EXHIBIT 10.15
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 12th day
of February, 2003, by and between ARK RESTAURANTS CORP., a New York corporation
(the "Company") and BANK LEUMI USA, a New York banking corporation (the "Bank").
A. Pursuant to a Revolving Credit Loan Agreement between the Bank and
the Company dated as of March 3, 1989, as amended by Agreement dated August 3,
1989, the Bank made available to the Company a revolving credit facility, a
standby letter of credit facility, and other financial accommodations
(collectively, the "Initial Facility").
B. On or about December 30, 1992, the Bank and the Company entered
into an Amended and Restated Credit Agreement, dated as of said date (the
"Restated Agreement"), wherein and whereby the Bank and the Company, among other
things, renewed and increased the Initial Facility. The Restated Agreement was
amended by an Agreement dated August 10, 1994.
C. On or about March 5, 1996, the Bank and the Company entered into a
Second Amended and Restated Credit Agreement, dated as of said date (the "Second
Restated Agreement") wherein and whereby the Bank and the Company, among other
things (i) renewed, increased and made amendments to the Initial Facility, and
(ii) the Bank provided the Company with a second loan facility and a second
letter of credit facility. The Second Restated Agreement was amended by
Agreements dated as of March 31, 1996, and as of December 24, 1996.
D. On or about May 28, 1998, the Bank and the Company entered into a
Third Amended and Restated Credit Agreement, dated said date (the "Third
Restated Agreement") wherein and whereby the Bank and the Company, among other
things, renewed and extended and made amendments to the loan facilities. The
Third Restated Agreement was amended by Agreements, dated as of April 27, 1999,
November 10, 1999 and December 13, 1999.
E. On or about December 27, 1999, the Bank and the Company entered
into a Fourth Amended and Restated Credit Agreement, dated said date, wherein
and whereby the Bank and the Company renewed, extended and made amendments to
the loan facilities and, among other things, provided that on the Conversion
Date (as therein defined) the revolving loans then outstanding would convert
into a Term Loan. The Fourth Amended and Restated Credit Agreement was amended
by Agreements, dated as of August 21, 2000, as of November 21, 2000, November 1,
2001, December 20, 2001, April 23, 2002, and as of January 22, 2002 (as so
amended, the "Fourth Restated Agreement").
F. The Bank and the Company have agreed (i) that the outstanding
principal amount of the extant Term Loan will be converted into a Revolving Loan
and that a revolving loan facility will be made available to the Borrower, (ii)
that the Letter of Credit facilities made available to the Company will be
renewed, and (iii) to certain other modifications of the existing arrangements.
The Bank and the Company have agreed to reflect these changes in this Fifth
Amended and Restated Credit Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEFINITIONS
Unless the context otherwise requires, for all purposes of this
Agreement and of the other Loan Documents (as hereinafter defined), all
capitalized terms used in this Agreement and in the other Loan Documents without
definition shall have the respective meanings provided therefor or referred to
below:
1.1 The term "Affiliate" means with reference to any Person, any
director, officer or employee of such Person, any Person in which such Person
has a direct or indirect controlling interest or by which
1
such person is directly or indirectly controlled or which is under direct or
indirect common control with such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with") when used with respect to any specified Person
shall mean the power to direct or cause the direction of the actions, management
or policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and whether or not
such power is actually exercised.
1.2 The term "Agreement" means this Fifth Amended and Restated
Credit Agreement, including all of the Schedules and Exhibits hereto, as the
same may be amended or otherwise modified from time to time, and the terms
"herein", "hereof", "hereunder" and like terms shall be taken as referring to
this Agreement in its entirety and shall not be limited to any particular
section or provision hereof.
1.3 The term "Bank Debt" means and includes all (i) Consolidated
Indebtedness for money borrowed, unless it meets the definition of Purchase
Money Indebtedness (ii) the amount of any letters of credit outstanding for the
account of the Company or any Subsidiary and (iii) the aggregate amount of all
equipment leases entered into by the Company or any Subsidiary where the rental
payments would be required to be capitalized under generally accepted accounting
principles, unless such lease meets the definition of Purchase Money
Indebtedness.
1.4 The term "Capital Expenditures" means assets purchased for
use in a Restaurant Related Business (other than assets purchased on a
non-recourse Purchase Money Indebtedness basis), including Indebtedness to the
Company of any newly organized Subsidiary (or any such Indebtedness guaranteed
by the Company) in connection with the development or acquisition of a
Restaurant Related Business.
1.5 The term "Capitalized Leases" means all capitalized leases
made by the Borrower or any Subsidiary as lessee.
