LOAN AGREEMENT
This LOAN AGREEMENT, dated as of April 21, 2000, is between CHAMPPS
OPERATING CORPORATION, a Minnesota corporation ("Borrower"), and FINOVA CAPITAL
CORPORATION, a Delaware corporation ("FINOVA").
PRELIMINARY STATEMENT:
Borrower desires to borrow up to $14,080,000 from FINOVA, which amount
shall be used (i) to reimburse Borrower for the Financeable Costs incurred in
developing the Owned Store and (ii) to consummate the Acquisitions. FINOVA has
agreed to make the Loans upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 Definitions. As used in this Loan Agreement and in the other Loan
Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
Acceleration Date: as defined in subsection 2.6.4.
Accountants: Xxxxxx Xxxxxxxx, LLP or any other independent certified
public accounting firm selected by Borrower and reasonably satisfactory
to FINOVA.
Accounting Changes: as defined in Section 1.3.
Acquisitions: collectively, the Eden Prairie Acquisition and the
Minnetonka Acquisition.
Acquisition Instruments: collectively, the Eden Prairie Acquisition
Instruments and the Minnetonka Acquisition Instruments.
ADA: the Americans with Disabilities Act of 1990, as amended, any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Additional Sums: as defined in subsection 2.2.4.
Affiliate: any Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control
with another Person. The term "control" means possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities or equity interests, by contract or otherwise. For
the purposes hereof any Person which owns or controls, directly or
indirectly, 10% or more of the securities or equity interests, as
applicable, whether voting or non-voting, of any other Person shall be
deemed to "control" such Person.
Bankruptcy Code: the United States Bankruptcy Code, any successor
statute thereto, and the rules, regulations and legally binding
policies promulgated thereunder, as amended and in effect from time to
time.
Basic Financial Statements: as defined in subsection 6.3.2.
Borrower: as defined in the Preamble to this Loan Agreement.
Borrower Capital Stock: as defined in subsection 5.3.1.
Borrower Fixed Charge Coverage Ratio: for any period, the ratio of (i)
the Cash Flow of Borrower for such period less, to the extent
capitalized, all Non-Financed Capital Expenditures of Borrower and its
Subsidiaries for such period to (ii) Borrower Fixed Charges for such
period.
Borrower Fixed Charges: during any period as applicable, the sum of (i)
all payments of principal, interest, premiums, loan fees and other
charges with respect to Indebtedness for Borrowed Money made or
required to be made by Borrower and its Subsidiaries during such period
plus (ii) rent expense paid or accrued under all Operating Leases of
Borrower and its Subsidiaries during such period, including all Leases
and all equipment leases of Borrower and its Subsidiaries which are not
Capitalized Leases.
Borrower's Obligations: (i) any and all Indebtedness due or to become
due, now existing or hereafter arising, of Borrower to FINOVA pursuant
to the terms of this Loan Agreement or any other Loan Instrument,
including, without limitation, the Loan Fees, and (ii) the performance
of the covenants of Borrower contained in the Loan Instruments.
Business Day: any day other than a Saturday, Sunday or other day on
which banks in Phoenix, Arizona or New York, New York are required to
close.
Capital Expenditures: payments that are made or liabilities that are
incurred by a Person for the lease, purchase, improvement, construction
or use of any Property, the value or cost of which under GAAP is
required to be capitalized and appears on such Person's balance sheet
in the category of property, plant, equipment or leasehold
improvements, without regard to the manner in which such payments or
the instruments pursuant to which they are made are characterized, and
shall include, without limitation, payments for or liabilities incurred
with respect to the installment purchase of Property and payments under
Capitalized Leases.
Capitalized Lease: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
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Cash Flow: for any period, the consolidated net income of Borrower or
Guarantor, as applicable, for such period:
(i) plus the sum of the following (without duplication),
to the extent deducted in determining such net income for such
period:
(A) losses from sales, exchanges and other
dispositions of Property, and other extraordinary and
non-recurring losses, in each case not in the
ordinary course of business;
(B) interest, fees and other charges paid or
accrued on Indebtedness, including, without
limitation, interest on Capitalized Leases that is
imputed in accordance with GAAP;
(C) income taxes which are accrued, but
not paid;
(D) depreciation, amortization and all
other non-cash items deducted in determining such
net income; and
(E) rent expense paid or accrued under all
Operating Leases during such period, including all
Leases and all equipment leases which are not
Capitalized Leases; and
(ii) minus the sum of the following (without duplication),
to the extent included in determining such net income for
such period:
(A) gains from sales, exchanges and other
dispositions of Property, and other extraordinary and
non-recurring gains, in each case not in the ordinary
course of business;
(B) proceeds of any insurance other than
business interruption insurance; and
(C) any other non-cash item included in
determining such net income.
Closing Date: with respect to (i) Term Loan A, the Term Loan A Closing
Date, (ii) Term Loan B, the Term Loan B Closing Date and (iii) Term
Loan C, the Term Loan C Closing Date.
Code: the Internal Revenue Code of 1986, any successor statute
thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
Collateral: (i) all existing and after-acquired Property of Borrower
related to the Collateral Stores, including, without limitation, all
furniture, fixtures, equipment and inventory located at the Collateral
Stores, and (ii) all proceeds of the foregoing.
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Collateral Stores: as of the (i) Term Loan A Closing Date, the Owned
Store, (ii) Term Loan B Closing Date, the Owned Store and the Eden
Prairie Leased Store and, if the Term Loan C Closing Date has occurred,
the Minnetonka Leased Store, (iii) Term Loan C Closing Date, the Owned
Store and the Minnetonka Leased Store and, if the Term Loan B Closing
Date has occurred, the Eden Prairie Leased Store and (ii) at any time
after the later to occur of the Term Loan B Closing Date and the Term
Loan C Closing Date, any Initial Store which has not been replaced by a
Substitute Store and each Substitute Store which has not been replaced
by a Substitute Store.
Compliance Certificate: a compliance certificate executed by Borrower
in the form of Exhibit 1.1(A) attached hereto.
Default Rate: with respect to any portion of the Principal Balance, the
applicable per annum rate of interest payable on such portion pursuant
to subsection 2.2.1 plus 5.0%.
Default Rate Period: a period of time commencing on the date an Event
of Default has occurred and ending on the date that such Event of
Default is cured or waived.
Eden Prairie Acquisition: the acquisition by Borrower of the assets of
the Eden Prairie Leased Store and the assumption by Borrower of the
Eden Prairie Lease pursuant to the terms and conditions of the Eden
Prairie Acquisition Instruments.
Eden Prairie Acquisition Agreement: Asset Purchase Agreement dated as
of April 6, 2000, as amended April 20, 2000 between the Eden Prairie
Seller (as seller) and Borrower (as buyer) relating to the Eden Prairie
Leased Store.
Eden Prairie Acquisition Instruments: the Eden Prairie Acquisition
Agreement and all documents, instruments and
agreements executed by or delivered to the Eden Prairie Seller in
connection therewith.
Eden Prairie Lease: the Lease of the Eden Prairie Leased Store
assumed by Borrower pursuant to the terms and conditions of the Eden
Prairie Acquisition Instruments.
Eden Prairie Leased Store: the Leased Store located at 0000 Xxxx
Xxxx, Xxxx Xxxxxxx, Xxxxxxxxx.
Eden Prairie Seller: Prairie Restaurant Group, Inc., a Minnesota
corporation.
Employee Benefit Plan: any employee benefit plan within the meaning of
Section 3(3) of ERISA which (i) is maintained for employees of Borrower
or any of its ERISA Affiliates or (ii) has at any time within the
preceding six years been maintained for the employees of Borrower or
any of its current or former ERISA Affiliates.
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Environmental Certificate: Environmental Certificate and Indemnity
Agreement executed by Borrower in favor of FINOVA.
Environmental Laws: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public
or occupational health and safety or protection of the environment,
as now or hereafter in effect and as have been or hereafter may be
amended or reauthorized, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C.ss.9601 et seq.), the Hazardous
Materials Transportation Act (42 U.S.C.ss.1802 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C.ss.1251 et seq.), the Toxic
Substances Control Act (15 U.S.C.ss.2601 et seq.), the Clean Air Act
(42 U.S.C.ss.7901 et seq.), the National Environmental Policy Act (42
U.S.C. ss.4231, et seq.), the Refuse Act (33 U.S.C.ss.407, et seq.),
the Safe Drinking Water Act (42 U.S.C.ss.300(f) et seq.), the
Occupational Safety and Health Act (29 U.S.C.ss.651 et seq.), and all
rules, regulations, codes, ordinances and guidance documents
promulgated or published thereunder, and the provisions of any
licenses, permits, orders and decrees issued pursuant to any of the
foregoing.
ERISA: the Employee Retirement Income Security Act of 1974, and any
successor statute thereto, and the rules, regulations and legally
binding policies promulgated thereunder, as amended and in effect from
time to time.
ERISA Affiliate: any Person who is a member of a group which is under
common control with Borrower, who together with Borrower is treated as
a single employer within the meaning of Section 414(b), (c) and (m) of
the Code.
Event of Default: any of the Events of Default set forth in Section
8.1.
Excess Interest: as defined in subsection 2.2.4.
Existing Indebtedness: all Indebtedness for Borrowed Money of Borrower
secured by a Lien on any of the Collateral.
Financeable Costs: as defined in Exhibit 2.1.1.
FINOVA: as defined in the Preamble to this Loan Agreement.
GAAP: generally accepted accounting principles as in effect from time
to time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or
any successor thereto.
Good Funds: United States Dollars available in Federal funds to FINOVA
at or before 2:00 p.m., Scottsdale time, on a Business Day.
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Governmental Body: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency,
public authority or instrumentality thereof or any court or
arbitrator.
Guaranty: a guaranty of Borrower's Obligations executed by Guarantor
in favor of FINOVA.
Guarantor: Champps Entertainment, Inc., a Delaware corporation.
Guarantor Fixed Charge Coverage Ratio: for any period, the ratio of
(i) the Cash Flow of Guarantor for such period less, to the extent
capitalized, all Non-Financed Capital Expenditures of Guarantor and
its Subsidiaries for such period to (ii) Guarantor Fixed Charges for
such period.
Guarantor Fixed Charges: during any period as applicable, the sum of
(i) all payments of principal, interest, premiums, loan fees and other
charges with respect to Indebtedness for Borrowed Money made or
required to be made by Guarantor and its Subsidiaries during such
period plus (ii) rent expense paid or accrued under all Operating
Leases of Guarantor and its Subsidiaries during such period, including
all Leases and all equipment leases of Guarantor and its Subsidiaries
which are not Capitalized Leases.
Hazardous Materials: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes
of any Environmental Law.
Incipient Default: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of
Default.
Indebtedness: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet or would be required to be disclosed in a
financial statement or the footnotes thereto, including, without
duplication: (i) Indebtedness for Borrowed Money, (ii) obligations
secured by any Lien upon Property, (iii) guaranties, letters of credit
and other contingent obligations and (iv) liabilities in respect of
unfunded vested benefits under any Pension Plan or in respect of
withdrawal liabilities incurred under ERISA by Borrower, or Guarantor,
as applicable, or any of its ERISA Affiliates to any Multiemployer
Plan.
Indebtedness for Borrowed Money: without duplication, all Indebtedness
(i) in respect of money borrowed, (ii) evidenced by a note, debenture
or other like written obligation to pay money (including, without
limitation, in the case of Borrower, all of Borrower's Obligations),
(iii) in respect of rent or hire of Property under Capitalized Leases
or for the deferred purchase price of Property, (iv) in respect of
obligations under conditional sales or other title retention
agreements and (v) all guaranties of any or all of the foregoing.
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Initial Stores: the Owned Store, the Eden Prairie Leased Store and the
Minnetonka Leased Store.
Landlord: a lessor under a Lease.
Landlord's Waiver: a landlord's waiver in form and substance
satisfactory to FINOVA.
Lease: any lease of real estate under which Borrower is the lessee or
sublessee.
Leased Store: any Collateral Store which is the subject of a Lease.
Leased Store Lease: a Lease of a Leased Store.
Lease Expiration: as defined in subsection 2.6.4(a).
Leasehold Property: any real estate which is the subject of a Lease.
Licenses: all licenses (including liquor licenses, if any), permits,
consents, approvals and authority issued by any Governmental Body in
connection with the operation of the Collateral Stores.
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor
under any conditional sale agreement, Capitalized Lease or other title
retention agreement.
Loans: collectively, Term Loan A, Term Loan B and Term Loan C. Loan
Agreement: this Loan Agreement and any amendments or supplements
hereto.
Loan Fees: the fees payable to FINOVA pursuant to Section 2.5.
Loan Instruments:
(i) Loan Agreement;
(ii) Notes;
(iii) Guaranty;
(iv) Security Agreement;
(v) Mortgage;
(vi) Solvency Certificates;
(vii) Environmental Certificate;
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(viii) Notices of Borrowing/Disbursement Requests;
(ix) such Uniform Commercial Code financing statements
as FINOVA may require in order to perfect the
Security Interests; and
(x) such other instruments and documents as FINOVA
reasonably may require in connection with the
transactions contemplated by this Loan Agreement.
Make-Whole Premium: as defined in subsection 2.6.6.
Mandatory Prepayment Amount: as defined in subsection 2.6.4(a).
Mandatory Prepayment Date: as defined in subsection 2.6.4(a).
Mandatory Prepayment Event: as defined in subsection 2.6.4(a).
Material Adverse Effect: (i) a material adverse effect upon the
business, operations, Property, profits or condition (financial or
otherwise) of Borrower or Guarantor, as the case may be, or of any of
the Collateral Stores, (ii) a material adverse effect upon the
validity, enforceability or priority of the Security Interests or
(iii) a material impairment of the ability of any Obligor to perform
its obligations under any Loan Instrument to which it is a party or of
FINOVA to enforce or collect any of Borrower's Obligations.
Maturity Date: the earlier to occur of (i) May 1, 2010 and (ii) the
date Borrower's Obligations are accelerated pursuant to Section 8.2.
Maximum Rate: as defined in subsection 2.2.4.
Minnetonka Acquisition: the acquisition by Borrower of the assets of
the Minnetonka Leased Store and the assumption by Borrower of the
Minnetonka Lease pursuant to the terms and conditions of the
Minnetonka Acquisition Instruments.
Minnetonka Acquisition Agreement: Asset Purchase Agreement dated as of
April 6, 2000, as amended April 20, 2000 between the Minnetonka Seller
(as seller) and Borrower (as buyer) relating to the Minnetonka Leased
Store.
Minnetonka Acquisition Instruments: the Minnetonka Acquisition
Agreement and all documents, instruments and agreements executed by or
delivered to the Minnetonka Seller in connection therewith.
Minnetonka Lease: the Lease of the Minnetonka Leased Store assumed by
Borrower pursuant to the terms and conditions of the Minnetonka
Acquisition Instruments.
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Minnetonka Leased Store: the Leased Store located at 0000 Xxxxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxxx.
Minnetonka Seller: collectively, Xxxx X. Xxxxxx and Breagan Investment
Group, Inc., a Minnesota corporation.
Mortgage: a mortgage or deed of trust executed by Borrower in favor of
FINOVA encumbering Borrower's right, title and interest in, to and
under the Real Estate upon which the Owned Store is located.
Multiemployer Plan: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which Borrower or any of its ERISA
Affiliates makes, or accrues an obligation to make contributions, or
has made, or been obligated to make, contributions within the
preceding six years.
Non-Financed Capital Expenditures: for any period, the aggregate
amount of all Capital Expenditures of Guarantor or any of its
Subsidiaries, as applicable, not financed with the proceeds of
Indebtedness for Borrowed Money.
Notes: collectively, Term Note A, Term Note B and Term Note C.
Notice of Borrowing/Disbursement Request: individually and
collectively, one or more notices of borrowing/disbursement requests
executed by Borrower in favor of FINOVA.
Obligor: any of the Obligors.
Obligors: collectively, Borrower and Guarantor.
Operating Agreements: all right-of-entry agreements, supply
agreements, access agreements, advertising contracts, equipment
leases, service contracts and similar agreements relating to the
operation of the Collateral Stores, excluding the Leased Store Leases.
Operating Lease: any lease which, under GAAP, is not required to be
capitalized.
Owned Store: that Store located at 0000 Xxxxxxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx.
Pay-Off Letters: pay-off letters addressed to FINOVA from the holders
of all Existing Indebtedness.
PBGC: the Pension Benefit Guaranty Corporation or any Governmental
Body succeeding to the functions thereof.
