EXHIBIT 10.7
EXECUTION COPY
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 5, 1999, is by and between
BUCA, INC., a Minnesota corporation (the "Borrower"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (the "Bank").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement the following terms
shall have the following respective meanings (and such meanings shall be equally
applicable to both the singular and plural form of the terms defined, as the
context may require):
"Advance": As defined in Section 2.1.
"Advance Date": The date of the making of any Advance hereunder.
"Affiliate": When used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person which beneficially owns or holds,
directly or indirectly, five percent or more of any class of voting stock of the
Person referred to (or if the Person referred to is not a corporation, five
percent or more of the equity interest), (c) each Person, five percent or more
of the voting stock (or if such Person is not a corporation, five percent or
more of the equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's officers,
directors, joint venturers and partners. The term control (including the terms
"controlled by" and "under common control with") means the possession, directly,
of the power to direct or cause the direction of the management and policies of
the Person in question.
"Applicable Fee Percentage": The Applicable Fee Percentage set forth in the
table below as in effect from time to time determined based on (a) for the
period from the Closing Date until April 30, 1999, a Cash Flow Leverage Ratio
deemed to be greater than 3.00 to 1.00, and (b) from and after May 1, 1999, the
Cash Flow Leverage Ratio calculated as of the end of the most recent fiscal
quarter of the Borrower for which the Borrower has furnished the financial
statements and reports required under Section 5.1(d) (adjustments to the
Applicable Fee Percentage to become effective as of the first day of the month
following receipt of the financial statements required under Section 5.1(d)):
Applicable
Cash Flow Leverage Ratio (in each case, to 1.00) Fee Percentage
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Less than or equal to 2.00 0.25%
Greater than 2.00 to less than or equal to 3.00 0.375%
Greater than 3.0 0.50%
Notwithstanding the foregoing, if the Borrower has not furnished the financial
statements and reports required under Section 5.1(d) for any fiscal quarter by
the required date, the Applicable Fee Percentage shall be calculated as if the
Cash Flow Leverage Ratio as of the end of such fiscal quarter was greater than
3.00 to 1.00 for the period from the first day of the fiscal quarter first
occurring after such required date until the first day of the month following
the month in which such financial statements and reports are delivered.
"Applicable Margin": The Applicable Margin set forth in the table below as
in effect from time to time determined based on (a) for the period from the
Closing Date until April 30, 1999, a Cash Flow Leverage Ratio deemed to be
greater than 3.00 to 1.00, and (b) from and after May 1, 1999, the Cash Flow
Leverage Ratio calculated as of the end of the most recent fiscal quarter of the
Borrower for which the Borrower has furnished the financial statements and
reports required under Section 5.1(d) (adjustments to the Applicable Margin to
become effective as of the first day of the month following receipt of the
financial statements required under Section 5.1(d)):
Applicable
Cash Flow Leverage Ratio (in each case, to 1.00) Fee Percentage
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Less than or equal to 2.00 0.75%
Greater than 2.00 to less than or equal to 3.00 1.00%
Greater than 3.0 1.25%
Notwithstanding the foregoing, if the Borrower has not furnished the financial
statements and reports required under Section 5.1(d) for any fiscal quarter by
the required date, the Applicable Margin shall be calculated as if the Cash Flow
Leverage Ratio as of the end of such fiscal quarter was greater than 3.00 to
1.00 for the period from the first day of the fiscal quarter first occurring
after such required date until the first day of the month following the month in
which such financial statements and reports are delivered.
"Average Annual Comparable Restaurant Sales Growth": For any date of
determination, the percentage annual increase in Total Restaurant Sales for
Comparable Restaurants calculated by comparing (a) Total Restaurant Sales for
Comparable Restaurants for
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the twelve consecutive fiscal months ended on such date of determination, to (b)
Total Restaurant Sales for Comparable Restaurants for the 12 consecutive fiscal
months ended on the last day of the fiscal month which ended 12 fiscal months
prior to such date of determination, in each case determined on a consolidated
basis in accordance with GAAP.
"Average Restaurant Annual Cash Flow": For any date of determination, (a)
the sum of (i) the aggregate Restaurant Net Income of the Borrower and the
Subsidiaries for the immediately preceding twelve fiscal month period, plus (ii)
Interest Expense, depreciation and amortization, and Corporate Overhead Expense
for the immediately preceding 12 fiscal month period , plus (iii) Pre-Opening
Expense, if any, charged to Restaurants for the immediately preceding twelve
fiscal month period (in an amount not to exceed the lesser of (A) $200,000 per
Restaurant and (B) $2,000,000 in the aggregate for all Restaurants for any
twelve fiscal month period), divided by (b) the number of Restaurants open
during the entire thirteen fiscal months prior to such determination date, in
each case determined on a consolidated basis in accordance with GAAP.
"Bank": As defined in the opening paragraph hereof.
"Board": The Board of Governors of the Federal Reserve System or any
successor thereto.
"Borrower": As defined in the opening paragraph hereof.
"Business Day": Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota.
"Capital Expenditures": For any period, the sum of all amounts that would,
in accordance with GAAP, be included as additions to property, plant and
equipment on a consolidated statement of cash flows for the Borrower and the
Subsidiaries during such period, in respect of (a) the acquisition,
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds, (b) to the
extent related to and not included in (a) above, materials and contract labor
(excluding expenditures properly chargeable to repairs or maintenance in
accordance with GAAP), and (c) other capital expenditures and other uses
recorded as capital expenditures or similar terms having substantially the same
effect.
"Capitalized Lease": A lease of (or other agreement conveying the right to
use) real or personal property with respect to which at least a portion of the
rent or other amounts thereon constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations": As to any Person, the obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real or personal property which obligations are
required to be classified and accounted for as
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a capital lease on a balance sheet of such Person under GAAP (including
Statement of Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board), and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP (including such Statement No. 13).
"Cash Flow Leverage Ratio": For any date of determination, the ratio of
(a) the sum (without duplication) of
(i) the aggregate principal amount as of that date of all outstanding
Capitalized Lease Obligations of the Borrower and the Subsidiaries and
that portion of Total Liabilities bearing interest, plus (ii) the
product of (A) Operating Lease Payments for the immediately preceding
six-fiscal month period, times (B) two, times (C) eight,
to
(b) the sum of
(i) the product of (A) EBITDA for the immediately preceding six-month
period, times (B) two, plus (ii) the product of (A) Operating Lease
Payments for the immediately preceding six-fiscal month period, times
(B) two,
in each case, determined on a consolidated basis in accordance with GAAP.
"Century Bank": Century Bank, a national banking association.
"Century Bank Letters of Credit": The following letters of credit issued by
Century Bank for the account of the Borrower:
(a) Letter of Credit No. 269, dated March 16, 1998, in the face amount of
$125,000 and naming Six Point Co., as beneficiary, with an expiration date
of March 13, 2009;
(b) Letter of Credit No. 270, dated March 29, 1998, in the face amount of
$146,875 and naming U.S. Restaurant Properties Operating L.P., as
beneficiary, with an expiration date of April 1, 1999; and
(c) Letter of Credit No. 290, dated May 20, 1998, in the face amount of
$175,000 and naming Greek Eastern Orthodox Church of Minneapolis,
Minnesota, as beneficiary, with an expiration date of July 31, 2000.
"Change of Control": Either (a) the first day on which a majority of the
members of the Board of Directors of the Borrower are not Continuing Directors,
or (b) at any time prior to the occurrence of an Initial Public Offering, the
first day on which the Board of Directors of
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the Borrower does not include (x) at least one member designated by Norwest
Equity Partners V, L.P., and (y) at least one member designated by a group
composed of Centre Capital Investors II, L.P., Centre Capital Tax-Exempt
Investors II, L.P., Centre Capital Offshore Investors II, L.P., Centre Parallel
Management Partners, L.P., Centre Partners Coinvestment, L.P. and the State
Board of Administration of Florida. For purposes of this provision, "Continuing
Directors" means any member of the Board of Directors of the Borrower who (i)
was a member of such Board on the date of this Agreement, or (ii) was nominated
for election or elected or appointed to such Board by the Board of Directors of
the Borrower at a time when a majority of the Board of Directors of the Borrower
consisted of Continuing Directors.
"Closing Date": February 5, 1999.
"Code": The Internal Revenue Code of 1986, as amended.
"Commitments": The Revolving (A) Commitment, the Revolving (B) Commitment
and the Term Loan Commitment.
"Comparable Restaurant": Each Restaurant continuously owned and operated by
the Borrower or a Subsidiary during the 24 fiscal months of the Borrower prior
to the date of determination.
"Contingent Obligation": With respect to any Person at the time of any
determination, without duplication, any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in any manner, whether
directly or otherwise: (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any direct or indirect security therefor, (b)
to purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain
working capital, equity capital or other financial statement condition of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
otherwise to protect the owner thereof against loss in respect thereof, or (d)
entered into for the purpose of assuring in any manner the owner of such
Indebtedness of the payment of such Indebtedness or to protect the owner against
loss in respect thereof; provided, that the term "Contingent Obligation" shall
not include endorsements for collection or deposit, in each case in the ordinary
course of business.
"Corporate Overhead Expense": For any month of the Borrower's Fiscal Year,
all expenses of the Borrower and the Subsidiaries during such period which are
not properly allocable to the restaurants including, but not limited to,
compensation and benefit expenses for corporate staff; rent, occupancy and
telephone expenses for corporate offices; professional fees; travel and
entertainment expense; market-wide advertising expenses; automobile expense; and
other general administrative expenses attributable to corporate functions.
Corporate Overhead Expense shall not include depreciation, amortization,
interest expense, the Origination Fee, the Revolving Commitment Fees or the
Participation Fees.
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"Current Liabilities": As of any date, the consolidated current liabilities
of the Borrower and the Subsidiaries, determined in accordance with GAAP.
"Default": Any event which, with the giving of notice (whether such notice
is required under Section 7.1, or under some other provision of this Agreement,
or otherwise) or lapse of time, or both, would constitute an Event of Default.
"EBIT": For any period of determination, the consolidated net income of the
Borrower and the Subsidiaries before deductions, without duplication, for
(a) income taxes,
(b) Interest Expense,
(c) nonrecurring litigation and legal expenses in an amount not to
exceed (i) $350,000 if such period includes the fiscal month ended June 28,
1998, (ii) $250,000 if such period includes the fiscal month ended December
27, 1998, and (iii) without duplication, $600,000, if such period includes
the fiscal months ended June 28, 1998 and December 27, 1998, and
(d) loss relating to the early extinguishment of Indebtedness of the
Borrower to Sirrom and Regent under the Existing Credit Documents in an
amount not to exceed $1,400,000 if such period included the Closing Date,
all as determined in accordance with GAAP.
"EBITDA": For any period of determination, the consolidated net income of
the Borrower and the Subsidiaries before deductions, without duplication, for
(a) income taxes,
(b) Interest Expense,
(c) depreciation and amortization,
(d) nonrecurring litigation and legal expenses in an amount not to
exceed (i) $350,000 if such period includes the fiscal month ended June 28,
1998, (ii) $250,000 if such period includes the fiscal month ended December
27, 1998, and (iii) without duplication, $600,000, if such period includes
the fiscal months ended June 28, 1998 and December 27, 1998, and
(e) loss relating to the early extinguishment of Indebtedness of the
Borrower to Sirrom and Regent under the Existing Credit Documents in an
amount not to exceed $1,400,000 if such period included the Closing Date,
all as determined in accordance with GAAP.
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"ERISA": The Employee Retirement Income Security Act of 1974, as -----
amended.
"ERISA Affiliate": Any trade or business (whether or not incorporated) that
is a member of a group of which the Borrower is a member and which is treated as
a single employer under Section 414 of the Code.
"Event of Default": Any event described in Section 7.1.
"Existing Credit Documents": (a) that certain Secured Promissory Note dated
October 31, 1997 made by the Borrower in favor of Sirrom in the original
principal amount of $2,000,000, (b) that certain Secured Promissory Note dated
October 31, 1997 made by the Borrower in favor of Regent in the original
principal amount of $500,000, (c) that certain Secured Promissory Note dated May
19, 1998 made by the Borrower in favor of Sirrom in the original principal
amount of $2,000,000, (d) that certain Secured Promissory Note dated May 19,
1998 made by the Borrower in favor of Regent in the original principal amount of
$1,500,000, and (e) that certain Promissory Note dated July 31, 1995 made by the
BUCA (Eden Prairie), Inc. in favor of Century Bank in the original principal
amount of $500,000, that certain Promissory Note dated March 15, 1996 made by
BUCA (DT Milwaukee), Inc. in favor of Century in the original principal amount
of $440,000, that certain Promissory Note dated May 9, 1994 made by BUCA (Xxxxxx
Road), Inc. in favor of Century in the original principal amount of $300,000,
and that certain Promissory Note dated June 1, 1997 made by the Borrower in the
maximum principal amount of $1,000,000.
"Fiscal Year": The fiscal year of the Borrower, which ends on the last
Sunday of each December. The fiscal quarters and the fiscal months of the
Borrower through December 31, 2000 are set forth in Schedule 1.1-1.
"Fixed Charge Coverage Ratio": For any date of determination, the ratio of
(a) the sum of (i) the product of (A) EBITDA for the immediately preceding
six-fiscal month period, times (B) two, plus (ii) the product of (A)
Operating Lease Payments for the immediately preceding six-fiscal
month period, times (B) two
to
(b) the sum (without duplication) of (i) the product of (A) Interest
Expense for the immediately preceding six-fiscal month period,
excluding the loss relating to the early extinguishment of
Indebtedness of the Borrower to Sirrom and Regent under the Existing
Credit Documents in an amount not to exceed $1,400,000 if such period
included the Closing Date, times (B) two, plus (ii) all required
principal payments with respect to Total Liabilities (including but
not limited to all such payments with respect to Capitalized Lease
Obligations of the Borrower and the Subsidiaries) for the immediately
preceding twelve-fiscal month period, plus (iii) the product of (A)
Operating Lease Payments for the immediately preceding six-fiscal
month period,
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times (B) two, plus (iv) the product of (A) depreciation expense of
the Borrower and the Subsidiaries for the immediately preceding
six-fiscal month period, times (B) two, plus (v) the product of (A)
income taxes of the Borrower and the Subsidiaries accrued for the
immediately preceding six-fiscal month period, times (B) two.
in each case determined on a consolidated basis in accordance with GAAP.
"GAAP": Generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of any date of determination.
"Guarantors": The Persons listed on Schedule 1.1-2 .
"Guaranty": Any of the guaranties of any Guarantor in the form of Exhibit
1.1-1, as the same may be amended, supplemented, restated or otherwise modified
and in effect from time to time.
"Holding Account": A deposit account belonging to the Bank into which the
Borrower may be required to make deposits pursuant to the provisions of this
Agreement, such account to be under the sole dominion and control of the Bank
and not subject to withdrawal by the Borrower, with any amounts therein to be
held for application toward payment of any outstanding Letters of Credit when
drawn upon. The Holding Account shall be a money market savings account or
substantial equivalent (or other appropriate investment medium as the Borrower
may from time to time request and to which the Bank in its sole discretion shall
have consented) and shall bear interest in accordance with the terms of similar
accounts held by the Bank for its customers.
"Immediately Available Funds": Funds with good value on the day and in the
city in which payment is received.
"Indebtedness": With respect to any Person at the time of any
determination, without duplication: (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid or accrued (other than
trade payables), (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such Person,
(e) all obligations of such Person issued or assumed as the deferred purchase
price of property or services, (f) all obligations of others secured by any Lien
on property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Capitalized Lease Obligations of such
Person, (h) all obligations of such Person in respect of interest rate
protection agreements, (i) all obligations of such Person, actual or contingent,
as an account party in respect of letters of credit or bankers' acceptances, (j)
all Contingent Obligations of such Person, and (k) all obligations of any
partnership or joint venture of a nature described in clauses (a) through (j)
above as to which such Person is or may become personally liable as a partner or
joint venturer.
