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EXHIBIT 99.1
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
September 30, 1997
between
NORTH'S RESTAURANTS, INC.
and
STAR BUFFET, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1. Definitions...................................................................2
Section 1.2. Accounting Terms and Determinations...........................................7
Section 1.3. References....................................................................8
Section 1.4. Use of Defined Terms..........................................................8
Section 1.5. Terminology. ................................................................8
ARTICLE II
THE CREDIT
Section 2.1. Loans.........................................................................8
Section 2.2. Maturity of Loans.............................................................9
Section 2.3. Interest......................................................................9
Section 2.4. Optional Prepayments..........................................................9
Section 2.5. Mandatory Prepayments.........................................................9
Section 2.6. General Provisions as to Payments............................................10
ARTICLE III
CONDITIONS TO CLOSING
Section 3.1. Conditions to Closing........................................................10
Section 3.2. Conditions to Borrowings Under Revolving Loans...............................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Corporate Existence and Power................................................11
Section 4.2. Corporate and Governmental Authorization; No Contravention...................11
Section 4.3. Binding Effect...............................................................12
Section 4.4. Financial Information........................................................12
Section 4.5. No Litigation................................................................12
Section 4.6. Compliance with ERISA........................................................12
Section 4.7. Compliance with Laws; Payment of Taxes.......................................12
Section 4.8. No Subsidiaries..............................................................13
Section 4.9. Investment Company Act.......................................................13
Section 4.10. Public Utility Holding Company Act...........................................13
Section 4.11. Ownership of Property; Liens.................................................13
Section 4.12. No Default...................................................................13
Section 4.13. Full Disclosure..............................................................13
Section 4.14. Environmental Matters........................................................13
Section 4.15. Capital Stock................................................................14
Section 4.16. Margin Stock.................................................................14
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ARTICLE V
COVENANTS
Section 5.1. Information..................................................................14
Section 5.2. Inspection of Property, Books and Records....................................15
Section 5.3. Restricted Payments..........................................................15
Section 5.4. Limitation on Indebtedness...................................................15
Section 5.5. Loans or Advances............................................................16
Section 5.6. Investments..................................................................16
Section 5.7. Negative Pledge..............................................................16
Section 5.8. Maintenance of Existence.....................................................17
Section 5.9. Dissolution..................................................................17
Section 5.10. Consolidations, Mergers and Sales of Assets..................................17
Section 5.11. Use of Proceeds..............................................................17
Section 5.12. Compliance with Laws; Payment of Taxes.......................................17
Section 5.13. Insurance....................................................................17
Section 5.14. Change in Fiscal Year........................................................17
Section 5.15. Maintenance of Property......................................................18
Section 5.16. Environmental Notices........................................................18
Section 5.17. Environmental Matters........................................................18
Section 5.18. Environmental Release........................................................18
Section 5.19. Transactions with Affiliates.................................................18
ARTICLE VI
DEFAULTS
Section 6.1. Events of Default............................................................18
ARTICLE VII
MISCELLANEOUS
Section 7.1. Notices......................................................................20
Section 7.2. No Waivers...................................................................21
Section 7.3. Expenses; Documentary Taxes..................................................21
Section 7.4. Indemnification..............................................................21
Section 7.5. Amendments and Waivers.......................................................21
Section 7.6. Successors and Assigns.......................................................21
Section 7.7. Confidentiality..............................................................21
Section 7.8. Utah Law.....................................................................22
Section 7.9. Severability.................................................................22
Section 7.10. Interest.....................................................................22
Section 7.11. Interpretation...............................................................22
Section 7.12. Waiver of Jury Trial; Consent to Jurisdiction................................22
Section 7.13. Counterparts.................................................................22
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EXHIBITS
EXHIBIT A Form of Term Note
EXHIBIT B Form of Revolving Note
EXHIBIT C Form of Amended and Restated Security Agreement
EXHIBIT D Form of Notice of Borrowing
EXHIBIT E Form of Opinion of Borrower's Counsel
SCHEDULES
Schedule 1 List of Loan Modification Agreements
Schedule 4.4 Material Adverse Effects
Schedule 4.5 Litigation
Schedule 4.15 Securities Laws Exceptions
Schedule 5.4 Indebtedness
Schedule 5.5 Loans
Schedule 5.6 Permitted Investments
Schedule 5.7 Liens
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EXHIBIT 99.1
AMENDED AND RESTATED CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of this 30th
day of September, 1997, by and between NORTH'S RESTAURANTS, INC. an Oregon
corporation (the "Borrower"), and STAR BUFFET, INC., a Delaware corporation
("Lender").
WHEREAS, on February 27, 1995, the Borrower and United States National
Bank of Oregon, a national bank ("US Bank"), entered into that certain Loan
Agreement (the "Initial Loan Agreement") pursuant to which US Bank made certain
loans to Borrower (the "Initial Loans"); and
WHEREAS, pursuant to the agreements listed on Schedule 1 hereto, the
Borrower and US Bank from time to time amended and modified the Initial Loan
Agreement (the Initial Loan Agreement as so amended and modified, the "Modified
Loan Agreement"); and
WHEREAS, Borrower and U.S. Bank have also further modified the Initial
Loan Agreement pursuant to a Loan Modification Agreement, dated as of September
30, 1997 (the "Modification Agreement"), pursuant to which the Initial Loans
were restructured into (a) a $7,864,020.93 restructured term loan (the
"Restructured Term Loan") and (b) a $750,000 restructured revolving credit
facility (the "Restructured Revolving Loan" and, together with the Restructured
Term Loan, the "Restructured Loans"); and
WHEREAS, pursuant to the Modification Agreement and at the Effective
Date thereof, outstanding principal balance of the Restructured Term Loan was
reduced to $7,000,000; and
WHEREAS, pursuant to an Assignment Agreement between US Bank and Lender,
dated as of September 30, 1997 (the "Assignment Agreement"), US Bank sold,
assigned, transferred and set over to the Lender, and the Lender acquired, all
of US Bank's right, title and interest in, to and under the Existing Loan
Documents (as defined in the Assignment Agreement); and
WHEREAS, the Borrower and Lender are parties to that certain Asset
Purchase Agreement dated as of July 24, 1997, as amended by that certain
Amendment No. 1 to Asset Purchase Agreement dated September 30, 1997 (as
amended, the "Purchase Agreement"), pursuant to which Lender has agreed to
cancel $4.0 million of Borrower's indebtedness under the Restructured Term Loan
in partial payment of the purchase price payable to Borrower under the Purchase
Agreement; and
WHEREAS, after giving effect to the foregoing cancellation of
indebtedness to Lender, Borrower's aggregate outstanding indebtedness to Lender
with respect to the Restructured Term Loan is $3,000,000; and
WHEREAS, Borrower has requested, and subject to the conditions set forth
herein, the Lender has agreed to restructure the Borrower's remaining
obligations under the Existing Loan Documents and the Restructured Loans; and
WHEREAS, this Agreement amends, restates and supersedes in its entirety
the Modified Loan Agreement, as amended to date, and no term or provision of the
Modified Loan Agreement shall bind the parties to this Agreement unless
specifically set forth herein.
