EXHIBIT 10.36
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement is executed as of this 30th
day of April, 1998, by and among SPAGHETTI WAREHOUSE, INC., a Texas corporation
("Parent") with its principal office at 000 Xxxxxxxxxx 00, Xxxxxxx, Xxxxx 00000,
the subsidiaries of Parent listed on the signature pages hereof and BANK ONE,
TEXAS, N.A., a national banking association with an office at 0000 Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000 and NATIONSBANK OF TEXAS, N.A., a national banking
association with an office at 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (such banks
being referred to collectively as the "Lenders" and individually as a "Lender").
W I T N E S S E T H:
WHEREAS, Co-obligors and Lenders entered into an Amended and Restated
Loan Agreement, dated November 1, 1993 in order to provide revolving credit and
term loan facilities, subject to the terms and conditions set forth therein and
as amended by an Amendment No. 1 dated December 21, 1993, an Amendment No. 2
dated February 9, 1995, an Amendment No. 3 dated March 29,1996 and an Amended
and Restated Loan Agreement dated August 12, 1996 (collectively, the "Prior
Agreement");
WHEREAS, the parties to the Prior Agreement desire to further amend and
restate the Prior Agreement;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extensions of credit heretofore, now or hereafter made by
Lenders, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. When used herein, the following terms
shall have the following meanings:
"Adjusted Cash Flow": For any twelve-month period, shall be
the sum of (i) parent's consolidated net income (after income taxes) and (ii)
all noncash charges (including, but not limited to, deferred taxes,
depreciation, amortization of goodwill and write-down of assets); less an annual
capital expenditure allowance equal to the product of the number of
company-owned restaurant units opened at least one full calendar year at the end
of such period times $32,000.
"Agent": Bank One, Texas, N.A., in its capacity as agent for
the Lenders hereunder, and its successors and assigns in such capacity.
"Agreement": This Amended and Restated Loan Agreement,
including all Exhibits and Schedules hereto, as the same may be from time to
time amended, modified or supplemented.
"Amendment Date": The date this Amended and Restated Loan
Agreement is executed by the parties.
"Applicable Rate": See Section 4.6(c) of this Agreement.
"Asset Sale Prepayment": See Section 4.2(c) of this Agreement.
"Bankruptcy Code": Title 11 of the United States Code, as in
effect from time to time, or any successor thereto.
"Borrowing Agent": Parent or such other person or entity
designated in writing by the Co-obligors, each of whom is hereby authorized by
each Co-obligor to bind such Co-obligor as its agent in all matters relating to
this Agreement and the Loans.
"Breakage Loss": With respect to a prepayment of any Fixed
Rate Revolving Loan on a day other than the last day of the Interest Period
related thereto, except under those circumstances expressly provided in this
Agreement wherein a Co-obligor is not liable therefor, any loss, cost or expense
incurred by any Lender as a result of the timing of such payment, including the
interest which, but for such payment, such Lender would have earned in respect
of such principal amount so paid for the remainder of the Interest Period
applicable to such sum, less the amount, if any, actually earned by such Lender
from relending such principal amount during the remainder of the Interest Period
applicable thereto. Breakage Loss shall represent compensation to the Lenders
for the privilege herein granted to the Co-obligors under certain circumstances
to repay a Fixed Rate Revolving Loan prior to the last day of the Interest
Period therefor, in the nature of a prepayment penalty.
"Business Day": A day on which commercial banks are open for
business in Dallas, Texas.
"CD Interest Period": With respect to any CD Loan, (i)
initially, the period commencing on the date such CD Loan is made and ending 30,
60 or 90 days thereafter as selected by the Borrowing Agent pursuant to Section
4.5(c) and thereafter, (ii) each period commencing on the last day of the next
preceding Interest Period applicable to such CD Loan and (in each case) ending
30, 60 or 90 days thereafter, as selected by the Borrowing Agent pursuant to
Section 4.5(c); provided that if any CD Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day.
"CD Loans": Any Revolving Loan bearing interest at the CD
Rate, or which would bear interest at such rate if the Maximum Rate were not in
effect at a particular time.
"CD Margin": shall mean, on any date, the applicable
percentage set forth below, based on the Fixed Charge Coverage Ratio of Parent
as of its most recently ended fiscal quarter for which financial statements in
compliance with Section 8.3(b) hereof have been supplied to Lenders:
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Fixed Charge Coverage
Ratio Percentage
--------------------- ----------
Greater than or equal to 2.5 2.00%
2.00 to 2.49 2.50%
Equal to or less than 1.99 3.00%
"CD Quoted Rate": With respect to each CD Loan for each CD
Interest Period, the rate of interest per annum then most recently published or
reported by Telerate Systems, Inc. through its Telerate Financial Information
Network service, by reference to the screen page designated Daily Selected Money
Market Rates (page 120) (or any equivalent successor to such page or service
selected by the Agent and approved by the Borrowing Agent) for certificates of
deposit in the secondary market, or if no such rate is published or reported
(and no such equivalent rate or service is mutually agreed upon), then the per
annum rate most recently published in The Wall Street Journal in the "Money
Rates" column, as the typical rate per annum offered by large U.S. money center
commercial banks in the secondary certificate of deposit market, in either case
two (2) Business Days before the beginning of such CD Interest Period, for a
face value in the amount equal or comparable to the principal amount of the
corresponding CD Loan and for a period of time equal or comparable to the length
of such CD Interest Period, expressed as a percentage rounded to the nearest one
hundredth (.01) of one percent (1%).
"CD Rate": With respect to each CD Loan for each CD Interest
Period a rate per annum equal to the following:
[CD Quoted Rate] + FDIC Percentage + CD Margin
[1.00-CD Reserve Requirement]
"CD Reserve Requirement": On any day, that percentage
(expressed as a decimal) which is in effect on such day, as provided by the
Board of Governors of the Federal Reserve System (or any successor governmental
body) applied for determining the maximum reserve requirements (including,
without limitation, any basic, supplemental and emergency reserves) under
Regulation D applicable to nonpersonal time deposits in units of $100,000 or
more having a maturity comparable to the related CD Interest Period (issued by
member banks of the Federal Reserve Bank of Dallas having time deposits
exceeding one billion dollars) rounded to the nearest one hundredth (.01) of one
percent (1%).
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"Change of Control": Shall be deemed to mean any of the
following events: (i) a merger or consolidation of Parent with any Person if the
Parent shall not be the surviving or continuing corporation, (ii) a sale,
transfer or other disposition by the Parent to any Person of all or
substantially all of the assets of the Parent, or (iii) any tender offer, sale
of voting securities by the Parent or other event or series of events as a
result of which more than 66_% of the voting securities of Parent is acquired,
directly or indirectly, by any Person or group (as defined in Section 13(d)(3)
of the Securities and Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder as in effect on the Amendment Date).
"Code": The Internal Revenue Code of 1986, as amended from
time to time.
"Co-obligor": Each of Spaghetti Warehouse, Inc., a Texas
corporation, Spaghetti Warehouse Service Corporation, a Delaware corporation,
SWEATAC, Inc. a Delaware corporation, Spaghetti Warehouse of Texas, L.P., a
Delaware limited partnership, Spaghetti Warehouse of Ohio, Inc., a Delaware
corporation and any other subsidiary of Parent that (with the prior written
consent of Lenders) executes and delivers a counterpart signature page of this
Agreement thereby becoming bound as a "Co-obligor" hereunder and "Co-obligors"
shall mean all of the foregoing.
"Consolidated Tangible Net Worth": See Section 8.1(g) of this
Agreement.
"Default": Any event which with the passage of time or the
giving of notice or both will be an Event of Default.
"EBITDA:" The consolidated net earnings of Parent (i) before
(A) provision for income taxes, and (B) any effect during each period within the
initial twelve-month period of any change in accounting principles promulgated
by the FASB becoming effective after the Amendment Date, and (ii) before
interest expense, depreciation and amortization, in each case, for the
immediately preceding twelve-month period.
"Environmental Laws": Any and all laws, statutes, ordinances,
rules and regulations, or orders or determinations of any governmental authority
pertaining to the environment or to health and safety in the workplace, in any
and all jurisdictions in which Parent or any other Co-obligor or their
respective subsidiaries are conducting business, or where any real property of
Parent or any other Co-obligor or their respective subsidiaries is located or
where any hazardous substances generated by or disposed of by Parent or any
other Co-obligor or their respective subsidiaries are located, including,
without limitation, the Occupational Safety & Health Act of 1970, as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Resource Conservation and Recovery
Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, and other environmental conservation or
protection laws. The terms "hazardous substance," "release" and "threatened
release" have the meanings specified in CERCLA, and the terms "solid waste,"
"hazardous waste," and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that in the event either CERCLA or RCRA is amended so
as to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment with respect to
all provisions of this Agreement, and in the event that either CERCLA or RCRA is
amended so as to narrow the meaning of any term defined thereby, such narrower
meaning shall apply during the effective period of such amendment, provided
further that, to the extent the laws of the state in which any
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real property of Parent or any other Co-obligor or their respective subsidiaries
is located have a meaning for "hazardous substance," "release," "solid waste,"
"hazardous waste" or "disposal" which is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate": See Section 7.9 of this Agreement.
"Event of Default": See Section 9.1 of this Agreement.
"FASB": Financial Accounting Standards Board or any successor
entity.
"FDIC Percentage": On any date, the net annual assessment rate
(expressed as a percentage rounded to the nearest one hundredth (.01) of one
percent (1%)) which is in effect on such day (under the regulations of the
Federal Deposit Insurance Corporation or any successor) for determining the
assessments paid by a Lender to the Federal Deposit Insurance Corporation (or
any successor) for insuring time deposits made in dollars at such Lender's
principal offices in Dallas, Texas.
"Fixed Charge Coverage Ratio": Ratio of (x) the sum of (i)
Parent's consolidated net income for the twelve-month period then ended (before
(A) income taxes and (B) any effect during each period within the initial
twelve-month period of any change in accounting principles promulgated by the
FASB becoming effective after the Amendment Date, (ii) all interest charges paid
or accrued ("Interest Expense"), and (ii) all rentals and other charges under
capitalized or operating leases ("Lease Expense"), over (y) the sum of (i)
Interest Expense, and (ii) Lease Expense.
"Fixed Rate Revolving Loan:" A LIBOR Loan or a CD Loan.