1.6 The term "Commitment" means (i) $17,0000,000 through June 29,
2003, (ii) $11,500,000 during the period June 30, 2003 through September 29,
2003, and (iii) $8,500,000 from September 30, 2003 until the Maturity Date.
1.7 The term "Company's Collateral" means all of the issued and
outstanding shares of capital stock of each of the Subsidiaries, other than
shares of stock issued by one Subsidiary to another Subsidiary, and the
"security", as such term is defined in paragraph 3 of the Company's Security
Agreement, and each of the notes pledged to the Bank pursuant to Section 2.4.3.
1.8 The term "Consolidated Debt Service" means interest expense
and required amortization cost for the applicable period on all of the Company's
Consolidated Indebtedness.
1.9 The term "Consolidated Indebtedness" means the aggregate
consolidated Indebtedness of the Company and its consolidated Subsidiaries. It
is understood that in the calculation of Consolidated Indebtedness, if one or
more Letters of Credit, Guarantees or similar obligations relate to the same
underlying liability, only the amount of the underlying liability will be
included in Consolidated Indebtedness.
1.10 The term "Consolidated Operating Cash Flow" means
consolidated after-tax earnings of the Company computed in accordance with
generally accepted accounting principles for the period of calculation, plus
depreciation and interest expense for such period on all Consolidated
Indebtedness.
1.11 The term "Consolidated Net Worth" shall mean the excess of
total assets over total liabilities of the Company and its consolidated
Subsidiaries total assets and total liabilities each to be determined as to both
classification of items and amounts in accordance with generally accepted
accounting principles, and consistent with the standards applied in the
financial statements referred to in Section 4.9; provided there shall be
excluded from total assets (i) cash set apart and held in a sinking or other
analogous fund established for the purposes of redemption or other retirement of
capital stock, (ii) any revaluation or other write-up in book value of
2
assets subsequent to the date hereof, and (iii) amounts owed to the Company or
any Subsidiary from any of the officers, directors or employees thereof or any
of their Affiliates in excess of $300,000 at any one time outstanding.
1.12 The term "Consolidated Trade Indebtedness" means Current
Liabilities of the Company and its consolidated Subsidiaries for trade or other
obligations, not outstanding more than sixty (60) days, incurred in the ordinary
course of their respective businesses and not as a result of money borrowed.
1.13 The term "Current Assets", with respect to any entity, means
as of the date of determination thereof, (i) cash and cash items on hand or in
transit to or on deposit in any bank or trust company which has not suspended
business and which is located in the United States of America; (ii) stocks,
bonds and other securities or obligations which are readily marketable in the
United States of America, all taken on the basis of cost or market value
whichever note is lower; (iii) good and collectible accounts and receivables
(including drafts, acceptances and letters of credit), in good standing and
payable in currency of the United States of America and incurred or created less
than one hundred twenty (120) days prior to such date of determination; (iv)
inventories of merchandise and supplies located in the United States of America,
all taken on the basis of cost or market value, whichever is lower, and (v)
subject to the limitations and qualifications set forth in clauses (i) through
(iv) of this paragraph, such other assets located in the United States of
America which in accordance with generally accepted accounting principles would
be included on a balance sheet as current assets; all after write-offs and
write-downs and after deducting adequate reserves, in each case where a
write-off, write-down or reserve is proper in accordance with generally accepted
accounting principles.
1.14 The term "Current Liabilities", with respect to any entity,
includes, as of the date of determination thereof, all Indebtedness maturing on
demand or within one year from the date as of which such determination is made,
serial maturities, fixed sinking fund payments or other prepayments required to
be made with respect to any Indebtedness within one year after such date, and
all other items (including taxes accrued as estimated) which in accordance with
generally accepted accounting principles would be included on a balance sheet as
current liabilities.
1.15 The term "Disclosure Schedule" means the Disclosure
Schedule, dated as of even date herewith, executed by an officer of the Company
and delivered to the Bank setting forth certain information with respect to the
Company and the Subsidiaries, as same may be amended or modified from time to
time.
1.16 The phrase "Earnings Before Taxes" means for any period the
sum of (i) net income (or loss) of the Restaurant Related Business for such
period, as determined in accordance with GAAP, plus (ii) all charges against
income of such Restaurant Related Business for such period for federal, sate and
local taxes actually paid.
1.17 The term "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations and
published interpretations thereof.
1.18 The term "ERISA Affiliate" means any trade or business
(whether or not incorporated) which together with the Company would be treated
as a single employer under Section 4001 (b)(1) of ERISA.
