Exhibit 10.19
SECOND AMENDMENT TO LOAN INSTRUMENTS
This SECOND AMENDMENT TO LOAN INSTRUMENTS (this "Amendment"), dated as of
January 31, 2002, is among RED XXXXX INTERNATIONAL, INC., a Nevada corporation
("Red Xxxxx"), RED XXXXX DISTRIBUTING COMPANY, INC., a Colorado corporation ("RR
Distributing Sub"), RED XXXXX XXXX, INC., formerly Red Xxxxx Holding Co., Inc.,
a Nevada corporation ("XX Xxxx Sub"), RED XXXXX OF BALTIMORE COUNTY, INC., a
Maryland corporation ("RR Baltimore Sub"), RED XXXXX OF XXXX ARUNDEL, COUNTY,
INC., a Maryland corporation ("RR Anne Arundel Sub") (Red Xxxxx, XX Xxxxxxxxxxxx
Xxx, XX Xxxx Xxx, XX Xxxxxxxxx Sub and RR Anne Arundel Sub hereinafter are
referred to individually as an "Original Borrower" and collectively as "Original
Borrowers"), RED XXXXX GOURMET BURGERS, INC., a Delaware corporation ("Holding
Company"), RED XXXXX OF XXXXXXXXXX COUNTY, INC., a Maryland corporation ("XX
Xxxxxxxxxx Sub"), WESTERN FRANCHISE DEVELOPMENT, INC., a California corporation
("Western Franchise Sub"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"), in its individual capacity and as agent for all Lenders
(this and all other capitalized terms used but not elsewhere defined herein are
defined in Section 2 below).
RECITALS:
A. Original Borrowers, Agent and Lenders entered into a Loan Agreement
dated as of September 6, 2000 (the "Original Loan Agreement") pursuant and
subject to the terms and conditions of which Lenders agreed to make loans and
other financial accommodations to Original Borrowers.
B. Original Borrowers, Holding Company, XX Xxxxxxxxxx Sub, Agent and
Lenders entered into a First Amendment to Loan Instruments dated as of August 9,
2001 (the "First Amendment") pursuant to which, among other things, Holding
Company and XX Xxxxxxxxxx Sub joined with and into the Original Loan Agreement
as additional Borrowers thereunder. The Original Loan Agreement, as amended by
the First Amendment, hereinafter is referred to as the "Loan Agreement."
C. Red Xxxxx has acquired all of the capital stock of Western Franchise
Sub. Original Borrowers, Holding Company, XX Xxxxxxxxxx Sub and Western
Franchise Sub desire to cause Western Franchise Sub to join with and into the
Loan Instruments as an additional borrower thereunder. Original Borrowers,
Holding Company and XX Xxxxxxxxxx Sub, together with Western Franchise Sub,
hereinafter are referred to individually as a "Borrower" and collectively as
"Borrowers."
D. Borrowers have requested that (i) Agent and Lenders permit Borrowers to
incur up to an additional $15,000,000 of indebtedness for borrowed money for
store development and acquisition and (ii) amend the Loan Agreement in certain
respects to facilitate an initial public offering by Holding Company.
E. Agent and Lenders are willing to agree to the requests of Borrowers,
pursuant and subject to the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and subject to the terms and conditions hereof, Borrowers, Agent and Lenders
agree as follows:
1. Incorporation of Recitals. The Recitals set forth above are incorporated
-------------------------
herein, are acknowledged by Borrowers to be true and correct and are made a part
hereof.
2. Definitions. All capitalized terms used but not elsewhere defined herein
-----------
shall have the respective meanings ascribed to such terms in the Loan Agreement,
as amended by this Amendment.
3. Joinder. Western Franchise Sub hereby (i) joins into each of the Loan
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Instruments executed by Original Borrowers and agrees to become a party thereto
with the same force and effect as if it had been an original signatory thereto,
(ii) agrees to be bound by all of the terms and conditions set forth in the Loan
Instruments as if it were a Borrower, and (iii) accepts and assumes all
Indebtedness heretofore, now and hereafter arising as a result of its joinder
into the Loan Instruments, including, without limitation, the obligation to pay
and perform Borrowers' Obligations. In furtherance of the foregoing, Western
Franchise Sub hereby agrees to be bound as a "Debtor" under the terms of that
certain Security Agreement dated as of September 6, 2000 among the Original
Borrowers and Agent (the "Security Agreement"), and further grants to Agent as
Secured Party thereunder a security interest in all Property of such Debtor
pursuant to the terms of the Security Agreement. Each Original Borrower, Holding
Company and XX Xxxxxxxxxx Sub hereby consents to the foregoing joinder by
Western Franchise Sub into the Loan Instruments.
4. Amendments to Loan Instruments. The Loan Instruments are amended as set
------------------------------
forth below:
4.1 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of the definition of
"Borrowers" and substituting the following therefor:
"Borrowers: Holding Company, Red Xxxxx, RR Distributing Sub, RR
---------
West Sub, RR Baltimore Sub, RR Anne Arundel Sub, XX Xxxxxxxxxx Sub,
Western Franchise Sub and each Additional Borrower."
