[Letterhead of Comerica Bank]
May 8, 2000
NBO, LLC
Attn: Mr. David W. Schostak
25800 Northwestern Hwy.
Suite 750
Southfield, MI 48075
Gentlemen:
We are pleased to advise you that Comerica Bank has approved a
$55,000,000 non-revolving line of credit (the "Loan") for NBO, LLC or a
wholly-owned subsidiary of NBO, LLC ("Borrower") for the purpose of acquiring a
controlling interest in Quality Dining, Inc. ("QDI"), on the following terms and
conditions. This commitment will remain outstanding through May 1, 2001, subject
to the terms and conditions set forth herein.
A. Interest Rate.
The Loan will bear interest at the eurodollar-based rate. The
eurodollar-based rate shall be a per annum rate equal to 4.0% (400 basis points)
plus the eurodollar interbank offering rate for one, two, three or six month
interest periods (as determined by the Bank to be available), adjusted for
reserves and rounded upwards, if necessary, to the nearest 1/16th of 1%. The
eurodollar-based rate may be selected by Borrower for fixed periods of one, two,
three or six months, in minimum increments of $1,000,000. No more than three (3)
separate eurodollar advances may be outstanding at any time.
Borrower will be required to compensate the Bank in the event any
applicable law, treaty, rule or regulation now or hereafter in effect or any
interpretation or administration thereof shall (i) affect the basis of taxation
of payments to the Bank of any amounts payable under the loan documents, (ii)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, the Bank,
(iii) affect the amount of capital required or expected to be maintained by the
Bank, or (iv) impose any other condition with respect to the Loan and the result
of the foregoing is to increase the cost of the Bank of maintaining the Loan or
reduce any amount payable to the Bank with respect to the Loan or increase the
amount of capital required by the Bank.
In the event of any prepayment of any portion of the Loan on a date
other than the last day of an interest period applicable thereto, the Borrower
shall be required to reimburse the Bank on demand for any costs incurred by the
Bank as a result of the timing thereof, including, but not limited to any costs
incurred in liquidating or employing deposits from third parties.
NBO, LLC
May 5, 2000
Page 2
Interest shall be calculated on the basis of a 360 day year and
assessed for the actual number of days elapsed. Upon the occurrence of any
default, interest shall accrue at a per annum rate equal to 3% above the rate
otherwise in effect.
B. Payments and Maturity. Payments of interest only will be due on the
first day of each month. The Loan will mature on May 1, 2001.
C. Security. Security for the Loan will consist of the following:
a. A first perfected security interest in the collateral that
currently secures and will continue to secure a separate
credit facility of Bank to SF Financial, L.L.C.
b. A first perfected security interest in the ownership interest
of Jerome, David, Robert and Mark Schostak in the Borrower.
c. An unlimited joint and several guaranty of payment executed by
Jerome, David, Robert and Mark Schostak ("Guarantors").
D. Fees. Borrower agrees to pay the following fees to Bank:
a. $150,000 upon acceptance of this letter.
b. $50,000 within 30 days of acceptance of this letter.
c. $50,000 within 60 days of acceptance of this letter.
d. $550,000 upon Borrower acquiring a controlling interest in
QDI, whether or not the Loan is funded.
e. a fee equal to1.5% of the amount advanced under the Loan, to
be paid at the time of such advance.
E. Closing Conditions.
As a condition to closing the Loan, the Bank must have received,
reviewed and approved the following:
a. True copies of the organization documents of Borrower, a good
standing certificate and borrowing resolution.
b. The loan documents, evidencing and securing the Loan pursuant
to the terms of this letter.
NBO, LLC
May 5, 2000
Page 3
F. Financial Reporting.
Borrower will be required to provide to the Bank the following, during
the term of this commitment and the Loan, (a) and (c) to be in form acceptable
to the Bank:
a. Within 90 days of the end of each fiscal year, annual
financial statements prepared by Borrower acceptable to the
Bank.
b. When available, annual audited financial statements of QDI.
c. By April 30 of each year, personal financial statements of
each guarantor.