Pension Plan: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of
ERISA, Title IV of ERISA, or Section 412 of the Code and which (i) is
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maintained for employees of Borrower or any of its ERISA Affiliates,
or (ii) has at any time within the preceding six years been maintained
for the employees of Borrower or any of its current or former ERISA
Affiliates.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) Liens for taxes or assessments and similar charges,
which either are (A) not delinquent or (B) being
contested diligently and in good faith by appropriate
proceedings, and as to which Borrower has set aside
reserves on its books which are satisfactory to
FINOVA;
(iii) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carrier's or other like Liens,
incurred in good faith in the ordinary course of
business, provided that the underlying obligations
relating to such Liens are paid in the ordinary
course of business, or are being contested diligently
and in good faith by appropriate proceedings and as
to which Borrower has set aside reserves on its books
satisfactory to FINOVA, or the payment of which
obligations are otherwise secured in a manner
satisfactory to FINOVA;
(iv) zoning ordinances, easements, licenses, reservations,
provisions, covenants, conditions, waivers or
restrictions on the use of Property and other title
exceptions, in each case, that are acceptable to
FINOVA;
(v) Liens in respect of judgments or awards with respect
to which no Event of Default would exist pursuant
to subsection 8.1.6; and
(vi) Liens to secure payment of insurance premiums (A) to
be paid in accordance with applicable laws in the
ordinary course of business relating to payment of
worker's compensation, or (B) that are required for
the participation in any fund in connection with
worker's compensation, unemployment insurance,
old-age pensions or other social security programs.
Permitted Prior Liens: any of the following Liens:
(i) the Permitted Liens described in clauses (ii) and
(iii) of the definition of Permitted Liens that
are accorded priority to the Security Interests by
law; and
(ii) the Permitted Liens described in clauses (iv) and
(vi) of the definition of Permitted Liens, subject to
the limitations set forth therein.
Person: any individual, firm, corporation, business enterprise, trust,
association, joint venture, partnership, Governmental Body or other
entity, whether acting in an individual, fiduciary or other capacity.
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Principal Balance: the aggregate unpaid principal balance of the Loans
or any specified portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and all types
of tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve System
having a combined capital and surplus of at least $100,000,000.
Real Estate: any fee simple real estate now owned or hereafter
acquired, beneficially or otherwise, by Borrower.
Restaurant Business: the ownership and operation of restaurants,
taverns, banquet centers, related commissary/catering services and
ancillary activities. Securities Act: the Securities Act of 1933, the
Securities Exchange Act of 1934, any successor statute thereto, and
the rules, regulations and legally binding policies of the Securities
Exchange Commission promulgated thereunder, as amended and in effect
from time to time.
Security Agreement: individually and collectively, one or more
security agreements executed by Borrower in favor of FINOVA.
Security Interests: the Liens in the Collateral granted to FINOVA
pursuant to the Security Agreement and any other document now or
hereafter executed by any Obligor which purports to xxxxx x Xxxx on
the Property of such Obligor in favor of FINOVA to secure Borrower's
Obligations.
Solvency Certificate: individually and collectively, one or more
solvency certificates executed by Borrower in favor of FINOVA.
Stated Rate: as defined in subsection 2.2.4.
Store: a Champps Americana restaurant owned and operated by Borrower.
Store Cash Flow: for any period, with respect to any designated Store
or Stores, the net income of Borrower derived from the operation of
such Store or Stores for such period:
(i) plus the sum of the following (without duplication), to
the extent deducted in determining such net income for such
period and to the extent attributable to such Store or Stores
for such period:
(A) losses from sales, exchanges and other
dispositions of Property, and other extraordinary and
non-recurring losses, in each case not in the
ordinary course of business;
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(B) interest, fees and other charges paid or
accrued on Indebtedness, including, without
limitation, interest on Capitalized Leases that is
imputed in accordance with GAAP;
(C) income taxes which are accrued, but
not paid;
(D) depreciation, amortization and all
other non-cash items deducted in determining such
net income; and
(E) rent expense paid or accrued under all
Operating Leases related to such Store or Stores,
including the Lease(s) of such Store or Stores and
all equipment leases which are not Capitalized Leases
pertaining to equipment located at such Store or
Stores; and
(ii) minus the sum of the following (without duplication), to
the extent included in determining such net income for such
period and to the extent attributable to such Store or Stores
for such period:
(A) gains from sales, exchanges and other
dispositions of Property, and other extraordinary and
non-recurring gains, in each case not in the ordinary
course of business;
(B) proceeds of any insurance other than
business interruption insurance; and
(C) any other non-cash item included in
determining such net income.
Store Fixed Charges: during any period with respect to any designated
Store or Stores, as applicable, the sum of (i) all payments of
principal, interest, premium, loan fees and other charges with respect
to Indebtedness for Borrowed Money made or required to be made by
Borrower which are allocable to such Store or Stores plus (ii) rent
expense paid or accrued under all Operating Leases of Borrower related
to such Store or Stores including the applicable Lease(s) of such
Store or Stores and all equipment leases which are not Capitalized
Leases pertaining to equipment located at such Store or Stores.
Subsidiary: any corporation, general partnership, limited partnership,
limited liability company, limited liability partnership or other
entity with respect to which another Person owns or controls, directly
or indirectly, such amount of outstanding shares or other equity
interests of such corporation, general partnership, limited
partnership, limited liability company, limited liability partnership
or other entity as have at the time of any determination hereunder 50%
or more of the ordinary voting power for the election of directors (or
their equivalent under the laws of the jurisdiction of organization of
such corporation, general partnership, limited partnership, limited
liability company, limited liability partnership or other entity).
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Substitute Store: as defined in subsection 2.6.4(a).
Substitution Conditions: as defined in subsection 2.6.4(a).
Substitution Documents: as defined in subsection 2.6.4(a).
Termination Event: (i) a "Reportable Event" described in Section 4043
of ERISA and the regulations issued thereunder; or (ii) the withdrawal
of Borrower or any of its ERISA Affiliates from a Pension Plan during
a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2); or (iii) the termination of a Pension Plan, the
filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section
4041 of ERISA; or (iv) the institution of proceedings to terminate, or
the appointment of a trustee with respect to, any Pension Plan by the
PBGC; or (v) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; or (vi) the
partial or complete withdrawal of Borrower or any of its ERISA
Affiliates from a Multiemployer Plan; or (vii) the imposition of a
lien pursuant to Section 412 of the Code or Section 302 of ERISA; or
(viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of
ERISA; or (ix) any event or condition which results in the termination
of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
Term Loan A: the term loan to be made by FINOVA pursuant to Section
2.1.1.
Term Loan A Closing: the disbursement of Term Loan A.
Term Loan A Closing Date: the date the Term Loan A Closing occurs.
Term Loan A Loan Year: a period of time from the Term Loan A Closing
Date or any anniversary of the Term Loan A Closing Date to the
immediately succeeding anniversary of the Term Loan A Closing Date.
Term Loan B: the term loan to be made by FINOVA pursuant to Section
2.1.2.
Term Loan B Closing: the disbursement of Term Loan B.
Term Loan B Closing Date: the date the Term Loan B Closing occurs.
Term Loan B Loan Year: a period of time from the Term Loan B Closing
Date or any anniversary of the Term Loan B Closing Date to the
immediately succeeding anniversary of the Term Loan B Closing Date.
Term Loan C: the term loan to be made by FINOVA pursuant to Section
2.1.3.
Term Loan C Closing: the disbursement of Term Loan C.
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Term Loan C Closing Date: the date the Term Loan C Closing occurs.
Term Loan C Loan Year: a period of time from the Term Loan B Closing
Date or any anniversary of the Term Loan B Closing Date to the
immediately succeeding anniversary of the Term Loan B Closing Date.
Term Note A: a promissory note in the principal amount of $5,000,000
executed and delivered by Borrower to FINOVA to evidence Term Loan A.
Term Note B: a promissory note in the principal amount of $4,540,000
executed and delivered by Borrower to FINOVA to evidence Term Loan B.
Term Note C: a promissory note in the principal amount of $4,540,000
executed and delivered by Borrower to FINOVA to evidence Term Loan C.
1.2 Time Periods. In this Loan Agreement and the other Loan
Instruments, in the computation of periods of time from a specified date to a
later specified date, (i) the word "from" means "from and including," (ii) the
words "to" and "until" each mean "to, but excluding" and (iii) the words
"through," "end of" and "expiration" each mean "through and including." Unless
otherwise specified, all references in this Loan Agreement and the other Loan
Instruments to (i) a "month" shall be deemed to refer to a calendar month, (ii)
a "quarter" shall be deemed to refer to a calendar quarter and (iii) a "year"
shall be deemed to refer to a calendar year.
1.3 Accounting Terms and Determinations. All accounting terms not
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In the
event that any Accounting Changes (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrower and FINOVA
agree to enter into negotiations to amend such provisions of this Loan Agreement
so as to reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of Borrower shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
For purposes hereof, "Accounting Changes" shall mean (i) changes in generally
accepted accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or any successor
thereto) or other appropriate authoritative body and (ii) changes in accounting
principles as approved by the Accountants.
1.4 References. All references in this Loan Agreement to "Article,"
"Section," "subsection," "subparagraph," "clause" or "Exhibit," unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.5 FINOVA's Discretion. Whenever the terms "satisfactory to FINOVA,"
"determined by FINOVA," "acceptable to FINOVA," "FINOVA shall elect," "FINOVA
shall request," "at the option or election of FINOVA," or similar terms are used
in the Loan Instruments, except as otherwise specifically provided therein, such
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terms shall mean satisfactory to, at the election or option of, determined by,
acceptable to or requested by FINOVA, in its sole and unlimited discretion.
1.6 Borrower's Knowledge. Any statements, representations or warranties
in the Loan Instruments that are based upon the best knowledge of Borrower or an
officer thereof shall be deemed to have been made after due inquiry by Borrower
or an officer, as applicable, with respect to the matter in question.
ARTICLE II
LOANS AND TERMS OF PAYMENT
2.1 Loans.
2.1.1 Term Loan A.
(a) Amount. Term Loan A shall consist of a term loan
from FINOVA to Borrower in the amount of $5,000,000.
(b) Disbursement. FINOVA shall disburse Term Loan A to or as
directed by Borrower when all of the terms and conditions set
forth in Sections 4.1 and 4.2 have been satisfied.
(c) Use of Proceeds. The proceeds of Term Loan A shall be used
to reimburse Borrower for the Financeable Costs incurred in
developing the Owned Store.
(d) Term Note A. Term Loan A shall be evidenced by
Term Note A.
(e) Reborrowing. Borrower shall not be entitled to
reborrow any portion of Term Loan A which is repaid or
prepaid.
2.1.2 Term Loan B.
(a) Amount. Term Loan B shall consist of a term loan
from FINOVA to Borrower in the amount of $4,540,000.
(b) Disbursement. FINOVA shall disburse Term Loan B to or as
directed by Borrower at any time on or prior to August 1, 2000
provided all of the terms and conditions set forth in Sections
4.1 and 4.3 have been satisfied.
(c) Use of Proceeds. The proceeds of Term Loan B shall
be used to consummate the Eden Prairie Acquisition.
(d) Term Note B. Term Loan B shall be evidenced by Term
Note B.
(e) Reborrowing. Borrower shall not be entitled to
reborrow any portion of Term Loan B which is repaid or
prepaid.
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2.1.3 Term Loan C.
(a) Amount. Term Loan C shall consist of a term loan
from FINOVA to Borrower in the amount of $4,540,000.
(b) Disbursement. FINOVA shall disburse Term Loan C to or as
directed by Borrower at any time on or prior to August 1, 2000
provided all of the terms and conditions set forth in Sections
4.1 and 4.4 have been satisfied.
(c) Use of Proceeds. The proceeds of Term Loan C shall
be used to consummated the Minnetonka Acquisition.
(d) Term Note C. Term Loan C shall be evidenced by Term
Note C.
(e) Reborrowing. Borrower shall not be entitled to
reborrow any portion of Term Loan C which is repaid or
prepaid.
2.2 Interest.
2.2.1 Interest Rate. Except as provided in subsection 2.2.2:
(a) Term Loan A. The Principal Balance of Term Loan A shall
bear interest at a fixed rate per annum equal to 10.23%.
(b) Term Loan B. The Principal Balance of Term Loan B shall
bear interest at a fixed rate per annum equal to the yield on
the 11.75% February 5, 2010 U.S. Treasury Note/Bond as
published in The Wall Street Journal on the Friday before the
Term Loan B Closing Date plus 3.75% per annum.
(c) Term Loan C. The Principal Balance of Term Loan C shall
bear interest at a fixed rate per annum equal to the yield on
the 11.75% February 5, 2010 U.S. Treasury Note/Bond as
published in The Wall Street Journal on the Friday before the
Term Loan C Closing Date plus 3.75% per annum.
2.2.2 Default Rate. During a Default Rate Period, the
Principal Balance shall bear interest at the applicable Default Rate.
2.2.3 Interest Computation. Interest shall be computed on the
basis of a year consisting of 360 days and charged for the actual number of days
during the period for which interest is being charged. In computing interest,
the date of funding of a Loan shall be included and the date of payment shall be
excluded.
2.2.4 Maximum Interest. Notwithstanding any provision to the
contrary contained herein or in any other Loan Instrument, FINOVA shall not
collect a rate of interest on any obligation or liability due and owing by
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Borrower to FINOVA in excess of the maximum contract rate of interest permitted
by applicable law ("Excess Interest"). All fees, charges, goods, things in
action or any other sums or things of value (other than items (a), (b) and (c)
below) paid or payable by Borrower (collectively, the "Additional Sums"),
whether pursuant to the Notes, this Loan Agreement, the other Loan Instruments
or any other document or instrument in any way pertaining to the Loans, that,
under the laws of the State of Arizona, may be deemed to be interest with
respect to the Loans, for the purpose of any laws of the State of Arizona that
may limit the maximum amount of interest to be charged with respect to the Loans
shall be payable by Borrower and shall be deemed to be additional interest, and
for such purposes only, the agreed upon and "contracted for rate of interest"
with respect to the Loan shall be deemed to be increased by the rate of interest
resulting from the Additional Sums. FINOVA and Borrower agree that the interest
laws of the State of Arizona shall govern the relationship among them and
understand and believe that the transactions contemplated by the Loan
Instruments comply with the usury laws of the State of Arizona, but in the event
of a final adjudication to the contrary, Borrower shall be obligated to pay,
nunc pro tunc, to FINOVA only such interest as then shall be permitted by the
laws of the state found to govern the contract relationship between FINOVA and
Borrower. For the purpose of any laws of the State of Arizona that may limit the
maximum amount of interest to be charged with respect to a loan, the "contracted
for rate of interest" for the Loan shall consist of the following: (a) interest
calculated in accordance with the provisions of subsection 2.2.1 and 2.2.2; (b)
the late charges calculated in accordance with the provisions of Section 2.4;
(c) the Loan Fees; and (d) all Additional Sums, if any. Borrower agrees to pay
an effective "contracted for rate of interest" which is the sum of items (a),
(b), (c) and (d) above. If any Excess Interest is provided for or determined by
a court of competent jurisdiction to have been provided for in this Loan
Agreement or any other Loan Instrument, then in such event (i) no Obligor shall
be obligated to pay such Excess Interest, (ii) any Excess Interest collected by
FINOVA shall be, at FINOVA's option, (A) applied to the Principal Balance of any
Loan in such manner as FINOVA may elect or to accrued and unpaid interest not in
excess of the maximum rate permitted by applicable law or (B) refunded to the
payor thereof, (iii) the interest rates provided for herein (collectively,
including, without limitation, the Loan Fees, the "Stated Rate") shall be
automatically reduced to the maximum rate allowed from time to time under
applicable law (the "Maximum Rate") and this Loan Agreement and the other Loan
Instruments, as applicable, shall be deemed to have been, and shall be, modified
to reflect such reduction, and (iv) neither Borrower nor any other Obligor shall
have any action against FINOVA for any damages arising out of the payment or
collection of such Excess Interest.
2.3 Payments.
2.3.1 Stub Period Interest. Interest which will accrue on the
Principal Balance of any Loan from the Closing Date of such Loan through the
last day of the month in which such Closing Date occurs shall be paid in advance
on such Closing Date.
2.3.2 Monthly Installments.
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(a) Term Loan A. Commencing on the first Business Day of June,
2000 and on the first Business Day of each month thereafter
through the first Business Day of April, 2010, the Principal
Balance of Term Loan A and all accrued and unpaid interest
thereon shall be payable in 119 equal monthly installments of
$49,015.47.
(b) Term Loan B. Commencing on the first Business Day of the
first month following the month in which the Term Loan B
Closing Date occurs and on the first Business Day of each
month thereafter through the first Business Day of April,
2010, the Principal Balance of Term Loan B and all accrued and
unpaid interest thereon shall be payable in monthly
installments, each in an amount equal to the amount, based on
a mortgage style amortization schedule, which would fully
amortize the Principal Balance of Term Loan B by May 1, 2020.
