EXHIBIT 10.4.1
[FIRST UNION LOGO]
LOAN AGREEMENT
FIRST UNION NATIONAL BANK
000 XXXXX XXXX
XXXXXX, XXX XXXXXX 00000
(Hereinafter referred to as the "Bank")
CHEFS INTERNATIONAL, INC
00 XXXXXXXX
XXXXX XXXXXXXX XXXXX, XXX XXXXXX 00000
(Individually and collectively "Borrower)
This Loan Agreement ("Agreement) is entered into September 7, 2001, by and
between Bank and Borrower.
This Agreement amends and restates in its entirety that certain Loan Agreement
dated June 23, 2000 and applies to the loan or loans (individually and
collectively, the "Loan') evidenced by one or more promissory notes dated
September 7, 2001 or other notes subject hereto, as modified from time to time
(whether one or more, the "Note") and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Borrower or any guarantor, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the Loan Documents) on any of Borrower's or any guarantors assets, or (iii)
give cause for the acceleration of any obligations of Borrower or any guarantor
to any other creditor. ASSET OWNERSHIP. Borrower has good and marketable title
to all of the properties and assets reflected on the balance sheets and
financial statements supplied Bank by Borrower, and all such properties and
assets are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by Borrower in
writing and approved by Bank ("Permitted Liens"). To Borrower's knowledge, no
default has occurred under any Permitted Liens and no claims or interests
adverse to Borrower's present rights in its properties and assets have arisen.
DISCHARGE OF LIENS AND TAXES. Borrower has duly filed, paid and/or discharged
all taxes or other claims which may become a lien on any of its property or
assets, except to the extent that such items are being appropriately contested
in good faith and an adequate reserve for the payment thereof is being
maintained. SUFFICIENCY OF CAPITAL. Borrower is not, and after consummation of
this Agreement and after giving effect to all indebtedness incurred and liens
created by Borrower in connection with the Note and any other Loan Documents,
will not be, insolvent within the meaning of 11 U.S.C. ss. 101 (32). COMPLIANCE
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WITH LAWS. Borrower is in compliance in all respects with all federal, state and
local laws, rules and regulations applicable to its properties, operations,
business, and finances, including, without limitation, any federal or state laws
relating to liquor (including 18 U.S.C. ss. 3617, et seq.) or narcotics
(including 21 U.S.C. ss. 801, et seq.) and/or any commercial crimes; all
applicable, federal, state and local laws and regulations intended to protect
the environment; and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), if applicable. ORGANIZATION AND AUTHORITY. Each corporate or
limited liability company Borrower and/or guarantor, as applicable, is duly
created, validly existing and in good standing under the laws of the state of
its organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted. Each
corporate or limited liability company Borrower and/or guarantor, as applicable,
is duly qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. NO LITIGATION. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing, and approved by Bank
AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: ACCESS TO BOOKS AND RECORDS. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower at Bank shall reasonably require, and allow Bank to make
copies thereof at Bank's expense. BUSINESS CONTINUITY. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. CERTIFICATE OF FULL COMPLIANCE FROM ACCOUNTANT.
Deliver to Bank, with the financial statements required herein, a certification
by Borrower's independent certified public accountant that Borrower is in full
compliance with the Loan Documents. COMPLIANCE WITH OTHER AGREEMENTS. Comply
with all terms and conditions contained in this Agreement, and any other Loan
Documents, and swap agreements, if applicable, as defined in the 11 U.S.C. ss.
101. ESTOPPEL CERTIFICATE. Furnish, within 15 days after request by Bank, a
written statement duly acknowledged of the amount due under the Loan and whether
offsets or defenses exist against the Obligations. INSURANCE. Maintain adequate
insurance coverage with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily insured against by companies
of established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. MAINTAIN PROPERTIES.
Maintain, preserve and keep its property in good, repair, working order and
condition, making all needed replacements, additions and improvements thereto,
to the extent allowed by this Agreement. NON-DEFAULT CERTIFICATE FROM BORROWER.
Deliver to Bank, with the Financial Statements required below, a certificate
signed by Borrower, in the form attached hereto as Exhibit A, if Borrower is an
individual, or by a principal financial officer of Borrower warranting that no
"Default' as specified in the Loan Documents nor any event which, upon the
giving of notice or lapse of time or both, would constitute such a Default, has
occurred and demonstrating Borrower's compliance with the financial covenants
contained herein. NOTICE OF DEFAULT AND OTHER NOTICES. (A) NOTICE OF DEFAULT.
