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EXHIBIT 10
[Conformed Copy]
AMENDMENT NO. 2
This Amendment No. 2 dated as of June 30, 1997 ("Agreement"), is
among Casa Ole Restaurants, Inc., a Texas corporation ("Borrower") and
NationsBank of Texas, N.A. ("Bank").
INTRODUCTION
The Borrower and the Bank are parties to the Credit Agreement dated as
of July 10, 1996, as amended by Amendment No. 1 dated as of January 13, 1997
(as modified, the "Credit Agreement"). The Borrower and the Bank have agreed
to make certain amendments to the Credit Agreement in connection with the
Borrower's request to enter into certain transactions.
THEREFORE, in connection with the foregoing and for other good and
valuable consideration, the Borrower and the Bank hereby agree as follows:
Section 1. Definitions; References. Unless otherwise defined in this
Agreement, each term used in this Agreement which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement.
Section 2. Amendment.
(a) Section 1.1 of the Credit Agreement is amended by deleting the
following definitions in their entirety: "Beaumont Harken Acquisitions,"
"Beaumont Harken Acquisition A," and "Beaumont Harken Acquisition B."
(b) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Borrowing Base" in its entirety with the following:
"Borrowing Base" means, at any date of its determination, an
amount equal to the product of (a) 2.25 and (b) the consolidated
EBITDA of the Borrower for the four fiscal quarters then most recently
ended; provided that following consummation of an acquisition by the
Borrower, for the purposes of determining the Borrowing Base, the
EBITDA of the Borrower shall be calculated by the Bank to include, on
a proforma basis, the combined results
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of the Borrower and the assets purchased in connection with such
acquisition for such period, but without any increase for
non-recurring items of expense. The Bank shall determine the
Borrowing Base based upon the most recent financial statements dated
as of the end of a fiscal quarter delivered to the Bank pursuant to
Section 5.2(b), together with any Bank approved financial statements
related to any acquisitions. If such Borrower financial statements
are delivered when required hereunder, any adjustment to the Borrowing
Base shall become effective on the 45th day following the last day of
the applicable fiscal quarter. If such Borrower financial statements
are not delivered when required hereunder, the Borrowing Base shall be
set by the Bank at any level from such 45th day until three days after
such Borrower financial statements are received by the Bank.
(c) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Credit Documents" in its entirety with the following:
"Credit Documents" means this Agreement, the Notes, the Letter
of Credit Documents, the Pledge Agreement, the Guaranty, and each
other agreement, instrument, or document executed at any time in
connection with this Agreement.
(d) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Guidance Loan Maturity Date" in its entirety with the
following:
"Guidance Loan Maturity Date" means, with respect to each
Guidance Loan, six years from the date of funding such Advance, as set
forth in the Guidance Loan Note executed in connection with such
Guidance Loan.
(e) Section 1.1 of the Credit Agreement is amended by replacing
subparagraph (b) of the definition of "Permitted Debt" in its entirety with the
following:
(b) Debt in the form of purchase money indebtedness in an
aggregate outstanding amount not to exceed $1,000,000; provided,
however, that the Borrower may not incur such purchase money
indebtedness if a Default or Event of Default is continuing or if
entering into such purchase money indebtedness would cause a Default
or Event of Default;
(f) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Revolving Loan Commitment" in its entirety with the
following:
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"Revolving Loan Commitment" means $7,000,000 prior to the
Autoborrow Loan Activation Date and $6,500,000 thereafter; provided
that prior to the Bank's receipt of the items listed in Section 5.20,
no greater than $4,600,000 of such Revolving Loan Commitment shall be
available to be advanced to the Borrower.
(g) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Revolving Loan Commitment Termination Date" in its entirety
with the following:
"Revolving Loan Commitment Termination Date" means May 31,
1999.
(h) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Revolving Loan Maturity Date" in its entirety with the
following:
"Revolving Loan Maturity Date" means May 31, 2003.
(i) Section 1.1 of the Credit Agreement is amended by replacing
the definition of "Revolving Loan Note" in its entirety with the following:
"Revolving Loan Note" means the $7,000,000 Promissory Note
(Revolving Credit) dated as of June 30, 1997, made by the Borrower
payable to the order of the Bank evidencing the indebtedness of the
Borrower to the Bank resulting from Revolving Loan Advances made by
the Bank to the Borrower.
(j) Section 1.1 of the Credit Agreement is amended by inserting in
appropriate alphabetical order the following definition:
"Letter of Credit Termination Date" means May 31, 2000.