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NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The terms as defined in this Section 1.1
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person"), (ii)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person, or (iii) any Person (other
than a Subsidiary) of which the Borrower owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests, excluding existing
joint ventures. As used herein, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. It is acknowledged and agreed that Lender is not an
Affiliate of Borrower.
"Agreement" means this Amended and Restated Credit Agreement, together
with all amendments and supplements hereto and all exhibits and schedules
hereto.
"Borrower" means North's Restaurants, Inc., an Oregon corporation, and
its successors and its permitted assigns.
"Borrowing" means any borrowing consisting of the Term Loan as of the
Closing and thereafter consisting of Revolving Loans made to the Borrower by the
Lender pursuant to Article II.
"Capital Stock" means any nonredeemable capital stock of the Borrower or
any Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et. seq. and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Control" means the occurrence of any of the following events:
(a) the acquisition after the Closing Date, in one or more transactions, by any
Person or entity, or any group of Persons or entities who are acting in concert,
of any securities of the Borrower such that, as a result of such acquisition,
such Person, entity or group either (A) "beneficially owns" (within the meaning
of Rule 13 under the Exchange Act), directly or indirectly 51% or more of the
Borrower's then outstanding voting securities entitled to vote on the election
of directors of the Borrower ("Voting Securities") or (B) otherwise has the
ability to elect, directly or indirectly, a majority of the members of the
Borrower's Board of Directors; (b) the sale, lease, transfer or other
disposition of all or substantially all of the assets of the Borrower as
entirety or substantially as an entirety in one transaction or a series of
related
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transactions (other than pursuant to the Option Agreement); (c) the liquidation
or dissolution of the Borrower; or (d) any transaction permitted under Section
5.10 which results in any of the foregoing.
"Closing Certificate" has the meaning set forth in Section 3.1(c).
"Closing Date" means the date on which all matters set forth in Section
3.1 are satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Collateral" has the meaning set forth in the Security Agreement.
"Commitment" means, with respect to the Revolving Loans to be made by
Lender pursuant to Section 2.1(b) of this Agreement, the amount of $750,000.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Default" has the meaning set forth in Section 6.1.
"Default Rate" means a rate per annum equal to the lesser of (i)
thirteen percent (13%) per annum or (ii) the maximum rate permitted by law.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in the State of Utah are authorized by law to
close.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower or any Wholly Owned Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority,
of possible or alleged noncompliance with or liability under any Environmental
Requirement, including without limitation any complaints, citations, demands or
requests from any Environmental Authority or from
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any other person or entity for correction of any, violation of any Environmental
Requirement or any investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any Wholly
Owned Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Event of Default" has the meaning set forth in Section 6.1.
"Fiscal Quarter" means any fiscal quarter of the Borrower, it being
understood that each of the first, second and third fiscal quarters of each
Fiscal Year consists of three Reporting Periods and the fourth fiscal quarter
consists of four Reporting Periods.
"Fiscal Year" means any fiscal year of the Borrower consisting of the 52
or 53 week period ending on the Monday closest to June 30.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.2, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. Section 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or in
any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof or
(d) insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable state
or local law or regulation, as each such Act, statute or regulation may be
amended from time to time.
"Indebtedness" shall have the meaning set forth in Section 5.4.
"Intercreditor Agreement" means that certain Subordination Agreement,
dated as of even date herewith, by and between Borrower and PMF, as the same may
be amended or modified from time to time.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or
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advance to such Person, making of a time deposit with such Person, guarantee or
assumption of any obligation of such Person or otherwise.
"Lender" means Star Buffet, Inc., a Delaware corporation, and its
successors and assigns.
"Lending Office" means, as to Lender, its office located at its address
set forth on the signature pages hereof or identified on the signature pages
hereof as its Lending Office or such other office as such Lender may hereafter
designate as its Lending Office by notice to the Borrower.
"Lien" means, with respect to any asset, any lien, pledge, charge,
security interest, security title, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Indebtedness or a
guarantee of a Indebtedness, whether by consensual agreement or by operation of
statute or other law, or by any agreement, contingent or otherwise, to provide
any of the foregoing. For the purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease (as determined under GAAP) or other title retention agreement
relating to such asset. Provided, however, an operating lease (as determined
under GAAP) shall not constitute a Lien.
"Loans" shall mean the Term Loan and the Revolving Loan.
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Inter-creditor Agreement, Post-Closing Collateral Documents and
any other document evidencing, relating to or securing the obligations of the
Borrower hereunder, and any other document or instrument delivered from time to
time in connection with the foregoing documents, or the obligations of the
Borrower hereunder, as such documents and instruments may be amended, modified
or supplemented from time to time.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U or
X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence, of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding that
is not a judgment giving rise to a Default), whether singly or in conjunction
with any other event or events, act or acts, condition or conditions, occurrence
or occurrences, whether or not related, a material adverse change in, or a
material adverse effect upon, any of (a) the financial condition, operations,
business, properties or prospects of the Borrower and its Consolidated
Subsidiaries taken as a whole, (b) the rights and remedies of the Lender under
the Loan Documents, or (c) the legality, validity or enforceability of any Loan
Document.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"North's Restaurants" shall mean any and all restaurants operated as a
XX Xxxxx'x Grand Buffet, owned or operated by the Borrower.