Furnish to Bank immediately upon becoming aware of the existence of any
condition or event which constitutes a Default (as defined in the Loan
Documents) or any event which, upon the giving of notice or lapse of time or
both, may become a Default, written notice specifying the nature and period of
existence thereof and the action which Borrower is taking or proposes to take
with respect thereto. (b) OTHER NOTICES. Promptly notify Bank in writing of (i)
any material adverse change in its financial condition or its business; (ii) any
default under any material agreement, contract or other instrument to which it
is a party or by which any of its properties are bound, or any acceleration of
the maturity of any indebtedness owing by Borrower; (iii) any material adverse
claim against or affecting Borrower or any part of its properties; (iv) the
commencement of, and any material determination in, any litigation with any
third party or any proceeding before any governmental agency or unit affecting
Borrower; and (v) at least 30 days prior thereto, any change in Borrower's name
or address as shown above, and/or any change in Borrower's structure. OTHER
FINANCIAL INFORMATION. Deliver promptly such other information regarding the
operation, business affairs, and financial condition of Borrower which Bank may
reasonably request.
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PAYMENT OF DEBTS. Pay and discharge when due, and before subject to penalty or
further charge, and otherwise satisfy before maturity or delinquency, all
obligations, debts, taxes, and liabilities of whatever nature or amount, except
those which Borrower in good faith disputes. REPORTS AND PROXIES. Deliver to
Bank, promptly, a copy of all financial statements, reports, notices, and proxy
statements, sent by Borrower to stockholders, and all regular or periodic
reports required to be filed by Borrower with any governmental agency or
authority.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: CHANGE IN FISCAL YEAR. Change its fiscal
year. CHANGE OF CONTROL. Borrower shall not make a material change of ownership
that effectively changes control of Borrower or changes the current management
structure and personnel. ENCUMBRANCES. Create, assume, or permit to exist any
mortgage, security deed, deed of trust, pledge, lien, charge or other
encumbrance on any of its assets, whether now owned or hereafter acquired, other
than: (i) security interests required by the Loan Documents; (ii) liens for
taxes contested in good faith; (iii) liens accruing by law for employee
benefits; (iv) Permitted Liens; or (v) indebtedness not to exceed $150,000.00 in
any fiscal year for the purpose of purchasing machinery and equipment.
GUARANTEES. Guarantee or otherwise become responsible for obligations of any
other person or persons other than the endorsement of checks and drafts for
collection in the ordinary course of business. DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. GOVERNMENT INTERVENTION. Permit the assertion or
making of any seizure, vesting or intervention by or under authority of any
government by which the management of Borrower or any guarantor is displaced of
its authority in the conduct of its respective business or its such business is
curtailed or materially impaired. JUDGMENT ENTERED. Permit the entry of any
monetary judgment or the assessment against, the filing of any tax lien against,
or the issuance of any writ of garnishment or attachment against any property of
or debts due Borrower in an amount in excess of $50,000.00 which is not
discharged or execution is not stayed within 30 days of entry. PREPAYMENT OF
OTHER DEBT. Retire any long-term debt entered into prior to the date of this
Agreement at a date in advance of its legal obligation to do so. RETIRE OR
REPURCHASE CAPITAL STOCK. Retire or otherwise acquire any of its capital stock,
with the exception of 400,000 shares at market value through May 15, 2002
approved under waiver letter dated May 15, 2000, and 270,000 shares at $2.10 per
share (above market) as approved under waiver letter dated August 22,2001.
ANNUAL FINANCIAL STATEMENTS Borrower shall deliver to Bank, within 120 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If audited statements are required, all such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Borrower or any
other person or entity. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval. If audited statements are required, Borrower's accountant shall
provide Bank with a written acknowledgment of the Bank's reliance upon the
statements in accordance with N.J.S. 2A:53A-25.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank compiled
semi-annually financial statements including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules, as soon as available and in any event within 60 days after the close
of each such period; all in reasonable detail and prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year. Such statements shall be certified as to their
correctness by a principal financial officer of Borrower and in each case, if
audited statements are required, subject to audit and year-end adjustments.
FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
hereof until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, and the Tangible Net Worth covenant shall be
calculated on a consolidated basis, using the financial information for
Borrower,
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its subsidiaries, affiliates and its holding or parent company, as applicable:
FUNDS FLOW COVERAGE RATIO. Borrower shall, at all times, maintain a Funds Flow
Coverage Ratio of not less than 1.20 to 1.00, measured at fiscal year-end.
"Funds Flow Coverage Ratio" shall mean the sum of net profit, depreciation,
amortization and interest expense minus all dividends and Maintenance Capital
Expenditures divided by the sum of all current maturities of long-term debt,
current maturities of capital lease obligations and interest expense.
"Maintenance Capital Expenditures" is defined as those expenditures required on
an annual basis to maintain existing restaurant locations. TANGIBLE NET WORTH.
Borrower shall, from closing until the day before fiscal year-end 2002, maintain
an Effective Tangible Net Worth of not less than $12,500,000.00, measured
semi-annually. At all times thereafter, the minimum required Effective Tangible
Net Worth shall increase by not less than $50,000.00 each fiscal year-end.
"Tangible Net Worth" shall mean total assets minus total liabilities. For
purposes of this computation, the aggregate amount of any intangible assets of
Borrower including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, brand names and any amounts
due from officers, affiliates and/or stockholders, shall be subtracted from
total assets, and total liabilities shall exclude debt fully subordinated to
Bank on terms and conditions acceptable to Bank. DEPOSIT RELATIONSHIP. Borrower
shall maintain its primary depository account with Bank. REQUIRED HEDGE.
