EXHIBIT (10)(a)
LOAN AGREEMENT
This Loan Agreement ("Agreement") entered into as of the 12th day of
May, 2003, by and among X. XXXXXXXXX'X CORPORATION, X. XXXXXXXXX'X RESTAURANTS,
INC., both Tennessee corporations (collectively referred to as the "Borrower"),
and BANK OF AMERICA, N.A. a national banking association ("Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender provide a Five
Million and No/100 Dollars ($5,000,000.00) credit facility to the Borrower; and
WHEREAS, the Lender has agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, as an inducement to cause Lender to extend credit to
Borrower, and for other valuable consideration, the receipt and sufficiency of
which are acknowledged, it is agreed as follows:
1. Definitions.
(a) "Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling (including but not
limited to all directors and officers of such Person), controlled by or
under direct or indirect common control with such Person. A Person
shall be deemed to control a corporation if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors
of such corporation or (ii) to direct or cause direction of the
management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
(b) "Applicable Margin" means for any Fiscal Quarter the
applicable rate per annum in excess of the LIBOR Rate set forth in the
table below:
Unused
LEVEL Ratio of Adjusted Debt to Applicable Commitment
EBITDAR Margin Fee %
------------------------- ---------- ----------
I Less than or equal to 2.50 2.00% 0.125%
II Less than or equal to 3.00
but greater than 2.50 2.25% 0.25%
1
III Less than or equal to 4.00
but greater than 3.00 2.50% 0.30%
IV Less than or equal to 4.15
but greater than 4.00 4.00% 0.75%
V Greater than 4.15 Default Rate 0.75%
(c) "Bankruptcy Code" means the Bankruptcy Code in Title
11 of the United States Code, as amended, modified, succeeded or
replaced from time to time.
(d) "Base Rate" means the LIBOR Daily Floating Rate plus
the Applicable Margin. For purposes hereof, the Applicable Margin will
be that shown as Level III in the table contained in the definition of
Applicable Margin for the period from the Effective Date until delivery
by Borrower of the quarterly financial statements of the Borrower in
accordance with Section 17(b). Upon receipt of the Borrower's quarterly
financial statements, Lender shall determine if the results of such
financial statements justify resetting the Applicable Margin to another
Level, and if so, then the Applicable Margin shall be retroactively
adjusted as of the first day of the then Fiscal Quarter to Level I, II,
III, IV or V, as applicable, and shall continue to the last day of such
Fiscal Quarter. This will continue each Fiscal Quarter thereafter. If
Borrower fails to deliver the quarterly financial statements in
accordance with time limits set forth in Section 17(b), the Applicable
Margin shall be retroactively adjusted as of the first day of the then
Fiscal Quarter to Level IV.
(e) "Business Day" means any day other than a Saturday, a
Sunday, or legal holiday or a day on which banking institutions are
authorized or required by law or other governmental action to close in
Nashville, Tennessee; provided that such day is also a day on which
dealings between banks are carried on in U.S. dollar deposits in the
London interbank market. Should any payment of principal or interest be
due on a day that is not a Business Day, then the payment shall be due
on the first Business Day thereafter.
(f) "Capital Lease" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by that Person
as lessee which, in accordance with GAAP, is or should be accounted for
as a capital lease on the balance sheet of that Person.
(g) "Closing Date" means the date hereof.
(h) "Code" means the Internal Revenue Code of 1986, as
amended, modified, succeeded or replaced from time to time.
(i) "Collateral Documents" means the security agreements,
mortgages and such other documents executed and delivered in connection
with the attachment and perfection
2
of the Lender's security interests and/or liens in the assets of the
Borrower, including, without limitation, a UCC fixture filing financing
statement(s).
(j) "Collateral" means all collateral referred to in and
covered by the Collateral Documents.
(k) "Default" has the meaning specified in Section 36.
(l) "Default Rate" means the Base Rate plus three percent
per annum.
(m) "Dollars" and "$" means dollars in lawful currency of
the United States of America.
(n) "Effective Date" means the date on which the
conditions set forth in Section 5 shall have been fulfilled (or waived
in the sole discretion of the Lender) and on which the initial Loans
shall have been made and/or the initial Letters of Credit shall have
been issued.
(o) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto, as
interpreted by the rules and regulations thereunder, all as the same
may be in effect from time to time. References to sections of ERISA
shall be construed also to refer to any successor sections.
(p) "ERISA Affiliates" means an entity, whether or not
incorporated, which is under common control with Borrower within the
meaning of Section 4001(a)(14) or ERISA, or is a member of a group
which includes Borrower and which is treated as a single employer under
Sections 414(b), (c), (m), or (o) of the Code.
(q) "ERISA Plan" means any employee benefit plan (as
defined in Section 3(3) of ERISA) which is covered by ERISA and with
respect to which Borrower or any ERISA Affiliate is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" within the meaning of Section 3(5) of
ERISA.
(r) "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.
(s) "Fiscal Quarter" means each 13 or 14 week period, as
applicable, of Borrower's fiscal year.
(t) "Funded Debt" means, without duplication, the sum of
(a) all indebtedness of the Borrower for borrowed money, (b) all
purchase money indebtedness of the Borrower,
3
(c) the principal portion of all obligations of the Borrower under
Capital Leases, (d) commercial letters of credit and the maximum amount
of all performance and standby letters of credit issued by bankers'
acceptance facilities created for the account of the Borrower to the
extent of all unreimbursed draws thereunder, (e) all guaranty
obligations of the Borrower with respect to Funded Debt of another
person, (f) all Funded Debt of another entity secured by a Lien on any
property of the Borrower whether or not such Funded Debt has been
assumed by Borrower, (g) all Funded Debt of any partnership or
unincorporated joint venture to the extent the Borrower is legally
obligated or has a reasonable expectation of being liable with respect
thereto, net of any assets of such partnership or joint venture, (h)
the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product pursuant to which Borrower is the
obligor where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease
in accordance with GAAP, and (i) any subordinated or convertible debt.
(u) "Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles set forth in opinions
and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board,
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of Borrower and any
predecessors.
(v) "Governmental Authority" means any federal, state,
local, provincial or foreign court or governmental agency, authority,
instrumentality or regulatory body.
(w) "Hazardous Materials" 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. ss. 9601 et seq.; the Resource Conversation
and Recovery Act of 1976, 42 U.S.C. ss. 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.
(x) "Interest Expense" means, for any period, with
respect to the Borrower, all interest expense, including the interest
component under Capital Leases, as determined in accordance with GAAP.
(y) "Interest Income" means, for any period, with respect
to the Borrower, all interest income as determined in accordance with
GAAP.
(z) "Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance, lien
(statutory or otherwise), preference, priority or charge or any kind
(including, without limitation, any agreement to give any of
4
the foregoing, any conditional sale or other title retention agreement,
any financing or similar statement or notice filed under the Uniform
Commercial Code as adopted and in effect in the relevant jurisdiction
or other similar recording or notice statute, and any lease in the
nature thereof).
