case of
notices received after 11:00 AM, Chicago time, is deemed to have received such
notice). The Agent shall apply the proceeds of such Advance directly to
reimburse itself for such Unpaid Drawing. If any portion of any such amount
paid to the Agent should be recovered by or on behalf of the Borrower from the
Agent in bankruptcy, by assignment for the benefit of creditors or otherwise,
the loss of the amount so recovered shall be ratably shared between and among
the Banks in the manner contemplated by Section 8.10 hereof. If at the time the
Banks make funds available to the Agent pursuant to the provisions of this
Section, the applicable conditions precedent specified in Article III shall not
have been satisfied, the Borrower shall pay to the Agent for the account of the
Banks interest on the funds so advanced at a floating rate per annum equal to
the sum of the Reference Rate plus the
-28-
Applicable Margin plus two percent (2.00%). If for any reason any Bank is unable
to make an Advance to the Borrower to reimburse the Agent for an Unpaid Drawing,
then such Bank shall immediately purchase from the Agent a risk participation in
such Unpaid Drawing, at par, in an amount equal to such Bank's Revolving
Percentage of the Unpaid Drawing.
Section 2.16 Defaulting Bank.
---------------
(a) Generally. In addition to the rights and remedies that
---------
may be available to the Agent or the Borrower under this Agreement or
applicable law, if at any time a Bank is a Defaulting Bank such Defaulting
Bank's right to participate in the administration of the Loans, this
Agreement and the other Loan Documents, including without limitation, any
right to vote in respect of, to consent to or to direct any action or
inaction of the Agent, shall be suspended during the pendency of such
failure or refusal. If a Bank is a Defaulting Bank because it has failed to
make timely payment to the Agent of any amount required to be paid to the
Agent hereunder (without giving effect to any notice or cure periods), in
addition to other rights and remedies which the Agent or the Borrower may
have under the immediately preceding provisions or otherwise, the Agent
shall be entitled (i) to collect interest from such Defaulting Bank on such
delinquent payment for the period from the date on which the payment was
due until the date on which the payment is made at the Federal Funds Rate,
(ii) to withhold or setoff and to apply in satisfaction of the defaulted
payment and any related interest, any amounts otherwise payable to such
Defaulting Bank under this Agreement or any other Loan Document until such
defaulted payment and related interest has been paid in full and such
default no longer exists and (iii) to bring an action or suit against such
Defaulting Bank in a court of competent jurisdiction to recover the
defaulted amount and any related interest. Any amounts received by the
Agent in respect of a Defaulting Bank's Loans shall not be paid to such
Defaulting Bank and shall be held uninvested by the Agent and either
applied against the purchase price of such Loans under the following
subsection (b) or paid to such Defaulting Bank upon the default of such
Defaulting Bank being cured.
(b) Purchase of Defaulting Bank's Commitment. Any Bank who
----------------------------------------
is not a Defaulting Bank shall have the right, but not the obligation, in
its sole discretion, to acquire all of a Defaulting Bank's Commitment. If
more than one Bank exercises such right, each such Bank shall have the
right to acquire such proportion of such Defaulting Bank's Commitment on a
pro rata basis. Upon any such purchase, the Defaulting Bank's interest in
the Loans and its rights hereunder (but not its liability in respect
thereof or under the Loan Documents or this Agreement to the extent the
same relate to the period prior to the effective date of the purchase)
shall terminate on the date of purchase, and the Defaulting Bank shall
promptly execute all documents reasonably requested to surrender and
transfer such interest to the purchaser thereof subject to and in
accordance with the requirements set forth in Section 9.6, including an
Assignment and Acceptance. The purchase price for the Commitment of a
Defaulting Bank shall be equal to the amount of the principal balance of
and the accrued and unpaid interest and fees on the Loans outstanding and
owed by the Borrower to the Defaulting Bank. The purchaser shall pay to the
Defaulting Bank in Immediately Available Funds on the date of such purchase
the principal of and accrued and unpaid interest and fees on the Loans made
by such
-29-
Defaulting Bank hereunder. Prior to payment of such purchase price to a
Defaulting Bank, the Agent shall apply against such purchase price any
amounts retained by the Agent pursuant to the last sentence of the
immediately preceding subsection (a). There shall be no recourse by a
Defaulting Bank against any Bank or the Agent for the payment of such sums
except to the extent of the receipt of payments from any other party or in
respect of the Loans.
Part C - General
----------------
Section 2.17 Computation. Computation of interest on Reference Rate
-----------
Advances shall be calculated on the basis of a year of 365 or 366 days, as the
case may be, and the actual number of days elapsed. Computation of all other
types of interest and all fees shall be calculated on the basis of actual days
elapsed and a year of 360 days.
Section 2.18 Payments. Payments and prepayments of principal of, and
--------
interest on, the Notes and all fees, expenses and other obligations under this
Agreement payable to the Agent or the Banks shall be made without setoff or
counterclaim in Immediately Available Funds not later than 12:00 noon (Chicago
time) on the dates called for under this Agreement and the Notes to the Agent at
its main office in Chicago, Illinois. Funds received after such time shall be
deemed to have been received on the next Business Day. The Agent will promptly
distribute in like funds to each Bank its ratable share of each such payment of
principal, interest and fees received by the Agent for the account of the Banks.
Whenever any payment to be made hereunder or on the Notes shall be stated to be
due on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time, in the case of a payment of
principal, shall be included in the computation of any interest on such
principal payment. The Agent will from time to time provide to the Borrower a
statement or statements of amounts due and owing under the Notes and under this
Agreement. The Agent's failure to provide such statements shall not, however,
relieve the Borrower of its obligations to pay any amounts that are now or
hereafter become due under the Notes and under this Agreement. The Borrower
hereby further authorizes the Banks, if and to the extent payment is not made
when due under the Notes or this Agreement, to make an Advance and use the
proceeds of such Advance to make such payment, all without prior notice to the
Borrower. Each Bank shall, however, provide notice to the Borrower of any such
Advance made by it promptly after it is made.
Section 2.19 Use of Loan Proceeds. The proceeds of the Advances
--------------------
shall be used for the development of new Restaurants and the Borrower's general
business purposes in a manner not in conflict with any of the Borrower's
covenants in this Agreement and for the payment of Existing Indebtedness.
Section 2.20 Interest Rate Not Ascertainable, Etc. If, on or prior
------------------------------------
to the date for determining the Adjusted Eurodollar Rate in respect of the
Interest Period for any Eurodollar Rate Advance, any Bank determines (which
determination shall be conclusive and binding, absent error) that:
(a) deposits in dollars (in the applicable amount) are not
being made available to such Bank in the relevant market for such Interest
Period, or
-30-
(b) the Adjusted Eurodollar Rate will not adequately and fairly
reflect the cost to such Bank of funding or maintaining Eurodollar Rate
Advances for such Interest Period,
such Bank shall forthwith give notice to the Borrower and the other Banks of
such determination, whereupon the obligation of such Bank to make or continue,
or to convert any Advances to, Eurodollar Rate Advances shall be suspended until
such Bank notifies the Borrower and the Agent that the circumstances giving rise
to such suspension no longer exist. While any such suspension continues, all
further Advances by such Bank shall be made as Reference Rate Advances. No such
suspension shall affect the interest rate then in effect during the applicable
Interest Period for any Eurodollar Rate Advance outstanding at the time such
suspension is imposed.
Section 2.21 Increased Cost. If any Regulatory Change:
--------------
(a) shall subject any Bank (or its Applicable Lending Office) to
any tax, duty or other charge with respect to its Eurodollar Rate Advances,
its Notes or its obligation to make Eurodollar Rate Advances or shall
change the basis of taxation of payment to any Bank (or its Applicable
Lending Office) of the principal of or interest on its Eurodollar Rate
Advances or any other amounts due under this Agreement in respect of its
Eurodollar Rate Advances or its obligation to make Eurodollar Rate Advances
(except for changes in the rate of tax on the overall net income of such
Bank or its Applicable Lending Office imposed by the jurisdiction in which
such Bank's principal office or Applicable Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board, but excluding with respect to any
Eurodollar Rate Advance any such requirement to the extent included in
calculating the applicable Adjusted Eurodollar Rate) against assets of,
deposits with or for the account of, or credit extended by, any Bank's
Applicable Lending Office or against Letters of Credit issued by the LC
Bank or shall impose on any Bank (or its Applicable Lending Office) or the
interbank Eurodollar market any other condition affecting its Eurodollar
Rate Advances, its Notes or its obligation to make Eurodollar Rate Advances
or affecting any Letter of Credit;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Eurodollar Rate
Advance or issuing or maintaining any Letter of Credit, or to reduce the amount
of any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Notes, then, within 30 days after
demand by such Bank (with a copy to the Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
increased cost or reduction. Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to this Section
and will designate a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
-31-
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank.
If any Bank fails to give such notice within 45 days after it obtains knowledge
of such an event, such Bank shall, with respect to compensation payable pursuant
to this Section, only be entitled to payment under this Section for costs
incurred from and after the date 45 days prior to the date that such Bank does
give such notice. A certificate of any Bank claiming compensation under this
Section, setting forth the additional amount or amounts to be paid to it
hereunder and stating in reasonable detail the basis for the charge and the
method of computation, shall be conclusive in the absence of error. In
determining such amount, any Bank may use any reasonable averaging and
attribution methods. Failure on the part of any Bank to demand compensation for
any increased costs or reduction in amounts received or receivable with respect
to any Interest Period shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts received or
receivable in any subsequent Interest Period.
Section 2.22 Illegality. If any Regulatory Change shall make it
----------
unlawful or impossible for any Bank to make, maintain or fund any Eurodollar
Rate Advances, such Bank shall notify the Borrower and the Agent, whereupon the
obligation of such Bank to make or continue, or to convert any Advances to,
Eurodollar Rate Advances shall be suspended until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to such suspension no
longer exist. Before giving any such notice, such Bank shall designate a
different Applicable Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank determines that it may not lawfully
continue to maintain any Eurodollar Rate Advances to the end of the applicable
Interest Periods, all of the affected Advances shall be automatically converted
to Reference Rate Advances as of the date of such Bank's notice, and upon such
conversion the Borrower shall indemnify such Bank in accordance with Section
2.24.
Section 2.23 Capital Adequacy. In the event that any Regulatory
----------------
Change reduces or shall have the effect of reducing the rate of return on any
Bank's capital or the capital of its parent corporation (by an amount such Bank
deems material) as a consequence of its Revolving Commitment and/or Advances
and/or any Letters of Credit or any Bank's obligations to make Advances to cover
Letters of Credit to a level below that which such Bank or its parent
corporation could have achieved but for such Regulatory Change (taking into
account such Bank's policies and the policies of its parent corporation with
respect to capital adequacy), then the Borrower shall, within 30 days after
written notice and demand from such Bank (with a copy to the Agent), pay to such
Bank additional amounts sufficient to compensate such Bank or its parent
corporation for such reduction. If any Bank fails to give such notice within 45
days after it obtains knowledge of such an event, such Bank shall, with respect
to compensation payable pursuant to this Section, only be entitled to payment
under this Section for diminished returns as a result of such reduction for the
period from and after the date 45 days prior to the date that such Bank does
give such notice. Any determination by such Bank under this Section and any
certificate as to the amount of such reduction given to the Borrower by such
Bank shall be final, conclusive and binding for all purposes, absent error.
Section 2.24 Funding Losses; Eurodollar Rate Advances. The Borrower
----------------------------------------
shall compensate each Bank, upon its written request, for all losses, expenses
and liabilities (including any interest paid by such Bank to lenders of funds
borrowed by it to make or carry Eurodollar
-32-
Rate Advances and including loss of anticipated profits, in each case to the
extent not recovered by such Bank in connection with the re-employment of such
funds) which such Bank may sustain: (i) if for any reason, other than a default
by such Bank, a funding of a Eurodollar Rate Advance does not occur on the date
specified therefor in the Borrower's request or notice as to such Advance under
Section 2.2 or 2.4, or (ii) if, for whatever reason (including, but not limited
to, acceleration of the maturity of Advances following an Event of Default), any
repayment of a Eurodollar Rate Advance, or a conversion pursuant to Section
2.22, occurs on any day other than the last day of the Interest Period
applicable thereto. A Bank's request for compensation shall set forth the basis
for the amount requested and shall be final, conclusive and binding, absent
error.
Section 2.25 Discretion of Banks as to Manner of Funding. Each Bank
-------------------------------------------
shall be entitled to fund and maintain its funding of Eurodollar Rate Advances
in any manner it may elect, it being understood, however, that for the purposes
of this Agreement all determinations hereunder (including, but not limited to,
determinations under Section 2.24) shall be made as if such Bank had actually
funded and maintained each Eurodollar Rate Advances during the Interest Period
for such Advance through the purchase of deposits having a maturity
corresponding to the last day of the Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period.
Section 2.26 Optional Prepayment/Replacement of Banks.
----------------------------------------
(a) Within fifteen (15) days after receipt by the Borrower of
written notice and demand from any Bank for payment pursuant to Section
2.21, 2.22 or 2.23 (any such Bank demanding such payment being referred to
herein as an "Affected Bank"), and provided no Default or Event of Default
has occurred and is continuing, the Borrower may, at its option, notify the
Agent and such Affected Bank of its intention to do one of the following:
(i) The Borrower may obtain, at the Borrower's expense, a
replacement Bank ("Replacement Bank") for such Affected Bank, which
Replacement Bank shall be reasonably satisfactory to the Agent. In
the event the Borrower obtains a Replacement Bank that will refinance
all outstanding Obligations owed to such Affected Bank and assume its
Commitments hereunder within ninety (90) days following notice of the
Borrower's intention to do so, the Affected Lender shall sell and
assign all of its rights and delegate all of its obligations under
this Agreement to such Replacement Bank in accordance with the
provisions of Section 9.6 hereof, provided that the Borrower has
---------
reimbursed such Affected Bank for any administrative fee payable
pursuant to Section 9.6 and, in any case where such replacement occurs
as the result of a demand for payment pursuant to Sections 2.21, 2.22
or 2.23, paid all amounts required to be paid to such Affected Bank
pursuant to Section 2.21, 2.22 or 2.23 through the date of such sale
or assignment.