"Funded Debt": The Obligations and all indebtedness and other
obligations which in accordance with generally accepted accounting principles
should be carried on the consolidated balance sheet of Parent as liabilities of
Parent or its subsidiaries, and in any event shall include (i) obligations of
Parent or its subsidiaries for borrowed money or which have been incurred in
connection with the acquisition of property or assets, (ii) obligations secured
by any Lien upon the property or assets of Parent or any of its subsidiaries,
and (iii) the full face amount of all issued letters of credit (regardless of
whether such letters have been drawn upon) issued for the benefit of Parent of
any of its Subsidiaries, provided, however, that trade payables incurred in the
ordinary course of business shall be excluded therefrom.
"Interest Period": A LIBOR Interest Period or a CD Interest
Period.
"Lenders": The banks listed on the signature pages of this
Agreement and their respective successors-in-interest as owners and holders of
any Revolving Note or Term Note.
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"LIBOR Interest Period": With respect to any LIBOR Loan, (i)
initially, the period commencing on the date such LIBOR Loan is made and ending
one, three or six months thereafter as selected by the Borrowing Agent pursuant
to Section 4.5(c), and thereafter, (ii) each period commencing on the last day
of the next preceding Interest Period applicable to such LIBOR Loan and ending
one, three or six months thereafter, as selected by the Borrowing Agent pursuant
to Section 4.5(c); provided, that if any LIBOR Interest Period would otherwise
end on a day which is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day. Any LIBOR
Interest Period pertaining to a LIBOR Loan that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month.
"LIBOR Loans": Any Revolving Loan bearing interest at the
LIBOR Rate, or which would bear interest at such rate if the Maximum Rate were
not in effect at a particular time.
"LIBOR Margin" shall mean, on any date, the applicable
percentage set forth below, based on the Fixed Charge Coverage Ratio of Parent
as of its most recently ended fiscal quarter:
Fixed Charge Coverage
Ratio Percentage
--------------------- ----------
Greater than or equal to 2.5 2.00%
2.00 to 2.49 2.50%
Equal to or less than 1.99 3.00%
"LIBOR Quoted Rate": With respect to each LIBOR Loan for each
LIBOR Interest Period, the rate of interest per annum then most recently
published or reported by Telerate Systems, Inc. through its Telerate Financial
Information Network service, by reference to the screen page designated British
Bankers Association Interest Settlement Rates (page 3750) (or any equivalent
successor to such page or service selected by the Agent and approved by the
Borrowing Agent) for Eurodollar deposits, or if no such rate is published or
reported (and no such equivalent rate or service is mutually agreed upon), then
the rate of interest most recently published in The Wall Street Journal in the
"Money Rates" column as the average rate per annum at which Eurodollar deposits
are offered by major banks in the London Interbank Eurodollar Market, in either
case two (2) Business Days before the beginning of such LIBOR Interest Period in
the amount equal or comparable to the principal amount of the corresponding
LIBOR Loan, and for a period of time equal or comparable to the length of such
LIBOR Interest Period expressed as a percentage rounded to the nearest one
hundredth (.01) of one percent (1%).
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"LIBOR Rate": With respect to each LIBOR Loan for each LIBOR
Interest Period, a rate per annum equal to the sum of (i) the LIBOR Quoted
Rate, plus (ii) the LIBOR Margin.
"Lien": Any mortgage, lien (statutory or other), pledge,
hypothecation, assignment, security interest, title retention arrangement,
encumbrance, or other security agreement of any kind or nature whatsoever
(including without limitation, any conditional sale or other title retention
agreement, any sale of receivables or any capital lease), and the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing.
"Loans": All Revolving Loans and Term Loans.
"Maximum Rate": The maximum rate of interest, if any,
permitted by applicable law.
"Obligations": All of each Co-obligor's liabilities,
obligations and indebtedness owing to Lenders of any and every kind and nature
(including, without limitation, the obligations of the Co-obligors under the
indemnities contained in Section 8.1(c) of this Agreement, the fees and expenses
described in Section 11.2 of this Agreement, interest, charges, expenses,
reasonable attorneys' fees and other sums chargeable to Co-obligors by the
Lenders, each Co-obligor's joint and several Obligations with respect to the
Obligations of each of the other Co-obligors and future advances made to or for
the benefit of any Co-obligor), arising under this Agreement, the Revolving
Notes and the Term Notes, whether heretofore, now or hereafter owing, arising,
due or payable from Co-obligors to Lenders and howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, including obligations of performance.
"Permitted Liens: Any of the following:
(a) liens for property taxes and assessments or governmental
charges or levies and liens securing claims or demands of mechanics and
materialmen, as long as such assessments and claims are timely paid and
discharged or the validity, applicability or amount thereof is being
contested in good faith by appropriate proceedings which will prevent
the forfeiture or sale of any property of a Co-obligor or any
interference with the use thereof by a Co-obligor;
(b) liens of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Co-obligor shall at any time in
good faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured;
(c) liens, charges, encumbrances and priority claims
incidental to the conduct of business or the ownership of properties
and assets (including warehousemen's and
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attorneys' liens and statutory landlords' liens) and deposits, pledges
or liens to secure the performance of bids, tenders or trade contracts,
or to secure statutory obligations, surety or appeal bonds or other
liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money, provided
in each case, the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate proceedings;
(d) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of a Co-obligor or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation
of the business of such Co-obligor;
(e) mortgages, conditional sale contracts, security interests
or other arrangements for the retention of title (including capitalized
leases) incurred after the date hereof given to secure the payment of
the purchase price incurred in connection with the acquisition of
property by a Co-obligor, including liens existing on such property at
the time of acquisition thereof or at the time of acquisition by a
Co-obligor of any business entity then owning such property, whether or
not such existing liens were given to secure the payment of the
purchase price of the property to which they attach, provided that (i)
the lien or charge shall attach solely to the property acquired or
purchased, (ii) at the time of acquisition of such property, the
aggregate amount remaining unpaid on all indebtedness secured by liens
on such property whether or not assumed by a Co-obligor shall not
exceed an amount equal to the lesser of the total purchase price or
fair market value at the time of acquisition of such property (as
determined in good faith by the Board of Directors of the Parent), and
(iii) all such indebtedness shall have been incurred within the
applicable limitations provided in Section 8.2(a) hereof;
(f) liens for the benefit of Lenders resulting from this
Agreement; and
(g) liens in addition to those permitted by paragraphs (a)
through (e) above securing indebtedness of a Co-obligor specifically
identified on Schedule A hereto.
"Person": Any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plans": See Section 7.9 of this Agreement.
"Prime Rate": For any period, the greatest per annum rate of
interest then most recently published in The Wall Street Journal in the "Money
Rates" column as the base rate on corporate loans at large U.S. money center
commercial banks. Co-obligors hereby acknowledge that the Prime Rate in effect
from time to time merely serves as a basis upon which effective
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rates of interest are calculated for loans making reference thereto and that
such Prime Rate may not be the lowest or best rate at which interest is
calculated or credit is extended by the Lenders.
"Prime Rate Loan": Any Revolving Loan bearing interest at
the Prime Rate, or which would bear interest at such rate if the Maximum Rate
were not in effect at a particular time.
"Reportable Event": Any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Revolving Commitment": The several agreements of each of the
Lenders to make Revolving Loans to Co-obligors pursuant to Section 2.1 of this
Agreement.
"Revolving Commitment Period": The period from and including
the Amendment Date to (but not including) the Revolving Commitment Termination
Date.
"Revolving Commitment Termination Date": December 1, 1999, or
such other date on which the Revolving Commitment is terminated pursuant to the
provisions hereof.
"Revolving Loan": See Section 2.1 of this Agreement.
"Revolving Note": See Section 2.2 of this Agreement.
"Revolving Term-Out Maturity Date": December 1, 2002.
"Section 9.3 Event of Default": See Section 9.3 of this
Agreement.
"Term Loan": See Section 3.1 of this Agreement.
"Term Loan Margin" shall mean the applicable percentage set
forth below, based on the Fixed Charge Coverage Ratio of Parent as of its most
recently ended fiscal quarter:
Fixed Charge Coverage Ratio Percentage
--------------------------- ----------
Greater than or equal to 1.15 1.50%
1.14 1.60%
1.13 1.70%
1.12 1.80%
1.11 1.90%
1.10 2.00%
1.09 2.10%
1.08 2.20%
1.07 2.30%
1.06 2.40%
1.05 2.50%
1.04 2.60%
1.03 2.70%
1.02 2.80%
1.01 2.90%
1.00 3.00%
0.99 3.10%
0.98 3.20%
0.97 or less 3.25%
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"Term Loan Reference Rate": Five and two hundred ninety seven
one-hundredths percent (5.297%) per annum.
"Term Note": See Section 3.2 of this Agreement.
"Term Loan Rate": With respect to each Term Loan, a rate per
annum equal to the sum of (i) the Term Loan Reference Rate, plus (ii) the
Term Loan Margin.
1.2 Accounting Terms. All accounting terms defined in this Section 1 or
used in this Agreement not defined in this Section 1 shall, except as otherwise
provided for herein, be construed in accordance with generally accepted
accounting principles applied on a consistent basis.
SECTION 2. REVOLVING LOANS
2.1 Revolving Credit Commitment. Subject to the terms and conditions
hereof, and upon satisfaction of the conditions precedent set forth in Section 6
hereto, the Lenders severally agree to make revolving credit loans (the
"Revolving Loans") to the Co-obligors at the Borrowing Agent's request from time
to time during the Revolving Commitment Period; provided, however, that the
aggregate unpaid principal balance of all Revolving Loans to all Co-obligors
outstanding at any one time shall not exceed $5,000,000. Each Lender shall
participate on an equal pro rata basis in all Revolving Loans. During the
Revolving Commitment Period, the Co-obligors may use the Revolving Commitment by
borrowing, repaying in accordance with the provisions of this Agreement in whole
or in part, and reborrowing, all in accordance with the terms and conditions of
this Agreement. During the period following the Revolving Commitment Period
until the Revolving Term-Out Maturity Date, the aggregate unpaid principal
balance of all Revolving Loans to all Co-Obligors outstanding at any one time
shall not exceed the unpaid principal balance of the Revolving Loan on the
Revolving Commitment Termination Date, shall be subject to quarterly payments of
principal and interest as described in Section 4.2 hereof and principal amounts
repaid shall not be reborrowed. Each Revolving Loan will be either a Prime Rate
Loan, a CD Loan or a LIBOR Loan as the Borrowing Agent may request pursuant to
Section 4.5.