(c) Term Loan C. Commencing on the first Business Day of the
first month following the month in which the Term Loan C
Closing Date occurs and on the first Business Day of each
month thereafter through the first Business Day of April,
2010, the Principal Balance of Term Loan C and all accrued and
unpaid interest thereon shall be payable in monthly
installments, each in an amount equal to the amount, based on
a mortgage style amortization schedule, which would fully
amortize the Principal Balance of Term Loan C by May 1, 2020.
2.3.3 Payment at Maturity. The remaining Principal Balance,
together with all accrued and unpaid interest thereon and all other amounts
which then are due and payable pursuant to the terms of the Loan Instruments,
shall be due and payable in full on the Maturity Date.
2.4 Late Charges. If a payment of principal or interest to be made
pursuant to this Loan Agreement becomes past due for a period in excess of ten
days, Borrower shall pay on demand to FINOVA a late charge of 10% of the amount
of such overdue payment.
2.5 Loan Fees.
2.5.1 Term Loan A. Borrower shall pay to FINOVA a loan fee of
$50,000, which shall be deemed to be fully earned and payable upon the Term Loan
A Closing Date and against which FINOVA shall credit $8,333.33 of the $25,000
deposit (net of FINOVA's expenses) previously paid by Borrower to FINOVA.
2.5.2 Term Loan B. Borrower shall pay to FINOVA a loan fee of
$45,400, which shall be deemed to be fully earned and payable upon the Term Loan
B Closing Date and against which FINOVA shall credit $8,333.33 of the $25,000
deposit (net of FINOVA's expenses) previously paid by Borrower to FINOVA.
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2.5.3 Term Loan C. Borrower shall pay to FINOVA a loan fee of
$45,400, which shall be deemed to be fully earned and payable upon the Term Loan
C Closing Date and against which FINOVA shall credit $8,333.34 of the $25,000
deposit (net of FINOVA's expenses) previously paid by Borrower to FINOVA.
2.6 Prepayments.
2.6.1 Voluntary Prepayment of Term Loan A. Borrower may not
prepay any portion of the Principal Balance of Term Loan A at any time during
the first two Term Loan A Loan Years. Borrower voluntarily may prepay the
Principal Balance of Term Loan A in whole, but not in part, at any time after
the second Term Loan A Loan Year subject to the following conditions:
(a) Prepayment Premium. Concurrently with any such voluntary
prepayment of the Principal Balance of Term Loan A, Borrower
shall pay to FINOVA a prepayment premium equal to a percentage
of the amount of the Principal Balance prepaid, determined in
accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
Third Term Loan A Loan Year 5.0%
Fourth Term Loan A Loan Year 4.0%
Fifth Term Loan A Loan Year 3.0%
Sixth Term Loan A Loan Year 2.0%
Seventh Term Loan A Loan Year
and thereafter 1.0%
(b) Notice of Prepayment. Not less than 30 days prior to the
date upon which Borrower desires to prepay the Principal
Balance of Term Loan A, Borrower shall deliver to FINOVA
notice of its intention to prepay, which notice shall state
the prepayment date and the amount of the Principal Balance of
Term Loan A as of the prepayment date. If Borrower delivers to
FINOVA a notice of prepayment and fails to make such
prepayment, Borrower shall reimburse FINOVA on demand in the
amount of any loss, cost and/or expense incurred by FINOVA as
a result of FINOVA's reliance on such notice, including
without limitation, any loss, cost or expense resulting from
any contractual obligations of FINOVA in connection with the
reinvestment of the amount indicated in such notice of
prepayment.
(c) Additional Payments. Concurrently with any prepayment of
the Principal Balance of Term Loan A, Borrower shall pay to
FINOVA accrued and unpaid interest on the Principal Balance
which is being prepaid to the date on which FINOVA is in
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receipt of Good Funds, and any other sums which are due and
payable pursuant to the terms of any of the Loan Instruments.
2.6.2 Voluntary Prepayment of Term Loan B. Borrower may not
prepay any portion of the Principal Balance of Term Loan B at any time during
the first two Term Loan B Loan Years (except to the extent permitted under
subsection 2.6.4). Borrower voluntarily may prepay the Principal Balance of Term
Loan B in whole, but not in part (except to the extent permitted under
subsection 2.6.4), at any time after the second Term Loan B Loan Year subject to
the following conditions:
(a) Prepayment Premium. Concurrently with any such voluntary
prepayment of the Principal Balance of Term Loan B, Borrower
shall pay to FINOVA a prepayment premium equal to a percentage
of the amount of the Principal Balance prepaid, determined in
accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
Third Term Loan B Loan Year 5.0%
Fourth Term Loan B Loan Year 4.0%
Fifth Term Loan B Loan Year 3.0%
Sixth Term Loan B Loan Year 2.0%
Seventh Term Loan B Loan Year
and thereafter 1.0%
(b) Notice of Prepayment. Not less than 30 days prior to the
date upon which Borrower desires to prepay the Principal
Balance of Term Loan B, Borrower shall deliver to FINOVA
notice of its intention to prepay, which notice shall state
the prepayment date and the amount of the Principal Balance of
Term Loan B as of the prepayment date. If Borrower delivers to
FINOVA a notice of prepayment and fails to make such
prepayment, Borrower shall reimburse FINOVA on demand in the
amount of any loss, cost and/or expense incurred by FINOVA as
a result of FINOVA's reliance on such notice, including
without limitation, any loss, cost or expense resulting from
any contractual obligations of FINOVA in connection with the
reinvestment of the amount indicated in such notice of
prepayment.
(c) Additional Payments. Concurrently with any prepayment of
the Principal Balance of Term Loan B, Borrower shall pay to
FINOVA accrued and unpaid interest on the Principal Balance
which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, and any other sums which are due and
payable pursuant to the terms of any of the Loan Instruments.
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2.6.3 Voluntary Prepayment of Term Loan C. Borrower may not
prepay any portion of the Principal Balance of Term Loan C at any time during
the first two Term Loan C Loan Years (except to the extent permitted under
subsection 2.6.4). Borrower voluntarily may prepay the Principal Balance of Term
Loan C in whole, but not in part (except to the extent permitted under
subsection 2.6.4), at any time after the second Term Loan C Loan Year subject to
the following conditions:
(a) Prepayment Premium. Concurrently with any such voluntary
prepayment of the Principal Balance of Term Loan C, Borrower
shall pay to FINOVA a prepayment premium equal to a percentage
of the amount of the Principal Balance prepaid, determined in
accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
Third Term Loan C Loan Year 5.0%
Fourth Term Loan C Loan Year 4.0%
Fifth Term Loan C Loan Year 3.0%
Sixth Term Loan C Loan Year 2.0%
Seventh Term Loan C Loan Year
and thereafter 1.0%
(a) Notice of Prepayment. Not less than 30 days prior to the
date upon which Borrower desires to prepay the Principal
Balance of Term Loan C, Borrower shall deliver to FINOVA
notice of its intention to prepay, which notice shall state
the prepayment date and the amount of the Principal Balance of
Term Loan C as of the prepayment date. If Borrower delivers to
FINOVA a notice of prepayment and fails to make such
prepayment, Borrower shall reimburse FINOVA on demand in the
amount of any loss, cost and/or expense incurred by FINOVA as
a result of FINOVA's reliance on such notice, including
without limitation, any loss, cost or expense resulting from
any contractual obligations of FINOVA in connection with the
reinvestment of the amount indicated in such notice of
prepayment.
(b) Additional Payments. Concurrently with any prepayment of
the Principal Balance of Term Loan C, Borrower shall pay to
FINOVA accrued and unpaid interest on the Principal Balance
which is being prepaid to the date on which FINOVA is in
receipt of Good Funds, and any other sums which are due and
payable pursuant to the terms of any of the Loan Instruments.
2.6.4 Mandatory Prepayments.
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(a) Mandatory Prepayment Amount. If a Mandatory
Prepayment Event occurs, then, on the applicable Mandatory
Prepayment Date, Borrower shall prepay the Principal Balance
in an amount equal to the applicable Mandatory Prepayment
Amount.
As used herein, the following terms shall have the following
meanings:
"Mandatory Prepayment Event" shall mean the failure of
Borrower, as of the date of a closure, sale or Lease
Expiration of a Collateral Store, to replace such Collateral
Store with a Substitute Store and to satisfy the Substitution
Conditions.
"Mandatory Prepayment Date" shall mean the date the closure,
sale or Lease Expiration which is the subject of a Mandatory
Prepayment Event occurs.
"Mandatory Prepayment Amount" shall mean the amount,
determined by FINOVA as of the applicable Mandatory Prepayment
Date, which, after giving effect to the applicable Mandatory
Prepayment Event and the application of such amount to reduce
the Principal Balance, would cause the ratio of the Store Cash
Flow of the remaining Collateral Stores as of the twelve month
period most recently ended to the projected Store Fixed
Charges of the remaining Collateral Stores for the succeeding
twelve month period to be no less than 1.25.
"Lease Expiration" shall mean the termination of the Lease of
any Collateral Store prior to May 1, 2010 for any reason or
the failure of Borrower to renew or extend the term of the
Lease of any Collateral Store which expires prior to May 1,
2010 at least 60 days prior to the expiration date to a date
not earlier than May 1, 2010.
"Substitute Store" shall mean, in connection with the closure
or sale of a Collateral Store or a Lease Expiration with
respect to a Collateral Store and the replacement of such
Collateral Store, a Store:
(1) designated by Borrower to replace
the Collateral Store which is the subject of a
sale, closure or Lease Expiration;
(2) which is the subject of Lease which
does not expire prior to May 1, 2010; and
(3) with respect to which the
representations and warranties contained in Section
5.5 are true and correct in all material respects,
after giving effect to the applicable Substitution
Documents.
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"Substitution Conditions" shall mean, in connection with the
replacement of a Collateral Store with a Substitute Store,
that, as of the date such Collateral Store is closed or sold
or the date of the Lease Expiration of such Collateral Store,
as applicable:
(1) Borrower shall have demonstrated to the
satisfaction of FINOVA that the ratio of the Store
Cash Flow of the remaining Collateral Stores and the
Substitute Store as of the twelve month period most
recently ended to the projected Store Fixed Charges
of the remaining Collateral Stores and the Substitute
Store for the succeeding twelve month period is not
less than 1.25;
(2) Borrower shall have demonstrated to the
satisfaction of FINOVA that such Substitute Store has
not suffered a material adverse trend in financial
performance for the preceding three year period;
(3) Borrower shall have delivered to FINOVA
the Substitution Documents with respect to the
Substitute Store, each duly authorized and executed
and in form and substance satisfactory to FINOVA;
(4) all filings of Uniform Commercial Code
financing statements and other actions necessary to
perfect and maintain the Security Interests as first,
valid and perfected Liens in the Collateral covered
thereby, subject only to Permitted Liens and subject
in priority only to Permitted Prior Liens, shall have
been filed or taken and FINOVA shall have received
such UCC, state and federal tax Lien, pending suit
and other searches as it deems necessary to confirm
the foregoing;
(5) FINOVA shall have received evidence that
all insurance coverage required pursuant to Section
6.6 with respect to such Substitute Store is in full
force and effect and that all premiums thereon have
been paid in full; and
(6) no Event of Default or Incipient Default
shall exist and be continuing or be created by the
replacement of such Collateral Store with such
Substitute Store.
"Substitution Documents" shall mean, in connection with the
replacement of a Collateral Store with a Substitute Store (i)
a certified copy of the Lease of such Substitute Store, (ii) a
Landlord's Waiver from the Landlord under the Lease of such
Substitute Store and (iii) such amendments to this Loan
Agreement and the Security Agreement as are necessary to
reflect the substitution of such Substitute Store for such
Collateral Store, together with a UCC-1 financing statement
naming Borrower, as debtor, and FINOVA, as secured party,
covering the Collateral located at such Substitute Store
23
(a) Additional Payments; Prepayment Premium. Concurrently with
any mandatory prepayment pursuant to subsection 2.6.4(a),
Borrower shall pay to FINOVA accrued and unpaid interest on
the portion of the Principal Balance which is being prepaid to
the date on which FINOVA is in receipt of Good Funds, any
other sums which are due and payable pursuant to the terms of
any of the Loan Instruments and a prepayment premium equal to
a percentage of the Mandatory Prepayment Amount, determined in
accordance with the following schedule:
Percentage of Mandatory
Period of Prepayment Prepayment Amount
Third Term Loan B Loan Year
or Third Term Loan C Loan Year 5.0%
Fourth Term Loan B Loan Year
or Fourth Term Loan C Loan Year 4.0%
Fifth Term Loan B Loan Year
or Fifth Term Loan C Loan Year 3.0%
Sixth Term Loan B Loan Year
or Sixth Term Loan C Loan Year 2.0%
Seventh Term Loan B Loan Year or
or Seventh Term Loan C Loan Year
and thereafter 1.0%
(c) Application of Mandatory Prepayments. Prepayments received
by FINOVA pursuant to this subsection 2.6.4 shall be applied
in the following order of priority to the payment of: (i) any
and all sums which are due and payable pursuant to the terms
of the Loan Instruments, except the Principal Balance and
accrued and unpaid interest thereon, (ii) the Principal
Balance then projected to be payable on the Maturity Date and
(iii) any remainder, pro rata to the remaining monthly
installments payable under subsection 2.3.2 in the inverse
order of maturity.
2.6.5 No Prepayment Premium. No prepayment premium shall
be payable with respect to prepayments made from insurance proceeds.
2.6.6 Involuntary Prepayment. If an Event of Default occurs
and Borrower's Obligations are accelerated at any time (i) from and after the
second anniversary of the last Closing Date to occur, then, concurrently with
any payment of the Principal Balance received by FINOVA resulting from the
exercise by FINOVA of any remedy available to FINOVA, Borrower shall pay to
FINOVA a prepayment premium in an amount equal to the sum of the prepayment
24
premiums which would be payable if such payment was made pursuant to subsections
2.6.1, 2.6.2 and 2.6.3 and (ii) prior to the second anniversary of the last
Closing Date to occur, then, concurrently with any payment of the Principal
Balance received by FINOVA resulting from the exercise by FINOVA of any remedy
available to FINOVA, Borrower shall pay to FINOVA the Make-Whole Premium.
Borrower acknowledges and agrees that such prepayment premium is a reasonable
estimate of loss and not a penalty. Such prepayment premium is payable as
liquidated damages for loss of bargain but shall not reduce, affect or impair
any other obligation of Borrower under the Loan Instruments.
As used herein, the following terms shall have the following meanings:
"Acceleration Date" shall mean the date Borrower's Obligations are
accelerated.
"Make-Whole Premium" shall mean the remainder of (i) the sum of the
scheduled payments under Section 2.3 remaining unpaid as of the
Acceleration Date minus (ii) the present value on the Acceleration
Date, discounted at the highest interest rate set forth in subsection
2.2.1, of the stream of payments described in the preceding clause (i).
2.7 Payments after Event of Default. All payments received by FINOVA
during the existence of an Event of Default shall be applied in accordance with
Section 8.4.
ARTICLE III
GUARANTY AND SECURITY
Borrower's Obligations shall be (i) guaranteed by the Guarantor
pursuant to the Guaranty and (iii) secured by a Lien upon all of the Collateral,
which at all times shall be superior and prior to all other Liens, except
Permitted Prior Liens.
ARTICLE IV
CONDITIONS OF CLOSING
4.1 All Loans. The obligation of FINOVA to disburse any Loan is
subject to the satisfaction of the following conditions in a manner, form and
substance satisfactory to FINOVA:
4.1.1 Representations and Warranties. On the applicable
Closing Date the representations and warranties of each Obligor set forth in the
Loan Instruments to which such Person is a party shall be true and correct.
4.1.2 Performance; No Default. Each Obligor shall have
performed and complied with all agreements and conditions contained in the Loan
Instruments to be performed by or complied with by such Person prior to or at
such disbursement and no Event of Default or Incipient Default shall then exist
or result from the disbursement of such Loan.
25
4.1.3 No Material Adverse Effect. No event or series of events
shall have occurred, and no litigation or governmental proceeding or
investigation shall be pending, which has had or could reasonably be expected to
have a Material Adverse Effect. No judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions on the
transactions to be consummated on the applicable Closing Date shall be in
effect.
4.1.4 Security Interests. All filings of Uniform Commercial
Code financing statements, recordings of the Mortgage and all other filings and
actions necessary to perfect and maintain the Security Interests as first, valid
and perfected Liens in the Collateral covered thereby, subject only to Permitted
Prior Liens, shall have been filed or taken and FINOVA shall have received such
UCC, state and federal tax Lien, pending suit, judgment and other Lien searches
as it deems necessary to confirm the foregoing.