4.2 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of definition of
"Borrower Subsidiary Capital Stock" and substituting the following version
therefor:
"Borrower Subsidiary Capital Stock: all of the issued and
---------------------------------
outstanding capital stock and options, warrants and other rights to
acquire capital stock of XX Xxxxxxxxxxxx Xxx, XX Xxxxxxx Xxx, XX
Xxxxxxxxx Sub, RR Anne Arundel Sub, XX Xxxxxxxxxx Sub and Western
Franchise Sub."
4.3 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of definition of
"Collateral" and substituting the following version therefor:
"Collateral: (i) all existing and after-acquired Property of each
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Borrower, including, without limitation, all existing and
after-acquired accounts, furniture, fixtures, equipment, inventory and
general intangibles, all Real Estate and all Leases, but, subject to
the terms and conditions of Section 6.17, specifically excluding (A)
the Excluded Personal Property, (B) the Excluded Leases, (C) the
Excluded Real Estate, (D) the Real Estate Held for Sale, (E) the
Unencumbered Property and (F) the Additional Third Party Collateral,
(ii) the Borrower Subsidiary Capital Stock, (iii) the Red Xxxxx
Capital Stock and (iv) all proceeds of the foregoing."
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4.4 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of definition of "GE
Indebtedness" and substituting the following version therefor:
"GE Indebtedness: all Indebtedness for Borrowed Money of
---------------
Borrowers owed to General Electric Capital Corporation as of the
Second Amendment Effective Date other than the MetLife Indebtedness
acquired by General Electric Capital Corporation from MetLife."
4.5 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of definition of "GE
Indebtedness Liens" and substituting the following version therefor:
"GE Indebtedness Liens: the Liens on the Excluded Personal
---------------------
Property and the Excluded Leases of the Existing Stores located at
0000 Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx (Site No. 15), 0000
Xxxxxxxx Xxxxxxxxx X.X., Xxxxxxxx, Xxxxxxxxxx (Site No. 147), 0000
Xxxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx (Site No. 148), 000 Xxxx
Xxxx, Xxxxxxx, Xxxxxxxxxx (Site No. 151), 0000 Xxxx Xxxxxx Xxxx #0000,
Xxxxxxxxx, Xxxxxx (Site No. 152), 00000 Xxxxxxxxxx Xxxx #0000,
Xxxxxxxx, Xxxxxxxxxx (Site No. 158), 0000 Xxx Xxxx Xxxx,
Xxxxxxxxxxxxxxx, Xxxxxxxx (Site No. 157) and 000 Xxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxxxxx (Site No. 160), and the Liens on the Excluded
Personal Property and Borrower's fee simple estate in the Excluded
Real Estate located at 00000 Xxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxx (Site
No. 153) now or hereafter granted to secure the GE Indebtedness.
4.6 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of definition of
"Indebtedness for Borrowed Money" and substituting the following version
therefor:
"Indebtedness for Borrowed Money: without duplication, all
-------------------------------
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note, debenture or other like written obligation to pay money
(including, without limitation, all of Borrowers' Obligations, the
Orix Indebtedness, the MetLife Indebtedness, the Captec Indebtedness,
the Bonnyville Indebtedness, the GE Indebtedness, the Purchase
Money/Capitalized Lease Indebtedness and the Additional Third Party
Indebtedness), (iii) in respect of rent or hire of Property under
Capitalized Leases or for the deferred purchase price of Property,
(iv) in respect of obligations under conditional sales or other title
retention agreements, and (v) all guaranties of any or all of the
foregoing."
4.7 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of the definition of
"Pledge Agreements" and substituting the following version therefor:
"Pledge Agreements: the Borrower Subsidiary Pledge Agreement, the
-----------------
XX Xxxxxxxxxx Sub Pledge Agreement, the Substituted Pledge Agreement
and the Western Franchise Sub Pledge Agreement."
4.8 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting clause (ii) of the definition of
"Permitted Liens" and substituting the following clause therefor:
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"(ii) the Purchase Money/Capitalized Lease Indebtedness Liens,
the Orix Indebtedness Liens, the MetLife Indebtedness Liens, the
Captec Indebtedness Liens, the Bonnyville Indebtedness Liens, the GE
Indebtedness Liens and the Additional Third Party Indebtedness Liens;"
4.9 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of the definition of
"Non-Financed Capital Expenditures" and substituting the following version
therefor:
"Non-Financed Capital Expenditures: for any period, the aggregate
---------------------------------
amount of all Capital Expenditures of Borrowers not financed with the
proceeds of the Loan, the GE Indebtedness, Purchase Money/Capitalized
Lease Indebtedness or the Additional Third Party Indebtedness."
4.10 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of the definition of
"Purchase Money/Capitalized Lease Indebtedness" and substituting the
following version therefor:
"Purchase Money/Capitalized Lease Indebtedness: collectively,
---------------------------------------------
Indebtedness for Borrowed Money, other than Borrowers' Obligations,
the Bonnyville Indebtedness, the Captec Indebtedness, the MetLife
Indebtedness, the Orix Indebtedness, the GE Indebtedness and the
Additional Third Party Indebtedness, incurred by any Borrower to
purchase tangible personal property or Indebtedness for Borrowed Money
incurred by any Borrower to lease tangible personal property pursuant
to Capitalized Leases, provided that (i) such Indebtedness for
Borrowed Money existing as of the Closing Date, including, without
limitation, the Indebtedness for Borrowed Money owed by Borrowers to
NEC, IBM, Norwest Bank and U.S. Bank, shall not exceed $418,425, (ii)
during any Loan Year after the Closing Date the amount of such
Indebtedness for Borrowed Money at any one time outstanding shall not
exceed $1,000,000 and (iii) no Event of Default exists at the time or
will be created as a result of the incurrence of any Indebtedness for
Borrowed Money described in clause (ii) of this definition."