(ii) The Borrower may prepay in full all outstanding
Obligations owed to such Affected Bank and terminate such Affected
Bank's
-33-
Revolving Commitment Amount, in which case the Total Revolving
Commitment Amount will be reduced by the amount of such Affected
Bank's Revolving Commitment Amount. The Borrower shall, within ninety
(90) days following notice of its intention to do so, prepay in full
all outstanding Obligations owed to such Affected Bank (including, in
any case where such replacement occurs as the result of a demand for
payment of increased costs, such Affected Bank's increased costs for
which it is entitled to reimbursement under this Credit Agreement
through the date of such prepayment), and terminated such Affected
Bank's obligations under the Total Revolving Loan Commitment.
(b) Within fifteen (15) days after receipt by the Borrower of
written notice and demand from the LC Bank for payment pursuant to Section
2.14, and provided no Default or Event of Default has occurred and is
continuing, the Borrower may, at its option and expense, request that
another Bank be appointed the LC Bank, which Bank shall be reasonably
satisfactory to the Agent. In the event the Bank selected by the Borrower
consents to such appointment and agrees to assume the duties of LC Bank and
become the issuer of all Letters of Credit, within ninety (90) days
following notice of the Borrower's intention to do so the LC Bank shall
sell and assign all of its rights and delegate all of its obligations as
issuer of the Letters of Credit under this Agreement to such Bank, provided
--------
that the Borrower has paid all amounts required to be paid to the LC Bank
pursuant to Section 2.14 through the date of such sale or assignment.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions of Initial Transaction. The making of the
---------------------------------
initial Advance on the Revolving Loan shall be subject to the prior or
simultaneous fulfillment of the following conditions:
(a) Documents. The Agent shall have received the following in
---------
sufficient counterparts (except for the Notes) for each Bank:
(i) A Revolving Note drawn to the order of each Bank
executed by a duly authorized officer (or officers) of the Borrower
and dated the Closing Date.
(ii) The Security Documents executed by a duly authorized
officer of the Borrower or Guarantor, as applicable, and dated the
Closing Date.
(iii) For each Subsidiary, a certificate representing all
of Borrower's or any Subsidiary's Equity Interests in such Subsidiary,
together with a duly executed instrument of transfer or assignment in
blank of said certificate.
(iv) A certificate of the Secretary or Assistant Secretary
of the Borrower dated as of the Closing Date and certifying as to the
following:
-34-
(A) A true and accurate copy of the corporate
resolutions of the Borrower authorizing the execution,
delivery and performance of the Loan Documents to which the
Borrower is a party contemplated hereby and thereby;
(B) The incumbency, names, titles and signatures of
the officers of the Borrower authorized to execute the Loan
Documents to which the Borrower is a party and to request
Advances;
(C) A true and accurate copy of the Articles of
Incorporation of the Borrower; and
(D) A true and accurate copy of the bylaws for the
Borrower.
(v) A copy of the Articles of Incorporation of the
Borrower with all amendments thereto, certified by the appropriate
governmental official of the jurisdiction of its incorporation as of a
date not more than 30 days prior to the Closing Date.
(vi) A certificate of good standing for the Borrower in
the jurisdiction of its incorporation and in each State in which the
character of the properties owned or leased by the Borrower or the
business conducted by the Borrower makes such qualification necessary,
certified by the appropriate governmental officials as of a date not
more than 30 days prior to the Closing Date.
(vii) A certificate of the Secretary or Assistant Secretary
of each Guarantor dated as of the Closing Date and certifying as to
the following:
(A) A true and accurate copy of the corporate
resolutions of such Guarantor authorizing the execution,
delivery and performance of the Loan Documents to which such
Guarantor is a party contemplated hereby and thereby;
(B) The incumbency, names, titles and signatures of
the officers of such Guarantor authorized to execute the
Loan Documents to which such Guarantor is a party;
(C) A true and accurate copy of the articles of
incorporation, certificate of formation, certificate of
limited partnership, or other comparable charter of such
Guarantor; and
-35-
(D) A true and accurate copy of the bylaws,
operating agreement, or partnership agreement, as
applicable, for such Guarantor.
(viii) A copy of the articles of incorporation, certificate
of formation or certificate of limited partnership, as applicable, of
each Guarantor, together with all amendments thereto, certified by the
appropriate governmental official of the jurisdiction of its formation
as of a date not more than 30 days prior to the Closing Date.
(ix) A certificate of good standing for each Guarantor in
the jurisdiction of its formation and in each State in which the
character of the properties owned or leased by such Guarantor or the
business conducted by such Guarantor makes such qualification
necessary, certified by the appropriate governmental officials as of a
date not more than 30 days prior to the Closing Date.
(x) Such corporate and other organizational documents and
certificates as the Agent may reasonably request with respect to the
due organization, good standing, power and authority of the Borrower
or any Guarantor and incumbency of officers or other officials
thereof.
(xi) Financial statements of the Borrower and the
Subsidiaries for the Fiscal Year ended on December 31, 2000 and the
fiscal quarter ended on April 1, 2001, consisting of consolidated
statements of cash flow for such Fiscal Year and fiscal quarter, a
consolidated statement of changes in stockholders' equity for such
Fiscal Year, statements of income for each Restaurant for such Fiscal
Year and fiscal quarter, and a consolidated balance sheet as at the
end of such Fiscal Year and fiscal quarter, certified, in the case of
the consolidated statements for such Fiscal Year, without
qualification by Deloitte Touche or another firm of independent
certified public accountants of recognized national standing selected
by the Borrower and reasonably acceptable to the Agent, together with
all footnotes and any management letters, management reports or other
supplementary comments or reports to the Borrower or its board of
directors furnished by such accountants in connection with such
financial statements, and such other information relating to the
Borrower and the Subsidiaries, financial or otherwise, which the Agent
may reasonably request.
(xii) A certificate dated the Closing Date executed by the
chief executive officer or chief financial officer of the Borrower on
its behalf certifying as to the matters set forth in Sections 3.2 (a)
and 3.2 (b) below.
(xiii) A Certificate of Insurance prepared in accordance
with XXXXX 27 and XXXXX 25, showing property, liability, automobile,
and workers compensation insurance coverages carried by the Borrower
and the Subsidiaries with insurance companies licensed to do business
in the State of Minnesota and
-36-
reasonably acceptable to the Agent, in such amounts as may be
acceptable to the Agent, and otherwise providing evidence of the
Borrower's compliance with Section 5.3 concerning insurance.
(xiv) A calculation of the initial Borrowing Base.
(xv) Payoff letters duly executed by each creditor with
respect to the Existing Credit Agreement confirming that Borrower has
satisfied all Obligations (as defined in the Existing Credit
Agreement) in full (other than contingent Obligations that by their
terms survive the termination of the Existing Credit Agreement).
(xvi) A true, correct and complete copy of (A) each
management agreement entered into by a Liquor License Entity and the
Borrower or any Subsidiary, in form and substance satisfactory to the
Agent, and (B) each indenture, loan or credit agreement or other
material agreement, contract, lease or instrument identified on
Schedule 4.23.
(b) Opinion. The Borrower shall have requested Faegre & Xxxxxx,
-------
its counsel, to prepare a written opinion, addressed to the Banks and dated
the Closing Date, covering the matters set forth in Exhibit 3.1, and such
opinion shall have been delivered to the Agent in sufficient counterparts
for each Bank.
(c) Compliance. The Borrower shall have performed and complied
----------
with all agreements, terms and conditions contained in this Agreement
required to be performed or complied with by the Borrower prior to or
simultaneously with the Closing Date.
(d) Existing Indebtedness. The Commitments under and as defined
---------------------
in the Existing Credit Agreement shall have been terminated in their
entirety and all liens securing the Existing Indebtedness shall have been
released or terminated to the satisfaction of the Agent and its counsel.
(e) Security Documents. All Security Documents (or financing
------------------
statements with respect thereto) shall have been appropriately filed or
recorded to the satisfaction of the Agent; any pledged collateral shall
have been duly delivered to the Agent; and the priority and perfection of
the Liens created by the Security Documents shall have been established to
the satisfaction of the Agent and its counsel.
(f) Other Matters. All corporate and legal proceedings relating
-------------
to the Borrower and the Guarantors and all instruments and agreements in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in scope, form and substance to the Agent, the
Banks and the Agent's special counsel, and the Agent shall have received
all information and copies of all documents, including records of corporate
proceedings, as any Bank or such special counsel may reasonably have
-37-
requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities.
(g) Fees and Expenses. The Agent shall have received for itself
-----------------
and for the account of the Banks all fees and other invoiced amounts due
and payable by the Borrower on or prior to the Closing Date, including the
invoiced reasonable fees and expenses of counsel to the Agent payable
pursuant to Section 9.2.
Section 3.2 Conditions Precedent to all Advances and Letters of
---------------------------------------------------
Credit. The obligation of the Banks to make any Advances hereunder (including
------
the initial Advance on the Revolving Loan) and of the Agent to issue each Letter
of Credit (including the initial Letter of Credit) shall be subject to the
fulfillment of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties contained in Article IV shall be true and correct on and as of
the Closing Date and on the date of each Advance or the date of issuance of
each Letter of Credit, with the same force and effect as if made on such
date.
(b) No Default. No Default or Event of Default, or Material
----------
Adverse Occurrence first occurring after April 1, 2001, shall have occurred
and be continuing on the Closing Date and on the date of each Advance or
the date of issuance of each Letter of Credit or will exist after giving
effect to the Loans made on such date or the Letter of Credit so issued.
(c) No Merger/Acquisition. Neither the Borrower nor any of the
---------------------
Subsidiaries shall have made any commitment to (i) merge or consolidate
with any other entity or (ii) acquire all or substantially all of the
assets of any other entity, unless such merger, consolidation or
acquisition would not be prohibited by the terms of this Agreement.
(d) Notices and Requests. The Agent shall have received the
--------------------
Borrower's request for such Advance or such Letter of Credit as required
under Section 2.2 or Section 2.10.
(e) No Adverse Development in Litigation. No development shall
------------------------------------
have occurred in any litigation, arbitration or governmental investigation
or proceeding disclosed in writing by the Borrower to the Agent under this
Agreement, which would constitute a Material Adverse Occurrence.
(f) Additional Material Agreements. The Borrower shall have
------------------------------
delivered to the Agent a copy of each "material contract" (as such term is
defined in Item 6.01(b)(10) of Regulation S-K promulgated by the Securities
Exchange Commission) to which the Borrower or any Subsidiary is a party or
by which the Borrower or any Subsidiary or any of the Borrower's or any
Subsidiary's properties may be bound, which has not been previously
disclosed in, and a copy included with, any report or registration
statement previously filed by the Borrower with the Securities Exchange
Commission
-38-
pursuant to the requirements of the Securities Act or the Exchange Act, or
any successor law, and regulations and rules issued pursuant to the
Securities Act or the Exchange Act or any successor law thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, the
Banks to make Advances hereunder and the Agent to issue Letters of Credit, the
Borrower represents and warrants to the Agent and the Banks:
Section 4.1 Organization, Standing, Etc. The Borrower is a
---------------------------
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into this Agreement and to issue the Notes and to perform its obligations
under the Loan Documents to which it is a party. Each Subsidiary is a
corporation, limited partnership or limited liability company duly formed and
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, limited partnership or limited
liability company power and authority to carry on its business as now conducted.
Each of the Borrower and the Subsidiaries (a) holds all certificates of
authority, licenses and permits necessary to carry on its business as presently
conducted in each jurisdiction in which it is carrying on such business, except
where the failure to hold such certificates, licenses or permits would not
constitute a Material Adverse Occurrence, and (b) is duly qualified and in good
standing as a foreign corporation, limited partnership or limited liability
company in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such
qualification necessary and the failure so to qualify would permanently preclude
the Borrower or such Subsidiary from enforcing its rights with respect to any
material assets or expose the Borrower or any Subsidiary to any Material Adverse
Occurrence.
Section 4.2 Authorization and Validity. The execution, delivery and
--------------------------
performance by the Borrower of the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action by the Borrower, and this
Agreement constitutes, and the Notes and other Loan Documents to which it is a
party when executed will constitute, the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms, subject to limitations as to enforceability which might result
from bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and subject to general principles of equity.
Section 4.3 No Conflict; No Default. Except as set forth on Schedule
-----------------------
4.3, the execution, delivery and performance by the Borrower of the Loan
Documents to which it is a party will not (a) violate any provision of any law,
statute, rule or regulation or any order, writ, judgment, injunction, decree,
determination or award of any court, governmental agency or arbitrator presently
in effect having applicability to the Borrower, (b) violate or contravene any
provision of the Articles of Incorporation or bylaws of the Borrower, or (c)
result in a breach of or constitute a default under any indenture, loan or
credit agreement or any other agreement,
-39-
lease or instrument to which the Borrower is a party or by which it or any of
its properties may be bound or result in the creation of any Lien on the assets
of the Borrower or the Subsidiaries thereunder (except in the case of clause (a)
or (c), above, where the violation, breach or default or the creation of such
Lien could not adversely effect the validity or enforceability of the Loan
Documents or constitute a Material Adverse Occurrence). Except as set forth on
Schedule 4.3, neither the Borrower nor any Subsidiary is in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or credit
agreement or other agreement, lease or instrument in any case in which the
consequences of such default or violation could constitute a Material Adverse
Occurrence.