4.1.5 Use of Assets. FINOVA shall be satisfied that Borrower
at all times shall be entitled to the use and quiet enjoyment of all Property
necessary for the continued ownership and operation of the Collateral Stores,
including, without limitation, the use of equipment, fixtures, Licenses, offices
and means of ingress and egress thereto, necessary for the operation of the
Collateral Stores.
4.1.6 Licenses. FINOVA shall have received evidence that (i)
Borrower is the licensee of all Licenses necessary for the operation of the
Collateral Stores and the Restaurant Business therein and (ii) such Licenses are
in full force and effect as of the respective Closing Date and no event has
occurred which could result in the termination, revocation or non-renewal of any
such License;
4.1.7 Business and Flood Insurance. At least three Business
Days prior to the applicable Closing Date Borrower shall have delivered to
FINOVA evidence satisfactory to FINOVA that all insurance coverage required
pursuant to Section 6.6 is in full force and effect and all premiums then due
thereon have been paid in full.
4.1.8 Approval of Instruments and Security Interests. FINOVA
shall have received evidence that the approval or consent shall have been
obtained from all Governmental Bodies and all other Persons whose approval or
consent is required to enable Obligors to (i) enter into and perform their
respective obligations under the Loan Instruments to which each such Person is a
party and (ii) grant the Security Interests to FINOVA.
4.1.9 Opinion of Counsel. FINOVA shall have received an
opinion from such local counsel to the Obligors as FINOVA reasonably may
require, addressed to FINOVA, in such form and covering such matters as FINOVA
reasonably may require.
4.1.10 Payment of Fees and Expenses. Borrower shall have paid
the applicable Loan Fees and all fees and expenses described in subsection
10.1.1.
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4.2 Term Loan A. The obligation of FINOVA to disburse Term Loan A
is subject to the satisfaction of the conditions set forth in Section 4.1 above,
and the following conditions in a manner, form and substance satisfactory to
FINOVA:
4.2.1 Store Fixed Charge Coverage. Borrower shall demonstrate
to the satisfaction of FINOVA that the ratio of the Store Cash Flow of the Owned
Store for the fiscal year ending January 2, 2000 to the projected Store Fixed
Charges of such Owned Store for the twelve month period ending May 31, 2001 is
not less than 1.25:1.00.
4.2.2 Delivery of Documents. The following shall have been
delivered to FINOVA, each duly authorized and executed, where applicable, and in
form and substance satisfactory to FINOVA:
(a) the Loan Instruments, except those Loan Instruments
required to be delivered pursuant to subsections 4.3.3 and
4.4.3 below;
(b) good standing certificates for each Obligor from the State
in which each such Person is organized and for Borrower from
each State in which any Initial Store is located, each dated a
recent date prior to the Closing Date;
(c) copies of:
(1) the articles of incorporation of each
Obligor, certified by the Secretary of State of the
State in which such Obligor is organized, together
with all current and proposed amendments thereto,
certified by the corporate secretary of such Obligor;
(2) the by-laws of each Obligor,
together with all current and proposed amendments
thereto, certified by the corporate secretary of such
Obligor;
(3) resolutions adopted by the board of
directors of each Obligor, authorizing the execution
and delivery by such Obligor of the Loan Instruments
to which such Obligor is a party and the consummation
of the transactions contemplated thereby, certified
as of the Closing Date by the corporate secretary of
such Obligor;
(4) signature and incumbency
certificates of the officers of each Obligor;
(5) the certificate of occupancy for the
Owned Store; and
(6) such other instruments, documents,
certificates, consents, waivers and opinions as
FINOVA reasonably may request; and
(d) the Pay-Off Letters, if any.
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4.2.3 Opinion of Counsel. FINOVA shall have received an
opinion dated the Closing Date from Xxxxx Xxxxxxx, general counsel to the
Obligors, addressed to FINOVA, in such form and covering such matters as FINOVA
reasonably may require..
4.2.4 Financial Statements, Reports and Projections;
Inspection. FINOVA shall have received the financial statements described in
Exhibit 5.7. Borrower shall have arranged for representatives of FINOVA to visit
and inspect its offices and properties.
4.2.5 Title Insurance. FINOVA shall have received a
mortgagee's policy of title insurance in favor of FINOVA with respect to each
parcel of Real Estate covered by the Mortgage, issued by a title company and in
an amount satisfactory to FINOVA, showing that the Borrower has a valid fee
simple estate in each parcel of Real Estate covered by the Mortgage and insuring
that the Mortgage constitutes a valid Lien on Borrower's right, title and
interest in, to and under such parcel, subject only to Permitted Liens and
subject in priority only to Permitted Prior Liens. Each such policy shall insure
over all survey and other general exceptions contained therein and shall include
such affirmative endorsements as reasonably may be required by FINOVA and as are
available in the applicable jurisdiction, including, without limitation,
comprehensive endorsement no. 1, contiguity (if applicable), usury, doing
business, tie-in, restrictions (where applicable), encroachment (where
applicable), 3.1 zoning (including parking), last dollar, tax parcel, survey,
location and access. FINOVA shall have received copies of and found reasonably
satisfactory the provisions of each document referred to in each such policy.
FINOVA shall have received evidence that all premiums with respect to such title
insurance have been paid by Borrower.
4.2.6 Survey. FINOVA shall have received a recent "as-built"
survey of each parcel of Real Estate covered by the Mortgage, certified to
FINOVA and the title company containing a flood plain certification, showing no
matters or exceptions which are not Permitted Liens and otherwise in sufficient
detail as to permit the elimination of any survey exceptions to the title
policies described above and the issuance of the affirmative endorsements
required above.
4.2.7 Environmental Audit or Insurance. FINOVA shall have
received and found satisfactory an environmental audit or environmental
insurance with respect to each parcel of Real Estate designated by FINOVA.
4.3 Term Loan B. The obligation of FINOVA to disburse Term Loan B
is subject to the satisfaction of the conditions set forth in Section 4.1 above,
and the following conditions in a manner, form and substance satisfactory to
FINOVA:
4.3.1 Term Loan A. Term Loan A shall have been disbursed.
4.3.2 Eden Prairie Acquisition. The Eden Prairie Acquisition
shall have been consummated or will be consummated concurrently with the Term
Loan B Closing in accordance with the terms of the Eden Prairie Acquisition
Instruments and applicable law. No party to the Eden Prairie Acquisition
28
Instruments shall have failed to perform or comply with any obligation contained
in such applicable Eden Prairie Acquisition Instruments to be performed or
complied with by it prior to the consummation of the transactions contemplated
therein.
4.3.3 Delivery of Documents. The following shall have been
delivered to FINOVA, each duly authorized and executed, where applicable, and in
form and substance satisfactory to FINOVA:
(a) certified copies or executed originals of
each of the following:
(1) the Eden Prairie Acquisition
Instruments; and
(2) the Eden Prairie Lease, as in effect
on the Term Loan B Closing Date; and
(3) the certificate of occupancy for the
Eden Prairie Leased Store;
(b) a Landlord's Waiver from the Landlord under
the Eden Prairie Lease;.
(c) a Solvency Certificate; and
(d) a Notice of Borrowing/Disbursement Request.
4.3.4 Store Fixed Charge Coverage. Borrower shall demonstrate
to the satisfaction of FINOVA that the ratio of the Store Cash Flow of the Eden
Prairie Leased Store for the fiscal year ending January 2, 2000 to the projected
Store Fixed Charges for such Eden Prairie Leased Store for the twelve month
period ending May 31, 2001 is not less than 1.25:1.00.
4.4 Term Loan C. The obligation of FINOVA to disburse Term Loan C
is subject to the satisfaction of the conditions set forth in Section 4.1 above,
and the following conditions in a manner, form and substance satisfactory to
FINOVA:
4.4.1 Term Loan A. Term Loan A shall have been disbursed.
4.4.2 Minnetonka Acquisition. The Minnetonka Acquisition shall
have been consummated or will be consummated concurrently with the Term Loan C
Closing in accordance with the terms of the Minnetonka Acquisition Instruments
and applicable law. No party to the Minnetonka Acquisition Instruments shall
have failed to perform or comply with any obligation contained in such
applicable Minnetonka Acquisition Instruments to be performed or complied with
by it prior to the consummation of the transactions contemplated therein.
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4.4.3 Delivery of Documents. The following shall have been
delivered to FINOVA, each duly authorized and executed, where applicable, and in
form and substance satisfactory to FINOVA:
(a) certified copies or executed originals of
each of the following:
(1) the Minnetonka Acquisition
Instruments; and
(2) the Minnetonka Lease, as in effect
on the Term Loan C Closing Date; and
(3) the certificate of occupancy for the
Minnetonka Leased Store;
(b) a Landlord's Waiver from the Landlord under
the Minnetonka Lease;
(c) a Solvency Certificate; and
(d) a Notice of Borrowing/Disbursement Request.
4.4.4 Store Fixed Charge Coverage. Borrower shall demonstrate
to the satisfaction of FINOVA that the ratio of the Store Cash Flow of the
Minnetonka Leased Store for the fiscal year ending January 2, 2000 to the
projected Store Fixed Charges for such Minnetonka Leased Store for the twelve
month period ending May 31, 2001 is not less than 1.25:1.00.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to FINOVA as follows:
5.1 Existence and Power. Each Obligor is a corporation, duly formed,
validly existing and in good standing under the laws of the State of its
incorporation. Each Obligor is duly authorized to transact business in each
other State where such Obligor conducts business and has all requisite power and
authority to own its Property and to carry on its business as now conducted and
as proposed to be conducted.
5.2 Authority. Each Obligor has full power and authority to enter into,
execute, deliver and carry out the terms of the Loan Instruments to which it is
a party and to incur the obligations provided for therein, all of which have
been duly authorized by all proper and necessary action and are not prohibited
by its articles of incorporation, by-laws or other organizational instruments of
such Person.
5.3 Borrower Capital Stock and Related Matters.
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5.3.1 Borrower Capital Stock. There is set forth in Exhibit
5.3.1 a complete description of the capital stock of Borrower and each of
Borrower's subsidiaries (collectively, "Borrower Capital Stock"), all of which
is validly issued, fully paid and non-assessable, and has been issued and sold
in compliance with all applicable federal and state laws, rules and regulations,
including, without limitation, all so-called "Blue-Sky" laws. All of the capital
stock of Borrower is owned beneficially and of record by Guarantor, free and
clear of all Liens. Borrower has four wholly-owned subsidiaries each of which is
engaged solely in owning and operating Champps Americana restaurants. All of
capital stock of each of Borrower's subsidiaries is owned beneficially and of
record by Borrower, free and clear of all Liens.
5.3.2 Restrictions. No Obligor (i) is a party to or has
knowledge of any agreements restricting the transfer of the Borrower Capital
Stock, except the Loan Instruments, (ii) has issued any rights which can be
convertible into or exchangeable or exercisable for any of the Borrower Capital
Stock, or any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
any of the Borrower Capital Stock or any securities convertible into or
exchangeable or exercisable for any of the Borrower Capital Stock and (iii) is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of the Borrower Capital Stock or any convertible
rights or options.
5.4 Binding Agreements. This Loan Agreement and the other Loan
Instruments, when executed and delivered, will constitute the valid and legally
binding obligations of each Obligor to the extent such Obligor is a party
thereto, enforceable against such Obligor in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally and
(ii) equitable principles (whether or not any action to enforce such document is
brought at law or in equity).
5.5 Business and Property; Collateral Stores.
5.5.1 Business and Property. Borrower owns all Property
including, without limitation, the Owned Store and holds or, with respect to the
Leased Stores, shall hold, as of the Closing Date of the respective Loan
relating to the applicable Leased Store, all Leased Store Leases, Licenses and
Operating Agreements necessary to conduct its business as now conducted.
Borrower does not engage or propose to engage in any business or activity other
than the Restaurant Business.
5.5.2 Collateral Stores; Other Locations. There is set forth
in Exhibit 5.5.2 (i) a complete and accurate address of each Collateral Store,
(ii) the chief executive office of each Obligor and (iii) all other locations
where any books and records of Borrower pertaining to the Collateral Stores are
located.
5.5.3 Leased Store Leases. There is set forth in Exhibit 5.5.3
a description of each Leased Store Lease, including the name and address of the
landlord thereunder, the commencement and expiration dates thereof, a
description of all renewal or extension options with respect thereto and a
complete and accurate legal description of each parcel of Leasehold Property
31
which is the subject of such Leased Store Lease. Each such Leased Store Lease is
and on the Closing Date of the respective Loan relating to the applicable Leased
Store shall be in full force and effect, there has been, and shall have been, as
of such respective Closing Date, no material default in the performance of any
of its terms or conditions by any party thereto, and no claims of default have
been, or shall have been, as of such respective Closing Date, asserted with
respect thereto. The present and contemplated use of the Leasehold Property
which is the subject of such Leased Store Lease is in compliance in all material
respects with all applicable zoning ordinances and regulations and other laws
and regulations.
5.5.4 Licenses. There is set forth in Exhibit 5.5.4 a
description of all Licenses with respect to the Collateral Stores which have
been issued or assigned, or, with respect to the Leased Stores, shall have been
issued, as of the Closing Date of the respective Loan relating to the applicable
Leased Store, to Borrower. All of such Licenses are, or shall be, as of such
respective Closing Date, in full force and effect and have been duly, or, with
respect to the Leased Stores, shall have been issued, as of the Closing Date of
the respective Loan relating to the applicable Leased Store, issued in the name
of, or validly assigned to, Borrower, no default or breach exists, or shall
exist, as of such respective Closing Date, thereunder and Borrower has full
power and authority thereunder to conduct its Restaurant Business with respect
to the Collateral Stores.
5.5.5 Operating Agreements. There is set forth in Exhibit
5.5.5 a description of all material Operating Agreements with respect to the
Collateral Stores. All of such Operating Agreements are, or, with respect to the
Leased Stores, shall be, as of the Closing Date of the respective Loan relating
to the applicable Leased Store, in full force and effect and no event has
occurred which could result in the cancellation or termination of any such
Operating Agreement or the imposition thereunder of any liability upon Borrower
which could have a Material Adverse Effect.
5.5.6 Real Estate. Except with respect to the Owned Store,
no Collateral Store is located upon any Real Estate.
5.5.7 Operation and Maintenance of Equipment. No equipment
owned or operated by Borrower which is necessary for the operation of any
Collateral Store has been used, operated or maintained in a manner which now or
hereafter could result in the cancellation or termination of the right of
Borrower to use or make use of the same or which could result in any material
liability of Borrower for damages in connection therewith. All of the equipment
and other tangible personal property owned by Borrower used in the operation of
the Collateral Stores is, in all material respects, in good operating condition
and repair (subject to normal wear and tear) and has been used, operated and
maintained in substantial compliance with all applicable laws, rules and
regulations.
5.5.8 Title to Property; Liens. Each Obligor has (i) good and
marketable title to all of its Property used or useful in connection with the
operation of the Collateral Stores, except (A) any License which cannot be
transferred without the consent of the applicable Governmental Body and (B) the
portion thereof consisting of a leasehold estate and (ii) a valid leasehold
estate in each portion of its Property which consists of a leasehold estate. All
32
of such Property is free and clear of all Liens, except Permitted Liens. Upon
the proper filing with the appropriate Governmental Bodies of appropriate
Uniform Commercial Code financing statements and the recording of the Mortgage,
the applicable Loan Instruments will create valid and perfected Liens in the
Property described therein, subject only to Permitted Prior Liens.
5.6 Indebtedness for Borrowed Money. There is set forth in Exhibit 5.6
a description of all Indebtedness for Borrowed Money of Borrower existing as of
the Closing Date, including the principal amount thereof and the interest rate,
amortization schedule and maturity date applicable thereto.
5.7 Financial Statements. Borrower has delivered to FINOVA the
financial statements described in Exhibit 5.7 pertaining to the operations of
the Obligors. Such financial statements present fairly in all material respects
the results of operations of the Obligors for the periods covered thereby and
the financial condition of the Obligors as of the dates indicated therein. All
of such financial statements have been prepared in conformity with GAAP. Since
January 2, 2000, there has been no change which has had a Material Adverse
Effect. Borrower also has delivered to FINOVA a pro-forma balance sheet as of
the Closing Date. Such pro-forma balance sheet, which assumes the consummation
of the transactions contemplated by the Loan Instruments, presents fairly in all
material respects the anticipated financial condition of Borrower as of the
Closing Date of Term Loan A.