4.11 Section 1.1 - Amended Definition. Section 1.1 of the Loan
--------------------------------
Agreement is amended by deleting the current version of the definition of
"Unencumbered Property" and substituting the following version therefor:
"Unencumbered Property: the Excluded Personal Property, the
---------------------
Excluded Real Estate and the Excluded Leases of the Existing Stores
located at Xxxxxxxxx Xxxx, 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx
00000 (Site Xx. 00), Xxxx Xxxxxx Xxxx, 000 Xxxxxxx Avenue, Store
#F241, Xxxxxxxxxxxx, Xxxxxxxx 00000 (Site No. 29), University Town
Center, 4545 La Jolla Drive, Space G-12, Xxx Xxxxx, Xxxxxxxxxx 00000
(Site No. 34), 0000 Xxx Xxxx Xxxx, Xxxxxx, Xxxxxxxxxx (Site No. 191),
000-X Xxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx (Site No. 192), 000
Xxxxxxxxx Xxxx, #X-00, Xxx Xxxx, Xxxxxxxxxx (Site No. 194), 0000 Xxxx
Xxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx (Site No. 352) and 0000 Xxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxx (Site No. 354)."
4.12 Section 1.1 - Additional Definitions. Section 1.1 of the Loan
------------------------------------
Agreement is hereby amended by adding the following definitions in the
appropriate alphabetical order:
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"Additional Third Party Collateral: the furniture, fixtures and
---------------------------------
equipment located at and/or the applicable Borrower's leasehold or fee
simple interest in one or more Stores described on Schedule 1.1.
Additional Third Party Indebtedness: Indebtedness for Borrowed
-----------------------------------
Money incurred by any Borrower after the Second Amendment Effective
Date to acquire, construct, renovate or develop one or more New
Stores.
Additional Third Party Indebtedness Instruments: all documents,
-----------------------------------------------
instruments and agreements evidencing, securing or governing the terms
of repayment of the Additional Third Party Indebtedness.
Additional Third Party Indebtedness Liens: Liens that secure
-----------------------------------------
Additional Third Party Indebtedness, provided that each such Lien
attaches only to Additional Third Party Collateral.
Change of Control: means the occurrence of any of the following
-----------------
events:
(a) prior to a Qualifying IPO, (i) the Investor Group shall
cease to (A) own and control a majority of Holding Company
Capital Stock or (B) have the ability to appoint a majority of
the Board of Directors of Holding Company, or (ii) the control
and veto rights granted to directors designated by Skylark
Company, Ltd under the Shareholders Agreement are expanded; or
(b) after a Qualifying IPO, any "person" or "group" (within
the meaning of Section 13(d) or 14(d) of the Exchange Act) (other
than one or more members of the Investor Group) has become the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that any such Person has
the right to acquire, whether such right is exercisable
immediately or only after the passage of time), by way of merger,
consolidation or otherwise, of a greater percentage than the
Investor Group of the total voting power in the aggregate of all
classes of capital stock of Holding Company then outstanding
normally entitled to vote in elections of directors of Holding
Company on a fully-diluted basis after giving effect to the
conversion and exercise of all outstanding securities of Holding
Company convertible into or exercisable for such classes of
capital stock (whether or not such securities are then currently
convertible or exercisable); or
(c) after a Qualifying IPO, during any period of two
consecutive calendar years, individuals who at the beginning of
such period constituted the board of directors (or persons
performing similar functions) of Holding Company together with
any new members of such board of directors (i) elected by the
Investor Group or (ii) whose elections by such board of directors
or whose nominations for election by the stockholders of Holding
Company was approved by a vote of a majority of the members of
such board of directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was
5
previously so approved, cease for any reason to constitute a
majority of the directors of Holding Company still in office; or
(d) the Investor Group ceases to own at least (i) 20% of the
total voting power in the aggregate of all classes of capital
stock of Holding Company then outstanding normally entitled to
vote in elections of directors of Holding Company on a
fully-diluted basis after giving effect to the conversion and
exercise of all outstanding securities of Holding Company
convertible into or exercisable for such classes of capital stock
(whether or not such securities are then currently convertible or
exercisable) after a Qualifying IPO and prior to a Secondary
Offering or (ii) 10% of the total voting power in the aggregate
of all classes of capital stock of Holding Company then
outstanding normally entitled to vote in elections of directors
of Holding Company on a fully-diluted basis after giving effect
to the conversion and exercise of all outstanding securities of
Holding Company convertible into or exercisable for such classes
of capital stock (whether or not such securities are then
currently convertible or exercisable) after a Secondary Offering;
or
(e) after a Qualifying IPO, the Management Group ceases to
own at least 5% of the total voting power in the aggregate of all
classes of capital stock of Holding Company then outstanding
normally entitled to vote in elections of directors of Holding
Company on a fully-diluted basis after giving effect to the
conversion and exercise of all outstanding securities of Holding
Company convertible into or exercisable for such classes of
capital stock (whether or not such securities are then currently
convertible or exercisable); or
(f) Holding Company shall cease to own and control, directly
or indirectly, all of the Borrower Subsidiary Capital Stock and
Red Xxxxx Capital Stock.