Section 4.4 Government Consent. No order, consent, approval,
------------------
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority is required
on the part of the Borrower to authorize, or is required on the part of the
Borrower in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, the Loan Documents to
which the Borrower is a party, except for any necessary filing or recordation of
or with respect to any of the Security Documents and except as set forth on
Schedule 4.3, and except where the failure to obtain such order, consent,
approval, license, authorization, validation or exemption, or to make such
filing, recording or registration, could not adversely effect the validity or
enforceability of the Loan Documents or constitute a Material Adverse
Occurrence.
Section 4.5 Financial Statements and Condition. The Borrower's
----------------------------------
audited consolidated financial statements as at, and for the Fiscal Year ended,
December 31, 2000 and its unaudited financial statements as at, and for the
fiscal quarter ended April 1, 2001, as heretofore furnished to the Bank, have
been prepared in accordance with GAAP on a consistent basis (except for the
absence of footnotes and subject to year-end audit adjustments as to the interim
statements) and fairly present, in all material respects, the consolidated
financial condition of the Borrower and the Subsidiaries as at such dates and
the results of their consolidated operations and their consolidated cash flows
for the respective periods then ended. As of April 1, 2001, neither the
Borrower nor any Subsidiary had any material Indebtedness, Contingent Liability,
liability for taxes or long-term lease obligation, nor other material obligation
which is not reflected in the unaudited financial statements as of April 1,
2001, or in the notes thereto, and which would be required to be reflected
therein in accordance with GAAP. Since April 1, 2001, there has been no
Material Adverse Occurrence.
Section 4.6 Litigation. Except as set forth on Schedule 4.6, there
----------
are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or adversely affecting the Borrower or any
Subsidiary or any of their properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower or such Subsidiary, would constitute a
Material Adverse Occurrence.
Section 4.7 Environmental, Health and Safety Laws. Except as set
-------------------------------------
forth on Schedule 4.7, there does not exist any violation by the Borrower or any
Subsidiary of any applicable federal, state or local law, rule or regulation or
order of any government,
-40-
governmental department, board, agency or other instrumentality relating to
environmental, pollution, health or safety matters which will or threatens to
impose a material liability on the Borrower or a Subsidiary or which would
require a material expenditure by the Borrower or such Subsidiary to cure.
Except as set forth on Schedule 4.7, neither the Borrower nor any Subsidiary has
received any notice to the effect that any part of its operations or properties
is not in material compliance with any such law, rule, regulation or order or
notice that it or its property is the subject of any governmental investigation
evaluating whether any remedial action is needed to respond to any release of
any toxic or hazardous waste or substance into the environment, which non-
compliance or remedial action could reasonably be expected to constitute a
Material Adverse Occurrence. Except as set forth in Schedule 4.7, the Borrower
does not have knowledge that it or its property or any Subsidiary or the
property of any Subsidiary will become subject to environmental laws or
regulations during the term of this Agreement, compliance with which could
reasonably be expected to require Capital Expenditures which would constitute a
Material Adverse Occurrence.
Section 4.8 ERISA. Each Plan is in compliance in all material
-----
respects with all applicable requirements of ERISA and the Code and with all
material applicable rulings and regulations issued under the provisions of ERISA
and the Code setting forth those requirements. No Reportable Event has occurred
and is continuing with respect to any Plan subject to Title IV of ERISA. All of
the minimum funding standards applicable to such Plans have been satisfied and
there exists no event or condition which would reasonably be expected to result
in the institution of proceedings to terminate any Plan under Section 4042 of
ERISA. With respect to each Plan subject to Title IV of ERISA, as of the most
recent valuation date for such Plan, the present value (determined on the basis
of reasonable assumptions employed by the independent actuary for such Plan and
previously furnished in writing to the Agent) of such Plan's projected benefit
obligations did not exceed the fair market value of such Plan's assets.
Section 4.9 Federal Reserve Regulations. Neither the Borrower nor
---------------------------
any Subsidiary is engaged principally or as one of its principal activities in
the business of extending credit for the purpose of purchasing or carrying
margin stock (as defined in Regulation U of the Board). The value of all margin
stock owned by the Borrower does not constitute more than 25% of the value of
the assets of the Borrower.
Section 4.10 Title to Property; Leases; Liens; Subordination. Each
-----------------------------------------------
of the Borrower and the Subsidiaries has (a) good and marketable title to its
owned real properties and (b) good and sufficient title to, or valid, subsisting
and enforceable leasehold interest in, its other material properties, including
all real properties and other material properties and assets referred to as
owned by the Borrower and the Subsidiaries in the most recent financial
statement referred to in Section 4.5 (other than property and assets disposed of
since April 1, 2001, in the ordinary course of business or, after the date of
this Agreement, as permitted under Section 6.2). None of such properties is
subject to a Lien, except as allowed under Section 6.14. The Borrower has not
subordinated any of its material rights under any obligation owing to it to the
rights of any other person.
Section 4.11 Taxes. Except as set forth in Schedule 4.11, each of
-----
the Borrower and the Subsidiaries has filed all federal, state and local tax
returns required to be filed and has
-41-
paid or made provision for the payment of all taxes due and payable pursuant to
such returns and pursuant to any assessments made against it or any of its
property and all other taxes, fees and other charges imposed on it or any of its
property by any governmental authority (other than taxes, fees or charges the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Borrower, and other than taxes,
fees, or charges, or returns which would have properly reported taxes, fees or
charges, not in excess of $100,000 in the aggregate in any Fiscal Year,
inclusive of any interest or penalties in relation to such taxes, fees, charges
or returns). No tax Liens have been filed and not subsequently released (other
than tax Liens permitted by Section 6.14), and no material claims are being
asserted as of the date of this Agreement with respect to any such taxes, fees
or charges (other than those being contested in good faith in accordance with
Section 5.4 hereof). Except as set forth in Schedule 4.11, the charges, accruals
and reserves on the books of the Borrower in respect of taxes and other
governmental charges are adequate and the Borrower knows of no proposed tax
assessment against it or any Subsidiary or any basis therefor which would
constitute a Material Adverse Occurrence.
Section 4.12 Trademarks, Patents. Except as set forth on Schedule
-------------------
4.12 , each of the Borrower and the Subsidiaries possesses or has the right to
use all of the material patents, trademarks, trade names, service marks and
copyrights, and applications therefor, and all material technology, know-how,
processes, methods and designs, used in or necessary for the conduct of its
business, without known material conflict with the rights of others.
Section 4.13 Burdensome Restrictions. Neither the Borrower nor any
-----------------------
Subsidiary is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which constitutes a Material
Adverse Occurrence.
Section 4.14 Force Majeure. Since April 1, 2001, the business,
-------------
properties and other assets (taken as a whole) of the Borrower and the
Subsidiaries have not been materially and adversely affected in any way as the
result of any fire or other casualty, strike, lockout, or other labor trouble,
embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity
of armed forces or act of God.
Section 4.15 Investment Company Act. Neither the Borrower nor any
----------------------
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 4.16 Public Utility Holding Company Act. Neither the
----------------------------------
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a holding company or an "affiliate" of a holding company or of a subsidiary
company of a holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 4.17 Retirement Benefits. Except as required under Section
-------------------
4980B of the Code, Section 601 of ERISA or applicable state law, neither the
Borrower nor any Subsidiary
-42-
is obligated to provide post-retirement medical or insurance benefits with
respect to employees or former employees.
Section 4.18 Full Disclosure. Subject to the following sentence,
---------------
neither the financial statements referred to in Section 4.5 nor any other
certificates, written statements, exhibits or reports furnished by or on behalf
of the Borrower in connection with or pursuant to this Agreement, when taken as
a whole, contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained therein not
misleading. Certificates or statements furnished by or on behalf of the
Borrower to the Agent or the Banks consisting of projections or forecasts of
future results or events have been prepared in good faith and based on good
faith estimates and assumptions of the management of the Borrower, and the
Borrower has no reason to believe that such projections or forecasts for any
periods or portions of periods not yet completed (as modified by any updates
thereof delivered to the Bank) are not reasonable.
Section 4.19 Solvency. On the Closing Date, after giving effect to
--------
all Advances, (a) the present fair saleable value of the assets of the Borrower
and the Subsidiaries is in excess of the total amount of their liabilities
(including for purposes of the definition all liabilities, whether or not
reflected on a balance sheet prepared in accordance with GAAP, and whether
direct or indirect, fixed or contingent, secured of unsecured, disputed or
undisputed); and (b) the Borrower and the Subsidiaries will be able to pay their
obligations as they mature in the ordinary course of business as proposed to be
conducted following the Closing Date; and (c) the Borrower and the Subsidiaries
do not have unreasonably small capital to carry out the business as proposed to
be conducted following the Closing Date. For purposes of this Section 4.19,
"present fair saleable value" means the value which would be realized from an
interested purchaser aware of all relevant information relating to the assets or
group of assets being sold and who is willing to purchase under ordinary selling
conditions in an existing and not theoretical market if the assets or group of
assets are disposed of within a period of six (6) months to one year.
Section 4.20 Liquor License Entities. Schedule 4.20 sets forth, as
-----------------------
of the date of this Agreement, a list of each Liquor License Entity, its
jurisdiction of organization, the Restaurant at which such Liquor License Entity
operates the bar or for which it holds the liquor license, the date of issuance
of, and the entity issuing, such liquor license, and the outstanding principal
amount of any loan made by the Borrower or any Subsidiary to such Liquor License
Entity. As of the Closing Date, (i) neither the Borrower nor any Subsidiary
owns directly or indirectly the Equity Interests of any Liquor License Entity,
(ii) each Liquor License Entity operating the bar at a Restaurant holds the
liquor license for such Restaurant, (iii) each Liquor License Entity operating
the bar at a Restaurant operates such bar pursuant to a management agreement
delivered to the Agent, and (iv) the liquor laws of the state, county or
municipality in which a Restaurant, the bar of which is operated by a Liquor
License Entity, is located requires that a Liquor License Entity hold the liquor
license for such Restaurant and operate the bar at such Restaurant if such
Restaurant is to serve liquor.
Section 4.21 Capitalization of Borrower and Subsidiaries. Schedule
-------------------------------------------
4.21 sets forth, as of the date of this Agreement:
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(a) for Borrower, its jurisdiction of organization,
(b) a list of all Subsidiaries of the Borrower and, as
applicable, the number and percentage of the authorized, issued and
outstanding Equity Interests owned beneficially or of record by the
Borrower or any such Subsidiary therein, and the jurisdiction of
organization of that Subsidiary.
As of the Closing Date, all of the outstanding capital stock of the Borrower
will be validly issued, fully paid and nonassessable, and all of the outstanding
Equity Interests of the Subsidiaries will be validly issued, fully paid and
nonassessable, and will be owned beneficially and of record directly as set
forth on Schedule 4.21, subject to no Liens other than Liens in favor of the
Agent, for itself and the benefit of the Banks, and the restrictions set forth
in Schedule 4.21. Except as reflected on Schedule 4.21, as of the Closing Date,
none of the Subsidiaries has outstanding any capital stock appreciation or
phantom capital stock rights or plans or other similar rights with respect to
its Equity Interests, or is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any of its Equity Interests.
Except as set forth on Schedule 4.21, there are no statutory or contractual
preemptive rights or rights of first offer or refusal with respect to the Equity
Interests of any of the Subsidiaries. Neither the Borrower nor any of the
Subsidiaries has violated in any material respect any applicable securities laws
in connection with the offer, sale or issuance of any of its respective Equity
Interests.
Section 4.22 Obligations Senior Debt. The Obligations shall at all
-----------------------
times be considered senior in right of payment to the indebtedness evidenced by
the Subordinated Debt, including without limitation, the Subordinated
Debentures.
Section 4.23 Restaurant Locations; Material Contracts and Agreements.
-------------------------------------------------------
Schedule 4.23 identifies the location of each Restaurant owned or operated by
the Borrower or any Subsidiary as of the Closing Date and (i) if such Restaurant
(or the real property on which such Restaurant is located) is not owned by the
Borrower or a Subsidiary, describes the lease pursuant to which the Borrower or
its Subsidiary leases or operates such Restaurant and identifies the name and
address of the lessor under each such lease, or (ii) if such Restaurant (or the
real property on which such Restaurant is located) is owned by the Borrower or a
Subsidiary, identifies whether any mortgage or deed of trust in respect of such
Restaurant (or real property) has been granted by the Borrower or a Subsidiary
and, if so, describes such mortgage or deed of trust and the amounts secured
thereby, and identifies the name and address of the mortgagee or other
beneficiary under such mortgage or deed of trust. As of the Closing Date,
except as set forth on Schedule 4.23, each indenture, loan or credit agreement
or any other "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the Securities and Exchange Commission) to which
the Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary or any of the Borrower's or any Subsidiary's properties may be bound
has been disclosed in, and a copy has been included with, a report or
registration statement filed by Borrower with the Securities and Exchange
Commission, pursuant to the requirements of the Securities Act of 1933
("Securities Act") or the Securities and Exchange Act
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of 1934 ("Exchange Act"), or any successor law, and regulations and rules issued
pursuant to the Securities Act or Exchange Act or any successor law thereto.
Section 4.24 Deposit Accounts and Securities Accounts. Schedule 4.24
----------------------------------------
identifies, as of the Closing Date, each "deposit account" (as defined in
Section 9-102 of Article 9 of the Uniform Commercial Code as adopted in the
State of Illinois) and "securities account" (as defined in Section 8-501 of
Article 8 of the Uniform Commercial Code as adopted in the State of Illinois)
established by the Borrower or any Subsidiary, or in the Borrower's or any
Subsidiary's name, the name of the bank, financial institution or other holder
of each such account, its address and the account name and/or number assigned to
each such account. The only securities accounts maintained by the Borrower or a
Subsidiary as of the Closing Date are identified, along with certain deposit
accounts, in Part I of Schedule 4.24.
