EXHIBIT 10.18
FIRST AMENDMENT TO LOAN INSTRUMENTS
This FIRST AMENDMENT TO LOAN INSTRUMENTS (this "Amendment"), dated as of
August 9, 2001, is among RED XXXXX GOURMET BURGERS, INC., a Delaware
corporation ("Holding Company"), RED XXXXX INTERNATIONAL, INC., a Nevada
corporation ("Red Xxxxx"), RED XXXXX DISTRIBUTING COMPANY, INC., a Colorado
corporation ("RR Distributing Sub"), RED XXXXX XXXX, INC., formerly Red Xxxxx
Holding Co., Inc., a Nevada corporation ("XX Xxxx Sub"), RED XXXXX OF BALTIMORE
COUNTY, INC., a Maryland corporation ("RR Baltimore Sub"), RED XXXXX OF
XXXXXXXXXX COUNTY, INC., a Maryland Corporation ("XX Xxxxxxxxxx Sub"), RED XXXXX
OF XXXX ARUNDEL, COUNTY, INC., a Maryland corporation ("RR Anne Arundel Sub"
which together with Red Xxxxx, XX Xxxxxxxxxxxx Xxx, XX Xxxx Xxx, XX Xxxxxxxxx
Sub and XX Xxxxxxxxxx Sub is referred to herein as "Original Borrowers") and
FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), in its individual
capacity and as agent for all Lenders (this and all other capitalized terms used
but not elsewhere defined herein are defined in Section 2 below).
RECITALS:
A. Original Borrowers, Agent and Lenders entered into a Loan Agreement
dated as of September 6, 2000 (the "Loan Agreement") pursuant to which Lenders
agreed to make loans and other financial accommodations to Original Borrowers.
B. Concurrently herewith, (i) the Corporate Reorganization is being
consummated, pursuant to which, among other things, Holding Company will become
the sole holder of all the capital stock, options, warrants and other rights to
acquire capital stock of Red Xxxxx, and (ii) Red Xxxxx formed XX Xxxxxxxxxx Sub.
C. Original Borrowers desire to cause Holding Company and XX Xxxxxxxxxx Sub
to join with and into the Loan Instruments as additional borrowers together with
Original Borrowers. Original Borrowers, together with Holding Company and XX
Xxxxxxxxxx Sub are referred to herein as "Borrowers."
D. Agent and Lenders are willing to agree to the requests of Borrowers,
subject to the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and subject to the terms and conditions hereof, Borrowers, Agent and Lenders
agree as follows:
1. Incorporation of Recitals. The Recitals set forth above are incorporated
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herein, are acknowledged by Borrower to be true and correct and are made a part
hereof.
2. Definitions. All capitalized terms used but not elsewhere defined herein
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shall have the respective meanings ascribed to such terms in the Loan Agreement,
as amended by this Amendment.
3. Joinder. Each of Holding Company and XX Xxxxxxxxxx Sub (i) joins into
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each of the Loan Instruments executed by Original Borrowers and agrees to become
a party thereto with the same force and effect as if it had been an original
signatory thereto, (ii) agrees to be bound by all of the terms and conditions
set forth in the Loan Instruments as if it were a Borrower, and (iii) accepts
and assumes all Indebtedness heretofore, now and hereafter arising as a result
of its joinder into the Loan Instruments, including, without limitation, the
obligation to pay and perform Borrowers' Obligations. In furtherance of
the foregoing, each of Holding Company and XX Xxxxxxxxxx Sub hereby agrees to be
bound as a "Debtor" under the terms of that certain Security Agreement dated as
of September 6, 2000 among the Original Borrowers and Agent (the "Security
Agreement"), and further grants to Agent as Secured Party thereunder a security
interest in all Property of such Debtor pursuant to the terms of the Security
Agreement. Each Original Borrower consents to the foregoing joinder by Holding
Company into the Loan Instruments.
4. Amendments to Loan Instruments. The Loan Agreement and the other Loan
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Instruments are amended as set forth below:
4.1 Section 1.1 of the Loan Agreement. Section 1.1 of the Loan
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Agreement is amended by deleting the current versions of the definitions
listed below and substituting the following definitions therefor:
Borrowers: Holding Company, Red Xxxxx, RR Distributing Sub, RR
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West Sub, RR Baltimore Sub, RR Anne Arundel Sub, XX Xxxxxxxxxx Sub and
each Additional Borrower.
Equity Instruments: the articles of incorporation and by-laws of
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each Borrower, the Registration Rights Agreement, the Holding Company
Stock Option Plan and all other similar documents and instruments
entered into with respect to the Borrower Equity Interests as of the
Closing Date.