(aa) "Loan" or "Loans" means the Revolving Loans, or a
portion of any Revolving Loan, as appropriate.
(bb) "Loan Documents" means this Agreement, the Notes, the
Collateral Documents, and all other related agreements and/or documents
issued or delivered hereunder or thereunder or pursuant hereto or
thereto.
(cc) "LIBOR Daily Floating Rate" shall mean the
fluctuating rate of interest equal to the per annum rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the one month London
interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) on the second preceding Business Day, as adjusted
from time to time in Lender's sole discretion for then applicable
reserve requirements, deposit insurance assessment rates and other
regulatory costs. If for any reason such rate is not available, the
term "LIBOR Daily Floating Rate" shall mean the fluctuating rate of
interest equal to the one month rate of interest (rounded upwards, if
necessary to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the one month London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) on the second
preceding Business Day, as adjusted from time to time in Lender's sole
discretion for then applicable reserve requirements, deposit insurance
assessment rates and other regulatory costs; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates. Interest based on
the LIBOR Daily Floating Rate is a floating rate and will change on and
as of the date of a change in the LIBOR Daily Floating Rate. The period
of time during which the LIBOR Daily Floating Rate shall be applicable
shall be a LIBOR Daily Floating Rate Interest Period.
(dd) "Material Adverse Effect" means a material adverse
effect, after taking in account applicable insurance, if any (to the
extent the provider thereof has the financial ability to support its
obligation with respect thereto and is not disputing same), on (a) the
operations, financial condition, business or prospects of the Borrower
and its subsidiaries taken as a whole, (b) the ability of Borrower to
perform its obligations under this Agreement or any of the other Loan
Documents, or (c) the validity or enforceability of this Agreement, any
of the other Loan Documents, or the rights or remedies of the Lender
hereunder or thereunder taken as a whole.
(ee) "Net Income" means, for any period, the net income
after taxes for such period of the Borrower, as determined in
accordance with GAAP.
5
(ff) "Note" or "Notes" means the Revolving Loan Note
together with any renewals, extensions or modifications thereof.
(gg) "Notice of Borrowing" means a request by the Borrower
for a Revolving Loan.
(hh) "Operating Lease" means, as applied to any Person,
any lease (including, without limitation, leases which may be
terminated by the lessee at any time) of any property (whether real,
personal or mixed) which is not a Capital Lease other than any such
lease in which that Person is the lessor.
(ii) "Permitted Liens" means (a) Liens securing
obligations of Borrower to Lender, (b) Liens for taxes not yet due or
Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosures, sale or loss on account
thereof), (c) Liens in respect of property imposed by law arising in
the ordinary course of business such as materialmen's, mechanics',
warehousemen's, carrier's, landlords' and other nonconsensual statutory
Liens which are not due and payable or, if due and payable, are being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and
as to which the property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof), (d) pledges or deposits
made in the ordinary course of business to secure payment of worker's
compensation insurance, unemployment insurance, pensions or social
security programs, (e) Liens arising from good faith deposits in
connection with or to secure performance of tenders, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (other
than obligations in respect of the payment of borrowed money), (f)
Liens arising from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal bonds, (g)
easements, rights-of-way, restrictions (including zoning restrictions),
minor defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of the
encumbered property for its intended purposes, (h) judgment Liens that
would not constitute an Event of Default, (i) Liens in connection with
indebtedness allowed under Section 33(a), (j) Liens arising by virtue
of any statutory or common law provision relating to banker's liens,
rights of setoff or similar rights as to deposit accounts or other
funds maintained with a creditor depository institution, and (k) Liens
existing on the date hereof and identified on Schedule 1; provided that
no such Liens shall extend to any property other than the property
subject thereto on the Closing Date.
(jj) "Permitted Investments" means (i) obligations of U.S.
banks limited to bankers acceptances, certificates of deposit,
Eurodollar certificates of deposit and Eurodollar time deposits. Banks
must be rated A1/P1/F1/D1, or "A" or better by any two of the four U.S.
rating agencies (Standard & Poor's, Moody's, Xxxx & Xxxxxx, and Fitch);
(ii) obligations of non U.S. banks which are headquartered in Canada,
United Kingdom,
6
France, West Germany, Netherlands, Belgium, Switzerland, Italy, Japan
and Australia and limited to Eurodollar certificates of deposit and
Eurodollar time deposits and with a bank rating of A1/P1/F1/D1 "A" or
better by any two of the four US rating agencies; (iii) commercial
paper rated top tier, A1/P1/F1/D1 by any two of the four rating
agencies; (iv) securities, including tax-advantaged floating rate
securities, of major U.S. corporations and U.S. bank holding companies
with a minimum rating of A1/P1, "A" or equivalent; (v) taxable and tax
exempt obligations of state, county and local governments including
floating rate and auction rate securities and bonds with put options;
such investments must be fully secured by standby letter of credit
issued by a U.S. bank meeting credit quality stated above or
investments must be rated A1/P1/F1/D1; "A"; SP-1/MIG-1 by two of the
rating agencies; (vi) Money Market funds regulated by the SEC and where
their portfolios consist of the listed eligible investments; or (vii)
obligations issued or backed by the U.S. Government or any of its
agencies.
(kk) "Person" means any individual partnership, joint
venture, firm, corporation, limited liability company, association,
trust or other enterprise (whether or not incorporated), or any
Governmental Authority.
(ll) "Revolving Committed Amount" means $5,000,000.00 or
such lesser amount as the Revolving Committed Amount may be reduced.
(mm) "Revolving Loan Maturity Date" means April 30, 2006.
(nn) "Revolving Loans" means the Revolving Loans made to
the Borrower pursuant to Section 2.
(oo) "Revolving Note" or "Revolving Notes" means the
promissory note of the Borrower in favor of the Lender evidencing the
Revolving Loans provided pursuant to Section 2, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to
time.
(pp) "Unused Commitment" means, for any period, the amount
by which the face principal amount of the $5,000,000.00 Line of Credit
Loan exceeds the daily average sum for such period of the outstanding
aggregate principal amount of the revolving loans made by Lender to
Borrower under the $5,000,000.00 Line of Credit Loan.
2. Revolving Loan. Lender agrees to make a $5,000,000.00
revolving line of credit loan to the Borrower at any time, and from time to time
during the period from the date hereof to, but not including, the Revolving Loan
Maturity Date (the "Revolving Loan"). Borrower may borrow, repay and reborrow
the Revolving Loan at any time, up to a maximum aggregate amount outstanding at
any one time equal to $5,000,000.00, provided that Borrower is not in default
under any provision of this Agreement or the Loan Documents, and provided that
the borrowings hereunder do not exceed the limitation on borrowings by Borrower
set forth in Section 2(g) below.
7
(a) Use of Proceeds. Advances under the Revolving Loan
shall be used by Borrower to pay or reimburse itself for capital
expenditures related to the development of new restaurants and for
general operating purposes.