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"Initial Public Offering": The closing of a sale by the Borrower for cash
of any class of stock of the Borrower registered in accordance with the
Securities Act of 1933, as amended.
"Interest/Operating Lease Payments Coverage Ratio": For any date of
determination, the ratio of
(a) the product of (i) the sum of the following for the immediately
preceding six-fiscal month period (A) EBIT, plus (B) Pre-Opening
Expense, plus (C) Operating Lease Payments, times (ii) two
to
(b) the product of (i) the sum of the following for the immediately
preceding six-fiscal month period (A) Interest Expense, excluding the
loss relating to the early extinguishment of Indebtedness of the
Borrower to Sirrom and Regent under the Existing Credit Documents in
an amount not to exceed $1,400,000 if such period included the Closing
Date, plus (B) Operating Lease Payments, times (ii) two,
in each case determined on a consolidated basis in accordance with GAAP.
"Interest Expense": For any period of determination, the aggregate
consolidated amount, without duplication, of interest paid, accrued or scheduled
to be paid, in respect of any Indebtedness of the Borrower and the Subsidiaries,
including (a) all but the principal component of payments in respect of
conditional sale contracts, Capitalized Leases and other title retention
agreements, (b) commissions, discounts and other fees and charges with respect
to letters of credit and bankers' acceptance financings, and (c) net costs under
interest rate protection agreements, in each case determined in accordance with
GAAP.
"Investment": The acquisition, purchase, making or holding of any stock or
other security, any loan, advance, contribution to capital, extension of credit
(except for trade and customer accounts receivable for inventory sold or
services rendered in the ordinary course of business and payable in accordance
with customary trade terms), any acquisitions of real or personal property
(other than real and personal property acquired in the ordinary course of
business, including real property and Restaurant equipment acquired in
anticipation of any sale leaseback transaction involving such property) and any
purchase or commitment or option to purchase stock or other debt or equity
securities of or any interest in another Person or any integral part of any
business of another Person or all or substantially all of the assets comprising
any such business or integral part thereof. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Letter of Credit": Any Letter of Credit issued by the Bank for the account
of the Borrower pursuant to the terms of this Agreement.
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"Letter of Credit Commitment": $1,000,000.
"Letter of Credit Fee": As defined in Section 2.8(d).
"Letter of Credit Obligations": At the time of any determination, the
aggregate amount available to be drawn on all outstanding Letters of Credit plus
all Unpaid Drawings with respect to any Letter of Credit on such date.
"Lien": With respect to any Person, any security interest, mortgage,
pledge, lien, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of each lessor under any
Capitalized Lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"Loan": The Revolving Loan or the Term Loan.
"Loan Documents": All agreements, instruments and documents heretofore,
herewith or hereafter executed and delivered by the Borrower or any Subsidiary
pursuant to, or in connection with, this Agreement, including, without
limitation, this Agreement, the Notes and each Security Document, together with
any subordination agreements, powers of attorney, consents, assignments,
contracts, notices, financing statements and any and all other writings pursuant
to or in aid of any of the foregoing.
"Material Adverse Occurrence": Any occurrence of whatsoever nature
(including, without limitation, any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding) which (a) has
materially adversely affected the present, or which is reasonably likely to
materially adversely affect the prospective, financial condition or operations
of the Borrower and the Subsidiaries, taken as a whole, or (b) impair the
ability of the Borrower or the Subsidiaries, taken as a whole, to perform their
respective obligations under the Loan Documents or any writing executed pursuant
thereto.
"Multiemployer Plan": A multiemployer plan, as such term is defined in
Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date, within
the five years preceding the Closing Date, or at any time after the Closing
Date) for employees of the Borrower or any ERISA Affiliate.
"Note": The Term Note or the Revolving Note.
"Obligations": The Borrower obligations in respect of the due and punctual
payment of principal and interest on the Notes when and as due, whether by
acceleration or otherwise, and all fees (including Revolving Commitment Fees),
expenses, indemnities, reimbursements and other obligations of the Borrower
under this Agreement or any other Borrower Loan Document, in all cases whether
now existing or hereafter arising or incurred.
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"Operating Lease": Any lease of real or personal property that is not a
Capitalized Lease.
"Operating Lease Payments": For any period, all payments consisting of
monthly rent and percentage of revenue or earnings made by the Borrower and the
Subsidiaries, on a consolidated basis, during such period under Operating
Leases.
"Partially-Owned Subsidiaries": Subsidiaries in which the Borrower,
directly or through its Wholly-Owned Subsidiaries, owns less than 100% of the
securities or other ownership interests having ordinary voting power for the
election of a majority of the board of directors or other Persons performing
similar functions.
"Participation Fees": As defined in Section 8.6 .
"PBGC": The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions
thereof.
"Person": Any natural person, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
"Plan": Each employee benefit plan (whether in existence on the Closing
Date or thereafter instituted), as such term is defined in Section 3 of ERISA,
maintained for the benefit of employees, officers or directors of the Borrower
or of any ERISA Affiliate.
"Pledge Agreement": The Pledge Agreement of the Borrower in the form of
Exhibit 1.1-2, as the same may be supplemented, amended or otherwise modified
and in effect from time to time.
"Pre-Opening Expense": Those expenses identified on the Borrower's
consolidated financial statements as "restaurant start-up costs".
"Prohibited Transaction": The respective meanings assigned to such term in
Section 4975 of the Code and Section 406 of ERISA, but excluding any exempt
transaction as provided thereunder.
"Reference Rate": The rate of interest from time to time publicly announced
by the Bank as its "reference rate." The Bank may lend to its customers at rates
that are at, above or below the Reference Rate. For purposes of determining any
interest rate hereunder or under any other Loan Document which is based on the
Reference Rate, such interest rate shall change as and when the Reference Rate
shall change.
"Regent": Regent Capital Partners, L.P., a Delaware limited partnership.
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"Regulatory Change": Any change after the Closing Date in federal, state or
foreign laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
the Bank under any federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reportable Event": A reportable event as defined in Section 4043 of ERISA
and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any waiver in accordance with
Section 412(d) of the Code.
"Restaurant": A restaurant location owned or leased by the Borrower or any
Subsidiary and operated by the Borrower or any Subsidiary as a restaurant.
"Restaurant Net Income": The net income of a Restaurant determined in
accordance with GAAP.
"Restricted Payments": With respect to the Borrower and the Partially-Owned
Subsidiaries, collectively, all dividends or other distributions of any nature
(whether in cash, securities of the Borrower or the Partially- Owned
Subsidiaries, assets or otherwise) on or in respect of, and all payments on, any
class of equity securities (including warrants, options or rights therefor but
excluding Indebtedness which is convertible into common or preferred stock which
is itself not convertible into Indebtedness) issued by the Borrower or the
Partially-Owned Subsidiaries, whether such securities are authorized or
outstanding on the Closing Date or at any time thereafter, and any redemption or
purchase of, or distribution in respect of, any of the foregoing, whether
directly or indirectly.
"Revolving (A) Commitment": The obligation of the Bank to make Advances to
the Borrower in an aggregate principal amount outstanding at any time not to
exceed the Revolving (A) Commitment Amount upon the terms and subject to the
conditions and limitations of this Agreement.
"Revolving (A) Commitment Amount": Initially $4,000,000 but as the same may
be reduced from time to time pursuant to Section 2.7.
"Revolving (A) Note": A promissory note of the Borrower in the form of
Exhibit 1.1-3, as the same may be amended, restated or otherwise modified and in
effect from time to time.
"Revolving (B) Commitment": The obligation of the Bank to make Advances to
the Borrower in an aggregate principal amount outstanding at any time not to
exceed the Revolving (B) Commitment Amount upon the terms and subject to the
conditions and limitations of this Agreement.
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"Revolving (B) Commitment Amount": Initially, zero; provided that the
Revolving (B) Commitment Amount shall be $4,000,000 (as the same may be reduced
from time to time pursuant to Section 2.7) if the Total Restaurant Sales for the
twelve fiscal months ending June 27, 1999 is equal to or greater than one
hundred and three percent (103%) of the Total Restaurant Sales for the twelve
fiscal months ending June 28, 1998. For the purpose of determining the Revolving
(B) Commitment Amount, only Restaurants which were open thirteen fiscal months
prior June 27, 1999, shall be included in the calculation of the Total
Restaurant Sales.
"Revolving (B) Note": A promissory note of the Borrower in the form of
Exhibit 1.1-4 , as the same may be amended, restated or otherwise modified and
in effect from time to time.
"Revolving Commitment Ending Date": December 31, 2000.
"Revolving Commitment Fees": As defined in Section 2.8(c).
"Revolving Loan": As defined in Section 2.1.
"Revolving Note": Either of the Revolving (A) Note or the Revolving (B)
Note.
"SBA Loan": The Indebtedness described on Schedule 6.13.
"Security Agreement (Guarantor)": Any of the security agreements of any
Guarantor in the form of Exhibit 1.1-5, as the same may be amended,
supplemented, restated or otherwise modified and in effect from time to time,
provided that, on the Closing Date, and subject to the provisions of Section
5.15, neither BUCA (Wheeling), Inc. nor BUCA (DT Milwaukee), Inc. shall be
required to enter into a Security Agreement (Guarantor).
"Security Agreement (Borrower)": The security agreement of the Borrower in
the form of Exhibit 1.1-6, as the same may be amended, supplemented, restated or
otherwise modified and in effect from time to time.
"Security Documents": The Security Agreement (Borrower), the Pledge
Agreement, the Trademark Assignment, each Guaranty, each Security Agreement
(Guarantor) and all other agreements, documents and instruments delivered
pursuant hereto or thereto or in connection herewith or therewith creating,
perfecting or otherwise providing for any Lien to secure the Obligations, in
each case as amended, supplemented, restated or otherwise modified and in effect
from time to time.
"Sirrom": Sirrom Capital Corporation, a Tennessee corporation.
"Subordinated Debentures": The Series A Convertible Subordinated Debentures
in the amount of approximately $1,800,000 issued by the Borrower (formerly known
as BUCA Ventures, Inc.) pursuant to that certain Purchase Agreement for Series A
Convertible Subordinated Debentures dated as of August 1, 1994.
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"Subordinated Debt": The Subordinated Debentures and any other Indebtedness
of the Borrower or any Subsidiary, now existing or hereafter created, incurred
or arising, which other Indebtedness is subordinated in right of payment to the
payment of the Obligations in a manner and to an extent (a) that the Bank has
approved in writing prior to the creation of such other Indebtedness, or (b) as
to any such other Indebtedness existing on the date of this Agreement, that the
Bank has approved as Subordinated Debt in a writing delivered by the Bank to the
Borrower on or prior to the Closing Date.
"Subsidiary": Any corporation or other entity of which securities or other
ownership interests having ordinary voting power for the election of a majority
of the board of directors or other Persons performing similar functions are
owned by the Borrower either directly or through one or more Subsidiaries.
"Term Loan": As defined in Section 2.1.
"Term Loan Commitment": The agreement of the Bank to make a Term Loan to
the Borrower in the amount specified in Section 2.1 upon the terms and subject
to the conditions of this Agreement.
"Term Note": A promissory note of the Borrower in the form of Exhibit
1.1-7, as the same may be amended, supplemented, restated or otherwise modified
and in effect from time to time.
"Termination Date": The earliest of (a) the Revolving Commitment Ending
Date, (b) the date on which the Total Revolving Commitment is terminated
pursuant to Section 7.2 or (c) the date on which the Revolving (A) Commitment
Amount and the Revolving (B) Commitment Amount are reduced to zero pursuant to
Section 2.7.
"Total Liabilities": At the time of any determination, the amount, on a
consolidated basis, of all items of Indebtedness of the Borrower and the
Subsidiaries that would constitute "liabilities" shown on the face of a
consolidated balance sheet of the Borrower prepared in accordance with GAAP.
"Total Restaurant Sales": The net sales of the Borrower and the
Subsidiaries arising out of the operation of Restaurants, determined on a
consolidated basis in accordance with GAAP.
"Total Revolving Commitment": Collectively, the Revolving (A) Commitment
and the Revolving (B) Commitment.
"Total Revolving Commitment Amount": The sum of (a) the Revolving (A)
Commitment Amount, plus (b) the Revolving (B) Commitment Amount.
"Total Revolving (A) Outstandings": As of any date of determination, the
sum of (a) the aggregate unpaid principal balance of the Advances evidenced by
the Revolving (A) Note
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outstanding on such date, plus (b) the product of (i) the aggregate maximum
amount of Letter of Credit Obligations outstanding on such date times (ii) the
result of (A) the Revolving (A) Commitment Amount divided by (B) the Total
Revolving Commitment Amount.
"Total Revolving (B) Outstandings": As of any date of determination, the
sum of (a) the aggregate unpaid principal balance of the Advances evidenced by
the Revolving (B) Note outstanding on such date, plus (b) the product of (i) the
aggregate maximum amount of Letter of Credit Obligations outstanding on such
date times (ii) the result of (A) the Revolving (B) Commitment Amount divided by
(B) the Total Revolving Commitment Amount.
"Total Revolving Outstandings": As of any date of determination, the sum of
(a) Total Revolving (A) Outstandings plus (b) Total Revolving (B) Outstandings.
"Trademark Assignment": The Collateral Assignment of Trademarks by the
Borrower in the form of Exhibit 1.1-8, as the same may be supplemented, amended,
or otherwise in effect from time to time.
"Unpaid Drawings": As defined in Section 2.12.
"Unused Revolving (A) Commitment": As of any date of determination, the
amount by which the Revolving (A) Commitment Amount exceeds the Total Revolving
(A) Outstandings on such date.
"Unused Revolving (B) Commitment": As of any date of determination, the
amount by which the Revolving (B) Commitment Amount exceeds the Total Revolving
(B) Outstandings on such date.
"Wholly-Owned Subsidiaries": Subsidiaries in which the Borrower, directly
or through the Subsidiaries which are not Partially-Owned Subsidiaries, owns
100% of the securities or other ownership interests having ordinary voting power
for the election of a majority of the board of directors or other Persons
performing similar functions.
Section 1.2 Accounting Terms and Calculations. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP. To the extent any change in GAAP affects any computation
or determination required to be made pursuant to this Agreement, such
computation or determination shall be made as if such change in GAAP had not
occurred unless the Borrower and the Bank agree in writing on an adjustment to
such computation or determination to account for such change in GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
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Section 1.4 Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly requires,
"or" has the inclusive meaning represented by the phrase "and/or". All
incorporation by reference of covenants, terms, definitions or other provisions
from other agreements are incorporated into this Agreement as if such provisions
were fully set forth herein, include all necessary definitions and related
provisions from such other agreements but including only amendments thereto
agreed to by the Bank, and shall survive any termination of such other
agreements until the obligations of the Borrower under this Agreement and the
Notes are irrevocably paid in full, all Letters of Credit have expired without
renewal or been returned to the Bank, and the commitments of the Bank to advance
funds to the Borrower are terminated.
ARTICLE II
Part A -- Terms of Lending
TERMS OF THE CREDIT FACILITIES
Section 2.1 Lending Commitments. On the terms and subject to the conditions
hereof, the Bank agrees to make the following lending facilities available to
the Borrower:
2.1(a) Revolving Credit. On the terms and subject to the conditions
hereof, the Bank agrees to make a loan (the "Revolving Loan") to the
Borrower on a revolving basis available as advances (each, an "Advance") at
any time and from time to time,
(i) with respect to the Revolving (A) Commitment, from the date
which is the later of (A) the Closing Date and (B) and the date upon
which the Bank has received a certificate in the form of Exhibit 2.1,
until the Termination Date, during which period the Borrower may
borrow, repay and reborrow in accordance with the provisions hereof,
provided, the unpaid principal amount of outstanding Advances in
respect of the Revolving (A) Commitment shall not at any time exceed
the Revolving (A) Commitment Amount, and
(ii) with respect to the Revolving (B) Commitment, from September
30, 1999 until the Termination Date, during which period the Borrower
may borrow, repay and reborrow in accordance with the provisions
hereof, provided, the unpaid principal amount of outstanding Advances
in respect of the Revolving (B) Commitment shall not at any time
exceed the Revolving (B) Commitment Amount.
