THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment") executed as
of June 29, 1998 is among ROCK BOTTOM RESTAURANTS, INC, a Delaware corporation
("Borrower"), the LENDERS (as such term is defined in the Loan Agreement
described below) and NORWEST BANK COLORADO, NATIONAL ASSOCIATION, a national
banking association, as agent for the Lenders ("Agent").
RECITALS
A. Borrower, the Lenders and the Agent are parties to a Loan Agreement,
dated as of July 2, 1996, and amended by an Amendment to Loan Agreement dated
February 24, 1997 and a Second Amendment to Loan Agreement dated July 28, 1997
(as amended, and as it may hereafter be amended, restated or supplemented from
time to time, the "Loan Agreement"), providing for a revolving line of credit
Loan from the Lenders to the Borrower in the amended maximum amount of
$40,000,000. Capitalized terms that are used but not defined herein have the
meanings set forth in the Loan Agreement.
B. Borrower has requested and the Lenders have agreed to (i) modify the
Total Liabilities to Tangible Net Worth covenant; (ii) modify the definition and
method of calculation of Fixed Charges to exclude principal payable by the
Borrower in connection with the Loan on the Maturity Date; (iii) modify the
capital expenditures limit set forth in Section 7.4 of the Loan Agreement and
exclude from such calculation certain sale leaseback transactions; (iv) exclude
certain capital leases from the calculation of permitted Indebtedness under
Section 7.1(e) of the Loan Agreement; and (v) consent to the sale by Borrower of
a facility in Fresno, California.
C. The parties desire to enter into this Amendment to reflect the
changes described above.
AGREEMENT
IN CONSIDERATION of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower, the Lenders and the Agent agree as follows:
1. Amendments to Loan Agreement.
a. The definition of "Fixed Charges" in Section 1.1 of the Loan Agreement
is hereby amended and restated in its entirety to read as follows and the
following definitions of "Qualified Sale Leaseback" and "Sale Leaseback Credit"
are added to Section 1.1 of the Loan Agreement in appropriate alphabetical
order:
"Fixed Charges" means the following for Borrower and its
Subsidiaries, calculated on a Consolidated basis in accordance with
GAAP: interest expense; plus long-term contractual debt (including
capital leases) principal payments required to be made in accordance
with the terms of the instruments governing such debt (excluding the
principal repayment required to be made by Borrower in connection with
the Loan on the Maturity Date pursuant to Section 2.1(f) hereof); plus
all required payments under all operating leases.
"Sale Leaseback Credit" means with respect to each Qualified
Sale Leaseback the lesser of (a) the net proceeds (gross proceeds minus
closing and transaction costs) received by Borrower from the purchaser
in connection with such Qualified Sale Leaseback or (b) the capital
expenditures incurred by Borrower in connection with the acquisition of
the land and construction of the improvements to which such Qualified
Sale Leaseback relates.
"Qualified Sale Leaseback" means any transaction in which
Borrower acquires the land and constructs a restaurant, brew pub or
similar facility and sells the land and facility to a third party and
immediately leases such land and facility back from the third party for
a minimum lease term of ten years.
b. Section 6.11(b) and (c) of the Loan Agreement (Financial Covenants) are
hereby amended and restated in their entirety to read as follows:
(b) Fixed Charge Coverage Ratio. Borrower shall maintain a
Fixed Charge Coverage Ratio (determined on a Consolidated basis) of not
less than 2.25 to 1 for the period in which the applicable Fiscal
Quarter ends, calculated at the end of each Fiscal Quarter and based
(except as set forth in the following sentence) on such Fiscal Quarter
and the three immediately preceding Fiscal Quarters. In determining
Fixed Charges for purposes of calculation of the Fixed Charge Coverage
Ratio, "long-term contractual debt (including capital leases) principal
payments required to be made in accordance with the terms of the
instruments governing such debt (excluding the principal repayment
required to be made by Borrower in connection with the Loan on the
Maturity Date pursuant to Section 2.1(f) hereof) plus all required
payments under operating leases" shall be based on the payments
required to be made in the four Fiscal Quarters immediately succeeding
the Fiscal Quarter during which the Fixed Charge Coverage Ratio is
being determined. All other aspects of the Fixed Charge Coverage Ratio
(including interest expense and Operating Cash Flow) shall be based on
such Fiscal Quarter and the three immediately preceding Fiscal
Quarters.
