BUSINESS LOAN AGREEMENT
EXHIBIT
10.76
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Principal
|
Loan
Date
|
Expiration
|
Loan
No
|
Call
/ Coll
|
Account
|
Officer
|
Initials
|
|
$15,000,000.00
|
05-13-2008
|
05-13-2010
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Line
#583277
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Port
#583277
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247
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References
in the boxes above are for Xxxxxx's use only and do not limit the applicability
of this document to any particular loan or item.
Any
item
above containing "***" has been omitted due to text length
limitations.
|
Borrower:
|
Rubio's
Restaurants, Inc., a Delaware corporation
0000
Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
|
Lender:
|
Pacific
Western Bank
Pasadena
Office
000
Xxxxx Xxx Xxxxxx
Xxxxx
000
Xxxxxxxx,
XX 00000
|
THIS
BUSINESS LOAN AGREEMENT dated May 13, 2008, is made and executed between Rubio's
Restaurants, Inc., a Delaware corporation ("Borrower") and Pacific Western
Bank
("Lender") on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan
or
loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement. Xxxxxxxx understands
and
agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying
upon Borrower's representations, warranties, and agreements as set forth in
this
Agreement; (B) the granting, renewing, or extending of any Loan by Xxxxxx at
all
times shall be subject to Xxxxxx's sole judgment and discretion; and (C) all
such Loans shall be and remain subject to the terms and conditions of this
Agreement.
TERM.
This
Agreement shall be effective as of May 13, 2008, and shall continue in full
force and effect until such time as all of Borrower's Loans in favor of Lender
have been paid in full, including principal, interest, costs, expenses,
attorneys' fees, and other fees and charges, or until such time as the parties
may agree in writing to terminate this Agreement.
ADVANCE
AUTHORITY.
The
following person or persons are authorized to request advances and authorize
payments under the line of credit until Xxxxxx receives from Xxxxxxxx, at
Xxxxxx's address shown above, written notice of revocation of such
authority:
Xxxxxx X. Xxxxxxx or Xxxxx Xxxxxxxx.
CONDITIONS
PRECEDENT TO EACH ADVANCE.
Lender's
obligation to make the initial Advance and each subsequent Advance under this
Agreement shall be subject to the fulfillment to Xxxxxx's satisfaction of all
of
the conditions set forth in this Agreement and in the Related Documents.
Loan
Documents.
Borrower
shall provide to Lender the following documents for the Loan: (1) the Note;
(2)
Security Agreements granting to Lender security interests in the Collateral;
(3)
financing statements and all other documents perfecting Lender's Security
Interests; (4) evidence of insurance as required below; (5) guaranties; (6)
together with all such Related Documents as Lender may require for the Loan;
all
in form and substance satisfactory to Lender and Xxxxxx's counsel.
Borrower's
Authorization.
Borrower
shall have provided in form and substance satisfactory to Lender properly
certified resolutions, duly authorizing the execution and delivery of this
Agreement, the Note and the Related Documents. In addition, Borrower shall
have
provided such other resolutions, authorizations, documents and instruments
as
Lender or its counsel, may require.
Payment
of Fees and Expenses.
Borrower
shall have paid to Lender all fees, charges, and other expenses which are then
due and payable as specified in this Agreement or any Related
Document.
Representations
and Warranties.
The
representations and warranties set forth in this Agreement, in the Related
Documents, and in any document or certificate delivered to Lender under this
Agreement are true and correct.
No
Event of Default.
There
shall not exist at the time of any Advance a condition which would constitute
an
Event of Default under this Agreement or under any Related
Document.
REPRESENTATIONS
AND WARRANTIES.
Borrower
represents and warrants to Lender, as of the date of this Agreement, as of
the
date of each disbursement of loan proceeds, as of the date of any renewal,
extension or modification of any Loan, and at all times any Indebtedness
exists:
Organization.
Borrower
is a corporation for profit which is, and at all times shall be, duly organized,
validly existing, and in good standing under and by virtue of the laws of the
State of Delaware. Borrower is duly authorized to transact business in all
other
states in which Borrower is doing business, having obtained all necessary
filings, governmental licenses and approvals for each state in which Borrower
is
doing business, except where failure would not have a material adverse affect
on
its business or financial condition. Specifically, Borrower is, and at all
times
shall be, duly qualified as a foreign corporation in all states in which the
failure to so qualify would have a material adverse effect on its business
or
financial condition. Borrower has the full power and authority to own its
properties and to transact the business in which it is presently engaged or
presently proposes to engage. Xxxxxxxx maintains an office at 0000 Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxx, XX 00000. Unless Borrower has designated otherwise in
writing, the principal office is the office at which Borrower keeps its books
and records including its records concerning the Collateral. Borrower will
notify Lender prior to any change in the location of Xxxxxxxx's state of
organization or any change in Borrower's name. Borrower shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to Borrower and Borrower's business activities, except
where
failure would not have a material adverse affect on its business or financial
condition.
Assumed
Business Names.
Xxxxxxxx
has filed or recorded all documents or filings required by law relating to
all
assumed business names used by Xxxxxxxx. Excluding the name of Xxxxxxxx, the
following is a complete list of all assumed business names under which Borrower
does business:
None.
Authorization.
Borrower's execution, delivery, and performance of this Agreement and all the
Related Documents have been duly authorized by all necessary action by Borrower
and do not conflict with, result in a violation of, or constitute a default
under (1) any provision of (a) Borrower's articles of incorporation or
organization, or bylaws, or (b) any agreement or other instrument binding upon
Borrower or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower's properties, except with respect to
(1)(b) and (2), where failure would not have a material adverse affect on its
business or financial condition.
Financial
Information.
Each of
Xxxxxxxx's financial statements supplied to Lender truly and completely
disclosed Xxxxxxxx's financial condition as of the date of the statement, in
all
material respects and in conformance with GAAP, and there has been no material
adverse change in Borrower's financial condition subsequent to the date of
the
most recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed to Lender in such financial
statements or as otherwise disclosed to Lender in Schedule
1
to the
Disclosure Schedule.
Legal
Effect.
This
Agreement constitutes, and any instrument or agreement Borrower is required
to
give under this Agreement when delivered will constitute legal, valid, and
binding obligations of Borrower enforceable against Borrower in accordance
with
their respective terms.
Properties.
Except
as contemplated by this Agreement (including Permitted Liens) or the Credit
Agreement or as previously disclosed in Borrower's financial statements or
in
writing to Lender and as accepted by Xxxxxx, and except for property tax liens
for taxes not presently due and payable, Borrower owns and has good title to
all
of Borrower's properties free and clear of all Security Interests, and has
not
executed any security documents or financing statements relating to such
properties. All of Xxxxxxxx's properties are titled in Borrower's legal name,
and Xxxxxxxx has not used or filed a financing statement under any other name
for at least the last five (5) years.
Hazardous
Substances.