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2.2 Letters of Credit. In addition to the Revolving Commitment, up to
an aggregate of $900,000 in Revolving Loans may be used to support letters of
credit issued by Lenders on behalf of the Co-obligors with a maturity date not
to extend beyond the Revolving Commitment Termination Date. In connection with
such letters of credit, Co-obligors agree that: (a) any draw under a letter of
credit may, at the option of Lenders, be added to the principal amount
outstanding under the Revolving Loans; such sum to bear interest and to be due
in the same manner as the Revolving Loans; (b) if there is an Event of Default,
Co-obligors will fully reimburse Lenders upon demand for any subsequent draw
made under any outstanding letters of credit within five (5) days of each such
draw; (c) the issuance of any letter of credit or any amendment to a letter of
credit is subject to Lenders' written approval, the payment of Lenders' issuance
and/or other fees Lenders may charge for issuing or processing letters of credit
in accordance with the schedule of fees established from time to time by each
Lender and completion of such documentation as Lenders may reasonably require;
and (d) any reduction from time to time in the aggregate amount of letters of
credit issued by Lenders under this Agreement shall permanently reduce the
amount available under this Section 2.2 for the support of letters of credit.
2.3 Promissory Notes for Revolving Loans. All Revolving Loans made by
each Lender shall be evidenced by a single master promissory note executed by
all of the Co-obligors, substantially in the form of Exhibit A attached hereto
with appropriate insertions (the "Revolving Note"), payable to the order of such
Lender, evidencing the joint and several obligation of each of the Co-obligors
to pay the aggregate unpaid principal amount of all Revolving Loans made by such
Lender, together with interest thereon as prescribed by this Agreement. Each
Revolving Note shall (i) be in the stated principal amount of $2,950,000, (ii)
be dated the Amendment Date, (iii) be stated to finally mature on the Revolving
Term-Out Maturity Date, and (iv) bear interest for the period from the date
thereof on the unpaid principal amount of all Revolving Loans from time to time
outstanding at a fluctuating rate per annum as provided in accordance with this
Agreement.
2.4 Revolving Commitment Fees. The Co-obligors agree to pay Lenders a
commitment fee during the Revolving Commitment Period computed at a rate per
annum (based on a year of 365 or 366 days, as the case may be) equal to
three-eights of one percent (3/8%) of the average daily unborrowed amount of the
Revolving Commitment. For purposes of the foregoing computation, the aggregate
stated amount of all outstanding letters of credit issued by Bank One, Texas,
N.A., or its successors or assigns, under which any of the Co-obligors is an
account party shall be deemed to be borrowed. Payments of such fee shall be
payable quarterly in arrears on the last day of each March, June, September and
December during the Revolving Commitment Period, and on the Revolving Commitment
Termination Date. The Agent shall be entitled to sixty percent (60%) of each
payment of this commitment fee.
SECTION 3. TERM LOANS
3.1 Term Loan Commitment. Subject to the terms and conditions of the
Prior Agreement, the Lenders have made term loans (the "Term Loans") to the
Co-obligors in an aggregate outstanding principal amount on the Amendment Date
equal to $5,892,641. Each Lender shall participate on a pro rata basis in the
Term Loans in accordance with its respective share of the Revolving Commitment
as indicated on the signature pages of this Agreement.
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3.2 Term Notes. Each Term Loan is evidenced by a master promissory note
("the Term Note") executed by all of the Co-obligors which (i) is dated as of
August 12, 1996, (ii) is in the stated principal amount of $5,725,000, and (iii)
bears interest for the period from the date thereof on the unpaid principal
balance of the Term Loan outstanding at a fixed rate as provided in accordance
with this Agreement, payable to the order of each Lender, evidencing the joint
and several obligations of each Co-obligor to pay the aggregate unpaid principal
of, and interest on, each Term Loan in accordance with the provisions of this
Agreement.
3.3 Amendment Fees. The Co-obligors agree to pay Lenders a one
time amendment fee of $25,000.00, upon execution of and delivery of this
Agreement, to be equally divided among the Lenders.
SECTION 4. TERMS OF REVOLVING AND TERM LOANS
4.1 Revolving Credit Loans. With respect to each proposed Revolving
Loan, Agent shall receive irrevocable notice from the Borrowing Agent by 11:00
a.m. on a Business Day prior to the advance by the Lenders of the proceeds of
such Revolving Loan, as follows:
Prime Rate Loan One (1) full Business Day
CD Loan Two (2) full Business Days
LIBOR Loan Three (3) full Business Days
No Revolving Loan shall be in an amount less than two hundred fifty
thousand dollars ($250,000) and, absent the election for such Revolving Loan to
be advanced as a Fixed Rate Loan in accordance with Section 4.5 hereof, each
Revolving Loan shall be a Prime Rate Loan.
4.2 Principal Payments.
(a) Revolving Loans. During the Revolving Commitment Period,
the unpaid principal amount of each Revolving Loan, and all accrued and unpaid
interest thereon, shall be due and payable on the earliest of: (i) the last day
of the applicable Interest Period, in the case of a Fixed Rate Revolving Loan,
(ii) the Revolving Commitment Termination Date, or (iii) upon the acceleration
of the Obligations pursuant to Section 9.2 of this Agreement. Unless the
maturity of the Revolving Loan has been theretofore accelerated pursuant to
Section 9.2 of this Agreement, the unpaid principal amount of the Revolving Loan
outstanding on the Revolving Commitment Termination Date shall be payable in
twelve (12) consecutive, quarterly installments in an amount equal to
one-twentieth of the outstanding principal amount of the Revolving Loan at the
Revolving Commitment Termination Date commencing on January 1, 2000, and
continuing on the first day of each January, April, July or October thereafter;
and on the Revolving Term-Out Maturity Date the entire unpaid principal balance
of the Revolving Loan shall be due and payable in full. Each quarterly
installment of principal shall be in an amount equal to one-twentieth of the
outstanding principal balance of the Revolving Loan on the Revolving Commitment
Termination Date; provided that the amount of the final installment shall be in
an amount equal to the entire unpaid principal balance of the Revolving Loans.
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(b) Term Loans. Unless the maturity of the Term Loans has been
accelerated pursuant to Section 9.2 of this Agreement, the unpaid principal
amount of the Term Loans outstanding on the Amendment Date shall be payable in
thirteen (13) consecutive, quarterly installments commencing on July 1, 1998,
and continuing on the first day of each January, April, July or October
thereafter; and on July 1, 2001 the entire unpaid principal balance of the Term
Loans shall be due and payable in full. Each quarterly installment of principal
shall be in an amount equal to $453,279 (subject to adjustment as set forth in
Section 4.2(e) below); provided, however, that the amount of the final
installment shall be in an amount equal to the entire unpaid principal balance
of the Term Loans.
(c) Mandatory Prepayments. Immediately upon the consummation
of the sale of any of their restaurant units, Co-obligors shall make a payment
equal to the sum of (i) 50% of the net cash proceeds from such sale (to be
applied to the outstanding principal amount of the Term Loans) and (ii) all
accrued and unpaid interest on the principal amount prepaid (an "Asset Sale
Prepayment"). Each Asset Sale Prepayment shall be applied to the installments of
principal coming due under the Term Loan in reverse chronological order and
subsequent installments of principal under the Term Loans shall be adjusted in
accordance with Section 4.2(e) hereof.
(d) Optional Prepayments. Each Co-obligor shall have the right
to prepay the outstanding principal of, and accrued and unpaid interest on, any
Term Loan and Prime Rate Loan at any time. A Co-obligor may not prepay any Fixed
Rate Revolving Loan before the expiration of the applicable Interest Period for
such Fixed Rate Revolving Loan unless (i) otherwise set forth in Sections 5.2
and 5.4 of this Agreement, or (ii) such prepayment is of the entire outstanding
principal balance of, and accrued and unpaid interest on, such Fixed Rate
Revolving Loan and no other Fixed Rate Revolving Loans are to be advanced or
remain outstanding immediately after such prepayment and is accompanied by
reimbursement for any Breakage Loss in accordance with Section 5.4 of this
Agreement.
(e) Adjustment of Quarterly Installments. Upon the occurrence
of an Asset Sale Prepayment, the remaining quarterly installments of principal
of the Term Loans shall be adjusted to an amount (rounded to the next one
dollar) that will amortize the then remaining unpaid principal amount of the
Term Loans over the remaining quarterly installments pursuant to Section 4.2(b)
of this Agreement.
4.3 Interest Payments. Accrued and unpaid interest on outstanding Loans
shall be due and payable (i) quarterly, on the first day of each consecutive
January, April, July and October, (ii) with respect to the principal amount of
any Loan paid or prepaid, at the time of any installment due date or the
optional or mandatory prepayment of such Loan, and (iii) at maturity.
4.4 Interest.
(a) Prime Rate Loans. The unpaid principal balance from day to
day outstanding of each Revolving Loan for which no other interest rate is
permitted or provided for under this Agreement (such Loan, a "Prime Rate Loan")
shall bear interest at a rate per annum from day to day equal to the lesser of
(i) the Prime Rate or (ii) the Maximum Rate.
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(b) LIBOR Loans. If the Borrowing Agent shall have elected to
pay interest on any Revolving Loan at a LIBOR Rate (such Loan, a "LIBOR Loan"),
the Co-obligors shall pay interest on such LIBOR Loan to the Lender for the
Interest Period applicable thereto at a rate per annum which equals the lesser
of (i) the LIBOR Rate or (ii) the Maximum Rate.
(c) CD Loans. If the Borrowing Agent shall have elected to pay
interest on any Revolving Loan at a CD Rate (such Loan, a "CD Loan"), the
Co-obligors shall pay interest on such CD Loan to the Lender for the Interest
Period applicable thereto at a rate per annum which equals the lesser of (i) the
CD Rate or (ii) the Maximum Rate.
(d) Term Loans. Each Term Loan shall bear interest at a fixed
rate per annum equal to the lesser of (i) the Term Loan Rate or (ii) the
Maximum Rate.
(e) Default Rate. Upon the acceleration of any Loan after the
occurrence of any Event of Default, the principal balance of such Loan and (to
the extent permitted by applicable law) accrued, unpaid interest thereon at the
time of such acceleration may, at the Lenders' option, bear interest at a rate
per annum which from day to day shall equal the lesser of (i) Maximum Rate, or
(ii) the Prime Rate plus five percent (5%) per annum.