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2.1(b) Term Loan. A term loan (the "Term Loan") from the Bank to the
Borrower on the Closing Date in the amount of $7,000,000.
2.1(c) Letters of Credit. Letters of Credit to support the Borrower's
business operations.
Section 2.2 Procedure for Loans.
2.2(a) Procedure for Revolving Loans. Any request by the Borrower
for an Advance on the Revolving Loan hereunder shall be in writing or
by telephone and must be given so as to be received by the Bank not
later than 12:00 noon (Minneapolis time) on the requested Advance
Date. Each request for an Advance hereunder shall be irrevocable and
shall be deemed a representation by the Borrower that on the requested
Advance Date and after giving effect to the requested Advance the
applicable conditions specified in Article III have been and will be
satisfied. Each request for an Advance hereunder shall specify (a) the
requested Advance Date and (b) the amount of the Advance which shall
be in a minimum amount of $50,000. The Bank may rely on any telephone
request for an Advance hereunder which it believes in good faith to be
genuine; and the Borrower hereby waives the right to dispute the
Bank's record of the terms of such telephone request. Unless the Bank
determines that any applicable condition specified in Article III has
not been satisfied, the Bank will make available to the Borrower at
the Bank's principal office in Minneapolis, Minnesota in Immediately
Available Funds not later than 5:00 p.m. (Minneapolis time) on the
requested Advance Date the amount of the requested Advance.
2.2(b) Procedure for Term Loan. No later than 12:00 noon
(Minneapolis time) one Business Day prior to the requested date for
the making of the Term Loan, the Borrower shall deliver to the Bank a
written notice of borrowing wherein the Borrower shall specify the
date (which shall be a Business Day) and the account to which the Bank
should transfer the proceeds thereof. The request for the Term Loan
shall be deemed a representation by the Borrower that on the requested
date and after giving effect to the Term Loan the applicable
conditions specified in Article III have been and will be satisfied.
Unless the Bank determines that any applicable condition specified in
Article III has not been satisfied, the Bank will make the proceeds of
the Term Loan available to the Borrower at the Bank's main office on
the requested date.
Section 2.3 Notes. The Advances on the Revolving Loan shall be evidenced by
a Revolving (A) Note payable to the order of the Bank in a principal amount
equal to the Revolving (A) Commitment Amount originally in effect and a
Revolving (B) Note payable to the order of the Bank in a principal amount equal
to the Revolving (B) Commitment Amount originally in effect. The Term Loan shall
be evidenced by a Term Note payable to the order of the Bank in the principal
amount of the Term Loan. The Bank shall enter in its records the amount of the
Term Loan, the various Advances made and the payments made thereon, and the Bank
is authorized by the Borrower to enter into its records, a record of such Term
Loan, Advances and payments; provided, however that the failure by the Bank to
make any such entry or any error in making such entry shall not limit or
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otherwise affect the obligation of the Borrower hereunder and on the Notes, and,
in all events, the principal amounts owing by the Borrower in respect of the
Revolving (A) Note and the Revolving (B) Note shall be the aggregate amount of
all Advances made by the Bank with respect to each of the Revolving (A)
Commitment and the Revolving (B) Commitment, less all payments of principal
thereof made by the Borrower and the principal amount owing by the Borrower in
respect of the Term Note shall be the aggregate amount of the Term Loan less all
payments of principal thereof made by the Borrower. The records of the Bank
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on the Revolving Notes and the Term Note and the amount available for
draw under the Letter of Credit Commitment, respectively.
Section 2.4 Interest Rates, Interest Payments and Default Interest.
2.4(a) The Advances. Interest shall accrue and be payable on the
Revolving Loans as follows:
(i) Subject to paragraph (ii) below, each Advance shall bear
interest on the unpaid principal amount thereof at a varying rate per
annum equal to the sum of (A) the Reference Rate, plus (B) the
Applicable Margin.
(ii) Upon the occurrence and during the continuance of any Event
of Default, each Advance shall, at the option of the Bank and upon
written notice to the Borrower, bear interest on the unpaid principal
amount thereof at a varying rate per annum equal to the sum of (A) the
Reference Rate, plus (B) the Applicable Margin, plus (C) 2.0%.
(iii) Interest shall be payable on the first day of each month,
upon any permitted prepayment (on the amount prepaid), and on the
Termination Date; provided that interest under Section 2.4 (a) (ii)
shall be payable on demand.
2.4(b) The Term Loan. Interest shall accrue and be payable on the Term
Loan as follows:
(i) Subject to paragraph (ii) below, the Term Loan shall bear
interest on the unpaid principal amount thereof at a fixed rate per
annum of 9.63%.
(ii) Upon the occurrence and during the continuance of any Event
of Default, the Term Loan shall, at the option of the Bank and upon
written notice to the Borrower, bear interest on the unpaid principal
amount thereof at a fixed rate per annum of 11.63%.
(iii) Interest shall be payable (A) on the first day of each
month; (B), upon any permitted prepayment (on the amount prepaid); and
(C) on the earlier of (I) the scheduled maturity date of the Term Note
or (II) an Initial Public Offering; provided that interest under
Section 2.4 (b) (ii) shall be payable on demand.
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Section 2.4(c) Lawful Interest. In no contingency or event whatsoever
shall the interest rate charged pursuant to the terms of this Agreement
exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that the Bank has
received interest hereunder in excess of the highest applicable rate, the
Bank shall promptly refund such excess interest to the Borrower as required
by such court.
Section 2.5 Repayment and Mandatory Prepayment. The unpaid principal
balance of the Revolving Notes, together with all accrued and unpaid interest
thereon, shall be due and payable on the Termination Date; provided that if at
any time the unpaid principal balance of the Revolving (A) Note exceeds the
Revolving (A) Commitment Amount or the unpaid principal balance of the Revolving
(B) Note exceeds the Revolving (B) Commitment Amount, the Borrower shall
immediately repay to the Bank the amount of such excess. The principal of the
Term Loan shall be payable (a) in equal monthly installments of $116,667 payable
on the first day of each month commencing on May 1, 1999, and ending on November
30, 2000, and (b) a final installment in an amount equal to the remaining
principal balance of the Term Loan, together with all accrued and unpaid
interest thereon, on the date which is the earlier of (i) December 31, 2000, and
(ii) the date upon which an Initial Public Offering occurs.
Section 2.6 Optional Prepayments. The Borrower may prepay the Revolving
Loan, in whole or in part, at any time, without premium or penalty. Any such
prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Each partial prepayment shall be in a minimum amount of $100,000 or, if
more, an integral multiple thereof. Amounts paid (unless following an
acceleration or upon termination of the Revolving (A) Commitment and the
Revolving (B) Commitment in whole) or prepaid on the Revolving Loan under this
Section 2.6 may be reborrowed upon the terms and subject to the conditions and
limitations of this Agreement. Any optional prepayment on the Term Loan shall be
in accordance with Section 2.19(b) and any amounts prepaid on the Term Loan may
not be reborrowed.
Section 2.7 Optional and Mandatory Reduction of the Total Revolving
Commitment Amount or Termination of Revolving Commitments.
2.7 (a) Optional Reduction/Termination of the Revolving Commitments.
The Borrower may, at any time, upon not less than three (3) Business Days
prior written notice to the Bank, reduce either the Revolving (A)
Commitment Amount or the Revolving (B) Commitment Amount, with any such
reduction in a minimum amount of $250,000 or, if more, in an integral
multiple of $50,000; provided, however, that the Borrower may not at any
time reduce the Total Revolving Commitment Amount below the then aggregate
unpaid balance of the Revolving Notes. The Borrower may, at any time, upon
not less than three (3) Business Days prior written notice to the Bank,
terminate either the Revolving (A) Commitment or the Revolving (B)
Commitment in its entirety. Upon termination of the Revolving (A)
Commitment pursuant to this Section, the Borrower shall pay to the Bank the
full amount of all outstanding Advances evidenced by the Revolving (A)
Note, all accrued and unpaid interest thereon, all unpaid Revolving
Commitment Fees accrued to the date of such
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termination under Section 2.8(c) (i) and all other unpaid Obligations of
the Borrower to the Bank hereunder with respect to the Revolving (A)
Commitment. Upon termination of the Revolving (B) Commitment pursuant to
this Section, the Borrower shall pay to the Bank the full amount of all
outstanding Advances evidenced by the Revolving (B) Note, all accrued and
unpaid interest thereon, all unpaid Revolving Commitment Fees accrued to
the date of such termination under Section 2.8(c) (ii) and all other unpaid
Obligations of the Borrower to the Bank hereunder with respect to the
Revolving (B) Commitment. Upon the date on which both the Revolving (A)
Commitment and the Revolving (B) have been terminated, the Borrower shall
have paid to the Bank all unpaid Obligations of the Borrower to the Bank
(other than the Term Loan and any accrued and unpaid interest thereon).
2.7(b) Mandatory Reduction of the Revolving Commitments. Upon the
occurrence of an Initial Public Offering, (i) the Revolving (A) Commitment
shall be reduced to $3,000,000 and the Revolving (B) Commitment shall be
reduced to zero and (ii) the Borrower shall pay to the Bank the full amount
of all outstanding Advances in excess of $3,000,000, all accrued and unpaid
interest thereon, and all unpaid Revolving Commitment Fees accrued thereon
to the date of such mandatory reduction.
Section 2.8 Fees.
2.8(a) Participation Fees. The Borrower shall pay the Participation
Fees in accordance with the terms of Section 8.6 .
2.8(b) Origination Fee. The Borrower shall pay to the Bank on the
Closing Date an origination fee (the "Origination Fee") in an amount equal
to $150,000; provided that the $20,000 non-refundable deposit paid by the
Borrower to the Bank prior to the date of this Agreement shall be credited
against the Origination Fee.
2.8(c) Revolving Commitment Fees. The Borrower shall pay to the Bank
fees (the "Revolving Commitment Fees") in an amount equal to the sum of
(i) the product of (A) the Applicable Fee Percentage times (B)
the average daily Unused Revolving (A) Commitment for the period from
the Closing Date to the Termination Date, plus
(ii) the product of (A) the Applicable Fee Percentage times (B)
the average daily Unused Revolving (B) Commitment for the period from
the Closing Date to the Termination Date, provided that,
notwithstanding the terms of this Agreement to the contrary, the
Applicable Fee Percentage to be used to determine the Revolving
Commitment Fee under this clause (ii) for the period from and after
the Closing Date to and including September 30, 1999, shall be 0.25%.
Such Revolving Commitment Fees are payable in arrears quarterly on the
first day of each April, July, October and January and on the Termination
Date.
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2.8(d) Letter of Credit Fees. For each Letter of Credit issued,
the Borrower shall pay to the Bank, in advance on the date of issuance, a
fee at a per annum rate equal to 200 basis points on the amount available
to be drawn under such Letter of Credit. In addition to the Letter of
Credit Fees, the Borrower shall pay to the Bank, on demand, all issuance,
amendment, drawing and other fees regularly charged by the Bank to its
letter of credit customers as shown as of the Closing Date on Schedule 2.8,
as the same may change from time to time, and all reasonable out-of-pocket
expenses incurred by the Bank in connection with the issuance, amendment,
administration or payment of any Letter of Credit.
Part B -- Terms of the Letter of Credit
Section 2.9 Letters of Credit. Upon the terms and subject to the conditions
of this Agreement, the Bank agrees to issue Letters of Credit for the account of
the Borrower from time to time between the Closing Date and the Termination Date
in such amounts as the Borrower shall request up to an aggregate amount at any
time outstanding not exceeding the Letter of Credit Commitment; provided that no
Letter of Credit will be issued in any amount which, after giving effect to such
issuance, would cause Total Revolving Outstandings to exceed the Total Revolving
Commitment Amount.
Section 2.10 Procedures for Letters of Credit. Each request for a Letter of
Credit shall be made by the Borrower in writing, by telex, telefacsimile
transmission or electronic conveyance received by the Bank by 12:00 noon,
Minneapolis time, on a Business Day which is not less than three Business Days
preceding the requested date of issuance (which shall also be a Business Day).
Each request for a Letter of Credit shall be deemed a representation by the
Borrower that on the date of issuance of such Letter of Credit, and after giving
effect thereto, the applicable conditions specified in Article III have been and
will be satisfied. The Bank may require that such request be made on such letter
of credit application and reimbursement agreement form as the Bank may from time
to time specify, along with satisfactory evidence of the authority and
incumbency of the officials of the Borrower making such request.
Section 2.11 Terms of Letters of Credit. Letters of Credit shall be issued
in support of obligations of the Borrower. All Letters of Credit must expire not
later than Revolving Commitment Ending Date. No Letter of Credit may have a term
longer than 12 months.
Section 2.12 Agreement to Repay Letter of Credit. If the Bank has received
documents purporting to draw under a Letter of Credit that the Bank believes
conform to the requirements of the Letter of Credit, or if the Bank has decided
that it will comply with the Borrower's written or oral request or authorization
to pay a drawing on any Letter of Credit, or that the Bank does not believe that
such documents conform to the requirements of the subject Letter of Credit, it
will notify the Borrower of that fact. The Borrower shall reimburse the Bank by
10:00 a.m. (Minneapolis time) on the day on which such drawing is to be paid in
Immediately Available Funds in an amount equal to the amount of such drawing.
Any amount by which the Borrower has failed to
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reimburse the Bank for the full amount of such drawing by 10:00 a.m. on the date
on which the Bank in its notice indicated that it would pay such drawing, until
reimbursed from the proceeds of an Advance pursuant to Section 2.15, is an
"Unpaid Drawing".
Section 2.13 Obligations Absolute. The obligation of the Borrower under
Section 2.12 to repay the Bank for any amount drawn on any Letter of Credit and
to repay the Bank for any Advances made under Section 2.16 to cover Unpaid
Drawings shall be absolute, unconditional and irrevocable, shall continue for so
long as any Letter of Credit, as the case may be, is outstanding notwithstanding
any termination of this Agreement, and shall be paid strictly in accordance with
the terms of this Agreement, under all circumstances whatsoever, including
without limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, setoff, defense or other right which
the Borrower may have or claim at any time against any beneficiary,
transferee or holder of any Letter of Credit (or any Person for whom any
such beneficiary, transferee or holder may be acting), the Bank or any
other Person, whether in connection with a Letter of Credit, this
Agreement, the transactions contemplated hereby, or any unrelated
transaction; or
(c) Any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever.
Neither the Bank nor its officers, directors or employees shall be liable or
responsible for, and the obligations of the Borrower to the Bank shall not be
impaired by:
(i) The use which may be made of any Letter of Credit, or for any
acts or omissions of any beneficiary, transferee or holder
thereof in connection therewith;
(ii) The validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents or endorsements
should, in fact, prove to be in any or all respects invalid,
insufficient, fraudulent or forged;
(iii) The acceptance by the Bank of documents that appear on their
face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary; or
(iv) Any other action of the Bank in making or failing to make payment
under any Letter of Credit if in good faith and in conformity
with U.S. or foreign laws, regulations or customs applicable
thereto.
Notwithstanding the foregoing, the Borrower shall have a claim against the Bank,
and the Bank shall be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by the
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Bank's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms thereof.
Section 2.14 Increased Cost for Letters of Credit. If any Regulatory Change
shall either (a) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by the Bank, or
(b) shall impose on the Bank any other conditions affecting this Agreement or
any Letter of Credit; and the result of any of the foregoing is to increase the
cost to the Bank of issuing or maintaining any Letter of Credit, or reduce the
amount of any sum received or receivable by the Bank hereunder, then, within 30
days after written notice and demand from the Bank (which written notice and
demand shall be given by the Bank promptly after it determines such increased
cost or reduction), the Borrower shall pay to the Bank the additional amount or
amounts as will compensate the Bank for such increased cost or reduction. A
certificate submitted to the Borrower by the Bank setting forth the basis for
the determination of such additional amount or amounts necessary to compensate
the Bank as aforesaid shall be conclusive and binding on the Borrower absent
error.