(b) Interest Rate. Prior to maturity, the principal
amount outstanding under the Revolving Loan shall bear interest at the
Base Rate.
(c) Method of Borrowing for Revolving Loan. By no later
than 11:00 a.m. Central Standard Time, on the same day of the requested
borrowing under the Revolving Loan, the Borrower shall notify Lender of
Borrower's desire to borrow under the Revolving Loan indicating the
exact amount requested.
(d) Funding of Revolving Loan. Upon Borrower's notice to
Lender of its intent to borrow under the Revolving Loan pursuant to
Section 2(c), the amount of the requested Revolving Loan will then be
made available to the Borrower by the Lender by crediting the account
of the Borrower on the books of such office of the Lender, to the
extent the amount of such request is available for borrowing.
(e) Payments. Payment of all obligations arising under
the Revolving Loan shall be made as follows:
(i) Interest and Fees. Interest on the
outstanding principal balance under the Revolving Loan shall be paid in
arrears on the 1st day of each month, beginning on June 1, 2003. Also,
on the 1st day of each calendar quarter, an Unused Commitment Fee shall
be paid in arrears to Lender in accordance with Unused Commitment Fee
percentage set forth in section 1(b), multiplied by the Unused
Commitment.
(ii) Mandatory Prepayment. Borrower must
immediately prepay any amount by which the principal balance of the
Revolving Loan exceeds $5,000,000.00 as reduced by subsection 2(g)
below.
(iii) All Amounts Due. All remaining principal,
interest and expenses outstanding under the Revolving Loan shall become
due on the Revolving Loan Maturity Date.
(f) Conversion to Term Loan. Subject to the provisions
contained herein, and provided that no Default has occurred and is
continuing, and further provided that the Collateral pledged to Lender
as security for the Revolving Loan has a loan to value ratio greater
than 80% on the date of conversion, Borrower has the option to make a
written election to convert the then outstanding balance of the
Revolving Loan to a term loan at any time prior to March 30, 2006 (the
"Term Loan"). The written election must be delivered to Lender at least
thirty (30) days prior to the Revolving Loan Maturity Date.
8
Upon conversion, there will be a conversion fee equal to one-quarter
(1/4) of one percent (1%) of the then outstanding principal balance.
The then unpaid principal balance will amortized over 60 months and be
repayable in sixty (60) equal monthly installments of principal with
the first principal payment due thirty (30) days following the
conversion date. Interest will continue to be paid monthly at the same
time as the principal payment is due. Interest shall accrue on the Note
at the Base Rate.
(g) Reductions in Committed Amount. In any calendar year,
Borrower may attempt to finance up to $750,000.00 of its capital
expenditures through one or more equipment leases with an affiliate of
Lender on terms and conditions to be negotiated between Borrower and
such affiliate. Borrower acknowledges that Lender is not extending any
commitment for refinancing on behalf of any such affiliates. To the
extent the Borrower utilizes such option, the maximum amount of the
Revolving Loan will be reduced dollar for dollar by the amount of such
leases.
3. Revolving Loan Note. The Revolving Loans made by Lender shall
be evidenced by a duly executed promissory note of the Borrower to Lender in the
face amount of the Revolving Committed Amount.
4. Interest. Interest shall be calculated based upon a 360-day
year. If the adoption of or change in any applicable legal requirement or any
change in the interpretation or administration thereof by any governmental
authority or compliance by the Lender with any request or directive (whether or
not having the force of law) from any central bank or other governmental
authority, shall at any time as a result of any portion of the principal balance
of the Revolving Loans being maintained on the LIBOR Daily Floating Rate:
(a) Subject the Lender to any tax (including without
limitation any United States Interest Equalization Tax), levy, impost,
duty, charge, fee (collectively "Taxes"), other than income and
franchise taxes of the United States and its political subdivisions; or
(b) Change the basis of taxation on payments due from the
Borrower to the Lender under any LIBOR Daily Floating Rate borrowing
(otherwise than by a change in the rate of taxation of the overall net
income of the Lender); or
(c) Impose, modify, increase or make applicable any
reserve requirement, special deposit requirement or similar requirement
(including, but not limited to, state law requirements and Regulation
D) against assets held by the Lender, or against deposits or accounts
in or for the account of the Lender, or against any loans made by the
Lender, or against any other funds, obligations or other property owned
or held by Lender; or
(d) Impose on the Lender any other condition regarding
any LIBOR Daily Floating Rate borrowing; and
9
The result of any of the foregoing (a) through (d) is to increase the
cost to the Lender of agreeing to make or of making, renewing or maintaining
such borrowing on the basis of the LIBOR Daily Floating Rate, or reduce the
amount of principal or interest received by the Lender, then, upon demand by the
Lender, the Borrower shall pay to the Lender, from time to time as specified by
the Lender, additional amounts which shall reasonably compensate the Lender for
such increased cost or reduced amount relating to LIBOR Daily Floating Rate
borrowings outstanding after Lender's demand. Lender will promptly notify
Borrower of any proposed increase hereunder. The Lender's reasonable
determination of the amount of any such increased cost, increased reserve
requirement or reduced amount shall be conclusive and binding, absent manifest
error.
In no event shall the interest rate charged on the Loans exceed the
maximum rate allowed under applicable law. Any amounts paid in excess of the
maximum lawful rate shall be applied to reduce the principal amount of
Borrower's obligations to Lender or shall be refunded to Borrower, at Lender's
election. After maturity or upon a Default (by acceleration or otherwise), the
principal amount under the Loans shall bear interest at the applicable rate of
interest in effect at the time of default plus 3%, per annum (the "Default
Rate").
5. Closing Conditions. The obligation of the Lender to enter into
this Agreement and make the Loans is subject to satisfaction of the following
conditions (in form and substance acceptable to the Lender in its sole
discretion):
(a) Executed Credit Documents. Receipt by the Lender of
duly executed copies of: (i) this Agreement; (ii) the Note; (iii) the
Collateral Documents and (iv) all other Loan Documents.
(b) Corporate Documents. Receipt by the Lender of the
following:
(i) Resolutions. Copies of resolutions of the
Board of Directors of Borrower approving and adopting the Loan
Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery
thereof, and an incumbency certificate, certified by a
secretary or assistant secretary of Borrower to be true and
correct and in force and effect as of the Effective Date.
(ii) Good Standing. Copies of (A) certificates of
good standing, existence or its equivalent with respect to
Borrower certified as of a recent date by the appropriate
Governmental Authorities of the state or other jurisdiction of
Borrower's incorporation and in the States of Illinois and
Ohio with respect to X. Xxxxxxxxx'x Restaurants, Inc. and in
the State of Ohio as to X. Xxxxxxxxx'x Corporation.