4.5 Election of LIBOR Rate and CD Rate.
(a) The Borrowing Agent shall have the right from time to
time, subject to the terms and conditions set forth in this Agreement, to elect
to have a LIBOR Rate or a CD Rate apply to a Revolving Loan (such an election in
the case of a LIBOR Loan, a "LIBOR Rate Election," and in the case of a CD Loan,
a "CD Rate Election"). Notwithstanding anything herein to the contrary, (i) no
LIBOR Rate Election or CD Rate Election may be made by the Borrowing Agent
without the Lenders' consent if an Event of Default has occurred and is
continuing, (ii) no LIBOR Rate Election or CD Rate Election may be made by the
Borrowing Agent if the Lenders may not lawfully maintain the LIBOR Rate or CD
Rate under all applicable laws, and (iii) no Interest Period selected for a
Fixed Rate Revolving Loan shall end after the Revolving Commitment Termination
Date.
(b) Any number of Revolving Loans may be outstanding at any
time, each with a different interest rate and, if a Fixed Rate Revolving Loan,
a different Interest Period.
(c) In order to make a LIBOR Rate Election or a CD Rate
Election, the Borrowing Agent shall, no later than 11:00 a.m. (Dallas, Texas
time), three (in the case of a LIBOR Election) or two (in the case of a CD Rate
Election) Business Days prior to the commencement of the applicable Interest
Period the Borrowing Agent proposes to select pursuant to such LIBOR Rate
Election or CD Rate Election, give the Agent telephonic notice (promptly
confirmed in writing) to the effect that the Borrowing Agent is making such
LIBOR Rate or CD Rate Election. Such notice shall also specify the commencement
date and duration of the Interest Period applicable thereto. Except as otherwise
provided in this paragraph (b), telephonic notice (whether or not so confirmed)
shall be irrevocable when given to the Agent. Upon the Agent's receipt of such
notice, the Agent shall, no later than 11:00 a.m. (Dallas, Texas time) two
Business Days after Agent receives such notice, determine the LIBOR Rate for
such LIBOR Interest Period, or CD Rate for such CD Interest Period, applicable
to the Loan, and notify the Lenders and the Borrowing Agent of such LIBOR Rate
or CD Rate. Such LIBOR Rate or CD Rate shall apply to such LIBOR Loan or CD Loan
during such Interest Period. Each LIBOR Rate Election and CD Rate Election made
by the Borrowing Agent shall be binding upon all Co-obligors.
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4.6 Interest; Computation, Savings Clause.
(a) Interest under this Agreement shall be calculated on the
basis of a year of 365 days or 366 days (as the case may be) and the actual
number of days elapsed during the period for which interest is calculated.
Interest shall be so calculated with respect to each day during such period by
multiplying the outstanding principal balance of the Loan at the close of
business on such day by a daily interest factor, which interest factor shall be
calculated by dividing the interest rate per annum in effect on such day with
respect to the Loan by 365 or 366 (as the case may be). For such purpose, a day
includes (i) the date on which such Loan is advanced by a Lender and (ii) the
day on which any interest or principal due under this Agreement is paid by a
Co-obligor if federal funds immediately available to the Agent in the place
designated for such payment are not received by the Agent by 11:00 a.m. (Dallas,
Texas time). Interest at a LIBOR Rate or CD Rate shall be calculated as to each
Interest Period from and including the first day thereof to and excluding the
last day thereof.
(b) It is the intention of the parties hereto to comply with
applicable usury laws (now or hereafter enacted); accordingly, notwithstanding
any provision to the contrary in this Agreement, the Revolving Notes, the Term
Notes or any other document relating hereto, in no event shall this Agreement or
any such other document require the payment or permit the collection of interest
in excess of the maximum amount permitted by such laws. If from any
circumstances whatsoever, fulfillment of any provision of this Agreement or of
any other document pertaining hereto, shall involve transcending the limit of
validity prescribed by law for the collection or charging of interest, then,
ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances a Lender shall ever receive
anything of value as interest or deemed interest by applicable law under this
Agreement, the Revolving Notes, the Term Notes or any other document pertaining
hereto or otherwise, an amount that would exceed the highest lawful rate, such
amount that would be excessive interest shall be applied to the reduction of the
principal amount owing under the Revolving Notes, or the Term Notes or on
account of any other indebtedness of any Co-obligor to such Lender, and not to
the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal of such indebtedness, such excess shall be refunded to the
Co-obligors. In determining whether or not the interest paid or payable with
respect to any indebtedness of any Co-obligor to a Lender, under any specific
contingency, exceeds the highest lawful rate, the Co-obligor and such Lender
shall, to the maximum extent permitted by applicable law, (i) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (ii)
amortize, prorate, allocate and spread the total amount of interest throughout
the full term of such indebtedness, and/or (iii) allocate interest between
portions of such indebtedness, to the end that no such portion shall bear
interest at a rate greater than that permitted by applicable law.
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(c) Notwithstanding anything to the contrary in the Revolving
Notes, the Term Notes or herein contained, in the event that the interest rate
applicable to any Loan hereunder (the "Applicable Rate") should ever exceed the
Maximum Rate, thereby causing the interest accruing on any of the indebtedness
evidenced by the Note to be limited to such Maximum Rate, then any subsequent
reduction in the Applicable Rate shall not reduce the rate of interest charged
hereunder below the Maximum Rate until the total amount of interest accrued on
such indebtedness equals the amount of interest which would have accrued on such
indebtedness if the otherwise applicable rate had been in effect at all times in
the period during which the rate charged thereon was limited to the Maximum
Rate.
4.7 Use of Proceeds. All Loan proceeds shall be used by the Co-obligors
(i) for the purchase or leasing of real estate for the location of, and the
construction, furnishing, equipping and pre-opening expenses for, "Italian
Grill" concept restaurants of a Co-obligor, (ii) for general corporate purposes,
(iii) for the repurchase of shares of common stock of Parent to the extent
permitted pursuant to Section 8.2(f), or (iv) for the making of loans and
advances by a Co-obligor to any other Co-obligor, to be used for the purposes
set forth in clause (i) above. In any case all Loan proceeds shall be used only
for legal and proper purposes which are consistent with all applicable laws and
statutes.
4.8 Manner of Payments. All payments made by Co-obligors to the Lenders
hereunder on account of principal, interest or otherwise shall be made not later
than 11:00 a.m., Dallas, Texas time, to the Agent in Dallas, Dallas County,
Texas, or at such other place as the Agent shall direct, in immediately
available United States funds. If any payment by a Co-obligor under this
Agreement, the Revolving Notes or the Term Notes is to be made on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time will in such case be included in computing
interest in connection with such payment.
4.9 Joint and Several Obligations. Each Co-obligor acknowledges and
agrees by its execution of this Agreement, the Revolving Notes and the Term
Notes and in consideration of Lenders making the Loans to Co-obligors and the
availability of the proceeds of such loans to each Co-obligor as provided in
Section 4.7 above, to be jointly and severally liable for each Loan and all
other Obligations as a co-maker of each Revolving Note and Term Note, and that
its obligations under this Agreement shall be primary, absolute and
unconditional, irrespective and unaffected by (i) the lack of genuineness,
validity, regularity, enforceability or any further amendment, extension or
modification of any such Note, this Agreement or any other agreement or
instrument to which the Co-obligors are or may be a party, (ii) the absence of
any action to enforce any such Note or this Agreement or the waiver or consent
by Lenders with respect to any provision thereof or hereof, (iii) the release of
any Co-obligor from its Obligations under this Agreement, (iv) the insolvency,
bankruptcy, arrangement, adjustment, composition, disability, dissolution or
lack of authority of any Co-obligor, whether now or hereafter arising, (v) any
action, omission, election or notice by the Borrowing Agent, or (vi) any other
action or circumstance which might otherwise constitute a legal or equitable
discharge or defense, it being agreed by the Co-obligors that their Obligations
under this Agreement shall not be discharged except by payment and performance
as provided herein.
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SECTION 5. SPECIAL PROVISIONS FOR FIXED RATE REVOLVING LOANS
5.1 Inadequacies of Loan Pricing. If, with respect to any Interest
Period for any Fixed Rate Revolving Loan, (i) a Lender determines that, by
reason of circumstances affecting the interbank Eurodollar market generally,
deposits in dollars (in the applicable amount) are not being offered to such
Lender in the interbank Eurodollar market for such Interest Period, (ii) no
timely quotations of the applicable CD Quoted Rate are offered to such Lender by
certificate of deposit dealers as contemplated herein, or (iii) such Lender
determines in good faith that the LIBOR Rate or CD Rate (as the case may be)
will not adequately and fairly reflect the cost to such Lender of maintaining
such a LIBOR Loan or CD Loan, such Lender may by notice to the Borrowing Agent
(y) suspend the obligation of such Lender to make LIBOR Loans and/or CD Loans
(as the case may be) and (z) the Co-obligors shall convert any such outstanding
Fixed Rate Revolving to a Prime Loan (or, if not so suspended, a LIBOR Loan or
CD Loan) on the last day of the current Interest Period applicable to such Loan.
5.2 Illegality. If the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by a Lender with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall make it
unlawful or impracticable for such Lender to make, maintain or fund a Fixed Rate
Revolving Loan, such Lender shall so notify the Borrowing Agent. Upon receipt of
such notice, Co-obligors shall either (i) repay in full the then outstanding
principal amount of any affected Fixed Rate Revolving Loan, together with
accrued interest thereon, or (ii) convert the affected Fixed Rate Revolving Loan
to another interest rate option on either (A) the last day of the then current
Interest Period applicable to the affected Fixed Rate Revolving Loan if such
Lender may lawfully continue to maintain and fund such Fixed Rate Revolving Loan
to such day, or (B) immediately if such Lender may not lawfully continue to fund
and maintain such Fixed Rate Revolving Loan to such day.
5.3 Increased Costs for Fixed Rate Loans. The following provisions
shall apply with respect to Fixed Rate Revolving Loans:
(a) If any governmental authority, central bank or other
comparable authority, shall at any time modify any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve System
but excluding any reserve requirement included in the CD Reserve Requirement),
special deposit, capital adequacy or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender
(collectively a "Reserve") existing on the Amendment Date or shall thereafter
impose or deem applicable any additional Reserve, or shall impose on a Lender
(or its Eurodollar lending office or the interbank Eurodollar market) any other
condition affecting such Lender's Fixed Rate Revolving Loans, the
17
Revolving Notes or Lender's obligation to make Fixed Rate Revolving Loans; and
the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining its Fixed Rate Revolving Loans, or to reduce the amount of
any sum received or receivable by such Lender under this Agreement or under the
Revolving Notes by an amount deemed by such Lender to be material then, within
five (5) days after demand by such Lender, Co-obligors shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
increased cost or reduction. A Lender shall promptly notify the Borrowing Agent
of any event of which it has knowledge which will entitle such Lender to
compensation pursuant to this Section 5.3. If a Lender demands compensation
under this Section 5.3, then Co-obligors may at any time, upon at least five (5)
Business Days' prior notice from the Borrowing Agent to such Lender, either (i)
repay in full the then outstanding affected Fixed Rate Revolving Loan(s),
together with accrued interest thereon to the date of prepayment, or (ii)
convert such Fixed Rate Revolving Loans to another interest rate option in
accordance with the provisions of this Agreement; provided, however, that
Co-obligors shall not be liable for any Breakage Loss arising pursuant to such
actions.