Development Notice: a notice and certification from Borrowers to
------------------
Agent in the form of Exhibit A attached to the Second Amendment
pertaining to the acquisition, construction, renovation or development
of one or more New Stores.
Exchange Act: the Securities Exchange Act of 1934, as amended, or
------------
any similar Federal statute, and the rules and regulations promulgated
thereunder, as in effect from time to time.
Investor Group: the Management Group and the Sponsor Group.
--------------
Management Group: the Management Holders and their Related
----------------
Parties.
Management Holders: Xxxxxx or any Person over which Xxxxxx,
------------------
directly or indirectly, exercises voting control, including, without
limitation, the right to direct the management and policies of such
Person and the right to elect a majority of the Board of Directors or
similar governing authority for such Person.
Qualifying IPO: means an underwritten primary public offering
--------------
(other than a public offering pursuant to a registration statement on
Form S-8 (or any successor
6
form)) of the common capital stock of Holding Company pursuant to an
effective registration statement filed with the United States
Securities of Exchange Commission in accordance with the Securities
Act (whether alone or in conjunction with a secondary public
offering).
Related Parties means (i) any spouse or immediate family member
---------------
of Xxxxxx, (ii) any trust set up for the benefit of Xxxxxx or any of
the Persons specified in clause (i) or (iii) any corporation or
limited liability company wholly owned by a Management Holder and/or
the Persons specified in clause (i) and (ii).
Second Amendment: the Second Amendment to Loan Instruments dated
----------------
as of January 31, 2002 among Borrowers and Agent.
Second Amendment Effective Date: January 31, 2002.
-------------------------------
Secondary Offering: means an underwritten secondary public
------------------
offering (other than a public offering pursuant to a registration
statement on Form S-8 (or any successor form)) of the common capital
stock of Holding Company, following a Qualifying IPO, pursuant to an
effective registration statement filed with the United States
Securities of Exchange Commission in accordance with the Securities
Act.
Sponsor Group: RR Investors, RR Investors II and any of their
-------------
respective Affiliates..
Western Franchise Sub: Western Franchise Development, Inc., a
---------------------
California corporation.
Western Franchise Sub Pledge Agreement: the pledge agreement
--------------------------------------
dated as of the Second Amendment Effective Date by and between Red
Xxxxx and Agent.
4.13 Subsection 2.1.7. Subsection 2.1.7 of the Loan Agreement is
----------------
deleted in its entirety and the following is substituted therefor:
"2.1.7 Prepayments.
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(a) Voluntary Prepayments. Except as set forth in subsection
---------------------
2.1.7(b), Borrowers may not prepay the Principal Balance of the
Loan at any time during the first three Loan Years. Borrowers
voluntarily may prepay the Principal Balance in whole or in part
at any time after the third Loan Year subject to the satisfaction
of the Voluntary Prepayment Conditions. Concurrently with any
such voluntary prepayment of the Principal Balance, Borrowers
shall pay to Agent, for the benefit of Lenders, a prepayment
premium equal to a percentage of the amount of the Principal
Balance prepaid, determined in accordance with the following
schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ---------------
Fourth Loan Year 4.0%
Fifth Loan Year 3.0%
Sixth Loan Year 2.0%
7
Seventh Loan Year
and Thereafter 1.0%
(b) Mandatory Prepayments. Concurrently with the
---------------------
consummation of a Qualifying IPO, Borrower shall prepay the
Principal Balance by $10,000,000 or such greater amount as
Borrowers may elect. Concurrently with such prepayment, Borrowers
shall pay to Agent, for the benefit of the applicable Lenders (i)
accrued and unpaid interest on the portion of the Principal
Balance being prepaid, to the date on which Agent is in receipt
of Good Funds, (ii) any other sums which then are due and payable
pursuant to the terms of the Loan Instruments and (iii) a
prepayment premium equal to a percentage of the amount of the
Principal Balance prepaid, determined in accordance with the
following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ---------------
Second Loan Year 4.0%
Third Loan Year 4.0%
Fourth Loan Year 4.0%
Fifth Loan Year 3.0%
Sixth Loan Year 2.0%
Seventh Loan Year
and Thereafter 1.0%
(c) Application of Prepayments. All prepayments of the
--------------------------
Principal Balance shall be applied: (i) first, to the payment of
any and all sums which then are due and payable pursuant to the
terms of the Loan Instruments, other than the Principal Balance
and interest accrued thereon, (ii) next to accrued and unpaid
interest on the Principal Balance until all such accrued and
unpaid interest is paid in full and (iii) then to the Principal
Balance in the inverse order of the maturity of the installments
thereof."
4.14 Article III.. The following sentence is inserted at the end of
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Article III of the Loan Agreement:
"Upon the written request of Borrowers and at their sole cost and
expense, Agent shall take such actions and execute such documents as
Borrowers reasonably may request, including, without limitation, the
execution and delivery of appropriate UCC-3 partial releases, in order
to release the Security Interests, if any, on any Additional Third
Party Collateral which is to become subject to an Additional Third
Party Lien permitted hereunder as a result of the incurrence of
Additional Third Party Indebtedness permitted hereunder."