"Notes" means the Term Note and any Revolving Note then outstanding.
"Notice of Borrowing" shall have the meaning set forth in Section
2.1(b).
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"Option Agreement" shall mean that certain Option Agreement, dated as of
even date herewith, between Borrower and Lender, as the same may be amended or
modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
"PMF" shall mean Pacific Mezzanine Fund, L.P., a California limited
partnership.
"PMF Loan Documents" means that certain Senior Subordinated Loan and
Security Agreement, dated as of February 15, 1995, between Borrower and PMF,
together with all documents executed and delivered by Borrower pursuant thereto.
"Post-Closing Collateral" has the meaning set forth in Section 2.7(a).
"Post-Closing Collateral Documents" has the meaning set forth in Section
2.7(a).
"Prior Notes" shall mean the Prior Revolving Note and the Prior Term
Note.
"Prior Revolving Note" means the Restructured Revolving Note dated
September 30, 1997, providing for a revolving credit facility of up to $750,000,
executed by Borrower in favor of US Bank.
"Prior Term Note" means the Restructured Term Note dated September 30,
1997, in the original principal amount of $7,864,020.93, executed by Borrower in
favor of US Bank.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Borrower or any Consolidated Subsidiary, wherever located.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
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"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Reporting Period" means, with respect to any Fiscal Year, each
consecutive 4 week period beginning on the first day of such Fiscal Year.
"Restricted Payment" means (i) any dividend or other distribution on any
shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any cash payment on account of the
purchase, redemption, retirement or acquisition (excluding therefrom any nominal
amount of cash paid in lieu of fractional shares of Capital Stock issued in the
ordinary course of business) of (a) any shares of the Borrower's capital stock
(except shares acquired upon the conversion thereof into other shares of its
capital stock) or (b) any option, warrant or other right to acquire shares of
the Borrower's capital stock.
"Retail Building" means any removable restaurant building owned by the
Borrower and operated under the "North's" trade name and all related equipment
and moveable site improvements.
"Revolving Loan" means the Revolving Loan made by Lender pursuant to
Section 2.1(b).
"Revolving Loan Termination Date" means December 31, 1999.
"Revolving Note" means the promissory note, in the form of Exhibit B,
delivered to Lender to evidence the obligation to repay any portion of the
Revolving Loan, together with all amendments, consolidations, modifications,
renewals and supplements thereto.
"Security Agreement" shall mean the Security Agreement between Borrower
and Lender, as successor in interest to US Bank, a copy of which is attached as
Exhibit C .
"Term Loan" shall mean the Term Loan as set forth in Section 2.1(a)
below .
"Term Loan Termination Date" means the sixth (6th) anniversary of the
date of this Agreement.
"Term Note" means the promissory note, in the form attached hereto as
Exhibit A, delivered to Lender to evidence the Term Loan, together with all
amendments, consolidations, modifications, renewals and supplements thereto, and
replacements thereof.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
Section 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP, applied on a basis consistent (except for changes with
which the Borrower's independent public accountants concur or that are otherwise
required by a change in GAAP) with the most recent reviewed consolidated
financial statements of the Borrower and its
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Consolidated Subsidiaries delivered to the Lender except for any change in which
the Borrower's independent public accountants concur or is required by GAAP, in
determining compliance with any of the provisions of this Agreement or any of
the other Loan Documents: (i) the Borrower shall have objected to determining
such compliance on such basis at the time of delivery of such financial
statements, or (ii) the Lender shall so object in writing within 30 days after
the delivery of such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 5.1 hereof, shall mean the
financial statements referred to in Section 4.4).
Section 1.3. References. Unless otherwise indicated, references in this
Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
Section 1.4. Use of Defined Terms. All terms defined in this Agreement
shall have the same defined meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall require
otherwise.
Section 1.5. Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.
ARTICLE II
THE CREDIT
Section 2.1. Loans.
(a) Term Loan. Lender agrees, subject to the terms and
conditions set forth herein and based on the representations and warranties set
forth herein, to restructure the Borrower's Indebtedness to Lender under the
Prior Term Note. On the Closing Date, subject to all of the conditions set forth
in Article III herein, Lender agrees to deliver to the Borrower the Prior Term
Note in exchange for the Term Note.
(b) Revolving Loan. Lender agrees, subject to the
terms and conditions set forth herein and based on the representations and
warranties set forth herein, to restructure the Borrower's Indebtedness to
Lender under the Prior Revolving Note. On the Closing Date, subject to all of
the conditions set forth in Article III herein, Lender agrees to deliver to the
Borrower the Prior Revolving Note in exchange for the Revolving Note. Subject to
the terms and conditions set forth herein, Lender shall from time to time on or
after the Closing Date and through and including the Revolving Loan Termination
Date, upon written request of the Borrower in the form of notice attached hereto
as Exhibit D (the "Notice of Borrowing"), make Revolving Loans to the Borrower
in an aggregate principal amount at any time not to exceed an amount equal to
$750,000 through and including the Revolving Loan Termination Date, each portion
of such Revolving Loan shall be evidenced by a Revolving Note. All proceeds of
Revolving Loans shall be used solely for the payment of store closure and lease
termination costs and severance costs, and for no other purpose.
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(c) Certain Representations. Borrower hereby
represents, warrants, ratifies and confirms that the Restructured Term Loan, in
the aggregate outstanding principal amount of $3,000,000 as of the Closing Date
remains in full force and effect and is payable without defense, offset,
recoupment or counterclaim.
Section 2.2. Maturity of Loans. Except for mandatory payments required
by this Agreement, the Loans shall mature, and the principal amount thereof, if
any, together with all accrued but unpaid interest thereon, if any, shall be due
and payable on the Term Loan Termination Date and the Revolving Loan Termination
Date, as the case may be, without notice to or demand upon the Borrower.