(b) If either (i) the introduction of, or any change in, or in
the interpretation of, any law or regulation, or (ii) compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by a Lender or any corporation
controlling such Lender and such Lender reasonably determines that the amount of
such capital is increased by or based upon the existence of such Lender's
advances hereunder or of such Lender's commitment to lend hereunder and other
commitments of this type, then, upon demand by such Lender, the Co-obligors
shall pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's advances
hereunder or of such Lender's commitment to lend hereunder. A certificate as to
such amounts submitted to the Borrowing Agent by such Lender shall be conclusive
and binding for all purposes, absent manifest error.
5.4 Payments Not At End of Interest Period. If the Co-obligors make any
voluntary payment of principal with respect to any Fixed Rate Revolving Loan on
any date other than the last day of the Interest Period applicable to such Fixed
Rate Revolving Loan, then unless otherwise expressly provided herein, the
Co-obligors shall reimburse each Lender on demand the Breakage Loss incurred by
such Lender as a result of the timing of such payment.
SECTION 6. CONDITIONS PRECEDENT TO LOANS
6.1 Conditions to Initial Revolving Loan. The obligations of each
Lender to continue to make Revolving Loans and Term Loans on and after the
Amendment Date are subject to the satisfaction of the following conditions
precedent:
(a) Notes. Each Lender shall have received a new Revolving
Note, conforming to the requirements hereof and executed on behalf of the
Co-obligors by a duly authorized executive officer of each Co-obligor.
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(b) Loan Agreement. The Agreement shall have been executed and
delivered on behalf of each Co-obligor by a duly authorized executive officer of
each Co-obligor.
(c) Representations and Warranties, Defaults and Judgments.
The Agent shall have received a certificate executed by an executive officer of
each Co-obligor dated the Amendment Date to the effect that: (i) the
representations and warranties made by each Co-obligor in the Agreement or which
are contained in any certificate, document or other statement of a Co-obligor
furnished at any time under or in connection with the Agreement shall be correct
on and as of the date requested for the making of the Loan as if made on and as
of such date, (ii) no Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the advance to be made on such
date, and (iii) no actions, suits or proceedings before any court or before any
governmental or administrative body or agency which might prevent or preclude
the consummation of the transactions contemplated by the Agreement are pending
or, to the best of its knowledge, threatened against any Co-obligor.
(d) Corporate Proceedings. The Agent shall have received a
certificate signed by an executive officer of each Co-obligor dated the
Amendment Date indicating that each Co-obligor has the authority to (i) execute,
deliver and perform this Agreement, the Revolving Notes and Term Notes (ii)
consummate the transactions contemplated by this Agreement, the Revolving Notes
and Term Notes, and (iii) become jointly and severally obligated with respect to
the Loans under the Agreement. Such certificate shall state that such authority
has not been amended, modified, revoked or rescinded as of the date of such
certificate and shall also state that the Borrowing Agent is duly authorized to
act for and bind such Co-obligor and that Lenders shall be entitled to rely upon
any act or omission of the Borrowing Agent.
(e) Corporate Documents. Each Co-obligor shall have delivered
to the Agent (i) a copy of each corporate Co-obligor's articles of incorporation
and bylaws, or the certificate and agreement of limited partnership of each
Co-obligor organized as a limited partnership, in each case together with all
amendments thereto, and (ii) a certificate dated the Amendment Date from an
executive officer of each Co-obligor (or the general partner of each Co-obligor
organized as a partnership) to the effect that the documents delivered pursuant
to clause (i) are true and correct copies of such documents and no action has
been taken to amend, modify or repeal such documents delivered pursuant to
clause (i), the same being in full force and effect in such form on the
Amendment Date.
(f) Transaction Costs. The Co-obligors shall have paid each
Lender all of its out-of-pocket costs attendant to the Loans, including but not
limited to, each Lender's attorneys' fees and closing costs, in accordance with
Section 11.2 hereof.
(g) Opinion of Counsel. The Agent shall have received from
legal counsel for Co-obligors a favorable opinion, dated the Amendment Date,
addressed to each Lender and in form and substance acceptable to each Lender and
its respective counsel, as to such matters as each Lender may reasonably
request.
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(h) Absence of Material Adverse Changes. No material adverse
change shall have occurred in the business, assets, operations, prospects or
condition (financial or otherwise) of any Co-obligor since September 28, 1997.
(i) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to each Lender and its respective
counsel.
6.2 Conditions to Each Subsequent Revolving Loan. The obligation of
each Lender to make each Revolving Loan subsequent to the Amendment Date shall
be subject to the initial satisfaction of the conditions precedent set forth in
Section 6.1 hereof, as well as the following conditions precedent:
(a) Representations. All of the representations and warranties
of Co-obligors, contained in the Agreement shall be true and correct on the date
of each such Revolving Loan, as the case may be, as though made on and as of
such date.
(b) Defaults. No event shall have occurred and be continuing,
or would result from the Revolving Loan, which constitutes or would constitute
an Event of Default.
(c) Co-obligor. The Co-obligor requesting such Revolving Loan
or on whose behalf such Loan is to be made continues to be a direct or indirect
wholly-owned subsidiary of Parent.
(d) Additional Matters. Co-obligors shall deliver to each
Lender all such other documents, certificates and opinions as each Lender may
reasonably request in connection with the Revolving Loan.
(e) Funded Debt/EBITDA Ratio. Both immediately prior to such
Revolving Loan and immediately subsequent to and after giving effect to such
Revolving Loan, the ratio of Funded Debt to EBITDA shall not exceed 2.00. The
acceptance by a Co-obligor of the proceeds of any Revolving Loan shall be deemed
to constitute, as of the date of such acceptance, a representation and warranty
by each Co-obligor that the applicable conditions in this Section 6.2 have been
satisfied.
SECTION 7. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make
the Loans, the Co-obligors hereby covenant, represent and warrant to each
Lender that:
7.1 Corporate Existence; Compliance with Law. Each Co-obligor and each
of its respective subsidiaries (a) is a duly organized and validly existing
corporation or limited partnership, in good standing under the laws of the
jurisdiction of its formation, (b) has the power and authority to conduct the
business in which it is currently engaged, and (c) is qualified under the laws
of any jurisdiction where the conduct of its business requires such
qualification.
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7.2 Power, Authorization; Enforceable Obligations. Each Co-obligor has
the corporate power and authority to make, deliver and perform this Agreement
and to become obligated with respect to borrowings hereunder, and has taken all
action necessary to be taken by it to authorize such borrowings, its obligations
under the Revolving Notes and the Term Notes and to authorize the execution,
delivery and performance of this Agreement and the Revolving Notes and the Term
Notes. No consent, waiver or authorization of, or filing with, any Person is
required in connection with the borrowings hereunder or the execution, delivery,
performance by, or the validity or enforceability against, any Co-obligor of
this Agreement or the Revolving Notes or the Term Notes. This Agreement has been
duly executed and delivered on behalf of each Co-obligor, and this Agreement
constitutes, and the Revolving Notes and the Term Notes when executed and
delivered hereunder will constitute, legal, valid and binding obligations of
each Co-obligor, enforceable against each Co-obligor, in accordance with their
respective terms, except as enforceability may be limited by general equitable
principles or by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally.
7.3 No Legal Bar. The execution, delivery and performance of this
Agreement, and the Revolving Notes and the Term Notes, the borrowings hereunder
and the use of the proceeds thereof and the consummation of the transactions
contemplated hereunder or thereunder do not and will not violate any provisions
of the articles of incorporation, bylaws or organizational documents of any
Co-obligor or any law, regulation, order, injunction, judgment, decree or writ,
or any lease, contract or agreement, to which any Co-obligor is subject and do
not and will not result in or require, the creation or imposition of any Lien on
any of its properties or revenues pursuant to any requirement of law or
contractual obligation.
7.4 No Litigation. Except as disclosed on Schedule A hereto, no
investigation by or litigation before, any court, tribunal, arbitrator,
mediator, referee or governmental authority is pending, nor to the knowledge of
any Co-obligor, is any of the foregoing threatened, by or against any Co-obligor
or any of its subsidiaries, or against any of their respective properties or
revenues (a) with respect to this Agreement, the Revolving Notes or the Term
Notes, or any of the transactions contemplated hereby or thereby or (b) which
involves the possibility of any judgment, decision or order that may have a
material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of any Co-obligor or any such subsidiary.
7.5 Indebtedness. Except (i) as provided in Schedule A attached hereto,
(ii) the indebtedness incurred pursuant to this Agreement and (iii) indebtedness
incurred after the Amendment Date in accordance with Section 8.2(a) hereof, no
Co-obligor or any of their subsidiaries has, and on the Amendment Date will
have, any indebtedness for borrowed money.
7.6 Ownership of Property; Liens. Except as set forth on Schedule A
attached hereto, each Co-obligor and each of its subsidiaries has good and
indefeasible title to all of its respective properties and assets, and none of
such property is subject to any Lien other than Permitted Liens.
21
7.7 Margin Securities. None of the Co-obligors or any of their
subsidiaries is engaged nor will engage, principally or as one of its important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulations G and X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. No part of the
proceeds of any loans hereunder will be used for "purchasing" or "carrying" any
"margin stock" (other than the repurchase of Common Stock of Parent) within the
respective meanings as so defined. If requested by any Lender, each Co-obligor
will furnish to such Lender a statement in conformity with the requirements of
Federal Reserve Form G-3 referred to in said Regulation G to the foregoing
effect.
7.8 Investment Company Act. None of the Co-obligors nor any of their
subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.9 ERISA. Neither Parent nor any Person which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as Parent or is under common control (within the meaning of Section 414(c)
of the Code) with Parent (collectively, an "ERISA Affiliate") currently has, nor
has Parent or any ERISA Affiliate ever had, any employee benefit plan or pension
plan as such plans are defined in Section 3(2) of ERISA (such plans herein
collectively referred to as a "Plan"), except as described on Schedule A
attached hereto. Each Plan which is required to be qualified under Section 401
of the Code has been determined by the Internal Revenue Service to be qualified
and nothing has occurred which would cause the loss of such qualification.
