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Exhibit 10.4
AMENDED AND RESTATED
LOAN AGREEMENT
Dated December 22, 1995
LENDER:
FIRST UNION NATIONAL BANK
OF TENNESSEE
BORROWER:
COOKER RESTAURANT CORPORATION
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AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement is entered into the
22nd day of December, 1995, by and between COOKER RESTAURANT CORPORATION
("Borrower"), an Ohio corporation, and FIRST UNION NATIONAL BANK OF TENNESSEE
("Lender"), a national banking association.
RECITALS
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WHEREAS, Lender has previously extended credit to Borrower
pursuant to the terms of that certain Loan Agreement dated August 26, 1991 (the
"First Agreement"); and
WHEREAS, Borrower and Lender have previously amended the First
Agreement pursuant to those instruments dated June 19, 1993, and January 11,
1995 (the First Agreement as amended is hereinafter referred to as the "Prior
Agreement"); and
WHEREAS, Lender has agreed to extend additional credit to
Borrower, on certain terms and conditions; and
WHEREAS, one condition to Lender's agreement to extend
additional credit is that Lender and Borrower must enter into a comprehensive
agreement setting forth all of the terms and conditions of Borrower's credit
and which amends and restates the Prior Agreement, as amended, in its entirety;
NOW, THEREFORE, as an inducement to cause Lender to extend
additional credit to Borrower, and for other valuable consideration, the
receipt and sufficiency of which are acknowledged, it is hereby agreed that the
Prior Agreement, as amended, is hereby amended and restated in its entirety as
set forth below:
ARTICLE I
DEFINITIONS
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As used in this Agreement, the following capitalized terms
shall have the following meanings, unless the context expressly requires
otherwise:
"Advance" means any disbursement of funds to Borrower made
pursuant to this Agreement.
"Affiliate" means, with respect to any Person, another Person
that, directly or indirectly, (i) has an equity interest in that Person, in any
degree, (ii) has common ownership with that Person, in any degree, (iii)
Controls that Person, or (iv) shares common Control with that Person.
"Agreement" means this Loan Agreement (including all exhibits
hereto), as the same may be amended from time to time.
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"Bankruptcy Code" means Title I of the Bankruptcy Reform Act
of 1978, as it may be amended from time to time.
"Borrower" means Cooker Restaurant Corporation, an Ohio
corporation, its successors and assigns. This definition does not abrogate the
requirement set forth below restricting Borrower's ability to assign its rights
under this Agreement.
"Business Day" or "Business Days" means any day or days on
which Lender's main office in Nashville, Tennessee is open for business with
the public.
"Capital Lease" means a lease that would be characterized as a
financed sale under GAAP or under Article 9 of the UCC.
"Closing" means the time and place of the delivery of the
executed Loan Documents to Lender.
"Closing Date" means the date of this Agreement.
"Collateral" means any and all Property now or hereafter
securing the Obligations.
"Control" or "Controlled" means that a Person has the power to
conduct or govern the policies of another Person, whether this power exists as
a matter of law or through economic compulsion.
"Conversion Date" shall have the meaning assigned in Section
2.5 hereof.
"Debt" means, with respect to any Person, all obligations,
contingent or otherwise, that would be classified under GAAP as a liability of
that Person including, but not limited to, any nonrecourse obligations secured
by Property of that Person.
"Deed of Trust" means the deed of trust recorded in Davidson
County, Tennessee, as more particularly described below.
"Default" or "Event of Default" means the occurrence of any of
the events specified in Section 8.1 hereof, as to which any requirement for
notice or lapse of time has been satisfied.
"Encumbrance" means any interest in Property in favor of one
not the owner thereof, whether voluntary or involuntary, including, but not
limited to, (i) the lien or security interest arising from a deed of trust,
mortgage, pledge, security agreement, conditional sale, Capital Lease,
consignment, or bailment for security purposes, and (ii) reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions.
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"Environmental Laws" means the Environmental Protection Act,
the Resource Conservation and Recovery Act of 1976, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Hazardous
Materials Transportation Act and any other federal, state or municipal law,
rule or regulation relating to air emissions, water discharge, noise emissions,
solid or liquid waste disposal, hazardous or toxic waste or materials, or other
environmental or health matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"Financial Statements" means the balance sheet, income
statement, and statement of cash flows for Borrower dated October 1, 1995,
delivered by Borrower to Lender, and all notes thereto.
"GAAP" means generally accepted accounting principles
pronounced by the Financial Accounting Standards Board or any successor
thereto, as in effect from time to time.
"Hazardous Substances" means those substances included from
time to time within the definition of hazardous substances, hazardous
materials, toxic substances, or solid waste under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended, 42
U.S.C. Section 9601 ET SEQ.; the Resource Conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 ET SEQ.; the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 ET SEQ., and in the regulations promulgated
pursuant to such acts and laws; and such other substances that are or become
regulated under any applicable local, state, or federal law or regulation
addressing environmental hazards.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time.
"Lease" means any Capital Lease or operating lease.
"Lender" means First Union National Bank of Tennessee, its
successors and assigns.
"Lender's Prime Rate" means the interest rate announced as
such by Lender from time to time. Lender's Prime Rate is not necessarily the
lowest rate charged by Lender. See also paragraph 2.2.
"Loan" means the aggregate borrowings by Borrower under this
Agreement.
"Loan Documents" means, collectively, each writing furnished
Lender in connection with this Agreement, whenever delivered.
"Maximum Lawful Rate" means the highest rate that Lender may
charge from time to time under applicable laws.
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"Mortgage" means the mortgage recorded in Xxxxxxxx and
Xxxxxxxx Counties in the State of Ohio, as more particularly described below.
"Obligations" means all present and future debts and other
obligations of Borrower to Lender, whether arising by contract, tort, guaranty,
overdraft, or otherwise; whether or not the advances or events creating such
debts or other obligations are presently foreseen; whether such obligations
were originally payable to Lender or are acquired by Lender from another
Person; and regardless of the class of the debts or other obligations, be they
otherwise secured or unsecured. Without limiting the foregoing, the
"Obligations" specifically includes the obligations of Borrower under this
Agreement and the other Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means:
(a) Encumbrances securing the payment of any of
the Obligations;
(b) Encumbrances securing taxes, assessments, or
other governmental charges not yet due or which are being
contested in good faith by appropriate action promptly
initiated and diligently conducted, if Borrower has made
reserve therefor as required by GAAP;
(c) Encumbrances referred to in the Financial
Statements;
(d) Mechanics', repairmen's, materialmen's,
warehousemen's and other like liens arising by operation of
law securing accounts that are not delinquent;
(e) Purchase money security interests in equipment
as further described in Section 7.1 hereof;
(f) Encumbrances on real property used by
Borrower not securing monetary obligations, provided that (i)
if the affected property is included in the Collateral, the
Encumbrances have been approved by Lender and are disclosed in
the title insurance policies obtained by Lender, or (ii) if
the affected property is not included in the Collateral, the
Encumbrances are of a type customarily placed on real property
and do not materially impair the value of the affected
property; and
(g) Those matters disclosed in title insurance
policies delivered by Borrower to Lender insuring Lender's
interest in any Real Property pledged to Lender under the
terms of this Agreement, if such matters have been approved by
Lender.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government, or any agency or political subdivision thereof, or any other form
of entity.
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"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
Subsidiary and covered by Title IV of ERISA or to which Section 412 of the IRC
applies.
"Property" or "Properties" means any interest in any kind of
property, whether real, personal, or mixed, or tangible or intangible.
"Real Property" means that certain real property described on
EXHIBIT A attached hereto and all present and future fixtures, leases, rents,
and other appurtenant rights, and such additional real property, wherever
located, owned by Borrower or to be acquired by Borrower with an Advance from
Lender, as may be approved by Lender as security for the Loan.
"Revolving/Term Loan" has the meaning assigned in Article II
of this Agreement.
"Solvent" shall mean, as to any Person, that the Person (i)
has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage, (ii) is able to pay
its Debts as they mature, and (iii) owns Property having present fair saleable
value greater than the amount required to pay its Debts.
"Subsidiary" means any Person in which Borrower has or has the
right to obtain under any conditions an equity interest of any degree or over
which Borrower has Control.
"UCC" means the Uniform Commercial Code as adopted in
Tennessee, as it may be amended from time to time.