Section 2.3. Interest. The Loans shall earn interest at a rate equal to
the rate secured by Lender under a credit facility to be obtained by Lender in
the future, provided, however, that in no event shall the rate exceed 8% per
annum. Interest shall be computed on the basis of a 360-day year and paid for
the actual number of days elapsed. The Borrower agrees to pay interest in
respect of the principal amount of the Loans, for each day from the date such
Loans are made until such Loans shall be paid in full in accordance with the
terms of the Notes. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on the Loans shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
After the occurrence and during the continuance of a Default, the principal
amount of the Loans (and, to the extent permitted by applicable law, all accrued
interest thereon) shall, at the election of the Lender, bear interest at the
Default Rate.
Section 2.4. Optional Prepayments. The Borrower may, upon at least five
Domestic Business Day's notice to the Lender, prepay the Loans by an aggregate
amount of at least $25,000 or any larger multiple of $25,000, without premium or
penalty.
Section 2.5. Mandatory Prepayments.
(a) Sales of Assets. All proceeds (whenever received, whether
upon, after or prior to consummation or as a result of payments under any
promissory note or other deferred payment instrument, net of reasonable
transaction costs, payable to and received by Borrower from the sale of assets
(other than sales of inventory in the ordinary course of business), whether or
not permitted hereby, shall be paid to Lender and shall be applied first against
accrued and unpaid interest under the Loans, and second against the outstanding
principal amounts of the Revolving Loans, and then against the outstanding
principal amounts of the Term Loan. Nothing in this Section 2.5(a) shall be
construed to permit the Borrower to sell any of its assets other than as
specifically authorized by this Agreement.
(b) Prepayment at Election of Lender Upon Change of Control.
Upon the occurrence of a Change of Control, Lender shall have the right to
require the Borrower to prepay the then outstanding principal amount of the
Notes, plus accrued and unpaid interest, if any, to the date of prepayment;
provided, however, that no such prepayment shall be required unless there is a
change in the management of the Borrower resulting from any Change of Control
described in subpart (a) of the definition thereof and such new management is
not reasonably acceptable to Lender. Within five Domestic Business Days
following any such Change of Control, the Borrower will mail a notice thereof to
Lender (a "Change of Control Notice"). Lender, by written notice to the Borrower
within 30 days following receipt of such Change of Control Notice, may elect
prepayment of its Notes and the Borrower shall prepay such Notes no later than
30 days thereafter.
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Section 2.6. General Provisions as to Payments. The Borrower shall make
each payment of principal of, and interest on, the Loans not later than 11:00
A.M. (Pacific Time) on the date when due, in Federal or other funds immediately
available. Whenever any payment of principal of, or interest on, the Loans shall
be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day..
ARTICLE III
CONDITIONS TO CLOSING
Section 3.1. Conditions to Closing. The obligation of Lender to make
the Loans, and to restructure the Borrower's obligations under the Prior Notes,
is subject to the satisfaction of the conditions set forth below and receipt by
the Lender of the documents, instruments, agreements and certificates set forth
below:
(a) duly executed originals of the Term Note and the Revolving
Note;
(b) duly executed Security Agreement;
(c) a certificate (the "Closing Certificate") dated as of the
Closing Date, signed by the chief executive officer of the Borrower, to the
effect that (i) the representations and warranties of the Borrower contained in
Article IV are true on and as of the Closing Date; (ii) Borrower has complied
with or performed with all covenants and agreements which is required to have
performed or complied with on or prior to the Closing Date; and (iii) no event,
act or condition has occurred after March 31, 1997 which has had or could have a
Material Adverse Effect.
(d) [intentionally omitted];
(e) all documents which the Lender may reasonably request
relating to the existence of the Borrower, the corporate authority for and the
validity of this Agreement, the Notes and the other Loan Documents and any other
matters relevant hereto, or thereto, all in form and substance reasonably
satisfactory to the Lender, including, without limitation, a certificate of
incumbency of each of the Borrower, signed by the Secretary or an Assistant
Secretary of the Borrower, certifying as to the names, true signatures and
incumbency of the officer or officers, respectively, of the Borrower authorized
to execute and deliver the Loan Documents, and certified copies of the following
items for the Borrower: (i) Articles of Incorporation, (ii) Bylaws, (iii) a
certificate of the Secretary of State of the State of Oregon and all other
states in which Borrower is qualified to transact business as a foreign
corporation as to the good standing of Borrower as a corporation in those
states, and (iv) the action taken by the Board of Directors authorizing the
execution, delivery and performance of this Agreement, the Notes and the other
Loan Documents;
(f) a certificate of insurance evidencing, of all insurance
required by Section 5.13 showing the insurer, the face amount and the nature of
coverage, and the Lender as a loss payee (or beneficiary, as the case may be)
under each policy then in force;
(g) all security interests securing the Borrower's obligations
hereunder shall be duly perfected and validly recorded;
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(h) the consummation of the transactions contemplated by the
Assignment Agreement; and
(i) the consummation of the transactions contemplated by the
Asset Purchase Agreement.
Section 3.2. Conditions to Borrowings Under Revolving Loans. The
obligation of Lender to make a Revolving Loan on the occasion of each Borrowing
is subject to the satisfaction of the following conditions:
(a) receipt by the Lender of a Notice of Borrowing;
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on and as of
the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Revolving Loans will not exceed
the amount of the Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in paragraphs (b), (c) and (d) of this Section; provided that
such Borrowing shall not be deemed to be such a representation and warranty to
the effect set forth in Section 4.4 as to any event, act or condition having a
Material Adverse Effect which has theretofore been disclosed in writing by the
Borrower to the Lender if the aggregate outstanding principal amount of the
Loans immediately after such Borrowing will not exceed the aggregate outstanding
principal amount thereof immediately before such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 4.1. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, except where the failure to qualify could not reasonably be
expected to have or cause a Material Adverse Effect, and has all corporate
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except where the failure to
have any license, authorization, consent or approval could not reasonably be
expected to have or cause a Material Adverse Effect.
Section 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents delivered as of the Closing
Date (i) are within the Borrower's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) require no action by or in
respect of or filing with, any
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governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the articles
of incorporation or bylaws of the Borrower or of any agreement, judgment,
injunction, order, decree or other material instrument binding upon the
Borrower, and (v) do not result in the creation or imposition of any Lien on any
asset of the Borrower other than Liens created or imposed pursuant to the Loan
Documents.