4.15 Section 6.7. Section 6.7 of the Loan Agreement is deleted in its
-----------
entirety and the following is substituted therefor:
"6.7 Future Leases. Deliver to Agent concurrently with the
-------------
execution by any Borrower, as lessee, of any lease pertaining to real
property other than any lease which consists of Unencumbered Property,
which is subject to any GE Indebtedness Lien or which becomes subject
to any Additional Third Party Indebtedness Lien prior
8
to March 31, 2003 (i) an executed copy thereof, (ii) a Landlord's
Agreement from the landlord under such lease, (iii) a first leasehold
mortgage or leasehold deed of trust in form and substance
substantially similar to the Leasehold Mortgages, (iv) a lender's
policy of title insurance, in such form and amount and containing such
endorsements as shall be reasonably satisfactory to Agent, (v) an
ALTA/ACSM survey of the real estate demised under such lease, (vi) an
Environmental Audit with respect to such real property and (vii) such
other documents and assurances with respect to such lease as Agent may
require."
4.16 Section 6.8. Section 6.8 of the Loan Agreement is deleted in its
-----------
entirety and the following is substituted therefor:
"6.8 Future Acquisitions of Real Property. Deliver to Agent
------------------------------------
concurrently with the (i) execution by any Borrower of any contract
relating to the purchase by such Borrower of any real property other
than any real property which consists of Unencumbered Property, which
is subject to any GE Indebtedness Lien or which becomes subject to any
Additional Third Party Indebtedness Lien prior to March 31, 2003, an
executed copy of such contract and an Environmental Phase I Report
with respect to such real property and (ii) closing of the purchase of
such real property, (A) a first mortgage or deed of trust in favor of
Agent on such real property, in form and substance reasonably
satisfactory to Agent, (B) a lender's policy of title insurance, in
such form and amount and containing such endorsements as shall be
satisfactory to Agent, (C) an ALTA/ACSM survey of such real property,
(D) an Environmental Phase I Report with respect to such real property
and (E) such other documents and assurances with respect to such real
property as Agent may require."
4.17 Section 6.17. Section 6.17 of the Loan Agreement is deleted in
------------
its entirety and the following is substituted therefor:
"6.17 Excluded Collateral. Deliver to Agent such Mortgages,
-------------------
Leasehold Mortgages, Security Agreements, UCC financing statements,
other Security Instruments, surveys, title insurance and landlord's
and mortgagee's consents as Agent reasonably may require to grant to
Agent, as security for Borrowers' Obligations, a valid and perfected
Lien, subject only to Permitted Liens and subject in priority only to
Permitted Prior Liens, on:
(i) each item of Excluded Personal Property, each Excluded
Lease, each parcel of Excluded Real Estate which secures the AEI
Indebtedness, the Orix Indebtedness, the MetLife Indebtedness,
the Captec Indebtedness, the Bonnyville Indebtedness or the GE
Indebtedness, in each case within 30 days after the repayment of
the applicable Indebtedness;
(ii) each item of Additional Third Party Collateral (A)
within 30 days after March 31, 2003 if an Additional Third Party
Indebtedness Lien has not been granted on such item of Additional
Third Party Collateral by March 31, 2003 and (B) on which an
Additional Third Party Indebtedness Lien is granted on or prior
to March 31, 2003 within 30 days after the repayment of the
related Additional Third Party Indebtedness unless such repayment
is the result of a refinancing of short term (i.e., maturing less
than one year from the date incurred) Additional Third Party
Indebtedness with long term (i.e.,
9
maturing five or more years from the date incurred) Additional
Third Party Indebtedness secured by such item of Additional Third
Party Collateral; and
(iii) each parcel of the Real Estate Held for Sale which has
not been sold to an unaffiliated third party of any Borrower
prior to the second anniversary of the Closing Date, within 30
days after the second anniversary of the Closing Date."