Section 2.15 Loans to Cover Unpaid Drawings. Whenever any Unpaid Drawing
exists for which there are not then funds in the Holding Account to cover the
same, the Bank is authorized (and the Borrower does here so authorize the Bank)
to, and shall, make an Advance to the Borrower in an amount equal to the amount
of the Unpaid Drawing. The Bank shall apply the proceeds of such Advance
directly to reimburse itself for such Unpaid Drawing. If at the time the Bank
makes an Advance pursuant to the provisions of this Section, the applicable
conditions precedent specified in Article III shall not have been satisfied, the
Borrower shall pay to the Bank interest on the funds so advanced at a floating
rate per annum equal to the sum of the Reference Rate plus the Applicable Margin
plus two percent (2.00%).
Part C - General
Section 2.16 Computation. Revolving Commitment Fees and interest on the
Loans shall be computed on the basis of actual days elapsed and a year of 360
days.
Section 2.17 Payments. Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other obligations under this
Agreement payable to the Bank shall be made without setoff or counterclaim in
Immediately Available Funds not later than 12:00 noon (Minneapolis time) on the
dates called for under this Agreement and the Notes to the Bank at its main
office in Minneapolis, Minnesota. Funds received after such time shall be deemed
to have been received on the next Business Day. Whenever any payment to be made
hereunder or on the Notes shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time, in the case of a payment of principal, shall be included
in the computation of any interest on such principal payment. The Bank will from
time to time provide to the Borrower a statement or statements of amounts due
and owing under the Notes and under this Agreement. The Bank's failure to
provide such statements shall not, however, relieve the Borrower of its
obligations to pay any amounts that are now or hereafter become due under the
Notes and under this Agreement. The Borrower hereby further authorizes the Bank,
if and to the
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extent payment is not made when due under the Notes or this Agreement, to make
an Advance and use the proceeds of such Advance to make such payment, all
without prior notice to the Borrower. The Bank shall, however, provide notice to
the Borrower of any such Advance promptly after it is made.
Section 2.18 Use of Loan Proceeds. The proceeds of the Term Loan shall be
used for repayment of the Borrower's indebtedness under the Existing Credit
Documents and the Borrower's general business purposes in a manner not in
conflict with any of the covenants, provisions or terms of this Agreement. The
proceeds of the Advances shall be used for the development of new Restaurants
and the Borrower's general business purposes in a manner not in conflict with
any of the Borrower's covenants in this Agreement.
Section 2.19 (a) Capital Adequacy; Prepayment Premium. In the event that
any Regulatory Change reduces or shall have the effect of reducing the rate of
return on the Bank's capital or the capital of its parent corporation (by an
amount the Bank deems material) as a consequence of the Commitments and/or its
Loans to a level below that which the Bank or its parent corporation could have
achieved but for such Regulatory Change (taking into account the Bank's policies
and the policies of its parent corporation with respect to capital adequacy),
then the Borrower shall, within 30 days after written notice and demand from the
Bank, pay to the Bank additional amounts sufficient to compensate the Bank or
its parent corporation for such reduction. If the Bank fails to give such notice
within 45 days after it obtains knowledge of such an event, the Bank shall, with
respect to compensation payable pursuant to this Section, only be entitled to
payment under this Section for diminished returns as a result of such reduction
for the period from and after the date 45 days prior to the date that the Bank
does give such notice. Any determination by the Bank under this Section and any
certificate as to the amount of such reduction given to the Borrower by the Bank
shall be final, conclusive and binding for all purposes, absent error.
(b) Term Loan Prepayment Premium. Borrower acknowledges and agrees that (i)
it has no right to prepay the Term Note without the Bank's consent, which the
Bank will grant only on the terms and subject to the conditions hereinafter
provided; (ii) the Bank will be harmed by reason of any prepayment of the Term
Note at a time when interest rates have declined below the levels prevailing at
the time funds were advanced under the Term Note, because any reinvestment of
the prepaid funds at the lower rates prevailing at the time of prepayment will
produce a lower return to the Bank; (iii) there is no readily available index of
rates payable on loans such as that from the Bank to Borrower, nor any assurance
that the Bank could replace the loan with a similar loan; and (iv) changes in
the yields on U.S. government securities provide a reasonable approximation for
changes in interest rates generally.
To induce the Bank to agree to accept voluntary prepayments, the Borrower agrees
to pay the Bank a prepayment indemnity as described in this Section 2.19(b) upon
any optional prepayment or upon acceleration of the Term Note, and agrees to all
of the other terms of prepayment herein.
"Average Maturity Period" means the weighted average time to scheduled
maturity of the amount prepaid. Average Maturity Period shall be computed by
multiplying the dollar amount of
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each installment of principal prepaid by the number of days until the scheduled
maturity of that installment, adding together the resulting products and
dividing the resulting sum by the total dollar amount of principal being
prepaid.
"Government Yield" means, as of any date of determination, the annual yield
(converted as necessary to the equivalent semi-annual compound rate) on a U.S.
Treasury security having a maturity date closest to the date computed by adding
the Average Maturity Period to the date of prepayment, as published in The Wall
Street Journal (or, if not so published, as determined by the Bank based on
quotations by secondary market dealers selected by the Bank). "U.S. Treasury
securities" means actively traded U.S. Treasury bonds, bills and notes. If more
than one issue of U.S. Treasury securities is scheduled to mature at or about
the time of such computed date, then to the extent possible the U.S. Treasury
security trading closest to its par value will be chosen as the basis of the
Government Yield.
"Interest Differential" means, as of any prepayment date, (i) 9.63% minus
(ii) the sum of (A) the Government Yield as of such date, plus (B) the Issuance
Spread.
"Issuance Spread" means forty-four one hundredths percent (0.44%) per
annum.
Any voluntary prepayment under the Term Note shall be either in the full amount
of the outstanding Term Loan under the Term Note or, if a partial prepayment, in
the amount of $100,000 or an integral multiple thereof, and partial prepayments
shall be applied to installments due under the Term Note in inverse order of
their maturities. If, at the time of any prepayment (whether voluntary or upon
acceleration of the Term Note under circumstances where a prepayment indemnity
is due as provided above), the Interest Differential shall exceed zero, such
prepayment shall be accompanied by payment of a prepayment indemnity. The amount
of the prepayment indemnity shall equal the present value (determined by The
Bank using the Government Yield as of the date of prepayment as the discount
factor) on the prepayment date of a stream of equal monthly payments in number
equal to the number of whole months (using a thirty-day month) in the Average
Maturity Period. The amount of each such monthly payment shall equal the
quotient obtained by dividing (a) the product of the amount prepaid, times the
Interest Differential, times a fraction, the numerator of which is the number of
days in the Average Maturity Period and the denominator of which is 360, by (b)
the number of whole months (using a thirty-day month) in the Average Maturity
Period.
Notwithstanding anything to the contrary stated herein, no prepayment indemnity
will be due upon any repayment or mandatory prepayment of the Term Note pursuant
to the second sentence of Section 2.5.
ARTICLE III
CONDITIONS PRECEDENT
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Section 3.1 Conditions of Initial Transaction. The making of the Term Loan
and the initial Advance on the Revolving Loan shall be subject to the prior or
simultaneous fulfillment of the following conditions:
3.1(a) Documents. The Bank shall have received the following:
(i) The Revolving (A) Note, the Revolving (B) Note and the Term
Note executed by a duly authorized officer (or officers) of the
Borrower and dated the Closing Date.
(ii) A certificate of the Secretary or Assistant Secretary of the
Borrower dated as of the Closing Date and certifying as to the
following:
(A) A true and accurate copy of the corporate resolutions of
the Borrower authorizing the execution, delivery and performance
of the Loan Documents to which the Borrower is a party
contemplated hereby and thereby;
(B) The incumbency, names, titles and signatures of the
officers of the Borrower authorized to execute the Loan Documents
to which the Borrower is a party and to request Advances and the
Term Loan;
(C) A true and accurate copy of the Articles of
Incorporation of the Borrower; and
(D) A true and accurate copy of the bylaws for the Borrower.
(iii) A copy of the Articles of Incorporation of the Borrower
with all amendments thereto, certified by the appropriate governmental
official of the jurisdiction of its incorporation as of a date not
more than 30 days prior to the Closing Date.
(iv) A certificate of good standing for the Borrower in the
jurisdiction of its incorporation and in each State in which the
character of the properties owned or leased by the Borrower or the
business conducted by the Borrower makes such qualification necessary,
certified by the appropriate governmental officials as of a date not
more than 30 days prior to the Closing Date.
(v) A certificate of the Secretary or Assistant Secretary of
each Guarantor dated as of the Closing Date and certifying as to the
following:
(A) A true and accurate copy of the corporate resolutions of
such Guarantor authorizing the execution, delivery and
performance of the Loan Documents to which such Guarantor is a
party contemplated hereby and thereby;
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(B) The incumbency, names, titles and signatures of the
officers of such Guarantor authorized to execute the Loan
Documents to which such Guarantor is a party;
(C) A true and accurate copy of the Articles of
Incorporation or other comparable charter of such Guarantor; and
(D) A true and accurate copy of the bylaws for such
Guarantor.
(vi) A copy of the Articles of Incorporation of each Guarantor
with all amendments thereto, certified by the appropriate governmental
official of the jurisdiction of its incorporation as of a date not
more than 30 days prior to the Closing Date.
(vii) A certificate of good standing for each Guarantor in the
jurisdiction of its incorporation and in each State in which the
character of the properties owned or leased by such Guarantor or the
business conducted by such Guarantor makes such qualification
necessary, certified by the appropriate governmental officials as of a
date not more than 30 days prior to the Closing Date.
(viii) Such corporate and other organizational documents and
certificates as the Bank may reasonably request with respect to the
due organization, good standing, power and authority of the Borrower
or any Guarantor and incumbency of officers or other officials
thereof.
(ix) Such information relating to the Borrower and the
Subsidiaries, financial or otherwise, which the Bank may reasonably
request.
(x) A certificate dated the Closing Date executed by the chief
executive officer or chief financial officer of the Borrower on its
behalf certifying as to the matters set forth in Sections 3.2 (a) and
3.2 (b) below.
(xi) A Certificate of Insurance prepared in accordance with
Xxxxx 27 and Xxxxx 25, showing property, liability, automobile, and
workers compensation insurance coverages carried by the Borrower and
the Subsidiaries with insurance companies licensed to do business in
the State of Minnesota and reasonably acceptable to the Bank, in such
amounts as may be acceptable to the Bank, and otherwise providing
evidence of the Borrower's compliance with Section 5.3 concerning
insurance.
(xii) Payoff letters duly executed by each creditor with respect
to its respective Existing Credit Documents.
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3.1(b) Opinion. The Borrower shall have requested Faegre &
Xxxxxx, its counsel, to prepare a written opinion, addressed to the Bank
and dated the Closing Date, covering the matters set forth in Exhibit 3.1 ,
and such opinion shall have been delivered to the Bank.
3.1(c) Compliance. The Borrower shall have performed and
complied with all agreements, terms and conditions contained in this
Agreement required to be performed or complied with by the Borrower prior
to or simultaneously with the Closing Date.
3.1(d) Security Documents. All Security Documents (or financing
statements with respect thereto) shall have been appropriately filed or
recorded to the satisfaction of the Bank; any pledged collateral shall have
been duly delivered to the Bank; and the priority and perfection of the
Liens created by the Security Documents shall have been established to the
satisfaction of the Bank and its counsel.
3.1(e) Other Matters. All corporate and legal proceedings
relating to the Borrower and the Guarantors and all instruments and
agreements in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in scope, form and substance to
the Bank and its counsel, and the Bank shall have received all information
and copies of all documents, including records of corporate proceedings, as
the Bank or its counsel may reasonably have requested in connection
therewith, such documents where appropriate to be certified by proper
corporate or governmental authorities.
3.1(f) Fees and Expenses. The Bank shall have received all fees
and other amounts due and payable by the Borrower on or prior to the
Closing Date, including the reasonable fees and expenses of counsel to the
Bank payable pursuant to Section 8.2.
Section 3.2 Conditions Precedent to Term Loan and all Advances. The
obligation of the Bank to make the Term Loan, any Advances hereunder (including
the initial Advance on the Revolving Loan) or any Letter of Credit shall be
subject to the fulfillment of the following conditions:
3.2(a) Representations and Warranties. The representations and
warranties contained in Article IV shall be true and correct on and as of
the Closing Date and on the date of each Advance, with the same force and
effect as if made on such date.
3.2(b) No Default. No Default or Event of Default, or Material
Adverse Occurrence first occurring after November 22, 1998 (other than the
fire at the Borrower's corporate headquarters on December 8, 1998), shall
have occurred and be continuing on the Closing Date and on the date of each
Advance or will exist after giving effect to the Loans made on such date.
3.2(c) No Merger/Acquisition. Neither the Borrower nor any of
the Subsidiaries shall have made any commitment to (i) merge or consolidate
with any other
-28-
entity or (ii) acquire all or substantially all of the assets of any other
entity, unless such merger, consolidation or acquisition would not be
prohibited by the terms of this Agreement.
3.2(d) Notices and Requests. The Bank shall have received the
Borrower's request for the Term Loan or such Advance or such Letter of
Credit as required under Section 2.2.
3.2(e) No Adverse Development in Litigation. No development
shall have occurred in any litigation, arbitration or governmental
investigation or proceeding disclosed in writing by the Borrower to the
Bank under this Agreement, which would constitute a Material Adverse
Occurrence.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make the Term Loan
and Advances hereunder, the Borrower represents and warrants to the Bank:
Section 4.1 Organization, Standing, Etc. The Borrower is a corporation duly
incorporated and validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted, to enter into this
Agreement and to issue the Notes and to perform its obligations under the Loan
Documents to which it is a party. Each Subsidiary is a corporation duly
incorporated and validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted. Each of the Borrower and
the Subsidiaries (a) holds all certificates of authority, licenses and permits
necessary to carry on its business as presently conducted in each jurisdiction
in which it is carrying on such business, except where the failure to hold such
certificates, licenses or permits would not constitute a Material Adverse
Occurrence, and (b) is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such
qualification necessary and the failure so to qualify would permanently preclude
the Borrower or such Subsidiary from enforcing its rights with respect to any
material assets or expose the Borrower or any Subsidiary to any Material Adverse
Occurrence.
Section 4.2 Authorization and Validity. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action by the Borrower, and this
Agreement constitutes, and the Notes and other Loan Documents to which it is a
party when executed will constitute, the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms, subject to limitations as to enforceability which might result
from bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and subject to general principles of equity.
-29-
Section 4.3 No Conflict; No Default. Except as set forth on Schedule 4.3 ,
the execution, delivery and performance by the Borrower of the Loan Documents to
which it is a party will not (a) violate any provision of any law, statute, rule
or regulation or any order, writ, judgment, injunction, decree, determination or
award of any court, governmental agency or arbitrator presently in effect having
applicability to the Borrower, (b) violate or contravene any provision of the
Articles of Incorporation or bylaws of the Borrower, or (c) result in a breach
of or constitute a default under any indenture, loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or any of its properties may be bound or result in the creation of any
Lien on the assets of the Borrower or the Subsidiaries thereunder (except in the
case of clause (a) or (c), above, where the violation, breach or default or the
creation of such Lien could not adversely effect the validity or enforceability
of the Loan Documents or constitute a Material Adverse Occurrence). Except set
forth on Schedule 4.3, neither the Borrower nor any Subsidiary is in default
under or in violation of any such law, statute, rule or regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture, loan
or credit agreement or other agreement, lease or instrument in any case in which
the consequences of such default or violation could constitute a Material
Adverse Occurrence.