Except
as disclosed to and acknowledged by Xxxxxx in writing, Borrower represents
and
warrants that: (1) During the period of Borrower's ownership of the Collateral,
there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance by any person on,
under, about or from any of the Collateral. (2) Borrower has no knowledge of,
or
reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any Hazardous Substance on, under,
about or from the Collateral by any prior owners or occupants of any of the
Collateral; or (c) any actual or threatened litigation or claims of any kind
by
any person relating to such matters. (3) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the Collateral shall use,
generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; and any such activity
shall be conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorizes Xxxxxx and its agents to enter upon
Xxxxxxxx’s premises to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of
the
Agreement. Any inspections or tests made by Lender shall be at Borrower's
expense (not to exceed $750 per day), upon prior written notice and not more
frequently than annually, and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of Lender to
Borrower or to any other person. The representations and warranties contained
herein are based on Borrower's due diligence in investigating the Collateral
for
hazardous waste and Hazardous Substances. Borrower hereby (1) releases and
waives any future claims against Lender for indemnity or contribution in the
event Borrower becomes liable for cleanup or other costs under any such laws,
and (2) agrees to indemnify, defend, and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a hazardous
waste or substance on the Collateral, except in the event of Lender’s gross
negligence or willful misconduct. The provisions of this section of the
Agreement, including the obligation to indemnify and defend, shall survive
the
payment of the Indebtedness and the termination, expiration or satisfaction
of
this Agreement and shall not be affected by Lender's acquisition of any interest
in any of the Collateral, whether by foreclosure or otherwise.
Litigation
and Claims.
Except
as set forth on Schedule
1
to the
Disclosure Schedule, no litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties.
Taxes.
To the
best of Xxxxxxxx's knowledge, all of Xxxxxxxx's tax returns and reports that
are
or were required to be filed, have been filed, and all taxes, assessments and
other governmental charges have been paid in full, except as set forth on
Schedule
2
to the
Disclosure Schedule, that are presently being or to be contested by Borrower
in
good faith in the ordinary course of business and for which adequate reserves
have been provided.
Lien
Priority.
Except
as set forth in Schedule
3
to the
Disclosure Schedule and other than Permitted Liens, Borrower has not entered
into or granted any Security Agreements, or permitted the filing or attachment
of any Security Interests on or affecting any of the Collateral directly or
indirectly securing repayment of Borrower's Loan and Note, that would be prior
or that may in any way be superior to Lender's Security Interests and rights
in
and to such Collateral.
Binding
Effect.
This
Agreement, the Note, all Security Agreements (if any), and all Related Documents
are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
AFFIRMATIVE
COVENANTS.
Borrower
covenants and agrees with Xxxxxx that, so long as this Agreement remains in
effect, Borrower will:
Notices
of Claims and Litigation.
Promptly
inform Xxxxxx in writing of (1) all material adverse changes in Borrower's
financial condition, and (2) all existing and all threatened litigation, claims,
investigations, administrative proceedings or similar actions affecting Borrower
or any Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
Financial
Records.
Maintain
its books and records in accordance with GAAP, applied on a consistent basis,
and permit Xxxxxx to examine and audit Xxxxxxxx's books and records at all
reasonable times.
Financial
Statements.
Furnish
Lender with the following:
Additional
Requirements.
BORROWER'S
FINANCIAL REQUIREMENTS:
(i)
Financial Statements:
ANNUAL
STATEMENTS.
Borrower
shall provide to Lender, as soon as available, but in no event later than one
hundred five (105) days after the end of each fiscal year end, a 10K report
and
consolidated balance sheet and income statement for the period ended in form
satisfactory to Lender, audited, unqualified opinion, by a CPA acceptable to
Lender.
INTERIM
STATEMENTS.
Borrower
shall provide to Lender, as soon as available, but in no event later than sixty
(60) days after the end of each fiscal quarter (including fiscal year end),
a
10Q and supporting schedules for the period ended, each in form satisfactory
to
Lender. Statements may be due more often if requested by Xxxxxx.
LEASE
MANAGEMENT REPORTS.
Borrower
shall provide to Lender, as soon as available, but in no event later than sixty
(60) days after the end of each fiscal quarter (including fiscal year end),
a
lease management report and same store sales analysis for the period ended,
each
in form satisfactory to Lender. Statements may be due more often if requested
by
Xxxxxx.
ANNUAL
BUDGET.
Borrower
shall provide to Lender, as soon as available, but in no event later than one
hundred five (105) days after the end of each fiscal year end, an annual budget
and balance sheet for the period ended in form satisfactory to
Lender.
(ii)
Financial Covenants/Ratios: (the first reporting period will be Xxxxxxxx’s
second fiscal quarter ending June 29, 2008)
TOTAL
DEBT/EBITDA RATIO.
Borrower
to maintain a maximum ratio of Total Debt/EBITDA of *** to ***. "Total Debt"
means Borrower's outstanding senior debt plus Standby Letters of Credit issued
by Xxxxxx. "EBITDA" means net earnings before interest expense, taxes,
depreciation, amortization, and other adjustments reasonably acceptable to
Lender in its sole discretion ( *** ), calculated on a rolling *** fiscal
quarter basis. This ratio must be maintained at all times and may be evaluated
quarterly.
PROFITABILITY.
Borrower
must ***
for its
*** ending *** (one time covenant) and to *** at the *** and *** reporting
periods (starting with the *** reporting). Borrower will *** in *** consecutive
fiscal quarters (first compliance review commencing with the *** reporting).
For
purposes of determining whether Borrower satisfies the profitability tests
set
forth in this paragraph, Xxxxxx agrees that Borrower may exclude ***
.
COMMERCIAL
LOAN DEBT SERVICE COVERAGE RATIO.
Borrower
to maintain a minimum Debt Service Coverage Ratio of *** to ***, which is
calculated based on a rolling *** fiscal quarter basis, as 1) the sum of net
profit plus depreciation and amortization and interest and other adjustments
reasonably acceptable to Lender in its sole discretion ( *** ), less the sum
of
dividends and distributions divided by 2) Current Portion of Long Term Debt
plus
Interest. This ratio must be maintained at all times and may be evaluated
quarterly. For purposes of determining whether Xxxxxxxx net profit for the
financial tests set forth in this paragraph, Xxxxxx agrees that Borrower may
exclude *** .
All
financial reports required to be provided under this Agreement shall be prepared
in accordance with GAAP, applied on a consistent basis, and certified by
Borrower as being true and correct.
Additional
Information.
Furnish
such additional information and statements, as Xxxxxx may request from time
to
time.
Insurance.
Maintain
fire and other risk insurance, public liability insurance, and such other
insurance as Lender may require with respect to Borrower's properties and
operations, in form, amounts, coverages and with insurance companies acceptable
to Lender in its commercially reasonable discretion. Borrower, upon request
of
Xxxxxx, will deliver to Lender from time to time the policies or certificates
of
insurance in form reasonably satisfactory to Lender, including stipulations
that
coverages will not be cancelled or diminished without at least thirty (30)
days
prior written notice to Lender. Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be impaired
in
any way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is offered
a security interest for the Loans, Borrower will provide Lender with such
lender's loss payable or other endorsements as Lender may require in its
commercially reasonable discretion.
Insurance
Reports.
Furnish
to Lender, upon request of Lender, reports on each existing insurance policy
showing such information as Lender may reasonably request, including without
limitation the following: (1) the name of the insurer; (2) the risks insured;
(3) the amount of the policy; (4) the properties insured; (5) the then current
property values on the basis of which insurance has been obtained, and the
manner of determining those values; and (6) the expiration date of the policy.
In addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender determine,
as
applicable, the actual cash value or replacement cost of any Collateral. The
cost of such appraisal shall be paid by Borrower. Xxxxxx acknowledges and agrees
that Xxxxxxxx does not currently insure the full cash value or replacement
cost
of the Collateral.
Guaranties.
Prior to
disbursement of any Loan proceeds, furnish executed guaranties of the Loans
in
favor of Xxxxxx, executed by the guarantors named below, on Xxxxxx's forms,
and
in the amounts and under the conditions set forth in those
guaranties.
|
Names
of Guarantors
|
Amounts
|
|
Xxxxx'x
Restaurants of Nevada, Inc., a Nevada corporation
|
Unlimited
|
|
Xxxxx'x
Promotions, Inc., an Arizona corporation
|
Unlimited
|
Other
Agreements.
Comply
with all terms and conditions of all other agreements, whether now or hereafter
existing, between Borrower and any other party and notify Lender immediately
in
writing of any default in connection with any other such agreements that would
have a material adverse affect on Borrower’s financial condition.
Loan
Proceeds.
Use all
Loan proceeds solely for Xxxxxxxx's business operations and Permitted
Acquisitions, unless specifically consented to the contrary by Xxxxxx in
writing.
Taxes,
Charges and Liens.
Pay and
discharge when due all of its indebtedness and obligations, including without
limitation all assessments, taxes, governmental charges, levies and liens,
of
every kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all lawful
claims that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits. Provided however, Xxxxxxxx will not be required
to pay and discharge any such assessment, tax, charge, xxxx, xxxx or claim
so
long as (1) the legality of the same shall be contested in good faith by
appropriate proceedings, and (2) Borrower shall have established on Borrower's
books adequate reserves with respect to such contested assessment, tax, charge,
levy, lien, or claim in accordance with GAAP.
***
Portions
of this page have been omitted pursuant to a request for Confidential Treatment
and filed separately with the Commission.
Performance.
Perform
and comply, in a timely manner, with all terms, conditions, and provisions
set
forth in this Agreement, in the Related Documents, and in all other instruments
and agreements between Borrower and Lender. Borrower shall notify Xxxxxx
immediately in writing of any default in connection with any agreement with
Lender.
Operations.
Maintain
executive and management personnel with substantially the same qualifications
and experience as the present executive and management personnel; provide
written notice to Lender of any change in executive and management personnel;
conduct its business affairs in a reasonable and prudent manner.
Environmental
Studies.
Promptly
conduct and complete, at Borrower's expense, all such investigations, studies,
samplings and testings as may be requested by Lender or any governmental
authority relative to any substance, or any waste or by-product of any substance
defined as toxic or a hazardous substance under applicable federal, state,
or
local law, rule, regulation, order or directive, at or affecting any property
or
any facility owned, leased or used by Borrower.
Compliance
with Governmental Requirements.
Comply
with all laws, ordinances, and regulations, now or hereafter in effect, of
all
governmental authorities including but not limited to Anti-Terrorism laws,
and
other laws applicable to the conduct of Borrower's properties, businesses and
operations, and to the use or occupancy of the Collateral, including without
limitation, the Americans With Disabilities Act, except any failure which would
not have a material adverse affect on its financial condition. Borrower may
contest in good faith any such law, ordinance, or regulation and withhold
compliance during any proceeding, including appropriate appeals, so long as
Borrower has notified Lender in writing prior to doing so and so long as, in
Xxxxxx's sole opinion, Xxxxxx's interests in the Collateral are not jeopardized.
Lender may require Borrower to post adequate security or a surety bond,
reasonably satisfactory to Lender, to protect Xxxxxx's interest.
Inspection.
Permit
employees or agents of Lender at any reasonable time to inspect any and all
Collateral for the Loan or Loans and Xxxxxxxx's other properties and to examine
or audit Xxxxxxxx's books, accounts, and records and to make copies and
memoranda of Xxxxxxxx's books, accounts, and records. If Borrower now or at
any
time hereafter maintains any records (including without limitation computer
generated records and computer software programs for the generation of such
records) in the possession of a third party, Borrower, upon request of Xxxxxx,
shall notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower's expense.
Compliance
Certificates.
Unless
waived in writing by Xxxxxx, provide Lender, within sixty (60) days after the
end of each fiscal quarter and at the time of each disbursement of Loan
proceeds, a certificate executed by Xxxxxxxx's chief financial officer, or
other
officer or person acceptable to Lender, certifying that the representations
and
warranties set forth in this Agreement are true and correct as of the date
of
the certificate and further certifying that, as of the date of the certificate,
no Event of Default exists under this Agreement.
Environmental
Compliance and Reports.
Borrower
shall comply in all respects with any and all Environmental Laws; not cause
or
permit to exist, as a result of an intentional or unintentional action or
omission on Borrower's part or on the part of any third party, on property
owned
and/or occupied by Borrower, any environmental activity where damage may result
to the environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate federal,
state or local governmental authorities; shall furnish to Lender promptly and
in
any event within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment and/or
other natural resources.
Additional
Assurances.
Make,
execute and deliver to Lender such notes, mortgages, deeds of trust, security
agreements, assignments, financing statements, instruments, documents and other
agreements as Lender or its attorneys may reasonably request to evidence and
secure the Loans and to perfect all Security Interests.
RECOVERY
OF ADDITIONAL COSTS.
If the
imposition of or any change in any law, rule, regulation or guideline, or the
interpretation or application of any thereof by any court or administrative
or
governmental authority (including any request or policy not having the force
of
law) shall impose, modify or make applicable any taxes (except federal, state
or
local income or franchise taxes imposed on Lender), reserve requirements,
capital adequacy requirements or other obligations which would (A) increase
the
cost to Lender for extending or maintaining the credit facilities to which
this
Agreement relates, (B) reduce the amounts payable to Lender under this Agreement
or the Related Documents, or (C) reduce the rate of return on Lender's capital
as a consequence of Lender's obligations with respect to the credit facilities
to which this Agreement relates, then Borrower agrees to pay Lender such
additional amounts as will compensate Lender therefor, within five (5) days
after Xxxxxx's written demand for such payment, which demand shall (x) be
provided to Borrower within ninety (90) days of such imposition or change,
and
(y) be accompanied by an explanation of such imposition or charge and a
calculation in reasonable detail of the additional amounts payable by Borrower,
which explanation and calculations shall be conclusive in the absence of
manifest error.
XXXXXX'S
EXPENDITURES.
If any
action or proceeding is commenced that would materially affect Xxxxxx's interest
in the Collateral (and in which Borrower is not taking reasonably prudent
actions to protect Lender’s interest in the Collateral) or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to)
take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures reasonably incurred or paid by Lender for such purposes will then
bear interest at the rate charged under the Note from the date incurred or
paid
by Xxxxxx to the date of repayment by Xxxxxxxx. All such expenses will become
a
part of the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C)
be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE
COVENANTS.
Borrower
covenants and agrees with Lender that while this Agreement is in effect,
Borrower shall not, without the prior written consent of Lender:
Indebtedness
and Liens.