4.18 Section 7.1. Section 7.1 of the Loan Agreement is deleted in its
-----------
entirety and the following is substituted therefor:
"7.1 Borrowing. Create, incur, assume or suffer to exist any
---------
liability for Indebtedness for Borrowed Money without the prior
written consent of Agent, which consent may be given or withheld in
the sole and unlimited discretion of Agent, except (i) Borrowers'
Obligations, (ii) the Orix Indebtedness, provided the aggregate
principal amount thereof does not exceed $131,845 at any time, (ii)
the MetLife Indebtedness, provided the aggregate principal amount
thereof does not exceed $3,089,414 at any time, (iii) the Captec
Indebtedness, provided the aggregate principal amount thereof does not
exceed $17,380,708 at any time, (iv) the Bonnyville Indebtedness,
provided the aggregate principal amount thereof does not exceed
$1,099,846 at any time, (v) Purchase Money/Capitalized Lease
Indebtedness, (vi) the GE Indebtedness, provided the aggregate amount
thereof does not exceed $9,895,118 at any time and (vii) Additional
Third Party Indebtedness incurred after the Second Amendment Effective
Date, provided that:
(A) the aggregate principal amount thereof outstanding at
any time after the Second Amendment Effective Date does not
exceed $15,000,000;
(B) the aggregate principal amount thereof outstanding at
any time prior to January 1, 2003 does not exceed $10,000,000;
(C) prior to incurring Additional Third Party Indebtedness
in an aggregate principal amount outstanding in excess of
$10,000,000, Borrowers demonstrate to the reasonable satisfaction
of Agent that (1) Holding Company has consummated a Qualifying
IPO and (2) the Leverage Ratio for the most recently ended Four
Quarter Period was less than 2.75:1.00 assuming such Indebtedness
had been incurred on the last day of such Four Quarter Period;
(D) the pricing and other terms of such Additional Third
Party Indebtedness and the value of any Additional Third Party
Collateral required to be pledged to secure such Additional Third
Party Indebtedness are consistent with prevailing market terms
applicable to Indebtedness for Borrowed Money of such character
and type (it being understood and agreed that the parties hereto
do not anticipate that all Additional Third Party Collateral must
be pledged to secure the amounts of Additional Third Party
Indebtedness permitted to be incurred under this Section 7.1);
(E) no Event of Default exists or would be created at the
time any such Additional Third Party Indebtedness is incurred;
and
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(F) Borrowers provide to Agent copies of all applicable
Additional Third Party Indebtedness Instruments prior to
incurring such Additional Third Party Indebtedness."
4.19 Section 7.6. Section 7.6 of the Loan Agreement is deleted in its
-----------
entirety and the following is substituted therefor:
"7.6 Payments of Indebtedness for Borrowed Money. Make any
-------------------------------------------
payment or prepayment on account of any Indebtedness for Borrowed
Money other than Borrowers' Obligations, except that Borrowers may (i)
make regularly scheduled payments on account of the AEI Indebtedness,
the Orix Indebtedness, the MetLife Indebtedness, the Captec
Indebtedness, the Bonnyville Indebtedness, the GE Indebtedness, the
Purchase Money/Capitalized Lease Indebtedness and the Additional Third
Party Indebtedness and (ii) refinance short term Additional Third
Party Indebtedness with long term Additional Third Party Indebtedness
(as contemplated by Section 6.17)."
4.20 Section 7.9. Section 7.9 of the Loan Agreement is deleted in its
-----------
entirety and the following is substituted therefor:
"7.9 Development of New Stores. Acquire, construct, renovate or
-------------------------
develop any New Stores (i) if any Event of Default then exists and is
continuing or any event or proceeding has occurred or shall be pending
which could reasonably be expected to have a Material Adverse Effect
and (ii) without delivering to Agent a duly executed and completed
Development Notice not more than 30 nor less than 10 days prior to
acquiring, constructing, renovating or developing such New Stores.
Notwithstanding the foregoing, Agent shall be deemed to have given its
consent to the development of the New Stores, the "Le Carnassier" and
"Western Franchise Development" New Store acquisitions described on
Schedule 1.1 hereto and the acquisition of the New Stores located at
0000 Xxx Xxxx Xxxx, Xxxxxx, Xxxxxxxxxx (Site No. 191), 000-X Xxx
Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx (Site No. 192) and 000 Xxxxxxxxx
Xxxx, #X-00., Xxx Xxxx, Xxxxxxxxxx."
4.21 Section 7.12. Section 7.12 of the Loan Agreement is deleted in
------------
its entirety and the following is substituted therefor:
"7.12 Amendment of Certain Agreements. Amend, modify or waive any
-------------------------------
term or provision of (i) its articles of organization, certificate of
incorporation, by-laws or other constitutive or organizational
documents or any of the other Equity Instruments, except pursuant to
(A) the Corporate Reorganization Documents or (B) amendments and
modifications in connection with a Qualifying IPO, provided such
amendments or modifications do not conflict with, or require any act
or omission prohibited by, the Loan Instruments; (ii) the Quad-C
Investment Instruments, (iii) the Xxxxxx Group Merger Instruments,
(iv) the Trust Indenture, the Debentures or the Sinking Fund
Assignment Instruments, (v) the Xxxxxx Employment Instruments, (vi)
the Quad-C Consulting Agreement, (v) any Leases, (vi) the Bonnyville
Indebtedness Instruments, (vii) the Captec Indebtedness Instruments,
(viii) the MetLife Indebtedness Instruments, (ix) the Orix
Indebtedness Instruments, (x) the GE Indebtedness Instruments or (xi)
once executed and delivered, the Additional Third Party Indebtedness
Instruments."
11
4.22 Section 8.1.10 of the Loan Agreement. Section 8.1.10 of the Loan
------------------------------------
Agreement is deleted in its entirety and the following is substituted
therefor:
"8.1.10 Change in Management or Control. If at any time (i)
-------------------------------
Xxxxxx shall cease to devote his full business time and effort to the
day-to-day management of the operations and affairs of Borrowers or
(ii) a Change of Control shall occur."
4.23 Schedules to the Loan Agreement. Schedules 5.3.1, 5.5.4, 5.5.5
-------------------------------
and 5.5.6 to the Loan Agreement are deleted in their entirety and Amended
and Restated Schedules 5.3.1, 5.5.4, 5.5.5 and, 5.5.6 attached hereto are
substituted therefor. Schedule 1.1 attached hereto is attached to the Loan
Agreement as Schedule 1.1 thereto.