Section 4.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required on the part of the Borrower in
connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, the Loan Documents to which the
Borrower is a party, except for any necessary filing or recordation of or with
respect to any of the Security Documents and except as set forth on Schedule
4.3, and except where the failure to obtain such order, consent, approval,
license, authorization, validation or exemption, or to make such filing,
recording or registration, could not adversely effect the validity or
enforceability of the Loan Documents or constitute a Material Adverse
Occurrence.
Section 4.5 Financial Statements and Condition. The Borrower's audited
consolidated financial statements as at, and for the Fiscal Year ended, December
28, 1997 and its unaudited financial statements as at, and for the eleven fiscal
months ended, November 22, 1998, as heretofore furnished to the Bank, have been
prepared in accordance with GAAP on a consistent basis (except for the absence
of footnotes and subject to year-end audit adjustments as to the interim
statements) and fairly present, in all material respects, the financial
condition of the Borrower and the Subsidiaries as at such dates and the results
of their operations and their cash flows for the respective periods then ended.
As of November 22, 1998, neither the Borrower nor any Subsidiary had any
material Indebtedness, Contingent Liability, liability for taxes or long-term
lease obligation, nor other material obligation which is not reflected in the
unaudited financial statements as of November 22, 1998, or in the notes thereto,
and which would be required to be reflected therein in accordance with GAAP.
Since November 22, 1998, there has been no Material Adverse Occurrence other
than the fire at the Borrower's corporate headquarters on December 8, 1998.
Section 4.6 Litigation. Except as set forth on Schedule 4.6 , there are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or adversely
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affecting the Borrower or any Subsidiary or any of their properties before any
court or arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to the Borrower or such
Subsidiary, would constitute a Material Adverse Occurrence.
Section 4.7 Environmental, Health and Safety Laws. Except as set forth on
Schedule 4.7, there does not exist any violation by the Borrower or any
Subsidiary of any applicable federal, state or local law, rule or regulation or
order of any government, governmental department, board, agency or other
instrumentality relating to environmental, pollution, health or safety matters
which will or threatens to impose a material liability on the Borrower or a
Subsidiary or which would require a material expenditure by the Borrower or such
Subsidiary to cure. Except as set forth on Schedule 4.7 , neither the Borrower
nor any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could reasonably be
expected to constitute a Material Adverse Occurrence. Except as set forth in
Schedule 4.7, the Borrower does not have knowledge that it or its property or
any Subsidiary or the property of any Subsidiary will become subject to
environmental laws or regulations during the term of this Agreement, compliance
with which could reasonably be expected to require Capital Expenditures which
would constitute a Material Adverse Occurrence.
Section 4.8 ERISA. Each Plan is in compliance in all material respects with
all applicable requirements of ERISA and the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and the
Code setting forth those requirements. No Reportable Event has occurred and is
continuing with respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no event or
condition which would reasonably be expected to result in the institution of
proceedings to terminate any Plan under Section 4042 of ERISA. With respect to
each Plan subject to Title IV of ERISA, as of the most recent valuation date for
such Plan, the present value (determined on the basis of reasonable assumptions
employed by the independent actuary for such Plan and previously furnished in
writing to the Bank) of such Plan's projected benefit obligations did not exceed
the fair market value of such Plan's assets.
Section 4.9 Federal Reserve Regulations. Neither the Borrower nor any
Subsidiary is engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined in Regulation U of the Board). The value of all margin stock
owned by the Borrower does not constitute more than 25% of the value of the
assets of the Borrower.
Section 4.10 Title to Property; Leases; Liens; Subordination. Each of the
Borrower and the Subsidiaries has (a) good and marketable title to its owned
real properties and (b) good and sufficient title to, or valid, subsisting and
enforceable leasehold interest in, its other material properties, including all
real properties and other material properties and assets referred to as owned by
the Borrower and the Subsidiaries in the most recent financial statement
referred to in Section 4.5
-31-
(other than property and assets disposed of since November 22, 1998, in the
ordinary course of business or, after the date of this Agreement, as permitted
under Section 6.2, and other than property and assets destroyed in the fire at
the Borrower's corporate headquarters on December 8, 1998). None of such
properties is subject to a Lien, except as allowed under Section 6.14. The
Borrower has not subordinated any of its rights under any obligation owing to it
to the rights of any other person.
Section 4.11 Taxes. Except as set forth in Schedule 4.11, each of the
Borrower and the Subsidiaries has filed all federal, state and local tax returns
required to be filed and has paid or made provision for the payment of all taxes
due and payable pursuant to such returns and pursuant to any assessments made
against it or any of its property and all other taxes, fees and other charges
imposed on it or any of its property by any governmental authority (other than
taxes, fees or charges the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in accordance with GAAP have been provided on the books of the
Borrower). No tax Liens have been filed and not subsequently released, and no
material claims are being asserted with respect to any such taxes, fees or
charges. Except as set forth in Schedule 4.11, the charges, accruals and
reserves on the books of the Borrower in respect of taxes and other governmental
charges are adequate and the Borrower knows of no proposed material tax
assessment against it or any Subsidiary or any basis therefor.
Section 4.12 Trademarks, Patents. Except as set forth on Schedule 4.12 ,
each of the Borrower and the Subsidiaries possesses or has the right to use all
of the patents, trademarks, trade names, service marks and copyrights, and
applications therefor, and all material technology, know-how, processes, methods
and designs, used in or necessary for the conduct of its business, without known
material conflict with the rights of others.
Section 4.13 Burdensome Restrictions. Neither the Borrower nor any
Subsidiary is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which constitutes a Material
Adverse Occurrence.
Section 4.14 Force Majeure. Since November 22, 1998, the business,
properties and other assets of the Borrower and the Subsidiaries have not been
materially and adversely affected in any way as the result of any fire or other
casualty, strike, lockout, or other labor trouble, embargo, sabotage,
confiscation, condemnation, riot, civil disturbance, activity of armed forces or
act of God, other than the fire at the Borrower's corporate headquarters on
December 8, 1998.
Section 4.15 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Section 4.16 Public Utility Holding Company Act. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
-32-
Section 4.17 Retirement Benefits. Except as required under Section 4980B of
the Code, Section 601 of ERISA or applicable state law, neither the Borrower nor
any Subsidiary is obligated to provide post-retirement medical or insurance
benefits with respect to employees or former employees.
Section 4.18 Full Disclosure. Subject to the following sentence, neither
the financial statements referred to in Section 4.5 nor any other certificates,
written statements, exhibits or reports furnished by or on behalf of the
Borrower in connection with or pursuant to this Agreement, when taken as a
whole, contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained therein not
misleading. Certificates or statements furnished by or on behalf of the Borrower
to the Bank consisting of projections or forecasts of future results or events
have been prepared in good faith and based on good faith estimates and
assumptions of the management of the Borrower, and the Borrower has no reason to
believe that such projections or forecasts for any periods or portions of
periods not yet completed (as modified by any updates thereof delivered to the
Bank) are not reasonable.
Section 4.19 Solvency. On the Closing Date, after giving effect to the Term
Loan and all Advances, (a) the present fair saleable value of the assets of the
Borrower and the Subsidiaries is in excess of the total amount of their
liabilities (including for purposes of the definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with GAAP, and
whether direct or indirect, fixed or contingent, secured of unsecured, disputed
or undisputed); and (b) the Borrower and the Subsidiaries will be able to pay
their obligations as they mature in the ordinary course of business as proposed
to be conducted following the Closing Date; and (c) the Borrower and the
Subsidiaries do not have unreasonably small capital to carry out the business as
proposed to be conducted following the Closing Date. For purposes of this
Section 4.19, "present fair saleable value" means the value which would be
realized from an interested purchaser aware of all relevant information relating
to the assets or group of assets being sold and who is willing to purchase under
ordinary selling conditions in an existing and not theoretical market if the
assets or group of assets are disposed of within a period of six (6) months to
one year.
Section 4.20 Year 2000. The Borrower has reviewed and assessed its and the
Subsidiaries' business operations and computer systems with respect to the "year
2000 problem" (that is, that computer applications and equipment may not be able
properly to perform date-sensitive functions, including without limitation its
credit card processing capabilities, before, during and after January 1, 2000)
and, based on those reviews and inquiries and subject to the matters set forth
on Schedule 4.20 , on or before June 30, 1999, the Borrower will have taken all
necessary steps to ensure that the year 2000 problem will not result in a
Material Adverse Occurrence.
Section 4.21 Capitalization of Borrower and Subsidiaries. Schedule 4.21
sets forth, as of the date of this Agreement:
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(a) for Borrower, the number and percentage of the authorized,
issued and outstanding shares of each class of capital stock owned of
record by its owners, and its jurisdiction of organization,
(b) a list of all Subsidiaries of the Borrower and, as
applicable, the number and percentage of the authorized, issued and
outstanding shares of each class of capital stock owned beneficially
or of record by the Borrower or any such Subsidiary therein, and the
jurisdiction of organization of such Subsidiary.
As of the Closing Date, all of the outstanding capital stock of the Borrower
will be validly issued, fully paid and nonassessable, and will be owned of
record directly as set forth on Schedule 4.21 (other than changes to such
ownership resulting from the exercise of options, warrants and other contractual
rights described in Schedule 4.21), and all of the outstanding capital stock of
the Subsidiaries, will be validly issued, fully paid and nonassessable, as
applicable, and will be owned beneficially and of record directly as set forth
on Schedule 4.21, subject to no Liens other than Liens in favor of the Bank and
the restrictions set forth in Schedule 4.21. Except as reflected on Schedule
4.21, as of the Closing Date, neither the Borrower nor any of the Subsidiaries
has outstanding any capital stock appreciation or phantom capital stock, rights
or plans, and is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its capital stock. Except as
set forth on Schedule 4.21, there are no statutory or contractual shareholder's
preemptive rights or rights of first offer or refusal with respect to the
capital stock of the Borrower or any of the Subsidiaries. Neither the Borrower
nor any of the Subsidiaries has violated any applicable securities laws in
connection with the offer, sale or issuance of any of its respective capital
stock. Except as set forth on Schedule 4.21, there is no agreement, to the
Borrower's knowledge, among or between the shareholders of the Borrower with
respect to the voting or transfer of the capital stock of the Borrower.
Section 4.22 Obligations Senior Debt. The Obligations shall at all times be
considered senior in right of payment to the indebtedness evidenced by the
Subordinated Debt, including without limitation, the Subordinate Debentures.
ARTICLE V
AFFIRMATIVE COVENANTS
Until any obligation of the Bank hereunder to make the Term Loan and
Advances or to issue Letters of Credit shall have expired or been terminated and
all the other Obligations have been paid in full and all outstanding Letters of
Credit shall have expired or shall have been returned to the Bank, or the
liability of the Bank thereon shall have been otherwise discharged, unless the
Bank shall otherwise consent in writing:
Section 5.1 Financial Statements and Reports. The Borrower will furnish to
the Bank:
5.1(a) As soon as available and in any event within 120 days
after the end of each Fiscal Year of the Borrower, the financial statements
of the Borrower and the
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Subsidiaries consisting of consolidated statements of cash flow and changes
in stockholders' equity for such Fiscal Year, statements of income for each
Restaurant for such Fiscal Year, and a consolidated balance sheet as at the
end of such Fiscal Year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified, in the
case of the consolidated statements, without qualification by Deloitte
Touche or another firm of independent certified public accountants of
recognized national standing selected by the Borrower and reasonably
acceptable to the Bank, together with all footnotes and any management
letters, management reports or other supplementary comments or reports to
the Borrower or its board of directors furnished by such accountants,
provided that, as long as the Borrower is required to file reports on Form
10-K with the Securities and Exchange Commission pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, the Borrower
shall be deemed to have fulfilled its obligations to furnish to the Bank,
by the date prescribed in this Section 5.1(a), the financial statements,
management letters , management reports or other supplementary comments or
reports in respect of any Fiscal Year by furnishing to the Bank a copy of
said report for such Fiscal Year.
5.1(b) Together with the audited financial statements required
under Section 5.1(a), a statement by the accounting firm performing such
audit to the effect that it has reviewed this Agreement and that in the
course of performing its examination nothing came to its attention that
caused it to believe that any Default or Event of Default exists, or, if
such Default or Event of Default existed, specifying the nature and period
of existence thereof.
5.1(c) As soon as available and in any event within 30 days
after the end of each fiscal month, unaudited consolidated statements of
cash flow and changes in stockholders' equity for the Borrower and the
Subsidiaries for such month and for the period from the beginning of such
Fiscal Year to the end of such month, unaudited statements of income for
each Restaurant for such month and for the period from the beginning of
such Fiscal Year to the end of such month, and an unaudited consolidated
balance sheet of the Borrower and the Subsidiaries as at the end of such
month, setting forth in comparative form figures for the corresponding
period for the preceding Fiscal Year, accompanied by a certificate signed
by the chief financial officer of the Borrower stating that such financial
statements present fairly, in all material respects, the consolidated
financial condition of the Borrower and the Subsidiaries and that the same
have been prepared in accordance with GAAP (except for the absence of
footnotes and subject to year-end audit adjustments).
5.1(d) As soon as available and in any event within 30 days
after the end of each fiscal quarter (or 45 days after the end of each
fiscal quarter, if the Borrower is required to file reports on Form 10-Q
with the Securities and Exchange Commission pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, in respect of
such fiscal quarter), unaudited consolidated statements cash flow and
changes in stockholders' equity for the Borrower and the Subsidiaries for
such quarter and for the period from the beginning of such Fiscal Year to
the end of such quarter, an unaudited statement of income for each
Restaurant for such quarter and for the period from the beginning of such
Fiscal Year to the end of such quarter, and an unaudited consolidated
balance sheet of the Borrower and the
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Subsidiaries as at the end of such quarter, setting forth in comparative
form figures for the corresponding period for the preceding Fiscal Year,
accompanied by a certificate signed by the chief financial officer of the
Borrower stating that such financial statements present fairly, in all
material respects, the consolidated financial condition of the Borrower and
the Subsidiaries and that the same have been prepared in accordance with
GAAP (except for the absence of footnotes and subject to year-end audit
adjustments).
5.1(e) As soon as practicable and in any event within 30 days
after the end of each fiscal month, a Compliance Certificate in the form of
Exhibit 5.1(e) signed by the chief financial officer of the Borrower
demonstrating in reasonable detail compliance (or noncompliance, as the
case may be) with these Sections: 6.10, 6.16, 6.17, 6.18, 6.19, 6.20, as at
the end of such month and stating that as at the end of such month there
did not exist any Default or Event of Default or, if such Default or Event
of Default existed, specifying the nature and period of existence thereof
and what action the Borrower proposes to take with respect thereto.
5.1(f) As soon as practicable and in any event at least 30 days
prior to the beginning of each Fiscal Year of the Borrower, a statement of
forecasted income for each Restaurant for each fiscal month in such Fiscal
Year, and a consolidated forecasted balance sheet of the Borrower and the
Subsidiaries, as at the end of each such fiscal month in such Fiscal Year,
together with supporting assumptions, all in reasonable detail and
reasonably satisfactory in scope to the Bank.
5.1(g) Immediately upon any officer of the Borrower becoming
aware of any Default or Event of Default, a notice describing the nature
thereof and what action the Borrower proposes to take with respect thereto.
5.1(h) Immediately upon any officer of the Borrower becoming
aware of the occurrence, with respect to any Plan, of any Reportable Event
or any Prohibited Transaction, a notice specifying the nature thereof and
what action the Borrower proposes to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have
a trustee appointed for any Plan.
5.1(i) Promptly, but in any event not later than ten Business
Days after the mailing or filing thereof, copies of all financial
statements, reports and proxy statements mailed to the Borrower's
shareholders generally, and copies of all registration statements, periodic
reports and other documents filed by the Borrower with the Securities and
Exchange Commission (or any successor thereto) or any national securities
exchange.
5.1(j) From time to time, such other information regarding the
business, operation and financial condition of the Borrower and the
Subsidiaries as the Bank may reasonably request.