(1)
Create, incur or assume indebtedness for borrowed money, including capital
leases, except for (a) trade debt incurred in the normal course of business,
(b)
equipment debt not to exceed ***
in the
aggregate (i) upon or in any equipment acquired or held by the Borrower to
secure the purchase price of such equipment or indebtedness incurred solely
for
the purpose of financing the acquisition or lease of such equipment, or (ii)
existing on such equipment at the time of its acquisition, (c) liabilities,
lines of credit, and leases in existence on the date of this Agreement and
disclosed to Lender on Schedule
4
to the
Disclosure Schedule and leases entered into after the date of this Agreement
in
the normal course of business, (d) endorsing negotiable instruments received
in
the usual course of business and (e) and indebtedness to Lender contemplated
by
this Agreement or the Credit Agreement; and (2) sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets (except as allowed as Permitted Liens), or (3) sell with
recourse any of Borrower's accounts, except to Lender.
Continuity
of Operations.
(1)
Engage in any business activities substantially different than those in which
Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or (3)
pay
any dividends on Borrower's stock (other than dividends payable in its stock),
provided, however that notwithstanding the foregoing, but only so long as no
Event of Default has occurred and is continuing or would result from the payment
of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
on
its stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments
to
satisfy their liabilities under federal and state law which arise solely from
their status as Shareholders of a Subchapter S Corporation because of their
ownership of shares of Borrower's stock, or purchase or retire any of Borrower's
outstanding shares or alter or amend Borrower's capital structure; provided,
further, that Borrower may use up to $*** of the Loan to fund Permitted
Acquisitions, Borrower may terminate up to *** percent (***%) of all leases
through the Maturity Date and Borrower may elect not to renew leases in
connection with locations that have generated less than $*** of trailing twelve
month EBITDA.
Loans,
Acquisitions and Guaranties.
Borrower
shall not: (1) except with respect to the Subsidiaries, loan, invest in or
advance money or assets to any other person, enterprise or entity,
(2) except with respect to the Subsidiaries, purchase, create or
acquire any interest in any other enterprise or entity, or (3) incur any
obligation as surety or guarantor other than in the ordinary course of business;
provided,
however,
Borrower may use up to $*** of the Loan to fund Permitted
Acquisitions.
Agreements.
Borrower
will not enter into any agreement containing any provisions which would be
violated or breached by the performance of Borrower's obligations under this
Agreement or in connection herewith.
CESSATION
OF ADVANCES.
If
Xxxxxx has made any commitment to make any Loan to Borrower, whether under
this
Agreement or under any other agreement, Lender shall have no obligation to
make
Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor
is
in default under this Agreement or any of the Related Documents or any other
agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any
Guarantor dies, becomes incompetent or becomes insolvent, files a petition
in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs
a
materially adverse change in Borrower's financial condition, in the financial
condition of any Guarantor, or in the value of any Collateral securing any
Loan;
or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or
revoke such Guarantor's guaranty of the Loan or any other loan with
Lender.
RIGHT
OF SETOFF.
To the
extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower's accounts with Lender (whether checking, savings, or some other
account). This includes all accounts Borrower holds jointly with someone else
and all accounts Borrower may open in the future. However, this does not include
any IRA or Xxxxx accounts, or any trust accounts for which setoff would be
prohibited by law. Xxxxxxxx authorizes Xxxxxx, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
DEFAULT.
Each of
the following shall constitute an Event of Default under this
Agreement:
Payment
Default.
Borrower
fails to make any payment when due under the Loan (including any
Note).
Other
Defaults.
Borrower
fails to comply with or to perform any other term, obligation, covenant or
condition contained in this Agreement or in any of the Related Documents or
to
comply with or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.
Default
in Favor of Third Parties.
Borrower
or any Grantor defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that would materially affect any of Borrower's or any
Grantor's financial condition or Borrower's or any Grantor's ability to repay
the Loans or perform their respective obligations under this Agreement or any
of
the Related Documents.
False
Statements.
Any
warranty, representation or statement made or furnished to Lender by Borrower
or
on Borrower's behalf under this Agreement or the Related Documents is false
or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.
Insolvency.
The
dissolution or termination of Xxxxxxxx's existence as a going business, the
insolvency of Xxxxxxxx, the appointment of a receiver for any part of Xxxxxxxx's
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
Defective
Collateralization.
This
Agreement or any of the Related Documents ceases to be in full force and effect
(including failure of any collateral document to create a valid and perfected
security interest or lien) at any time and for any reason other than as a result
of Xxxxxx’s actions or inactions.
Creditor
or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by judicial
proceeding, self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing the
Loan.
This includes a garnishment of any of Xxxxxxxx's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Xxxxxxxx as to the validity or reasonableness of
the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute; provided, however, Borrower may
terminate up to *** percent (***%) of all leases through the Maturity Date
and
Borrower may elect not to renew leases in connection with locations that have
generated less than $**
of
trailing twelve month EBITDA.
***
Portions
of this page have been omitted pursuant to a request for Confidential Treatment
and filed separately with the Commission.
Events
Affecting Guarantor.
Any of
the preceding events occurs with respect to any Guarantor of any of the
Indebtedness or any Guarantor dies or becomes incompetent, or revokes or
disputes the validity of, or liability under, any Guaranty of the
Indebtedness.
Change
in Ownership. Any
change in ownership an event or series of events by which (a) any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934) shall become, or obtains rights (whether by means of
warrants, options or otherwise) to become, the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly
or
indirectly, of twenty five percent (25%) or more of the equity securities of
the
Borrower entitled to vote for members of the board of directors or equivalent
governing body of the Borrower on a fully-diluted basis, (b) any “person” or
“group” acquires direct or indirect Control of the Borrower, or (c) the majority
of the members of the board of directors or other equivalent governing body
of
the Borrower cease to be composed of Continuing Directors. “Continuing
Directors” means the directors of the Borrower on the Loan Date, and each other
director of the Borrower, if such other director’s nomination for election to
the board of directors of the Borrower is recommended by a majority of the
then
Continuing Directors of the Borrower, whether or not directors on the Loan
Date,
in his or her election by the shareholders of the Borrower. For purposes of
this
Section, “Control” means (a) the power to control a majority of the Borrower’s
Board of Directors, whether by virtue of ownership of a specified number of
shares, or by contract, or (b) any contract with any person that gives such
person control over a substantial portion of the policies or other decision
making of the Borrower.
Adverse
Change.
Lender
determines, on the basis of its commercially reasonable discretion, that a
material adverse change has occurred or is occurring in Borrower's financial
condition.
Right
to Cure.
If any
default, other than a default on Indebtedness, is curable and if Borrower or
Grantor, as the case may be, has not been given a notice of a similar default
within the preceding twelve (12) months, it may be cured if Borrower or Grantor,
as the case may be, after receiving written notice from Lender demanding cure
of
such default: (1) cure the default within fifteen (15) days; or (2) if the
cure
requires more than fifteen (15) days, immediately initiate steps which Xxxxxx
deems in Xxxxxx's sole discretion to be sufficient to cure the default and
thereafter continue and complete all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
EFFECT
OF AN EVENT OF DEFAULT.
If any
Event of Default shall occur, except where otherwise provided in this Agreement
or the Related Documents, all commitments and obligations of Lender under this
Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make further Loan Advances or
disbursements), and, at Lender's option, all Indebtedness immediately will
become due and payable, all without notice of any kind to Borrower, except
that
in the case of an Event of Default of the type described in the "Insolvency"
subsection above, such acceleration shall be automatic and not optional. In
addition, Lender shall have all the rights and remedies provided in the Related
Documents or available at law, in equity, or otherwise. Except as may be
prohibited by applicable law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Xxxxxx
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Xxxxxx's right to declare a default
and to exercise its rights and remedies.