10
(c) Personal Property Collateral. The Lender shall have
received, in form and substance satisfactory to the Lender:
(i) duly executed UCC fixture filing financing
statements for each appropriate jurisdiction as is necessary,
in the Lender's sole discretion, to perfect the Lender's
security interest in the Collateral.
(d) Real Property Collateral. The Lender shall have
received in form and substance satisfactory to the Lender:
(i) A title commitment issued by a title
insurance company acceptable to Lender insuring that the deed
of trust or mortgage in favor of Lender is a first priority
deed of trust or mortgage with such title commitment being in
an amount acceptable to Lender and in a form and containing
only those exceptions acceptable to Lender;
(ii) A survey in form and content acceptable to
Lender and which survey shall cause the survey exception to
any title insurance policy to be deleted; and
(iii) An environmental checklist and questionnaire
completed by Borrower with respect to the Collateral.
(e) Evidence of Insurance. Receipt by the Lender of
copies of insurance policies or certificates of insurance of the
Borrower evidencing liability and casualty insurance meeting the
requirements set forth in the Loan Documents, including, but not
limited to, naming the Lender as sole loss payee on behalf of the
Lender.
(f) Corporate Structure. The corporate capital and
ownership structure of the Borrower shall be satisfactory in form and
substance to the Lender.
(g) Certain Consents. Receipt by the Lender of evidence
that all governmental, shareholder and material third party consents
including, without limitation, written consent, if necessary in the
sole discretion of the Lender, of any existing Lenders or bondholders
and expiration of all applicable waiting periods without any action
being taken by any authority that could reasonably be likely to
restrain, prevent or impose any material adverse conditions on the
transactions contemplated by this Agreement or that could reasonably be
likely to seek or threaten any of the foregoing, and no law or
regulation shall be applicable which in the judgment of the Lender
could reasonably be likely to have such effect.
(h) Material Adverse Effect. There shall not have
occurred a change since December 31, 2002, that has had or could
reasonably be expected to have a Material Adverse Effect (including
matters related to litigation, tax, accounting, labor, insurance and
pension liabilities).
11
(i) Litigation. There shall not exist any (i) order,
decree, judgment, ruling or injunction which restrains the consummation
of the transactions contemplated by this Agreement or (ii) any pending
or threatened action, suit, investigation or proceeding which if
adversely determined against the Borrower would have or would
reasonably be expected to have a Material Adverse Effect.
(j) Other Indebtedness. Receipt by the Lender of evidence
that after the funding of the Loans, the Borrower shall have no
borrowed money indebtedness other than the indebtedness under the Loan
Documents and other than miscellaneous indebtedness which does not
exceed $44,500,000.00 in the aggregate.
(k) Officer's Certificates. The Lender shall have
received a certificate or certificates executed by the president or
chief financial officer of the Borrower as of the Effective Date
stating that (A) the Borrower is in compliance with all existing
financial obligations, (B) all governmental, shareholder and third
party consents and approvals, if any, with respect to the Loan
Documents and the transactions contemplated thereby have been obtained,
(C) no action, suit, investigation and proceeding is pending or to his
knowledge threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Borrower or
any transaction contemplated by the Loan Documents, or could have or
might be reasonably expected to have a Material Adverse Effect, (D)
immediately after giving effect to this Agreement, the other Loan
Documents and all the transactions contemplated therein to occur on
such date, (1) the Borrower is solvent, (2) no Default or Event of
Default exists, (3) all representations and warranties contained herein
and in the other Loan Documents are true and correct in all material
respects, and (4) the Borrower is in compliance with each of the
financial covenants set forth in Section 34.
(l) Fees and Expenses. Payment by the Borrower of all
fees and expenses owed by them to the Lender.
(m) Opinion of Borrower's Counsel. Delivery of an opinion
of Borrower's counsel to Lender in the form attached as Exhibit B.
(n) Other. Receipts by the Lender of such other
documents, instruments, agreements or information as reasonably
requested by Lender, including, but not limited to, information
regarding litigation, tax, accounting, labor, insurance, pension
liabilities (actual or contingent), real estate leases, material
contracts, debt agreements, property ownership and contingent
liabilities of the Borrower.
6. Conditions to All Extensions of Credit. In addition to the
conditions precedent stated elsewhere herein, the Lender shall not be obligated
to make, continue or convert Loans unless:
12
(a) Notice. The Borrower shall have delivered (i) in the
case of any new Revolving Loan, a Notice of Borrowing, duly executed
and completed, by the time specified in Section 2(c).
(b) Representations and Warranties. The representations
and warranties made by the Borrower in any Loan Document are true and
correct in all material respects at and as if made as of such date.
(c) No Default. No Default or Event of Default shall
exist or be continuing either prior to or after giving effect thereto.
(d) No Material Adverse Effect. There shall not have
occurred any Material Adverse Effect.
(e) Availability. Immediately after giving effect to the
making of such Loan (and the application of the proceeds thereof), the
sum of the Revolving Loans outstanding shall not exceed the Revolving
Committed Amount.
7. Capacity. Borrower warrants that it is and shall remain a duly
organized Tennessee corporation in good standing under the laws of Tennessee,
and that Borrower is and shall remain duly qualified to do business in each
state other than Tennessee in which the failure to qualify would result in a
Material Adverse Effect on Borrower or its business. Borrower warrants that its
execution of and performance under this Agreement and all related documents are
permitted under and will not violate any provision of Borrower's Charter or
By-Laws or any agreement to which Borrower is a party or any law, rule,
ordinance, regulation or Court Order to which Borrower is subject. Borrower
further warrants that the execution of all necessary resolutions and other
prerequisites of corporate action, as applicable, have been duly performed so
that the individual executing this Agreement and related documents on behalf of
Borrower is duly authorized to bind Borrower by his signature.
8. No Subsidiaries. Except as set forth on Schedule 8, Borrower
warrants that it presently has no subsidiaries or interests in any partnership
or other business entity.
9. Corporate Records. Borrower covenants to maintain or cause to
be maintained current corporate minute books and stock ledgers and agrees to
allow Lender to inspect the same at any time during normal business hours upon
reasonable notice.
10. Accounting; Books, Records and Property. Borrower warrants
that Borrower's accounting complies with applicable "GAAP" and covenants that it
will continue to apply GAAP throughout the life of the Revolving Loan and Term
Loan. Borrower agrees to allow Lender to inspect Borrower's books and records
and the Collateral throughout the life of the Revolving Loan and Term Loan
during normal business hours upon reasonable notice.
13
11. ERISA. Borrower has not incurred and shall not incur a
material accumulated funding deficiency within the meaning of ERISA and has not
incurred any material liability to the Pension Benefit Guaranty Corporation
established under ERISA (or any successor thereto under ERISA) in connection
with any retirement plan, and no reportable event has occurred and is continuing
or shall occur with respect to any welfare or benefit plan maintained by
Borrower.