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Section 5.2 Corporate Existence. The Borrower will maintain, and cause each
Subsidiary to maintain, its corporate existence in good standing under the laws
of its jurisdiction of incorporation and its qualification to transact business
in each jurisdiction where failure so to qualify would permanently preclude the
Borrower or such Subsidiary from enforcing its rights with respect to any
material asset or would expose the Borrower or such Subsidiary to any material
liability; provided, however, that nothing herein shall prohibit the merger or
liquidation of any Subsidiary allowed under Section 6.1.
Section 5.3 Insurance. The Borrower shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurance companies
such insurance as may be required by law and such other insurance in such
amounts and against such hazards as is customary in the case of reputable firms
engaged in the same or similar business and similarly situated.
Section 5.4 Payment of Taxes and Claims. The Borrower shall file, and cause
each Subsidiary to file, all tax returns and reports which are required by law
to be filed by it and will pay, and cause each Subsidiary to pay, before they
become delinquent all taxes, assessments and governmental charges and levies
imposed upon it or its property and all claims or demands of any kind (including
but not limited to those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Subsidiary's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower's or such Subsidiary's books
in accordance with GAAP.
Section 5.5 Inspection. The Borrower shall permit any Person designated by
the Bank, upon reasonable notice, to visit and inspect any of the properties,
corporate books and financial records of the Borrower and the Subsidiaries, to
examine and to make copies of the books of accounts and other financial records
of the Borrower and the Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and the Subsidiaries with, and to be advised as to the
same by, its officers at such reasonable times and intervals as the Bank may
designate (which shall be not less than once during each fiscal quarter of the
Borrower). So long as no Event of Default exists, the Borrower shall reimburse
the Bank for the reasonable out-of-pocket cost of not more than one audit of
collateral in each Fiscal Year and any other visits, inspections and
examinations shall be at the expense of the Bank. Any such visits, inspections
and examinations made while any Event of Default is continuing shall be at the
expense of the Borrower.
Section 5.6 Maintenance of Properties. The Borrower will maintain, and
cause each Subsidiary to maintain, its material properties used or useful in the
conduct of its business in good condition, repair and working order (normal wear
and tear excepted), and supplied with all necessary equipment, and make all
necessary repairs, renewals, replacements, betterments and improvements thereto,
all as may be necessary so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
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Section 5.7 Books and Records. The Borrower will keep, and will cause each
Subsidiary to keep, adequate and proper records and books of account in which
full and correct entries will be made of its dealings, business and affairs.
Section 5.8 Compliance. The Borrower will comply, and will cause each
Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject; provided, however, that failure so to comply shall not be a
breach of this covenant if such failure does not constitute a Material Adverse
Occurrence and the Borrower or such Subsidiary is acting in good faith and with
reasonable dispatch to cure such noncompliance.
Section 5.9 Notice of Litigation. The Borrower will give prompt written
notice to the Bank of (a) the commencement of any action, suit or proceeding
before any court or arbitrator or any governmental department, board, agency or
other instrumentality adversely affecting the Borrower or any Subsidiary or any
property of the Borrower or a Subsidiary or to which the Borrower or a
Subsidiary is a party in which an adverse determination or result could
constitute a Material Adverse Occurrence, or (other than any litigation where
the insurance insures against the damages claimed and the insurer has assumed
defense of the litigation without reservation) in which the damages claimed
could exceed $200,000 on an individual claim or $500,000 when aggregated with
other such claims, stating the nature and status of such action, (b) any
material arbitration or governmental investigation or proceeding not previously
disclosed by the Borrower to the Bank which has been instituted or, to the
knowledge of the Borrower, is threatened against the Borrower or any of the
Subsidiaries or to which its or any Subsidiaries' property is subject and which,
if determined adversely to the Borrower or such Subsidiary, would constitute a
Material Adverse Occurrence; and (c) any adverse development which occurs in any
litigation, arbitration or governmental investigation or proceeding previously
disclosed by the Borrower to the Bank which, if determined adversely to the
Borrower or such Subsidiary, would constitute a Material Adverse Occurrence,
provided that no such notice by the Borrower shall, per se, excuse the Borrower
from complying with the terms of Section 3.2.
Section 5.10 ERISA. The Borrower will maintain, and cause each Subsidiary
to maintain, each Plan in compliance with all material applicable requirements
of ERISA and of the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and of the Code and will not
and not permit any of the ERISA Affiliates to (a) engage in any transaction in
connection with which the Borrower or any of the ERISA Affiliates would be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code, in either case in an amount
exceeding $100,000, (b) fail to make full payment when due of all amounts which,
under the provisions of any Plan, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, or permit to exist any accumulated
funding deficiency (as such term is defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, with respect to any Plan in an
aggregate amount exceeding $100,000 or (c) fail to make any payments in an
aggregate amount exceeding $100,000 to any Multiemployer Plan that the Borrower
or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.
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Section 5.11 Environmental Matters; Reporting. The Borrower will observe
and comply with, and cause each Subsidiary to observe and comply with, all
applicable laws, rules, regulations and orders of any government or government
agency relating to health, safety, pollution, hazardous materials or other
environmental matters to the extent non-compliance could result in a material
liability for Borrower or any Subsidiary or otherwise constitute a Material
Adverse Occurrence. The Borrower will give the Bank prompt written notice of any
violation of any environmental law, rule, regulation or order by the Borrower or
any Subsidiary of which the Borrower becomes aware and of the commencement of
any judicial or administrative proceeding against the Borrower or any Subsidiary
relating to health, safety or environmental matters (a) in which an adverse
determination or result is reasonably likely to result in the revocation of or
have a material adverse effect on any operating permits, air emission permits,
water discharge permits, hazardous waste permits or other permits held by the
Borrower or any Subsidiary which are material to the operations of the Borrower
and the Subsidiaries taken as whole, or (b) which will or is reasonably likely
to impose a material liability on the Borrower or such Subsidiary to any Person
or which will require a material expenditure by the Borrower or such Subsidiary
to cure any alleged problem or violation.
Section 5.12 Reaffirmation of Guaranties. When so requested by the Bank
from time to time, the Borrower will promptly cause the Guarantors, and any
other Person who may hereafter guaranty the Obligations or any part thereof, to
execute and deliver to the Bank reaffirmations of their respective Guaranties in
such form as the Bank may require.
Section 5.13 Further Assurances. The Borrower shall promptly correct any
non-material or patent defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment or recordation of any Loan
Document. Promptly upon request by the Bank, the Borrower also shall do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all conveyances, mortgages, deeds of trust, trust deeds,
assignments, estoppel certificates, financing statements and continuations
thereof, notices of assignment, transfers, certificates, assurances and other
instruments as the Bank may reasonably require from time to time in order: (a)
to carry out more effectively the purposes of the Loan Documents; (b) to perfect
and maintain the validity, effectiveness and priority of any security interests
intended to be created by the Loan Documents; and (c) to better assure, convey,
grant, assign, transfer, preserve, protect and confirm unto the Bank the rights
granted now or hereafter intended to be granted to the Bank under any Loan
Document or under any other instrument executed in connection with any Loan
Document or that the Borrower may be or become bound to convey, mortgage or
assign to the Bank in order to carry out the intention or facilitate the
performance of the provisions of any Loan Document. The Borrower shall furnish
to the Bank evidence satisfactory to the Bank of every such recording, filing or
registration.
Section 5.14 Year 2000 Remediation. The Borrower agrees to take, and to
cause each of the Subsidiaries to take, all actions reasonably necessary to
ensure that the representation set forth in Section 4.20 remains true, and the
Borrower agrees to notify the Bank promptly if, at any time during the term of
this Agreement, the Borrower becomes aware of facts or circumstances such that
the representation set forth in Section 4.20 has become or may become untrue or
this Section has been
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or may be breached. The Borrower will promptly deliver to the Bank such
information relating to the representation in Section 4.20 and the agreement set
forth in this Section as the Bank reasonably requests from time to time,
including, without limitation, any information pertaining to the review and
assessment set forth in Section 4.20.
Section 5.15 Additional Collateral.
(a) Pledge of BUCA (DT Minneapolis) Stock. The Borrower shall use its
best efforts to obtain the approval of the Minneapolis City Council to the
pledge to the Bank of the outstanding shares of capital stock of BUCA (DT
Minneapolis), Inc. promptly after the Closing Date. Upon the receipt of
such approval, the Borrower shall deliver to the Bank a duly executed
amendment to the Pledge Agreement in respect of the capital stock of BUCA
(DT Minneapolis), Inc., in form and substance reasonably satisfactory to
the Bank, together with the stock certificates representing the Borrower's
ownership of 100% of the shares of BUCA (DT Minneapolis), Inc. (together
with stock powers related thereto).
(b) SBA Loan. From and after the date of the repayment of the SBA Loan
described in Section 5.17, the Borrower shall (i) cause all assets of BUCA
(DT) Milwaukee, Inc. subject to any Lien securing the SBA Loan to become
subject to a first priority Lien thereon in favor of the Bank to secure the
Obligations, pursuant to a Security Agreement (Guarantor) and related UCC
financing statements for filing in such jurisdictions as the Bank shall
request, all duly executed by BUCA (DT) Milwaukee, Inc., and (ii) deliver
to the Bank a duly executed amendment to the Pledge Agreement in respect of
the capital stock of BUCA (DT) Milwaukee, Inc., in form and substance
reasonably satisfactory to the Bank, together with the stock certificates
representing the Borrower's ownership of 100% of the shares of BUCA (DT)
Milwaukee, Inc. (together with stock powers related thereto).
(c) Acquisition of Title to Real Property. Within 150 days (210 days
in the case of the real property located at 0000 Xxxxxx Xxxx in Saint Xxxx,
Minnesota) after the Borrower or any Subsidiary acquires title to any real
property, other than a leasehold interest therein, the Borrower shall, or,
as applicable, shall cause such Subsidiary to, create a first priority Lien
thereon in favor of the Bank to secure the Obligations, pursuant to
agreements and instruments reasonably satisfactory to the Bank, provided
that no such Lien shall be required in the event the Borrower or such
Subsidiary enters into a sale-leaseback agreement relating to such real
property within 120 days (180 days in the case of the real property located
at 0000 Xxxxxx Xxxx xx Xxxxx Xxxx, Xxxxxxxxx) following the date the
Borrower or such Subsidiary acquires such title, provided further that, to
the extent such real property is acquired with purchase money financing, to
the extent otherwise permitted under this Agreement, the Lien thereon in
favor of the Bank may be a second priority Lien.
Section 5.16 Operating Leases Relating to Real Property and Landlords'
Waivers. Not fewer than five (5) Business Days prior to execution of any new
Operating Lease relating to real property or renewal of any existing Operating
Lease relating to real property, the Borrower agrees to provide a copy thereof
to the Bank in substantially final form. With respect to Operating Leases
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related to real property entered into from and after the Closing Date (whether a
new Operating Lease related to real property or the renewal of an existing
Operating Lease related to real property ), the Borrower shall request the
lessor thereunder to provide a landlord waiver in form and substance reasonably
satisfactory to the Bank, and shall negotiate in good faith to obtain such
landlord waiver from such lessor.
Section 5.17 Repayment of SBA Loan. Within one hundred eighty (180) days
after the date of this Agreement, the Borrower shall repay the SBA Loan in full.
Section 5.18 Century Bank Letters of Credit. On or before April 1, 1999,
the Borrower will allow each of the Century Bank Letters of Credit either (a) to
expire without renewal, (b) to be returned to the issuer thereof and terminated,
or (c) to be replaced by a Letter of Credit. Upon the occurrence of the events
described in the preceding sentence, the Borrower will cause all Liens securing
the Borrower's or any Subsidiary's obligations with respect to the Century Bank
Letters of Credit to be released, terminated or satisfied, and all assets
pledged with respect thereto to be returned to the Borrower or such Subsidiary.
Section 5.19 New Restaurants. The Borrower agrees that each new Restaurant
created or acquired from and after the Closing Date shall be owned or leased and
operated only by a Wholly-Owned Subsidiary the capital stock of which has been
pledged and delivered to the Bank pursuant to the Pledge Agreement.
ARTICLE VI
NEGATIVE COVENANTS
Until any obligation of the Bank hereunder to make the Term Loan and
Advances or to issue Letters of Credit shall have expired or been terminated and
all the other Obligations have been paid in full and all outstanding Letters of
Credit shall have expired or shall have been returned to the Bank, or the
liability of the Bank thereon shall have been otherwise discharged, unless the
Bank shall otherwise consent in writing:
Section 6.1 Merger. The Borrower will not merge or consolidate or enter
into any analogous reorganization or transaction with any Person or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution) or permit
any Subsidiary to do any of the foregoing; provided, however, any Subsidiary may
be merged with or liquidated into the Borrower or any Wholly- Owned Subsidiary
(if the Borrower or such Wholly-Owned Subsidiary is the surviving corporation).
Section 6.2 Disposition of Assets. The Borrower will not, and will not
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one transaction or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
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6.2(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
6.2(b) the sale of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are applied with reasonable
promptness to the purchase price of such replacement equipment;
6.2(c) the sale, assignment, lease, conveyance, transfer or
other disposition of property (a "Transfer") by a Subsidiary to the
Borrower or any Wholly-Owned Subsidiary; provided that such transferee
Subsidiary shall have executed and delivered to the Bank a Security
Agreement (Guarantor) and related UCC financing statements for filing in
such jurisdictions as the Bank may request and, if the assets subject to a
Transfer are to be located on premises subject to a lease, then prior to
such Transfer, a landlord's waiver in form and substance reasonably
acceptable to the Bank shall have been executed and delivered to the Bank;
6.2(d) the sale of any real property or Restaurant equipment as
part of a sale leaseback transaction in which the Borrower or a Subsidiary
becomes the lessee of such real property or equipment; and
6.2(e) other dispositions of property during the term of this
Agreement whose net book value in the aggregate does not exceed five
percent (5%) of the Borrower's total consolidated assets as shown on its
balance sheet for its most recent prior fiscal quarter.
Section 6.3 Plans. The Borrower will not permit, and will not allow any
Subsidiary to permit, any event to occur or condition to exist which would
permit any Plan to terminate under any circumstances which would cause the Lien
provided for in Section 4068 of ERISA to attach to any assets of the Borrower or
any Subsidiary; and the Borrower will not permit, as of the most recent
valuation date for any Plan subject to Title IV of ERISA, the present value
(determined on the basis of reasonable assumptions employed by the independent
actuary for such Plan and previously furnished in writing to the Bank) of such
Plan's projected benefit obligations to exceed the fair market value of such
Plan's assets.
Section 6.4 Change in Nature of Business. The Borrower will not, and will
not permit any Subsidiary to, make any material change in the nature of the
business of the Borrower or such Subsidiary, as carried on at the date hereof.
Section 6.5 Subsidiaries. After the date of this Agreement, the Borrower
will not, and will not permit any Subsidiary to, form or acquire any corporation
which would thereby become a Subsidiary, except that the Borrower may form a
corporation (that would thereby become a Wholly-Owned Subsidiary) to operate any
Restaurant if the Borrower determines that the operation of such Restaurant
through a Subsidiary is desirable for tax reasons, or in order to facilitate
obtaining a liquor license for such Restaurant, or in order to facilitate
current or future negotiation with the landlord of
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the site for such Restaurant. In the event the Borrower hereafter forms a
corporation that thereby becomes a Wholly-Owned Subsidiary, then upon such
formation such corporation shall deliver to the Bank a Guaranty, a Security
Agreement (Guarantor) and related UCC financing statements for filing in such
jurisdictions as the Bank shall request, all duly executed by such corporation,
and the Borrower shall deliver to the Bank an amendment to the Pledge Agreement
in form and substance reasonably satisfactory to the Bank in respect of such
corporation, duly executed by the Borrower, and the stock certificates
representing the Borrower's ownership of 100% of the shares of such corporation
(together with stock powers related thereto).