PRIMARY
DEPOSITORY RELATIONSHIP.
Xxxxxxxx
agrees to maintain its primary depository relationship with Lender subject
to
Lender's applicable fees and charges.
OUTSIDE
INDEBTEDNESS.
New
outside indebtedness (in addition to Permitted Liens) is allowed to a maximum
amount of $*** in the aggregate, annually.
NON-REVOLVING
GUIDANCE LINE.
Guidance
Line Advances. Subject to the terms and conditions of this Agreement, advances
under the Guidance Line are subject to the following:
(a)
Once
an Advance under this Agreement is repaid, whether such repayment is voluntary
or required, Loans may not be reborrowed;
(b)
Borrower chief financial officer, or other officer or person acceptable to
Lender, shall certify that Borrower is in compliance with all financial
requirements and ratios on a proforma basis determined in good faith based
on
the Company’s current beliefs and assumptions. The certificate may contain a
statement that any proforma calculations are based on Borrower’s current beliefs
and assumptions and on information currently available to its management and
that known and unknown risks, uncertainties and other factors may cause the
Company’s actual results to be materially different from any results expressed
or implied by the proforma calculations. Borrower shall submit compliance
reporting, a ratio calculation worksheet and Xxxxxxxx's construction budget
estimate financing model for each store(s) being financed.
(c)
Each
Advance shall be evidenced by a Note, Commercial Security Agreement,
Disbursement Request and Authorization and Agreement to Provide Insurance,
or
any other document deemed necessary by Xxxxxx;
(d)
Repayment terms of each advance shall be as follows:
Maximum
term of 57 months, interest only for the first 9 months, then principal and
interest payments monthly, fully amortizing for 48 months. Interest rate shall
be Lender's Base Rate at time of the advance plus 0.25%;
(e)
Borrower shall apply all proceeds derived from any stock issuance by Borrower
towards payment of the Advances under the Guidance Line;
(f)
Each
advance will be subject to a $250.00 Loan Processing Fee;
(g)
This
Guidance Line of Credit will expire on the Expiration Date. Accordingly,
Borrower shall not request nor shall Lender make any Advances under the Guidance
Line on any day after the Expiration Date.
***
Portions
of this page have been omitted pursuant to a request for Confidential Treatment
and filed separately with the Commission.
ADDITIONAL
EVENTS OF DEFAULT.
1.
An
event of default will exist if Borrower's *** .
2.
An
event of default will exist if Borrower's *** .
To
cure a
potential default on the above referenced items, Lender will permit Borrower
to
***; Borrower has a five (5) business day period to cure either
default.
CONDITIONS
TO CLOSING. Lender
shall not be required to fund any Loans, arrange for issuance of any letters
of
credit or grant any other accommodation to or for the benefit of Borrower,
unless the following conditions are satisfied:
(a) All
Loan
Documents shall have been duly executed and delivered to Lender by each
signatory thereto, and each Obligor shall be in compliance with all terms
thereof.
(b) Lender
shall have received acknowledgments of all filings or recordations necessary
to
perfect its liens in the Collateral, as well as UCC and lien searches and other
evidence satisfactory to Lender that such liens are the only liens upon the
Collateral, except Permitted Liens and except as provided below in the Section
titled “Post Closing Conditions”.
(c) Lender
shall have received copies of policies or certificates of insurance for the
insurance policies carried by Borrower, all in compliance with this
Agreement.
(d) No
Event
of Default shall exist at the time of, or result from, such funding, issuance
or
grant.
(e) Lender
shall have received the written opinion of DLA Xxxxx in form and substance
reasonably satisfactory to Lender.
(f) No
event
shall have occurred or circumstance exist that has or would reasonably be
expected to have a material adverse effect on Borrower’s financial
condition.
(g) The
representations and warranties of each Obligor in the Loan Documents shall
be
true and correct on the date of, and upon giving effect to, such funding,
issuance or grant (except for representations and warranties that expressly
relate to an earlier date).
(h) Lender
shall have received a certificate of a duly authorized officer of each Obligor,
certifying (i) that attached copies of such Obligor’s organizational
documents are true and complete, and in full force and effect, without amendment
except as shown; (ii) that an attached copy of resolutions authorizing
execution and delivery of the Loan Documents is true and complete, and that
such
resolutions are in full force and effect, were duly adopted, have not been
amended, modified or revoked, and constitute all resolutions adopted with
respect to this credit facility; and (iii) to the title, name and signature
of each Person authorized to sign the Loan Documents. Agent may conclusively
rely on this certificate until it is otherwise notified by the applicable
Obligor in writing.
(i) Lender
shall have received good standing certificates for each Obligor, issued by
the
Secretary of State or other appropriate official of such Obligor’s jurisdiction
of organization and each jurisdiction where such Obligor’s conduct of business
necessitates qualification.
POST
CLOSING CONDITIONS. The
Borrower shall deliver or cause to be delivered to the Lender the following
documents, in form and substance satisfactory to Lender, within the prescribed
time period set forth below (failure to timely comply with such covenants shall
result in an immediate Event of Default under this Agreement):
(a) Within
10
days of the Loan Date, an acknowledgment/consent executed by Bank of America
and
any beneficiary to a letter of credit issued by Bank of America, in form and
substance satisfactory to Lender, acknowledging Bank of America’s release of any
security interest and existing liens (other than Permitted Liens) relating
to
any issued letter of credit, and consenting to the replacement of any such
issued letter of credit by a new letter of credit issued by Xxxxxx.
(b) Within
45
days of the Loan Date, either (1) evidence satisfactory to the Lender that
the Borrower has closed those certain deposit accounts (other than payroll
accounts) set forth on Schedule 5
to the
Disclosure Schedule, and transferred all funds therein to another deposit
account(s) held by Lender, or (2) control agreements substantially
establishing the Lender’s “control” (within the meaning of Section 8-106, 9-106
or 9-104 of the UCC, as applicable) with respect to such deposit accounts set
forth on Schedule 5
to the
Disclosure Schedule.
MISCELLANEOUS
PROVISIONS.
The
following miscellaneous provisions are a part of this Agreement:
Amendments.
This
Agreement, together with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters set forth in this
Agreement. No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.
Attorneys'
Fees; Expenses.
Xxxxxxxx
agrees to pay upon demand all of Xxxxxx's costs and expenses, including Xxxxxx's
reasonable attorneys' fees and Xxxxxx's reasonable legal expenses, incurred
in
connection with the enforcement of this Agreement. Lender may hire or pay
someone else to help enforce this Agreement, and Borrower shall pay the
reasonable costs and expenses of such enforcement. Costs and expenses include
Xxxxxx's reasonable attorneys' fees and legal expenses whether or not there
is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be directed by the
court.
Caption
Headings.
Caption
headings in this Agreement are for convenience purposes only and are not to
be
used to interpret or define the provisions of this Agreement.
***
Portions
of this page have been omitted pursuant to a request for Confidential Treatment
and filed separately with the Commission.
Consent
to Loan Participation.