ARTICLE V
AFFIRMATIVE COVENANTS
Until any obligation of the Banks hereunder to make Advances and of
the Agent to issue Letters of Credit shall have expired or been terminated and
all the other Obligations have been paid in full and all outstanding Letters of
Credit shall have expired or shall have been returned to the Agent, or the
liability of the Agent thereon shall have been otherwise discharged, unless the
Agent shall otherwise consent in writing:
Section 5.1 Financial Statements and Reports. The Borrower will
--------------------------------
furnish to the Agent:
(a) As soon as available and in any event within 120 days after
the end of each Fiscal Year of the Borrower, the financial statements of
the Borrower and the Subsidiaries consisting of consolidated statements of
cash flow and changes in stockholders' equity for such Fiscal Year,
statements of income for each Restaurant for such Fiscal Year, and a
consolidated balance sheet as at the end of such Fiscal Year, setting forth
in each case in comparative form corresponding figures from the previous
annual audit, certified, in the case of the consolidated statements,
without qualification by Deloitte Touche or another firm of independent
certified public accountants of recognized national standing selected by
the Borrower and reasonably acceptable to the Agent, together with all
footnotes and any management letters, management reports or other
supplementary comments or reports to the Borrower or its board of directors
furnished by such accountants in connection with such financial statements,
provided that, as long as the Borrower is required to file reports on Form
10-K with the Securities and Exchange Commission pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, the Borrower
shall be deemed to have fulfilled its obligations to furnish to the Agent,
by the date prescribed in this Section 5.1(a), the financial statements,
management letters , management reports or other supplementary comments or
reports in respect of any Fiscal Year by furnishing to the Agent a copy of
said report for such Fiscal Year.
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(b) Together with the audited financial statements required
under Section 5.1(a), a statement by the accounting firm performing such
audit to the effect that it has reviewed this Agreement and that in the
course of performing its examination nothing came to its attention that
caused it to believe that any Default or Event of Default exists, or, if
such Default or Event of Default existed, specifying the nature and period
of existence thereof.
(c) As soon as available and in any event within 30 days after
the end of each fiscal month in each Fiscal Year, an unaudited consolidated
statement of cash flow for the Borrower and the Subsidiaries for such month
and for the period from the beginning of such Fiscal Year to the end of
such month, an unaudited statement of income for each Restaurant for such
month and for the period from the beginning of such Fiscal Year to the end
of such month, and an unaudited consolidated balance sheet of the Borrower
and the Subsidiaries as at the end of such month, setting forth in
comparative form figures for the corresponding period for the preceding
Fiscal Year, accompanied by a certificate in the form of Exhibit 5.1 (c)
hereto signed by the chief financial officer of the Borrower setting forth
in reasonable detail a calculation of the Borrowing Base determined as of
the end of such month and stating that such financial statements present
fairly, in all material respects, the consolidated financial condition of
the Borrower and the Subsidiaries and that the same have been prepared in
accordance with GAAP (except for the absence of footnotes and subject to
year-end audit adjustments).
(d) As soon as available and in any event within 30 days after
the end of each of the first three fiscal quarters of each Fiscal Year (or
45 days after the end of each of the first three fiscal quarters of each
Fiscal Year, if the Borrower is required to file reports on Form 10-Q with
the Securities and Exchange Commission pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, in respect of such
fiscal quarter), an unaudited consolidated statement of cash flow for the
Borrower and the Subsidiaries for such quarter and for the period from the
beginning of such Fiscal Year to the end of such quarter, an unaudited
statement of income for each Restaurant for such quarter and for the period
from the beginning of such Fiscal Year to the end of such quarter, and an
unaudited consolidated balance sheet of the Borrower and the Subsidiaries
as at the end of such quarter, setting forth in comparative form figures
for the corresponding period for the preceding Fiscal Year, accompanied by
a certificate signed by the chief financial officer of the Borrower stating
that such financial statements present fairly, in all material respects,
the consolidated financial condition of the Borrower and the Subsidiaries
and that the same have been prepared in accordance with GAAP (except for
the absence of footnotes and subject to year-end audit adjustments).
(e) As soon as practicable and in any event within 45 days after
the end of each fiscal quarter, a Compliance Certificate signed by the
chief financial officer of the Borrower demonstrating in reasonable detail
compliance (or noncompliance, as the case may be) with these Sections:
6.10, 6.16, 6.17, 6.18, 6.19, 6.20 and 6.21 as at the end of such quarter,
and stating that as at the end of such quarter there did not exist any
Default or Event of Default or, if such Default or Event of Default
existed, specifying the
-46-
nature and period of existence thereof and what action the Borrower
proposes to take with respect thereto.
(f) As soon as practicable and in any event at least 30 days
prior to the beginning of each Fiscal Year of the Borrower, a statement of
forecasted income for each Restaurant for each fiscal month in such Fiscal
Year, and a consolidated forecasted balance sheet of the Borrower and the
Subsidiaries, as at the end of each such fiscal month in such Fiscal Year,
together with supporting assumptions, all in reasonable detail and
reasonably satisfactory in scope to the Agent.
(g) Immediately upon any officer of the Borrower becoming aware
of any Default or Event of Default, a notice describing the nature thereof
and what action the Borrower proposes to take with respect thereto.
(h) Immediately upon any officer of the Borrower becoming aware
of the occurrence, with respect to any Plan, of any Reportable Event or any
Prohibited Transaction, a notice specifying the nature thereof and what
action the Borrower proposes to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have
a trustee appointed for any Plan.
(i) Promptly, but in any event not later than ten Business Days
after the mailing or filing thereof, copies of all financial statements,
reports and proxy statements mailed to the Borrower's shareholders
generally, and copies of all registration statements, periodic reports and
other documents filed by the Borrower with the Securities and Exchange
Commission (or any successor thereto) or any national securities exchange.
(j) From time to time, such other information regarding the
business, operation and financial condition of the Borrower and the
Subsidiaries as the Agent may reasonably request.
Section 5.2 Corporate Existence. The Borrower will maintain, and
-------------------
cause each Subsidiary to maintain, its existence as a corporation, limited
partnership or limited liability company, as the case may be, in good standing
under the laws of its jurisdiction of organization and its qualification to
transact business in each jurisdiction where failure so to qualify would
permanently preclude the Borrower or such Subsidiary from enforcing its rights
with respect to any material asset or would expose the Borrower or such
Subsidiary to any material liability; provided, however, that nothing herein
shall prohibit the merger or liquidation and dissolution of any Subsidiary
allowed under Section 6.1.
Section 5.3 Insurance. The Borrower shall maintain, and shall cause
---------
each Subsidiary to maintain, with financially sound and reputable insurance
companies such insurance as may be required by law and such other insurance in
such amounts and against such hazards as is customary in the case of reputable
firms engaged in the same or similar business and similarly situated.
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Section 5.4 Payment of Taxes and Claims. The Borrower shall file,
---------------------------
and cause each Subsidiary to file, all tax returns and reports which are
required by law to be filed by it and will pay, and cause each Subsidiary to
pay, before they become delinquent all taxes, assessments and governmental
charges and levies imposed upon it or its property and all claims or demands of
any kind (including but not limited to those of suppliers, mechanics, carriers,
warehouses, landlords and other like Persons) which, if unpaid, might result in
the creation of a Lien upon its property (other than taxes, fees, assessments,
levies, claims, demands or charges, or returns or reports which would have
properly reported taxes, assessments, levies, fees or charges, not in excess of
$100,000 in the aggregate in any Fiscal Year, inclusive of any interest or
penalties in relation to such taxes, assessments, levies, fees, charges or
returns); provided that the foregoing items need not be paid if they are being
contested in good faith by appropriate proceedings, and as long as the
Borrower's or such Subsidiary's title to its property is not materially
adversely affected, its use of such property in the ordinary course of its
business is not materially interfered with and adequate reserves with respect
thereto have been set aside on the Borrower's or such Subsidiary's books in
accordance with GAAP.
Section 5.5 Inspection. The Borrower shall permit any Person
----------
designated by the Agent, upon reasonable notice, to visit and inspect any of the
properties, corporate books and financial records of the Borrower and the
Subsidiaries, to examine and to make copies of the books of accounts and other
financial records of the Borrower and the Subsidiaries, and to discuss the
affairs, finances and accounts of the Borrower and the Subsidiaries with, and to
be advised as to the same by, its officers at such reasonable times and
intervals as the Agent may designate (which shall be not less than once during
each fiscal quarter of the Borrower). So long as no Event of Default exists,
the Borrower shall reimburse the Agent for the reasonable out-of-pocket cost of
not more than one audit of collateral in each Fiscal Year and any other visits,
inspections and examinations shall be at the expense of the Banks, but any such
visits, inspections and examinations made while any Event of Default is
continuing shall be at the expense of the Borrower.
Section 5.6 Maintenance of Properties. The Borrower will maintain,
-------------------------
and cause each Subsidiary to maintain, its material properties used or useful in
the conduct of its business in good condition, repair and working order (normal
wear and tear excepted), and supplied with all necessary equipment, and make all
necessary repairs, renewals, replacements, betterments and improvements thereto,
all as may be necessary so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
Section 5.7 Books and Records. The Borrower will keep, and will
-----------------
cause each Subsidiary to keep, adequate and proper records and books of account
in which full and correct entries will be made of its dealings, business and
affairs.
Section 5.8 Compliance. The Borrower will comply, and will cause
----------
each Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject; provided, however, that failure so to comply shall not be a
breach of this covenant if such failure does not constitute a Material Adverse
Occurrence and the Borrower or such Subsidiary is acting in good faith and with
reasonable dispatch to cure such noncompliance.
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Section 5.9 Notice of Litigation. The Borrower will give prompt
--------------------
written notice to the Agent of (a) the commencement of any action, suit or
proceeding before any court or arbitrator or any governmental department, board,
agency or other instrumentality adversely affecting the Borrower or any
Subsidiary or any property of the Borrower or a Subsidiary or to which the
Borrower or a Subsidiary is a party in which an adverse determination or result
could constitute a Material Adverse Occurrence, or (other than any litigation
where the insurance insures against the damages claimed and the insurer has
assumed defense of the litigation without reservation) in which the damages
claimed could exceed $200,000 on an individual claim or $500,000 when aggregated
with other such claims, stating the nature and status of such action, (b) any
material arbitration or governmental investigation or proceeding not previously
disclosed by the Borrower to the Agent which has been instituted or, to the
knowledge of the Borrower, is threatened against the Borrower or any of the
Subsidiaries or to which its or any Subsidiaries' property is subject and which,
if determined adversely to the Borrower or such Subsidiary, would constitute a
Material Adverse Occurrence; and (c) any adverse development which occurs in any
litigation, arbitration or governmental investigation or proceeding previously
disclosed by the Borrower to the Agent which, if determined adversely to the
Borrower or such Subsidiary, would constitute a Material Adverse Occurrence,
provided that no such notice by the Borrower shall, per se, excuse the Borrower
------
from complying with the terms of Section 3.2.
Section 5.10 ERISA. The Borrower will maintain, and cause each ERISA
-----
Affiliate to maintain, each Plan in compliance with all material applicable
requirements of ERISA and of the Code and with all material applicable rulings
and regulations issued under the provisions of ERISA and of the Code and will
not and not permit any of the ERISA Affiliates to (a) engage in any transaction
in connection with which the Borrower or any of the ERISA Affiliates would be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code, in either case in an amount
exceeding $100,000, (b) fail to make full payment when due of all amounts which,
under the provisions of any Plan, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, or permit to exist any accumulated
funding deficiency (as such term is defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, with respect to any Plan in an
aggregate amount exceeding $100,000 or (c) fail to make any payments in an
aggregate amount exceeding $100,000 to any Multiemployer Plan that the Borrower
or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.
Section 5.11 Environmental Matters; Reporting. The Borrower will
--------------------------------
observe and comply with, and cause each Subsidiary to observe and comply with,
all applicable laws, rules, regulations and orders of any government or
government agency relating to health, safety, pollution, hazardous materials or
other environmental matters to the extent non-compliance could result in a
material liability for Borrower or any Subsidiary or otherwise constitute a
Material Adverse Occurrence. The Borrower will give the Agent prompt written
notice of any violation of any environmental law, rule, regulation or order by
the Borrower or any Subsidiary of which the Borrower becomes aware and of the
commencement of any judicial or administrative proceeding against the Borrower
or any Subsidiary relating to health, safety or
-49-
environmental matters (a) in which an adverse determination or result is
reasonably likely to result in the revocation of or have a material adverse
effect on any operating permits, air emission permits, water discharge permits,
hazardous waste permits or other permits held by the Borrower or any Subsidiary
which are material to the operations of the Borrower and the Subsidiaries taken
as whole, or (b) which will or is reasonably likely to impose a material
liability on the Borrower or such Subsidiary to any Person or which will require
a material expenditure by the Borrower or such Subsidiary to cure any alleged
problem or violation.
Section 5.12 Reaffirmation of Guaranties. When so requested by the
---------------------------
Agent from time to time, the Borrower will promptly cause the Guarantors, and
any other Person who may hereafter guaranty the Obligations or any part thereof,
to execute and deliver to the Agent reaffirmations of their respective
Guaranties in such form as the Agent may require.
