SECOND AMENDMENT TO LOAN AGREEMENT
EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (“Second Amendment”) is dated as of September 20,
2006, by and among X. XXXXXXXXX’X CORPORATION, X. XXXXXXXXX’X RESTAURANTS, INC., both Tennessee
corporations (collectively referred to as the “Borrower”), and BANK OF AMERICA, N.A., a national
banking association (“Lender”).
WITNESSETH
WHEREAS, Borrower and Lender entered into that certain Loan Agreement dated May 12, 2003, as
amended by that certain First Amendment to Loan Agreement dated January 20, 2004 (the “Loan
Agreement”); and
WHEREAS, Borrower has requested and Lender has agreed to provide an additional $5,000,000.00
in availability under Borrower’s existing Revolving Loan; and
WHEREAS, in connection with the foregoing, Borrower and Lender have agreed to amend the Loan
Agreement as set forth herein.
NOW, THEREFORE, as an inducement to cause Lender to extend credit to Borrower, and for other
valuable consideration, the receipt and sufficiency of which are acknowledged, it is agreed as
follows:
1. Capitalized terms not defined herein shall have the meaning contained in the Loan
Agreement.
2. Section 1(b) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(b) “Applicable Margin” means for any Fiscal Quarter the applicable rate per annum in
excess of the LIBOR Fixed Rate set forth in the table below:
| Ratio of Adjusted Debt to | Applicable | Unused Commitment | ||||||||
| LEVEL | EBITDAR | Margin | Fee % | |||||||
I
|
Less than or equal to 2.50 | 1.75 | % | 0.125 | % | |||||
II
|
Less than or equal to 3.00 but greater than 2.50 | 2.00 | % | 0.25 | % | |||||
III
|
Less than or equal to 4.00 but greater than 3.00 | 2.25 | % | 0.30 | % | |||||
IV
|
Greater than 4.00 | 3.75 | % | 0.75 | % | |||||
3. Section 1(d) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(d) “Base Rate” means the LIBOR Fixed Rate plus the Applicable Margin. For
purposes hereof, the Applicable Margin will be that shown as Level II in the table
contained in the definition of Applicable Margin for the period from June 30, 2006
until delivery by Borrower of the quarterly financial statements of the Borrower in
accordance with Section 17(b) for the Fiscal Quarter ending October 1, 2006.
Upon receipt of the Borrower’s quarterly financial statements for such Fiscal
Quarter, Lender shall determine if the results of such financial statements justify
resetting the Applicable Margin to another Level, and if so, then the Applicable
Margin shall be retroactively adjusted as of the first day of the then Fiscal
Quarter to Level I, II, III, or IV, as applicable, and shall continue to the last
day of such Fiscal Quarter. This will continue each Fiscal Quarter thereafter. If
Borrower fails to deliver the quarterly financial statements in accordance with time
limits set forth in Section 17(b), the Applicable Margin shall be retroactively
adjusted as of the first day of the then Fiscal Quarter to Level III.”
4. Section 1(cc) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
(cc) “LIBOR Fixed Rate” shall mean the rate of interest equal to the rate per annum
equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA LIBOR as
selected by the Lender from time to time) as determined for each Interest Rate
Change Date at approximately 11:00 a.m. London time two (2) Business Days prior to
the Interest Rate Change Date, for U.S. Dollar deposits (for delivery on the first
day of such interest period) with a term of one month, as adjusted from time to time
in the Lender’s sole discretion for reserve requirements, deposit insurance
assessment rates and other regulatory costs; if such rate is not available at such
time for any reason, then the rate for that interest period will be determined by
such alternate method as reasonably selected by the Lender. For purposes hereof,
“Business Day” shall mean each day other than a Saturday, a Sunday, or any holiday
on which commercial banks are closed for business; and “Interest Rate Change Date”
shall mean the first day of each one month period; provided, however, that if any
such day is not a Business Day, at Lender’s option, the Interest Rate Change Date
shall be the next succeeding Business Day. The interest rate shall change on each
Interest Rate Change Date.”