Equity Interests: collectively, all of the issued and outstanding
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capital stock of, partnership interests in, limited liability company
membership interests in and other equity interests in Holding Company
and each of its direct and indirect Subsidiaries and all warrants,
options and other rights to purchase capital stock of, partnership
interests in, limited liability company membership interests in and
other equity interests in Holding Company and each of its direct and
indirect Subsidiaries.
GE Indebtedness Liens: the Liens on the Excluded Personal
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Property and the Excluded Leases of the Existing Stores located at
0000 Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx (Site No. 15), 0000
Xxxxxxxx Xxxxxxxxx X.X., Xxxxxxxx, Xxxxxxxxxx (Site No. 147), 0000
Xxxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx (Site No. 148), 000 Xxxx
Xxxx, Xxxxxxx, Xxxxxxxxxx (Site No. 151), 0000 Xxxx Xxxxxx Xxxx #0000,
Xxxxxxxxx, Xxxxxx (Site No. 152), 00000 Xxxxxxxxxx Xxxx #0000,
Xxxxxxxx, Xxxxxxxxxx (Site No. 158), 0000 Xxx Xxxx Xxxx,
Xxxxxxxxxxxxxxx, Xxxxxxxx (Site No. 157) and 000 Xxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxxxxx (Site No. 160), and the Liens on the Excluded
Personal Property and Borrower's fee simple estate in the Excluded
Real Estate located at 00000 Xxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxx (Site
No. 153) now or hereafter granted to secure the GE Indebtedness.
Holding Company: Red Xxxxx Gourmet Burgers, Inc., a Delaware
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corporation formed after the Closing Date to hold all of the Red Xxxxx
Capital Stock.
Obligors: each Borrower.
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Pledge Agreements: the Borrower Subsidiary Pledge Agreement, the
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XX Xxxxxxxxxx Sub Pledge Agreement and the Substitute Pledge
Agreement.
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Registration Rights Agreement: that certain Registration Rights
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Agreement dated as of May 11, 2000 by and among Red Xxxxx and certain
holders of its common shares, as amended by that certain First
Amendment to Registration Rights Agreement dated as of August 9,
2001.
Shareholders Agreement: that certain Amended and Restated
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Shareholders Agreement dated as of August 9, by and among Holding
Company, Red Xxxxx, Skylark Company, Ltd, a Japan corporation, RR
Investors, RR Investors II, Xxxxxx and certain other shareholders.
Substitute Pledge Agreement: the Pledge Agreement dated as of
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August 9, 2001 by and between Holding Company and Agent.
4.2 Section 1.1 of the Loan Agreement. Section 1.1 of the Loan
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Agreement is hereby amended by adding the following definitions in the
appropriate alphabetical order:
First Amendment: the First Amendment to Loan Instruments dated as
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of August 9, 2001 by and between Borrowers and Agent.
First Amendment Effective Date: August 9, 2001.
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XX Xxxxxxxxxx Sub: Red Xxxxx of Xxxxxxxxxx County, Inc.
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XX Xxxxxxxxxx Sub Pledge Agreement: the pledge agreement dated as
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of August 9, 2001 by and between XX Xxxxxxxxxx Sub and Agent.
XX Xxxx Sub: Red Xxxxx Xxxx, Inc.
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4.3 Section 1.1 of the Loan Agreement. Section 1.1 of the Loan
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Agreement is hereby amended by deleting the definitions of "Red Xxxxx Stock
Option Plan," "RR Holding Sub" and "Red Xxxxx Pledge Agreement."
4.4 Section 5.5.1 of the Loan Agreement. Section 5.5.1 of the Loan
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Agreement is deleted in its entirety and the following is inserted
therefor:
"5.5.1 Business and Property. Holding Company is not engaged, and
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as of the First Amendment Effective Date does not propose to engage,
in any business activity other than the Restaurant Business and the
ownership of the Equity Interests of Red Xxxxx. Red Xxxxx is not
engaged, and as of the First Amendment Effective Date does not propose
to engage, in any business activity other than the Restaurant Business
and the ownership of the Equity Interests of the other Borrowers and
the Inactive Subsidiaries. No other Borrower is engaged or, as of the
First Amendment Effective Date, proposes to engage, in any business
activity other than the Restaurant Business. Except as set forth on
Schedule 5.5.1, no Inactive Subsidiary (i) engages, or proposes to
engage, in any business activity, (ii) owns any material Property or
(iii) has any material Indebtedness. Holding Company has no direct
Subsidiaries other than Red Xxxxx. Red Xxxxx has no Subsidiaries other
than the other Borrowers and the Inactive Subsidiaries. Except as set
forth on Schedule 5.5.1, no other Borrower has any Subsidiaries. Each
Borrower owns all Property and holds all Leases,
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Licenses and Operating Agreements required to conduct its business as
now conducted."