"Unmatured Default" means any event or condition that, but for
the giving of any required notice by Lender and/or the passing of time, would
be a Default hereunder.
ARTICLE II
REVOLVING/TERM LOAN
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Concurrently with the execution of this Agreement, Lender
shall make a Revolving/Term Loan (the "Revolving/Term Loan") available to
Borrower under the following terms:
2.1 AMOUNT. The amount of the existing Sixteen Million
Three Hundred Thousand Dollars ($16,300,000) Loan shall be increased to
Thirty-Three Million Dollars ($33,000,000).
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2.2 INTEREST RATE.
(a) The initial interest rate charged on the indebtedness
evidenced by the Note shall be based on the 30-day LIBOR Rate plus 162.50 basis
points and shall be in effect until March 31,1996.
(b) Thereafter, the interest rate charged on the
indebtedness outstanding under the Note shall be based on Borrower's
performance. Subject to the requirements of subparagraph (c) below, if (i)
Borrower's earnings performance satisfies the conditions set forth below, and
(ii) no defaults exist under the terms or provisions of any of the documents
evidencing or securing the Revolving/Term Loan, then the outstanding principal
balance of the Revolving/Term Loan shall bear interest at the corresponding
rate set forth below:
Applicable Ratio Prime + LIBOR +
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Greater than 7.75 50 basis points 200 basis points
7.01 to 7.75 0 basis points 175 basis points
6.00 to 7.00 0 basis points 150 basis points
Less than 6.00 0 basis points 125 basis points
The Applicable Ratio shall be determined by dividing Borrower's EBITDA by the
average unpaid balance of the Revolving/Term Loan on the first and last days
of the quarter. The ratio will be calculated quarterly and will apply to all
outstandings for the following quarter. As used herein EBITDA shall mean for
the Borrower and its subsidiaries on a consolidated basis for any period, the
sum of consolidated net income, plus interest expense, plus any provision for
taxes based on income or profits that was deducted in computing consolidated
net income, plus depreciation, plus amortization of intangible assets.
(c) Unless notified by Borrower in writing to the
contrary the Prime Rate option set forth above shall apply to all sums
outstanding under the Revolving/Term Loan (except as otherwise provided in
paragraph (a)). When the Borrower requests disbursements in increments of
$1,000,000 (e.g. $1,000,000.00; $2,000,000.00; and $3,000,000.00), then the
Borrower may choose to have such disbursements bear interest at the 30-day,
90-day, or 180-day LIBOR Rate option as set forth above. At the end of each
interest rate period, when the LIBOR Rate option is chosen, the Borrower may
elect to have the LIBOR Rate apply for the succeeding 30-day, 90-day or 180-day
period. Borrower shall, not less than five (5) days before the beginning of
any interest rate period during which it desires to choose a LIBOR Rate option,
notify Lender of its intention to choose such option. Provided, finally, at no
time shall more than three (3) separate interest rates apply to borrowings
under the Revolving/Term Loan. Borrower will be responsible for all customary
and reasonable expenses associated with the prepayment of any disbursement when
the LIBOR Rate option is chosen for such disbursement and is prepaid prior to
the expiration of the LIBOR based period.
As used herein 30-day, 90-day or 180-day LIBOR rate shall mean
that rate per annum at which, in the opinion of the Lender, United States
Dollars in the amount of $5,000,000
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are being offered to major top credit quality banks at 11:00 a.m. London time
two business days prior to the beginning of the interest rate period for which
Borrower desires to choose the 30-day, 90-day or 180-day LIBOR Rate for
settlement in immediately available funds by major top credit quality banks in
the Lending Interbank Market for a period equal to the chosen option.
The Lender's Prime Rate shall be that rate announced by Lender
from time to time as its Prime Rate and is one of several interest rate bases
used by Lender. Lender lends at rates both above and below Lender's Prime Rate
and Borrower acknowledges that Lender's Prime Rate is not represented or
intended to be the lowest or most favorable rate of interest offered by Lender.
In no event shall the rate of interest provided hereunder
exceed the Maximum Lawful Rate.
2.3 PAYMENTS. Payment of all obligations arising under
the Revolving/Term Loan shall be made as follows:
(a) INTEREST INSTALLMENTS. Interest on the outstanding
principal balance under the Revolving/Term Loan shall be paid in arrears on the
First (1st) day of each calendar quarter beginning on January 1, 1996.
(b) PRINCIPAL INSTALLMENTS/REDUCTION IN AVAILABILITY.
The Note and documents evidencing the Revolving/Term Loan shall also be revised
to reflect that accrued interest shall be due and payable quarterly in arrears.
Additionally, beginning on the first business day after January 1, 1998, and on
the first business day of each calendar quarter thereafter availability under
the Note shall be reduced by $1,650,000. Provided, however, if the
Revolving/Term Loan is not fully funded on January 1, 1998 the quarterly
principal installments shall be determined by dividing the actual principal
balance on such debt by twenty (20).
(c) VOLUNTARY PREPAYMENT. Except as provided above in
the case of LIBOR borrowings voluntary prepayments of principal or accrued
interest may be made, in whole or in part, at any time without penalty.
(d) ALL AMOUNTS DUE. All remaining principal, interest
and expenses outstanding under the Revolving/Term Loan shall become due
December 31, 1998.
2.4 USE OF PROCEEDS. Advances under the Revolving/Term
Loan shall be used by Borrower for general working capital purposes and costs
incurred in expansion of its restaurant business.
2.5 REVOLVING LOAN; ADVANCES. From the Closing Date
until December 31, 1997 (the "Conversion Date"), Borrower may from time to time
request and repay Advances under the Revolving/Term Loan, provided that the
total principal amount outstanding under the Revolving/Term Loan shall not at
any time exceed the amount stated in Section 2.1 above. No
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reborrowings or additional Advances shall be permitted after the Conversion
Date. Prior to the Conversion Date, Advances under the Revolving/Term Loan
shall be disbursed as follows:
(a) ADVANCE REQUESTS. Lender may honor requests for
Advances under the Revolving/Term Loan made on Borrower's behalf by any agent
or purported agent of Borrower, whether such request is made in person, by
telephone, or in writing. Lender may require that requests for Advances be
submitted in writing, and may also require that Borrower submit with such
requests written warranties or other assurances reasonably acceptable to Lender
showing that Borrower has satisfied the conditions to funding set forth in this
Agreement.
(b) FUNDING. As long as Borrower meets the conditions
for funding stated in this Agreement, Lender shall fund Advances requested
under the Revolving/Term Loan within two (2) Business Days of the actual
receipt of Borrower's request by Xxx Xxxxx, Vice President of Lender, or by any
other loan officer of Lender. Draws shall be made in increments of One Hundred
Thousand Dollars ($100,000). All funds shall be disbursed directly into an
account maintained by Borrower with Lender. Borrower agrees that if Lender
elects to fund any requested Advance(s) sooner after requested than is required
of Lender hereunder, Lender may nevertheless use the entire response period
allowed hereunder upon receipt of any subsequent request, at Lender's sole
option.
(c) CONDITIONS TO FUNDING. Lender shall not be obligated
to make any Advance under the Revolving/Term Loan unless all of the following
conditions are satisfied as of the time of the request and of funding:
(i) All of the Loan Documents provided for
herein (or otherwise requested by Lender pursuant to the
"Further Assurances" provision hereof) to evidence and secure
the Revolving/Term Loan must have been executed and delivered
to Lender.
(ii) All warranties made in the Loan Documents
must be true as of the dates of the Advance request and as of
the date of funding thereof.
(iii) All covenants made in the Loan Documents must
have been complied with as of the dates of the Advance request
and funding thereof.
(iv) No Default or Unmatured Default shall exist
under this Agreement.
(v) There shall not have occurred any event, and
no condition shall exist, that has caused a material adverse
change in the financial condition, operations or prospects of
Borrower.
(d) IMPLIED REPRESENTATIONS UPON REQUEST FOR ADVANCE.
Upon making any request for an Advance under the Revolving/Term Loan, Borrower
shall be deemed to have warranted to Lender that all conditions to funding are
satisfied as of the submission of the request to Lender.
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(e) ADVANCE NOT WAIVER. Lender's making of any Advance
under the Revolving/Term Loan that it is not obligated to make under Section
2.5(c) above shall not be construed as a waiver of Lender's right to withhold
future Advances, declare a Default, or otherwise demand strict compliance with
this Agreement.