Section 6.6 Negative Pledges; Subsidiary Restrictions. The Borrower will
not, and will not permit any Subsidiary to, enter into any agreement, bond, note
or other instrument with or for the benefit of any Person other than the Bank
which would (i) prohibit the Borrower or such Subsidiary from granting, or
otherwise limit the ability of the Borrower or such Subsidiary to grant, to the
Bank any Lien on any assets or properties of the Borrower or such Subsidiary
(other than assets or properties subject to Liens permitted by Section 6.14(i)
or Section 6.14(j)), or (ii) require the Borrower or such Subsidiary to xxxxx x
Xxxx to any other Person if the Borrower or such Subsidiary grants any Lien to
the Bank. The Borrower will not permit any Subsidiary to place or allow any
restriction, directly or indirectly, on the ability of such Subsidiary to (a)
pay dividends or any distributions on or with respect to such Subsidiary's
capital stock or (b) make loans or other cash payments to the Borrower (other
than restrictions contained in this Agreement).
Section 6.7 Restricted Payments. The Borrower will not, and will not permit
any of the Partially-Owned Subsidiaries to, make any Restricted Payments;
provided that,
(a) the Borrower may (i) repurchase common stock to the extent
required by the Redemption Agreement dated September 30, 1996 between the
Borrower and Parasole Restaurant Holdings, Inc. or by the BUCA, Inc.
Employee Stock Ownership Plan, (ii) distribute common stock or Series C
convertible preferred stock in respect of its outstanding Series C
convertible preferred stock as required by the Contingent Value Right
Agreements between the Borrower and the holders of such Series C
convertible preferred stock, and (iii) make dividends, distributions,
payments, redemptions or purchases payable solely in, or in exchange for,
common stock of the Borrower; and
(b) as long as no Default or Event of Default shall exist or would be
created thereby, the Borrower may (i) repurchase common stock issued
pursuant to options or awards granted to employees or consultants under the
Borrower's 1996 Stock Incentive Plan, as amended, and the Stock Option Plan
for Nonemployee Directors, as amended, (ii) repurchase common stock upon
the exercise by it of its purchase rights under any of the Paisano Partner
Program Stock Purchase Agreements, (iii) repurchase common stock upon the
exercise by it of its rights of first refusal under the Shareholder
Agreement dated as of October 23, 1996, among the Borrower and certain of
its shareholders, as amended, and (iv) make dividends, distributions,
payments, redemptions or purchases out of the net cash proceeds of an
Initial Public Offering if and only if the Borrower has previously made
all payments then due under Sections 2.4(b), 2.5 and 2.7(b).
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Section 6.8 Transactions with Affiliates. Except as set forth on Schedule
6.8 , the Borrower will not, and will not permit any Subsidiary to, enter into
any transaction with any Affiliate of the Borrower, except upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate.
Section 6.9 Accounting Changes. The Borrower will not, and will not permit
any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change its Fiscal Year or
the fiscal year of any Subsidiary.
Section 6.10 Capital Expenditures. The Borrower will not, and will not
permit any Subsidiary to, make Capital Expenditures in an amount exceeding, on a
consolidated basis, $18,000,000 during any Fiscal Year; provided that all
Capital Expenditures shall be invested in the development of new Restaurants or
the maintenance of existing Restaurants or in the construction, acquisition,
repair or maintenance of the Borrower's corporate headquarters.
Section 6.11 Subordinated Debt. The Borrower will not, and will not permit
any Subsidiary to (a) make any scheduled payment of the principal of or interest
on any Subordinated Debt which would be prohibited by the terms of such
Subordinated Debt and any related subordination agreement; (b) directly or
indirectly make any prepayment on or purchase, redeem or defease any
Subordinated Debt or offer to do so (whether such prepayment, purchase or
redemption, or offer with respect thereto, is voluntary or mandatory), except
that, subject to the provisions of Section 7.1(p), the Borrower may make any
mandatory prepayment on or mandatory purchase, redemption or defeasance of the
Subordinated Debentures which would not be prohibited by the terms of such
Subordinated Debentures and any related subordination agreement; (c) amend or
cancel the subordination provisions applicable to any Subordinated Debt; (d)
take or omit to take any action if as a result of such action or omission the
subordination of such Subordinated Debt, or any part thereof, to the Obligations
might be terminated, impaired or adversely affected; or (e) omit to give the
Bank prompt notice of any notice received from any holder of Subordinated Debt,
or any trustee therefor, or of any default under any agreement or instrument
relating to any Subordinated Debt by reason whereof such Subordinated Debt might
become or be declared to be due or payable;
Section 6.12 Investments. The Borrower will not, and will not permit any
Subsidiary to, acquire for value, make, have or hold any Investments, except:
6.12(a) Investments existing on the date of this Agreement.
6.12(b) Travel and expense advances to management personnel and
employees in the ordinary course of business.
6.12(c) Investments in readily marketable direct obligations
issued or guaranteed by the United States or any agency thereof and
supported by the full faith and credit of the United States.
6.12(d) A deposit account with Century Bank having funds in an
aggregate amount not to exceed $446,875, plus interest accrued thereon and
deposited therein, and
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certificates of deposit or bankers' acceptances or in any amount by any
commercial bank organized under the laws of the United States or any State
thereof which has (i) combined capital and surplus of at least
$100,000,000, and (ii) a credit rating with respect to its unsecured
indebtedness from a nationally recognized rating service of at least "A".
6.12(e) Commercial paper given the highest rating by two nationally
recognized rating services.
6.12(f) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America.
6.12(g) Other readily marketable Investments in debt securities which
are reasonably acceptable to the Bank.
6.12(h) The stock of any Subsidiary the formation or acquisition of
which is permitted under Section 6.5.
6.12(i) Loans from the Borrower to any Wholly-Owned Subsidiary which
has executed and delivered to the Bank a Guaranty and a Security Agreement
(Guarantor).
6.12(j) Investments in the assets of individual Restaurant locations
for consideration of no more than $2,000,000 per location.
Any Investments under clauses (c), (d), (e) or (f) above must mature within one
year of the acquisition thereof by the Borrower or a Subsidiary.
Section 6.13 Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, incur, create, issue, assume or suffer to exist any Indebtedness,
except:
6.13(a) The Obligations.
6.13(b) Current Liabilities, other than for borrowed money, incurred
in the ordinary course of business.
6.13(c) Indebtedness existing on the date of this Agreement and
disclosed on Schedule 6.13 , but not including any extension or refinancing
thereof.
6.13(d) Indebtedness secured by Liens permitted under Section 6.14(a)
through Section 6.14(h) .
6.13(e) Indebtedness secured by Liens permitted under Section 6.14(i)
in an aggregate principal amount, in the case of any such Indebtedness
secured by Liens on personal property, not to exceed $2,500,000 at any one
time outstanding.
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6.13(f) Subordinated Debt.
6.13(g) Indebtedness owing to the Borrower from any Wholly-Owned
Subsidiary which has executed and delivered to the Bank a Guaranty and a
Security Agreement (Guarantor).
6.13(h) From and after the Closing Date to and including April 1,
1999, Indebtedness with respect to the Century Bank Letters of Credit.
6.13(i) Contingent Obligations permitted under Section 6.15.
Section 6.14 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into,
or make any commitment to enter into, any arrangement for the acquisition of any
property through conditional sale, lease-purchase or other title retention
agreements, with respect to any property now owned or hereafter acquired by the
Borrower or a Subsidiary, except:
6.14(a) Liens granted to the Bank under the Security Documents to
secure the Obligations.
6.14(b) Liens existing on the date of this Agreement and disclosed on
Schedule 6.14 .
6.14(c) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations in the ordinary course of business of the Borrower or
a Subsidiary.
6.14(d) Liens for taxes, fees, assessments and governmental charges
not delinquent or to the extent that payment therefor shall not at the time
be required to be made in accordance with the provisions of Section 5.4.
6.14(e) Liens of carriers, warehousemen, landlords, mechanics and
materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of
Section 5.4.
6.14(f) Liens incurred or deposits or pledges made or given in
connection with, or to secure payment of, indemnity, performance, appeal,
or other similar bonds.
6.14(g) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is
not a dedicated cash collateral account and is not subject to restriction
against access by the Borrower or a Subsidiary in excess of those set forth
by
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regulations promulgated by the Board, and (ii) such deposit account is not
intended by the Borrower or any Subsidiary to provide collateral to the
depository institution.
6.14(h) Encumbrances on real property in the nature of zoning
restrictions, easements, rights of way, encroachments, restrictive
covenants and other similar rights or restrictions, whether or not of
record, on the use of real property, which encumbrances do not materially
detract from the value of such property or materially impair the use
thereof in the business of the Borrower or a Subsidiary.
6.14(i) The interest of any lessor under any Capitalized Lease or
purchase money Liens; provided, that, (i) the Indebtedness secured thereby
is permitted by this Agreement and (ii) such Liens are limited to the
property acquired and do not secure Indebtedness other than the related
Capitalized Lease Obligations or the purchase price of such property.
6.14(j) Liens on cash in bank accounts securing rents and other
obligations under real property leases, provided that no obligations under
any single lease shall be secured by cash in an amount in excess of
$200,000.
6.14(k) From and after the Closing Date to and including April 1,
1999, Liens securing Indebtedness incurred with respect to the Century Bank
Letters of Credit on assets of the Borrower having a fair market value not
to exceed $446,875, plus interest accrued thereon.
Section 6.15 Contingent Liabilities. The Borrower will not, and will not
permit any Subsidiary to, be or become liable on any Contingent Obligations,
except Contingent Obligations existing on the date of this Agreement and
described on Schedule 6.15, Contingent Obligations under any Guaranty, and
Contingent Obligations of the Borrower incurred from and after the Closing Date
with respect to obligations of Subsidiaries under leases of real property.
Section 6.16 Average Annual Comparable Restaurant Sales Growth. The
Borrower will not permit the Average Annual Comparable Restaurant Sales Growth
to be less than one percent (1%), as of the last day of any fiscal month.
Section 6.17 Average Restaurant Annual Cash Flow. The Borrower will not
permit the Average Restaurant Annual Cash Flow to be less than $450,000, as of
the last day of any fiscal month.
Section 6.18 Interest/Operating Lease Payment Coverage Ratio. The Borrower
will not permit the Interest/Operating Lease Payment Coverage Ratio, as of the
last day of any fiscal month which ends during any period of measurement
described below, to be less than the ratio set forth below for such period:
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Minimum Interest/
Operating
Lease Payment
Measurement Period Coverage Ratio
------------------ -----------------
Closing Date through March 31, 1999 1.05 to 1.00
April 1, 1999 through June 30, 1999 1.30 to 1.00
July 1, 1999 through September 30, 1999 1.50 to 1.00
October 1, 1999 through December 31, 1999 1.60 to 1.00
January 1, 2000 through March 31, 2000 1.80 to 1.00
April 1, 2000 through June 30, 2000 1.95 to 1.00
Thereafter 2.00 to 1.00
Section 6.19 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio, as of the last day of any fiscal month which ends
during any period of measurement described below, to be less than the ratio set
forth below for such period:
Minimum Fixed Charge
Measurement Period Coverage Ratio
------------------ --------------------
Closing Date through December 31, 1999 Not Applicable
January 1, 2000 through March 31, 2000 1.10 to 1.00
April 1, 2000 through June 30, 2000 1.15 to 1.00
July 1, 2000 through September 30, 2000 1.25 to 1.00
Thereafter 1.35 to 1.00
Section 6.20 Cash Flow Leverage Ratio. The Borrower will not permit the
Cash Flow Leverage Ratio, as of the last day of any fiscal month which ends
during any period of measurement described below, to be greater than the ratio
set forth below for such period:
Maximum Cash Flow
Measurement Period Leverage Ratio
------------------ -----------------
Closing Date through March 31, 1999 Not Applicable
April 1, 1999 through June 30, 1999 6.10 to 1.00
July 1, 1999 through September 30, 1999 5.50 to 1.00
October 1, 1999 through December 31, 1999 5.30 to 1.00
January 1, 2000 through March 31, 2000 4.35 to 1.00
April 1, 2000 through June 30, 2000 4.00 to 1.00
July 1, 2000 through September 30, 2000 3.75 to 1.00
Thereafter 3.50 to 1.00
Section 6.21 Loan Proceeds. The Borrower will not, and will not permit any
Subsidiary to, use any part of the proceeds of the Loans or Advances directly or
indirectly, and whether immediately, incidentally or ultimately, (a) to purchase
or carry margin stock (as defined in Regulation U of the Board) or to extend
credit to others for the purpose of purchasing or carrying
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margin stock or to refund Indebtedness originally incurred for such purpose or
(b) for any purpose which entails a violation of, or which is inconsistent with,
the provisions of Regulations G, U or X of the Board.
Section 6.22 Modification of Ownership or Equity Structure. The Borrower
will not permit any Subsidiary to issue or authorize the issuance of capital
stock of such Subsidiary (other than directors' qualifying shares) which would
result in any other Person becoming an owner thereof; issue or authorize the
issuance of options to purchase capital stock of such Subsidiary which
immediately, or in the future upon the exercise of rights granted therein, would
result in any other Person becoming an owner thereof; issue or authorize the
issuance or warrants to purchase capital stock of such Subsidiary which
immediately, or in the future upon the exercise of rights granted therein, would
result in any other Person becoming an owner thereof; issue or authorize the
issuance of securities or instruments convertible into capital stock of such
Subsidiary which immediately, or in the future upon the exercise of rights
granted therein, would result in any other Person becoming an owner thereof; or
authorize, issue or grant any capital stock appreciation rights, phantom stock,
profit participations or other similar rights with respect to the capital stock
of such Subsidiary which immediately, or in the future upon the exercise of
rights granted therein, would result in any other Person becoming an owner
thereof.
Section 6.23 Real Property. Except with respect to real property leased for
the Borrower's executive offices, the Borrower shall not, and shall not permit
any Subsidiary to, acquire any interest in real property unless, within one
hundred fifty (150) days after the date of the acquisition of an interest
therein, a Subsidiary commences operation of a Restaurant of similar size and
type to those Restaurants in existence on the date of this Agreement, provided
that, to the extent such interest in real property is obtained through a lease
with respect to such property, the one hundred fifty (150) day period with
respect thereto shall not begin until the date on which such Subsidiary (or in
the case of a lease under negotiation as of the date of this Agreement, the
Borrower) is required to make its first lease payment with respect thereto.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
7.1(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal of or interest on any
Note or any other Obligation required to be made to the Bank pursuant to
this Agreement, provided that failure to pay interest shall not constitute
an Event of Default if such failure does not continue for more than two
Business Days.
7.1(b) Any representation or warranty made by or on behalf of
the Borrower, any Subsidiary or any Guarantor in this Agreement or any
other Loan Document or by or on
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behalf of the Borrower, any Subsidiary or any Guarantor in any certificate,
written statement, report or document herewith or hereafter furnished to
the Bank pursuant to this Agreement or any other Loan Document shall prove
to have been false or misleading in any material respect on the date as of
which the facts set forth are stated or certified.
7.1(c) The Borrower shall fail to comply with Section 5.2 or 5.3
or any Section of Article VI.
7.1(d) The Borrower shall fail to comply with any other
agreement, covenant or term contained in this Agreement (other than those
hereinabove set forth in this Section 7.1) or under Section 2 (d) or
Section 7 of the Trademark Assignment, and such failure to comply shall
continue for thirty (30) calendar days after whichever of the following
dates is the earliest: (i) the date the Borrower gives notice of such
failure to the Bank, (ii) the date the Borrower should have given notice of
such failure to the Bank pursuant to Section 5.1(g), and (iii) the date the
Bank gives notice of such failure to the Borrower.
7.1(e) Any default (however denominated or defined) shall occur
under any Guaranty or the Trademark Assignment (other than those set forth
in Section 7.1 (d)), or any "Event of Default," as defined in any other
Security Document, shall occur.