5.8 Litigation. There is set forth in Exhibit 5.8 a description of all
actions, suits, arbitration proceedings and claims pending or, to the best
knowledge of Borrower, threatened against any Obligor or maintained by any
Obligor at law or in equity or before any Governmental Body, or in respect of
which any Obligor may have any liability which could reasonably be expected to
be adversely determined and, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
5.9 Defaults in Other Agreements; Consents; Conflicting Agreements. No
Obligor is in default under any agreement to which it is a party or by which it
or any of its Property is bound, the effect of which default could have a
Material Adverse Effect. No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Body or any other Person which
has not already been obtained, taken or filed, as applicable, is required (i)
for the due execution, delivery or performance by any Obligor of any of the Loan
Instruments to which it is a party or (ii) as a condition to the validity or
enforceability of any of the Loan Instruments to which it is a party or any of
the transactions contemplated thereby or the priority of the Security Interests,
except for certain filings to establish and perfect the Security Interests. No
provision of any mortgage, indenture, contract, agreement, statute, rule,
regulation, judgment, decree or order binding on any Obligor or affecting its
Property conflicts with, or requires any consent which has not already been
obtained under, or would in any way prevent the execution, delivery or
performance of the terms of any of the Loan Instruments or affect the validity
or priority of the Security Interests. The execution, delivery and performance
of the terms of the Loan Instruments will not constitute a default under, or
result in the creation or imposition of, or obligation to create, any Lien upon
the Property of any Obligor pursuant to the terms of any such mortgage,
indenture, contract or agreement.
33
5.10 Taxes. Each Obligor has filed all tax returns required to be
filed, and has paid, or made adequate provision for the payment of, all taxes
shown to be due and payable on such returns or in any assessments made against
it, and no tax liens have been filed and, to the best knowledge of Borrower, no
claims are being asserted in respect of such taxes which are required by GAAP to
be reflected in the financial statements of such Obligor and are not so
reflected therein. The charges, accruals and reserves on the books of each
Obligor with respect to all federal, state, local and other taxes are considered
by the management of Borrower to be adequate, and Borrower does not know of any
unpaid assessment which is or might be due and payable by any Obligor or create
a Lien against such Obligor's Property, except such assessments as are being
contested in good faith and by appropriate proceedings diligently conducted, and
for which adequate reserves have been set aside in accordance with GAAP. None of
the tax returns of any Obligor are under audit or investigation by the Internal
Revenue Service.
5.11 Compliance with Applicable Laws. No Obligor is in default in
respect of any judgment, order, writ, injunction, decree or decision of any
Governmental Body, which default could have a Material Adverse Effect. Each
Obligor is in compliance in all material respects with all applicable statutes
and regulations, including, without limitation, all Environmental Laws, ERISA,
ADA and all laws and regulations relating to unfair labor practices, equal
employment opportunity and employee safety, of all Governmental Bodies. No
material condemnation, eminent domain or expropriation has been commenced or, to
the best knowledge of Borrower, threatened against the Property which any
Obligor owns or will own upon the Closing.
5.12 Patents, Trademarks, Franchises, Agreements. Each Obligor owns,
possesses or has the right to use all patents, trademarks, service marks, trade
names, copyrights, franchises and rights with respect thereto which are
necessary for the conduct of its business, the failure to own, possess or have
the right to use could have a Material Adverse Effect, without any known
conflict with the rights of others.
5.13 Regulatory Matters. Each Obligor (i) has duly and timely filed all
reports and other filings which are required to be filed by Borrower under any
applicable law, rule or regulation of any Governmental Body, the non-filing of
which could have a Material Adverse Effect, and (ii) is in compliance with all
such laws, rules and regulations, the noncompliance with which could have a
Material Adverse Effect.
5.14 Environmental Matters. Each Obligor is in compliance in all
material respects with all applicable Environmental Laws and no portion of any
Real Estate or Leasehold Property has been used as a land fill. There currently
are not any known Hazardous Materials generated, manufactured, released, stored,
buried or deposited over, beneath, in or on (or used in the construction and/or
renovation of) the Real Estate or Leasehold Property in violation of applicable
Environmental Laws.
5.15 Application of Certain Laws and Regulations. Borrower is not
and no Affiliate of Borrower is:
34
5.15.1 Investment Company Act. An "investment company," or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.15.2 Holding Company Act. 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," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
5.15.3 Foreign or Enemy Status. (i) An "enemy" or an "ally of
an enemy" within the meaning of Section 2 of the Trading with the Enemy Act,
(ii) a "national" of a foreign country designated in Executive Order No. 8389,
as amended, or of any "designated enemy country" as defined in Executive Order
No. 9095, as amended, of the President of the United States of America, in each
case within the meaning of such Executive Orders, as amended, or of any
regulation issued thereunder, (iii) a "national of any designated foreign
country" within the meaning of the Foreign Assets Control Regulations or the
Cuban Assets Control Regulations of the United States of America (Code of
Federal Regulations, Title 31, Chapter V, Part 515, Subpart B, as amended) or
(iv) an alien or a representative of any alien or foreign government within the
meaning of Section 310 of Title 47 of the United States Code.
5.15.4 Regulations as to Borrowing. Subject to any statute or
regulation which regulates the incurrence of any Indebtedness for Borrowed
Money, including, without limitation, statutes or regulations relative to common
or interstate carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
5.16 Margin Regulations. None of the transactions contemplated by this
Loan Agreement or any of the other Loan Instruments, including the use of the
proceeds of the Loans, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X, and no
Obligor owns or intends to carry or purchase any "margin security" within the
meaning of such Regulation U or G.
5.17 No Misrepresentation. Neither this Loan Agreement nor any other
Loan Instrument, certificate, financial statement, information or report
furnished or to be furnished by or on behalf of any Obligor to FINOVA in
connection with any of the transactions contemplated hereby or thereby, contains
or will contain a misstatement of material fact, or omits or will omit to state
a material fact required to be stated in order to make the statements contained
herein or therein, taken as a whole, not misleading in the light of the
circumstances under which such statements were made. There is no fact, other
than information known to the public generally, known to Borrower after diligent
inquiry, that could have a Material Adverse Effect that has not expressly been
disclosed to FINOVA in writing.
5.18 Employee Benefit Plans.
35
5.18.1 ERISA and Code Compliance and Liability. Borrower and
each ERISA Affiliate are in compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans except where failure to comply would not result in a
material liability to Borrower and except for any required amendments for which
the remedial amendment period as defined in Section 401(b) of the Code has not
yet expired. Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has been determined to
be exempt under Section 401(a) of the Code. No material liability has been
incurred by Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan.
5.18.2 Funding. No Pension Plan has been terminated, nor has
any accumulated funding deficiency (as defined in Section 412 of the Code) been
insured (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has Borrower or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and owing
as required by Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under Section 412 of
the Code or Section 302 of ERISA, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(C), 4063(a) or 4068 of ERISA with respect to
any Pension Plan.
5.18.3 Prohibited Transactions and Payments. Neither Borrower
nor any ERISA Affiliate has: (i) engaged in a nonexempt "prohibited transaction"
as such term is defined in Section 406 of ERISA or Section 4975 of the Code;
(ii) incurred any liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and unpaid;
(iii) failed to make a required contribution or payment to a Multiemployer Plan;
or (iv) failed to make a required installment or other required payment under
Section 412 of the Code.
5.18.4 No Termination Event. No Termination Event has
occurred or is reasonably expected to occur.
5.18.5 ERISA Litigation. No material proceeding, claim,
lawsuit and/or investigation is existing or, to the best knowledge of Borrower,
threatened concerning or involving any (i) employee welfare benefit plan (as
defined in Section 3(1) of ERISA) currently maintained or contributed to by
Borrower or any ERISA Affiliate, (ii) Pension Plan or (iii) Multiemployer Plan.
5.19 Employee Matters.
5.19.1 Collective Bargaining Agreements; Grievances. Except as
set forth in Exhibit 5.20.1, (i) none of the employees of Borrower is subject to
any collective bargaining agreement with Borrower, (ii) no petition for
certification or union election is pending with respect to the employees of
Borrower and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of Borrower and (iii)
36
there are no strikes, slowdowns, work stoppages, unfair labor practice
complaints, grievances, arbitration proceedings or controversies pending or, to
the best knowledge of Borrower, threatened against Borrower by any of Borrower's
employees, other than employee grievances or controversies arising in the
ordinary course of business that could not in the aggregate be expected to have
a Material Adverse Effect.
5.19.2 Claims Relating to Employment. Neither Borrower nor, to
Borrower's best knowledge, any employee of Borrower, is subject to any
employment agreement or non-competition agreement with any former employer or
any other Person which agreement would have a Material Adverse Effect due to (i)
any information which Borrower would be prohibited from using under the terms of
such agreement or (ii) any legal considerations relating to unfair competition,
trade secrets or proprietary information.
5.20 Burdensome Obligations. After giving effect to the transactions
contemplated by the Loan Instruments (i) no Obligor (A) will be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome so as to cause, in
the foreseeable future, a Material Adverse Effect and (B) intends to incur, or
believes that it will incur, debts beyond its ability to pay such debts as they
become due, and (ii) each Obligor (A) owns and will own Property, the fair
saleable value of which is (I) greater than the total amount of its liabilities
(including contingent liabilities) and (II) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured, and (B) has and will have capital that is not
unreasonably small in relation to its business as presently conducted and as
proposed to be conducted. Borrower does not presently anticipate that future
expenditures needed to meet the provisions of federal or state statutes, orders,
rules or regulations will be so burdensome so as to have a Material Adverse
Effect.
5.21 Broker Fees. The services of a broker or other similar agent
have not been used in connection with the Loans.
5.22 Insurance. No written notice of cancellation has been received
with respect to any insurance policies required pursuant to Section 6.6 and
Borrower is in material compliance with all conditions contained in such
policies.
5.23 Acquisition Instruments. The representations and warranties set
forth in the Acquisition Instruments are true and correct in all material
respects.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full
Borrower agrees that it will:
6.1 Legal Existence; Good Standing. Maintain its existence and its good
standing in the jurisdiction of its formation and its qualification in each
37
jurisdiction in which the failure so to qualify could have a Material Adverse
Effect, and in any event in each jurisdiction in which any Store is operated by
it.
6.2 Inspection. Permit representatives of FINOVA at any time to (i)
visit its offices, (ii) examine its books and records and Accountants' reports
relating thereto, (iii) make copies or extracts therefrom, (iv) discuss its
affairs with its employees, (v) examine and inspect the Collateral and (vi) meet
and discuss its affairs with the Accountants, and such Accountants, as a
condition to their retention by Borrower, are hereby irrevocably authorized by
Borrower to fully discuss and disclose all such affairs with FINOVA.
6.3 Financial Statements and Other Information. Maintain a
standard system of accounting in accordance with GAAP and furnish to FINOVA:
6.3.1 Quarterly Statements. As soon as available and in
any event within 45 days after the close of each quarter:
(a) a copy of the balance sheet of each Obligor as of the end of
such quarter, and
(b) statements of operations and Cash Flow of each Obligor for
such quarter and for the period from the beginning of the then
current year to the end of such quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding period in the preceding year, all in reasonable
detail, containing such information as FINOVA reasonably may
require, and certified by the chief financial officer of Borrower
as complete and correct, subject to normal year-end adjustments.
6.3.2 Annual Statements. As soon as available and in any
event within 90 days after the close of each year:
(a) the balance sheet of Guarantor as of the end of such year
and the statements of operations, cash flows, shareholders'
equity of Guarantor for such year (collectively, the "Basic
Financial Statements"), a statement of Cash Flow of each
Obligor for such year, setting forth in each case in
comparative form the corresponding figures for the preceding
year, and
(b) an opinion of the Accountants which shall accompany the
Basic Financial Statements which opinion shall be unqualified
as to going concern and scope of audit, stating that (i) the
examination by the Accountants in connection with such Basic
Financial Statements has been made in accordance with
generally accepted auditing standards, (ii) such Basic
38
Financial Statements have been prepared in conformity with
GAAP and in a manner consistent with prior periods, and (iii)
such Basic Financial Statements fairly present in all material
respects the financial position and results of operations of
each Obligor.
6.3.3 Compliance Certificate. The financial statements
described in subsection 6.3.1 and in subsection 6.3.2 shall be accompanied by a
Compliance Certificate.
6.3.4 Audit Reports. Promptly upon receipt thereof, a copy of
each report, other than the reports referred to in subsection 6.3.2, including
any so-called "Management Letter" or similar report, submitted to any Obligor by
the Accountants in connection with any annual, interim or special audit made by
the Accountants of the books of such Obligor.
6.3.5 Notice of Defaults; Loss. Prompt written notice if: (i)
any Indebtedness of any Obligor is declared or shall become due and payable
prior to its declared or stated maturity, or called and not paid when due, (ii)
an event has occurred that enables the holder of any note, or other evidence of
such Indebtedness, certificate or security evidencing any such Indebtedness of
any Obligor to declare such Indebtedness due and payable prior to its stated
maturity, (iii) there shall occur and be continuing an Event of Default,
accompanied by a statement of setting forth what action Borrower proposes to
take in respect thereof, or (iv) any event shall occur which has a Material
Adverse Effect, including the amount or the estimated amount of any loss or
adverse effect.
6.3.6 Notice of Suits; Adverse Events. Prompt written notice
of: (i) any citation, summons, subpoena, order to show cause or other order
naming any Obligor a party to any proceeding before any Governmental Body which
could reasonably be expected to have a Material Adverse Effect, including with
such notice a copy of such citation, summons, subpoena, order to show cause or
other order, (ii) any lapse or other termination of any license, permit,
franchise, agreement or other authorization issued to any Obligor by any
Governmental Body or any other Person that is material to the operation of the
business of such Obligor, (iii) any refusal by any Governmental Body or any
other Person to renew or extend any such license, permit, franchise, agreement
or other authorization and (iv) any dispute between any Obligor and any
Governmental Body or any other Person, which lapse, termination, refusal or
dispute referred to in clauses (ii) and (iii) above or in this clause (iv) could
have a Material Adverse Effect.
6.3.7 Reports to Shareholders, Creditors and Governmental
Bodies.
(a) Promptly upon becoming available, copies of all financial
statements, reports, notices and other statements sent or made
available generally by any Obligor to its shareholders, of all
regular and periodic reports and all registration statements
and prospectuses filed by any Obligor with any securities
exchange or with the Securities and Exchange Commission or any
Governmental Body succeeding to any of its functions, and of
39
all statements generally made available by any Obligor or
others concerning material developments in the business of
such Obligor.
(b) Promptly upon becoming available, copies of any periodic
or special reports filed by any Obligor with any Governmental
Body or Person, if such reports indicate any material adverse
change in the business, operations, affairs or condition of
such Obligor, or if copies thereof are requested by FINOVA,
and copies of any material notices and other communications
from any Governmental Body or Person which specifically relate
to any Obligor.
6.3.8 ERISA Notices and Requests.
(a) With reasonable promptness, and in any event within 30
days after occurrence of any of the following, notice and/or
copies of: (i) the establishment of any new Employee Benefit
Plan, Pension Plan or Multiemployer Plan; (ii) the
commencement of contributions to any Employee Benefit Plan,
Pension Plan or Multiemployer Plan to which Borrower or any of
its ERISA Affiliates was not previously contributing or any
increase in the benefits of any existing Employee Benefit
Plan, Pension Plan or Multiemployer Plan; (iii) each funding
waiver request filed with respect to any Employee Benefit Plan
and all communications received or sent by Borrower or any
ERISA Affiliate with respect to such request; and (iv) the
failure of Borrower or any of its ERISA Affiliates to make a
required installment or payment under Section 302 of ERISA or
Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 days of becoming aware
of the occurrence of or forthcoming occurrence of any (i)
Termination Event or (ii) "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the
Code, in connection with any Pension Plan or any trust created
thereunder, a notice specifying the nature thereof, what
action Borrower has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event within 10 days
after the occurrence of any of the following, copies of: (i)
any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code; (ii)
all notices received by Borrower or any ERISA Affiliate of the
PBGC's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan; (iii) each
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Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by Borrower or any ERISA Affiliate with the
Internal Revenue Service with respect to each Pension Plan;
and (iv) all notices received by Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA; and written notice within two Business
Days of Borrower's or any ERISA Affiliate's filing of or
intention to file a notice of intent to terminate any Pension
Plan under a distress termination within the meaning of
Section 4041(c) of ERISA.
6.3.9 Other Information.
(a) Immediate notice of any change in the location of any
Property of Borrower located at any of the Collateral Stores,
any change in the name of Borrower, any sale or purchase of
Property outside the regular course of business of Borrower,
and any change in the business or financial affairs of any
Obligor, which change could have a Material Adverse Effect.