2.6 DRAWS BY DEBIT MEMORANDUM. Lender may draw amounts
available under the Revolving/Term Loan to pay any Obligation that is not
otherwise timely paid, provided that Lender has previously given Borrower
notice of the nature and amount of such obligation and Borrower has not made
payment thereof after demand by Lender.
ARTICLE III
CONDITIONS PRECEDENT
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3.1 CONDITIONS TO INITIAL ADVANCE. Lender shall not be
obligated to make its initial Advance under the Loan on the Closing Date unless
and until Borrower provides Lender with the following documents, all fully
executed by all appropriate parties and in form and substance satisfactory to
Lender:
(a) THIS AGREEMENT.
(b) REVOLVING/TERM LOAN NOTE as amended on June 23, 1993,
on January 11, 1995, and by instrument of even date herewith made by Borrower
payable to the order of Lender in the maximum principal amount stated in
Section 2.1 hereof.
(c) DEED OF TRUST as amended on June 23, 1993, on January
11, 1995, and by instrument of even date herewith encumbering three parcels of
Real Property located in Davidson County, Tennessee with a first priority deed
of trust lien, and the following related documents:
(i) Title insurance policy issued by a national
title insurance company acceptable to Lender, insuring the
deed of trust lien in favor of Lender subject only to
Permitted Encumbrances.
(ii) Survey of each parcel of Real Property, with
a surveyor's certification sufficient to induce the title
insurance company to delete from the title policy any
exception for matters of survey.
(iii) Owner's affidavit sufficient to induce the
title insurance company to delete all standard exceptions from
the title policy.
(iv) Phase 1 environmental audit report on each
parcel of Real Property issued by an environmental engineering
firm acceptable to Lender pursuant to a professional services
contract entered into with Lender.
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(v) Evidence that Borrower has obtained the
insurance required pursuant to this Agreement with respect to
each parcel of Real Property.
(vi) Appraisal of each parcel of Real Property,
issued to Lender by an appraiser satisfactory to Lender and
which, taken together with the appraisals of the Real Property
Collateral located in Ohio, has a total appraised value of at
least $8,400,000.
(d) MORTGAGE as amended on June 23, 1993, on January 11,
1995, and by instrument of even date herewith encumbering three parcels of Real
Property Collateral located in Franklin and Xxxxxxxx Counties, Ohio with a
first priority mortgage lien, and the following related documents:
(i) Title insurance policy issued by a national
title insurance company acceptable to Lender, insuring the
deed of trust lien in favor of Lender subject only to
Permitted Encumbrances.
(ii) Survey of each parcel of Real Property, with
a surveyor's certification sufficient to induce the title
insurance company to delete from the title policy any
exception for matters of survey.
(iii) Owner's affidavit sufficient to induce the
title insurance company to delete all standard exceptions from
the title policy.
(iv) Phase 1 environmental audit report on each
parcel of Real Property issued by an environmental engineering
firm acceptable to Lender pursuant to a professional services
contract entered into with Lender.
(v) Evidence that Borrower has obtained the
insurance required pursuant to this Agreement with respect to
the Real Property.
(vi) Appraisal of each parcel of Real Property,
issued to Lender by an appraiser satisfactory to Lender and
which, taken together with the appraisals of the Collateral
located in Tennessee, has a total appraised value of at least
$8,400,000.
(e) CURRENT CERTIFIED COPY OF BORROWER'S CORPORATE
CHARTER, issued by the Ohio Secretary of State.
(f) CURRENT CERTIFICATE OF BORROWER'S GOOD STANDING
issued by the Ohio Secretary of State.
(g) CURRENT CERTIFICATES OF AUTHORITY issued by the
secretaries of state for Florida, Georgia, Kentucky, Maryland , Virginia,
Tennessee, Michigan and Indiana, being states other than Ohio in which Borrower
operates restaurants.
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(h) CERTIFIED COPY OF RESOLUTIONS of Borrower's Board of
Directors authorizing a named officer or officers to execute the Loan Documents
and confirming the incumbency of those officers.
(i) OPINIONS OF BORROWER'S COUNSEL addressed to Lender,
addressing matters reasonably required by Lender.
(j) SUCH OTHER DOCUMENTS as Lender may reasonably
require.
3.2 CONDITIONS TO SUBSEQUENT ADVANCES. Lender shall not
be obligated to make Advances after the Closing Date unless and until all
conditions set forth in Section 3.1 and those set forth in Section 2.5(c) are
satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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Borrower represents, and warrants to Lender that, as of the
Closing Date:
4.1 CAPACITY. Borrower is an Ohio corporation, validly
existing and in good standing under the laws of the State of Ohio. Borrower is
qualified or authorized to do business in all jurisdictions other than Ohio in
which its ownership of property or conduct of business requires such
qualification or authorization. Borrower has the power and authority to own
its Properties and to carry on its business as now being conducted and as
proposed to be conducted after the execution hereof, to execute and perform
this Agreement and the other Loan Documents, and to execute, deliver and
perform its obligations under the other Loan Documents.
4.2 AUTHORIZATION. Borrower's execution, delivery and
performance of this Agreement and the other Loan Documents have been duly
authorized by all requisite corporate action.
4.3 BINDING OBLIGATIONS. This Agreement is and the other
Loan Documents, when executed and delivered to Lender, will be, legal, valid
and binding upon Borrower, enforceable in accordance with their respective
terms.
4.4 NO CONFLICTING LAW OR AGREEMENT. Borrower's
execution, delivery and performance of this Agreement and the other Loan
Documents do not constitute a breach of or default under, and will not violate
or conflict with, any provisions of the Charter or By-Laws of Borrower; any
contract, financing agreement, Lease, or other agreement to which Borrower is a
party or by which its Properties may be affected; or any law, regulation,
order, injunction, judgment, decree, or writ to which Borrower is subject or by
which its Properties may be affected; nor will the same result in the creation
or imposition of any Encumbrance upon any Properties of Borrower, other than
those contemplated by the Loan Documents.
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4.5 NO CONSENT REQUIRED. Borrower's execution, delivery,
and performance of the Loan Documents do not require the consent or approval of
or the giving of notice to any Person other than the approval of Borrower's
Board of Directors.
4.6 FINANCIAL STATEMENTS. The Financial Statements are
complete and correct, have been prepared in accordance with GAAP, and present
fairly the financial condition and results of operations of Borrower as of the
date and for the period stated therein. No material adverse change in the
financial condition of Borrower has occurred since the date of the Financial
Statements. Borrower acknowledges that Lender has advanced (or shall advance)
the Loan in reliance upon the Financial Statements.
4.7 FISCAL YEAR. Borrower's fiscal year ends on the
Sunday closest to December 31 of each year, and Borrower will not change its
fiscal year without Lender's prior written consent.
4.8 LITIGATION. Except as disclosed on EXHIBIT B hereto,
there is no litigation, legal or administrative proceeding, tax audit,
investigation, or other action of any nature pending or, to the knowledge of
Borrower, threatened against, likely to be instituted against or affecting
Borrower or any of its Properties. Borrower is not subject to any outstanding
court or administrative order, writ or injunction. To the best of Borrower's
knowledge, information and belief, no facts exist that give claims to third
parties against Borrower, except as disclosed in the Financial Statements.
4.9 TAXES; GOVERNMENTAL CHARGES. Borrower has filed or
caused to be filed all tax returns and reports required to be filed. Borrower
has paid, or made adequate provision for the payment of, all taxes that have or
may have become due pursuant to such returns or otherwise, or pursuant to any
assessment received by Borrower, except such taxes, if any, as are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided. Borrower knows of no proposed material tax
assessment against it and no extension of time for the assessment of federal,
state or local taxes of Borrower is in effect or has been requested, except as
disclosed in the Financial Statements. Borrower has made all required
withholding deposits.
4.10 TITLE TO REAL PROPERTY. Borrower has good and
marketable title to the Real Property, free and clear of all Encumbrances
except for Permitted Encumbrances.
4.11 NO DEFAULT. Borrower is not in default in any
respect that affects its business, Properties, operations, or condition,
financial or otherwise, under any indenture, mortgage, deed of trust, credit
agreement, note, agreement, lease, sale agreement or other instrument to which
Borrower is a party or by which its Properties are bound. To the best of
Borrower's knowledge, information and belief, no other party to any contract
with Borrower is in default or breach thereof and no circumstances exist which,
with the giving of notice and/or the passing of time would constitute such
default or breach. No Default or Unmatured Default exists under this
Agreement.