7.1(f) The Borrower, any Subsidiary or any Guarantor shall
become insolvent or shall generally not pay its debts as they mature or
shall apply for, shall consent to, or shall acquiesce in the appointment of
a custodian, trustee or receiver of the Borrower, such Subsidiary or such
Guarantor or for a substantial part of the property thereof or, in the
absence of such application, consent or acquiescence, a custodian, trustee
or receiver shall be appointed for the Borrower, a Subsidiary or a
Guarantor or for a substantial part of the property thereof and shall not
be discharged within 60 days, or the Borrower, any Subsidiary or any
Guarantor shall make an assignment for the benefit of creditors.
7.1(g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against the Borrower, any Subsidiary or any Guarantor, and, if
instituted against the Borrower, any Subsidiary or any Guarantor, shall
have been consented to or acquiesced in by the Borrower, such Subsidiary or
such Guarantor, or shall remain undismissed for 60 days, or an order for
relief shall have been entered against the Borrower, such Subsidiary or
such Guarantor.
7.1(h) Any dissolution or liquidation proceeding not permitted
by Section 6.1 shall be instituted by or against the Borrower or a
Subsidiary or any Guarantor, and, if instituted against the Borrower, any
Subsidiary or any Guarantor, shall be consented to or acquiesced in by the
Borrower, such Subsidiary or such Guarantor or shall remain for 60 days
undismissed.
7.1(i) Any judgment for the payment of money in excess of the
sum of $100,000, or judgements for the payment of money in excess of the
sum of $500,000 in
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the aggregate at any time, shall be rendered against the Borrower or a
Subsidiary and either (i) the judgment creditor executes on such judgment
or (ii) such judgment remains unpaid or undischarged for more than 60 days
from the date of entry thereof or such longer period during which execution
of such judgment shall be stayed during an appeal from such judgment.
7.1(j) The maturity of any material Indebtedness of the Borrower
(other than Indebtedness under this Agreement) or a Subsidiary shall be
accelerated, or the Borrower or a Subsidiary shall fail to pay any such
material Indebtedness when due (after the lapse of any applicable grace
period) or, in the case of such Indebtedness payable on demand, when
demanded (after the lapse of any applicable grace period), or any event
shall occur or condition shall exist and shall continue for more than the
period of grace, if any, applicable thereto and shall have the effect of
causing, or permitting the holder of any such Indebtedness or any trustee
or other Person acting on behalf of such holder to cause, such material
Indebtedness to become due prior to its stated maturity or any collateral
given as security therefor to be realized upon. For purposes of this
Section, Indebtedness of the Borrower or a Subsidiary shall be deemed
"material" if it exceeds $500,000 as to any item of Indebtedness or in the
aggregate for all items of Indebtedness with respect to which any of the
events described in this Section 7.1(j) has occurred.
7.1(k) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower or any Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated or
stayed within 60 days after the issuance thereof.
7.1(l) Any Guarantor shall repudiate or purport to revoke its,
his or her Guaranty, or any Guaranty for any reason shall cease to be in
full force and effect as to the Guarantor executing and delivering the same
or shall be judicially declared null and void as to such Guarantor.
7.1(m) Any Security Document shall, at any time, cease to be in
full force and effect or shall be judicially declared null and void, or the
validity or enforceability thereof shall be contested by the Borrower, or
the Bank shall cease to have a valid and perfected security interest having
the priority contemplated thereunder in all of the collateral described
therein, other than by action or inaction of the Bank, if (i) the aggregate
value of the collateral affected by any of the foregoing exceeds $25,000
and (ii) any of the foregoing shall remain unremedied for ten days or more
after receipt of notice thereof by the Borrower from the Bank.
7.1(n) Any Change of Control shall occur.
7.1(o) Xxxxxx Xxxxxxxxxx shall cease to be the President and
Chief Executive Officer of the Borrower, and a successor President and
Chief Executive Officer approved by a majority of the Board of Directors of
the Borrower shall not have been appointed within 60 days.
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7.1(p) Any Indebtedness evidenced by the Subordinated Debentures
in excess of $1,000,000 shall be paid by the Borrower prior to July 30,
2001.
Section 7.2 Remedies. If (a) any Event of Default described in Sections
7.1(f), (g) or (h) shall occur with respect to the Borrower, the Commitments
shall automatically terminate and the Notes and all other Obligations shall
automatically become immediately due and payable and the Borrower shall without
demand pay into the Holding Account an amount equal to the aggregate undrawn
face amount of all outstanding Letters of Credit; or (b) any other Event of
Default shall occur and be continuing, then the Bank may (i) declare the
Commitments terminated, whereupon the Commitments shall terminate, (ii) declare
the outstanding unpaid principal balance of the Notes, the accrued and unpaid
interest thereon and all other Obligations to be forthwith due and payable,
whereupon the Notes, all accrued and unpaid interest thereon and all such
Obligations shall immediately become due and payable, in each case without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, and (iii) demand that the Borrower pay into the
Holding Account an amount equal to the aggregate undrawn face amount of all
outstanding Letters of Credit. Upon the occurrence of any of the events
described in clauses (a) or (b) of the preceding sentence the Bank may exercise
all rights and remedies under any of the Loan Documents, and enforce all rights
and remedies under any applicable law.
Section 7.3 Offset. In addition to the remedies set forth in Section 7.2,
upon the occurrence of any Event of Default and thereafter while the same be
continuing, the Borrower hereby irrevocably authorizes the Bank to set off any
Obligations against all deposits and credits of the Borrower with, and any and
all claims of the Borrower against, the Bank. Such right shall exist whether or
not the Bank shall have made any demand hereunder or under any other Loan
Document, whether or not the Obligations, or any part thereof, or deposits and
credits held for the account of the Borrower is or are matured or unmatured, and
regardless of the existence or adequacy of any collateral, guaranty or any other
security, right or remedy available to the Bank. The Bank agrees that, as
promptly as is reasonably possible after the exercise of any such setoff right,
it shall notify the Borrower of its exercise of such setoff right; provided,
however, that the failure of the Bank to provide such notice shall not affect
the validity of the exercise of such setoff rights. Nothing in this Agreement
shall be deemed a waiver or prohibition of or restriction on the Bank to all
rights of banker's Lien, setoff and counterclaim available pursuant to law.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Modifications. Notwithstanding any provisions to the contrary
herein, any term of this Agreement may be amended with the written consent of
the Borrower; provided that no amendment, modification or waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
Section 8.2 Expenses. Whether or not the transactions contemplated hereby
are consummated, the Borrower agrees to reimburse the Bank upon demand for all
reasonable out-of-pocket expenses paid or incurred by the Bank (including filing
and recording costs and reasonable fees and expenses of Xxxxxx & Xxxxxxx LLP,
counsel to the Bank) in connection with the negotiation, preparation, approval,
review, execution and delivery of this Agreement and the other Loan Documents
and any commitment letters relating thereto (provided that the Borrower shall
not be obligated to reimburse the Bank for any such expenses in excess of
$50,000 in the aggregate). Subject to the limitations contained in Section 5.5,
the Borrower shall also reimburse the Bank upon demand for all reasonable
out-of-pocket expenses (including reasonable expenses of legal counsel) paid or
incurred by the Bank in connection with the administration, amendment,
modification, interpretation, collection and enforcement of this Agreement and
any other Loan Document. The obligations of the Borrower under this Section
shall survive any termination of this Agreement.
Section 8.3 Waivers, etc. No failure on the part of the Bank or the holder
of a Note to exercise and no delay in exercising any power or right hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any power or right preclude any other or further
exercise thereof or the exercise of any other power or right. The remedies
herein and in the other Loan Documents provided are cumulative and not exclusive
of any remedies provided by law.
Section 8.4 Notices. Except when telephonic notice is expressly authorized
by this Agreement, any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery,
telegram, telex, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Bank under Article II shall be deemed to have been given only
when received by the Bank.
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Section 8.5 Taxes. The Borrower agrees to pay, and save the Bank harmless
from all liability for, any stamp or other taxes which may be payable with
respect to the execution or delivery of this Agreement or the issuance of the
Notes, which obligation of the Borrower shall survive the termination of this
Agreement.
Section 8.6 Successors and Assigns; Disposition of Loans; Transferees. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign its rights or delegate its obligations hereunder or under any other Loan
Document without the prior written consent of the Bank. The Bank may at any time
sell, assign, transfer, grant participations in, or otherwise dispose of any
portion of the Commitments, the Term Loan and/or Advances (each such interest so
disposed of being herein called a "Transferred Interest") to banks or other
financial institutions ("Transferees"). The Borrower agrees that each Transferee
shall be entitled to the benefits of Section 8.2 with respect to its Transferred
Interest and that each Transferee may exercise any and all rights of banker's
Lien, setoff and counterclaim as if such Transferee were a direct lender to the
Borrower. If the Bank makes any assignment to a Transferee, then upon notice to
the Borrower such Transferee, to the extent of such assignment (unless otherwise
provided therein), shall become a "Bank" hereunder and shall have all the rights
and obligations of the Bank hereunder and the Bank shall be released from its
duties and obligations under this Agreement to the extent of such assignment.
Notwithstanding the sale by the Bank of any participation hereunder, (a) no
participant shall be deemed to be or have the rights and obligations of the Bank
hereunder except that any participant shall have a right of setoff under Section
7.3 as if it were the Bank and the amount of its participation were owing
directly to such participant by the Borrower and (b) the Bank shall not in
connection with selling any such participation condition the Bank's rights in
connection with consenting to amendments or granting waivers concerning any
matter under any Loan Document upon obtaining the consent of such participant
other than on matters relating to (i) any reduction in the amount of any
principal of, or the amount of or rate of interest on, any Note or Advance in
which such participation is sold, (ii) any postponement of the date fixed for
any payment of principal of or interest on any Note or Advance in which such
participation is sold, (iii) the release or subordination of any material
portion of any collateral other than pursuant to the terms of any Security
Document or (iv) the release of any Guaranty. The Borrower shall pay to the Bank
(a) upon the first transfer of a Transferred Interest to a Transferee hereunder,
a fee of $7,500 for such transfer and (b) a fee of $7,500 on each date which is
the anniversary of such transfer (the "Participation Fees").
Section 8.7 Confidentiality of Information. The Bank shall use reasonable
efforts to assure that information about the Borrower and its operations,
affairs and financial condition, not generally disclosed to the public or to
trade and other creditors, which is furnished to the Bank pursuant to the
provisions hereof or of the other Loan Documents is used only for the purposes
of this Agreement and any other relationship between the Bank and the Borrower
and shall not be divulged to any Person other than the Bank, its Affiliates and
their respective officers, directors, employees and agents (who have been
informed of the provisions of this Section 8.7 explicitly or implicitly under
the policies and practices of the Bank), except: (a) to their attorneys and
accountants (who have been informed of the provisions of this Section 8.7
explicitly or implicitly under the policies and practices of the Bank), (b) in
connection with the enforcement of the rights of the Bank hereunder and under
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the Notes, the Guaranties and the Security Documents or otherwise in connection
with related litigation, (c) in connection with assignments and participations
and the solicitation of prospective assignees and participants referred to in
the immediately preceding Section (provided that any such assignee or
participant or prospective assignee or participant has agreed to be bound by the
provisions of this Section 8.7), and (d) as may otherwise be required or
requested by any regulatory authority having jurisdiction over the Bank or by
any applicable law, rule, regulation or judicial process, the opinion of the
Bank's counsel concerning the making of such disclosure to be binding on the
parties hereto. The Bank shall not incur any liability to the Borrower by reason
of any disclosure permitted by this Section 8.7.
Section 8.8 Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision of this
Agreement and the other Loan Documents and any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto shall
be interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Agreement, the other Loan Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement, the other Loan Documents or any
other statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto.
Section 8.9 Consent to Jurisdiction. AT THE OPTION OF THE BANK, THIS
AGREEMENT AND THE OTHER BORROWER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE
BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY
ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED
TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER
CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 8.10 Waiver of Jury Trial. EACH OF THE BORROWER AND THE BANK
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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Section 8.11 Survival of Agreement. All representations, warranties,
covenants and agreement made by the Borrower herein or in the other Borrower
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be deemed to have been relied upon by the Bank and shall survive
the making of the Loans by the Bank and the execution and delivery to the Bank
by the Borrower of the Notes, regardless of any investigation made by or on
behalf of the Bank, and shall continue in full force and effect as long as any
Obligation is outstanding and unpaid and so long as the Commitments have not
been terminated; provided, however, that the obligations of the Borrower under
Sections 8.2, 8.5 and 8.12 shall survive payment in full of the Obligations and
the termination of the Commitments.
Section 8.12 Indemnification. The Borrower hereby agrees to defend,
protect, indemnify and hold harmless the Bank and its Affiliates and the
directors, officers, employees, attorneys and agents of the Bank and its
Affiliates (each of the foregoing being an "Indemnitee" and all of the foregoing
being collectively the "Indemnitees") from and against any and all claims,
actions, damages, liabilities, judgments, costs and expenses (including all
reasonable fees and disbursements of counsel which may be incurred in the
investigation or defense of any matter) imposed upon, incurred by or asserted
against any Indemnitee, whether direct, indirect or consequential and whether
based on any federal, state, local or foreign laws or regulations (including
securities laws, environmental laws, commercial laws and regulations), under
common law or on equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the execution,
delivery, performance or enforcement of any Loan Document, any commitments
relating thereto, or any transaction contemplated by any Loan Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under the Loan Documents or any act done or omitted by any
Person, or the exercise of any rights or remedies, thereunder, including
the acquisition of any collateral by the Bank by way of foreclosure of the
Lien thereon, deed or xxxx of sale in lieu of such foreclosure or
otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee for
any portion of such claims, actions, damages, liabilities, judgments, costs and
expenses resulting from any Indemnitee's gross negligence or willful misconduct.
In the event this indemnity is unenforceable as a matter of law as to a
particular matter or consequence referred to herein, it shall be enforceable to
the full extent permitted by law and the Borrower agrees to make the maximum
contribution to the payment and satisfaction of each of the indemnified claims,
damages, liabilities and expenses which is permissible under applicable law.
This indemnification applies, without limitation, to any act, omission,
event or circumstance existing or occurring on or prior to the later of the
Termination Date or the date of payment in full of the Obligations, including
specifically Obligations arising under clause (b) of this Section. The
indemnification provisions set forth above shall be in addition to any liability
the
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Borrower may otherwise have. Without prejudice to the survival of any other
obligation of the Borrower hereunder the indemnities and obligations of the
Borrower contained in this Section shall survive the payment in full of the
other Obligations.
Section 8.13 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 8.14 Entire Agreement. This Agreement and the other Borrower Loan
Documents embody the entire agreement and understanding between the Borrower and
the Bank with respect to the subject matter hereof and thereof. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Nothing contained in this Agreement or in any other Loan
Document, expressed or implied, is intended to confer upon any Persons other
than the parties hereto any rights, remedies, obligations or liabilities
hereunder or thereunder.
Section 8.15 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 8.16 Borrower Acknowledgments. The Borrower hereby acknowledges
that (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents, (b) the Bank has no
fiduciary relationship to the Borrower, the relationship being solely that of
debtor and creditor, (c) no joint venture exists between the Borrower and the
Bank, and (d) the Bank undertakes no responsibility to the Borrower to review or
inform the Borrower of any matter in connection with any phase of the business
or operations of the Borrower and the Borrower shall rely entirely upon its own
judgment with respect to its business, and any review, inspection or supervision
of, or information supplied to, the Borrower by the Bank is for the protection
of the Bank and neither the Borrower nor any third party is entitled to rely
thereon.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BUCA, INC.
By /s/ Xxxx X. Xxxxx
---------------------------------
Title CFO
------------------------------
Address for the Borrower:
Attention: Xxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
U.S. BANK NATIONAL ASSOCIATION
By /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Title Commercial Banking Officer
------------------------------
Address for the Bank:
Attention: Xxxxxx X. Xxxxxxxxx MPFP0602
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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