Section 5.13 Further Assurances. The Borrower shall promptly correct
------------------
any non-material or patent defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment or recordation of any Loan
Document. Promptly upon request by the Agent, the Borrower also shall do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all conveyances, mortgages, deeds of trust, trust deeds,
assignments, estoppel certificates, financing statements and continuations
thereof, notices of assignment, transfers, certificates, assurances and other
instruments as the Agent may reasonably require from time to time in order: (a)
to carry out more effectively the purposes of the Loan Documents; (b) to perfect
and maintain the validity, effectiveness and priority of any security interests
intended to be created by the Loan Documents; and (c) to better assure, convey,
grant, assign, transfer, preserve, protect and confirm unto the Agent or the
Banks the rights granted now or hereafter intended to be granted to the Agent or
the Banks under any Loan Document or under any other instrument executed in
connection with any Loan Document or that the Borrower may be or become bound to
convey, mortgage or assign to the Agent for the benefit of the Banks in order to
carry out the intention or facilitate the performance of the provisions of any
Loan Document. The Borrower shall furnish to the Agent evidence satisfactory to
the Agent of every such recording, filing or registration.
Section 5.14 Operating Leases Relating to Real Property and
----------------------------------------------
Landlords' Waivers. Not more than 60 days after the Closing Date, the Borrower
------------------
agrees to deliver to the Agent, for each Restaurant listed on Schedule 4.23
which is not owned by the Borrower or a Subsidiary, either a landlord waiver
executed by the owner of the real property on which such Restaurant is located
in the form attached as Exhibit 5.14 or written evidence of Borrower's good
faith efforts to obtain such a landlord waiver. Not fewer than five (5)
Business Days after execution of any new Operating Lease relating to real
property or renewal of any existing Operating Lease relating to real property,
the Borrower agrees to provide an executed copy thereof to the Agent. With
respect to Operating Leases related to real property entered into from and after
the Closing Date (whether a new Operating Lease related to real property or the
renewal of an existing Operating Lease related to real property), the Borrower
shall attach to or incorporate in any proposed lease and request the lessor
thereunder to provide a landlord waiver in the form attached hereto as Exhibit
5.14, and shall negotiate in good faith to obtain such landlord waiver from such
lessor.
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Section 5.15 New Restaurants. The Borrower agrees that each new
---------------
Restaurant created or acquired from and after the Closing Date shall be owned or
leased and operated only by a Wholly-Owned Subsidiary, the Equity Interests
(which shall be certificated) of which (or, in the case of a Foreign Subsidiary,
65% of the Equity Interests of which) have been pledged and delivered to the
Agent pursuant to the Pledge Agreement or a Pledge Agreement (Subsidiary), as
applicable, except that a non-profit entity (each, a "Liquor License Entity" and
collectively, the "Liquor License Entities"), the Equity Interests of which are
not owned directly or indirectly by the Borrower or any of its Subsidiaries or
pledged and delivered to the Agent, shall be permitted to hold the liquor
license for a Restaurant and operate the bar at such Restaurant to the extent
necessary to comply with the liquor laws of the state, county or municipality in
which such Restaurant is located; provided that (i) the Borrower shall give the
--------
Agent prior written notice of any such proposed Liquor License Entity organized
after the date of this Agreement, (ii) the Borrower shall provide to the Agent
any additional information regarding the Liquor License Entity that the Agent
may reasonably request, (iii) if requested by the Agent, the Borrower shall
provide to the Agent an opinion of counsel that the holding of the liquor
license and operation of the bar by the Liquor License Entity is necessary to
comply with applicable liquor laws if such Restaurant is to serve liquor, and
(iv) the Liquor License Entity shall operate the bar pursuant to the terms of a
management agreement (A) delivered to the Agent within ten (10) days of its
execution that is in substantially the form of the management agreements
delivered to, and approved by, the Agent under Section 3.1(a)(xvi) hereof or (B)
otherwise approved in writing by the Agent in its reasonable discretion.
Section 5.16 Deposit Accounts and Securities Accounts. Not more than
----------------------------------------
60 days after the Closing Date, the Borrower agrees to deliver to the Agent, for
each deposit account, securities account or other account described in Part I of
Schedule 4.24 (other than deposit accounts maintained with the Agent), a
"control agreement" in form and substance reasonably satisfactory to the Agent,
and duly executed by the Borrower or the Subsidiary which is the account party
with respect to such account and the financial institution or securities
intermediary at which such account is maintained, provided that in the event
that the Borrower is unable to obtain such "control agreement" within such 60-
day period, the Borrower shall have an additional 120-day period in which to
relocate such account to a financial institution or securities intermediary
which will enter into a "control agreement" in form and substance reasonably
satisfactory to the Agent and duly executed by the Borrower or the Subsidiary
which is the account party with respect to such relocated account and the
financial institution or securities intermediary at which such relocated account
is maintained.
Section 5.17 Mortgages and Deeds of Trust on Owned Properties. After
------------------------------------------------
an Event of Default has occurred and is continuing, the Borrower will deliver,
and will cause each Subsidiary to deliver, at the written request of the
Majority Banks, mortgages and deeds of trust in favor of the Agent for the
benefit of the Banks, in form and substance reasonably satisfactory to the Agent
and the Majority Banks, on each parcel of real property owned by the Borrower or
a Subsidiary.
-51-
ARTICLE VI
NEGATIVE COVENANTS
Until any obligation of the Banks hereunder to make Advances and of
the Agent to issue Letters of Credit shall have expired or been terminated and
all the other Obligations have been paid in full and all outstanding Letters of
Credit shall have expired or shall have been returned to the Agent, or the
liability of the Agent thereon shall have been otherwise discharged, unless the
Agent shall otherwise consent in writing:
Section 6.1 Merger. The Borrower will not merge or consolidate or
------
enter into any analogous reorganization or transaction with any Person or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution)
or permit any Subsidiary to do any of the foregoing; provided, however, any
-------- -------
Subsidiary may be merged with or liquidated into the Borrower or any Wholly
Owned Subsidiary which has executed and delivered a Guaranty and a Security
Agreement (Guarantor) (and, in connection with any such liquidation, dissolved)
if the Borrower or such Wholly-Owned Subsidiary, in the case of a merger, is the
surviving corporation.
Section 6.2 Disposition of Assets. The Borrower will not, and will
---------------------
not permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one transaction or a series
of transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are applied with reasonable
promptness to the purchase price of such replacement equipment;
(c) the sale, assignment, lease, conveyance, transfer or other
disposition of property by the Borrower to any Wholly-Owned Subsidiary or
by a Subsidiary to the Borrower or any Wholly-Owned Subsidiary; provided
--------
that such transferee Subsidiary shall have executed and delivered to the
Agent a Guaranty and a Security Agreement (Guarantor) and related UCC
financing statements for filing in such jurisdictions as the Agent may
request;
(d) the sale of any real property or Restaurant equipment as
part of a sale leaseback transaction in which the Borrower or a Subsidiary
becomes the lessee of such real property or equipment; provided that (i) no
--------
such sale leaseback transaction shall be permitted at any time an Event of
Default has occurred and is continuing, (ii) for each such sale leaseback
transaction, the Borrower shall have delivered to the Agent a pro forma
Compliance Certificate showing compliance as of the end of the immediately
preceding fiscal quarter of the Borrower for which a Compliance Certificate
has been
-52-
provided with Sections 6.10, 6.16, 6.17, 6.18, 6.19, 6.20 and 6.21 after
giving effect to such sale leaseback transaction, and (iii) with reasonable
promptness, the net cash proceeds paid to the Borrower or a Subsidiary in
connection with such sale leaseback transaction shall be used to pay down
the outstanding principal balance of the Revolving Loans or, if no such
principal balance exists, shall be either (A) deposited into a deposit
account or securities account maintained by the Borrower or any Subsidiary
for which a "control agreement," in form and substance reasonably
satisfactory to the Agent, has been executed and delivered to the Agent, or
into an Excluded Account, or (B) within 30 calendar days after the closing
of such sale leaseback transaction or the withdrawal from any such deposit
account, securities account or Excluded Account, reinvested by the Borrower
or a Subsidiary in the development of a new Restaurant or the maintenance
or operation of an existing Restaurant;
(e) dispositions of Investments permitted under Section 6.12(n)
upon the exercise of options granted under the Key Employee Share Ownership
Plan; and
(f) other dispositions of property during the term of this
Agreement whose net book value in the aggregate does not exceed five
percent (5%) of the Borrower's total consolidated assets as shown on its
balance sheet for its most recent prior fiscal quarter; provided that no
--------
disposition which is permitted under this Section 6.2(e) at the time it is
consummated shall thereafter cease to be permitted because of a subsequent
decrease in the Borrower's total consolidated assets.
Section 6.3 Plans. The Borrower will not permit, and will not allow
-----
any ERISA Affiliate to permit, any event to occur or condition to exist which
would permit any Plan to terminate under any circumstances which would cause the
Lien provided for in Section 4068 of ERISA to attach to any assets of the
Borrower or any ERISA Affiliate; and the Borrower will not permit, as of the
most recent valuation date for any Plan subject to Title IV of ERISA, the
present value (determined on the basis of reasonable assumptions employed by the
independent actuary for such Plan and previously furnished in writing to the
Agent) of such Plan's projected benefit obligations to exceed the fair market
value of such Plan's assets.
Section 6.4 Change in Nature of Business. The Borrower will not, and
----------------------------
will not permit any Subsidiary to, make any material change in the nature of the
business of the Borrower or such Subsidiary, as carried on at the date hereof.
Section 6.5 Subsidiaries.
------------
(a) After the date of this Agreement, the Borrower will not, and
will not permit any Subsidiary to, form or acquire any Person which would
thereby become a Subsidiary, except that, the Borrower or any Subsidiary
may form a corporation, limited liability company, or limited partnership
("New Entity") that would thereby become a Wholly-Owned Subsidiary provided
such Borrower or Subsidiary provides 30 days' prior written notice to the
Agent of any initial capitalization of such New Entity in excess of any
deminimus capitalization necessary for the organization of such New Entity.
In the event the Borrower hereafter forms a New Entity that thereby becomes
a Wholly-Owned
-53-
Subsidiary, then upon such formation such New Entity shall promptly: (a)
certificate all Equity Interests in such New Entity in form and substance
reasonably satisfactory to the Agent and its counsel; and (b) deliver a
Guaranty, a Security Agreement (Guarantor) and related UCC financing
statements for filing in such jurisdictions as the Agent shall request, all
duly executed by such New Entity, and the Borrower shall deliver to the
Agent (x) in the case of a New Entity owned directly by the Borrower, an
amendment to the Pledge Agreement in respect of such New Entity in form and
substance reasonably satisfactory to the Agent; and (y) in the case of a
New Entity owned by a Subsidiary, a Pledge Agreement (Subsidiary) in
respect of such New Entity, in each case duly executed by the Borrower or
the applicable Subsidiary, and the certificates representing the Borrower's
or the applicable Subsidiary's ownership of 100% of the Equity Interests of
such New Entity, together with stock powers or other comparable assignment
forms related thereto requested by the Agent; provided, however, that in
-------- -------
the event such New Entity is a Foreign Subsidiary, the Borrower or the
applicable Subsidiary shall be required to pledge only 65% of the Equity
Interests of such New Entity and such New Entity will not be required to
execute and deliver a Guaranty, a Security Agreement (Guarantor) or UCC
financing statements.
(b) Notwithstanding the provisions of this Section to the
contrary if, following a change in the relevant sections of the Code or the
regulations, rules, rulings, notices or other official pronouncements
issued or promulgated thereunder, counsel for the Borrower reasonably
acceptable to the Agent does not, within 30 days after a written request
from the Agent or the Majority Banks, deliver evidence, in form and
substance reasonably satisfactory to the Agent, with respect to any Foreign
Subsidiary that has not already had 100% of its Equity Interests pledged
pursuant to a Pledge Agreement or Pledge Agreement (Subsidiary) that (i) a
pledge of 66-2/3% or more of the total combined voting power of all classes
of Equity Interests of such Foreign Subsidiary entitled to vote, and (ii)
the entering into by such Foreign Subsidiary of a Guaranty and Security
Agreement (Guarantor), in any such case could reasonably be expected to
cause (I) the undistributed earnings of such Foreign Subsidiary as
determined for federal income tax purposes to be treated as a deemed
dividend to such Foreign Subsidiary's United States parent for federal
income tax purposes or (II) other material adverse federal income tax
consequences to the Borrower or any Subsidiary, then in the case of a
failure to deliver the evidence described in clause (i) above, that portion
of the Foreign Subsidiary's Equity Interests owned by the Borrower or a
Subsidiary and not theretofore pledged pursuant to the Pledge Agreement or
Pledge Agreement (Subsidiary), as the case may be, shall be pledged
pursuant to the Pledge Agreement or a Pledge Agreement (Subsidiary), as the
case may be, and in the case of a failure to deliver the evidence described
in clause (ii) above, such Foreign Subsidiary shall execute and deliver a
Pledge Agreement (Subsidiary), if applicable, a Guaranty and a Security
Agreement (Guarantor), in each case to the extent that the entering into of
such documents is permitted by the laws of the respective foreign
jurisdiction and with all documents delivered pursuant to this Section to
be in form and substance reasonably satisfactory to the Agent.
Section 6.6 Negative Pledges; Subsidiary Restrictions. The Borrower
-----------------------------------------
will not, and will not permit any Subsidiary to, enter into any agreement, bond,
note or other instrument
-54-
with or for the benefit of any Person other than the Agent which would (i)
prohibit the Borrower or such Subsidiary from granting, or otherwise limit the
ability of the Borrower or such Subsidiary to grant, to the Agent any Lien on
any assets or properties of the Borrower or such Subsidiary (other than assets
or properties subject to Liens permitted by Section 6.14(i) or Section 6.14(j)),
or (ii) require the Borrower or such Subsidiary to xxxxx x Xxxx to any other
Person if the Borrower or such Subsidiary grants any Lien to the Agent. The
Borrower will not permit any Subsidiary to place or allow any restriction,
directly or indirectly, on the ability of such Subsidiary to (a) pay dividends
or any distributions on or with respect to such Subsidiary's capital stock or
(b) make loans or other cash payments to the Borrower (other than restrictions
contained in this Agreement).
