[WELLS FARGO BANK LETTERHEAD]
February 1, 1996
Christine E. Munson
Vice President of Finance
California Culinary Academy, Inc.
625 Polk Street
San Francisco, CA 94102
Dear Chris:
This letter is to confirm the changes agreed upon between Wells Fargo
Bank, National Association ("Bank") and CALIFORNIA CULINARY ACADEMY, INC.
("Borrower") to the terms and conditions of that certain letter agreement
between Bank and Borrower dated as of February 1, 1995, as amended from time
to time (the "Agreement"). For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree
that the Agreement shall be amended as follows to reflect said changes.
1. The Agreement is hereby amended by deleting "February 1, 1996" as the
last day on which Bank will made advances under the Line of Credit, and by
substituting for said date "February 1, 1997," with such change to be
effective upon the execution and delivery to Bank of a promissory note
substantially in the form of Exhibit A attached hereto and all other
contracts, instruments and documents required by Bank to evidence such change.
2. The following is hereby added to the Agreement as Paragraph II.4:
"4. UNUSED COMMITMENT FEE. Borrower shall pay to Bank a fee
equal to one hundred twenty-five thousandths percent (.125%)
per annum (computed on the basis of a 360-day year, actual
days elapsed) on the average daily unused amount of the Line
of Credit, which fee shall be calculated on a calendar quarter
basis by Bank and shall be due and payable by Borrower in
arrears on the last day of each calendar quarter."
California Culinary Academy, Inc.
February 1, 1996
Page 2
3. Paragraph V.9.(a) is hereby deleted in its entirety, and the
following substituted therefor:
"(a) Current Ratio not at any time less than 1.0 to 1.0,
with "Current Ratio" defined as total current assets divided
by total current liabilities."
4. Paragraph V.9.(b) is hereby deleted in its entirety, without
substitution.
5. Paragraph V.9.(c) is hereby deleted in its entirety, and the
following substituted therefor:
"(c) Tangible Net Worth not at any time less than
$4,000,000.00, with "Tangible Net Worth" defined as
the aggregate of total stockholders' equity plus
subordinated debt less any intangible assets."
6. Paragraph V.9.(e) is hereby deleted in its entirety, and the following
substituted therefor:
"(e) Net income after taxes not less than $1.00 on a
cumulative quarterly basis, cumulation beginning with
the quarter ended December 31, 1995, determined as of
each fiscal quarter. Cumulative quarterly basis,
cumulation beginning with the quarter ended December 31,
1995 is defined as the quarter ended December 31, 1995
for the period ended December 31, 1995 and March 31, 1996
for the period ended March 31, 1996; the three quarters
ended December 31, 1995, March 31, 1996, and June 30,
1996 for the period ended June 30, 1996.
Net income after taxes not less than $1.00 on a rolling
four quarter basis, determined as of each fiscal quarter
for the quarter ended September 30, 1996 and thereafter."
7. The following is hereby added to the Agreement as new Paragraph V.17:
"17. PLEDGE OF ASSETS. Not mortgage, pledge, grant or permit
to exist a security interest in, or lien upon, all or any portion
California Culinary Academy, Inc.
February 1, 1996
Page 3
of Borrower's assets now owned or hereafter acquired,
except any of the foregoing in favor of Bank or which are
existing as of, and disclosed to Bank in writing prior to,
the date hereof."
8. Except as specifically provided herein, all terms and conditions of
the Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Agreement shall have the same meaning
when used herein. This letter and the Agreement shall be read together, as
one document.
9. Borrower hereby remakes all representations and warranties contained
in the Agreement and reaffirms all covenants set forth herein. Borrower
further certifies that as of the date of Borrower's acknowledgment set forth
below there exists no default or defined event of default under the Agreement
or any promissory note or other contract, instrument or document executed in
connection therewith, nor any condition, act or event which with the giving
of notice or the passage of time or both would constitute such a default or
defined event of default.
California Culinary Academy, Inc.
February 1, 1996
Page 4
Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions.
Sincerely,
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ STEPHANIE ARNOLD
-------------------------------
Stephanie Arnold
Assistant Vice President
Acknowledged and accepted as of Feb. 1, 1996:
CALIFORNIA CULINARY ACADEMY, INC.
By: /s/ CHRISTINE E. MUNSON
------------------------------------
Title: Chief Financial Officer
---------------------------------
By: /s/ ALEXANDER M. HEHMEYER
------------------------------------
Title: President and CEO
---------------------------------
EXHIBIT A
WELLS FARGO BANK REVOLVING LINE OF CREDIT NOTE
- --------------------------------------------------------------------------------
$500,000.00 SAN FRANCISCO, CALIFORNIA
FEBRUARY 1, 1996
FOR VALUE RECEIVED, the undersigned CALIFORNIA CULINARY ACADEMY, INC.