(b) Promptly upon request therefor, such other information and
reports relating to the past, present or future financial
condition, operations, plans and projections of Borrower as
FINOVA reasonably may request from time to time.
6.4 Reports to Governmental Bodies and Other Persons. Timely file all
material reports, applications, documents, instruments and information required
to be filed pursuant to all rules, regulations or requests of any Governmental
Body or other Person having jurisdiction over the operation of the business of
Borrower, including, but not limited to, such of the Loan Instruments as are
required to be filed with any such Governmental Body or other Person pursuant to
applicable rules and regulations promulgated by such Governmental Body or other
Person.
6.5 Maintenance of Licenses. Maintain in full force and effect at all
times, and apply in a timely manner for renewal of, all Licenses, trademarks,
tradenames and agreements necessary for the operation of its Restaurant
Business, the loss of any of which could have a Material Adverse Effect.
6.6 Insurance.
6.6.1 Maintenance of Insurance. (i) Maintain in full force and
effect at all times such property, casualty, business interruption and other
insurance with respect to the Collateral Stores (including, without limitation,
all Collateral therein) required by FINOVA, all of which shall be written by
insurers, contain terms and be in amounts and forms satisfactory to FINOVA and
otherwise meeting the requirements set forth on Exhibit 6.6.1 attached hereto
and (ii) deliver to FINOVA, from time to time as FINOVA reasonably may request,
41
evidence of compliance with this subsection, but in any event at least 15 days
prior to the expiration date of any policy required hereunder, each bearing
notations evidencing prior payment of premiums.
6.6.2 Claims and Proceeds. Borrower hereby directs all
insurers under all policies of casualty and property insurance pertaining to the
furniture, fixtures, equipment and other contents located at the Collateral
Stores required to be maintained by Borrower pursuant to subsection 6.6.1 to pay
all proceeds payable thereunder directly to FINOVA and Borrower hereby
authorizes FINOVA to collect such proceeds; provided that so long as no
Incipient Default or Event of Default exists and is continuing any proceeds
payable thereunder in an aggregate amount of $50,000 or less may be paid
directly to Borrower provided Borrower promptly uses such proceeds to pay for
the cost of repair or replacement of the Collateral subject to the applicable
loss, damage, destruction or other casualty to at least equal value and
substantially the same character as prior to such loss, damage, destruction or
other casualty. Borrower hereby irrevocably appoints FINOVA (and all officers,
employees or agents designated by FINOVA) as Borrower's true and lawful attorney
and agent in fact for the purpose of and with power to make, settle and adjust
claims under such policies of insurance, endorse the name of Borrower on any
check, draft, instrument or other item of payment for the proceeds of such
policies of insurance, and to make all determinations and decisions with respect
to such policies of insurance. Borrower acknowledges that such appointment of
FINOVA as its attorney and agent in fact is a power coupled with an interest and
therefore is irrevocable. FINOVA agrees that it shall use reasonable efforts to
consult with Borrower in the event that FINOVA makes, settles or adjusts any
claims under such policies of insurance; provided, however, any decision in
connection therewith made by FINOVA may be made in FINOVA's discretion, without
the consent of Borrower. Borrower shall promptly notify FINOVA of any loss,
damage, destruction or other casualty to the Collateral. Subject to the first
sentence of this subsection 6.6.2, the insurance proceeds received on account of
any loss, damage, destruction or other casualty (i) if any Incipient Default or
Event of Default exists, at the option of FINOVA shall be applied (A) as set
forth in the following clause (ii) or (B) in reduction of Borrower's Obligations
in the following order of priority: (1) first, to the payment of any and all
sums which are then due and payable pursuant to the terms of the Loan
Instruments, other than the Principal Balance and accrued and unpaid interest
thereon, (2) next, to accrued and unpaid interest on the Principal Balance and
(3) next, to the Principal Balance of the Loans in the inverse order of the
maturity of the installments thereof or (ii) if no Incipient Default or Event of
Default exists or if FINOVA so elects, shall be held by FINOVA and applied to
pay for the cost of repair or replacement of the Collateral subject to such
loss, damage, destruction or other casualty, in which event such proceeds shall
be made available in the manner and under such conditions as FINOVA reasonably
may require. In the event the proceeds are to be applied to the repair or
replacement of Collateral, the Collateral shall be so repaired or replaced as to
be of at least equal value and substantially the same character as prior to such
loss, damage, destruction or other casualty.
6.7 Environmental Matters. At all times comply with, and be responsible
for, its obligations under all Environmental Laws applicable to the Real Estate
and Leasehold Property and any other Property owned by Borrower or used by
Borrower in the operation of its Restaurant Business. At its sole cost and
42
expense, Borrower shall (i) comply in all respects with (A) any notice of any
violation or administrative or judicial complaint or order having been filed
against Borrower, any portion of any Real Estate or Leasehold Property or any
other Property owned by Borrower or used by Borrower in the operation of its
business alleging violations of any law, ordinance and/or regulation requiring
Borrower to take any action in connection with the release, transportation
and/or clean-up of any Hazardous Materials, and (B) any notice from any
Governmental Body or any other Person alleging that Borrower is or may be liable
for costs associated with a response or clean-up of any Hazardous Materials or
any damages resulting from such release or transportation, or (ii) diligently
contest in good faith by appropriate proceedings any demands set forth in such
notices, provided (A) reserves in an amount satisfactory to FINOVA to pay the
costs associated with complying with any such notice are established by Borrower
and (B) no Lien would or will attach to the Property which is the subject of any
such notice as a result of any compliance by Borrower which is delayed during
any such contest. Promptly upon receipt of any notice described in the foregoing
clause (i), Borrower shall deliver to FINOVA a copy thereof.
6.8 Compliance with Laws. Comply with all federal, state and local
laws, ordinances, requirements and regulations and all judgments, orders,
injunctions and decrees applicable to Borrower and its operations, the failure
to comply with which could have a Material Adverse Effect.
\
6.9 Taxes and Claims. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any Property belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien (other than
a Permitted Lien) upon the Property of Borrower, provided that Borrower shall
not be required by this Section 6.9 to pay any such amount if the same is being
contested diligently and in good faith by appropriate proceedings and as to
which Borrower has set aside reserves on its books satisfactory to FINOVA.
6.10 Maintenance of Properties. Maintain all of its Properties
necessary in the operation of the Collateral Stores in good working order and
condition.
6.11 Approvals. Upon the exercise by FINOVA of any power, right or
privilege pursuant to the provisions of any of the Loan Instruments requiring
any consent, approval or authorization of any Governmental Body, Landlord or
other Person (including, without limitation, transfers of Licenses and Leases),
promptly execute and cause the execution of all applications, certificates,
instruments and other documents that FINOVA may be required to obtain for such
consent, approval or authorization.
6.12 Payment of Indebtedness. Except as to matters being contested in
good faith and by appropriate proceedings, promptly pay when due, or in
conformance with customary trade terms, all of its Indebtedness.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower shall not:
43
7.1 Borrowing. Create, incur, assume or suffer to exist any liability
for Indebtedness for Borrowed Money if the Borrower Fixed Charge Coverage Ratio
for the twelve month period most recently ended would be less than 1.20 assuming
such Indebtedness for Borrowed Money was incurred on the first day of such
period.
7.2 Liens. Create, incur, assume or suffer to exist any Lien upon any
of the Collateral or the Leased Store Leases, in each case whether now owned or
hereafter acquired, except Permitted Liens.
7.3 Merger and Acquisition. Consolidate with or merge with or into any
Person unless (i) Borrower is the surviving corporation and (ii) immediately
upon consummation of such consolidation or merger, Borrower would be permitted
to borrow at least $1.00 of additional Indebtedness for Borrowed Money under
Section 7.1.
7.4 Contingent Liabilities. Assume, guarantee, endorse, contingently
agree to purchase, become liable in respect of any letter of credit, or
otherwise become liable upon the obligation of any Person, where any such
liabilities, in the aggregate, exceed $250,000.00, except for liabilities
arising from the endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business.
7.5 Dividends and Distributions. Make any dividends or distributions
with respect to the capital stock of Borrower or apply any of its Property to
the purchase, redemption or other retirement of, or set apart any sum for the
payment of, or make any other distribution by reduction of capital or otherwise
in respect of, any of the capital stock of Borrower, if the ratio of the Cash
Flow of Borrower for the twelve month period most recently ended to the sum of
Borrower Fixed Charges for such period plus the amount of such dividends,
distributions or other payments for such period would be less than 1.00.
7.6 Equipment Leases. Enter into any (i) Operating Leases pertaining to
equipment or other Property located at any of the Collateral Stores if the
aggregate rent expense payable under all such Operating Leases at such
Collateral Store would exceed $50,000 in any year or (ii) Capitalized Leases
pertaining to equipment or other Property located at any of the Collateral
Stores.
7.7 Investments, Loans. Except with respect to dividends or
distributions made by Borrower to Guarantor permitted under Section 7.5, at any
time purchase or otherwise acquire, hold or invest in the capital stock of, or
any other interest in, any Person (except with respect to Borrower's ownership
of the capital stock of its subsidiaries listed in Exhibit 5.3.1), or make any
loan or advance to, or enter into any arrangement for the purpose of providing
funds or credit to, or make any other investment, whether by way of capital
contribution or otherwise, in or with any Person, including, without limitation,
any Affiliate, except (i) investments in direct obligations of, or instruments
unconditionally guaranteed by, the United States of America or in certificates
of deposit issued by a Qualified Depository, (ii) investments in commercial or
finance paper which, at the time of investment, is rated "A" or better by
Xxxxx'x Investors Service, Inc., or Standard & Poor's Corporation, respectively,
or at the equivalent rate by any of their respective successors and (iii) any
interests in any money market account maintained, at the time of investment,
with a Qualified Depository, the investments of which, at the time of
44
investment, are restricted to the types specified in clause (i) above. All
investments permitted pursuant to this Section 7.7 shall have a maturity not
exceeding one year.
7.8 Fundamental Business Changes. Materially change the nature of
its business or engage in any business other than the Restaurant Business and
activities incidental thereto.
7.9 Facility Sites. Change the locations of its chief executive office
or other Property used in the operation of the Collateral Stores unless (i)
FINOVA shall have received at least 30 days' prior written notice thereof and
(ii) Borrower shall have executed and delivered to FINOVA any documents FINOVA
may reasonably require in order to maintain the validity and priority of the
Security Interests.
7.10 Sale or Transfer of Assets; Store Closing or Sale. Sell,
lease, assign, transfer or otherwise dispose of any of the Collateral or any of
the Leased Store Leases, or close or sell any Collateral Store, except that
Borrower may:
7.10.1 Inventory and Equipment. Sell or dispose of (i)
inventory in the ordinary course of business and (ii) obsolete or unusable items
of equipment which promptly are replaced with new items of equipment of like
function and comparable value to the unusable items of equipment when the same
were new or not obsolete or unusable, provided such replacement items of
equipment shall become subject to the Security Interests.
7.10.2 Store Closing or Sale. Close or sell:
(a) the Eden Prairie Store or any Substitute Store for the
Eden Prairie Store (i) during the first two Term Loan B Loan
Years provided that such Collateral Store is replaced with a
Substitute Store and FINOVA determines that the Substitution
Conditions have been satisfied as of the date of such closure
or sale and (ii) after the first two Term Loan B Loan Years
provided that (B) such Collateral Store is replaced with a
Substitute Store and FINOVA determines that the Substitution
Conditions have been satisfied as of the date of such closure
or sale or (B) Borrower makes the payments required under
subsection 2.6.4 on the date of such closure or sale; and
(b) the Minnetonka Store or any Substitute for the Minnetonka
Store (i) during the first two Term Loan C Loan Years provided
that such Collateral Store is replaced with a Substitute Store
and FINOVA determines that the Substitution Conditions have
been satisfied as of the date of such closure or sale and (ii)
after the first two Term Loan C Loan Years provided that (A)
such Collateral Store is replaced with a Substitute Store and
FINOVA determines that the Substitution Conditions have been
satisfied as of the date of such closure or sale or (B)
Borrower makes the payments required under subsection 2.6.4 on
the date of such closure or sale.
45
7.11 Amendment of Certain Agreements. Amend, modify or waive any term
or provision of its articles of incorporation or by-laws or the Leased Store
Leases without the prior written consent of FINOVA, which consent shall not be
unreasonably withheld.
7.12 Transactions with Affiliates. Sell, lease, assign, transfer or
otherwise dispose of any Property to any Obligor or any Affiliate of any
Obligor, lease Property, render or receive services or purchase assets from any
Obligor or any such Affiliate, or otherwise enter into any contractual
relationship with any Obligor or any Affiliate of any Obligor except on terms
and conditions no less favorable to Borrower than could be obtained on an arm's
length basis from a third party who is not an Obligor or an Affiliate of an
Obligor.
7.13 Compliance with ERISA.
(i) Permit the occurrence of any Termination Event which would result
in a liability to Borrower or any ERISA Affiliate in excess of
$50,000;
(ii) Permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities by more than
$50,000;
(iii) Permit any accumulated funding deficiency in excess of $50,000
(as defined in Section 302 of ERISA and Section 412 of the Code) with
respect to any Pension Plan, whether or not waived;
(iv) Fail to make any contribution or payment to any Multiemployer
Plan which Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto which results in or is likely to result in a
liability in excess of $50,000;
(v) Engage, or permit Borrower or any ERISA Affiliate to engage, in
any "prohibited transaction" as such term is defined in Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant
to Section 502(i) of ERISA or a tax pursuant to Section 4975 of the
Code in excess of $50,000 is imposed;
(vi) Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or amendment could result in
liability to Borrower or any ERISA Affiliate or increase the
obligation of Borrower or any ERISA Affiliate to a Multiemployer Plan
which liability or increase, individually or together with all similar
liabilities and increases, is material to Borrower or amu ERISA
Affiliate; or
(vii) Fail, or permit Borrower or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with ERISA, the Code and all other
applicable laws and regulations and interpretations thereof.
46
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 Events of Default. The occurrence of any of the following
shall constitute an Event of Default under the Loan Instruments:
8.1.1 Default in Payment. If Borrower shall fail to pay
all or any portion of Borrower's Obligations the same become due and payable.
8.1.2 Breach of Covenants.
(a) If Borrower shall fail to observe or perform any covenant
or agreement made by Borrower contained in Sections 6.1, 6.2
or 6.6 or in Article VII;
(b) If Borrower shall fail to observe or perform any covenant
or agreement made by Borrower contained in Sections 6.3, 6.5,
6.7, 6.8, 6.9, 6.10 or 6.11 and such failure shall continue
for a period of 15 days; or
(c) If Borrower or Guarantor shall fail to observe or perform
any covenant or agreement (other than those referred to in
subparagraphs (a) or (b) above or specifically addressed
elsewhere in this Section 8.1) made by such Person in any of
the Loan Instruments to which such Person is a party, and such
failure shall continue for a period of 30 days after the
earlier of (i) notice to Borrower from FINOVA of such failure,
or (ii) the date Borrower first becomes aware of such failure.
8.1.3 Breach of Warranty. If any representation or warranty
made by or on behalf of any Obligor in or pursuant to any of the Loan
Instruments or in any instrument or document furnished in compliance with the
Loan Instruments shall prove to be false or misleading in any material respect.
8.1.4 Default Under Other Indebtedness for Borrowed Money. If
(i) any Obligor at any time shall be in default (as principal or guarantor or
other surety) in the payment of any principal of or premium or interest on any
Indebtedness for Borrowed Money (other than Borrower's Obligations) beyond the
grace period, if any, applicable thereto and the aggregate amount of such
payments then in default beyond such grace period shall exceed $100,000 or (ii)
any default shall occur in respect of any issue of Indebtedness for Borrowed
Money of any Obligor (other than Borrower's Obligations) outstanding in a
principal amount of at least $1,000,000, or in respect of any agreement or
instrument relating to any such issue of Indebtedness for Borrowed Money, and
such default shall continue beyond the grace period, if any, applicable thereto.
8.1.5 Bankruptcy.
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(a) If any Obligor shall (i) generally not be paying its debts
as they become due, (ii) file, or consent, by answer or
otherwise, to the filing against it of a petition for relief
or reorganization or arrangement or any other petition in
bankruptcy or insolvency under the laws of any jurisdiction,
(iii) make an assignment for the benefit of creditors, (iv)
consent to the appointment of a custodian, receiver, trustee
or other officer with similar powers for it or for any
substantial part of its Property, or (v) be adjudicated
insolvent.
(b) If any Governmental Body of competent jurisdiction shall
enter an order appointing, without consent of such Obligor, a
custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial
part of its Property, or if an order for relief shall be
entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of any Obligor or
if any petition for any such relief shall be filed against it
and such petition shall not be dismissed or stayed within 60
days.