Section 6.7 Restricted Payments. The Borrower will not, and will not
-------------------
permit any of the Partially-Owned Subsidiaries to, make any Restricted Payments;
provided that,
(a) the Borrower may make dividends, distributions, payments,
redemptions or purchases payable solely in, or in exchange for, common
stock of the Borrower; and
(b) as long as no Default or Event of Default shall exist or
would be created thereby, the Borrower may (i) repurchase common stock
issued pursuant to options or awards granted to directors, officers,
employees or consultants under any Stock-Based Incentive Plan, (ii)
repurchase common stock upon the exercise by it of its purchase rights
under any of the Paisano Partner Program Stock Purchase Agreements, and
(iii) make dividends, distributions, payments, redemptions or purchases out
of the net cash proceeds of a Public Offering if and only if the Borrower
has previously made all payments then due under Sections 2.5, 2.6(a),
2.6(b), 2.8(b) and 2.8(c).
Section 6.8 Transactions with Affiliates. Except as set forth on
----------------------------
Schedule 6.8, the Borrower will not, and will not permit any Subsidiary to,
enter into any transaction with any Affiliate of the Borrower, except upon fair
and reasonable terms no less favorable to the Borrower or such Subsidiary than
would obtain in a comparable arm's-length transaction with a Person not an
Affiliate.
Section 6.9 Accounting Changes. The Borrower will not, and will not
------------------
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change its Fiscal Year or
the fiscal year of any Subsidiary.
Section 6.10 Capital Expenditures. The Borrower will not, and will
--------------------
not permit any Subsidiary to, make Capital Expenditures in an amount exceeding,
on a consolidated basis, $50,000,000 in any Fiscal Year; provided that all
--------
Capital Expenditures shall be invested in the development of new Restaurants or
the maintenance of existing Restaurants or in the construction, acquisition,
repair or maintenance of the Borrower's corporate headquarters.
Section 6.11 Subordinated Debt. The Borrower will not, and will not
-----------------
permit any Subsidiary to (a) make any scheduled payment of the principal of or
interest on any Subordinated Debt which would be prohibited by the terms of such
Subordinated Debt and any
-55-
related subordination agreement; (b) directly or indirectly make any prepayment
on or purchase, redeem or defease any Subordinated Debt or offer to do so
(whether such prepayment, purchase or redemption, or offer with respect thereto,
is voluntary or mandatory); (c) amend or cancel the subordination provisions
applicable to any Subordinated Debt; (d) take or omit to take any action if as a
result of such action or omission the subordination of such Subordinated Debt,
or any part thereof, to the Obligations might be terminated, impaired or
adversely affected; or (e) omit to give the Agent prompt notice of any notice
received from any holder of Subordinated Debt, or any trustee therefor, or of
any default under any agreement or instrument relating to any Subordinated Debt
by reason whereof such Subordinated Debt might become or be declared to be due
or payable;
Section 6.12 Investments. The Borrower will not, and will not permit
-----------
any Subsidiary to, acquire for value, make, have or hold any Investments,
except:
(a) Investments existing on the date of this Agreement.
(b) Travel and expense advances to management personnel and
employees in the ordinary course of business.
(c) Investments in readily marketable direct obligations issued
or guaranteed by the United States or any agency thereof and supported by
the full faith and credit of the United States.
(d) A deposit account with Century Bank having funds in an
aggregate amount not to exceed $125,000, plus interest accrued thereon and
deposited therein; and certificates of deposit or bankers' acceptances in
any amount of or by any commercial bank organized under the laws of the
United States or any State thereof which has (i) combined capital and
surplus of at least $100,000,000, and (ii) a credit rating with respect to
its unsecured indebtedness from a nationally recognized rating service of
at least "A".
(e) Commercial paper given the highest rating by two nationally
recognized rating services.
(f) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America.
(g) Other readily marketable Investments in debt securities
which are reasonably acceptable to the Agent.
(h) Equity Interests in any Subsidiary, the formation or
acquisition of which is permitted under Section 6.5, and contributions to
the capital of any such Subsidiary or any other Wholly Owned Subsidiary
which has executed and delivered to the Agent a Guaranty and a Security
Agreement (Guarantor).
(i) Loans from the Borrower to any Wholly-Owned Subsidiary which
(except in the case of Foreign Subsidiaries) has executed and delivered to
the Bank a
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Guaranty and (except in the case of BUCA (Wheeling), Inc.) a Security
Agreement (Guarantor).
(j) Investments in the real and personal property assets of
individual restaurant locations for consideration of no more than
$2,000,000 per location.
(k) Loans from the Borrower or any Subsidiary to employees of
the Borrower or any Subsidiary the aggregate outstanding principal amount
of which does not exceed $250,000 at any time.
(l) Investments in entities that operate restaurants if (i) the
aggregate cost of such Investments to the Borrower or Subsidiary originally
acquiring or making such Investments does not exceed $250,000 for the
period from the Closing Date through the Termination Date, or (ii) such
Investments are acquired or made solely with the proceeds of the sale of
any other Investments permitted by this Section 6.12(1).
(m) Acquisitions of restaurants or entities that operate
restaurants if (i) such acquisition is made solely in consideration for the
issuance of Equity Interests of the Borrower, and (ii) such restaurants are
converted to Restaurants not later than one year following the closing date
of such acquisition.
(n) Investments made by the Borrower to hedge its obligations
under the Key Employee Share Ownership Plan or any options granted pursuant
thereto, in an amount not to exceed $5,000,000 in the aggregate.
(o) Loans to Liquor License Entities in the aggregate
outstanding principal amount of no more than $250,000 at any time.
Any Investments under clauses (c), (d), (e) or (f) above (other than the deposit
account with Century Bank) must mature within one year of the acquisition
thereof by the Borrower or a Subsidiary.
Section 6.13 Indebtedness. The Borrower will not, and will not
------------
permit any Subsidiary to, incur, create, issue, assume or suffer to exist any
Indebtedness, except:
(a) The Obligations.
(b) Current Liabilities, other than for borrowed money, incurred
in the ordinary course of business.
(c) Indebtedness existing on the date of this Agreement and
disclosed on Schedule 6.13 , but not including any extension or refinancing
thereof.
(d) Indebtedness secured by Liens permitted under Section
6.14(a) through Section 6.14(h).
-57-
(e) Indebtedness secured by Liens permitted under Section
6.14(i) in an aggregate principal amount, in the case of any such
Indebtedness secured by Liens on personal property, not to exceed
$2,500,000 at any one time outstanding.
(f) Subordinated Debt.
(g) Indebtedness owing to the Borrower from any Wholly-Owned
Subsidiary which has executed and delivered to the Bank a Guaranty and
(except in the case of BUCA (Wheeling), Inc.) a Security Agreement
(Guarantor).
(h) Indebtedness with respect to the Century Bank Letter of
Credit or the USBNA Letter of Credit.
(i) Contingent Obligations permitted under Section 6.15.
Section 6.14 Liens. The Borrower will not, and will not permit any
-----
Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into,
or make any commitment to enter into, any arrangement for the acquisition of any
properly through conditional sale, lease-purchase or other title retention
agreements, with respect to any property now owned or hereafter acquired by the
Borrower or a Subsidiary, except:
(a) Liens granted to the Agent for itself and for the benefit of
the Banks under the Security Documents to secure the Obligations.
(b) Liens existing on the date of this Agreement and disclosed
on Schedule 6.14.
(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations in the ordinary course of business of the Borrower or
a Subsidiary.
(d) Liens for taxes, fees, assessments and governmental charges
not delinquent or to the extent that payment therefor shall not at the time
be required to be made in accordance with the provisions of Section 5.4.
(e) Liens of carriers, warehousemen, landlords, mechanics and
materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of
Section 5.4.
(f) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance, appeal,
or other similar bonds.
(g) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution;
-58-
provided that (i) such deposit account is not a dedicated cash collateral
--------
account and is not subject to restriction against access by the Borrower or
a Subsidiary in excess of those set forth by regulations promulgated by the
Board, and (ii) such deposit account is not intended by the Borrower or any
Subsidiary to provide collateral to the depository institution.
(h) Encumbrances on real property in the nature of zoning
restrictions, easements, rights of way, encroachments, restrictive
covenants and other similar rights or restrictions, whether or not of
record, on the use of real property, which encumbrances do not materially
detract from the value of such property or materially impair the use
thereof in the business of the Borrower or a Subsidiary.
(i) The interest of any lessor under any Capitalized Lease or
purchase money liens on personal property; provided, that, (i) the
Indebtedness secured thereby is permitted by this Agreement and (ii) such
Liens are limited to the property acquired and do not secure Indebtedness
other than the related Capitalized Lease Obligations or the purchase price
of such personal property.
(j) Liens on cash in bank accounts securing rents and other
obligations under real property leases, provided that no obligations under
any single lease shall be secured by cash in an amount in excess of
$200,000.
(k) Liens securing Indebtedness incurred with respect to the
Century Bank Letter of Credit on assets of the Borrower having a fair
market value not to exceed $125,000, plus interest accrued thereon.
(l) Rights of participants under the Key Employee Share
Ownership Plan or options granted pursuant thereto.
Section 6.15 Contingent Liabilities. The Borrower will not, and will
----------------------
not permit any Subsidiary to, be or become liable on any Contingent Obligations,
except Contingent Obligations existing on the date of this Agreement and
described on Schedule 6.15, Contingent Obligations under any Guaranty, and
Contingent Obligations of the Borrower incurred from and after the Closing Date
with respect to obligations of Subsidiaries under leases of real property.
Section 6.16 Average Annual Comparable Restaurant Sales Growth. The
-------------------------------------------------
Borrower will not permit the Average Annual Comparable Restaurant Sales Growth
as of the last day of any fiscal quarter to be negative.
Section 6.17 Average Restaurant Annual Cash Flow. The Borrower will
-----------------------------------
not permit the Average Restaurant Annual Cash Flow as of the last day of any
fiscal quarter to be less than $500,000.
Section 6.18 Interest/Operating Lease Payment Coverage Ratio. The
-----------------------------------------------
Borrower will not permit the Interest/Operating Lease Payment Coverage Ratio as
of the last day of any fiscal quarter to be less than the 2.75 to 1.00.
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Section 6.19 Fixed Charge Coverage Ratio. The Borrower will not
---------------------------
permit the Fixed Charge Coverage Ratio as of the last day of any fiscal quarter
to be less than 1.75 to 1.00.
Section 6.20 Cash Flow Leverage Ratio. The Borrower will not permit
------------------------
the Cash Flow Leverage Ratio as of the last day of any fiscal quarter to be
greater than 2.75 to 1.00.
Section 6.21 Net Worth. The Borrower will not permit its Net Worth
---------
as of the last day of any fiscal quarter to be less than:
(a) for each fiscal quarter during Fiscal Year 2001,
$93,951,000; and
(b) for each fiscal quarter during any Fiscal Year thereafter,
the greater of (A) the minimum required Net Worth during the preceding
Fiscal Year or (B) 90% of the actual Net Worth as of the end of the
preceding Fiscal Year.
Section 6.22 Loan Proceeds. The Borrower will not, and will not
-------------
permit any Subsidiary to, use any part of the proceeds of the Loans or Advances
directly or indirectly, and whether immediately, incidentally or ultimately, (a)
to purchase or carry margin stock (as defined in Regulation U of the Board) or
to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund Indebtedness originally incurred for such purpose or (b) for
any purpose which entails a violation of, or which is inconsistent with, the
provisions of Regulations U or X of the Board.
Section 6.23 Modification of Ownership or Equity Structure. The
---------------------------------------------
Borrower will not permit any Subsidiary to issue or authorize the issuance of
Equity Interests of such Subsidiary (other than qualifying shares or other
Equity Interest held by directors or other Persons performing similar functions)
which would result in any other Person becoming an owner thereof; issue or
authorize the issuance of options to purchase Equity Interests of such
Subsidiary which immediately, or in the future upon the exercise of rights
granted therein, would result in any other Person becoming an owner thereof;
issue or authorize the issuance of warrants to purchase Equity Interests of such
Subsidiary which immediately, or in the future upon the exercise of rights
granted therein, would result in any other Person becoming an owner thereof;
issue or authorize the issuance of securities or instruments convertible into
Equity Interests of such Subsidiary which immediately, or in the future upon the
exercise of rights granted therein, would result in any other Person becoming an
owner thereof; or authorize, issue or grant any stock appreciation rights,
phantom stock, profit participations or other similar rights with respect to the
Equity Interests of such Subsidiary which immediately, or in the future upon the
exercise of rights granted therein, would result in any other Person becoming an
owner thereof.
Section 6.24 Annual Additional Restaurants. The Borrower will not,
-----------------------------
nor will it permit any Subsidiary to, open more than 20 new Restaurants, in the
aggregate, in any Fiscal Year.
Section 6.25 Limitations on Deposit Accounts and Securities Accounts.
-------------------------------------------------------
The Borrower will not, nor will it permit any Subsidiary to, establish or
maintain any securities
-60-
account other than those securities accounts set forth on Schedule 4.24 unless
the Borrower or such Subsidiary has, upon establishment of an additional
securities account, delivered to the Agent a "control agreement" in form and
substance reasonably satisfactory to the Agent and duly executed by the Borrower
or the Subsidiary which is the account party with respect to such securities
account and the securities intermediary at which such account is maintained. For
each deposit account or securities account established or maintained by the
Borrower or a Subsidiary for which a "control agreement" in form and substance
reasonably satisfactory to the Agent has not been executed and delivered to the
Agent (other than such accounts maintained with the Agent and such accounts for
which "control agreements" must be maintained under Section 5.16 but with
respect to which the time period for obtaining such "control agreements" or for
relocating such accounts under Section 5.16 has not yet expired (collectively,
the "Excluded Accounts")), the Borrower will not, nor will it permit any
Subsidiary to, maintain a balance in such account of greater than $100,000 for
more than 5 consecutive Business Days.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of
-----------------
the following events shall constitute an Event of Default:
(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal of or interest on any
Note or any other Obligation required to be made to the Agent or any Bank
pursuant to this Agreement, provided that failure to pay interest shall not
--------
constitute an Event of Default if such failure does not continue for more
than two Business Days.