Section 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower enforceable in accordance with its terms, the
Notes, and the other Loan Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding obligations of the
Borrower enforceable in accordance with their respective terms; provided that
the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
Section 4.4. Financial Information. The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of June 30, 1996, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the Fiscal Year then ended, and the consolidated balance sheet of the
Borrower of June 30, 1997, and the related consolidated statements of operations
and cash flows for the Fiscal Year then ended, copies of which have been
delivered to Lender, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower as of such dates and their consolidated
results of operations and cash flows for such periods stated. Since June 30,
1997 and excepted as disclosed in Schedule 4.4 attached hereto, there has been
no event, act, condition or occurrence having a Material Adverse Effect.
Section 4.5. No Litigation. Except as disclosed as Schedule 4.5, there
is no action, suit or proceeding pending, or, to the knowledge of the Borrower,
threatened, against or affecting the Borrower before any court or arbitrator or
any governmental body, agency or official which could reasonably be expected to
have or cause a Material Adverse Effect.
Section 4.6. Compliance with ERISA. The Borrower and each member of the
Controlled Group have fulfilled their obligations in all material respects under
the minimum funding standards of ERISA and the Code with respect to each Plan
and are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA. Neither the Borrower nor any member of
the Controlled Group is or ever has been obligated to contribute to any
Multiemployer Plan.
Section 4.7. Compliance with Laws; Payment of Taxes. The Borrower is in
compliance with all applicable laws, regulations and similar requirements of
governmental authorities, except where such compliance is being contested in
good faith through appropriate proceedings and except where the failure to
comply could not reasonably be expected to have or cause a Material Adverse
Effect. There have been filed on behalf of the Borrower all Federal and state
income, excise, property and other tax returns which are required to be filed by
them and all taxes due pursuant to such returns or pursuant to any assessment
received by or on behalf of the Borrower have been paid. There have been filed
on behalf of the Borrower all local income, excise, property and other tax
returns that are required to be filed by them and all taxes due pursuant to the
returns or any assessment received by Borrower have been paid. The charges,
accruals and reserves on the books of the Borrower in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate, except for
any changes in taxes which are imposed retroactively.
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Section 4.8. No Subsidiaries. The Borrower has no Subsidiaries.
Section 4.9. Investment Company Act. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Section 4.10. Public Utility Holding Company Act. Borrower is not 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", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
Section 4.11. Ownership of Property; Liens. Borrower has title to its
properties sufficient for the conduct of its business, and none of such property
is subject to any Lien except as permitted in Section 5.7.
Section 4.12. No Default. Except for the leases for Borrower's
restaurants located in Midvale, Utah, Reno, Nevada, Rancho Cordova, California
and Stockton, California, Borrower is not in default under or with respect to
any agreement, instrument or undertaking to which it is a party or by which it
or any of its property is bound (other than the PMF Loan Documents) which could
have or cause a Material Adverse Effect (it being understood that Borrower makes
no representation or warranty concerning the absence of defaults on its 10%
Series B Debentures).
Section 4.13. Full Disclosure. All written information heretofore
furnished by the Borrower to the Lender for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to Lender will be, true,
accurate and complete in every material respect or based on reasonable estimates
on the date as of which such information is stated or certified. The Borrower
has disclosed to the Lender in writing any and all facts which could have or
cause a Material Adverse Effect.
Section 4.14. Environmental Matters.
(a) Borrower is not subject to any Environmental Liability
which could have or cause a Material Adverse Effect as the Environmental
Liability becomes due and the Borrower has not been designated as a potentially
responsible party under CERCLA or under any state statute similar to CERCLA.
None of the Properties has been identified on any current or proposed (i)
National Priorities List under 40 C.F.R. Section 300, (ii) CERCLIS list or (iii)
any list arising from a state statute similar to CERCLA.
(b) No Hazardous Materials are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties except in material compliance with Environmental Requirements. No
Hazardous Materials are present at, on, in or under the Properties, or, to the
best of the knowledge of the Borrower, at or from any adjacent site or facility
(except for Hazardous Materials, such as cleaning solvents, pesticides and other
materials used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed, or otherwise handled in minimal amounts in the
ordinary course of business in compliance with all applicable Environmental
Requirements) in such quantities that the cost to monitor, investigate, and/or
remediate the Hazardous Materials in compliance with Environmental Requirements
could not reasonably be expected to have or cause a Material Adverse Effect.
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(c) The Borrower in all material respects is in compliance
with all Environmental Requirements in connection with the operation of the
Properties and the Borrower's businesses.
Section 4.15. Capital Stock. Except as set forth on Schedule 4.15, all
Capital Stock, debentures, bonds, notes and all other securities of the Borrower
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including but not limited to, the "Blue Sky" laws of
all applicable states and the federal securities laws.
Section 4.16. Margin Stock. The Borrower is not engaged principally, or
as one of its important activities, in the business of purchasing or carrying
any Margin Stock, and no part of the proceeds of the Loans will be used to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation X.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any amount payable hereunder
or under the Notes remains unpaid:
Section 5.1. Information.
(a) The Borrower will deliver or cause to be delivered to the
Lender:
(i) as soon as available and in any event within 120 days
after the end of each Fiscal Year, a consolidated balance sheet
of the Borrower as of the end of such Fiscal Year and the related
consolidated statements of operations, stockholders' equity and
cash flows for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous fiscal year,
reviewed by independent public accountants reasonably acceptable
to Lender, with such certification to be free of exceptions and
qualifications not acceptable to the Lender;
(ii) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year, a consolidated balance sheet of the Borrower as of
the end of such Fiscal Quarter and the related statements of
operations and statements of cash flows for such Fiscal Quarter
and for the portion of the Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in each case in comparative form
the figures for the corresponding Fiscal Quarter and the
corresponding portion of the previous Fiscal Year;
(iii) within two (2) Domestic Business Days after the
Borrower has knowledge of the occurrence of any Default, a notice
setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(iv) promptly upon receipt or obtaining knowledge thereof,
any and all bona fide offers or expressions of interest (whether
verbal or written, solicited or unsolicited)
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to merge with or to acquire all or any part of the assets or
capital stock of the Borrower; and
(v) from time to time such additional information
regarding the financial position or business of the Borrower and
its Subsidiaries as may be reasonably requested.