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4.12 CASUALTIES; TAKING OF PROPERTIES. Neither the
business nor the Property of Borrower is presently impaired as a result of any
fire, explosion, earthquake, flood, drought, windstorm accident, strike or
other labor disturbance, embargo, requisition or taking of property,
cancellation of contracts, permits, concessions by any domestic or foreign
government or any agency thereof, riot, activities of armed forces or acts of
God or of any public enemy.
4.13 COMPLIANCE WITH LAWS. To the best of Borrower's
knowledge, information and belief, Borrower is not in violation of any law,
judgment, decree, order, ordinance, or governmental rule or regulation to which
Borrower, its business or any of its Properties are subject, and there are no
outstanding citations, notices or orders of noncompliance issued to Borrower
under any such law, rule or regulation. Borrower has obtained all licenses,
permits, franchises, or other governmental authorizations necessary to the
ownership of its Properties or to the conduct of Borrower's business. All
improvements on the Real Property conform in all material respects to all
applicable state and local laws, zoning and building ordinances and health and
safety ordinances, and such Real Property is zoned for the purposes for which
such Real Property and improvements thereon are presently being used.
4.14 ERISA. To the best of Borrower's knowledge,
information and belief, Borrower is in compliance in all material respects with
the applicable provisions of ERISA. Borrower has not incurred and shall not
incur any material "accumulated funding deficiency" within the meaning of
ERISA, and Borrower has not incurred any material liability to PBGC in
connection with any Plan. No reportable event or prohibited transaction has
occurred and is continuing or shall occur with respect to any Plan.
4.15 FULL DISCLOSURE OF MATERIAL FACTS. Borrower has
fully advised Lender of all matters involving Borrower's financial condition,
operations, Properties or industry that would be reasonably expected to have a
material adverse effect on the financial condition, operations, Properties or
prospects of Borrower. No information, exhibit, or report furnished or to be
furnished by Borrower to Lender in connection with this Agreement contains, as
of the date thereof, any misrepresentation of fact or failed or will fail to
state any material fact, the omission of which would render the statements
therein materially false or misleading.
4.16 INVESTMENT COMPANY ACT. Borrower is not an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.17 PERSONAL HOLDING COMPANY. Borrower is not a
"personal holding company" as defined in Section 542 of the Internal Revenue
IRC.
4.18 SOLVENCY. Borrower is Solvent as of the Closing Date.
4.19 GOVERNMENT CONTRACTS. Borrower is not subject to the
renegotiation of any government contracts.
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4.20 CHIEF EXECUTIVE OFFICE. The address designated
herein to which notices are to be sent is Borrower's chief executive office
within the meaning of Tennessee Code Annotated Section 47-9-103(3)(d).
4.21 SUBSIDIARIES. Borrower has no Subsidiaries.
4.22 OWNERSHIP OF PATENTS, LICENSES. ETC. Borrower owns
all licenses, permits, franchises, registrations, patents, copyrights,
trademarks, trade names or service marks, or the rights to use the foregoing,
that are necessary for the continued operation of Borrower's business.
4.23 ENVIRONMENTAL COMPLIANCE. Borrower has duly complied
with, and its Properties are owned and operated in compliance with, all
Environmental Laws. There have been no citations, notices or orders of
non-compliance issued to Borrower or relating to its business or Properties.
Borrower has obtained all required federal, state and local licenses,
certificates or permits relating to Borrower and its Properties.
4.24 LABOR MATTERS. Borrower is not subject to any
collective bargaining agreements or any agreements, contracts (other than
certain employment contracts with key executive officers), decrees or orders
requiring Borrower to recognize, deal with or employ any Person. No demand for
collective bargaining has been asserted against Borrower by any union or
organization. Borrower has not experienced any strike, labor dispute, slowdown
or work stoppage due to labor dispute and, to the best knowledge of Borrower,
there is no such strike, dispute, slowdown or work stoppage threatened against
Borrower. Borrower is in compliance in all material respects with the Fair
Labor Standards Act of 1938, as amended, and the Federal Occupational Safety
and Health Act, as amended, and all regulations under the foregoing.
4.25 TRADE RELATIONS. There exists no actual or
threatened determination, cancellation or limitation of, or any modification or
change of, the business relationship between Borrower and any customer or any
group of customers whose purchases individually or in the aggregate are
material to the business of Borrower, or with any material supplier, and there
exists no present condition or state of facts or circumstances that would
materially and adversely affect Borrower or prevent Borrower from conducting
such business after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it was heretofore
conducted.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that, during the term of this Agreement
(and thereafter where expressly stated herein):
5.1 FINANCIAL STATEMENTS AND REPORTS. Borrower shall
furnish to the Lender or cause the Lender to receive all of the following, all
of which must be in form and substance satisfactory to the Lender:
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(a) ANNUAL REPORTS. Within 90 days after the end of each
Fiscal Year, Borrower shall deliver to Lender audited financial statements,
including without limitation, balance sheets of Borrower as of the end of such
year and the related audited statements of income, retained earnings and cash
flows for such year, together with supporting schedules, all such statements
prepared in accordance with GAAP and accompanied by an unqualified audit report
prepared by an independent certified public accountant acceptable to Lender
showing the financial condition of Borrower at the close of such year and the
results of its operations during such year. If applicable, these reports shall
be provided in both consolidated and consolidating forms. Also, Borrower shall
annually provide its SEC Form 10-K and corporate proxy to Lender.
(b) QUARTERLY REPORTS. Within forty-five (45) days after
the end of each calendar quarter, Borrower shall deliver to Lender unaudited
quarterly financial statements with supporting schedules in the form of an SEC
Form 10-Q, including without limitation, balance sheet and income statement of
Borrower, together with supporting schedules, all prepared by Borrower and
certified by Borrower's president or chief financial officer to be, in his
opinion, complete and correct and to present fairly, in accordance with GAAP
(excluding year-end adjustments and required footnote disclosures), the
financial condition of Borrower as of the date of such statements and the
results of its operations for such period, together with a compliance
certificate signed by such officer stating that no Default or Unmatured Default
exists under this Agreement. In addition quarterly same store sales
information on a month-to-month and year-to-date basis and all information
provided to stock analysts shall be delivered concurrently with and in addition
to the statements described above.
(c) ACCOUNTANT REPORTS. Promptly upon the receipt
thereof, Borrower shall deliver to Lender a copy of each other report (other
than work papers) submitted to Borrower by its accountants in connection with
any annual, interim or special audit made by them of the books of Borrower.
(d) SHAREHOLDER MAILINGS. Promptly upon the sending
thereof, Borrower shall deliver to Lender a copy of each statement, report or
notice sent by Borrower to its shareholders.
(e) OTHER REPORTS. With reasonable promptness, Borrower
shall deliver to Lender such other information and data as reasonably requested
by Lender regarding Borrower, its business operations and Properties.
5.2 TAXES AND OTHER ENCUMBRANCES. Borrower shall make
due and timely payment or deposit of all federal, state and local taxes,
assessments or contributions required of it by law, and execute and deliver to
Lender, on demand, appropriate certificates attesting to the payment or deposit
thereof. Borrower shall make due and timely payment or deposit of all F.I.C.A.
payments and withholding taxes required of it by all applicable laws.
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5.3 MAINTENANCE OF EXISTENCE AND ASSETS; COMPLIANCE WITH
LAW.
(a) CORPORATE EXISTENCE. Borrower shall maintain its
corporate existence, name, rights, and franchises and maintain its
qualification and good standing in all states in which such qualification is
necessary.
(b) COMPLIANCE WITH LAWS. Borrower shall observe and
comply with all applicable laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, and requirements of all
federal, state, county, municipal, and other governments, and shall maintain
all certificates, franchises, permits, licenses, and authorizations necessary
to the conduct of its business or the operation of its Properties, and will
conduct its business in an orderly, efficient and regular manner and comply
with the terms of any indenture, contract or other instrument to which it may
be a party or under which it or its Properties may be bound.