8.1.6 Judgments. If there shall be entered against Borrower
one or more judgments, awards or decrees, or orders of attachment, garnishment
or any other writ, which exceed $250,000 in the aggregate at any one time
outstanding, excluding judgments, awards, decrees, orders or writs (i) for which
there is full insurance (subject to applicable deductibles) and with respect to
which the insurer has assumed responsibility for the defense thereof, (ii) for
which there is full indemnification (upon terms and by creditworthy indemnitors
which are satisfactory to FINOVA), (iii) which have been in force for less than
the applicable period for filing an appeal so long as execution has not been
levied thereunder (or in respect of which Borrower shall at the time in good
faith be prosecuting an appeal or proceeding for review and in respect of which
a stay of execution or appropriate appeal bond shall have been obtained pending
such appeal or review) or (iv) which arise in connection with that certain case
known as Xxxxxx XxXxxx x. Xxxxxx University, et al. Civil Action No. 97-CA-7505
(D.C. Superior Court), filed September 27, 1997 ("XxXxxx"), provided the final
judgment, award or settlement amount incurred by Borrower in connection with
XxXxxx does not exceed $500,000 (and, in the event that any such final judgment,
award or settlement in XxXxxx exceeds $250,000, then the $250,000 limitation
described in the third line of this subsection 8.1.6 shall be reduced dollar for
dollar for each dollar that such final judgment, award or settlement exceeds
$250,000).
8.1.7 Impairment of Licenses; Other Agreements. If (i) any
Governmental Body shall revoke, terminate, suspend or adversely modify any
License of Borrower, the adverse modification or non-continuation of which could
have a Material Adverse Effect, or (ii) there shall exist any violation or
default in the performance of, or a material failure to comply with any
agreement, or condition or term of any License, which violation, default or
failure has a Material Adverse Effect, or (iii) any Franchise Agreement or other
agreement which is necessary to the operation of the Restaurant Business of
48
Borrower shall be revoked or terminated and not replaced by a substitute
acceptable to FINOVA within 30 days after the date of such revocation or
termination, and such revocation or termination and non-replacement could have a
Material Adverse Effect.
8.1.8 Collateral. If any material portion of the Collateral or
any Leased Store Lease shall be seized or taken by a Governmental Body or Person
(unless in any such case either (i) the Initial Store or Substitute Store
affected is replaced with a Substitute Store within 60 days after such seizure
or taking and Borrower otherwise complies with the requirements of subsection
2.6.4(a) with respect to such Substitute Store or (ii) Borrower prepays the
Principal Balance in an amount required pursuant to subsection 2.6.4(a), or
Borrower shall fail to maintain or cause to be maintained the Security Interests
and priority of the Loan Instruments as against any Person, or the title and
rights of Borrower to any material portion of the Collateral or any Leased Store
Lease shall have become the subject matter of litigation which could reasonably
be expected to result in impairment or loss of the security provided by the Loan
Instruments.
8.1.9 Plans. If an event or condition specified in subsection
6.3.8 hereof shall occur or exist with respect to any Pension Plan or
Multiemployer Plan and, as a result of such event or condition, together with
all other such events or conditions, Borrower or any ERISA Affiliate shall
incur, or in the opinion of FINOVA be reasonably likely to incur, a liability to
a Pension Plan or Multiemployer Plan or the PBGC (or any of them) which, in the
reasonable judgment of FINOVA, would have a Material Adverse Effect.
8.1.10 Change in Control. If Guarantor at any time shall cease
(i) to own 100% of the capital stock of Borrower or (ii) to maintain (A)
effective voting control over Borrower, including the right to elect a majority
of the board of directors of Borrower or (B) the ability to direct the
management and policies of Borrower, or Borrower at any time shall cease to own
100% of the capital stock of each of its subsidiaries.
8.1.11 Guaranty. If prior to the termination of the Guaranty
in accordance with its terms, Guarantor shall (i) deny or disaffirm its
obligations thereunder or (ii) fail to make any payment required thereunder when
due.
8.1.12 Guarantor Fixed Charge Coverage Ratio. If the Guarantor
Fixed Charge Coverage Ratio for the twelve month period ending on the last day
of any quarter commencing with the month ending June 30, 2000 is less than 1.20.
8.2 Acceleration of Borrower's Obligations. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrower's
Obligations at that time outstanding automatically shall mature and
become due, and
49
(b) any other Event of Default, FINOVA, at any time, at its option,
without further notice or demand, may declare all of Borrower's
Obligations due and payable, whereupon Borrower's Obligations
immediately shall mature and become due and payable, all without
presentment, demand, protest or notice (other than notice of the
declaration referred to in clause (b) above), all of which hereby are
waived.
8.3 Remedies on Default. If Borrower's Obligations have been
accelerated pursuant to Section 8.2, FINOVA, at its option, may: 8.3.1
Enforcement of Security Interests. Enforce its rights and remedies under the
Loan Instruments in accordance with their respective terms.
8.3.2 Other Remedies. Enforce any of the rights or
remedies accorded to FINOVA at equity or law, by virtue of statute or otherwise.
8.4 Application of Funds. Any funds received by FINOVA pursuant to
the exercise of any rights accorded to FINOVA pursuant to, or by the operation
of any of the terms of, any of the Loan Instruments, including, without
limitation, insurance proceeds, condemnation proceeds or proceeds from the sale
of Collateral, shall be applied to Borrower's Obligations in the following order
of priority:
8.4.1 Expenses. First, to the payment of (i) all fees and
expenses actually incurred, including, without limitation, court costs, fees of
appraisers, title charges, costs of maintaining and preserving the Collateral,
costs of sale, and all other costs incurred by FINOVA in exercising any rights
accorded to such Persons pursuant to the Loan Instruments or by applicable law,
including, without limitation, reasonable attorney's fees, and (ii) all Liens
superior to the Liens of FINOVA except such superior Liens subject to which any
sale of the Collateral may have been made.
8.4.2 Borrower's Obligations. Next, to the payment of the
remaining portion of Borrower's Obligations in such order as FINOVA may
determine.
8.4.3 Surplus. Any surplus, to the Person or Persons
entitled thereto.
8.5 Performance of Borrower's Obligations. If Borrower fails to (i)
maintain in force and pay for any insurance policy or bond which Borrower is
required to provide pursuant to any of the Loan Instruments, (ii) keep the
Collateral free from all Liens except for Permitted Liens, (iii) pay when due
all taxes, levies and assessments on or in respect of the Collateral, except as
otherwise permitted pursuant to the terms hereof, (iv) make all payments and
perform all acts on the part of Borrower to be paid or performed in the manner
required by the terms hereof and by the terms of the other Loan Instruments with
respect to any of the Collateral, including, without limitation, all expenses of
protecting, storing, warehousing, insuring, handling and maintaining the
Collateral, (v) keep fully and perform promptly any other of the obligations of
Borrower hereunder or under any of the other Loan Instruments, and (vi) keep
fully and perform promptly the obligations of Borrower with respect to any issue
50
of Indebtedness for Borrowed Money secured by a Permitted Prior Lien, then
FINOVA may (but shall not be required to) procure and pay for such insurance
policy or bond, place such Collateral in good repair and operating condition,
pay, contest or settle such Liens or taxes or any judgments based thereon or
otherwise make good any other aforesaid failure of Borrower; provided, however,
FINOVA shall not, except in (a) the event that Borrower is in default pursuant
to Section 8.1.5 above, or (b) any reasonable threat of diminishment of value of
the Collateral or impairment of FINOVA's security interest therein, take any
such action unless such failure by Borrower continues for more than five (5)
days following notice from FINOVA to Borrower of such failure. Borrower shall
reimburse FINOVA immediately upon demand for all sums paid or advanced on behalf
of Borrower for any such purpose, together with costs and expenses (including
reasonable attorney's fees) paid or incurred by FINOVA in connection therewith
and interest on all sums advanced from the date of advancement until repaid to
FINOVA at the Default Rate. All such sums advanced by FINOVA, with interest
thereon, immediately upon advancement thereof, shall be deemed to be part of
Borrower's Obligations.
ARTICLE IX
CLOSING
The Term Loan A Closing Date shall be such date as the parties shall
determine, and the Term Loan A Closing shall take place on such date, provided
all conditions for the Term Loan A Closing as set forth in this Loan Agreement
have been satisfied or otherwise waived by FINOVA. The Term Loan A Closing shall
take place at the offices of Altheimer & Xxxx, 00 X. Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 or such other place as the parties hereto shall agree. Unless the
Term Loan A Closing Date occurs on or before May 1, 2000, this Loan Agreement
shall terminate and be of no further force or effect and, except for any
obligation of Borrower to FINOVA pursuant to Article X, none of the parties
hereto shall have any further obligation to any other party.
ARTICLE X
EXPENSES AND INDEMNITY
10.1 Attorneys' Fees and Other Fees and Expenses. Whether or not
any of the transactions contemplated by this Loan Agreement shall be
consummated, subject to the limitations set forth in subsection 10.1.1, Borrower
agrees to pay to FINOVA on demand all expenses incurred by FINOVA in connection
with the transactions contemplated hereby and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
10.1.1 Fees and Expenses for Preparation of Loan Instruments.
All expenses, disbursements (including, without limitation, charges for required
mortgagee's title insurance, lien searches, surveys, document recording and
filing fees, reproduction of documents, long distance telephone calls and
overnight express carriers) and reasonable attorneys' fees, actually incurred by
FINOVA in connection with the (i) preparation and negotiation of the Loan
Instruments or any amendments, modifications or waivers thereto or any documents
delivered pursuant thereto and (ii) administration of the Loan.
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10.1.2 Fees and Expenses in Enforcement of Rights or Defense
of Loan Instruments. Any expenses or other costs, including reasonable
attorneys' fees and expert witness fees, actually incurred by FINOVA in
connection with the enforcement or collection against any Obligor of any
provision of any of the Loan Instruments, and in connection with or arising out
of any litigation, investigation or proceeding instituted by any Governmental
Body or any other Person with respect to any of the Loan Instruments, whether or
not suit is instituted, including, but not limited to, such costs or expenses
arising from the enforcement or collection against any Obligor of any provision
of any of the Loan Instruments in any workout or restructuring or in any state
or federal bankruptcy or reorganization proceeding.
10.2 Indemnity. Borrower agrees to indemnify and save FINOVA
harmless of and from the following:
10.2.1 Brokerage Fees. The fees, if any, of brokers and
finders engaged by Borrower.
10.2.2 General. Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred by FINOVA in
investigating, preparing for, defending against, providing evidence, producing
documents or taking other action in respect of any commenced or threatened
litigation, administrative proceeding, suit instituted by any Person or
investigation under any law, including any federal securities law, the
Bankruptcy Code, any relevant state corporate statute or any other securities
law, bankruptcy law or law affecting creditors generally of any jurisdiction, or
any regulation pertaining to any of the foregoing, or at common law or
otherwise, relating, directly or indirectly, to the transactions contemplated by
or referred to in, or any other matter related to, the Loan Instruments, except
to the extent of any gross negligence or willful misconduct of FINOVA.
10.2.3 Operation of Collateral; Joint Venturers. Any loss,
cost, liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or maintenance of
the Collateral, the construction of FINOVA and Borrower as having the
relationship of joint venturers or partners or the determination that FINOVA has
acted as agent for Borrower.
10.2.4 Environmental Indemnity. Any and all claims, losses,
damages, response costs, clean-up costs and expenses suffered and/or incurred at
any time by FINOVA arising out of or in any way relating to the existence at any
time of any Hazardous Materials in, on, under, at, transported to or from, or
used in the construction and/or renovation of, any of the Real Estate or
Leasehold Property, or otherwise with respect to any Environmental Law, and/or
the failure of any Obligor to perform its obligations and covenants hereunder
witch respect to environmental matters, including, but not limited to: (i)
claims of any Persons for damages, penalties, response costs, clean-up costs,
injunctive or other relief, (ii) costs of removal and restoration, including
52
fees of attorneys and experts, and costs of reporting the existence of Hazardous
Materials to any Governmental Body, and (iii) any expenses or obligations,
including attorneys' fees and expert witness fees, incurred at, before and after
any trial or other proceeding before any Governmental Body or appeal therefrom
whether or not taxable as costs, including, without limitation, witness fees,
deposition costs, copying and telephone charges and other expenses, all of which
shall be paid by Borrower to FINOVA on demand.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices and communications under this Loan Agreement
shall be in writing and shall be (i) delivered in person, (ii) sent by telecopy,
or (iii) mailed, postage prepaid, either by registered or certified mail, return
receipt requested, or by overnight express carrier, addressed in each case as
follows:
To Borrower: Champps Operating Corporation
0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
President
Telecopy No.: (000) 000-0000
Copy to: Xxxxx Xxxxxxx
000 Xxxxxx Xxxxxx
Xx. Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
To FINOVA: FINOVA Capital Corporation
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X'Xxxxxxx
Vice President
Telecopy No.: (000) 000-0000
Copy to: FINOVA Capital Corporation
The FINOVA Corporate Center
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Vice President, Law
Telecopy No.: (000) 000-0000
Copy to: Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
53
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 11.1 shall be deemed received
(i) if personally delivered, then on the Business Day of delivery, (ii) if sent
by telecopy before 2:00 p.m. Phoenix time, on the day sent if a Business Day or
if such day is not a Business Day or if sent after 2:00 p.m. Phoenix time, then
on the next Business Day, (iii) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent, or (iv) if sent by
registered or certified mail, on the earlier of the fifth Business Day following
the day sent or when actually received. Any notice by telecopy shall be followed
by delivery on the next Business Day by overnight, express carrier or by hand.
11.2 Survival of Loan Agreement; Indemnities. All covenants,
agreements, representations and warranties made in this Loan Agreement and in
the certificates delivered pursuant hereto shall survive the making by FINOVA of
the Loans and the execution and delivery to FINOVA of the Notes and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrower's Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments, the
cancellation of the Note and the release and/or cancellation of any and all of
the Loan Instruments or the foreclosure of any Liens on the Collateral, the
obligations of Borrower to indemnify FINOVA with respect to the expenses,
damages, losses, costs and liabilities described in Section 10.2 shall survive
until all applicable statute of limitations periods with respect to actions
which may be brought against FINOVA have run.
11.3 Further Assurance. From time to time, Borrower shall execute and
deliver to FINOVA such additional documents as FINOVA reasonably may require to
carry out the purposes of the Loan Instruments and to protect rights of FINOVA
thereunder, including, without limitation, using its best efforts in the event
any Collateral is to be sold to secure the approval by any Governmental Body of
any application required by such Governmental Body in connection with such sale,
and not take any action inconsistent with such sale or the purposes of the Loan
Instruments.
11.4 Taxes and Fees. Should any tax (other than taxes based upon the
net income of any FINOVA), recording or filing fees become payable in respect of
any of the Loan Instruments, or any amendment, modification or supplement
thereof, Borrower agrees to pay the same on demand, together with any interest
or penalties thereon attributable to any delay by Borrower in meeting any FINOVA
demand, and agrees to hold FINOVA harmless with respect thereto.
11.5 Severability. In the event that any provision of this Loan
Agreement is deemed to be invalid by reason of the operation of any law, or by
reason of the interpretation placed thereon by any court or any other
Governmental Body, as applicable, the validity, legality and enforceability of
the remaining terms and provisions of this Loan Agreement shall not in any way
be affected or impaired thereby, all of which shall remain in full force and
effect, and the affected term or provision shall be modified to the minimum
extent permitted by law so as to achieve most fully the intention of this Loan
Agreement.
54
11.6 Waiver. No delay on the part of FINOVA in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
11.7 Modification of Loan Instruments. No modification or waiver of any
provision of any of the Loan Instruments shall be effective unless the same
shall be in writing and signed by Borrower and FINOVA, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Borrower not specifically required
under the Loan Instruments in any case shall entitle Borrower to any other or
further notice or demand in the same, similar or other circumstances.
11.8 Captions. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 Successors and Assigns. This Loan Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that Borrower may not assign any of its
rights or delegate any of its duties hereunder to any other Person.
11.10 Remedies Cumulative. All rights and remedies of the parties
hereto, any other Loan Instruments or otherwise, shall be cumulative and
non-exclusive, and may be exercised singularly or concurrently. FINOVA shall not
be required to prosecute collection, enforcement or other remedies against any
Obligor before proceeding against any other Obligor or to enforce or resort to
any security, liens, collateral or other rights of FINOVA. One or more
successive actions may be brought against Borrower and/or any other Obligor,
either in the same action or in separate actions, as often as FINOVA deems
advisable, until all of Borrower's Obligations are paid and performed in full.