All references in the Loan Agreement to the defined term “LIBOR Daily Floating Rate” are hereby
deleted and replaced by the new defined term “LIBOR Fixed Rate.”
5. Section 1(ll) of the Loan Agreement is hereby deleted in its entirety and in lieu
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thereof shall read as follows:
“(ll) “Revolving Committed Amount” means the lesser of $10,000,000.00; or (ii)
such lesser amount as the Revolving Committed Amount may be reduced as set forth
herein.”
6. Section 1(mm) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(mm) “Revolving Loan Maturity Date” means July 1, 2009.”
7. Section 1(pp) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(pp) “Unused Commitment” means, for any period, the amount by which the face
principal amount of the $10,000,000.00 Revolving Loan exceeds the daily average sum
for such period of the outstanding aggregate principal amount of the revolving loans
made by Lender to Borrower under the $10,000,000.00 Revolving Loan.”
8. Section 2 of the Loan Agreement is hereby deleted in its entirety and in lieu there of
shall read as follows:
“2. Revolving Loan. Lender agrees to make a $10,000,000.00 revolving
line of credit loan to the Borrower at any time, and from time to time during the
period from the date hereof to, but not including, the Revolving Loan Maturity Date
(the “Revolving Loan”). Borrower may borrow, repay and reborrow the Revolving Loan
at any time, up to a maximum aggregate amount outstanding at any one time equal to
$10,000,000.00, provided that Borrower is not in default under any provision of this
Agreement or the Loan Documents, and provided that the borrowings hereunder do not
exceed the limitation on borrowings by Borrower set forth in Section 2(g) below.
(a) Use of Proceeds. Advances under the Revolving Loan shall be used
by Borrower to pay or reimburse itself for capital expenditures related to the
development of new restaurants and for general corporate purposes.
(b) Interest Rate. Prior to maturity, the principal amount outstanding
under the Revolving Loan shall bear interest at the Base Rate.
(c) Method of Borrowing for Revolving Loan. By no later than 11:00 a.m.
Central Standard Time, on the same day of the requested borrowing under the
Revolving Loan, the Borrower shall notify Lender of Borrower’s desire to borrow
under the Revolving Loan indicating the exact amount requested.
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(d) Funding of Revolving Loan. Upon Borrower’s notice to Lender of its
intent to borrow under the Revolving Loan pursuant to Section 2(c), the amount of
the requested Revolving Loan will then be made available to the Borrower by the
Lender by crediting the account of the Borrower on the books of such office of the
Lender, to the extent the amount of such request is available for borrowing.
(e) Payments. Payment of all obligations arising under the Revolving
Loan shall be made as follows:
(i) Interest and Fees. Interest on the outstanding principal balance
under the Revolving Loan shall be paid in arrears on the 1st day of each
calendar quarter, beginning on October 1, 2006. Also, on the 1st day of
each calendar quarter, an Unused Commitment fee shall be paid in arrears to Lender
in accordance with the per annum Unused Commitment fee percentage set forth in
section 1(b), multiplied by the Unused Commitment beginning on October 1, 2006.
(ii) Mandatory Prepayment. Borrower must immediately prepay any amount
by which the principal balance of the Revolving Loan exceeds $10,000,000.00 as
reduced by subsection 2(g) below.
(iii) All Amounts Due. All remaining principal, interest and expenses
outstanding under the Revolving Loan shall become due on the Revolving Loan Maturity
Date.
(f) Conversion to Term Loan. Subject to the provisions contained
herein, and provided that no Default has occurred and is continuing, , Borrower has
the option to make a written election to convert all or a portion of the then
outstanding balance of the Revolving Loan to a term loan at any time prior to May 1,
2009 (the “Term Loan”) provided, that the minimum outstanding principal amount to be
converted by Borrower shall be no less than $2,500,000.00. The written election must
be delivered to Lender at least thirty (30) days prior to the Revolving Loan
Maturity Date. Upon conversion, there will be a conversion fee equal to one-quarter
(1/4) of one percent (1%) of the then outstanding principal balance so converted.