Xxxxxxxx
agrees and consents to Xxxxxx's sale or transfer, whether now or later, of
one
or more participation interests in the Loan to one or more purchasers, whether
related or unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to privacy
Borrower may have with respect to such matters. Borrower additionally waives
any
and all notices of sale of participation interests, as well as all notices
of
any repurchase of such participation interests. Xxxxxxxx also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale
of
such participation interests. Borrower further waives all rights of offset
or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Xxxxxxxx's obligation under the
Loan
irrespective of the failure or insolvency of any holder of any interest in
the
Loan. Xxxxxxxx further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Xxxxxx.
Confidentiality.
Lender
agrees to maintain the confidentiality of all Information (as defined below),
except that Information may be disclosed (a) to its Affiliates and to its and
its Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom
such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential); (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, including but not limited
to
the Federal Deposit Insurance Corporation or the California Department of
Financial Institutions); (c) to the extent required by Applicable Law or by
any
subpoena or similar legal process; (d) to any other party hereto; (e) in
connection with the exercise of any remedies, the enforcement of any rights,
or
any action or proceeding relating to any Loan Documents; (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any transferee or any actual or prospective party (or its advisors) to any
Bank Product; (g) with the consent of the Borrower; or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach
of
this Section or (ii) becomes available to Lender or any of its Affiliates on
a
nonconfidential basis from a source other than Borrower. Notwithstanding the
foregoing, Xxxxxx may issue and disseminate to the public general information
describing this credit facility, including the name and address of Borrower
and
a general description of Xxxxxxxx’s business, and may use Borrower’s name in
advertising and other promotional materials. For purposes of this Section,
“Information” means all information received from an Obligor or Subsidiary
relating to it or its business, other than any information that is available
to
Lender on a nonconfidential basis prior to disclosure by the Obligor or
Subsidiary, provided,
however,
that,
in the case of information received from an Obligor or Subsidiary after the
date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
pursuant to this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord
to
its own confidential information, but in no event less than commercially
reasonable care. Lender acknowledges that (i) Information may include material
non-public information concerning an Obligor or Subsidiary; (ii) it has
developed compliance procedures regarding the use of material non-public
information; and (iii) it will handle such material non-public information
in
accordance with Applicable Law, including federal and state securities
laws.
For
purposes of this Section, “Affiliate” means with respect to any Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified. For
purposes of this Section, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or
policies of a Person, whether through the ability to exercise voting power,
by
contract or otherwise (“Controlling” and “Controlled” have correlative
meanings).
Governing
Law. This
Agreement will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of California without
regard to its conflicts of law provisions. This Agreement has been accepted
by
Xxxxxx in the State of California.
Choice
of Venue.
If there
is a lawsuit, Xxxxxxxx agrees upon Xxxxxx's request to submit to the
jurisdiction of the courts of Los Angeles County, State of
California.
Waiver
of Jury Trial. TO
THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND XXXXXX XXXXXX
IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER RELATED DOCUMENT, THE
OBLIGATIONS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR EITHER
PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT HEREOF OR
THEREOF. BORROWER AND XXXXXX EACH ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED
HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.
Judicial
Reference. The
parties prefer that any dispute between them be resolved in litigation subject
to a Jury Trial Waiver as set forth in this Agreement, but the California
Supreme Court has held that such pre-dispute jury trial waivers are
unenforceable. This section will be applicable until: (i) the California
Supreme Court holds that a pre-dispute jury trial waiver provision similar
to
that contained in this Agreement is valid or enforceable; or (ii) the
California Legislature passes legislation and the governor of the State of
California signs into law a statute authorizing pre-dispute jury trial waivers
and as a result such waivers become enforceable.
Other
than the exercise of provisional remedies (any of which may be initiated
pursuant to applicable law), any controversy, dispute or claim (each, a “Claim”)
between the parties arising out of or relating to this Agreement will be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure
(“CCP”), or their successor sections, which shall constitute the exclusive
remedy for the resolution of any Claim, including whether the Claim is subject
to the reference proceeding. Venue for the reference proceeding will be in
the
Superior Court or Federal District Court in Los Angeles County, California
(the
“Court”).
The
referee shall be a retired Judge or Justice selected by mutual written agreement
of the parties. If the parties do not agree, the referee shall be selected
by
the Presiding Judge of the Court (or his or her representative). A request
for
appointment of a referee may be heard on an ex
parte
or
expedited basis, and the parties agree that irreparable harm would result if
ex
parte
relief
is not granted. The referee shall be appointed to sit with all the powers
provided by law. Pending appointment of the referee, the Court has power to
issue temporary or provisional remedies.
The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change
in
the time periods specified herein for good cause shown, to (a) set the
matter for a status and trial-setting conference within forty-five (45) days
after the date of selection of the referee, (b) if practicable, try all
issues of law or fact within one hundred twenty (120) days after the date of
the
conference and (c) report a statement of decision within twenty (20) days
after the matter has been submitted for decision.
The
referee will have power to expand or limit the amount and duration of discovery.
The referee may set or extend discovery deadlines or cutoffs for good cause,
including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party
shall
be entitled to “priority” in conducting discovery, depositions may be taken by
either party upon ten (10) days written notice, and all other discovery shall
be
responded to within twenty (20) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.
Except
as
expressly set forth in this Agreement, the referee shall determine the manner
in
which the reference proceeding is conducted including the time and place of
hearings, the order of presentation of evidence, and all other questions that
arise with respect to the course of the reference proceeding. All proceedings
and hearings conducted before the referee, except for trial, shall be conducted
without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter
at
trial.
The
referee shall be required to determine all issues in accordance with existing
case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, provide all temporary or provisional
remedies, enter equitable orders that will be binding on the parties and rule
on
any motion which would be authorized in a trial, including without limitation
motions for summary judgment or summary adjudication. The referee shall issue
a
decision pursuant to CCP Section 644 the referee’s decision shall be entered by
the Court as a judgment or an order in the same manner as if the action had
been
tried by the Court. The final judgment or order or from any appealable decision
or order entered by the referee shall be fully appealable as provided by law.
The parties reserve the right to findings of fact, conclusions of laws, a
written statement of decision, and the right to move for a new trial or a
different judgment, which new trial, if granted, is also to be a reference
proceeding under this provision.
If
the
enabling legislation which provides for appointment of a referee is repealed
(and no successor statute is enacted), any dispute between the parties that
would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act Section 1280
through Section 1294.2 of the CCP as amended from time to time. The limitations
with respect to discovery set forth above shall apply to any such arbitration
proceeding.
THE
PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE
PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING
(OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH
PARTY KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS
REFERENCE PROVISION WILL APPLY TO ANY DISPUTE BETWEEN THEM WHICH ARISES OUT
OF
OR IS RELATED TO THIS AGREEMENT.
No
Waiver by Xxxxxx.
Lender
shall not be deemed to have waived any rights under this Agreement unless such
waiver is given in writing and signed by Xxxxxx. No delay or omission on the
part of Lender in exercising any right shall operate as a waiver of such right
or any other right. A waiver by Xxxxxx of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to demand
strict compliance with that provision or any other provision of this Agreement.
No prior waiver by Xxxxxx, nor any course of dealing between Xxxxxx and
Borrower, or between Lender and any Grantor, shall constitute a waiver of any
of
Lender's rights or of any of Borrower's or any Grantor's obligations as to
any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
Integration.