(c) Total Liabilities to Tangible Net Worth. The ratio of
Borrower's Total Liabilities to Tangible Net Worth calculated at the
end of each Fiscal Quarter shall not exceed 1 to 1 at any time during
the term of the Loan.
c. Section 7.1(e) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
(e) Indebtedness (including all capital leases, except for
capital leases entered into by Borrower as part of a Qualified Sale
Leaseback transaction) incurred after the date hereof, not exceeding
$2,000,000 in the aggregate outstanding at any one time (in addition to
(1) the Loan, (2) the trade payables described in (b) above and (3)
Indebtedness described in (c) and (d) above;
d. Section 7.4 of the Loan Agreement (Negative Covenants) is amended and
restated in its entirety to read as follows:
7.4 Capital Expenditures. Make or incur any capital
expenditures (as such term is defined in accordance with GAAP),
exceeding the aggregate limit of $25,000,000 during any Fiscal Year,
beginning with the Fiscal Year ended December 29, 1998. For purposes of
calculating Borrower's compliance with this Section 7.4, actual capital
expenditures by Borrower during any fiscal year shall be reduced by the
Sale Leaseback Credit resulting from each Qualified Sale Leaseback
closed and funded during such fiscal year.
e. Exhibit D to the Loan Agreement is hereby replaced with
Exhibit D attached hereto and Exhibit D attached hereto is substituted
in place of Exhibit D to the Loan Agreement as locations where the
Collateral is located. Borrower hereby represents, warrants and
certifies that (a) each Subsidiary set forth on Exhibit D (as amended
by this Amendment) conducts operations only at the locations set forth
below such Subsidiary's name on Exhibit D (as amended by this
Amendment) and Borrower or such Subsidiary own all of the Collateral
located at such location, (b) the Collateral is not located in any
location, and neither Borrower nor any Subsidiary conducts any
operations in any location other than those listed on Exhibit D of the
Loan Agreement (as amended by this Amendment) and (c) Borrower leases
and does not own, directly or indirectly, any of the locations
described on Exhibit D other than the Fee Properties.
f. Exhibit F to the Loan Agreement is hereby replaced with
Exhibit F attached hereto and Exhibit F attached hereto is substituted
in place of Exhibit F to the Loan Agreement.
2. Sale and Closure of Facilities.
a. Lenders hereby consent to Borrower entering into a contract to sell and
selling the business known as "Rock Bottom Fresno" operated at 000 Xxxx Xxxx
Xxxxxx in Fresno, California; on the condition that (i) such sale occurs on or
before December 31, 1998 and (ii) immediately upon the closing of such sale,
Borrower repays the Loan in an amount equal to the greater of (A) $1,500,000 or
(B) the net sale proceeds from the sale of such operation. Lenders authorize
Agent to execute UCC-3 releases releasing the lien on inventory, equipment and
related collateral used in connection with such operation.
b. In the event that Borrower elects to close its business operation known
as "Rock Bottom Salem" located in Salem, Oregon, Lenders hereby consent to the
closure of such operation.
c. Lenders hereby consent to the closure of Borrower's "Rock Bottom
Restaurant" operations in Houston, Texas, and Overland Park, Kansas, and
Borrower's "Old Chicago" operations in Evergreen, Colorado, and Gladstone,
Missouri.
3. Conditions Precedent. All of Lenders' obligations under this Amendment are
conditioned upon and subject to satisfaction of all of the following conditions
precedent in a manner acceptable to Agent:
a. Borrower shall pay to Agent, as agent for Lenders, a restructure fee in
the amount of $40,000. Such restructure fee shall be distributed between the
Lenders in the following manner: Norwest: $20,000, First Security: $5,000, U.S.
Bank: $5,000, SunTrust: $5,000, and UMB: $5,000;
b. Borrower or the Subsidiaries, as the case may be, shall have executed
and delivered this Amendment, and any other documents, instruments or agreements
as may be required by Agent, to give effect to the amendments effected by this
Amendment, including without limitation any additional Uniform Commercial Code
financing statements required by Agent;
c. Borrower shall pay all Loan Expenses incurred by the Agent in connection
with the transactions contemplated by this Amendment;
d. Borrower shall provide to Agent an opinion of counsel to Borrower
acceptable in form and substance to Agent;
e. As of the date of this Amendment, there was and is no Event of Default
or Unmatured Event of Default, other than the Events of Default arising out of
(i) Borrower's failure to comply with the Total Liabilities to Tangible Net
Worth ratio, as set forth in Section 6.11(c) of the Loan Agreement for the
period ended Xxxxx 00, 0000, (xx) Borrower's failure to comply with the
limitation on Indebtedness in Section 7.1 of the Loan Agreement and (iii)
Borrower's dissolution of Rock Bottom Kansas, LLC, which may be in violation of
Section 8.12 of the Loan Agreement (the foregoing are hereinafter collectively
referred to as the "Existing Defaults"); and
f. The representations and warranties set forth in Paragraph 5 below shall
be true and correct in all respects.
4. Further Assurances. Borrower shall execute all documents and instruments and
take all actions or cause any other party to execute all documents and
instruments and take all actions as the Agent may reasonably require to effect
the transactions contemplated by this Amendment.