(k) Section 1.1 of the Credit Agreement is amended by inserting in
appropriate alphabetical order the following definition:
"Monterey's Acquisition" means the acquisition by the Borrower
of the stock of Monterey's Acquisition Corp. on substantially the
terms disclosed to the Bank in writing prior to the date of this
Agreement.
(l) Section 1.1 of the Credit Agreement is amended by inserting in
appropriate alphabetical order the following definition:
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"Pledge Agreement" means the Pledge Agreement dated as of June
30, 1997, made by the Borrower in favor of the Bank, pledging the
stock of Monterey's Acquisition Corp. to the Bank as security for the
Credit Obligations.
(m) Sections 2.3 (a) and (c) of the Credit Agreement are amended
by deleting the term "Revolving Loan Commitment Termination Date" each time it
appears therein, and inserting in lieu thereof the term "Letter of Credit
Termination Date."
(n) Section 2.4 (d) of the Credit Agreement is amended by
replacing the first sentence of such section in its entirety with the following
sentence:
The Borrower shall pay to the Bank the outstanding principal
amount of each Guidance Loan in equal monthly installments of 1/72nd
of the outstanding principal amount of such Guidance Loan.
(o) Section 5.2(d)(i) of the Credit Agreement is amended by
replacing such section in its entirety with the following:
(i) As soon as available and in any event not later than
45 days after the end of each fiscal quarter, for each of Casa Ole,
Monterey's, and Tortuga, a report setting forth in reasonable detail
sales volume, gross profit, and pre-tax operating profit (before and
after occupancy expenses) for such concept for such fiscal quarter (A)
restaurants in operation for more than 48 months and (B) for
restaurants in operation for less than 48 months, including the number
of restaurants in each of categories (A) and (B); and
(p) Section 5.3 of the Credit Agreement is amended by adding the
following sentences to the end of such section:
In addition, the Borrower shall and shall cause each Credit Party to
permit the Bank to visit the corporate headquarters of such Person and
inspect same-store sales and financial material of such Person with
the Chief Financial Officer of the Borrower; provided that the
Borrower is given at least five Business Days' advance notice thereof.
The Bank may exercise such inspection right a maximum of two times
during any fiscal year of the Borrower, and the Bank shall not remove
any copies or extracts of the material inspected or any notes related
thereto from the applicable retail location.
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(q) Section 5.4 of the Credit Agreement is amended by replacing
such section in its entirety with the following:
Section 5.4 Use of Proceeds. The proceeds of the
Autoborrow Loan Advances and the Revolving Loan Advances shall be used
by the Credit Parties only for general corporate and working capital
purposes, including without limitation the opening of new restaurants
owned by the Borrower, and for the Monterey's Acquisition. The
proceeds of the Guidance Loan Advances shall be used by the Borrower
only for the financing of the Monterey's Acquisition. The Borrower
shall not, directly or indirectly, use any part of such proceeds for
any purpose which violates, or is inconsistent with, Regulations G, T,
U, or X of the Board of Governors of the Federal Reserve System.
(r) Section 5.5(a) of the Credit Agreement is amended by replacing
such section in its entirety with the following:
(a) Leverage Ratio. The Borrower shall not permit the
ratio of (A) the consolidated total liabilities of the Borrower less
the Subordinated Debt of the Borrower to (B) the consolidated Tangible
Net Worth of the Borrower plus the Subordinated Debt of the Borrower
to exceed the following ratios for the following periods:
Period Leverage Ratio
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June 30, 1997, through
March 30, 1998 2.50 to 1.00
March 31, 1998, through
December 30, 1998 2.25 to 1.00
December 31, 1998, through
June 29, 1999 2.00 to 1.00
June 30, 1999, and
thereafter 1.75 to 1.00
(s) Section 5.5 of the Credit Agreement is amended by inserting in
appropriate alphabetical order the following subparagraph (c):
(c) Tangible Net Worth. On the date on which the
Monterey's
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Acquisition is consummated, the Borrower shall not permit the
consolidated Tangible Net Worth of the Borrower to be less than
$5,250,000.