Parent and each ERISA Affiliate have filed all reports with respect to each Plan
and each Plan has been maintained in material compliance with applicable law.
Neither Parent nor any ERISA Affiliate has failed to make any contributions or
pay any amounts under the terms of any Plan or applicable law. No accumulated
funding deficiency (as defined in Section 412 of the Code) or Reportable Event
has occurred with respect to any Plan.
7.10 Subsidiaries. Parent has no direct or indirect subsidiaries
other than those set forth on Schedule A attached hereto.
7.11 Possession of Franchises, Licenses, etc. None of the Co-obligors
nor any of their subsidiaries is in violation of any law, ordinance, rule or
regulation of any governmental authority to which it or any of its properties is
subject, except for violations that would not individually or in the aggregate
have a material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of Parent. Each Co-obligor and each of their
subsidiaries possesses all franchises, certificates, licenses, permits and other
authorizations from governmental authorities, free from burdensome restrictions,
that are necessary in any material respect for operation of their respective
businesses, and are not in violation of any provision thereof in any material
respect. There are no pending actions, suits or proceedings seeking to revoke,
rescind, suspend, alter or annul any license, permit or authorization pursuant
to which any Co-obligor or any of their subsidiaries conducts any business; and,
to the knowledge of Co-obligors, there are no claims or investigations for such
purpose pending or threatened.
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7.12 Financial Condition. Parent has delivered to the Lenders copies of
the consolidated and consolidating balance sheet of Parent and its subsidiaries
as of September 28, 1997, and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows for the fiscal period
ended such date; and all such financial statements are true and correct, fairly
represent the financial condition of Parent and its subsidiaries as of such
dates and have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with that of prior periods. As of the
date hereof, except as set forth on Schedule A, there are no obligations,
liabilities or indebtedness of Parent or any of its subsidiaries which are
material and are not reflected in such financial statements; and no changes
having a material adverse effect on the financial condition of Parent and its
subsidiaries taken as a whole have occurred since the date of such financial
statements.
7.13 Full Disclosure. There is no material fact that Co-obligors have
not disclosed to Lender which could have a material adverse effect on the
properties, assets, operations, business, prospects or condition (financial or
otherwise) of Parent and its subsidiaries taken as a whole. Neither the
financial statements referenced in Section 7.12 hereof, nor any certificate or
statement delivered herewith or heretofore by any Co-obligors in connection with
negotiations of this Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary to keep the statements contained
herein or therein from being misleading.
7.14 No Default. Giving effect to this Agreement, no event has
occurred and is continuing which constitutes a Default or an Event of Default.
7.15 Material Agreements. Neither any Co-obligors nor any of their
subsidiaries is in default in any material respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its properties is bound,
which default might have a material adverse effect on the business, operations,
property, assets or condition (financial or otherwise) of Parent and its
subsidiaries taken as a whole.
7.16 Taxes. All income tax returns required to be filed by Parent and
each of its subsidiaries in any jurisdiction have been filed (or appropriate
extensions obtained) and all taxes, assessments, fees and other governmental
charges upon Parent and each of its subsidiaries or upon any of its or their
properties, income or franchises have been paid prior to the time that such
taxes could give rise to a lien thereon, except to the extent the validity,
applicability or amount thereof is being contested in good faith by appropriate
proceedings.
7.17 Environmental Matters. To the best of each Co-obligor's knowledge,
each Co-obligor and each of their subsidiaries have obtained all environmental,
health and safety permits, licenses and other authorizations required under all
Environmental Laws to carry on their respective businesses as now being (or as
proposed to be) conducted, except to the extent failure to have any such permit,
license or authorization would not reasonably be expected to have a material
adverse effect on the business, operations, properties, prospects or condition
(financial or otherwise) of such Co-obligor. To the best of each Co-obligor's
knowledge, each of such permits, licenses and authorizations is in good standing
and each Co-obligor and each of its
23
subsidiaries is in compliance with the terms and conditions of all such permits,
licenses and authorizations, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, or demand letter issued, entered,
promulgated or approved thereunder, except to the extent the failure thereof to
be in good standing or the failure to comply therewith would not reasonably be
expected to have a material adverse effect on the business, operations,
properties, prospects of condition (financial or otherwise) of such Co-obligor.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. Each Co-obligor covenants and agrees
that, unless the Lenders shall otherwise consent in writing:
(a) Maintenance of Existence. Each Co-obligor and each of
their subsidiaries will do or cause to be done all things necessary to preserve
and maintain at all times their respective existence.
(b) Inspection. Each Co-obligor will permit any officer,
employee or agent of any Lender at any time to visit and inspect any of the
properties of the Co-obligors and their subsidiaries, and discuss the affairs,
finances and accounts of each Co-obligor with its executive officers, all at
such reasonable times and as often as any Lender may reasonably request. In
addition, after the occurrence and continuation of a Default, any Lender shall
also be entitled to examine each Co-obligor and their subsidiaries' respective
books of record and accounts, take copies and abstracts therefrom, conduct an
audit of such books of record and account and of Parent's consolidated
operations, all at such reasonable times and as often as such Lender may desire.
(c) Environmental Indemnity. Each Co-obligor, hereby, jointly
and severally, indemnifies and agrees to hold each Lender, and its respective
officers, directors, employees, representatives, agents and affiliates (each an
"Indemnified Party"), harmless against, and agrees to promptly pay on demand or
reimburse each of them with respect to, any and all claims, demands, causes of
action, loss, damage, liabilities, costs and expenses of any and every kind or
nature whatsoever, INCLUDING, WITHOUT LIMITATION, THOSE BASED UPON NEGLIGENCE,
SOLE NEGLIGENCE, COMPARATIVE NEGLIGENCE, CONCURRENT NEGLIGENCE OR GROSS
NEGLIGENCE, ASSERTED AGAINST OR INCURRED BY ANY OF THEM (EXCLUDING, HOWEVER, ALL
CLAIMS, DEMANDS, CAUSES OF ACTION, LOSS, DAMAGE, LIABILITIES, COSTS AND EXPENSES
OF AN INDEMNIFIED PARTY WHICH ARISE FROM OR RELATE TO THE WILLFUL MISCONDUCT OR
THE GROSS NEGLIGENCE OF SUCH INDEMNIFIED PARTY), by reason of or arising out of
or in any way related to (a) the breach of any representation, warranty or
covenant as set forth herein regarding Environmental Laws, and (b) the failure
of any Co-obligor or any of their subsidiaries to perform any obligation
required to be performed pursuant to Environmental Laws (collectively
"Environmental Indemnity Matters"). Without limiting the generality of the
foregoing, each Co-obligor shall be obligated to pay or reimburse each
Indemnified Party for all out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred by such
Indemnified Party in the defense of
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any claims arising out of any Environmental Indemnity Matter at the time such
costs and expenses are incurred. The provisions of this Section 8.1(c) shall be
payable upon written demand therefor, shall survive the final payment of all of
the Obligations and the termination of this Agreement and shall continue
thereafter in full force and effect.
(d) Compliance with Laws and Preservation of Rights and
Properties. Each Co-obligor and each of their subsidiaries will remain in
compliance with all Environmental Laws (except for violations that would not
have a material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of such Co-obligor), and shall otherwise
comply with all other laws, except to the extent being contested by a Co-obligor
or its subsidiaries in good faith, and otherwise do or cause to be done all
things necessary to preserve and keep in full force and effect all rights and
franchises necessary to the conduct of their respective businesses. Each
Co-obligor and each of its subsidiaries will do or cause to be done all things
necessary to preserve and keep in full force and effect at all times all rights,
licenses and franchises necessary to the conduct of their respective businesses
and to comply with all laws applicable to each of them and all applicable rules,
regulations and orders issued by any governmental authority, except to the
extent being contested by a Co-obligor or such subsidiary in good faith; to
continue to conduct their respective businesses substantially as now proposed to
be conducted; and at all times to maintain, preserve and protect all licenses,
franchises and trade names, preserve all property necessary to the conduct of
their respective businesses and keep the same in good repair, working order and
condition, ordinary wear and tear excepted, and from time to time make, or cause
to be made, all repairs, renewals, replacements, betterments and improvements
thereto as may be necessary to the conduct of their respective businesses.
(e) Cash Flow. Parent will maintain Adjusted Cash Flow as of
the end of each twelve month period, measured at the end of each of Parent's
fiscal quarters, in an amount equal to or greater than 1.45 times the annual
principal debt service requirements for the next twelve (12) months on (i) the
then outstanding balance of the Loans (assuming, for purposes of this
calculation, that the principal balance of all outstanding Revolving Loans is
being amortized over five years and the principal balance of all Term Loans is
being amortized on the actual amortization schedule provided for herein), (ii)
all current installments of indebtedness of Parent and its subsidiaries (other
than balloon payments of the entire outstanding principal amount of long-term
debt), and (iii) 20% of any balloon payments which otherwise would have been
included in current maturities of long-term debt of Parent and its subsidiaries.
(f) Fixed Charge Coverage. Parent shall maintain a Fixed
Charge Coverage Ratio measured as of the end of each of Parent's fiscal quarters
of 1.35.
(g) Minimum Tangible Net Worth. Parent's total shareholders'
equity (including capital stock, additional paid-in capital and retained
earnings, after deducting all treasury stock) as of the end of each fiscal
quarter of Parent, which would appear on a consolidated balance sheet of Parent
and its subsidiaries prepared as of such date in accordance with generally
accepted accounting principles, consistently applied (but exclusive of any
effect of any change in accounting principles promulgated by the FASB becoming
effective after August 12, 1996), less the aggregate book value of all
intangible assets (such as goodwill, intellectual
25
property and unamortized debt discount or expense) (the result of such
computation being herein referred to as "Consolidated Tangible Net Worth") shall
be not less than the sum of (A) $39,600,000, plus (B) an amount (not less than
zero) equal to 50% of Parent's consolidated net income (after income taxes)
calculated on a cumulative basis commencing with the period beginning January
29, 1996, plus (C) an amount equal to 50% of the net proceeds from the sale of
any equity securities by Parent after January 28, 1996.
(h) Debt to Net Worth Ratio. Parent shall at all times
maintain a ratio of (i) total consolidated liabilities, determined in accordance
with generally accepted accounting principles, consistently applied, to (ii)
Consolidated Tangible Net Worth, no greater than 1 to 1.