The
parties agree that (a) this Agreement, together with all of the Related
Documents, represents the final agreement between the parties, and therefore
incorporates all negotiations of the parties hereto (b) there are no unwritten
oral agreements between the parties, and (c) this Agreement may not be
contradicted by evidence of any prior, contemporaneous, or subsequent oral
agreements or understandings of the parties.
Notices.
Any
notice required to be given under this Agreement shall be given in writing,
and
shall be effective when actually delivered, when actually received by
telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement.
Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of
the
notice is to change the party's address. For notice purposes, Xxxxxxxx agrees
to
keep Xxxxxx informed at all times of Xxxxxxxx's current address. Unless
otherwise provided or required by law, if there is more than one Borrower,
any
notice given by Lender to any Borrower is deemed to be notice given to all
Borrowers.
Severability.
If a
court of competent jurisdiction finds any provision of this Agreement to be
illegal, invalid, or unenforceable as to any circumstance, that finding shall
not make the offending provision illegal, invalid, or unenforceable as to any
other circumstance. If feasible, the offending provision shall be considered
modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this
Agreement. Unless otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect the
legality, validity or enforceability of any other provision of this
Agreement.
Subsidiaries
and Affiliates of Borrower.
To the
extent the context of any provisions of this Agreement makes it appropriate,
including without limitation any representation, warranty or covenant, the
word
"Borrower" as used in this Agreement shall include all of Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require Lender to make any
Loan or other financial accommodation to any of Borrower's subsidiaries or
affiliates.
Successors
and Assigns.
All
covenants and agreements by or on behalf of Borrower contained in this Agreement
or any Related Documents shall bind Xxxxxxxx's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower shall
not, however, have the right to assign Xxxxxxxx's rights under this Agreement
or
any interest therein, without the prior written consent of Lender.
Survival
of Representations and Warranties.
Xxxxxxxx
understands and agrees that in extending Loan Advances, Xxxxxx is relying on
all
representations, warranties, and covenants made by Borrower in this Agreement
or
in any certificate or other instrument delivered by Borrower to Lender under
this Agreement or the Related Documents. Borrower further agrees that regardless
of any investigation made by Xxxxxx, all such representations, warranties and
covenants will survive the extension of Loan Advances and delivery to Lender
of
the Related Documents, shall be continuing in nature, shall be deemed made
and
redated by Xxxxxxxx at the time each Loan Advance is made, and shall remain
in
full force and effect until such time as Borrower's Indebtedness shall be paid
in full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.
Time
is of the Essence.
Time is
of the essence in the performance of this Agreement.
Patriot
Act Notice. Xxxxxx
hereby notifies Borrower that pursuant to the requirements of the Patriot Act,
Lender is required to obtain, verify and record information identifying
Xxxxxxxx, including Xxxxxxxx’s legal name, address, tax ID number and other
information that will allow Lender to identify Borrower in accordance with
the
Patriot Act. Lender will also require information regarding each personal
guarantor, if any, and may require information regarding Borrower’s management
and owners, such as legal name, address, social security number and date of
birth.
DEFINITIONS.
The
following capitalized words and terms shall have the following meanings when
used in this Agreement. Unless specifically stated to the contrary, all
references to dollar amounts shall mean amounts in lawful money of the United
States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code. Accounting words and
terms not otherwise defined in this Agreement shall have the meanings assigned
to them in accordance with generally accepted accounting principles as in effect
on the date of this Agreement:
Advance.
The word
"Advance" means a disbursement of Loan funds made, or to be made, to Borrower
or
on Borrower's behalf on a line of credit or multiple advance basis under the
terms and conditions of this Agreement.
Agreement.
The word
"Agreement" means this Business Loan Agreement, as this Business Loan Agreement
may be amended or modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement from time to time.
Anti-Terrorism
Laws. The
words
“Anti-Terrorism laws” mean any laws relating to terrorism or money laundering,
including the Patriot Act.
Base
Rate. The
word
“Base Rate” means at any time, the rate of interest per annum equal to the
“Prime Rate” as reported from time to time in The Wall Street Journal; each
change in the “Prime Rate” shall be effective from and including the date such
change is reported. In the event that such Prime Rate is not available at
such time for any reason, “Prime Rate” shall mean a rate of interest per annum
publicly announced from time to time by any banking institution selected by
the
Lender in its sole discretion as its prime rate. The Base Rate is not
necessarily the lowest rate charged by Lender on its loans and is set by Lender
in its sole discretion.
Borrower.
The word
"Borrower" means Rubio's Restaurants, Inc., a Delaware corporation and includes
all co-signers and co-makers signing the Note and all their successors and
assigns.
Collateral
Description.
The word
"Collateral" as used in this Agreement means the following described property,
whether now owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located, in which Borrower is giving to Lender a security
interest for the payment of the Indebtedness and performance of all other
obligations under the Note, the Security Agreement, and this
Agreement:
All
present and future right, title and interest of Xxxxxxxx in and to, without
limitation, all: personal and fixture property of every kind and nature
including without limitation all goods (including inventory, equipment and
any
accessions thereto), instruments (including promissory notes), documents,
accounts (including health care insurance receivables), chattel paper (whether
tangible or electronic), deposit accounts, letter of credit rights (whether
or
not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, supporting obligations, any other
contract rights or rights to the payment of money, insurance claims and
proceeds, tort claims, and all general intangibles including, without
limitation, all payment intangibles, patents, patent applications, trademarks,
trademark applications, trade names, copyrights, copyright applications,
software, engineering drawings, service marks, customer lists, goodwill, and
all
licenses, permits, agreements of any kind or nature pursuant to which the Debtor
possesses, uses or has authority to possess or use property (whether tangible
or
intangible) of others or others possess, use or have authority to possess or
use
property (whether tangible or intangible) of the Borrower, and all recorded
data
of any kind or nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and schematics. With
respect to any term used herein that is defined in either (i) Article 9 of
the
Uniform Commercial Code as in force in the jurisdiction in which this agreement
was signed by Xxxxxxxx at the time that it was signed, or (ii) Article 9 as
in
force at any relevant time in the jurisdiction in which the financing statement
is filed, the meaning to be ascribed thereto with respect to any particular
item
of property shall be that under the more encompassing of the two
definitions. In
addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(A)
All
accessions, attachments, accessories, replacements of and additions to any
of
the collateral described herein, whether added now or later.
(B)
All
products and proceeds of any of the property described in this Collateral
section.
(C)
All
accounts, general intangibles, instruments, rents, monies, payments, and all
other rights, arising out of a sale, lease, consignment or other disposition
of
any of the property herein described.
(D)
All
proceeds (including insurance proceeds) from the sale, destruction, loss, or
other disposition of any of the property herein described and sums due from
a
third party who has damaged or destroyed the Collateral or from that party's
insurer, whether due to judgment, settlement or other process.
(E)
All
records and data relating to any of the property herein described whether in
the
form of a writing, photograph, microfilm, microfiche, or electronic media,
together with all of Borrower's right, title, and interest in and to all
computer software required to utilize, create, maintain, and process any such
records or data on electronic media.
For
purposes of clarity, the word “Collateral” shall include the Company’s interests
in the leases and the equipment for its existing and future restaurant units
only to the extent allowed by and in accordance with the terms and conditions
of
such leases.