4.5 Section 7.4 of the Loan Agreement. Section 7.4 of the Loan
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Agreement is deleted in its entirety and the following is inserted
therefor:
"7.4 Contingent Liabilities. Assume, guarantee, endorse,
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contingently agree to purchase, become liable in respect of any letter
of credit, or otherwise become liable upon the obligation of any
Person, except for the guaranty of a Borrower's obligations under a
Lease by Holding Company, liabilities arising from the endorsement of
negotiable instruments for deposit or collection, or similar
transactions in the ordinary course of business.
4.6 Section 8.1.10 of the Loan Agreement. Section 8.1.10 of the Loan
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Agreement is deleted in its entirety and the following is inserted
therefor:
"8.1.10 Change in Management or Control. If at any time (i)
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Xxxxxx shall cease to devote his full business time and effort to the
day-to-day management of the operations and affairs of Borrowers, (ii)
Holding Company shall cease to own and control, directly or
indirectly, all of the Borrower Subsidiary Capital Stock and Red Xxxxx
Capital Stock, (iii) Xxxxxx and one or more Quad-C Entities shall
cease to (A) own and control a majority of Holding Company Capital
Stock or (B) have the ability to appoint a majority of the Board of
Directors of Holding Company and Red Xxxxx, or (iv) the control and
veto rights granted to directors designated by Skylark Company, Ltd
under the Shareholders Agreement are expanded."
4.7 Loan Agreement. The Loan Agreement is amended by deleting each
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reference to Red Xxxxx Holding Co., Inc. and inserting Red Xxxxx Xxxx, Inc.
in its place, and by deleting each reference to RR Holding Sub and
inserting XX Xxxx Sub in its place.
4.8 Schedules to the Loan Agreement. The Loan Agreement is hereby
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amended by substituting Schedule 5.3.1 attached hereto for the current
version of Schedule 5.3.1 to the Loan Agreement.
5. Conditions to Effectiveness. The effectiveness of this Amendment shall
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be subject to the satisfaction of all of the following conditions in a manner,
form and substance satisfactory to Lenders:
5.1 Delivery of Documents. The following shall have been delivered to
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Agent, each duly authorized and executed and each in form and substance
satisfactory to Lenders:
(a) this Amendment;
(b) the Substitute Pledge Agreement;
(c) the XX Xxxxxxxxxx Sub Pledge Agreement;
(d) a good standing certificate for each Borrower from the State
in which each such Borrower is organized and each State in which any
Store owned or operated by such Borrower is located, each dated a
recent date prior to the Effective Date;
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(e) certified copies of (i) the articles or certificate of
incorporation of each Borrower, together with all amendments thereto,
certified by the Secretary of State of the State in which such
Borrower is located as of recent date prior to the Effective Date;
(ii) the by-laws of each Borrower certified as of the Effective Date
by the corporate secretary of such Borrower, and (iii) resolutions
adopted by the board of directors of each Borrower authorizing the
execution and delivery of the First Amendment and the related
documents and the consummation of the transactions contemplated
thereby, certified as of the Effective Date by the corporate secretary
of such Borrower;
(f) signature and incumbency certificates of the officers of each
Borrower;
(g) a certificate of merger from the Delaware Secretary of State
and the Nevada Secretary of State reflecting the consummation of the
merger of RR Merger Sub with and into RRI, certified by the Delaware
Secretary of State and the Nevada Secretary of State, as applicable
and copies of such of the merger instruments as are required to be and
in fact were filed with the Delaware Secretary of State of State and
the Nevada Secretary of State in connection with the merger;
(h) certified copies or originals of the following:
(1) the First Amendment to Escrow Agreement;
(2) the Shareholder Agreement;
(3) the Registration Rights Agreement;
(4) such landlord consents to the Corporate Reorganization
as are required by each Lease;
(6) the Corporate Reorganization Documents; and
(i) such other instruments, documents, certificates, consents,
waivers and opinions as Lenders reasonably may request.
5.2 Performance; No Default. Each Obligor shall have performed and
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complied with all agreements and conditions contained in the Loan
Instruments to be performed by or complied with by it, and no Event of
Default or Incipient Default shall exist.
5.3 Material Adverse Effect. No event shall have occurred since
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September 6, 2000 which has had or could have a Material Adverse Effect.
The date on which all of the conditions set forth in this Paragraph 4 have
been satisfied is referred to herein as the "Effective Date."
6. References. From and after the Effective Date, (i) all terms used in the
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Loan Instruments which are defined in the Loan Agreement shall be deemed to
refer to such terms as amended by this Amendment and (ii) all references in the
Loan Agreement and the other Loan Instruments to the Loan Agreement shall be
deemed to refer to the Loan Agreement as amended by this Amendment.