Section 5.2. Inspection of Property, Books and Records. The Borrower
will (i) keep proper books of record and account in which full, true and correct
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities; and (ii) permit representatives of
Lender, at the Borrower's expense, to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and inspections, in each
case at such reasonable times and as often as may reasonably be desired.
Section 5.3. Restricted Payments. The Borrower will not declare or
make any Restricted Payments.
Section 5.4. Limitation on Indebtedness. Borrower will not create,
incur, assume, or become, be or remain liable in any manner in respect of, or
allow to exist, any Indebtedness (which term shall include: all indebtedness,
obligations and liabilities which in accordance with generally accepted
accounting principles would be reflected on the balance sheet of the Borrower as
a liability; all indebtedness, obligations and liabilities, whether or not
assumed by Borrower, secured by any mortgage, pledge or lien existing on
property owned by the Borrower; and all amounts representing rental payments
which, in accordance with generally accepted accounting principles, would be
classified as a liability on its balance sheet), except for:
(a) the Notes and any other obligations owed to the Lender
under this Agreement or otherwise;
(b) Indebtedness of the Borrower existing as of the date of
this Agreement which is specifically disclosed in Schedule 5.4(b) attached
hereto;
(c) Indebtedness of the Borrower to PMF under the PMF Loan
Documents;
(d) Indebtedness representing trade debt, wages, employee
benefits, advance payments on sales contracts and other indebtedness incurred in
the ordinary course of business;
(e) Indebtedness existing as of the date of this Agreement
secured by liens permitted by subsection (a) of Section 5.7;
(f) Liabilities for taxes, assessments, governmental charges,
liens or claims described in Section 5.12 hereof to the extent that payment
thereof is not required by such Section 5.12; and
(g) Indebtedness in respect of final judgments for the payment
of money not in excess of $10,000 in the aggregate at any time outstanding
(excluding sums covered by insurance)
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remaining unsatisfied and in effect for any period of less than thirty (30) days
or in respect of which a stay of execution shall have been obtained pending an
appeal or proceeding for review.
Section 5.5. Loans or Advances. The Borrower shall not make any loans
or advances to any Person except (without duplication): (a) loans or advances to
employees not exceeding $5,000 in the aggregate principal amount outstanding at
any time, in each case made in the ordinary course of business and consistent
with practices existing on the Closing Date; (b) deposits required by government
agencies or public utilities; (c) loans, advances or monetary capital
contributions from the Borrower to an Affiliate; (d) loans in existence on the
Closing Date not exceeding a total aggregate principal amount outstanding as
described on Schedule 5.5 attached hereto, which are evidenced by legally
enforceable promissory notes and subject to the Lender's perfected Liens; and
(e) loans or advances consented to by the Lender in connection with asset sales
under Section 5.10 or loans or advances in connection with asset sales which do
not require the consent of the Lender; provided that after giving effect to the
making of any loans, advances or deposits permitted by this Section, the
Borrower will be in full compliance with all the provisions of this Agreement.
Section 5.6. Investments. Except as permitted by Section 5.5 or as set
forth on Schedule 5.6, the Borrower shall not make Investments in any Person and
except Investments (i) in direct obligations of the United States Government
maturing within one year, (ii) in certificates of deposit issued by a commercial
bank whose long-term certificates of deposit are rated at least AA or the
equivalent thereof by Standard & Poor's Corporation and Aa or the equivalent
thereof by Xxxxx'x Investors Service, Inc., (iii) in commercial paper rated A1
or the equivalent thereof by Standard & Poor's Corporation or P1 or the
equivalent thereof by Xxxxx'x Investors Service, Inc. and in either case
maturing within 6 months after the date of acquisition, and (iv) in tender bonds
the payment of the principal of and interest on which is fully supported by a
letter of credit issued by a United States bank whose long-term certificates of
deposit are rated at least AA or the equivalent thereof by Standard & Poor's
Corporation and Aa or the equivalent thereof by Xxxxx'x Investors Service, Inc.
Section 5.7. Negative Pledge. Borrower will not create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) Liens existing on the date of this Agreement and
identified on Schedule 5.7;
(b) any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring or
constructing such asset (so long as the asset so acquired or constructed
constitutes a capital expenditure permitted hereunder);
(c) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by any of
the foregoing paragraphs of this Section, provided that (i) such Indebtedness is
not secured by any additional assets, and (ii) the amount of such Indebtedness
secured by any such Lien is not increased or, if increased, the excess of the
amount of the Indebtedness secured by any such lien over the amount of the
Indebtedness so refinanced extended, renewed, or refunded shall be tendered to
the Lender as a prepayment of the Loan;
(d) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Indebtedness and (ii) do not in
the aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business;
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(e) Liens in favor of the Lender created under the Loan
Documents;
(f) Liens in favor of PMF created under the PMF Loan
Documents; and
(g) Liens incurred by Borrower in the ordinary course of
business for items not past due and payable, including mechanics' and
materialmen's liens and deposits and charges for workers' compensation and liens
for taxes and assessments not past due and payable.
Section 5.8. Maintenance of Existence. The Borrower shall maintain its
corporate existence and carry on its business in substantially the same manner
and in substantially the same fields as such business is now carried on and
maintained.
Section 5.9. Dissolution. Borrower shall not suffer or permit
dissolution or liquidation either in whole or in part or redeem or retire any
shares of its own stock, except through corporate reorganization to the extent
permitted by Section 5.12.
Section 5.10. Consolidations, Mergers and Sales of Assets. Except as
contemplated by the Asset Purchase Agreement by and between Borrower and Lender
dated as of the date hereof, the Borrower will not consolidate or merge with or
into, or sell, lease or otherwise transfer all or any substantial part of its
assets to, any other Person, or discontinue or eliminate any business line or
segment; provided, however, that if no Default has occurred and is continuing
the Borrower may merge with another Person if (A) such Person was organized
under the laws of the United States of America or one of its states, (B) the
Borrower is the corporation surviving such merger, and (C) immediately after
giving effect to such merger, no Default shall have occurred and be continuing.