(b) Any representation or warranty made by or on behalf of the
Borrower, any Subsidiary or any Guarantor in this Agreement or any other
Loan Document or by or on behalf of the Borrower, any Subsidiary or any
Guarantor in any certificate, written statement, report or document
herewith or hereafter furnished to any Bank or the Agent pursuant to this
Agreement or any other Loan Document shall prove to have been false or
misleading in any material respect on the date as of which the facts set
forth are stated or certified.
(c) The Borrower shall fail to comply with Section 5.2, 5.3 or
5.5 or any Section of Article VI.
(d) The Borrower shall fail to comply with any other agreement,
covenant or term contained in this Agreement (other than those hereinabove
set forth in this Section 7.1) or under Section 2(d) or Section 7 of the
Trademark Assignment, and such failure to comply shall continue for thirty
(30) calendar days after whichever of the following dates is the earliest:
(i) the date the Borrower gives notice of such failure to the Agent, (ii)
the date the Borrower should have given notice of such failure to the Agent
pursuant to Section 5.1(g), and (iii) the date the Agent or any Bank gives
notice of such failure to the Borrower.
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(e) Any default (however denominated or defined) shall occur
under any Guaranty or the Trademark Assignment (other than those set forth
in Section 7.1 (d)), or any "Event of Default," as defined in any other
Security Document, shall occur.
(f) The Borrower, any Subsidiary or any Guarantor shall become
insolvent or shall generally not pay its debts as they mature or shall
apply for, shall consent to, or shall acquiesce in the appointment of a
custodian, trustee or receiver of the Borrower, such Subsidiary or such
Guarantor or for a substantial part of the property thereof or, in the
absence of such application, consent or acquiescence, a custodian, trustee
or receiver shall be appointed for the Borrower, a Subsidiary or a
Guarantor or for a substantial part of the property thereof and shall not
be discharged within 60 days, or the Borrower, any Subsidiary or any
Guarantor shall make an assignment for the benefit of creditors.
(g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against the Borrower, any Subsidiary or any Guarantor, and, if
instituted against the Borrower, any Subsidiary or any Guarantor, shall
have been consented to or acquiesced in by the Borrower, such Subsidiary or
such Guarantor, or shall remain undismissed for 60 days, or an order for
relief shall have been entered against the Borrower, such Subsidiary or
such Guarantor.
(h) Any dissolution or liquidation proceeding not permitted by
Section 6.1 shall be instituted by or against the Borrower or a Subsidiary
or any Guarantor, and, if instituted against the Borrower, any Subsidiary
or any Guarantor, shall be consented to or acquiesced in by the Borrower,
such Subsidiary or such Guarantor or shall remain for 60 days undismissed.
(i) Any judgment for the payment of money in excess of the lesser
of 1% of the Borrower's consolidated total assets as of the end of the most
recently completed fiscal quarter and $1,600,000, or judgments for the
payment of money in excess of, in the aggregate at any time, the lesser of
3% of the Borrower's consolidated total assets as of the end of the most
recently completed fiscal quarter and $5,500,000, shall be rendered against
the Borrower or a Subsidiary and either (i) the judgment creditor executes
on such judgment or (ii) such judgment remains unpaid or undischarged for
more than 60 days from the date of entry thereof or such longer period
during which execution of such judgment shall be stayed during an appeal
from such judgment.
(j) The maturity of any material Indebtedness of the Borrower
(other than Indebtedness under this Agreement) or a Subsidiary shall be
accelerated, or the Borrower or a Subsidiary shall fail to pay any such
material Indebtedness when due (after the lapse of any applicable grace
period) or, in the case of such Indebtedness payable on demand, when
demanded (after the lapse of any applicable grace period), or any event
shall occur or condition shall exist and shall continue for more than the
period of grace, if any, applicable thereto and shall have the effect of
causing, or permitting the holder of any such Indebtedness or any trustee
or other Person acting on behalf of such holder to
-62-
cause, such material Indebtedness to become due prior to its stated
maturity or any collateral given as security therefor to be realized upon.
For purposes of this Section, Indebtedness of the Borrower or a Subsidiary
shall be deemed "material" if it exceeds, as to any item of Indebtedness or
in the aggregate for all items of Indebtedness with respect to which any of
the events described in this Section 7.10) has occurred, the lesser of 3%
of the Borrower's consolidated total assets as of the end of the most
recently completed fiscal quarter and $5,500,000.
(k) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower or any Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 60 days after the issuance thereof.
(1) Any Guarantor shall repudiate or purport to revoke its, his
or her Guaranty, or any Guaranty for any reason shall cease to be in full
force and effect as to the Guarantor executing and delivering the same or
shall be judicially declared null and void as to such Guarantor.
(m) Any Security Document shall, at any time, cease to be in full
force and effect or shall be judicially declared null and void, or the
validity or enforceability thereof shall be contested by the Borrower, or
the Agent or the Banks shall cease to have a valid and perfected security
interest having the priority contemplated thereunder in all of the
collateral described therein, other than by action or inaction of the Agent
or the Banks, if (i) the aggregate value of the collateral affected by any
of the foregoing exceeds $2,000,000 and (ii) any of the foregoing shall
remain unremedied for ten days or more after receipt of notice thereof by
the Borrower from the Agent.
(n) Any Change of Control shall occur.
(o) Xxxxxx Xxxxxxxxxx shall cease to be the President and Chief
Executive Officer of the Borrower, and a successor President and Chief
Executive Officer approved by a majority of the Board of Directors of the
Borrower shall not have been appointed within 60 days.
Section 7.2 Remedies. If (a) any Event of Default described in
--------
Sections 7.1(f), (g) or (h) shall occur with respect to the Borrower, the
Commitments shall automatically terminate and the Notes and all other
Obligations shall automatically become immediately due and payable and the
Borrower shall without demand pay into the Holding Account an amount equal to
the aggregate undrawn face amount of all outstanding Letters of Credit; or (b)
any other Event of Default shall occur and be continuing, then, upon receipt by
the Agent of a request in writing from the Majority Banks, the Agent shall take
any of the following actions so requested: (i) declare the Commitments
terminated, whereupon the Commitments shall terminate, (ii) declare the
outstanding unpaid principal balance of the Notes, the accrued and unpaid
interest thereon and all other Obligations to be forthwith due and payable,
whereupon the Notes, all accrued and unpaid interest thereon and all such
Obligations shall immediately become due and payable, in each case without
presentment, demand, protest or other notice of any kind, all of
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which are hereby expressly waived, anything in this Agreement or in the Notes to
the contrary notwithstanding, and (iii) demand that the Borrower pay into the
Holding Account an amount equal to the aggregate undrawn face amount of all
outstanding Letters of Credit. Upon the occurrence of any of the events
described in clause (a) of the preceding sentence, or upon the occurrence of any
of the events described in clause (b) of the preceding sentence when so
requested by the Majority Banks, the Agent may exercise all rights and remedies
under any of the Loan Documents, and enforce all rights and remedies under any
applicable law.
Section 7.3 Offset. In addition to the remedies set forth in Section
------
7.2, upon the occurrence of any Event of Default and thereafter while the same
be continuing, the Borrower hereby irrevocably authorizes each Bank to set off
any Obligations owed to such Bank against all deposits and credits of the
Borrower with, and any and all claims of the Borrower against, such Bank. Such
right shall exist whether or not such Bank shall have made any demand hereunder
or under any other Loan Document, whether or not the Obligations, or any part
thereof, or deposits and credits held for the account of the Borrower is or are
matured or unmatured, and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to such
Bank or the Banks. Each Bank agrees that, as promptly as is reasonably possible
after the exercise of any such setoff right, it shall notify the Borrower of its
exercise of such setoff right; provided, however, that the failure of such Bank
to provide such notice shall not affect the validity of the exercise of such
setoff rights. Nothing in this Agreement shall be deemed a waiver or
prohibition of or restriction on any Bank to all rights of banker's Lien, setoff
and counterclaim available pursuant to law.
ARTICLE VIII
THE AGENT
The following provisions shall govern the relationship of the Agent
with the Banks.
Section 8.1 Appointment and Authorization. Each Bank appoints and
-----------------------------
authorizes the Agent to take such action as agent on its behalf and to exercise
such respective powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers or employees
shall be liable to the Banks for any action taken or omitted to be taken by it
under or in connection with the Loan Documents, except for its own gross
negligence or willful misconduct. The Agent shall act as an independent
contractor in performing its obligations as Agent hereunder and nothing herein
contained shall be deemed to create any fiduciary relationship among or between
the Agent, the Borrower, or the Banks.
Section 8.2 Note Holders. The Agent may treat the payee of any Note
------------
as the holder thereof until written notice of transfer shall have been filed
with it, signed by such payee and in form satisfactory to the Agent.
Section 8.3 Consultation With Counsel. The Agent may consult with
-------------------------
legal counsel selected by it and shall not be liable to the Banks for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
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Section 8.4 Loan Documents. The Agent shall not be under a duty to
--------------
examine or pass upon the validity, effectiveness, genuineness or value of any of
the Loan Documents or any other instrument or document furnished pursuant
thereto, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
Section 8.5 BofA and Affiliates. With respect to its Revolving
-------------------
Commitments and the Revolving Loan made by it, BofA shall have the same rights
and powers under the Loan Documents as any other Bank and may exercise the same
as though it were not the Agent consistent with the terms thereof, and BofA and
its Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with the Borrower as if it were not the Agent.
Section 8.6 Action by Agent. Except as may otherwise be expressly
---------------
stated in this Agreement, the Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, the Loan
Documents. The Agent shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Banks, and such instructions shall be binding upon
all holders of Notes; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or which is
contrary to the Loan Documents or applicable law. The Agent shall incur no
liability to the Banks under or in respect of any of the Loan Documents by
acting upon any notice, consent, certificate, warranty or other paper or
instrument believed by it to be genuine or authentic or to be signed by the
proper party or parties and to be consistent with the terms of this Agreement.
Section 8.7 Credit Analysis. Each Bank has made, and shall continue
---------------
to make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrower in
connection with entering into this Agreement and has made its own appraisal of
the creditworthiness of the Borrower. Except as explicitly provided herein, the
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect to such
operations, business, property, condition or creditworthiness, whether such
information comes into its possession on or before the first Event of Default or
at any time thereafter.
Section 8.8 Notices of Event of Default, Etc. In the event that the
--------------------------------
Agent shall have acquired actual knowledge of any Event of Default or Default,
the Agent shall promptly give notice thereof to the Banks.
Section 8.9 Indemnification. Each Bank agrees to indemnify the
---------------
Agent, as Agent (to the extent not reimbursed by the Borrower), ratably
according to such Bank's share of the Total Revolving Commitment Amount from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on or incurred by the Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by the Agent
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under the Loan Documents, provided that no Bank shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. No payment by any Bank under this
Section shall relieve the Borrower of any of its obligations under this
Agreement.
Section 8.10 Payments and Collections. All funds received by the
------------------------
Agent in respect of any payments made by the Borrower on the Notes, Revolving
Commitment Fees or Letter of Credit Fees shall be distributed forthwith by the
Agent among the Banks, in like currency and funds as received, ratably according
to each Bank's Revolving Percentage. After any Event of Default has occurred,
all funds received by the Agent, whether as payments by the Borrower or as
realization on collateral or on any guaranties, shall (except as may otherwise
be required by law) be distributed by the Agent in the following order: (a)
first to the Agent or any Bank who has incurred unreimbursed costs of collection
with respect to any Obligations hereunder, ratably to the Agent and each Bank in
the proportion that the costs incurred by the Agent or such Bank bear to the
total of all such costs incurred by the Agent and all Banks; (b) next to the
Agent for the account of the Banks (in accordance with their respective
Revolving Percentages) for application on the Notes; (c) next to the Agent for
the account of the Banks (in accordance with their respective Revolving
Percentages) for any unpaid Revolving Commitment Fees or Letter of Credit Fees
owing by the Borrower hereunder ; and (d) last to the Agent to be held in the
Holding Account to cover any outstanding Letters of Credit.
Section 8.11 Sharing of Payments. If any Bank shall receive and
-------------------
retain any payment, voluntary or involuntary, whether by setoff, application of
deposit balance or security, or otherwise, in respect of Indebtedness under this
Agreement or the Notes in excess of such Bank's share thereof as determined
under this Agreement, then such Bank shall purchase from the other Banks for
cash and at face value and without recourse, such participation in the Notes
held by such other Banks as shall be necessary to cause such excess payment to
be shared ratably as aforesaid with such other Banks; provided, that if such
excess payment or part thereof is thereafter recovered from such purchasing
Bank, the related purchases from the other Banks shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so
recovered, but without interest. Subject to the participation purchase
obligation above, each Bank agrees to exercise any and all rights of setoff,
counterclaim or banker's lien first fully against any Notes and participations
therein held by such Bank, next to any other Indebtedness of the Borrower to
such Bank arising under or pursuant to this Agreement and to any participations
held by such Bank in Indebtedness of the Borrower arising under or pursuant to
this Agreement, and only then to any other Indebtedness of the Borrower to such
Bank.
Section 8.12 Advice to Banks. The Agent shall forward to the Banks
---------------
copies of all notices, financial reports and other communications received
hereunder from the Borrower by it as Agent, excluding, however, notices, reports
and communications which by the terms hereof are to be furnished by the Borrower
directly to each Bank.