(c) MAINTENANCE OF PROPERTY. Borrower shall maintain its
Property (and any Property leased by or consigned to it or held under title
retention or conditional sales contracts) in good and workable condition at all
times and make all repairs, replacements, additions, and improvements to its
Property reasonably necessary and proper to ensure that the business carried on
in connection with its Property may be conducted properly and efficiently at
all times.
5.4 FURTHER ASSURANCES. Borrower shall promptly cure any
defects in the creation, issuance, and delivery of the Loan Documents.
Borrower at its expense will execute (or cause to be executed) and deliver to
Lender upon request all such other and further documents, agreements, and
instruments in compliance with or accomplishment of the covenants and
agreements of Borrower in the Loan Documents, or to evidence further and to
describe more fully any Collateral intended as security for the Obligations, or
to correct any omissions in the Loan Documents, or to state more fully the
Obligations and agreements set out in any of the Loan Documents, or to perfect,
protect, or preserve any Encumbrances created pursuant to any of the Loan
Documents, or to make any recordings, to file any notices, or to obtain any
consents, all as may be reasonably necessary or appropriate in connection
therewith.
5.5 INSURANCE.
(a) GENERAL INSURANCE REQUIREMENTS. In addition to the
other specific requirements set forth in this Agreement and in other Loan
Documents, Borrower shall maintain insurance on all insurable Properties now or
hereafter owned by Borrower against such risks and to the extent customary in
Borrower's industry, and shall maintain or cause to be maintained public
liability, worker's compensation and business interruption insurance to the
extent customary in Borrower's industry.
(b) INSURANCE ON TANGIBLE COLLATERAL. Borrower shall
keep the Real Property (and any other Collateral subsequently pledged by
Borrower to Lender to secure the Obligations) insured against "all risks of
physical loss" (except earthquake, unless Lender specifically so requires at
its election, and also including flood insurance, if applicable) under a
casualty insurance policy with the "replacement cost" endorsement and a
deductible calculated on an "occurrence" basis of no more than $50,000. Public
liability coverage shall be obtained on all
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Real Property locations included in the Collateral in an amount of at least
$1,000,000 per occurrence. The following provisions shall apply to all such
insurance policies issued with respect to tangible Collateral, including the
Real Property:
(i) Each insurance policy shall be issued by an
insurance company with a rating of "A" or better by A. M. Best
& Co.
(ii) Each casualty policy shall name Lender as
first insured mortgagee pursuant to a non-contribution
mortgagee clause satisfactory to Lender, and all liability
insurance policies shall name Lender as an additional insured.
The issuers of such policies must agree in writing (by the
policy provisions, endorsement or letter) to give Lender at
least twenty (20) days prior written notice before termination
or any reduction of amount or scope of coverage.
(iii) Borrower shall deliver such original policies
to Lender. Not less than thirty (30) days prior to the
expiration date of each policy of insurance required under
this Instrument, Borrower shall deliver to Lender evidence of
the renewal of such policy or policies or of the substitution
of another policy or policies complying with the terms of this
Agreement. Lender may require that such evidence consist of
the presentment of a renewal policy or policies marked
"premium paid." If Borrower fails to maintain the required
insurance, Lender may, at Lender's option and without notice
to Borrower, obtain such insurance, or Lender may obtain
single interest coverage insuring only Lender's interest in
the Collateral. In no event shall Lender be under any
obligation to procure or maintain insurance on the Collateral.
The cost of any insurance so obtained shall become part of the
Obligations and shall be due from Borrower upon demand.
(iv) Borrower hereby assigns to Lender, as further
security for the payment of the Obligations, all policies of
insurance which now or hereafter insure against any loss or
damage to the Collateral. Borrower shall promptly give
written notice to Lender of any loss or damage to the
Collateral and will not adjust or settle any such loss without
the written consent of Lender. If Lender, on account of any
insurance on the Collateral, receives any money for loss or
damage, such amount may, in the reasonable exercise of
Lender's discretion, be retained and applied by Lender toward
payment of the Obligations, or be paid to Borrower, wholly or
in part, subject to such conditions as Lender may require.
Lender is hereby irrevocably appointed attorney-in-fact for
Borrower to receive any sums collected under insurance
policies insuring the Collateral, to endorse any drafts or
instruments received under such policies, and to make proof of
loss for, settle, and give binding acquittances for claims
under such policies.
(v) Borrower covenants that it will not do any
act or voluntarily suffer or permit any act to be done whereby
any insurance required hereunder shall or may be suspended,
impaired or defeated, unless replaced with similar insurance
required hereby without any intervening lapse of coverage.
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5.6 ACCOUNTS AND RECORDS. Borrower shall maintain
current books of record and account, in which full, true, and correct entries
will be made of all transactions.
5.7 CORPORATE RECORDS. Borrower shall maintain current
corporate minute books and stock ledgers.
5.8 BANKING RELATIONSHIPS. Borrower shall maintain its
deposit accounts with Lender or with other FDIC-insured depository institutions.
5.9 RIGHT OF INSPECTION. Borrower shall permit any
officer, employee, or agent of Lender to visit and inspect any of the Property
of Borrower, to examine Borrower's books of record and accounts and Borrower's
corporate records, to take copies and extracts from such books of record and
accounts, and to discuss the affairs, finances, and accounts of Borrower with
Borrower's respective officers, accountants, and auditors, all at such
reasonable times and as often as Lender may reasonably desire. Without
limiting Lender's right to obtain equitable relief as to any other appropriate
right in this Agreement or in other Loan Documents, Borrower agrees that the
rights in this Section may be enforced by affirmative injunction and, to the
extent the right to review records may be denied, the right may be enforced by
a restraining order prohibiting the interference by Borrower with Lender's
exercise of its rights to review of the records.
5.10 NOTICE OF CERTAIN EVENTS. Borrower shall promptly
notify Lender if Borrower learns of the occurrence of (i) any event that
constitutes a Default or an Unmatured Default together with a detailed
statement of the steps being taken as a result thereof; (ii) any legal,
judicial, or regulatory proceedings affecting Borrower which, if adversely
determined, would have a material adverse effect on the business or the
financial condition of Borrower; (iii) any material adverse changes, either
individually or in the aggregate, in the assets, liabilities, financial
condition, business, operations, affairs, or circumstances of Borrower from
those reflected in the Financial Statements or from the facts warranted or
represented in any Loan Document, or (iv) any default by Borrower under Debt to
any party other than Lender, unless cured within any grace period applicable
thereto.
5.11 ERISA INFORMATION AND COMPLIANCE. Borrower shall
comply with ERISA and all other applicable laws governing any pension or profit
sharing plan or arrangement to which Borrower is a party. Borrower shall (i)
provide Lender with copies of any annual report required to be filed pursuant
to ERISA with respect to any plan or any other employee benefit plan; (ii)
notify Lender as soon as practicable of any "reportable event," "prohibited
transaction" or "withdrawal liability" within the meaning of ERISA and of any
additional act or condition arising in connection with any Plan which Borrower
believes might constitute grounds for termination thereof by the PBGC or for
the appointment of a trustee to administer the Plan; and (iii) furnish to
Lender, promptly upon request, such additional information concerning any Plan
or any other employee benefit plan as Lender may request.
5.12 INDEMNITY; EXPENSES. Borrower agrees to indemnify,
defend (with counsel reasonably satisfactory to Lender) and hold harmless
Lender against any loss, liability, claim or expense, including reasonable
attorneys' fees, that Lender may incur in connection with the Obligations,
except for (i) the ordinary overhead of Lender associated with the receipt of
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payments under the Loans and (ii) for losses, etc. arising from the willful
misconduct or gross negligence of Lender.
Without limiting the foregoing, upon demand by Lender, Borrower will advance to
Lender or, at Lender's option, reimburse Lender for, the following expenses if
not paid by Borrower promptly after written demand by Lender:
(a) TAXES. All taxes that Lender may be required to pay
because of the Obligations or because of Lender's interest in any property
securing the payment of the Obligations.
(b) PROTECTION OF COLLATERAL. All costs of preserving,
insuring, preparing for sale (whether by improvement, repair or otherwise) or
selling any collateral securing the Obligations.
(c) COSTS OF COLLECTION. All court costs and other costs
of collecting any debt, overdraft or other obligation included in the
Obligations, including reasonable compensation for time spent by employees of
Lender.