Section 5.11. Use of Proceeds. No portion of the proceeds of the
Revolving Loans will be used by the Borrower (i) in connection with, whether
directly or indirectly, any tender offer for, or other acquisition of, stock of
any corporation with a view towards obtaining control of such other corporation,
(ii) directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose
in violation of any applicable law or regulation, or otherwise for any purpose
other than those described in Section 2.1(b) above.
Section 5.12. Compliance with Laws; Payment of Taxes. The Borrower will
comply with applicable laws (including but not limited to ERISA), regulations
and similar requirements of governmental authorities (including but not limited
to PBGC) in all material respects, except where the necessity of such compliance
is being contested in good faith through appropriate proceedings. The Borrower
will pay promptly before past due all taxes, assessments, governmental charges,
claims for labor, supplies, rent and other obligations which, if unpaid, might
become or remain a lien against the property of the Borrower, except liabilities
being contested in good faith and against which, if requested by the Lender, the
Borrower will set up reserves in accordance with GAAP.
Section 5.13. Insurance. The Borrower will maintain, with financially
sound and reputable insurance companies, insurance on all its property in at
least such amounts and against at least such risks as are usually insured
against in the same general area by companies of established repute engaged in
the same or similar business, and as required by the other Loan Documents.
Section 5.14. Change in Fiscal Year. The Borrower will not change its
Fiscal Year without the consent of the Lender which consent shall not be
unreasonably withheld.
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Section 5.15. Maintenance of Property. The Borrower shall maintain all
of its properties and assets in good condition, repair and working order, except
for ordinary wear and tear and loss by casualty.
Section 5.16. Environmental Notices. The Borrower shall furnish to the
Lender prompt written notice of all Environmental Liabilities, pending,
threatened or anticipated Environmental Proceedings, Environmental Notices,
Environmental Judgments and Orders, and Environmental Releases at, on, in, under
or in any way affecting the Properties or any adjacent property, and all facts,
events, or conditions that could lead to any of the
foregoing.
Section 5.17. Environmental Matters. The Borrower will not, and will
not permit any Third Party to, use, produce, manufacture, process, treat,
recycle, generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for Hazardous
Materials such as cleaning solvents, pesticides and other similar materials
used, produced, manufactured, processed, treated, recycled, generated, stored,
disposed, managed, or otherwise handled in minimal amounts in the ordinary
course of business in compliance with all applicable Environmental Requirements.
Section 5.18. Environmental Release. The Borrower agrees that upon the
occurrence of an Environmental Release at or on any of the Properties it will
act immediately to investigate the extent of, and to take appropriate remedial
action to eliminate, such Environmental Release, whether or not ordered or
otherwise directed to do so by any Environmental Authority.
Section 5.19. Transactions with Affiliates. Borrower shall not enter
into, or be a party to any transaction with any Affiliate of the Borrower except
such transactions as are otherwise fully disclosed to the Lender and consented
to in writing in advance by the Lender.
ARTICLE VI
DEFAULTS
Section 6.1. Events of Default. If one or more of the following events
(each, a "Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
the Loans or shall fail to pay any interest on the Loans within two (2) Domestic
Business Days after such interest shall become due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in: (i) Section 5.1 and such failure shall continue for ten (10)
Business Days after the earlier to occur of (x) written notice thereof has been
given to the Borrower by the Lender or (y) the Borrower obtains knowledge of any
such failure; or (ii) Sections 5.2 through 5.12, inclusive, Sections 5.14 or
5.19; or
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement or in any other agreement entered into
between Lender and Borrower (other than those covered by paragraph (a) or (b)
above) and such failure shall not have been cured within 30 days after the
earlier to occur of (i) written notice thereof has been given to the Borrower by
the Lender or (ii) the Borrower otherwise becomes aware of any such failure; or
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(d) any representation, warranty, certification or statement
made by the Borrower in Article IV of this Agreement or in any certificate,
financial statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect or misleading in any material respect when made (or
deemed made); or
(e) the Borrower shall fail to make any payment in respect of
Indebtedness outstanding (other than the Notes) when due or within any
applicable grace period (it being understood that the failure by Buyer to make
or to have made any payment required by the PMF Loan Documents but which is not
made by reason of the Intercreditor Agreement, or any payment on the
Indebtedness which is expressly subordinated to the Loans, shall not constitute
a Default under this paragraph (e)); or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Indebtedness of the Borrower outstanding in an
aggregate amount in excess of $100,000 (including, without limitation, any
required mandatory prepayment or "put" of such Indebtedness to the Borrower) or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holders of such Indebtedness or any Person acting on such holders' behalf to
accelerate the maturity thereof (including, without limitation, any required
mandatory prepayment or "put" of such Indebtedness to the Borrower); or
(g) the Borrower shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against the Borrower under the federal bankruptcy laws as now or
hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or the Borrower or any other member of the Controlled Group shall
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enter into, contribute or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan;
(j) one or more final, nonappealable judgments or orders for
the payment of money in an aggregate amount in excess of $250,000 shall be
rendered against the Borrower and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days provided, however, that,
notwithstanding the foregoing, in the event that any judgment or order is
rendered against Borrower in connection with that certain matter known as
Xxxxxxx Xxxxx Xxxxxxxx ("Xxxxxxxx") v. North's Restaurants, Inc., xx.xx., No
97-1097-L-3, such order or judgment shall not constitute a Default under this
paragraph (j) unless Xxxxxxxx takes such action that, in the sole judgment of
Lender, may have an adverse effect on Lender; or
(k) a federal tax lien for a claimed amount in excess of
$100,000 shall be filed against the Borrower under Section 6323 of the Code or a
lien of the PBGC shall be filed against the Borrower under Section 4068 of ERISA
and in either case such lien shall remain undischarged for a period of 25 days
after the date of filing; or
(l) (i) any default by the Borrower under any of the Loan
Documents shall exist after the satisfaction of any applicable grace, notice or
cure periods, if any, (ii) any Loan Documents shall cease to be enforceable, or
(iii) the Borrower shall assert that any Loan Document shall cease to be
enforceable then, and in every such event (an "Event of Default"), the Lender
may by notice to the Borrower declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately due and
payable without presentment, demand, protest or additional notice of any kind,
all of which are hereby waived by the Borrower, together with interest at the
Default Rate accruing on the principal amount thereof from and after the date of
such Event of Default; provided that if any Event of Default specified in
paragraph (g) or (h) above occurs with respect to the Borrower, without any
notice to the Borrower or any other act by the Lender, the Notes (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower together with interest thereon at the Default Rate
accruing on the principal amount thereof from and after the date of such Event
of Default. Notwithstanding the foregoing, the Lender shall have available to it
all other remedies at law or equity, and may any one or all of them.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopier or
similar writing) and shall be given to such party at its address or telecopier
number set forth on the signature pages hereof or such other address or
telecopier number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopier number specified on the signature page hereof and the appropriate
confirmation is received (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified on the signature page hereof.