Section 8.13 Resignation. If at any time the Agent shall deem it
-----------
advisable, in its sole discretion, it may submit to each of the Banks and the
Borrower a written notification of its resignation as Agent under this
Agreement, such resignation to be effective upon the
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appointment of a successor Agent, but in no event later than 30 days from the
date of such notice. Upon submission of such notice, the Majority Banks may
appoint a successor Agent; provided, however, that, with respect to any
-------- -------
successor Agent appointed while no Default or Event of Default has occurred and
is continuing, such successor Agent is consented to by the Borrower (which
consent shall not be unreasonably withheld).
ARTICLE IX
MISCELLANEOUS
Section 9.1 Modifications. Notwithstanding any provisions to the
-------------
contrary herein, any term of this Agreement may be amended with the written
consent of the Majority Banks (or the Agent with the written consent of the
Majority Banks) and the Borrower; provided that no amendment, modification or
waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective except in the specific
instance and for the purpose for which given. The Agent may enter into
amendments or modifications of, and grant consents and waivers to departure from
the provisions of, those Loan Documents to which the Banks are not signatories
without the Banks joining therein. Notwithstanding the forgoing, no such
amendment, modification, waiver or consent shall:
(a) Reduce the rate or extend the time of payment of interest on
any Note, or reduce the amount or extend the time of payment of the
principal of any Note without the consent of the holder of each Note so
affected; or
(b) Subject to Section 2.7(c), increase the amount or extend the
time of any Commitment of any Bank, without the consent of all Banks; or
(c) Reduce the rate or extend the time of payment of any fee
payable to a Bank, without the consent of the Bank affected; or
(d) Except as may otherwise be expressly provided in any of the
other Loan Documents as existing on the Closing Date or as thereafter
amended with the consent of the Majority Banks, release all or
substantially all of the collateral securing, or all or substantially all
of the guaranties for, all or any part of the Obligations without the
consent of all the Banks; or
(e) Amend any of the foregoing Sections 9.1 (a) through (d) or
this Section 9.1 (e) or change the definition of Majority Banks without the
consent of all the Banks; or
(f) Amend any provision of this Agreement relating to the Agent
in its capacity as Agent without the consent of the Agent; or
(g) Amend any provision of this Agreement relating to the
issuance of Letters of Credit without the consent of the Agent.
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Section 9.2 Expenses. Whether or not the transactions contemplated
--------
hereby are consummated, the Borrower agrees to reimburse the Agent upon demand
for all reasonable out-of-pocket expenses paid or incurred by the Agent
(including filing and recording costs and reasonable fees and expenses of Xxxxxx
& Xxxxxxx LLP, counsel to the Agent) in connection with the negotiation,
preparation, approval, review, execution and delivery of this Agreement and the
other Loan Documents and any commitment letters relating thereto. Subject to
the limitations contained in Section 5.5, the Borrower shall also reimburse the
Agent and each Bank upon demand for all reasonable out-of-pocket expenses
(including reasonable expenses of legal counsel) paid or incurred by the Agent
or any Bank in connection with the administration, amendment, modification,
interpretation, collection and enforcement of this Agreement and any other Loan
Document. The obligations of the Borrower under this Section shall survive any
termination of this Agreement.
Section 9.3 Waivers, etc. No failure on the part of the Agent and
------------
the Banks or the holder of a Note to exercise and no delay in exercising any
power or right hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in the other Loan Documents provided
are cumulative and not exclusive of any remedies provided by law.
Section 9.4 Notices. Except when telephonic notice is expressly
-------
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other parties hereto in writing. All periods of notice shall
be measured from the date of delivery thereof if manually delivered, from the
date of sending thereof if sent by telegram, telex or facsimile transmission,
from the first Business Day after the date of sending if sent by overnight
courier, or from four days after the date of mailing if mailed; provided,
however, that any notice to the Agent or any Bank under Article II shall be
deemed to have been given only when received by the Agent or such Bank.
Section 9.5 Taxes. The Borrower agrees to pay, and save the Agent
-----
and the
Banks harmless from all liability for, any stamp or other taxes which may be
payable with
respect to the execution or delivery of this Agreement or the issuance of the
Notes, which
obligation of the Borrower shall survive the termination of this Agreement.
Section 9.6 Successors and Assigns; Disposition of Loans;
---------------------------------------------
Transferees. This Agreement shall be binding upon and inure to the benefit of
-----------
the parties hereto and their respective successors and assigns, except that the
Borrower may not assign its rights or delegate its obligations hereunder or
under any other Loan Document without the prior written consent of all Banks.
Each Bank may at any time sell, assign, transfer, grant participations in, or
otherwise dispose of any portion of the Commitments and/or Advances (each such
interest so disposed of being herein called a "Transferred Interest") to banks
or other financial institutions ("Transferees"); provided, however, that a Bank
may dispose of or grant a participation in a Transferred Interest only with the
consent of the Borrower (so long as no Default or Event of
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Default has occurred and is continuing, and which consent shall not be
unreasonably withheld) and Agent (which consent shall not be unreasonably
withheld) and only upon payment to the Agent by the parties to such disposition
of a processing and recording fee in the amount of $3,500 for each party;
provided further that each Transferred Interest shall be in a minimum amount of
$3,000,000. The Borrower agrees that each Transferee shall be entitled to the
benefits of Sections 2.22, 2.23, 2.24, 2.25 and 9.2 with respect to its
Transferred Interest and that each Transferee may exercise any and all rights of
banker's Lien, setoff and counterclaim as if such Transferee were a direct
lender to the Borrower. If any Bank makes any assignment to a Transferee, then
upon notice to the Borrower such Transferee, to the extent of such assignment
(unless otherwise provided therein), shall become a "Bank" hereunder and shall
have all the rights and obligations of such Bank hereunder and such Bank shall
be released from its duties and obligations under this Agreement accruing from
and after such assignment, to the extent of such assignment. Notwithstanding the
sale by any Bank of any participation hereunder, (a) no participant shall be
deemed to be or have the rights and obligations of a Bank hereunder except that
any participant shall have a right of setoff under Section 7.3 as if it were
such Bank and the amount of its participation were owing directly to such
participant by the Borrower and (b) such Bank shall not in connection with
selling any such participation condition such Bank's rights in connection with
consenting to amendments or granting waivers concerning any matter under any
Loan Document upon obtaining the consent of such participant other than on
matters relating to (i) any reduction in the amount of any principal of, or the
amount of or rate of interest on, any Note or Advance in which such
participation is sold, (ii) any postponement of the date fixed for any payment
of principal of or interest on any Note or Advance in which such participation
is sold, (iii) the release or subordination of all or substantially all of the
collateral other than pursuant to the terms of any Security Document or (iv) the
release of all or substantially all of the Guarantors other than pursuant to the
terms of any Security Document.
Section 9.7 Confidentiality of Information. The Agent, the Arranger
------------------------------
and each Bank shall use reasonable efforts to assure that information about the
Borrower and its operations, affairs and financial condition, not generally
disclosed to the public or to trade and other creditors, which is furnished to
the Agent, the Arranger or such Bank pursuant to the provisions hereof or of the
other Loan Documents is used only for the purposes of this Agreement and any
other relationship between the Agent, the Arranger or such Bank and the Borrower
and shall not be divulged to any Person other than the Banks, their Affiliates
and their respective officers, directors, employees and agents (who have been
informed of the provisions of this Section 9.7 explicitly or implicitly under
the policies and practices of the Agent, the Arranger, or such Bank), except:
(a) to their attorneys and accountants (who have been informed of the provisions
of this Section 9.7 explicitly or implicitly under the policies and practices of
the Agent, the Arranger or such Bank), (b) in connection with the enforcement of
the rights of the Agent and the Banks hereunder and under the Notes, the
Guaranties and the Security Documents or otherwise in connection with related
litigation, (c) in connection with assignments and participations and the
solicitation of prospective assignees and participants referred to in the
immediately preceding Section (provided that any such assignee or participant or
prospective assignee or participant has agreed to be bound by the provisions of
this Section 9.7), and (d) as may otherwise be required or requested by any
regulatory authority having jurisdiction over the Agent, the Arranger or such
Bank or by any applicable law, rule, regulation or judicial process, the opinion
of the Agent's, the Arranger's or such Bank's counsel concerning the making of
such
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disclosure to be binding on the parties hereto. No Bank nor the Arranger or
Agent shall incur any liability to the Borrower by reason of any disclosure
permitted by this Section 9.7.
Section 9.8 Governing Law and Construction. THE VALIDITY,
------------------------------
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision
of this Agreement and the other Loan Documents and any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto.
Section 9.9 Consent to Jurisdiction. AT THE OPTION OF THE AGENT,
-----------------------
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT
OR ILLINOIS STATE COURT SITTING IN XXXX COUNTY, ILLINOIS; AND THE BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVEDESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
Section 9.10 Waiver of Jury Trial. EACH OF THE BORROWER, THE AGENT,
--------------------
THE ARRANGER, AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 9.11 Survival of Agreement. All representations, warranties,
---------------------
covenants and agreement made by the Borrower herein or in the other 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 deemed to have been relied upon by the Banks and shall survive the making of
the Loans by the Banks and the execution and delivery to the Banks by the
Borrower of the Notes, regardless of any investigation made by or on behalf of
the Banks, and shall continue in full force and effect as long as any Obligation
is outstanding and
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unpaid and so long as the Commitments have not been terminated; provided,
however, that the obligations of the Borrower under Sections 9.2, 9.5 and 9.12
shall survive payment in full of the Obligations and the termination of the
Commitments.
Section 9.12 Indemnification. The Borrower hereby agrees to defend,
---------------
protect, indemnify and hold harmless the Agent, the Arranger and the Banks and
their respective Affiliates and the directors, officers, employees, attorneys
and agents of the Agent, the Arranger and the Banks and their respective
Affiliates (each of the foregoing being an "Indemnitee" and all of the foregoing
being collectively the "Indemnitees") from and against any and all claims,
actions, damages, liabilities, judgments, costs and expenses (including all
reasonable fees and disbursements of counsel which may be incurred in the
investigation or defense of any matter) imposed upon, incurred by or asserted
against any Indemnitee, whether direct, indirect or consequential and whether
based on any federal, state, local or foreign laws or regulations (including
securities laws, environmental laws, commercial laws and regulations), under
common law or on equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the
execution, delivery, performance or enforcement of any Loan Document, any
commitments relating thereto, or any transaction contemplated by any Loan
Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under the Loan Documents or any act done or omitted by any
Person, or the exercise of any rights or remedies, thereunder, including
the acquisition of any collateral by the Agent or the Banks by way of
foreclosure of the Lien thereon, deed or xxxx of sale in lieu of such
foreclosure or otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee for
any portion of such claims, actions, damages, liabilities, judgments, costs and
expenses resulting from any Indemnitee's gross negligence or willful misconduct.
In the event this indemnity is unenforceable as a matter of law as to a
particular matter or consequence referred to herein, it shall be enforceable to
the full extent permitted by law and the Borrower agrees to make the maximum
contribution to the payment and satisfaction of each of the indemnified claims,
damages, liabilities and expenses which is permissible under applicable law.
This indemnification applies, without limitation, to any act,
omission, event or circumstance existing or occurring on or prior to the later
of the Termination Date or the date of payment in full of the Obligations,
including specifically Obligations arising under clause (b) of this Section.
The indemnification provisions set forth above shall be in addition to any
liability the Borrower may otherwise have. Without prejudice to the survival of
any other obligation of the Borrower hereunder the indemnities and obligations
of the Borrower contained in this Section shall survive the payment in full of
the other Obligations.
Section 9.13 Captions. The captions or headings herein and any table
--------
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
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Section 9.14 Entire Agreement. This Agreement and the other Loan
----------------
Documents embody the entire agreement and understanding between the Borrower,
the Agent, the Arranger and the Banks with respect to the subject matter hereof
and thereof. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Nothing contained in this Agreement or
in any other Loan Document, expressed or implied, is intended to confer upon any
Persons other than the parties hereto any rights, remedies, obligations or
liabilities hereunder or thereunder.
Section 9.15 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 9.16 Borrower Acknowledgments. The Borrower hereby
------------------------
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (b)
neither the Agent nor any Bank has any fiduciary relationship to the Borrower,
the relationship being solely that of debtor and creditor, (c) no joint venture
exists between the Borrower and the Agent or any Bank, and (d) neither the Agent
nor any Bank undertakes any responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon its own
judgment with respect to its business, and any review, inspection or supervision
of, or information supplied to, the Borrower by the Agent or any Bank is for the
protection of the Banks and neither the Borrower nor any third party is entitled
to rely thereon.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
BUCA, INC.
By /s/ Xxxx X. Xxxxx
---------------------------
Title CFO
---------------------------
Address:
Attention: Xxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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BANK OF AMERICA, N.A.,
as the Agent
By /s/ Xxxxx X. Xxxxxxxx
---------------------------
Title Vice President
---------------------------
Address:
Attention: Xxxxx Xxxxxxxx
IL1-231-06-13
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
BANK OF AMERICA, N.A.,
as a Bank
By /s/ Xxxxx X. XxXxxxx
---------------------------
Title Vice President
---------------------------
Address:
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
ILl-231-06-13
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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FLEET NATIONAL BANK,
as a Bank
By /s/ Xxxxxx XxxXxxxxxx
---------------------------
Title Director
---------------------------
Address:
Attention: Xxxxxx XxxXxxxxxx
MADE 10008H
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
-75-
BRANCH BANKING AND TRUST COMPANY,
as a Bank
By /s/ Xxxx Xxxxx
---------------------------
Title Executive Vice President
---------------------------
Address:
Attention: Xxxx Xxxxx
000 Xxxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx-Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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