1.19 The term "Events(s) of Default" shall have the meaning
provided therefor in Section 8.1.
1.20 The term "Indebtedness", as applied to a Person (an
"obligor") at any time, shall mean the following amounts and liabilities:
1.20.1. all amounts which, in accordance with generally
accepted accounting principles, are or should be treated as liabilities or other
obligations on the liabilities side of a balance sheet of such obligor prepared
in accordance with generally accepted accounting principles; provided, however,
that amounts accrued by such obligor in respect of operating lease deferred
credits shall not be deemed indebtedness; and
3
1.20.2. also, to the extent not so treated,
(i) letters of credit (whether revocable or irrevocable)
issued for the account of such obligor, but only to the extent drawn upon and
not repaid to the issuer;
(ii) liabilities of any other Person guaranteed directly or
indirectly, in any manner by such obligor;
(iii) liabilities of or to any Person in effect guaranteed,
directly or indirectly, by such obligor through any agreement, endorsement or
understanding, contingent or otherwise (except liabilities arising from
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business) of such obligor entered into for the purpose, or which is
used for the purpose, in whole or in part, of enabling the debtor to pay,
indemnify against or otherwise satisfy a liability or obligation or to assure
the obligee of the liability against loss, including without limitation (x)
agreements, commitments or understandings to repay amounts drawn down by
beneficiaries of letters of credit (whether revocable or irrevocable) whether or
not issued, directly or indirectly, for the account of such obligor (y)
statements or representations to the effect that such obligor will not permit
any other person to default in respect of any liability or will maintain minimum
net worth of another person, or (z) agreements, commitments or understandings
(A) to purchase securities or Indebtedness, or (B) to purchase or sell services,
products, raw materials or other property of any description, outside of the
ordinary course of its business, or (C) to supply funds to or in any other
manner make an investment in the debtor;
(iv) all liabilities secured (directly or indirectly) by a
lien or encumbrance upon any property or asset of such obligor regardless of
whether such obligor has assumed or become liable for the payment of such
liabilities; and
(v) amounts equal to any reserves or commitments which are,
or, under generally accepted accounting principles, should be, reflected on the
liabilities side of a balance sheet of such obligor in respect of contingent or
disputed claims, debts or other similar monetary obligations, either direct or
guaranteed, to the extent that the same are not included pursuant to (i), (ii)
or (iii) above; provided, however, that items includable as stockholders' equity
(or parts thereof), minority interests and reserves for deferred income taxes,
each as determined or set aside in accordance with generally accepted accounting
principles, shall not be deemed to be "Indebtedness". Obligations in respect of
leases shall be included as "Indebtedness" only to the extent that the same are
treated as liabilities or obligations by such obligor on its balance sheets
prepared in accordance with generally accepted accounting principles, except
that operating lease deferred credits shall not be included as "Indebtedness".
1.21 The term "Letter of Credit" shall have the meaning provided
therefor in Section 2.1.5 hereof.
1.22 "Letter of Credit Availability" means $500,000.
1.23 The term "Lien" means any charge, lien, mortgage, pledge,
security interest or other encumbrance of any nature whatsoever upon, of or in
property or other assets of a Person, whether absolute or conditional, voluntary
or involuntary, whether created pursuant to agreement, arising by force of
statute, by judicial proceedings or otherwise.
1.24 The term "Loan Documents" shall mean and include this
Agreement, the Revolving Note, the Guarantees, the Security Agreements and all
other documents executed by the Company or any Subsidiary pursuant hereto or
thereto, as same may be amended, modified, renewed or restated from time to
time.
1.25 The term "Maturity Date" shall mean such date as is the
second anniversary of the date of this Agreement.
4
1.26 The term "Multiemployer Plan" means a Plan described in
Section 4001(a)(3) of ERISA which covers employees of the Company or any ERISA
Affiliate.
1.27 The term "PBGC" means the Pension Benefit Guaranty
Corporation, or any successor thereto.
1.28 The term "Outstanding Loan Balance" shall have the meaning
defined in Section 2.1.1.
1.29 The term "Person" shall include an individual, a
partnership, a joint venture, a corporation (including, without limitation, the
Company or any Subsidiary), a limited liability company, a trust, an estate, an
unincorporated organization or association, a governmental agency and any other
business or legal entity.
1.30 The term "Plan" means any employee benefit plan as defined
in Section 3(2) of ERISA.
1.31 The term "Prohibited Transaction" means any transaction set
forth in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time.