The then unpaid principal balance so converted will be amortized over 60 months and
be repayable in sixty (60) equal monthly installments of principal with the first
principal payment due thirty (30) days following the conversion date. Interest will
continue to be paid monthly at the same time as the principal payment is due.
Interest shall accrue on the Note at the Base Rate.
(g) Reductions in Committed Amount. In any calendar year, Borrower may
finance up to $750,000.00 of its capital expenditures through one or more equipment
leases with an affiliate of Lender on terms and conditions to be negotiated between
Borrower and such affiliate. Borrower acknowledges that Lender is not extending any
commitment for financing on behalf of any such affiliates. To the extent the
Borrower utilizes such option, the maximum amount
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of the Revolving Loan from time to time will be reduced dollar for dollar by the
amount then outstanding in respect of such leases.”
9. Section 6(b) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(b) Representations and Warranties. The representations and
warranties made by the Borrower in any Loan Document are true and correct in all
material respects at and as if made as of such date except for changes permitted by
this Agreement, as amended from time to time.”
10. Section 33(d) of the Loan Agreement is hereby deleted in its entirety and in lieu
thereof shall read as follows:
“(d) Reorganization. Enter into any agreement to merge, consolidate
or otherwise reorganize or recapitalize, or enter into any agreement to acquire
stock or assets having a value in excess of $1,000,000.00, provided, that this
covenant shall not restrict the Borrower’s ability to purchase or lease real
property for construction of a new restaurant(s), nor shall it restrict the
Borrower’s ability to purchase or lease existing buildings and improvements for a
new restaurant(s).”
11. Section 33(h) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(h) Management Change. Change the Borrower’s chief executive officer
and/or chief financial officer without the prior consent of Lender, which consent
shall not be unreasonably conditioned, withheld, or delayed, provided, that this
covenant shall not restrict Borrower’s ability to terminate the employment of its
chief executive officer and/or chief financial officer for cause and shall not apply
to any change in management that occurs outside the control of the Borrower.”
12. Section 33 of the Loan Agreement is hereby amended to add a new subsection (k) which shall
read as follows:
“(k) Negative Pledge. Other than Permitted Liens, create or permit any
lien, encumbrance, charge, or security interest of any kind to exist on that certain
real property described on Schedule 33(k) attached hereto, nor transfer, sell,
assign, or in any manner dispose of such real property or any interest therein,
including, but not limited to, entering into a negative pledge agreement with
another party, except for easements, rights of way and similar rights granted in
connection with the provision of utilities to such real property or in connection
with any construction on such real property.”
13. Schedule 33(k) attached to this Second Amendment is hereby added as Schedule 33(k)
to the Loan Agreement.
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14. Section 34(b) of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“(b) Maximum Adjusted Debt to EBITDAR Ratio. The Maximum Adjusted Debt
to EBITDAR Ratio measured at the end of each fiscal quarter computed on a trailing
four quarters basis shall be less than 3.50 to 1.00. For purposes hereof, the
Maximum Adjusted Debt to EBITDAR Ratio is defined as the ratio of (i)total Funded
Debt minus Invested Funds plus (rent expense multiplied by 8), to (ii) EBITDAR. For
purposes hereof, Invested Funds is defined as short term, liquid investments such as
money markets with maturities less than one year in length, and cash and cash
equivalents; provided that investments into any joint venture or any endeavor not
consistent with the Borrower’s core restaurant operating business without the
written consent of Lender shall be specifically excluded. For purposes hereof,
EBITDAR is defined as the sum of Net Income for such period (excluding the effect of
any extraordinary or non-recurring gains or losses outside of the ordinary course of
business) plus an amount which, in the determination of net income for such period
has been deducted for (i) interest expense for such period; (ii) total federal,
state, foreign or other income taxes for such period; (iii) all depreciation and
amortization for such period; and (iv) rent expense, all as determined in accordance
with GAAP.”