(i) Funded Debt to EBITDA. Parent shall maintain a ratio of
Funded Debt to EBITDA, measured at the end of each fiscal quarter of Parent,
not to exceed 2.00.
(j) Insurance. Each Co-obligor and its subsidiaries shall at
all times maintain or cause to be maintained, with reputable insurers, insurance
with respect to its properties and business against fire, theft, burglary,
public liability, property damage, product liability and workers' compensation
and all other casualties and contingencies and of such other types, and in such
amounts, as is customary in the case of businesses engaged in the same or
similar businesses or having similar properties similarly situated.
(k) Litigation. At all times until the payment in full of the
Obligations, each Co-obligor will furnish to Lender notification, promptly upon
such Co-obligor's learning thereof, but in no event later than five (5) Business
Days after its learning thereof, of (i) any litigation which may materially and
adversely affect the business, operations, prospects, property, assets or
condition (financial or otherwise) of any Co-obligor, and (ii) all suits and
proceedings relating to any Plan.
8.2 Negative Covenants. Each Co-obligor covenants and agrees that,
unless the Lenders shall otherwise agree in writing:
(a) Debt. Each Co-obligor and its subsidiaries shall neither
incur nor assume any indebtedness for borrowed money except for (i) trade
payables incurred in the ordinary course of business, (ii) purchase money
indebtedness incurred or assumed as a result of an acquisition of property or
capital stock of another Person, not to exceed $2,500,000 with respect to all
Co-obligors taken together on an aggregate basis, (iii) indebtedness of a
Co-obligor to another Co-obligor or indebtedness of any subsidiary of a
Co-obligor to such Co-obligor, and (iv) existing indebtedness on the Amendment
Date expressly identified on Schedule A hereto.
(b) Liens. No Co-obligor shall, nor permit any of its
subsidiaries to, create, incur, grant, permit or suffer to exist any Lien upon
any of its property or assets, now owned or hereinafter acquired, other than
Permitted Liens.
(c) Sale of Assets. No Co-obligor shall convey, sell, lease,
transfer or otherwise dispose of, whether by sale, merger, consolidation,
liquidation, dissolution, or
26
otherwise (including, but not limited to, the sale, transfer or other
disposition of any of the capital stock, limited partnership interest or other
equity interest held by any Co-obligor in any other Co-obligor or subsidiary
thereof), in one transaction or a series of related transactions, any Material
Portion of the business, property or assets of such Co-obligor, provided
however, that (i) a Co-obligor may convey, sell, lease, transfer or otherwise
dispose of any assets, business or property to any other Co-obligor, and (ii) a
Co-obligor may engage in sale/leaseback transactions involving real property
constituting more than a Material Portion of its assets as long as the aggregate
consideration to be received by such Co-obligor upon the sale of such property
is no less than the value of such real property as reflected on the accounting
records of the Co-obligor ("Book Value"), and the net proceeds from such sale
(after deduction of reasonable expenses) are used by Co-obligor to acquire
additional fixed assets. Sale proceeds will be maintained by the Co-obligor in
cash or invested only in high quality, short-term liquid instruments prior to
their deployment to acquire fixed assets. As used in this Section 8.2(c)
"Material Portion" shall mean assets or property having a Book Value greater
than ten percent (10%) of consolidated assets of Parent and its subsidiaries
taken as a whole as of the end of the fiscal quarter of Parent then most
recently ended. In computing "Material Portion," all assets or property disposed
of by all Co-obligors within the preceding twelve (12) months shall be
aggregated together. Sales or other disposition of any restaurant unit,
regardless of whether such assets represent a Material Portion, shall be subject
to the mandatory prepayment of the Term Loans as set forth in Section 4.2(c)
hereof.
(d) Seller Financing. No Co-obligor shall convey, sell, lease,
transfer or otherwise dispose of any restaurant unit for a consideration other
than cash unless (i) Lenders shall have been granted a first priority security
interest in, and collateral assignment of, any promissory note or other
instrument received by a Co-obligor as consideration for such disposition, in
form and substance reasonably accepted to Lenders, and (ii) such promissory note
or other instrument shall be secured by the assets being disposed of.
(e) Nature of Business. No Co-obligor shall permit any
material change to be made in the character of its principal line of business
(i.e. the ownership, operation and/or management of restaurants) as carried on
at the date hereof. The ownership, operation and management of different or
additional restaurant concepts as those now operated shall not constitute any
change in the character of any Co-obligor's principal line of business.
(f) Stock Repurchase. Lenders have consented to Parent's
repurchase of 185,000 shares of its common stock on December 23, 1997 at a price
equal to $5.25 per share. As long as any Loans are outstanding, Parent will not
purchase, redeem or otherwise acquire additional shares of its capital stock
having an aggregate purchase price in excess of $1,000,000. The purchase price
per share of common stock purchased from time to time by Parent shall not be
greater than the then current independent bid quotation or the last independent
sales price of such shares on the New York Stock Exchange, whichever is greater.
8.3 Reporting Requirements. So long as this Agreement is in effect and
until the payment in full of the Loans, Co-obligors will furnish to Lenders the
following:
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(a) Defaults. As soon as possible and in any event within five
(5) Business Days after a Co-obligor has knowledge of the occurrence of any
Default or Event of Default, a statement of an executive officer of such
Co-obligor setting forth details of such Default or Event of Default and the
action which such Co-obligor has taken or proposes to take with respect thereto.
(b) Financial Statements.
(i) As soon as available and in any event within 45
days after the end of each fiscal quarter, either (A)
consolidated balance sheets of Parent and related statements
of income of Parent on a quarterly and fiscal year-to-date
basis, duly certified by the chief financial officer of Parent
as having been prepared in accordance with generally accepted
accounting principles (except for customary year-end
adjustments) consistently applied, or (B) a copy of Parent's
Quarterly Report on Form 10-Q, as filed with the Securities
and Exchange Commission for such period, in either case,
together with (Y) a certificate of an executive officer of
Parent stating that no Default or Event of Default has
occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to the
nature thereof and the action that Parent has taken or
proposes to take with respect thereto, and (Z) a schedule of
the computations used by Parent in determining compliance with
the covenants contained in Sections 8.1(e), (f), (g), (h) and
(i) of this Agreement.
(ii) As soon as available and in any event within 90
days after the end of each fiscal year of Parent, a copy of
the annual audit report for such year for Parent, prepared by
Xxxxxx Xxxxxxxx LLP or other firm of independent certified
public accountants of recognized national standing, including
therein consolidated balance sheets of Parent as of the end of
such fiscal year and related statements of income,
shareholders' equity and cash flow for such fiscal year,
setting forth in each case in comparative form the
corresponding figures of the previous fiscal year, accompanied
in each case by (A) a report of Xxxxxx Xxxxxxxx LLP or other
independent accountants of recognized national standing, to
the effect that such accountants have examined such financial
statements and that the examination by such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and
such other auditing procedures as were considered necessary
under the circumstances and such report shall state that in
the opinion of such accountants such financial statements have
been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the
financial position and the results of operations of Parent and
its subsidiaries; (B) upon the reasonable request of any
Lender, the management letter, if any, of such accounting firm
commenting on the accounting or auditing practices of Parent
and its subsidiaries; (C) a certificate of such accounting
firm to the Lenders stating that in the course of such audit
of the businesses of Parent and its subsidiaries such
accounting firm (i) has obtained no knowledge that any
28
information provided to Lenders by a Co-obligor in connection
with this Agreement is incorrect or incomplete and (ii) has
obtained no knowledge that a Default or Event of Default has
occurred and is continuing, or if, in the opinion of such
accounting firm, such a Default or Event of Default has
occurred and is continuing, a statement as to the nature
thereof, all of which shall be in form satisfactory to Agent,
and (D) a certificate of the chief financial officer of Parent
which shall state that such financial statements have been
prepared in accordance with generally accepted accounting
principles consistently applied.
(iii) Such other information pertaining to any
Co-obligor as any Lender may from time to time reasonably request.
(c) Operating Data. As soon as available and in any event
within 90 days after the end of each fiscal year of Parent, store-by-store
operating data setting forth in comparative form the corresponding data from the
previous fiscal year.
8.4. Survival of Obligations Upon Termination of Agreement. Upon
indefeasible payment of the outstanding principal amount of the Loan and all
other Obligations, all of the undertakings, agreements, covenants, warranties
and representations contained in this Agreement, the Revolving Notes and the
Term Notes shall thereupon be terminated and the parties thereto released from
all prospective obligations hereunder and thereunder; provided that the
Obligations of Co-obligors pursuant to Sections 8.1(c) and 11.2 of this
Agreement to indemnify and reimburse Lenders shall survive such termination.
SECTION 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
9.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The principal amount of any of the Loans is not paid when
due and such default shall continue for a period of five (5) Business Days after
notice thereof has been sent to the Borrowing Agent; or the interest on any of
the Loans is not paid when due and such default shall continue for a period of
five (5) Business Days after notice thereof has been sent to the Borrowing
Agent; or
(b) A Co-obligor fails to perform, keep or observe any term,
provision, condition, or covenant contained in Section 8.1(a), (e), (f), (g),
(h) or (i) or Section 8.2(a) or (c) of this Agreement; or
(c) A Co-obligor fails to perform, keep or observe any other
term, provision, or covenant contained in this Loan Agreement and such failure
shall continue for a period of thirty (30) days after notice thereof has been
sent to the Borrowing Agent; or
29
(d) A default shall occur and remain unremedied beyond any
applicable cure period under any agreement, document or instrument evidencing
indebtedness for borrowed money to which a Co-obligor is a party, other than
this Agreement; or
(e) Any statement, representation, warranty, report, financial
statement or certificate contained herein or made or delivered by a Co-obligor
or any of its officers, employees or agents, to Lender is not true and correct
in any material respect when made or deemed to have been made; or
(f) An application is made by a Co-obligor for the appointment
of a receiver, trustee or custodian for any assets of such Co-obligor; a
petition under any section or chapter of the Bankruptcy Code or any similar law
or regulation shall be filed by a Co-obligor; a Co-obligor makes an assignment
for the benefit of its creditors; or any case or proceeding is filed by a
Co-obligor for its dissolution, liquidation, or termination; or
(g) A Co-obligor ceases to conduct its business substantially
as now conducted; a petition under any section or chapter of the Bankruptcy Code
or any similar law or regulation is filed against a Co-obligor or any case or
proceeding is filed against a Co-obligor for its dissolution or liquidation, and
such injunction, restraint or petition is not dismissed within 60 days after the
entry or filing thereof; or
(h) A Co-obligor becomes insolvent or admits in writing its
inability to pay its debts as they mature; or
(i) A Change of Control shall occur; or
(j) Any final judgment(s) for the payment of money in excess
of the sum of $1,000,000 in the aggregate shall be rendered against a Co-obligor
or any of its subsidiaries and such judgment(s) shall not be satisfied or
discharged at least 10 days prior to the date on which any of its assets could
be lawfully seized to satisfy such judgment.