G. Other Loan Document Provisions.
a. The loan documents shall contain, without limitation, the
following provisions:
b. In the event a controlling interest in QDI is obtained by
Borrower, Borrower will not permit QDI to make any
distribution, loan or other payment to any Guarantor until the
Loan is fully repaid.
c. In the event QDI becomes a wholly owned subsidiary of
Borrower, Borrower will apply the net proceeds of any sales or
refinancing of assets of QDI to reduce the principal balance
of the Loan.
d. Borrower will not be permitted to make any distribution, loan
or payment to any Guarantor until the Loan is fully repaid.
e. Borrower agrees to pay to Bank for application to the Loan all
distributions and other payments to Borrower from QDI.
H. Agency. Borrower agrees as follows:
Bank shall be entitled, after consultation with you, to change the
pricing, terms and/or structure of the financing if the Bank determines, in its
sole discretion, that such changes are necessary or advisable to insure a
successful syndication of the financing; provided, however, that the total
amount of the financing and maturity remains unchanged. It is understood that
the Bank's commitment is expressly subject to the agreements in this paragraph,
and that these agreements shall survive the closing of the financing and
continue to be enforceable by Bank.
Borrower also agrees that it will fully cooperate with Bank to
syndicate the Loan. This includes but is not limited to assisting in preparing
and holding a lender meeting in order to successfully syndicate the proposed
facilities, meeting with any lenders interested in participating in the facility
as necessary, and providing any additional
3
NBO, LLC
May 5, 2000
Page 4
information which prospective members of the lender group indicate is necessary
for them to obtain credit approval.
I. General Conditions.
This loan commitment is made further subject to the absence of a
material adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of Borrower or any Guarantor
since the date of the most recent financial statements provided to the Bank.
All documentation regarding the Loan is subject to preparation and
approval by the Bank's designated legal counsel. The Bank may require such
certificates, legal opinions, instruments and other documents that are
customarily included as part of transactions of the type described in this
letter in form and substance satisfactory to the Bank.
All of the Bank's fees, costs and expenses incurred in connection with
or relating to the matters and transactions contemplated by this commitment
shall be paid by the Borrower without regard to whether or not these matters and
transactions are ever closed or consummated.
The commitments set forth herein shall not be assignable by the
Borrower by operation of law, or otherwise, are not intended to create any
rights in favor of and may not be relied upon by any third party, and may be
terminated at the Bank's option and in any manner as the Bank may determine if
the Borrower shall fail to comply with any of the terms and conditions hereof,
or in the event at any time prior to the closing of the financing arrangements
described herein of a filing by or against the Borrower or any Guarantor of a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee or the making by the Borrower or any
Guarantor of an assignment for the benefit of creditors or the filing of a
petition for arrangement with respect to the Borrower or any Guarantor.
This commitment letter contains the entire agreement of the Bank as of
the date hereof and is not subject to or supplemented by any previous
correspondence between the Borrower and the Bank or any other document not
expressly referenced herein. No change in this commitment letter shall be
binding upon the Bank unless expressed in writing and signed by the Bank.
Please indicate your acceptance of the terms and conditions of this
commitment letter by signing the original copy where indicated, and returning it
to us, together with the first fee of $150,000, on or before May 8, 2000 or all
of the Bank's commitments set forth in this commitment letter will expire. This
commitment will expire if the definitive loan documents for the loans are not
closed on or before May 1, 2001, or if any fee payment is not paid when due.
4
NBO, LLC
May 5, 2000
Page 5
The terms and conditions of this commitment shall survive the closing
of the Loan, except where superseded by the loan documents.
Very truly yours,
COMERICA BANK
By: /s/ Kurt R. Strehlke
---------------------------
Kurt R. Strehlke
Its: Vice President
Accepted and Agreed:
NBO, L.L.C.
By: /s/ David W. Schostak
-------------------------
Its: Member
Dated: May 8, 2000