(d) LITIGATION. All reasonable costs arising from any
litigation, investigation, or administrative proceeding (whether or not Lender
is a party thereto) that Lender may incur as a result of the Obligations or as
a result of Lender's association with Borrower, including, but not limited to,
expenses incurred by Lender in connection with a case or proceeding involving
Borrower under any chapter of the Bankruptcy Code or any successor statute
thereto.
(e) ATTORNEYS' FEES. Reasonable attorneys' fees incurred
in connection with any of the foregoing.
If Lender pays any of the foregoing expenses after written notice to Borrower
and Borrower's refusal to pay the same, they shall become a part of the
Obligations and shall bear interest at the Maximum Lawful Rate. This Section
shall remain in full effect regardless of the full payment of the Obligations,
the purported termination of this Agreement, the delivery of the executed
original of this Agreement to Borrower, or the content or accuracy of any
representation made by Borrower to Lender; provided, however, Lender may
terminate this Section by executing and delivering to Borrower a written
instrument of termination specifically referring to this Section.
5.13 ASSISTANCE IN LITIGATION. Borrower covenants to,
upon request, cooperatively participate in any proceeding in which Borrower is
not an adverse party to Lender and which concerns Lender's rights regarding the
Obligations or any collateral securing its payment.
5.14 ESTOPPEL LETTERS. Borrower covenants to provide
Lender, within five (5) days after request, an estoppel letter stating (i) the
balance of the Obligations, (ii) whether Borrower has any defenses to payment
of the obligations, and (iii) the nature of any defenses to payment of the
Obligations. Such balance as presented for confirmation and the nonexistence
of
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defenses shall be presumed if Borrower fails to respond to such a request
within the required period.
5.15 ENVIRONMENTAL MATTERS.
(a) COMPLIANCE WITH ENVIRONMENTAL LAWS. Borrower will
not use, generate, manufacture, produce, store, release, discharge or dispose
of on, under or about any of its Properties, or transport to or from any of
Borrower's Properties, any Hazardous Substance, or permit any other Person or
entity to do so, in a manner that would violate any Environmental Law, and
shall maintain and operate its Properties in compliance with all Environmental
Laws.
(b) REMEDIAL WORK. If any investigation, site
monitoring, containment, clean-up, removal, restoration or other remedial work
of any kind or nature with respect to Borrower's Properties is required to be
performed by Borrower under any applicable local, state or federal law or
regulation, any judicial order, or by any governmental or non-governmental
entity or Person because of, or in connection with, the current or future
presence, suspected presence, release or suspected release of a Hazardous
Substance in or into the air, soil, groundwater, surface water or soil vapor
at, on, about, under, or within any of Borrower's Property (or any portion
thereof), Borrower shall within 30 days after written demand for performance
thereof (or such shorter period of time as may be required under applicable
law, regulation, order or agreement), commence and thereafter diligently
prosecute to completion, all such remedial work.
(c) INDEMNIFICATION OF LENDER. Borrower agrees to
indemnify, defend (with counsel satisfactory to Lender) and hold harmless
Lender against any loss, liability claim or expense, including attorneys' fees,
that Lender may incur as a result of the violation or alleged violation of any
Environmental Law by Borrower or with respect to any other violation of
Environmental Laws with respect to Borrower's Properties. This covenant shall
survive the repayment of the Loan.
ARTICLE VI
FINANCIAL COVENANTS
-------------------
6.1 TANGIBLE NET WORTH. Borrower shall maintain a
minimum Tangible Net Worth for each fiscal quarter equal to or greater than $35
million beginning at fiscal year-end 1995 and at all times thereafter; and then
Borrower shall maintain a minimum Tangible Net Worth equal to or greater than
$40 million beginning at fiscal year-end 1996 and at all times thereafter and
then Borrower shall maintain a minimum Tangible Net Worth equal to or greater
than $45 million beginning at fiscal year-end 1997 and at all times thereafter;
and then Borrower shall maintain a minimum Tangible Net Worth equal to or
greater than $52.5 million beginning at fiscal year-end 1998 and thereafter.
As used herein "Tangible Net Worth" shall mean stockholders' equity determined
according to GAAP less all assets that would be classified as intangible assets
under GAAP, including but not limited to, goodwill, patents, trademarks, trade
names, copyrights and franchises.
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6.2 FIXED CHARGE COVERAGE. Borrower shall maintain a
minimum Fixed Charge Coverage Ratio calculated for each fiscal quarter on a
rolling quarter average of not less than 1.15. As used herein, "Fixed Charge
Coverage Ratio" shall be calculated as follows:
Net income + Depreciation + Amortization +
------------------------------------------
Interest Expenses + Lease Expense
---------------------------------
*CMLTD + SubDebt Called + Interest + Lease Expense +
20% of Avg. Outstanding on Revolving/Term Loan During Previous Four Quarters
*Excludes Revolving Paydowns
6.3 FUNDED SENIOR DEBT TO TOTAL CAPITALIZATION. The
ratio of Funded Senior Debt to Total Capitalization shall not be greater than
50%. Total Capitalization shall be defined as Senior Debt plus Subordinated
Debt plus Equity.
ARTICLE VII
NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, without Lender's prior
written consent, which may be withheld in Lender's sole discretion exercised
reasonably and in good faith, Borrower shall not, either directly or
indirectly:
7.1 DEBTS, GUARANTIES, AND OTHER OBLIGATIONS. Incur,
create, assume, or in any manner become or be liable with respect to any Debt,
except as disclosed on EXHIBIT C hereto and the following:
(a) OBLIGATIONS. Any Obligations to Lender.
(b) EXISTING LIABILITIES. Liabilities, direct or
contingent, of Borrower existing on the date of this Agreement that are
reflected in the Financial Statements.
(c) ENDORSEMENTS. Endorsements of negotiable or similar
instruments for collection or deposit in the ordinary course of business.
(d) TRADE DEBT. Trade payables from time to time
incurred in the ordinary course of business.
(e) PURCHASE MONEY SECURITY INTERESTS. Purchase money
security interests on equipment used in the operation of Borrower's business in
an aggregate maximum amount of not more than $350,000 per fiscal year, not to
exceed an aggregate amount $1,000,000 over the life of the Loan.
(f) TAXES. Taxes, assessments, or other governmental
charges that are not delinquent or are being contested in good faith by
appropriate action promptly initiated and diligently conducted, if Borrower has
made the reserve therefor required by GAAP.
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7.2 [Intentionally Deleted.]
7.3 CHANGE OF MANAGEMENT. Allow any change of management
staffing or structure whereby Xxxxxxx Xxxxxxxxx will cease serving the
customary responsibilities of chief executive officer.
7.4 DISTRIBUTIONS. Borrower shall not declare or pay a
distribution or dividend (of cash, property or stock), except that cash
dividends may be declared (in any fiscal year during which the net income for
that year has exceeded $2,000,000) in an amount that, together with all other
cash dividends declared within such fiscal year, will not exceed fifteen
percent (15%) of net income for the previous fiscal year. Also no distribution
or dividend may be made upon the occurrence of any event of default under the
documents evidencing and securing the Revolving/Term Loan.
7.4.1 NEW RESTAURANT EXPANSION. Borrower shall limit new
restaurant expansion to 11 in fiscal year 1996. Borrower will not commit to
any new restaurants or restaurant expansion in 1997 beyond those stores that
can be supported out of operational cash flow until financing sources
acceptable to Lender and Borrower in the form of debt or equity are available.
In no event shall store expansion in 1997 exceed 15 stores.
7.5 STOCK ACQUISITIONS. Redeem or acquire any stock or
warrants.
7.6 ENCUMBRANCES. Borrower shall not create, assume, or
permit to exist any mortgage, security deed, deed of trust, pledge, lien,
charge or other encumbrance on any of its assets, whether now owned or
hereafter acquired, other than: (i) security interests required by the Loan
Documents; (ii) liens for taxes contested in good faith, (iii) liens accruing
by law for employee benefits; or (iv) Permitted Liens. As used herein
Permitted Liens shall mean liens disclosed to Lender and listed on EXHIBIT D
and the Permitted Encumbrances.
7.7 INVESTMENTS, LOANS, AND ADVANCES. Make or permit to
remain outstanding any investments in any Person, except that, subject to all
other provisions of this Article, the foregoing restriction shall not apply to:
(a) U.S. AND OTHER GOVERNMENT OBLIGATIONS. Investments
in direct obligations of the United States of America or any agency thereof,
Eurodollars, other Aerated government obligations and other similar debt
securities.