9.2 Acceleration of the Obligations. Upon the occurrence of any Event
of Default of the kind referred to in any of paragraphs, (f), (g), (h) or (i) of
Section 9.1 above, all of the Obligations (and accrued interest thereon) shall
automatically and without demand, notice of legal process of any kind, become
due and payable and the Revolving Commitment and the Lenders' commitments to
make Term Loans shall automatically terminate. Upon the occurrence and
continuation of any other Event of Default, all of the Obligations (and accrued
interest thereon), may, at the option of Lenders, be declared, and immediately
shall become, due and payable and the Revolving Commitment and the Lenders'
commitments to make Term Loans may, at the option of Lenders, be terminated.
9.3 Lien. Without limiting Lenders' rights upon the occurrence of any
single Event of Default, within ten (10) days following the request of Lenders
following the occurrence of an Event of Default or Events of Default with
respect to the payment of any Obligation due hereunder or compliance with any
covenant contained in Sections 8.1(e), (f), (g), (h) or (i) (each
30
a "Section 9.3 Event of Default") which occur(s) or exist(s) as of the end of
two (2) or more consecutive fiscal quarters of Parent beginning June 30, 1997,
which request Lenders may make at their option, Co-obligors agree to execute for
the Lenders' benefit a deed or deeds of trust, in form and substance reasonably
acceptance to Lenders, granting Lenders a first priority lien upon a sufficient
number of properties of Co-obligors located in the State of Texas (or if such
properties are inadequate in value, properties located in other states) with a
then current fair market value (confirmed by the third-party appraisals
described below) of not less than 125% of the then outstanding principal balance
of the Loans. It is expressly agreed and understood that the second Section 9.3
Event of Default triggering the foregoing agreement may be with respect to the
same or a different covenant or payment as the first Section 9.3 Event of
Default. Such deed or deeds of trust shall be recorded, at the expense of the
Co-obligors, with such filing offices as may be required to evidence Lenders'
Lien on all such properties. Co-obligors shall provide Lenders within sixty (60)
days after the request of Lenders, at the expense of Co-obligors, such
additional documentation as Lenders would ordinarily require in connection with
real estate loans, including, without limitation, the following: an appraisal of
such property by an independent, qualified third-party appraiser, a Phase I
environmental assessment of such property, a mortgagee's policy of title
insurance, a survey of the property and policies of hazard, casualty and
liability insurance naming Lenders as an additional loss payee, in each of the
foregoing cases, reasonably acceptable to Lenders.
SECTION 10. THE AGENT
10.1 Appointment and Authorization. Each Lender irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the Notes as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
10.2 Agent and Affiliates. Bank One, Texas, N.A. shall have the same
rights and powers under this Agreement as any other Lender and may exercise or
refrain from exercising the same as though it were not the Agent, and Bank One,
Texas, N.A. and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Co-obligors or any subsidiary
or affiliate of a Co-obligor as if it were not the Agent hereunder.
10.3 Action by Agent and Lenders. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default or Event of Default. Any action, consent, election,
right, remedy or approval stated herein to be permitted of, or required by, the
Lenders shall require the unanimous consent of the Lenders.
10.4 Consultation with Experts. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
31
10.5 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable for any action taken or not taken
by it in connection herewith (i) with the consent or at the request of the
Lenders or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or the borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Co-obligors; (iii) the satisfaction of
any condition specified in Section 6, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Revolving Notes or the Term Notes of any other instrument or
writing furnished in connection herewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, telecopy or
similar writing) believed by it in good faith to be genuine or to be signed or
authorized by the Borrowing Agent or any other proper party or parties.
10.6 Indemnification. Each Lender shall, ratably in accordance with its
share of the Revolving Commitment, indemnify the Agent (to the extent not
reimbursed by the Co-obligors) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with this Agreement or any action taken or
omitted by the Agent hereunder.
10.7 Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
10.8 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowing Agent. Upon any such
resignation, the Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Lender, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
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SECTION 11. MISCELLANEOUS
11.1 Sale of Interest; Parties. No Co-obligor may sell, assign or
transfer this Agreement, or any portion hereof, including, without limitation, a
Co-obligor's rights, title, interests, remedies, powers, liabilities,
obligations and/or duties hereunder. This Agreement shall be binding upon and
inure to the benefit of the successors and, subject to the first sentence of
this Section 10.1, assigns of Co-obligor and Agent and the Lenders.
11.2 Expenses (Including Attorneys' Fees). Co-obligors shall reimburse
Lenders on demand (giving reasonable notice upon request) for all the Lenders'
expenses (including, but not limited to, reasonable attorneys' fees) of, or
incidental to:
(a) The preparation of this Agreement, the Revolving Notes and
the Term Notes and any amendment to or modification or waiver of this Agreement
or said Notes and all other out- of-pocket expenses of the Lender incurred in
connection with the closing of this Loan Agreement;
(b) Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, a Co-obligor or any other Person) in any
way relating to this Agreement, the Revolving Notes, the Term Notes or a
Co-obligor's obligations or affairs; provided, however, that a Co-obligor shall
have no obligation to a Lender hereunder with respect to defenses, rights or
remedies by a Co-obligor available against such Lender pursuant to this
Agreement if and only if a Co-obligor prevails against such Lender by means of
such defenses, rights or remedies as evidenced by a final judgment upholding
such defenses, rights or remedies; and
(c) Any attempt to enforce any rights of the Lenders against a
Co-obligor or any other Person which may be obligated to Lenders by virtue of
this Agreement.
Such expenses shall be additional Obligations. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include
reasonable legal fees, costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses (to the extent permitted by
applicable law); long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and reasonable expenses for travel,
lodging and food paid or incurred in connection with such legal services.
11.3 Nonwaiver by Lenders. Lenders' failure, at any time or times
hereafter, to require strict performance by a Co-obligor of any provision of
this Agreement shall not waive, affect or diminish any right of Lenders to
demand strict compliance and performance by a Co-obligor thereafter. Any
suspension or waiver by Lenders of an Event of Default under this Agreement
shall not suspend, waive or affect any other Event of Default under this
Agreement, whether the same is prior to or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations contained in this Agreement and no Event of
Default under this Agreement shall be deemed to have been suspended or waived by
Lenders, unless such suspension or waiver is by an instrument in writing signed
by an officer of Lenders and directed to the Co-obligors specifying such
suspension or waiver. All
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rights and remedies provided for in this Agreement shall be cumulative with all
other rights and remedies available to Lenders hereunder or otherwise available
at law or in equity upon the occurrence of an Event of Default. The rights of
Lenders under Section 9.3 hereof and the imposition or maintenance of an
increased LIBOR Margin or Term Loan Margin shall expressly be cumulative with
all other rights and remedies of Lenders in connection with the occurrence of an
Event of Default and shall in no event be construed to be an election of
remedies or the waiver of any other right or remedy belonging to Lenders.
11.4 Construction of Agreement; Modifications.
(a) THIS AGREEMENT, TOGETHER WITH THE NOTES, AND ALL SCHEDULES
AND EXHIBITS HERETO REFERRED TO HEREIN, EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. Except as
otherwise provided in this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the Notes
or any other document relating hereto, the provision contained in this Agreement
shall govern and control.
(b) Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
(c) The section titles contained in this Agreement are
included for convenience only and are without substantive meaning or content and
are not a part of the agreement between the parties hereto.
(d) This Agreement may not be modified, altered or amended,
except by an agreement in writing signed by all parties.
11.5 Waivers by Co-obligors. Except as otherwise provided in this
Agreement, each Co-obligor waives, to the extent permitted by law (i)
presentment, demand and protest and notice of presentment, notice of intent to
accelerate the maturity of the Obligations and notice of such acceleration,
protest, default, non-payment, maturity, release, compromise, settlement,
extension or renewal and hereby ratifies and confirms whatever the Lenders may
do in this regard; and (ii) the benefit of all valuation, appraisal, stay,
extension, marshaling-of-assets or similar laws, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the performance
of the Obligations by Co-obligors or the enforcement of the Obligations by the
34
Lenders. Each Co-obligor acknowledges that it has been advised by counsel with
respect to this Agreement and the transactions evidenced by this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED AT AND SHALL BE
DEEMED TO HAVE BEEN MADE AT DALLAS, TEXAS, AND SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS EXECUTED, DELIVERED AND
PERFORMED WITHIN SUCH STATE. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY
RECEIVED, EACH CO-OBLIGOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN DALLAS COUNTY, TEXAS.
11.7 Notice. Except as otherwise provided herein, any notice required
hereunder shall be in writing, and shall be deemed to have been validly served,
given or delivered upon the earlier of: (i) three (3) Business Days following
deposit in the United States mails, with proper postage prepaid, and addressed
to the party to be notified at its address on the first page of this Agreement,
(ii) at the time of transmission by facsimile or telecopier, so long as such
transmission is sent during the hours of 8:30 a.m. to 5:00 p.m., Dallas, Texas
time, on a Business Day, or (iii) actual delivery.
11.8 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signature of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on such
counterpart, but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signature of the persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
Co-obligors and by Lenders in Dallas, Texas as of the day and year specified at
the beginning hereof.
CO-OBLIGORS
-----------
SPAGHETTI WAREHOUSE, INC.
By:/s/ Xxxxxx X. Xxxxxx
--------------------
SPAGHETTI WAREHOUSE
SERVICE CORPORATION
By:/s/ Xxxxxx X. Xxxxxx
--------------------
SWEATAC, INC.
By:/s/ Xxxxxx X. Xxxxxx
--------------------
SPAGHETTI WAREHOUSE OF TEXAS, L.P.
BY: SPAGHETTI WAREHOUSE
SERVICE CORPORATION,
General Partner
By:/s/ Xxxxxx X. Xxxxxx
--------------------
SPAGHETTI WAREHOUSE OF OHIO, INC.
By:/s/ Xxxxxx X. Xxxxxx
--------------------
LENDERS:
--------
BANK ONE, TEXAS, N.A.
By:/s/ Xxxx Xxxx
-------------
NATIONSBANK OF TEXAS, N.A.
By:/s/ Xxxxx Xxxxx Xxxxxx
----------------------