(t) Section 5.10 of the Credit Agreement is amended by replacing
such section in its entirety with the following:
5.10 Distributions. The Borrower shall not (a) declare
or pay any dividends; (b) purchase, redeem, retire, or otherwise
acquire for value any of such Person's capital stock now or hereafter
outstanding or make any distribution of assets to such Person's
stockholders as such, whether in cash, assets, or in obligations of
such Person; (c) allocate or otherwise set apart any sum for the
payment of any dividend or distribution on, or for the purchase,
redemption, or retirement of, any shares of such Person's capital
stock; or (d) make any other distribution by reduction of capital or
otherwise in respect of any shares of such Person's capital stock.
(u) Section 5.13(b) of the Credit Agreement is amended by
replacing such section in its entirety with the following:
(b) Without the prior written consent of the Bank, the
Borrower shall not and shall not permit any other Credit Party to make
any Capital Expenditure or Acquisition Expenditure (exclusive of
Capital Expenditures and Acquisition Expenditures related to the
Monterey's Acquisition in an amount not to materially exceed
$11,750,000) that would:
(i) cause the sum of the Capital Expenditures and
the Acquisition Expenditures of the Credit Parties to exceed
$10,000,000 during any fiscal year of the Borrower;
(ii) for any single acquisition, cause the
Acquisition Expenditures and Capital Expenditures incurred in
connection therewith (exclusive of consideration in the form of common
stock of the Borrower) to exceed 25% of the Borrower's consolidated
Tangible Net Worth as of the end of the previous fiscal quarter of the
Borrower without the prior written consent of the Bank; or
(iii) cause the sum of the Capital Expenditures and
the Acquisition Expenditures incurred by the Credit Parties in
connection with acquisitions (exclusive of consideration in the form
of common stock of the Borrower) during any fiscal year of the
Borrower to exceed 50% of the
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Borrower's consolidated Tangible Net Worth as of the beginning of such
fiscal year without the prior written consent of the Bank.
(v) Article 5 of the Credit Agreement is amended by inserting as
Section 5.20 the following:
5.20 Post-Closing Items. The Borrower shall deliver all
of the following items to the Bank prior to July 31, 1997: (a)
evidence, reasonably acceptable to the Bank, that all Debt of
Monterey's Acquisition Corp. to Finova Capital Corporation has been
paid in full and all security therefor has been released; (b) the
Pledged Securities (as such term is defined in the Pledge Agreement),
and (c) an opinion of counsel to the Borrower, reasonably acceptable
to the Bank, regarding the enforceability of Amendment No.2 to this
Agreement, the Notes, and the Pledge Agreement, and certain other
matters in connection therewith.
(w) Section 6.1 of the Credit Agreement is amended by inserting as
subparagraphs (i) and (j) the following:
(i) Pledge Agreement. The Pledge Agreement shall at any
time and for any reason cease to create the Lien on the property
purported to be subject to such agreement in accordance with the terms
of such agreement, or cease to be in full force and effect, or shall
be contested by any party thereto.
Section 3. Representations and Warranties. The Borrower represents
and warrants that (a) the execution, delivery and performance of this Agreement
are within the corporate power and authority of the Borrower and have been duly
authorized by appropriate proceedings, (b) this Agreement constitutes legal,
valid, and binding obligations of the Borrower enforceable in accordance with
their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally and general principles of equity, and (c) upon the effectiveness of
this Agreement and the amendment of the Credit Documents as provided for
herein, no Event of Default shall exist under the Credit Documents and there
shall have occurred no event which with notice or lapse of time would become an
Event of Default under the Credit Documents, as amended.
Section 4. Effect on Credit Documents. Except as amended
herein, the Credit Agreement and all other Credit Documents remain in full
force and effect as originally executed. Nothing herein shall act as a waiver
of the Bank's rights under the Credit Documents as amended, including the
waiver of any default or event of default, however denominated. The Borrower
must continue to comply with the terms of the Credit
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Documents, as amended. This Agreement is a Credit Document for the purposes of
the provisions of the other Credit Documents. Without limiting the foregoing,
any breach of representations, warranties, and covenants under this Agreement
may be a default or event of default under other Credit Documents.
Section 5. Effectiveness. This Agreement shall become effective and
the Credit Agreement shall be amended as provided in this Agreement effective
on the date first set forth above when the Borrower and the Bank shall have
duly and validly executed originals of this Agreement and the Borrower shall
have delivered the same to the Bank.
Section 6. Miscellaneous. The miscellaneous provisions of the
Credit Agreement apply to this Agreement. This Agreement may be signed in any
number of counterparts, each of which shall be an original.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
BORROWER:
CASA OLE RESTAURANTS, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Vice President and
Chief Financial Officer
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BANK:
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx
Vice President
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