12. Operation of Restaurants. Borrower represents and warrants to
Lender that X. Xxxxxxxxx'x Corporation owns Borrower's restaurant located in
Lyndhurst, Ohio and leases said restaurant to X. Xxxxxxxxx'x Restaurants, Inc.,
as tenant, pursuant to an unrecorded Lease dated as of January 23, 1996; except
for the foregoing lease, there are no unrecorded real property and/or operating
leases between X. Xxxxxxxxx'x Corporation and any other party with respect to
the restaurant located in Lyndhurst, Ohio. Borrower represents and warrants to
Lender that X. Xxxxxxxxx'x Restaurants, Inc. operates Borrower's restaurant
located in the Village of Northbrook, Illinois, and there are no unrecorded real
property and/or operating leases between X. Xxxxxxxxx'x Restaurants, Inc. and
any other party, including, but not limited to, X. Xxxxxxxxx'x Corporation with
respect to the restaurant located in Northbrook, Illinois.
13. Insurance. In addition to any specific insurance requirements
contained herein or in any other document pertaining to the Loans, Borrower
agrees to generally maintain adequate insurance against casualty, liability
losses, and business interruption in accordance with customary practices in
Borrower's field of enterprise. Borrower agrees to provide Lender with proof of
the existence of such insurance upon demand.
14. Chief Executive Office. Borrower warrants that the address
designated herein to which notices are to be sent to Borrower is Borrower's
chief executive office. Borrower agrees to notify Lender in writing of any
change thereof and agree that the same shall not in any event be moved outside
Davidson County, Tennessee, without Lender's prior written consent.
15. No Defaults Under Other Agreements. Borrower warrants that
neither Borrower, nor to the best of Borrower's knowledge, information, and
belief, any other party thereto is presently in default beyond any applicable
notice and/or cure periods in any material respect under any material contract
or agreement to which Borrower is a party, and no condition presently exists
which, with the giving of notice, the passing of time, or both, would cause such
a default.
16. Disclosure of Litigation. Except as disclosed on Schedule 16,
there are no actions, suits or proceedings pending (including, but not limited
to, matters relating to any Environmental Laws), or, to the best of knowledge of
Borrower, threatened, against or affecting Borrower or involving the validity or
enforceability of any of the Loan Documents, at law or in equity, or before any
governmental or administrative agency, except actions, suits and proceedings
that are covered by insurance in all material respects or that, if adversely
determined, would not impair the ability of Borrower to perform each and every
one of its obligations under this Agreement, or, if adversely determined, would
not materially and adversely affect Borrower's business or Borrower's ability to
carry on its business substantially in the manners now conducted (individually
or in the aggregate).
14
17. Financial Statements.
(a) Warranties. Borrower warrants that Borrower's
quarterly and annual financial statements delivered to Lender in
connection with the Loans have been prepared in accordance with
Generally Accepted Accounting Principles, consistently applied, and
present fairly the financial condition of Borrower as of the date or
dates thereof and are true and correct in all material respect. Without
limiting the foregoing, Borrower warrants that such financial
statements disclose all known material contingent liabilities as well
as material direct liabilities. Borrower acknowledges that Lender has
advanced (or shall advance) the Loans in reliance upon such financial
statements, and Borrower warrants that no Material Adverse Effect has
occurred to the financial condition of Borrower as set forth in the
most recent financial statements.
(b) Reporting Requirements. Borrower covenants to furnish
Lender Borrower's annual audited financial statements, annual budget
and cash flow projections for the upcoming year within ninety (90) days
of the close of the preceding fiscal year. Each audit must be performed
by Ernst & Young, or another certified public accountant reasonably
acceptable to Lender, at Borrower's expense. In addition, Borrower
covenants to furnish to Lender, on or before the forty-fifth (45th) day
following the end of the first three fiscal quarters of Borrower's
fiscal year, unaudited consolidated income statements, cash flow
statements, balance sheets and a covenant calculation report together
with an officer's certificate executed by the chief financial officer
of Borrower certifying compliance with the financial covenants set
forth herein and further stating that, to the best of his knowledge,
information and belief, no Default exists hereunder as of the date of
the certification. Borrower also covenants to furnish to Lender, upon
demand, copies of Borrower's tax returns and additional financial
information in form and substance acceptable to Lender.
18. Notice of Changes in Financial Condition and Defaults.
Borrower covenants to give Lender prompt written notice of (i) the creation or
discovery of any material additional contingent liability or the occurrence of
any other material adverse change in the financial condition of Borrower, and
(ii) the occurrence of any event, or presence of any condition, which
constitutes a Default hereunder or which with the giving of notice, the passing
of time, or both, would constitute a Default or which would have a Material
Adverse Effect. Borrower covenants that it will not change its fiscal year
without obtaining the prior written consent of Lender.
19. No Unpaid Taxes. Borrower has filed or properly extended all
tax returns and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon it or upon any of
its properties or income, which are due and payable, including interest and
penalties, or has provided adequate reserves for the payment thereof, other than
any taxes or assessments that could not impair the ability of Borrower to
perform each and every one of its obligations hereunder; or materially and
adversely affect the ability of Borrower to carry on its business in the manner
as now conducted. To the best knowledge of Borrower, no tax liens have been
filed against Borrower or any of its properties, that could impair the ability
of Borrower to
15
perform each and every one of its obligations hereunder; or materially and
adversely affect the business of Borrower.
20. No Untrue or Misleading Representations. Borrower warrants
that no information, exhibit or report furnished in writing by Borrower to
Lender in connection with the Loans contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained therein not misleading in any material respect.
21. Compliance with Law. Borrower warrants that the business
activities of Borrower are conducted in material compliance with all applicable
laws and regulations. Borrower covenants that such activities shall continue to
be so conducted.
22. 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 Loans.
23. Name. Borrower warrants that during the past five (5) years,
Borrower has not been known under or done business under any name other than the
name used by Borrower in executing this Agreement. Borrower agrees to give
Lender written notice no later than 15 days before Borrower begins using any
name other than that used in executing this Agreement.
24. Intentionally Omitted.
25. Fees and Expenses. Upon demand, Borrower will advance to
Lender or, at Lender's option, reimburse Lender for, the following fees and
expenses:
(a) Taxes. All taxes (other than income taxes) that
Lender may be required to pay because of the Loans.
(b) Administration. All expenses that Lender may incur in
connection with the preparation, execution, or enforcement of this
Agreement or of any other document pertaining to the Loans;
(c) Costs of Collection. All court costs and other costs
of collecting any debt, overdraft or other obligation included in the
Loans;
(d) Litigation. All 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 Loans 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;
16
(e) Fees. All fees, costs or other amounts payable under
the Loan Documents; and
(f) Attorneys Fees. Reasonable attorneys' fees incurred
in connection with any of the foregoing.
If Lender pays any of the foregoing fees and expenses or if Borrower
fails to pay Lender any of the foregoing fees and expenses when due, they shall
become a part of the Revolving Loans and shall bear interest at the rate of
interest then in effect. This paragraph shall remain in full effect regardless
of the full payment of the Loans, 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 paragraph by executing and delivering to
Borrower a written instrument of termination specifically referring to this
Paragraph.