11.11 Entire Agreement; Conflict. This Loan Agreement and the other
Loan Instruments executed prior or pursuant hereto constitute the entire
agreement among the parties hereto with respect to the transactions contemplated
hereby or thereby and supersede any prior agreements, whether written or oral,
relating to the subject matter hereof. In the event of a conflict between the
terms and conditions set forth herein and the terms and conditions set forth in
any other Loan Instrument, the terms and conditions set forth herein shall
govern.
11.12 Applicable Law. The Loan Instruments shall be construed in
accordance with and governed by the laws and decisions of the State of Arizona.
For purposes of this Section 11.12, the Loan Instruments shall be deemed to be
performed and made in the State of Arizona.
11.13 Jurisdiction and Venue. Borrower hereby agrees that all actions
or proceedings initiated by Borrower and arising directly or indirectly out of
the Loan Instruments shall be litigated in the Superior Court of Maricopa
County, or the United States District Court for the District of Arizona or, if
FINOVA initiates such action, in addition to the foregoing courts, any court in
which FINOVA shall initiate or to which FINOVA shall remove such action, to the
55
extent such court has jurisdiction. Borrower hereby expressly submits and
consents in advance to such jurisdiction in any action or proceeding commenced
by FINOVA in or removed by FINOVA to any of such courts, and hereby agrees that
personal service of the summons and complaint, or other process or papers issued
therein may be served in the manner provided for notices herein, and agrees that
service of such summons and complaint or other process or papers may be made by
registered or certified mail addressed to Borrower at the address to which
notices are to be sent pursuant to Section 11.1. Borrower waives any claim that
Maricopa County, Arizona or the District of Arizona is an inconvenient forum or
an improper forum based on lack of venue. To the extent provided by law, should
Borrower, after being so served, fail to appear or answer to any summons,
complaint, process or papers so served within the number of days prescribed by
law after the mailing thereof, Borrower shall be deemed in default and an order
and/or judgment may be entered by the court against Borrower as demanded or
prayed for in such summons, complaint, process or papers. The exclusive choice
of forum for Borrower set forth in this Section 11.13 shall not be deemed to
preclude the enforcement by FINOVA of any judgment obtained in any other forum
or the taking by FINOVA of any action to enforce the same in any other
appropriate jurisdiction, and Borrower hereby waives the right to collaterally
attack any such judgment or action.
11.14 Waiver of Right to Jury Trial. FINOVA and Borrower acknowledge
and agree that any controversy which may arise under any of the Loan Instruments
or with respect to the transactions contemplated thereby would be based upon
difficult and complex issues and, therefore, the parties agree that any lawsuit
arising out of any such controversy will be tried in a court of competent
jurisdiction by a judge sitting without a jury.
11.15 Time of Essence. Time is of the essence for the performance by
Borrower of the obligations set forth in this Loan Agreement and the other Loan
Instruments.
11.16 Estoppel Certificate. Within 15 days after FINOVA requests
Borrower to do so, Borrower will execute and deliver to FINOVA a statement
certifying (i) that this Loan Agreement is in full force and effect and has not
been modified except as described in such statement, (ii) the date to which
interest and principal on the Notes has been paid, (iii) the Principal Balance,
(iv) whether or not to its knowledge an Incipient Default or Event of Default
has occurred and is continuing, and, if so, specifying in reasonable detail each
such Incipient Default or Event of Default of which it has knowledge, (v)
whether to its knowledge it has any defense, setoff or counterclaim to the
payment of any Note in accordance with its terms, and, if so, specifying each
defense, setoff or counterclaim of which it has knowledge in reasonable detail
(including where applicable the amount thereof), and (vi) as to any other matter
reasonably requested by FINOVA.
11.17 Consequential Damages. Neither FINOVA nor any agent or attorney
of FINOVA shall be liable to Borrower for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of Borrower's Obligations.
56
11.18 Counterparts. This Loan Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same agreement.
11.19 No Fiduciary Relationship. No provision in this Loan Agreement or
in any other Loan Instrument, and no course of dealing among the parties hereto,
shall be deemed to create any fiduciary duty by FINOVA to Borrower.
11.20 Notice of Breach by FINOVA. Borrower agrees to give FINOVA
written notice of (i) any action or inaction by FINOVA or any agent or attorney
of FINOVA in connection with the Loan Instruments that may be actionable against
FINOVA or such agent or attorney and (ii) any defense to the payment of
Borrower's Obligations for any reason, including, but not limited to, commission
of a tort or violation of any contractual duty implied by law. Borrower agrees
that unless such notice is fully given as promptly as possible (but in any event
within 30 days) after Borrower has knowledge, or with the exercise of reasonable
diligence should have had knowledge, of any such action, inaction or defense,
Borrower shall not assert, and shall be deemed to have waived, any claim or
defense arising therefrom.
11.21 Sale of Notes; Participations. FINOVA may assign to one or more
banks or other Persons all or any part of, or may grant participations to one or
more banks or other Persons in, its right, title and interest in the Loans, this
Loan Agreement, the other Loan Instruments, or any of them, and to the extent of
any such assignment or participation (unless otherwise stated therein) the
assignee or participant of such assignment or participation shall have the same
rights, benefits and obligations hereunder and thereunder as FINOVA would have
hereunder.
11.22 Publicity. Neither party hereto shall issue any press release or
cause any announcement to be published regarding the consummation of this
transaction or the aggregate amount thereof without the prior written consent of
the other, which consent shall not be unreasonably withheld or delayed.
[remainder of this page intentionally left blank]
57
IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered
by each of the parties hereto by a duly authorized officer of each such party on
the date first set forth above.
CHAMPPS OPERATING CORPORATION,
a Minnesota corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
President
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X'Xxxxxxx
Xxxxxx X'Xxxxxxx
Vice President
58
EXHIBIT 1.1(A)
COMPLIANCE CERTIFICATE
CHAMPPS OPERATING CORPORATION
Reference is made to that certain Loan Agreement dated as of April 21,
2000 (such Loan Agreement, as the same may be amended, modified, supplemented or
restated from time to time, the "Loan Agreement"), between Champps Operating
Corporation, a Minnesota corporation, and FINOVA Capital Corporation, a Delaware
corporation. All capitalized terms used but not elsewhere defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.
Pursuant to the Loan Agreement the undersigned hereby certifies to
Agent and FINOVA that:
(1) as of April 21 2000, Xxxx Xxxxxxxxx is the Chief Financial
Officer of Borrower; and
(2) except as set forth below, Borrower is in full compliance with
all terms and conditions of the Loan Agreement; and
(3) with respect to the Sections of the Loan Agreement set forth below
and the covenants contained therein, Borrower is in full compliance unless
otherwise indicated.
Section and Covenant In Full Compliance Not in Compliance
6.1 Legal Existence; Good Standing |_| |_|
6.2 Inspection |_| |_|
6.3 Financial Statements and Other Information
6.3.1 Quarterly Statements |_| |_|
6.3.2 Annual Statements |_| |_|
6.3.3 Compliance Certificate |_| |_|
6.3.4 Audit Report |_| |_|
6.3.5 Notice of Defaults; Loss |_| |_|
59
6.3.6 Notice of Suits; Adverse Events |_| |_|
6.3.7 Reports to Shareholders, Creditors |_| |_|
and Governmental Bodies
6.3.8 ERISA Notices and Requests |_| |_|
6.3.9 Other Information |_| |_|
6.4 Reports to Governmental Bodies and Other Persons |_| |_|
6.5 Maintenance of Licenses and Franchise Agreements |_| |_|
6.6 Insurance
6.6.1 Maintenance of Insurance |_| |_|
6.6.2 Claims and Proceeds |_| |_|
6.7 Environmental Matters
6.7.1 Compliance |_| |_|
6.7.2 Environmental Audit |_| |_|
6.8 Compliance with Laws |_| |_|
6.9 Taxes and Claims |_| |_|
6.10 Maintenance of Properties |_| |_|
6.11 Governmental Approvals |_| |_|
6.12 Payment of Indebtedness |_| |_|
7.1 Borrowing |_| |_|
7.2 Liens |_| |_|
60
7.3 Merger and Acquisition |_| |_|
7.4 Contingent Liabilities |_| |_|
7.5 Dividends and Distributions |_| |_|
7.6 Equipment Leases |_| |_|
7.7 Investments and Loans |_| |_|
7.8 Fundamental Business Changes |_| |_|
7.9 Facility Sites |_| |_|
7.10 Sale or Transfer of Assets |_| |_|
7.11 Amendment of Certain Agreements |_| |_|
7.12 Transactions with Affiliates |_| |_|
7.13 Compliance with ERISA |_| |_|
7.14 Borrower Fixed Charge Coverage Ratio |_| |_|
(See Schedule 1 for supporting calculations)
7.15 Guarantor Fixed Charge Coverage Ratio |_| |_|
(See Schedule 1 for supporting calculations)
With respect to any item identified above as not being in compliance,
the undersigned has attached and certifies as to the accuracy of statements
specifying the violation, condition, or events which result in such
non-compliance, the nature and status thereof, and the actions which Borrower
proposes to take with respect thereto to bring Borrower into full compliance
with the Loan Agreement.
The foregoing certifications are made by Xxxx Xxxxxxxxx, in his
capacity as the acting Chief Financial Officer of Borrower, from his personal
knowledge, after due inquiry and with full knowledge that FINOVA will rely
thereon. This Certificate is given pursuant to and in compliance with subsection
6.3.3 of the Loan Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate on this 21st day of April, 2000.
CHAMPPS OPERATING CORPORATION,
a Minnesota corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
President
62
Schedule 1
Borrower Fixed Charge Coverage Ratio
For ________________________ ended on _________________________________
(Indicate fiscal period) (Indicate date of financial statements)
Guarantor Fixed Charge Coverage Ratio
For ________________________ ended on _________________________________
(Indicate fiscal period) (Indicate date of financial statements)
63
EXHIBIT 2.2.1
FINANCEABLE COSTS
X. XXXXXXX PROPERTY: The following categories constitute the financeable
costs for the Lombard property.
A. Financeable Hard Costs (associated with fee simple real estate)
include:
Land Cost
Building Costs
Site Improvements
B. Allowable Soft Costs include (see note below for non-financeable soft
costs):
Tap Fees
Building Permits
Engineering Fees
Architectural Fees
Appraisal Fees
Soil Fees
Phase I Inspection Costs
C. Equipment Costs include:
The invoice cost of the furniture, fixtures and equipment
Note: The following costs, as they relate to fee simple real estate, represent
non-financeable soft costs:
Insurance
Franchise Fees
Legal Costs
Liquor Licenses
Construction Loan Interest
Pre-Opening Expenses
FINOVA Loan Points/FINOVA fees
Utilities
Contingency Costs
II. EDEN PRAIRIE, MINNESOTA
The Financeable Costs are equal to eighty percent (80%) of the Purchase
Price, as set forth in the Section 3.1 of the Asset Purchase Agreement (Eden
Prairie).
64
III. MINNETONKA, MINNESOTA
The Financeable Costs are equal to eighty percent (80%) of the Purchase
Price, as set forth in Section 3.1 of the Asset Purchase Agreement (Minnetonka).
65
EXHIBIT 5.3.1
(See Attached List of Subsidiaries)
66
EXHIBIT 5.5.2
Location of Chief Executive Office: Champps Operating Corporation
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Location of other Places of Business: None
Location of Books and Records: Champps Operating Corporation
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
0000 Xxxx Xxxx
Xxxx Xxxxxxx, XX 00000
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Locations of All Tangible Collateral: 0000 Xxxx Xxxx
Xxxx Xxxxxxx, XX 00000
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
67
EXHIBIT 5.5.3
Leased Store Leases
ARTICLE 12.
Eden Prairie: That certain Lease dated June 24, 1998, as amended by First by and
between Prairie Entertainment Associates, a Minnesota general partnership, as
Lessor, and Prairie Restaurant Group, Inc., a Minnesota corporation, as Lessee.
ARTICLE 13.
Minnetonka:
a. That certain Lease Agreement dated June 2, 1989 by and between
CSM Bonaventure Limited Partnership, as ultimate successor in
interest to Bonaventure Associates Limited Partnership, as
Lessor, and Breagan Investment Group, Inc., a Minnesota
corporation, as ultimate successor in interest to Champps of
Minnetonka, Inc, as Lessee.
b. That certain Office Lease Agreement dated February 5, 1990 by
and between CSM Bonaventure Limited Partnership, as ultimate
successor in interest to Welsh Companies, as Lessor, and
Breagan Investment Group, Inc., a Minnesota corporation, as
ultimate successor in interest to Champps of Minnetonka, Inc,
as Lessee.
c. That certain Bakery Lease Agreement dated November 24, 1992 by
and between CSM Bonaventure Limited Partnership, as ultimate
successor in interest to CSM Investors, Inc., as Lessor and
Breagan Investment Group, Inc., a Minnesota corporation, as
ultimate successor in interest to Champps of Minnetonka, Inc,
as Lessee.
68
EXHIBIT 5.5.4
LICENSES
69
EXHIBIT 5.5.5
OPERATING AGREEMENTS
70
EXHIBIT 5.6
Indebtedness for Borrowed Money
None.
71
EXHIBIT 5.7
FINANCIAL STATEMENTS
72
EXHIBIT 5.8
LITIGATION
None.
73
EXHIBIT 5.20.1
COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES
None.
74
EXHIBIT 6.6.1
(See Attached Coverage Requirements)
75
EXHIBIT 2.2.1
FINANCEABLE COSTS
X. XXXXXXX PROPERTY: The following categories constitute the financeable
costs for the Lombard property.
A. Financeable Hard Costs (associated with fee simple real estate)
include:
Land Cost
Building Costs
Site Improvements
B. Allowable Soft Costs include (see note below for non-financeable soft
costs):
Tap Fees
Building Permits
Engineering Fees
Architectural Fees
Appraisal Fees
Soil Fees
Phase I Inspection Costs
C. Equipment Costs include:
The invoice cost of the furniture, fixtures and equipment
Note: The following costs, as they relate to fee simple real estate, represent
non-financeable soft costs:
Insurance
Franchise Fees
Legal Costs
Liquor Licenses
Construction Loan Interest
Pre-Opening Expenses
FINOVA Loan Points/FINOVA fees
Utilities
Contingency Costs
II. EDEN PRAIRIE, MINNESOTA
The Financeable Costs are equal to eighty percent (80%) of the purchase
price, as set forth in the Asset Purchase Agreement for the Eden Prairie
property.
III. MINNETONKA, MINNESOTA
The Financeable Costs are equal to eighty percent (80%) of the purchase
price, as set forth in the Asset Purchase Agreement for the Minnetonka property.
2
EXHIBIT 5.3.1
(See Attached List of Subsidiaries)
3
EXHIBIT 5.5.2
Location of Chief Executive Office: Champps Operating Corporation
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Location of other Places of Business: None
Location of Books and Records: Champps Operating Corporation
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
0000 Xxxx Xxxx
Xxxx Xxxxxxx, XX 00000
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Locations of All Tangible Collateral: 0000 Xxxx Xxxx
Xxxx Xxxxxxx, XX 00000
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
4
EXHIBIT 5.5.3
Leased Store Leases
1. Eden Prairie: That certain Lease dated June 24, 1998, as amended by
First by and between Prairie Entertainment Associates, a Minnesota general
partnership, as Lessor, and Prairie Restaurant Group, Inc., a Minnesota
corporation, as Lessee.
2. Minnetonka:
a. That certain Lease Agreement dated June 2, 1989 by and between
CSM Bonaventure Limited Partnership, as ulimate successor in
interest to Bonaventure Associates Limited Partnership, as
Lessor, and Bregean Investment Group, Inc., a Minnesota
corporation, as ultimate successor in interest to Champps of
Minnetonka, Inc, as Lessee.
b. That certain Office Lease Agreement dated February 5, 1990 by
and between CSM Bonaventure Limited Partnership, as ultimate
successor in interest to Welsh Companies, as Lessor, and
Bregean Investment Group, Inc., a Minnesota corporation, as
ultimate successor in interest to Champps of Minnetonka, Inc,
as Lessee.
c. That certain Bakery Lease Agreement dated November 24, 1992 by
and between CSM Bonaventure Limited Partnership, as ulimate
successor in interest to CSM Investors, Inc., as Lessor and
Bregean Investment Group, Inc., a Minnesota corporation, as
ultimate successor in interest to Champps of Minnetonka, Inc,
as Lessee.
5
EXHIBIT 5.6
Indebtedness for Borrowed Money
None.
6
EXHIBIT 5.20.1
Collective Bargaining Agreements: Grievances
None.
7
EXHIBIT 6.6.1
(See Attached Coverage Requirements)
8
EXHIBIT 5.8
LITIGATION
None.
9