Credit
Agreement. The
word
“Credit Agreement” means that certain Business Loan Agreement entered into among
Borrower and Lender dated May 13, 2008 (as the same may be amended or modified
from time to time, together with all exhibits and schedules attached to such
Credit Agreement from time to time) pursuant to which Xxxxxx provided Borrower
certain financial accommodations.
Disclosure
Schedule.
The word
“Disclosure Schedule” means that certain Disclosure Schedule drafted by Borrower
in connection with this Agreement and the Credit Agreement.
Environmental
Laws.
The
words "Environmental Laws" mean any and all state, federal and local statutes,
regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act
of
1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act,
42
U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
California Health and Safety Code, Section 25100, et seq., or other applicable
state or federal laws, rules, or regulations adopted pursuant
thereto.
Rubio’s
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Business
Loan Agreement (04-2008)
10
Event
of Default.
The
words "Event of Default" mean any of the events of default set forth in this
Agreement in the default section of this Agreement.
Expiration
Date. The
words
“Expiration Date” shall mean May 13, 2010.
GAAP.
The word
"GAAP" means generally accepted accounting principles.
Grantor.
The word
"Grantor" means each and all of the persons or entities granting a Security
Interest in any Collateral for the Loan, including without limitation all
Borrowers granting such a Security Interest.
Guarantor.
The word
"Guarantor" means any guarantor, surety, or accommodation party of any or all
of
the Loan.
Guaranty.
The word
"Guaranty" means the guaranty from Guarantor to Lender, including without
limitation a guaranty of all or part of the Note.
Hazardous
Substances.
The
words "Hazardous Substances" mean materials that, because of their quantity,
concentration or physical, chemical or infectious characteristics, may cause
or
pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured,
transported or otherwise handled. The words "Hazardous Substances" are used
in
their very broadest sense and include without limitation any and all hazardous
or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes, without
limitation, petroleum and petroleum by-products or any fraction thereof and
asbestos.
Indebtedness.
The word
"Indebtedness" means the indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other
indebtedness and costs and expenses for which Borrower is responsible under
this
Agreement or under any of the Related Documents.
Lender.
The word
"Lender" means Pacific Western Bank, its successors and assigns.
Loan.
The word
"Loan" means any and all loans and financial accommodations from Lender to
Borrower whether now or hereafter existing, and however evidenced, including
without limitation those loans and financial accommodations described herein
or
described on any exhibit or schedule attached to this Agreement from time to
time.
Loan
Date.
The word
“Loan Date” means May 13, 2008.
Loan
Documents. The
word
“Loan Documents” means this Agreement, the Credit Agreement, and all Related
Documents.
Maturity
Date. The
word
“Maturity Date” means for each Advance made under this Agreement, a date no
later than 57 months after the date on which such Advance is made.
Note.
The word
"Note" means the Note from time to time executed by Xxxxxxxx, together with
all
renewals of, extensions of, modifications of, refinancings of, consolidations
of, and substitutions for the note or this Agreement.
Obligor.
The
word
“Obligor” means Borrower, Guarantor, or other Person that is liable for payment
of any Obligations or that has granted a Lien in favor of Agent on its assets
to
secure any Obligations.
Patriot
Act. The
words
“Patriot Act” means and refers to Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272
(2001).
Permitted
Acquisition.
Any
acquisition that conforms to all of the following requirements: (i) the assets,
division or line of business to be acquired is primarily in a substantially
similar line of business as the Borrower’s, (ii) the assets, division or line of
business to be acquired shall be used towards expansion of Borrower’s existing
business operations, or the establishment of the Borrower’s future Rubio’s
restaurant units, (iii) all transactions related to such acquisition shall
be
consummated in accordance with applicable law; and (iv) all such assets,
divisions or lines of business acquired shall be (a) owned directly by Borrower
or any Guarantor that has granted a Security Interest to Lender, and (b) subject
to Lender’s Security Interest under the Loan Documents.
Permitted
Liens.
The
words "Permitted Liens" mean (1) liens and security interests securing
Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments,
or
similar charges either not yet due or being contested in good faith; (3) liens
of materialmen, mechanics, warehousemen, or carriers, or other like liens
arising in the ordinary course of business and securing obligations which are
not yet delinquent or are being contested in good faith by appropriate
proceedings and Borrower shall have established on Xxxxxxxx’s books adequate
reserves with respect to such contested lien or claim in accordance with GAAP;
(4) purchase money liens or purchase money security interests upon or in any
property acquired or held by Borrower in the ordinary course of business to
secure indebtedness outstanding on the date of this Agreement or permitted
to be
incurred under the paragraph of this Agreement titled "Indebtedness and Liens";
(5) liens and security interests which, as of the date of this Agreement, have
been disclosed to and approved by the Lender in writing, including the liens
and
security interests, if any, of the landlords for the Company’s existing and
future restaurant units; and (6) those liens and security interests which in
the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets; and (7) liens not to exceed
***
in the
aggregate (i) upon or in any equipment acquired or held by the Borrower to
secure the purchase price of such equipment or indebtedness incurred solely
for
the purpose of financing the acquisition or lease of such equipment, or (ii)
existing on such equipment at the time of its acquisition, provided that the
lien is confined solely to the property so acquired and improvements thereon,
and the proceeds of such equipment.
Person.
The
word
“Person” means any individual, corporation, limited liability company,
partnership, joint venture, joint stock company, land trust, business trust,
unincorporated organization, Governmental Authority or other entity.
Related
Documents.
The
words "Related Documents" mean all notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of
trust, security deeds, collateral mortgages, disclosure schedules and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with this Loan or the Credit Agreement.
***
Portions
of this page have been omitted pursuant to a request for Confidential Treatment
and filed separately with the Commission.
Xxxxx’x
Restaurants, Inc.-Line #583277
Business
Loan Agreement (04-2008)
11
Security
Agreement.
The
words "Security Agreement" mean and include without limitation any agreements,
promises, covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing, representing,
or
creating a Security Interest.
Security
Interest.
The
words "Security Interest" mean, without limitation, any and all types of
collateral security, present and future, whether in the form of a lien, charge,
encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's
lien, equipment trust, conditional sale, trust receipt, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever whether created by law, contract, or
otherwise.
Subsidiaries.
The word
“Subsidiaries” means, collectively, Xxxxx'x Promotions, Inc., an Arizona
corporation, and Xxxxx'x Restaurants of Nevada, Inc., a Nevada
corporation.
UCC.
The
word
“UCC” means Uniform Commercial Code.
Xxxxx’x
Restaurants, Inc.-Line #583277
Business
Loan Agreement (04-2008)
12
XXXXXXXX
ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT
AND
XXXXXXXX AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MAY 13,
2008.
BORROWER:
XXXXX'X
RESTAURANTS, INC., A DELAWARE CORPORATION
|
By:
/s/
Xxxxxx X.
Xxxxxxx
Xxxxxx
X. Xxxxxxx, President/CEO of Rubio's
Restaurants,
Inc., a Delaware corporation
|
By:
/s/
Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx, Chief Financial Officer of
Xxxxx'x
Restaurants, Inc., a Delaware
corporation
|
LENDER:
PACIFIC
WESTERN BANK
By:
/s/
Xxxx X. Xxxxx, VP______________________
Authorized
Signer
S-1
Business
Loan Agreement (Line #583277)