26. Further Assurances. Borrower covenants to execute such other
documents that Lender may reasonably deem necessary to further evidence the
obligations provided for herein.
27. Default Certificates. Borrower covenants to deliver to Lender,
within five (5) business days after request, the certificate of Borrower, or of
Borrower's appropriate representative (as specified by Lender) stating whether,
to the best of the person's knowledge, information, and belief and after due
investigation, a Default then exists under this Agreement. The certificate shall
describe with particularity any Default and shall address with particularity any
circumstances or subjects described by Lender in its request. Borrower covenants
that it will promptly forward to Lender a copy of any notice of default Borrower
receives from any party with which any Borrower has a contract, where the amount
of such contract exceeds $100,000.00. Borrower covenants that it will promptly
forward to Lender copies of any individual litigation matter involving Borrower
or any of its property where the amount of such litigation exceeds $100,000.00.
28. Recitals. Borrower warrants and agrees that the recitals set
forth at the beginning of this Agreement relating to it are true.
29. No Burdensome Agreements. Borrower warrants that Borrower is
not a party to any material contract or agreement and is not subject to any
material contingent liability that does or may impair the ability of Borrower to
perform under the terms of this Agreement. Borrower further warrants that the
execution and performance of this Agreement will not cause a default,
acceleration or other event under any other contract or agreement to which
Borrower or any property of Borrower is subject, and will not result in the
imposition of any charge, penalty, lien or other encumbrance against any
property of Borrower except in favor of Lender.
30. Legal and Binding Agreement. Borrower warrants that the
execution and performance of this Agreement will not violate any judicial or
administrative order or governmental law or regulation, and that this Agreement
is valid, binding and enforceable according to its terms, subject to bankruptcy
and other laws affecting the rights of creditors generally.
17
31. No Consent Required. Borrower warrants that Borrower's
execution, delivery and performance of this Agreement does not require the
consent of or the giving of notice to any third party including, but not limited
to, any other Lender, governmental body or regulatory authority, which has not
been obtained.
32. No Default. Borrower warrants that, as of the execution of
this Agreement, no Default exits hereunder and no condition exists which, with
the giving of notice, the passing of time, or both, would constitute such a
Default.
33. Negative Covenants. Without Lender's prior written consent,
Borrower shall not do any of the following:
(a) Other Debt. Incur, create, assume or permit to exist
any indebtedness for borrowed money except:
(i) Indebtedness to Lender.
(ii) Debts existing as of the execution hereof
and disclosed in the financial statements delivered to Lender
and any modifications, renewals or extensions thereof and any
refinancing of such debt with no increase in the amount of
such refinanced debt.
(iii) Unsecured debts on open account incurred in
the ordinary course of business.
(iv) Indebtedness arising from the negotiation
and deposit of instruments received in the ordinary course of
business.
(v) $750,000.00 of additional indebtedness (the
"additional indebtedness amount") incurred by Borrower during
any calendar year with another lender; to the extent Borrower
does not utilize the entirety of the additional indebtedness
amount during any calendar year, any portion of the additional
indebtedness amount not borrowed by Borrower shall be added to
the additional indebtedness amount for the following calendar
year.
(b) Pledge or Mortgage of Assets. Except for Permitted
Liens (together with renewals and extensions thereof), pledge or
mortgage any of its existing, or future acquired assets to any other
party.
(c) Stock Transactions. Redeem any stock, subordinated
debt, warrants, or debt securities convertible into stock; provided
that Borrower may redeem up to a maximum of $1,500,000.00 of Borrower's
currently issued and outstanding common stock, and further provided
that Borrower may redeem subordinated debt prior to its stated
redemption date,
18
so long as Borrower is not in Default or after giving effect to the
proposed transaction, including computing all financial covenants and
ratios immediately after such transaction, would not be in Default
herewith.
(d) Reorganization. Enter into any agreement to merge,
consolidate, or otherwise reorganize or recapitalize, or enter into any
agreement to acquire stock or assets having a value in excess of
$1,000,000.00.
(e) ERISA Matters. Suffer or permit any of the following
events or conditions to exist or occur: (A) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and
Section 412 of the Code, whether or not waived, shall exist with
respect to any ERISA Plan, or any lien shall arise on the assets of the
Borrower or any ERISA Affiliate in favor of the PBGC of an ERISA Plan;
(B) a Termination Event shall occur with respect to a Single Employer
Plan, which is, in the reasonable opinion of the Lender, likely to
result in the termination of such Plan for the purposes of Title IV or
ERISA; (C) a Termination Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Lender, likely to result in (i) the
termination of such Plan for purposes of Title IV of ERISA, or (ii) the
Borrower or any ERISA Affiliate incurring any liability in connection
with a withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency of (within the meaning of Section
4245 of ERISA) such Plan; or (D) any prohibited transaction (within the
meaning of Section 406 of ERISA of Section 4975 of the Code) or breach
of fiduciary responsibility shall occur which may subject the Borrower
or any ERISA Affiliate to any liability under Sections 406, 409,
502(i), or 502(l) or ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrower or any
ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(f) Fiscal Year; Organizational Documents. Change its
fiscal year or materially change its articles or certificate of
incorporation or its by-laws.
(g) Investments. Purchase or acquire an interest in any
stocks, bonds, debentures, instruments or securities other than (i)
Permitted Investments, (ii) investments permitted under Section 33(d),
and (iii) other investments whereby the amount invested does not exceed
$100,000.00.
(h) Management Change. Change its senior management.
(i) Change of Business. Make any material change to the
business of Borrower as conducted on the Effective Date.
(j) Continuation of Business. Liquidate, dissolve or
voluntarily suspend business.
19
34. Financial Covenants. Borrower shall maintain the following
financial covenants as determined by GAAP on a consolidated basis (unless
otherwise noted):
(a) Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio measured at the end of each fiscal quarter computed on a
trailing four quarters basis shall be at least 1.50 to 1.00. For
purposes hereof, the Fixed Charge Coverage Ratio is defined as: (Net
Income plus depreciation and amortization plus interest expense plus
rent expense minus the greater of i) total store maintenance capital
expenditures (excluding major remodeling or image enhancements), or ii)
the total number of Borrower's stores operating for at least 18 months
multiplied by $40,000.00) divided by (interest expense plus rent
expense plus current maturities of long term debt plus current
maturities of capital leases).
(b) Maximum Adjusted Debt to EBITDAR Ratio. The Maximum
Adjusted Debt to EBITDAR Ratio measured at the end of each fiscal
quarter computed on a trailing four quarters basis shall be less than
4.15 to 1.00. For purposes hereof, the Maximum Adjusted Debt to EBITDAR
Ratio is defined as (total Funded Debt minus Invested Funds plus (rent
expense multiplied by 8)) divided by EBITDAR. For purposes hereof,
Invested Funds is defined as short term, liquid investments such as
money markets with maturities generally less than one year in length;
provided that investments into any joint venture or any endeavor not
consistent with the Borrower's core restaurant operating business
without the written consent of Lender shall be specifically excluded.