15. Section 40 of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
shall read as follows:
“40. Dispute Resolution Provision. This paragraph, including the
subparagraphs below, is referred to as the “Dispute Resolution Provision.” This
Dispute Resolution Provision is a material inducement for the parties entering into
this agreement.
(a) This Dispute Resolution Provision concerns the resolution of any
controversies or claims between the parties, whether arising in contract, tort or by
statute, including but not limited to controversies or claims that arise out of or
relate to: (i) this agreement (including any renewals, extensions or modifications);
or (ii) any document related to this agreement (collectively a “Claim”). For the
purposes of this Dispute Resolution Provision only, the term “parties” shall include
any parent corporation, subsidiary or affiliate of the Lender involved in the
servicing, management or administration of any obligation described or evidenced by
this agreement.
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S.
Code) (the “Act”). The Act will apply even though this agreement provides that it
is governed by the law of a specified state.
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(c) Arbitration proceedings will be determined in accordance with the Act, the
then-current rules and procedures for the arbitration of financial services disputes
of the American Arbitration Association or any successor thereof (“AAA”), and the
terms of this Dispute Resolution Provision. In the event of any inconsistency, the
terms of this Dispute Resolution Provision shall control. If AAA is unwilling or
unable to (i) serve as the provider of arbitration or (ii) enforce any provision of
this arbitration clause, the Lender may designate another arbitration organization
with similar procedures to serve as the provider of arbitration.
(d) The arbitration shall be administered by AAA and conducted in Nashville,
Tennessee. All Claims shall be determined by one arbitrator; however, if Claims
exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims
shall be decided by three arbitrators. All arbitration hearings shall commence
within ninety (90) days of the demand for arbitration and close within ninety (90)
days of commencement and the award of the arbitrator(s) shall be issued within
thirty (30) days of the close of the hearing. However, the arbitrator(s), upon a
showing of good cause, may extend the commencement of the hearing for up to an
additional sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to any
court having jurisdiction to be confirmed and have judgment entered and enforced.
(e) The arbitrator(s) will give effect to statutes of limitation in determining
any Claim and may dismiss the arbitration on the basis that the Claim is barred. For
purposes of the application of any statutes of limitation, the service on AAA under
applicable AAA rules of a notice of Claim is the equivalent of the filing of a
lawsuit. Any dispute concerning this arbitration provision or whether a Claim is
arbitrable shall be determined by the arbitrator(s), except as set forth at
subparagraph (h) of this Dispute Resolution Provision. The arbitrator(s) shall have
the power to award legal fees pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or
non-judicial foreclosure against any real or personal property collateral; (iii)
exercise any judicial or power of sale rights, or (iv) act in a court of law to
obtain an interim remedy, such as but not limited to, injunctive relief, writ of
possession or appointment of a receiver, or additional or supplementary remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require submittal of
the Claim to arbitration.
(h) Any arbitration or trial by a judge of any Claim will take place on an
individual basis without resort to any form of class or representative action (the
“Class Action Waiver”). Regardless of anything else in this Dispute Resolution
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Provision, the validity and effect of the Class Action Waiver may be determined
only by a court and not by an arbitrator. The parties to this Agreement acknowledge
that the Class Action Waiver is material and essential to the arbitration of any
disputes between the parties and is nonseverable from the agreement to arbitrate
Claims. If the Class Action Waiver is limited, voided or found unenforceable, then
the parties’ agreement to arbitrate shall be null and void with respect to such
proceeding, subject to the right to appeal the limitation or invalidation of the
Class Action Waiver. The Parties acknowledge and agree that under no circumstances
will a class action be arbitrated.