5. Representations and Warranties.
a. Borrower hereby represents and warrants to the Lenders that as of the
date of this Amendment (taking into consideration the transactions contemplated
by this Amendment), all of Borrower's representations and warranties contained
in the Loan Documents are true, accurate and complete in all material respects,
and no Event of Default or Unmatured Event of Default has occurred under any
Loan Document (as amended concurrent herewith), other than the Existing
Defaults.
b. Without limiting the generality of the foregoing, Borrower represents
and warrants to the Lenders that the execution and delivery of this Amendment
has been authorized by all necessary action on the part of Borrower, that each
person executing this Amendment on behalf of Borrower is duly authorized to do
so, and that this Amendment constitutes the legal, valid, binding and
enforceable obligation of Borrower (subject to the same limitations of
enforceability as set forth in the Loan Agreement).
c. In addition, without limiting the generality of the foregoing, Borrower
represents and warrants to Lender that Borrower has not created or formed any
new Subsidiaries since July 28, 1997.
d. Borrower represents and warrants that Indebtedness (for purposes of
Section 7.1(e) of the Loan Agreement) outstanding at any one time has not at any
time exceeded $4,500,000.
6. Old Chicago Franchising, Inc. Borrower represents and warrants that Old
Chicago Franchising, Inc. ("Franchising") does not conduct any operations as of
the date hereof and does not own any assets as of the date hereof. Borrower
covenants and agrees that at least 30 days prior to Franchising commencing any
operations or acquiring any assets that Borrower will notify Agent and will
grant Agent, as agent for Lenders, a lien on all assets of Franchinsing and a
pledge of 100 percent of the stock of Franchising; subject in each case to no
other liens or encumbrances and all in accordance with the terms of the Loan
Documents. The representations, warranties and covenants set forth in this
Paragraph 6 are incorporated into and made a part of the Loan Agreement.
7. Loan Documents.
a. The Lenders, the Agent, and the Borrower agree that all of the Loan
Documents shall be amended to reflect the amendments set forth herein.
b. All references in any document to the Loan Agreement hereafter refer to
the Loan Agreement as amended pursuant to this Amendment.
c. All references in the Loan Agreement to the Loan Documents, or any
particular Loan Document, hereby refer to such Loan Documents as amended
pursuant to the amendments executed concurrent herewith.
8. Continuation of the Loan Agreement Except as specified in this Amendment, the
provisions of the Loan Agreement remain in full force and effect, and if there
is a conflict between the terms of this Amendment and those of the Loan
Agreement, the terms of this Amendment control.
9. Miscellaneous.
a. This Amendment shall be governed by and construed under the laws of the
State of Colorado and shall be binding upon and inure to the benefit of the
parties hereto and their successors and permissible assigns.
b. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
instrument.
c. This Amendment and all documents to be executed and delivered hereunder
may be delivered in the form of a facsimile copy, subsequently confirmed by
delivery of the originally executed document.
d. Time is of the essence hereof with respect to the dates, terms and
conditions of this Amendment and the documents to be delivered pursuant hereto.
e. This Amendment constitutes the entire agreement between Borrower, the
Agent, and the Lenders concerning the subject matter of this Amendment. This
Amendment may not be amended or modified orally, but only by a written agreement
executed by Borrower, the Agent and the Lenders and designated as an amendment
or modification of the Loan Agreement.
f. If any provision of this Amendment is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Amendment shall not be impaired thereby.
g. The section headings herein are for convenience only and shall not
affect the construction hereof.
h. By execution of this Amendment, Lenders hereby waive the Existing
Defaults. Execution of this Amendment is not intended to and shall not
constitute a waiver by the Lenders of any other Event of Default or Unmatured
Event of Default.
EXECUTED as of the date first set forth above.
LENDERS:
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
a national banking association
By:
--------------------------
Xxxxx X. Xxxxx
Vice President
FIRST SECURITY BANK, N.A., a
national banking association
(f/k/a First Security Bank of Idaho, N.A.)
By:
--------------------------
Xxxx Xxxxxx
Vice President
U.S. BANK NATIONAL ASSOCIATION
(f/k/a U.S. Bank of Idaho)
By:
-------------------------
Xxxxx Xxxxxx
Vice President
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:
-------------------------
Xxxxxxx Xxxxxx, Jr.
Vice President
UMB BANK, N.A.
By:
--------------------------
Xxxxx Xxxxxx
Senior Vice President
AGENT:
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
a national banking association
By:
--------------------------
Xxxxx X. Xxxxx
Vice President
BORROWER:
ROCK BOTTOM RESTAURANTS, INC., a
Delaware corporation
By:
-------------------------
Xxxxxxx X. Xxxxx
Executive Vice President and
Chief Financial Officer