Borrower shall hedge the Loan's floating interest expense for the full term of
the Loan by maintaining an interest rate swap, cap or collar with Bank or other
counterparty acceptable to Bank in a notional amount equal to the then principal
balance of the Loan and providing for a fixed rate satisfactory to Bank, and
containing such other items and conditions as shall be reasonably acceptable to
Bank. SENIOR LIABILITIES TO EFFECTIVE TANGIBLE NET WORTH RATIO. Borrower shall,
at all times, maintain a ratio of Senior Liabilities to Effective Tangible Net
Worth of not more than 0.50 to 1.00, measured semi-annually. "Senior
Liabilities" shall mean the sum of total liabilities, including capitalized
leases and all reserves for deferred taxes and other deferred sums appearing on
the liabilities side of a balance sheet, in accordance with generally accepted
accounting principles applied on a consistent basis, excluding debt fully
subordinated to Bank on terms and conditions acceptable to Bank. "Effective
Tangible Net Worth" shall mean total assets minus Senior Liabilities. For
purposes of this computation, the aggregate amount of any intangible assets of
Borrower including without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, brand names and any amounts
due from officers, affiliates and/or stockholders, shall be subtracted from
total assets. "Total Liabilities" shall mean all liabilities of Borrower,
including capitalized leases and all reserves for deferred taxes and other
deferred sums appearing on the liabilities side of a balance sheet of Borrower,
in accordance with generally accepted accounting principles applied on a
consistent basis. LIQUIDITY REQUIREMENT. Borrower shall, at all times, maintain
Liquid Assets of not less than $500,000.00. "Liquid Assets" shall mean the sum
of all cash, time deposits and marketable securities.
CONDITIONS PRECEDENT. The obligations of Bank to make the loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
CHEFS INTERNATIONAL, INC
By: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
-----------------------------------
Xxxxxxx X. Xxxxxxx, President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx, Senior Vice President
EXHIBIT A
NON-DEFAULT CERTIFICATE
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EXHIBIT A
NON-DEFAULT CERTIFICATE
In accordance with the terms of the Loan Documents dated September 7, 2001 by
and between First Union National Bank and Chefs International, Inc ("Borrower"),
I hereby certify that:
1. I am a principal financial officer of Borrower;
2. The enclosed financial statements are prepared in accordance with generally
accepted accounting principles;
3. No Default (as defined in the Loan Documents) or any event which, upon the
giving of notice or lapse of time or both, would constitute such a Default,
has occurred.
4. Borrower is in compliance with the Financial Covenant(s) set forth in the
Loan Documents, as demonstrated by the calculations contained in the
Covenant Compliance Certificate attached hereto as Schedule 1.
/s/ Xxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
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SCHEDULE 1
COVENANT COMPLIANCE CERTIFICATE
Borrower Name: Chefs International, Inc
For the fiscal _______________ ended _______________
ALL CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN
IN THE LOAN DOCUMENTS.
COVENANT ACTUAL REQUIRED
-------- ------ --------
FUNDS FLOW COVERAGE RATIO NOT LESS THAN 1.20 TO 1.00
(a) net income ______
(b) depreciation ______
(c) Amortization ______
(d) interest expense ______
(e) dividends ______
(f) Maintenance Capital Expenditures ______
(g) CMLTD*
(h) CMCLO**
the sum of (a) plus (b) plus (c) plus (d)
minus (e) minus (f) divided by the
sum of (g) plus (h) plus (d) equals
Funds Flow Coverage Ratio of ______ COMPLIANCE? YES NO
TANGIBLE NET WORTH [$12,500,000.00, PLUS $50,000.00
(a) total assets ______ EACH FISCAL YEAR-END THEREAFTER]
(b) intangible assets ______
(c) Total Liabilities ______
(d) CAOAS*** ______
the sum of (a) minus(b) minus (c)
minus (d) equals Tangible Net Worth of _____ COMPLIANCE? YES NO
LIQUIDITY REQUIREMENT (Not Pledged) NOT LESS THAN $500,000.00
(a) cash in Banks ______
(b) time deposit ______
(c) marketable securities (US Gov't) ______
Sum of (a) plus (b) plus (c)
equals Liquid Assets of: ______ COMPLIANCE? YES NO
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* Current Maturities of Long Term Debt
** Current Maturities of Capital Lease Obligations
*** Current Amounts due from Officers, Affiliates, and/or Stockholders
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SENIOR LIABILITIES TO EFFECTIVE
TANGIBLE NET WORTH RATIO NOT MORE THAN .50 TO 1.00
(a) Senior Liabilities ______
(b) total assets ______
(c) intangible assets ______
(d) CAOAS* ______
(a) divided by the sum of (b) minus
(a) minus (c) equals Senior
Liabilities to Effective
Tangible Net Worth of ______ COMPLIANCE? YES NO
----------
* Current Amounts due from Officers, Affiliates, and/or Stockholders
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