(i) By agreeing to binding arbitration, the parties irrevocably and voluntarily
waive any right they may have to a trial by jury in respect of any Claim.
Furthermore, without intending in any way to limit this agreement to arbitrate, to
the extent any Claim is not arbitrated, the parties irrevocably and voluntarily
waive any right they may have to a trial by jury in respect of such Claim. This
waiver of jury trial shall remain in effect even if the Class Action Waiver is
limited, voided or found unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION
OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS
AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT
PERMITTED BY LAW.”
The parties to this Second Amendment agree that the foregoing arbitration provision is
intended to supersede and replace any conflicting arbitration provisions set forth in any
Loan Document executed prior to the date hereof.
16. Borrower hereby acknowledges that the Revolving Loan is secured by the Lender’s security
interest and liens in certain real property located in Lyndhurst, Ohio and Northbrook, Illinois, as
evidenced by that certain Open End Mortgage Deed, Security Agreement and Assignment of Rents and
Leases made by X. Xxxxxxxxx’x Corporation in favor of Lender dated May 12, 2003 and of record as
instrument no. 200305230500, Cuyahoga County, Ohio Recorder’s Office; and that certain Mortgage
dated May 12, 2003 made by X. Xxxxxxxxx’x Restaurants, Inc. in favor of Lender and of record as
Instrument Xx. 0000000000, Xxxx Xxxxxx, Xxxxxxxx, Recorder of Deeds. Furthermore, concurrent with
the execution of this Second Amendment, Borrower has entered into that certain Negative Pledge
Agreement whereby Borrower has agreed to refrain from granting a security interest or lien in
certain real property owned by Borrower as more particularly set forth therein.
17. Borrower shall pay all costs incidental to this Second Amendment, including, but not
limited to, the fees and expenses of Lender’s counsel.
18. Borrower warrants and represents that (a) the Loan Documents are valid, binding and
enforceable against the Borrower according to their terms; (b) all warranties and representations
made by Borrower in the Loan Documents are hereby again warranted and represented to be true as of
the date hereof, except with regard to matters expressed only as of a specific time or which have
been supplemented or superseded by disclosures to Lender in writing and (c) no default presently
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exists under the Loan Documents. Borrower further acknowledges that Borrower’s obligations
evidenced by the Loan Documents are not subject to any counterclaim, defense or right of set-off
and Borrower does hereby release Lender from any claim, known or unknown, that Borrower may have
against Lender as of the execution of this Second Amendment.
19. As amended hereby, the Loan Agreement remains in full effect, and all agreements among the
parties with respect to the subject hereof are represented fully in this Second Amendment and the
other written documents among the parties. The provisions of the Loan Agreement regarding the
arbitration of disputes and other general matters also govern this Second Amendment. The validity,
construction and enforcement hereof shall be determined according to the substantive laws of the
State of Tennessee.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to be effective the day
and year first above written.
| BANK OF AMERICA, N.A. | X. XXXXXXXXX’X CORPORATION | |||||||||
By:
|
/s/ Xxxxxx X. Xxxxxxxxx, Xx.
|
By: | /s/ R. Xxxxxxx Xxxxx
|
|||||||
Title:
|
SVP | Title: | Vice President and Chief Financial Officer | |||||||
| X. XXXXXXXXX’X RESTAURANTS, INC. | ||||||||||
| By: | /s/ R. Xxxxxxx Xxxxx
|
|||||||||
| Title: | Vice President | |||||||||
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SCHEDULE 33(k)
REAL PROPERTY SUBJECT TO NEGATIVE PLEDGE
| 1. | 000 Xxxx Xxxxx Xxxxxxx, Xxxxx, Xxxxxxxxxxxx Xxxxxx, XX 00000 | |
| 2. | 0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx Xxxxxx, XX 00000 | |
| 3. | 0000 Xxxx Xxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxx Xxxxxx, XX 00000 | |
| 4. | 0000 Xxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx Xxxxxx, XX 00000 |
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