4.24 Security Agreement. Due to the repayment of the AEI Indebtedness
------------------
and pursuant to Section 6.17 of the Loan Agreement, each Borrower hereby
grants to Agent, for the benefit of Lenders, a security interest in all
furniture, fixtures and equipment now or hereafter located at 0000 Xxxxxxxx
Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx (Site No. 207), all additions and
accession thereto or replacements thereof and all proceeds of the
foregoing, all of which shall be deemed to be included in the Collateral
(as defined in the Security Agreement).
5. Conditions to Effectiveness. The effectiveness of this Amendment shall
---------------------------
be subject to the satisfaction of all of the following conditions in a manner,
form and substance satisfactory to Lenders:
5.1 Delivery of Documents. The following shall have been delivered to
---------------------
Agent, each duly authorized and executed and each in form and substance
satisfactory to Lenders:
(a) this Amendment;
(b) the Western Franchise Sub Pledge Agreement, together with the
original stock certificates evidencing all of the Equity Interests of
Western Franchise Sub and duly executed assignments separate from
certificate with respect thereto;
(c) certified copies of (i) the articles or certificate of
incorporation of each Borrower, together with all amendments thereto,
certified by the corporate secretary of such Borrower as of the date
hereof, (ii) the by-laws of each Borrower, together with all
amendments thereto, certified as of the date hereof by the corporate
secretary of such Borrower, and (iii) resolutions adopted by the board
of directors of each Borrower authorizing the execution, delivery and
performance of this Amendment, certified as of the date hereof by the
corporate secretary of such Borrower;
(d) signature and incumbency certificates of the officers of each
Borrower;
(e) evidence that the AEI Indebtedness Liens have been released;
(f) such other instruments, documents, certificates, consents,
waivers and opinions as Lenders reasonably may request.
5.2 Performance; No Default. Each Obligor shall have performed and
-----------------------
complied with all agreements and conditions contained in the Loan
Instruments to be performed by or complied with by it, and no Event of
Default or Incipient Default shall exist.
12
5.3 Material Adverse Effect. No event shall have occurred since
-----------------------
December 31, 2000 which has had or could have a Material Adverse Effect.
5.4 Amendment Fee; Costs and Expenses. Borrower shall have paid to
---------------------------------
Agent the $100,000 amendment fee described herein and all other fees and
expenses described in Paragraph 7 hereof incurred by Agent in connection
with this Amendment.
The date on which all of the conditions set forth in this Paragraph 4 have
been satisfied is referred to herein as the "Effective Date."
6. References. From and after the Effective Date, (i) all terms used in the
----------
Loan Instruments which are defined in the Loan Agreement shall be deemed to
refer to such terms as amended by this Amendment and (ii) all references in the
Loan Agreement and the other Loan Instruments to the Loan Agreement shall be
deemed to refer to the Loan Agreement as amended by this Amendment.
7. Representations and Warranties. Each Borrower hereby confirms to Agent
------------------------------
and Lenders that the representations and warranties set forth in the Loan
Instruments, as amended by this Amendment and except as previously disclosed to
Agent in writing with respect to any representation or warranty other than those
contained in Sections 5.3.1, 5.5.4, 5.5.5 and 5.5.6, to which such Borrower is a
party are true and correct in all material respects as of the date hereof, and
shall be deemed to be remade as of the date hereof. Each Borrower represents and
warrants to Agent and Lenders that (i) such Borrower has full power and
authority to execute and deliver this Amendment and to perform its obligations
hereunder, (ii) upon the execution and delivery hereof, this Amendment will be
valid, binding and enforceable upon such Borrower in accordance with its terms,
(iii) the execution and delivery of this Amendment does not and will not
contravene, conflict with, violate or constitute a default under (A) its
articles of incorporation or by-laws, or (B) any applicable law, rule,
regulation, judgment, decree or order or any agreement, indenture or instrument
to which such Borrower is a party or is bound or which is binding upon or
applicable to all or any portion of such Borrower's Property and (iv) as of the
date hereof no Incipient Default or Event of Default exists.
8. Amendment Fee; Costs and Expenses. In consideration of the execution and
---------------------------------
delivery by Agent and Lenders of this Amendment, Borrowers shall pay to Agent
and Lenders a non-refundable amendment fee of $100,000, which shall be deemed to
be fully earned and payable upon the execution and delivery of this Amendment by
Agent and Lenders. Borrowers shall reimburse Agent and Lenders for all fees and
expenses incurred in the preparation, negotiation and execution of this
Amendment and the consummation of the transactions contemplated hereby,
including, without limitation, the fees and expenses of counsel for Agent and
Lenders.
9. No Further Amendments; Ratification of Liability. Except as amended
------------------------------------------------
hereby, the Loan Agreement and each of the other Loan Instruments shall remain
in full force and effect in accordance with its respective terms. Each Borrower
hereby ratifies and confirms its liabilities, obligations and agreements under
the Loan Agreement and the other Loan Instruments, all as amended by this
Amendment, and the Liens created thereby, and acknowledges that (i) it has no
defenses, claims or set-offs to the enforcement by Agent or Lenders of such
liabilities, obligations and agreements, (ii) Agent and each Lender have fully
performed all obligations to such Borrower which it may have had or has on and
as of the date hereof and (iii) other than as specifically set forth herein,
Lenders (A) expressly reserve and preserve all of their rights and remedies
under the Loan Agreement and the other Loan Instruments and (B) do not waive,
diminish or limit any term or condition contained in the Loan Agreement or the
other Loan Instruments. Lenders' agreement to the terms of this Amendment or any
other amendment of the Loan Agreement shall not be deemed to establish or create
a custom or course of dealing among
13
Lenders and Borrowers. The Loan Instruments, as amended by this Amendment,
contain the entire agreement among Lenders and Borrowers with respect to the
transactions contemplated hereby.