(b) BANK OBLIGATIONS. Investments in accounts,
certificates of deposit, repurchase agreements or other obligations issued by
Lender or by other FDIC-insured commercial banks in the United States of
America.
(c) MONEY MARKET FUNDS. Investments in money market
funds, provided that all investments by the funds are of a type permitted
above.
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(d) EXPENSE ADVANCES. Travel or other expense advances
to employees in the ordinary course of business.
(e) TRADE CREDIT. Unsecured trade credit extended in the
ordinary course of business.
7.8 SALES AND LEASEBACKS. Enter into any arrangement,
directly or indirectly, with any Person by which Borrower shall sell or
transfer any of its Property, whether now owned or hereafter acquired, and by
which Borrower shall then or thereafter rent or lease as lessee such Property
or any part thereof or other Property that Borrower intends to use for
substantially the same purpose or purposes as the Property sold or transferred.
7.9 NATURE OF BUSINESS. Suffer or permit any material
change to be made in the character of Borrower's business as carried on at the
Closing Date.
7.10 FURTHER ACQUISITIONS, MERGERS, ETC. Enter into any
agreement to merge, consolidate, or otherwise reorganize or recapitalize, or
sell, assign, lease, or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its Property (whether now
owned or hereafter acquired).
7.11 SALE OR DISCOUNT OF RECEIVABLES. Except to minimize
losses on bona fide debts previously contracted, discount or sell with
recourse, or sell for less than the greater of the face or market value
thereof, any of its notes receivable or accounts.
7.12 DISPOSITION OF ASSETS. Dispose of any of its assets
other than in the ordinary course of its present business upon terms standard
in its industry.
7.13 INCONSISTENT AGREEMENTS. Enter into any agreement
containing any provision which would be violated or breached by the performance
by Borrower of its Obligations.
7.14 FICTITIOUS NAMES. Use any corporate name (other than
the name used in executing this Agreement) or any assumed or fictitious name.
7.15 SUBSIDIARIES AND AFFILIATES. Create any direct or
indirect Subsidiary or Affiliate or divest itself of any material assets by
transferring them to any existing Subsidiary or Affiliate or to any Subsidiary
or Affiliate to whose existence Lender has not consented, enter into any
partnership, joint venture, or similar arrangement, or otherwise make any
material change in its corporate structure.
7.16 PLACE OF BUSINESS. Transfer its executive offices,
or maintain records with respect to receivables at any locations other than at
the address-specified herein, except with Lender's prior written consent and
after the delivery to Lender of financing statements, if required by Lender, in
form satisfactory to Lender.
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7.17 ADVERSE ACTION WITH RESPECT TO PLANS. Take any
action to terminate any Plan which should reasonably result in a material
liability of Borrower to any Person.
7.18 TRANSACTIONS WITH AFFILIATES. Enter into any
transaction with any Affiliate except in the ordinary course of business and on
fair and reasonable terms no less favorable to Borrower than it would obtain in
a comparable arms length transaction with a Person not an Affiliate. This
Section does not imply an obligation on Lender to approve the existence of any
Affiliate.
7.19 CORPORATE AMENDMENTS. Amend its corporate charter or
bylaws.
7.20 ADVERSE TRANSACTIONS. Enter into any transaction
that materially and adversely affects or may materially and adversely affect
the Collateral or Borrower's ability to repay the Obligations.
7.21 USE OF LENDER'S NAME. Without the prior written
consent of Lender, use the name of Lender or the name of any Affiliates of
Lender in connection with any of Borrower's business or activities, except in
connection with internal business matters, as required in making required
securities law disclosures, in dealings with governmental agencies and
financial institutions and to trade creditors of Borrower solely for credit
reference purposes.
7.22 MARGIN SECURITIES. Own, purchase or acquire (or
enter into any contract to purchase or acquire) any "margin security" as
defined by any regulation of the Federal Reserve Board as now in effect or as
the same may hereafter be in effect.
7.23 ACTION OUTSIDE ORDINARY COURSE. Take any other
action outside the ordinary course of its business.
7.24 DEFAULT ON OTHER CONTRACTS OR OBLIGATIONS. Borrower
shall not default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed.
7.25 JUDGMENT ENTERED. Borrower shall not permit the
entry of any monetary judgment or the assessment against Borrower, the filing
of any tax lien against Borrower, or the issuance of any writ of garnishment or
attachment against any property of or debts due Borrower in any amount in
excess of $250,000 and that is not discharged or execution is not stayed within
60 days of entry.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.1 EVENTS OF DEFAULT. Any of the following events shall
be considered a Default under this Agreement and the Loan after the expiration
of any applicable cure period as further described below:
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(a) PRINCIPAL AND INTEREST PAYMENTS. Borrower's failure
to make payment of any installment of principal or interest on the Obligations
when due (provided, however, that Borrower shall not be in default as a result
of a missed interest payment if Lender has failed to deliver to Borrower an
interest statement for such payment).
(b) REPRESENTATIONS AND WARRANTIES. Lender's
determination that any representation or warranty made by Borrower or any other
party in any Loan Document was incorrect in any material respect as of the date
thereof.
(c) COVENANTS. Borrower's failure to perform any covenant
contained in any Loan Document, not subject to any specific provision in this
Article VIII.
(d) INVOLUNTARY BANKRUPTCY OR RECEIVERSHIP PROCEEDINGS.
A receiver, custodian, liquidator, or trustee of Borrower, or of any of its
Property, is appointed by the order or decree of any court or agency or
supervisory authority having jurisdiction (and such proceeding is not dismissed
within sixty (60) days); or Borrower is adjudicated bankrupt or insolvent; or
any of the Property of Borrower is sequestered by court order or a petition is
filed against Borrower under any state or federal bankruptcy, reorganization,
debt arrangement, insolvency, readjustment of debt, dissolution, liquidation,
or receivership law of any jurisdiction, whether now or hereafter in effect
(and such proceeding is not dismissed within sixty (60) days).
(e) VOLUNTARY PETITIONS. Borrower's filing of a petition
in voluntary bankruptcy or to seek relief under any provision of any
bankruptcy, reorganization, debt arrangement, insolvency, receivership,
readjustment of debt, dissolution, or liquidation law of any jurisdiction,
whether now or hereafter in effect, or consents to the filing of any petition
against it under any such law.
(f) DISCONTINUANCE OF BUSINESS. Borrower's
discontinuance of its usual business.
(g) DEFAULT ON OTHER DEBT. Subject to any applicable
grace period or waiver prior to any due date, Borrower's failure to make any
payment due on any Debt or security (as "security" is defined for purposes of
the federal securities laws) or any event shall occur or any condition shall
exist with respect to any Debt or security of Borrower, that causes the holder
of such Debt to accelerate the Debt or declare the Debt to be in default.
(h) [Intentionally Deleted.]
(i) INSOLVENCY. Borrower's no longer being Solvent.
(j) ATTACHMENT. The issuance of an attachment or other
process against any Property of Borrower that is not removed or bonded-off
within thirty (30) days.
(k) INSURANCE. Borrower's failure to maintain any
insurance required herein or in any other Loan Document.
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(l) OTHER EVENT. The occurrence of any event or
condition which, in Lender's reasonable discretion, materially and adversely
affects the ability of Borrower to perform the Obligations.
(m) CONTEST. Borrower shall challenge or contest the
validity or enforceability of this Agreement or any other Loan Document or the
validity, priority or perfection of any security interest created hereunder or
under any other Loan Document in any action, suit or proceeding.
The foregoing notwithstanding, no event enumerated in
subsections (b), (c), (g), (1) or (m) above shall constitute a Default
hereunder until the expiration of ten (10) Business Days after Lender delivers
notice to Borrower regarding such event.
8.2 REMEDIES. Upon the happening of any Default set
forth above:
(a) ACCELERATION. Lender may declare the entire
principal amount of all Obligations then outstanding, including interest
accrued thereon, to be immediately due and payable without presentment, demand,
protest, notice of protest, or dishonor or other notice of default of any kind,
all of which are hereby expressly waived.
(b) EXERCISE OF REMEDIES. Lender may exercise its right
of setoff, its remedies under all Loan Documents and all other rights afforded
a creditor under applicable law.