For purposes hereof, EBITDAR is defined as the sum of Net Income for
such period (excluding the effect of any extraordinary or non-recurring
gains or losses outside of the ordinary course of business) plus an
amount which, in the determination of net income for such period has
been deducted for (i) interest expense for such period; (ii) total
federal, state, foreign or other income taxes for such period; (iii)
all depreciation and amortization for such period; and (iv) rent
expense, all as determined in accordance with GAAP.
35. Environmental Matters
(a) Environmental Law Compliance. Borrower warrants and
covenants that the conduct of Borrower's business operations do not and
will not violate, in any material respect, any federal laws, rules, or
ordinance for environmental protection, regulations of the
Environmental Protection Agency and any applicable local or state law,
rule, regulation, or rule of common law and any judicial interpretation
thereof relating primarily to the environmental or Hazardous Materials
and Borrower will not use or permit any other party to use any
Hazardous Materials at any of Borrower's places of business or at any
other property owned by Borrower except such materials as are
incidental to Borrower's normal course of business, maintenance and
repairs and which are handled in material compliance with all
applicable environmental laws. Upon the occurrence of a Default or if
necessary to meet any regulatory requirement imposed on any Lender,
Borrower agrees to permit Lender, its agents, contractors, and
employees to enter and inspect any of Borrower's places of business or
any other property of Borrower at any reasonable times upon five (5)
days prior
20
notice for the purpose of conducting an environmental investigation and
audit (including taking physical samples) to insure that Borrower is
complying with this covenant and Borrower shall reimburse Lender on
demand for the costs of any such environmental investigation and audit.
Borrower shall provide Lender, its agents, contractors, employees, and
representatives with access to and copies of any and all data and
documents relating to or dealing with any Hazardous Materials used,
generated, manufactured, stored or disposed of by Borrower's business
operations within five (5) days of the request thereof.
(b) Notification of Environmental Claims. Borrower shall
immediately advise Lender in writing of (i) any and all material
enforcement, cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed, or threatened pursuant to any
applicable federal, state, or local laws, ordinances or regulations
relating to any Hazardous Materials affecting Borrower's business
operations; and (ii) all material claims made or threatened by any
third party against Borrower relating to damages, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous
Materials. Borrower shall immediately notify Lender of any material
remedial action taken by Borrower with respect to Borrower's business
operations.
(c) Indemnification. Borrower shall indemnify, defend,
and hold Lender and its successors and assigns harmless from and
against any and all claims, demands, suits, losses, damages,
assessments, fines, penalties, costs, or other expenses (including
reasonable attorneys' fees and court costs) arising from or in any way
related to actual or threatened damage to the environment, agency costs
of investigation, personal injury or death, or property damage, due to
a release or alleged release of Hazardous Materials, arising from
Borrower's business operations, any other property owned by Borrower or
in the surface or ground water arising from Borrower's business
operations, or gaseous emissions arising from Borrower's business
operations or any other condition existing from Borrower's business
operations resulting from the use or existence of Hazardous Materials,
whether such claim proves to be true or false. Borrower further agrees
that its indemnity obligations shall include, but are not limited to,
liability for damages resulting from the personal injury or death of an
employee of the Borrower, regardless of whether the Borrower has paid
the employee under the worker's compensation laws of any state or other
similar federal or state legislation for the protection of employees.
The term "property damage" as used in this paragraph includes, but is
not limited to, damage to any real or personal property of the
Borrower, the Lender, and of any third parties. The Borrower's
obligations under this paragraph shall survive the repayment of the
Loans.
36. Default Defined. The occurrence of any one or more of the
following events shall constitute a Default under this Agreement:
(a) Monetary Default. The failure of Borrower to timely
pay any amount due Lender under the Loans as and when due.
21
(b) Breach of Covenant. The failure of Borrower to comply
with any of the terms and obligations of this Agreement (other than
those addressed in a, c, d, e, f or g hereof) for a period of 30 days.
(c) Breach of Warranty. Lender's discovery that any
representation or warranty in connection with this Agreement or the
Loans or any other Loan Document was materially false when made.
(d) Default Under Other Document. Subject to applicable
cure periods, the occurrence of a default under the terms of any
document evidencing or otherwise pertaining to the Loans, including,
without limitation, the Loan Documents or the occurrence of a default
under the terms of any document evidencing or otherwise pertaining to
any other extension of credit by Lender or any affiliate of Lender to
Borrower.
(e) Voluntary Bankruptcy. The Borrower shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to
authorize any of the foregoing.
(f) Involuntary Bankruptcy. An involuntary case or other
proceeding shall be commenced against Borrower seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days; or an order
for relief shall be entered against the Borrower under the bankruptcy
laws as now or hereafter in effect.
(g) Default Under Other Loans. Subject to any grace or
cure periods, the occurrence of a default under the terms of any
document or agreement evidencing, securing or otherwise pertaining to
the extension of credit in excess of $50,000.00 by any other party to
Borrower, the default, which if not cured, would permit the
acceleration of the debt.
(h) Judgment. The entry of a judgment against Borrower or
any of its property in an amount is excess of $100,000.00 which is not
either satisfied or bonded off prior to the time execution could issue
under such judgment.
22
(i) Collateral. Should any Lien in favor of Lender on any
Collateral prove to be unperfected, unenforceable or void or should
Borrower assert that with respect to any such Lien.
37. Remedies Upon Default. Upon a Default, Lender may exercise any
or all of the following remedies:
(a) Remedies. Lender, may exercise any right that it may
have at law or equity, including those under the Loan Documents and
including an action to collect the Loans and foreclosure on some or all
of the Collateral. All obligations of Lender to advance or readvance
under the Revolving Loans will terminate. Lender, at its option, may
increase the rate of interest on the Loans to the Default Rate.
(b) Application of Proceeds. All amounts received by
Lender for Borrower's account by exercise of its remedies hereunder
shall be applied as follows: First, to the payment of all reasonable
expenses incurred by Lender in exercising their rights hereunder,
including reasonable attorney's fees, and any other expenses due Lender
from Borrower; Second, to the payment of all interest included in the
Loans, in such order as Lender may elect; Third, to the payment of all
principal included in the Loans, in such order as Lender may elect; and
Fourth, surplus to Borrower or other party entitled thereto.
38. Reversal of Payments. To the extent Borrower makes a payment
or payments to the Lender or the Lender receives any payment or proceeds of the
collateral, if applicable, which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Loans or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Lender.
39. Set-Off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon and
after the occurrence of any Default and during the continuance thereof, the
Lender, and any assignee or participant of a Lender, is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by the Lender, or any such assignee or participant to or for the
credit or the account of Borrower against and on account of the Loans
irrespective of whether or not (a) the Lender shall have made any demand under
this Agreement or any of the other Loan Documents or (b) the Lender shall have
declared any or all of the Loans to be due and payable and although such Loans
shall be contingent or unmatured.