("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Bank") at its office at SAN FRANCISCO RCBO, 420 MONTGOMERY
STREET 1ST FLR, SAN FRANCISCO, CA 94163, or at such other place as the holder
hereof may designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of $500,000.00, or so much
thereof as may be advanced and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth
herein.
INTEREST:
(a) INTEREST. The outstanding principal balance of this Note shall bear
interest at a rate per annum (computed on the basis of a 360-day year, actual
days elapsed) EQUAL TO the Prime Rate in effect from time to time. The "Prime
Rate" is a base rate that Bank from time to time establishes and which serves
as the basis upon which effective rates of interest are calculated for those
loans making reference thereto. Each change in the rate of interest hereunder
shall become effective on the date each Prime Rate change is announced within
Bank.
(b) PAYMENT OF INTEREST. Interest accrued on this Note shall be payable on
the 1ST day of each MONTH, commencing MARCH 1, 1996.
(c) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note
shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to 4%
above the rate of interest from time to time applicable to this Note.
(d) COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all
interest and fees due hereunder by charging Borrower's demand deposit account
number 4018-035501 with Bank, or any other demand deposit account maintained
by any Borrower with Bank, for the full amount thereof. Should there be
insufficient funds in any such demand deposit account to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.
BORROWING AND REPAYMENT:
(a) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of any document executed in connection with or
governing this Note; provided however, that the total outstanding borrowings
under this Note shall not at any time exceed the principal amount stated
above. The unpaid principal balance of this obligation at any time shall be
the total amounts advanced hereunder by the holder hereof less the amount of
principal payments made hereon by or for any Borrower, which balance may be
endorsed hereon from time to time by the holder. The outstanding principal
balance of this Note shall be due and payable in full on FEBRUARY 1, 1997.
(b) ADVANCES. Advances hereunder, to the total amount of the principal sum
available hereunder, may be made by the holder at the oral or written request
of (i) ALEXANDER M. HEHMEYER OR CHRISTINE MUNSON, any one acting alone, who
are authorized to request advances and direct the disposition of any advances
until written notice of the revocation of such authority is received by the
holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any account of any Borrower with the
holder, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Borrower regardless of the fact
that persons other than those authorized to request advances may have
authority to draw against such account. The holder shall have no obligation
to determine whether any person requesting an advance is or has been authorized
by any Borrower.
(c) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
EVENTS OF DEFAULT:
The occurrence of any of the following shall constitute an "Event of
Default" under this Note:
1. The failure to pay any principal, interest, fees or other charges when
due hereunder or under any contract, instrument or document executed in
connection with this Note.
2. The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner
and/or joint venturer referred to herein as a "Third Party Obligor") under
any provisions of the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time, or under any similar or
other law relating to bankruptcy, insolvency, reorganization or other relief
for debtors; the appointment of a receiver, trustee, custodian or liquidator
of or for any part of the assets or property of any Borrower or Third Party
Obligor; any Borrower or Third Party Obligor becomes insolvent, makes a
general assignment for the benefit of creditors or is generally not paying its
REVOLVING LINE OF CREDIT NOTE, PAGE 1
debts as they become due; or any attachment or like levy on any property of
any Borrower or Third Party Obligor.
3. The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.
4. Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred
any obligation for borrowed money, any purchase obligation, or any other
liability of any kind to any person or entity, including the holder.
5. Any financial statement provided by any Borrower or Third Party Obligor
to Bank proves false.
6. Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary
course of its business.
7. Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust or other document executed in connection
with or securing this Note.
MISCELLANEOUS:
(a) REMEDIES. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are
expressly waived by each Borrower, and the obligation, if any, of the holder
to extend any further credit hereunder shall immediately cease and terminate.
Each Borrower shall pay to the holder immediately upon demand the full amount
of all payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of
the holder's in-house counsel), incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any amounts which
become due to the holder under this Note, and the prosecution or defense of
any action in any way related to this Note, including without limitation, any
action for declaratory relief, and including any of the foregoing incurred in
connection with any bankruptcy proceeding relating to any Borrower.
(b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
(c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California, except to the extent
Bank has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Bank of any such rights and remedies as may be available
under Federal law.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
CALIFORNIA CULINARY ACADEMY, INC.
By:
------------------------------------
Tile:
----------------------------------
By:
------------------------------------
Title:
---------------------------------
REVOLVING LINE OF CREDIT NOTE, Page 2