7. Representations and Warranties. Each Borrower hereby confirms to Agent
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and Lenders that the representations and warranties set forth in the Loan
Instruments, as amended by this
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Amendment and expect as previously disclosed to Agent in writing, to which such
Borrower is a party are true and correct in all material respects as of the date
hereof, and shall be deemed to be remade as of the date hereof. Each Borrower
represents and warrants to Agent and Lenders that (i) such Borrower has full
power and authority to execute and deliver this Amendment and to perform its
obligations hereunder, (ii) upon the execution and delivery hereof, this
Amendment will be valid, binding and enforceable upon such Borrower in
accordance with its terms, (iii) the execution and delivery of this Amendment
does not and will not contravene, conflict with, violate or constitute a default
under (A) its articles of incorporation or by-laws, or (B) any applicable law,
rule, regulation, judgment, decree or order or any agreement, indenture or
instrument to which such Borrower is a party or is bound or which is binding
upon or applicable to all or any portion of such Borrower's Property and (iv) as
of the date hereof no Incipient Default or Event of Default exists.
8. Costs and Expenses. Borrowers agree to reimburse Agent and Lenders for
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all fees and expenses incurred in the preparation, negotiation and execution of
this Amendment and the consummation of the transactions contemplated hereby,
including, without limitation, the fees and expenses of counsel for Agent and
Lenders.
9. No Further Amendments; Ratification of Liability. Except as amended
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hereby, the Loan Agreement and each of the other Loan Instruments shall remain
in full force and effect in accordance with its respective terms. Each Borrower
hereby ratifies and confirms its liabilities, obligations and agreements under
the Loan Agreement and the other Loan Instruments, all as amended by this
Amendment, and the Liens created thereby, and acknowledges that (i) it has no
defenses, claims or set-offs to the enforcement by Agent or Lenders of such
liabilities, obligations and agreements, (ii) Agent and each Lender have fully
performed all obligations to such Borrower which it may have had or has on and
as of the date hereof and (iii) other than as specifically set forth herein,
Lenders (A) expressly reserve and preserve all of their rights and remedies
under the Loan Agreement and the other Loan Instruments and (B) do not waive,
diminish or limit any term or condition contained in the Loan Agreement or the
other Loan Instruments. Lenders' agreement to the terms of this Amendment or any
other amendment of the Loan Agreement shall not be deemed to establish or create
a custom or course of dealing among Lenders and Borrowers. The Loan Instruments,
as amended by this Amendment, contain the entire agreement among Lenders and
Borrowers with respect to the transactions contemplated hereby.
10. Counterparts; Facsimile Execution. This Amendment may be executed in
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one or more counterparts, each of which shall be deemed an original and by
facsimile , and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile shall also deliver a manually executed
counterpart of this Amendment, but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
11. Further Assurances. Borrowers covenant and agree that they will at any
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time and from time to time do, execute, acknowledge and deliver, or will cause
to be done, executed, acknowledged and delivered, all such further acts,
documents and instruments as reasonably may be required by Lenders in order to
effectuate fully the intent of this Amendment.
12. Severability. If any term or provision of this Amendment or the
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application thereof to any party or circumstance shall be held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
the validity, legality and enforceability of the remaining terms and provisions
of this Amendment shall not in any way be affected or impaired thereby, and the
affected term or provision
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shall be modified to the minimum extent permitted by law so as most fully to
achieve the intention of this Amendment.
13. Captions. The captions in this Amendment are inserted for convenience
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of reference only and in no way define, describe or limit the scope or intent of
this Amendment or any of the provisions hereof.
14. Governing Law. This Amendment shall be construed in accordance with and
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governed as to validity, interpretation, construction, effect and in all other
respects by the laws and decisions of the State of Arizona. For purposes of this
Section 14, this Amendment shall be deemed to be performed and made in the State
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of Arizona.
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IN WITNESS WHEREOF, this Amendment has been executed and delivered by each
of the parties hereto by a duly authorized officer of each such party on the
date first set forth above.
RED XXXXX GOURMET BURGERS, INC., a
Delaware corporation
/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer & President
RED XXXXX INTERNATIONAL, INC., a Nevada
corporation
/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer & President
RED XXXXX DISTRIBUTING COMPANY, INC., a
Colorado corporation
/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer & President
RED XXXXX XXXX, INC., a Nevada corporation
/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer & President
RED XXXXX OF BALTIMORE COUNTY, INC., a
Maryland corporation
/s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President
RED XXXXX OF XXXX ARUNDEL COUNTY,
INC., a Maryland corporation
/s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President
RED XXXXX OF XXXXXXXXXX COUNTY, INC.,
a Maryland corporation
/s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Vice President
Contract Administration
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List of Omitted Schedule
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The following schedule to the First Amendment to Loan Instruments has been
omitted and shall be furnished supplementally to the Commission upon request:
Schedule 5.3.1 - Equity Interests