23
40. Arbitration. Any controversy or claim between or among the
parties to this Agreement or any related loan or collateral agreements or
instruments (collectively, "Loan Documents"), including any claim based on or
arising from an alleged tort, shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), the Rules of Practice and Procedure for the arbitration
of commercial disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the "special rules" set forth below. In the event of any
inconsistency, the special rules shall control. Judgment upon any arbitration
award may be entered in any court having jurisdiction. Any party to the Loan
Documents may bring an action, including a summary or expedited proceeding, to
compel arbitration of any controversy or claim to which this agreement applies
in any court having jurisdiction over such action.
The following "Special Rules" shall apply. The arbitration shall be
conducted in Nashville, Tennessee and administered by J.A.M.S. who will appoint
an arbitrator; if J.A.M.S. is unable or legally precluded from administering the
arbitration, then the American Arbitration Association will serve. All
arbitration hearings will be commenced within 90 days of the demand for
arbitration; further, the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for up to an additional 60
days.
Nothing in the foregoing arbitration shall be deemed to (i) limit the
applicability of any otherwise applicable statutes of limitation or repose and
any waivers contained in the Loan Documents; or (ii) be a waiver by Lender of
the protection afforded to it by 12 U.S.C. Sec. 91 or any substantially
equivalent state law; or (iii) limit the rights of Lender under the Loan
Documents (a) to exercise self help remedies such as (but not limited to)
set-off, or (b) to foreclose against any real or personal property collateral,
or (c) to obtain from a court provisional or ancillary remedies such as (but not
limited to) injunctive relief, possession of collateral or the appointment of a
receiver. Lender may exercise such self help rights, foreclose upon such
property, or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant to the Loan
Documents. At Lender's option, foreclosure under a deed of trust or mortgage may
be accomplished by any of the following: the exercise of a power of sale under
the deed of trust or mortgage, or by judicial sale under the deed of trust or
mortgage, or by judicial foreclosure. Neither this exercise or self help
remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
41. 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, Borrower 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.
24
42. Regulation U. Borrower warrants that none of the proceeds of
the loan evidenced by the Note will be used to purchase or carry "margin stock,"
as defined in Regulation U issued by the Federal Reserve Board.
43. Business Days. If any payment date under the Revolving Loans
falls on a day that is not a Business Day of Lender, 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 succeeding Business Day of Lender.
44. Notices. Any communications concerning this Agreement or the
credit described herein shall be addressed as follows:
As to Borrower:
X. Xxxxxxxxx'x Corporation
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
X. Xxxxxxxxx'x Restaurants, Inc.
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
With a Copy to:
Bass, Xxxxx & Xxxx, PLC
Attention: Xxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
As to Lender:
Bank of America, N.A.
Attention: Xxxxxx Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to:
Xxxx & Xxxxxxx, PLC
Attention: Xxxxx X. Xxxxxx
0000 Xxx Nashville Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
25
Communications to be given to a party shall be effective when
actually or constructively received by such party or three (3) days
after when set forth in writing and mailed by certified mail, return
receipt requested, or hand-delivery to such party's address stated
above. Any party may change its address for receipt of notices by
submitting the change in writing to the other party.
45. 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. Such participants will have no direct relationship with Borrower and will
have no right with respect to waivers or amendments or default declarations.
Lender may from time to time disclose to any participant or prospective
participant such information as the Lender may have regarding the financial
condition, operations, and prospects of Borrower, but the Lender shall take
reasonable precautions to require such participant or prospective participant to
keep such information confidential.
46. Incorporation of Exhibits and Schedules. All Exhibits and
Schedules referred to in this Agreement are incorporated herein by this
reference.
47. 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.
48. 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.
49. Amendments, Waiver and Consents. Neither this Agreement nor
any other Loan Documents nor any of the terms hereof or thereof may be amended,
changed, waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing and signed by the Lender and the
Borrower.
50. Assignment. This Agreement shall be binding upon and inure to
the benefit of the respective heirs, 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.
51. Entire Agreement. This Agreement and the other written
agreements 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.
52. Severability. Should any provision of this Agreement be
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
26
53. Time of Essence. Time is of the essence of this Agreement, and
all dates and time periods specified herein shall be strictly observed, except
that Lender may permit specific deviations therefrom by its written consent.
54. Applicable Law. The validity, construction and enforcement of
this Agreement and all other documents executed with respect to the Loans shall
be determined according to the laws of Tennessee applicable to contracts
executed and performed entirely within that state, in which state this Agreement
has been executed and delivered.
55. Gender and Number. Words used herein indicating gender or
number shall be read as context may require.
56. 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 paragraphs.
Executed the date first written above.
BANK OF AMERICA, N.A.
By: Xxxxxx X. Xxxxxxxxx, Xx.
--------------------------------------------
Title: Senior Vice President
-----------------------------------------
X. XXXXXXXXX'X CORPORATION
By: R. Xxxxxxx Xxxxx
---------------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
X. XXXXXXXXX'X RESTAURANTS, INC.
By: R. Xxxxxxx Xxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
27
SCHEDULE 1
PERMITTED LIENS
28
SCHEDULE 8
SUBSIDIARIES
Company/Subsidiary Name: Nature of Business
1. X. Xxxxxxxxx'x Corporation: Common parent corporation, Florida
restaurant operations, and real estate ownership.
2. Union Leasing Corporation: Owns very small portfolio of restaurant
stocks; otherwise inactive.
3. VCE Restaurants, Inc.; Inactive subsidiary; was Wendy's operating
company.
4. Volunteer Capital West, Inc.: Leasing of former Wendy's properties.
Limited activity.
5. X. Xxxxxxxxx'x Restaurants, Inc.: Restaurant operating subsidiary.
6. X. Xxxxxxxxx'x Restaurants of Kansas, Inc.: Operating subsidiary for
Kansas restaurant.
7. X. Xxxxxxxxx'x Restaurants of Texas, Inc.: Operating subsidiary for
Texas restaurant.
8. JAX Holdings, Inc.: Holding company for VCE Restaurants, Inc.
9. *JAX Real Estate, LLC: Owns real estate mortgaged to GE Capital
Franchise Finance Corporation and leases to operating subsidiary.
10. *JAX RE Holdings, LLC: Holding Company for JAX Real Estate, LLC.
11. *JAX Real Estate Management, Inc.: Management Company for JAX Real
Estate, LLC and JAX RE Holdings, LLC.
12. X. Xxxxxxxxx'x of Kansas, LLC: Gift Card Business.
*See Note D to Consolidated Financial Statements included in X. Xxxxxxxxx'x
Corporation's 2002 Annual Report to Shareholders.
29
SCHEDULE 16
LITIGATION
None.
30