10. Counterparts; Facsimile Execution. This Amendment may be executed in
---------------------------------
one or more counterparts, each of which shall be deemed an original and by
facsimile , and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile shall also deliver a manually executed
counterpart of this Amendment, but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
11. Further Assurances. Borrowers covenant and agree that they will at any
------------------
time and from time to time do, execute, acknowledge and deliver, or will cause
to be done, executed, acknowledged and delivered, all such further acts,
documents and instruments as reasonably may be required by Lenders in order to
effectuate fully the intent of this Amendment.
12. Severability. If any term or provision of this Amendment or the
------------
application thereof to any party or circumstance shall be held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
the validity, legality and enforceability of the remaining terms and provisions
of this Amendment shall not in any way be affected or impaired thereby, and the
affected term or provision shall be modified to the minimum extent permitted by
law so as most fully to achieve the intention of this Amendment.
13. Captions. The captions in this Amendment are inserted for convenience
--------
of reference only and in no way define, describe or limit the scope or intent of
this Amendment or any of the provisions hereof.
14. Governing Law. This Amendment shall be construed in accordance with and
-------------
governed as to validity, interpretation, construction, effect and in all other
respects by the laws and decisions of the State of Arizona. For purposes of this
Section 13, this Amendment shall be deemed to be performed and made in the State
----------
of Arizona.
[remainder of this page intentionally left blank]
14
IN WITNESS WHEREOF, this Amendment has been executed and delivered by each
of the parties hereto by a duly authorized officer of each such party on the
date first set forth above.
RED XXXXX GOURMET BURGERS, INC.,
a Delaware corporation
By: /s/ Xxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title:Chief Financial Officer & Secretary
RED XXXXX INTERNATIONAL, INC., a Nevada
corporation
By: /s/ Xxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title:Chief Financial Officer & Secretary
RED XXXXX DISTRIBUTING COMPANY, INC., a
Colorado corporation
By: /s/ Xxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title:Chief Financial Officer & Secretary
RED XXXXX XXXX, INC., a Nevada corporation
By: /s/ Xxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title:Chief Financial Officer & Secretary
RED XXXXX OF BALTIMORE COUNTY, INC., a
Maryland corporation
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
Title:President
RED XXXXX OF XXXX ARUNDEL COUNTY, INC., a
Maryland corporation
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
Title:President
RED XXXXX OF XXXXXXXXXX COUNTY, INC., a
Maryland corporation
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
Title:President
WESTERN FRANCHISE DEVELOPMENT, INC., a
California corporation
By: /s/ Xxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title:Chief Financial Officer & Secretary
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
RED XXXXX OF XXXX ARUNDEL COUNTY, INC., a
Maryland corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
RED XXXXX OF XXXXXXXXXX COUNTY, INC., a
Maryland corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
WESTERN FRANCHISE DEVELOPMENT, INC., a
California corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By: /s/ Xxxx Xxxxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title:Vice President
Schedule 1.1
1. Northeast corner of NW Civic Street and Division Street, Gresham, OR
(location # 351)
2. Xxxxxxxxx xxxxxx xx XX Xxxxxxxxxx Xxxxxx and SE 100th Avenue, Portland OR
(location # 145)
3. Roseville (Creekside), Town Center, Pad 6, Xxxxxxx Boulevard and Antelope
Creek Drive, Roseville, CA (location # 49)
4. 00000 Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxx, XX 00000 (location # 146)
5. 1. X. Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX (location # 20)
6. Crown Point, CO under development
7. Dulles Town Center, VA under development
8. Germantown, MD under development
9. Mesa, AZ under development
10. Peoria, AZ under development
11. Prescott, Arizona under development
12. The following New Stores which are the subject of the "Le Carnassier"
acquisition:
0000 Xxxxx Xxx. XX, Xxxxxx, Xxxx (Site No. 601)
00000 Xxxxxxxxxxxx Xxxxxxx Xxxx, Xxxxxxxxxxxx, XX (Site No. 615)
00000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX (Site No. 604)
13. The following New Stores which are the subject of the "Western Franchise
Development" acquisition:
0000 Xx Xxxxxx Xxxx, Xxx Xxxxx, XX (Site No. 193)
0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, XX (Site No. 195)
0000 Xxxxxxxxxxxx Xxxxxxx, Xxx Xxxxx, XX (Site No. 196)
List of Omitted Exhibits and Schedules
--------------------------------------
The following exhibits and schedules to the Second Amendment to Loan Instruments
have been omitted and shall be furnished supplementally to the Commission upon
request:
Schedule 5.3.1 - Equity Interests
Schedule 5.5.4 - Facility Sites
Schedule 5.5.5 - Leases
Schedule 5.5.6 - Real Estate