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1 NOTICES. All communications relating to this
Agreement or any of the other Loan Documents shall be in writing and shall be
delivered by certified mail, postage prepaid, return receipt requested,
reliable overnight courier or hand delivery to the following addresses:
(a) if to Borrower:
Cooker Restaurant Corporation
Attn: Xx. Xxxxxxx Xxxxxxxxx
0000 Xxxxxxx Xxxx., 0xx Xxxxx
Xxxx Xxxx Xxxxx, XX 00000
With a Copy To: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx Co., L.P.A.
000 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxx 00000-0000
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(b) if to Lender:
First Union National Bank of Tennessee
Attn: Xxx Xxxxx
Vice President
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
With a Copy To: Boult, Cummings, Xxxxxxx & Xxxxx
Attn: Xxxxxxx X. Xxxxxx, Xx.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Any notice addressed as aforesaid shall be deemed given to and
received by the party to whom it is addressed as follows: (a) if personally
delivered, on the date delivered to the address specified above; (b) if sent by
overnight courier, on the next following Business Day after placed in the hands
of an agent for such service or deposited in a pick-up box for such service; or
(c) if mailed as aforesaid, two Business Days after deposited with the U.S.
Postal Service. Any party may change its address for receipt of notice by
written direction to the other party hereto.
9.2 RENEWAL, EXTENSION, OR REARRANGEMENT. All provisions
of this Agreement relating to Obligations shall apply with equal force and
effect to each and all promissory notes executed hereafter which in whole or in
part represent a renewal, extension for any period, increase, or rearrangement
of any part of the Obligations originally represented by any part of such other
Obligations.
9.3 APPLICATION OF PREPAYMENTS. Prepayments shall be
applied at Lender's sole discretion (i) first to accrued interest under any of
the Obligations, (ii) second to reduce principal of any of the Obligations; and
(iii) third to any expenses due Lender which have not been paid by Borrower
after written demand by Lender, all in such manner as determined by Lender.
9.4 COMPUTATIONS; ACCOUNTING PRINCIPLES. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined, or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, such determination
or calculation, to the extent applicable and except as otherwise specified in
this Agreement, shall be made in accordance with GAAP.
9.5 COUNTERPARTS. This Agreement may be executed by
counterpart signature pages, and it shall not be necessary that the signatures
of all parties be contained on any one counterpart. Each counterpart shall be
deemed an original, but all of them together shall constitute one and the same
instrument.
9.6 NEGOTIATED DOCUMENT. This Agreement and the other
Loan Documents have been negotiated by the parties with full benefit of counsel
and should not be construed against either party as author.
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9.7 CONSENT TO JURISDICTION. Borrower hereby irrevocably
consents to the jurisdiction of the United States District Court for the Middle
District of Tennessee and of all Tennessee state courts sitting in Davidson
County, Tennessee, for the purpose of any litigation to which Lender may be a
party and which concerns this Agreement or the Obligations. It is further
agreed that venue for any such action shall lie exclusively with courts sitting
in Davidson County, Tennessee, unless Lender agrees to the contrary in writing.
9.8 NOT PARTNERS; NO THIRD PARTY BENEFICIARIES. Nothing
contained herein or in any related document shall be deemed to render Lender a
partner of Borrower for any purpose. This Agreement has been executed for the
sole benefit of Lender, and no third party is authorized to rely upon Lender's
rights hereunder or to rely upon an assumption that Lender has or will exercise
its rights under this Agreement or under any document referred to herein.
9.9 NO MARSHALLING OF ASSETS. Lender may proceed against
collateral securing the Obligations and against parties liable therefor in such
order as it may elect, and neither Borrower nor any surety or guarantor for
Borrower nor any creditor of Borrower shall be entitled to require Lender to
marshal assets. The benefit of any-rule of law or equity to the contrary is
hereby expressly waived.
9.10 IMPAIRMENT OF COLLATERAL. Lender may, in its sole
discretion, release any collateral securing the obligations or release any
party liable therefor. The defenses of impairment of collateral and impairment
of recourse and any requirement of diligence on Lender's part in collecting the
Obligations are hereby waived.
9.11 BUSINESS DAYS. If any payment date under the
Obligations falls on a day that is not a Business Day, or if the last day of
any notice period falls on such a day, the payment shall be due and the notice
period shall end on the next preceding Lender Business Day.
9.12 PARTICIPATIONS. Lender may, from time to time, in its
sole discretion, and without notice to Borrower, sell participations in any
credit subject hereto to such other investors or financial institutions as it
may elect. Lender may from time to time disclose to any participant or
prospective participant such information as Lender may have regarding the
financial condition, operations, and prospects of Borrower. Any expenses
incurred as a result of the sale of participations will be borne by Lender.
9.13 NOTICE TO LENDER UPON PERCEIVED BREACH. Borrower
agrees to give Lender written notice of any action or inaction by Lender in
connection with this Agreement or the Obligations that Borrower believes may be
actionable against Lender or a defense to payment of Obligations for any
reason, including, but not limited to, commission of a tort or violation of any
contractual duty or duty implied by law.
9.14 INCORPORATION OF EXHIBITS. All Exhibits referred to
in this Agreement are incorporated herein by this reference.
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9.15 INDULGENCE NOT WAIVER. Lender's indulgence in the
existence of a default hereunder or any other departure from the terms of this
Agreement shall not prejudice Lender's rights to declare a default or otherwise
demand strict compliance with this Agreement.
9.16 CUMULATIVE REMEDIES. The remedies provided Lender in
this Agreement are not exclusive of any other remedies that may be available to
Lender under any other document or at law or equity.
9.17 AMENDMENT AND WAIVER IN WRITING. No provision of
this Agreement can be amended or waived except by a statement in writing
signed by the party against whom enforcement of the amendment or waiver is
sought.
9.18 ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of Borrower and
Lender, except that Borrower shall not assign any rights or delegate any
obligations arising hereunder without the prior written consent of Lender. Any
attempted assignment or delegation by Borrower without the required prior
consent shall be void.
9.19 ENTIRE AGREEMENT. This Agreement and the other
written agreements contemplated herein between Borrower and Lender represent
the entire agreement between the parties concerning the subject matter hereof,
and all oral discussions and prior agreements are merged herein. Provided, if
there is a conflict between this Agreement and any other document executed
contemporaneously herewith with respect to the Obligations, the provision in
this Agreement shall control.
9.20 SEVERABILITY. Should any provision of this Agreement
be declared invalid or unenforceable for any reason, the remaining provisions
hereof shall remain in full effect.
9.21 TIME OF ESSENCE. Time is of the essence of this
Agreement, and all dates and time periods specified herein shall be strictly
observed.
9.22 APPLICABLE LAW. The validity, construction and
enforcement of this Agreement and all other documents executed with respect to
the Obligations shall be determined according to the laws of Tennessee
applicable to contracts executed and performed entirely within that state,
except as provided in the Mortgage and as specifically provided in any other
document governing the pledge of Collateral outside the State of Tennessee and
executed by Borrower and Lender subsequent to the date of this Agreement.
9.23 GENDER AND NUMBER. Words used herein indicating
gender or number shall be read as context may require.
9.24 CAPTIONS NOT CONTROLLING. Captions and headings have
been included in this Agreement for the convenience of the parties, and shall
not be construed as affecting the content of the respective Sections.
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9.25 AMENDED AND RESTATED AGREEMENT. The terms and
provisions of this Agreement amend and restate in their entirety the terms and
provisions of the Prior Agreement. Provided, however, it is intended that the
increase in the amount of the Revolving/Term Loan be treated as an increase of
an existing credit facility and not as a new or distinct loan. Accordingly all
deeds of trust, mortgages, liens, security interests, assignments and other
pledges securing the indebtedness secured by and described in the Prior
Agreement are hereby ratified, extended and confirmed as security for the
indebtedness evidenced and secured by this Agreement which indebtedness is only
an increase of the indebtedness secured by and described in the Prior
Agreement.
Executed the date first written above.
THE UNDERSIGNED ACKNOWLEDGE A THOROUGH
UNDERSTANDING OF THE TERMS OF
THIS AGREEMENT AND AGREE TO BE
BOUND THEREBY:
FIRST UNION NATIONAL BANK OF TENNESSEE
By: /s/ X. Xxxxx
-----------------------------------
Xxx Xxxxx, Vice President
COOKER RESTAURANT CORPORATION
By: /s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx, Vice President,
Chief Financial Officer
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