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Section 7.2. No Waivers. No failure or delay by the Lender in
exercising any right, power or privilege hereunder or under the Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 7.3. Expenses; Documentary Taxes. If a Default occurs, the
Borrower shall pay or reimburse lender, as the case may be, for all
out-of-pocket expenses incurred by the Lender, including fees and disbursements
of counsel, in connection with such Default and collection and other enforcement
proceedings resulting therefrom, including out-of-pocket expenses incurred in
enforcing this Agreement and the other Loan Documents. The Borrower shall
indemnify the Lender against any transfer taxes, documentary taxes, assessments
or charges made by any Authority by reason of the execution and delivery of this
Agreement or the other Loan Documents.
Section 7.4. Indemnification. The Borrower shall indemnify the Lender
and its directors, officers, partners, trustees, beneficiaries, controlling
persons, shareholders, employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to which any of them
may become subject, insofar as such losses, liabilities, claims or damages arise
out of or result from (i) any actual or proposed use by the Borrower of the
proceeds of any extension of credit by Lender hereunder, or (ii) breach by the
Borrower of this Agreement (including, without limitation, representations,
warranties and covenants relating to environmental matters) or any other Loan
Document, or from any investigation, litigation (including, without limitation,
any actions taken by Lender to enforce this Agreement or any of the other Loan
Documents) or other proceeding (including, without limitation, any threatened
investigation or proceeding) relating to the foregoing, and the Borrower shall
reimburse Lender, and its directors, officers, employees and agents, upon demand
for any expenses (including, without limitation, legal fees) incurred in
connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
Section 7.5. Amendments and Waivers. Any provision of this Agreement,
the Note or any other Loan Documents may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the Borrower and the
Lender. The Borrower will not solicit, request or negotiate for or with respect
to any proposed waiver or amendment of any of the provisions of this Agreement
unless Lender shall be informed thereof by the Borrower and shall be afforded an
opportunity of considering the same and shall be supplied by the Borrower with
sufficient information to enable it to make an informed decision with respect
thereto.
Section 7.6. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither the Borrower nor the
Lender may assign or otherwise voluntarily transfer any of its rights or
obligations under this Agreement.
Section 7.7. Confidentiality. Lender agrees to keep any information
delivered or made available by the Borrower to it which is clearly indicated to
be confidential information, confidential from anyone other than persons
employed or retained by Lender who are or are expected to become engaged in
evaluating, approving, structuring or administering the Borrower's obligations
hereunder provided, that, such individuals shall be subject to the agreement
contained in this Section 7.7;
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provided, however that nothing herein shall prevent Lender from disclosing such
information (i) to any other Lender, (ii) upon the order of any court or
administrative agency after notice to the Borrower, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
Lender after notice to the Borrower, (iv) which has been publicly disclosed by
Borrower, (v) to the extent reasonably required in connection with any
litigation to which the Lender or its Affiliates may be a party, (vi) to the
extent reasonably required in connection with the exercise of any remedy
hereunder, (vii) to Lender's legal counsel and independent auditors and (viii)
to any actual or proposed assignee of all or part of its rights hereunder,
provided that such proposed assignee agrees in writing to be bound by this
Section.
Section 7.8. Utah Law. This Agreement and each of the Loan Documents
shall be construed in accordance with and governed by the law of the State of
Utah.
Section 7.9. Severability. In case any one or more of the provisions
contained in this Agreement, the Note or any of the other Loan Documents should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
Section 7.10. Interest. In no event shall the amount of interest due or
payable hereunder or under the Notes exceed the maximum rate of interest allowed
by applicable law, and in the event any such payment is inadvertently made to
Lender by the Borrower or inadvertently received by Lender, then such excess sum
shall be credited as a payment of principal, unless the Borrower shall notify
such Lender in writing that it elects to have such excess sum returned
forthwith. It is the express intent hereof that the Borrower not pay and the
Lender not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrower under applicable law.
Section 7.11. Interpretation. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
Section 7.12. Waiver of Jury Trial; Consent to Jurisdiction. Each of the
Borrower and the Lender irrevocably (a) waives any and all right to trial by
jury in any legal proceeding arising out of this Agreement, any of the other
Loan Documents, or any of the transactions contemplated hereby or thereby, (b)
submits to the nonexclusive personal jurisdiction in the State of Utah, the
courts thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Note and the other Loan Documents, (c) waives
any and all personal rights under the law of any jurisdiction to object on any
basis (including, without limitation, inconvenience of forum) to jurisdiction or
venue within the State of Utah for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (d) agrees that service of
process may be made upon it in the manner prescribed in Section 7.1 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Lender from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
Section 7.13. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NORTH'S RESTAURANTS, INC
/s/ XXXX X. NORTH JR.
-------------------------------------
Xxxx X. North Jr., President
0000 X. Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxx, President
Telecopier number: (000) 000-0000
Telephone number: _____________
STAR BUFFET, INC.,
/s/ XXXXXXXX XXXXXXX
-----------------------------------------
Xxxxxxxx Xxxxxxx, Chief Financial Officer
000 Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: General Counsel
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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