1.32 The term "Purchase Money Indebtedness" means purchase money
Indebtedness incurred by a Subsidiary at the time of the acquisition of
Restaurant-Related Business assets, which Indebtedness is secured only by the
assets of the business being acquired and not guaranteed by the Company or any
Subsidiary of the Company and for which the instrument or instruments relating
to the Indebtedness does not provide recourse against the Company or any
Subsidiary of the Company other than the Subsidiary issuing the Indebtedness.
1.33 The term "Reference Rate" means the rate designated by the
Bank, and in effect from time to time, as its reference rate, adjusted when such
reference rate changes.
1.34 The term "Reduction Amount" shall have the meanings defined
in Section 7.3 and 7.13.
1.35 The term "Reportable Event" means any of the events set
forth in Section 4043 of ERISA.
1.36 The term "Restaurant-Related Business" means a restaurant,
catering, hospitality, food preparation or food service business.
1.37 The term "Revolving Note" shall have the meaning defined in
Section 2.1.4.
1.38 The terms "Revolving Loan" and "Revolving Loans" shall have
the meanings defined in Section 2.1.1.
1.39 The term "Security Agreement" and "Security Agreements" mean
each security agreement made by the Company or a Subsidiary, as debtor, in favor
of the Bank, as secured party, and all of the foregoing.
1.40 The term "Shareholders' Equity" means the excess of the
total assets of the Company and its consolidated Subsidiaries over their total
liabilities, in each case as such items would be classified on the consolidated
balance sheet of the Company and its consolidated Subsidiaries determined in
accordance with generally accepted accounting principles.
1.41 The term "Subsidiary" and "Subsidiaries" mean, respectively,
each of the
5
corporations listed on the Disclosure Schedule, and any other corporation or
Person, not less than a majority of the outstanding shares of the class or
classes of stock or other equity interest of which, having by the terms thereof
ordinary voting power to elect a majority of the directors or manage such
corporation or Person, are at any time owned by the Company or by a Subsidiary
of the Company, or by the Company and one or more Subsidiaries of the Company.
1.42 The terms "Subsidiary's Collateral" and "Subsidiaries
Collateral", respectively, shall mean all of the assets of a Subsidiary and all
of the assets of all of the Subsidiaries, except as is otherwise provided in the
Disclosure Schedule, including shares of stock in any other Subsidiary.
1.43 The term "Term Loan" means the term loan in the current
principal amount of $14,908,333.33, made by the Bank to the Borrower pursuant to
the Fourth Restated Agreement.
1.44 The term "Subordinated Indebtedness" shall have the meaning
defined in Section 7.3.
1.45 The term "United States of America", when used in a
geographical sense, means all of the States of the United States of America and
the District of Columbia and, so long as they continue as possessions or
territories of the United States, Puerto Rico and the Virgin Islands.
1.46 The term "Working Capital", with respect to any corporation,
means the excess, if any, of the Current Assets over the Current Liabilities of
such corporation.
2. THE LOAN
2.1 Amount and Terms of Credit.
2.1.1. Commitment of the Bank. Subject to and upon the terms
and conditions herein set forth, the Bank shall make available to the Company
loans (each a "Revolving Loan" and collectively the "Revolving Loans"). The
Revolving Loans made available to the Company pursuant to this facility are to
provide working capital for the Company's operations. The aggregate principal
amount of the Revolving Loans, at any time outstanding (the "Outstanding Loan
Balance"), shall not exceed the Commitment minus the Letter of Credit
Availability. Subject to the foregoing, the Company may borrow, repay and
reborrow the Revolving Loans to the limit of the Commitment minus the Letter of
Credit Availability.
2.1.2 Term Loan. Concurrently with the execution and
delivery of this Agreement, the Term Loan is being converted into a Revolving
Loan, and the note evidencing the Term Loan is being returned to the Borrower.
2.1.3. Notice of Borrowing. If and whenever the Company
desires to borrow under the Commitment it shall give the Bank prior written
notice, specifying the date of the proposed borrowing, and the amount to be
borrowed (which shall be not less than $250,000). Subject to all the terms and
conditions of this Agreement, the Bank shall make available to the Company in
immediately available funds at the Bank's office specified in Section 9.6, not
later than 11 a.m. current local time on the date specified in such notice, the
amount to be advanced hereunder. Thirty (30) days prior to the Maturity Date,
the Company shall no longer have the right to request borrowings under the
Commitment. The principal sum of the Revolving Loans outstanding on the Maturity
Date, shall be repaid by the Company to the Bank on the Maturity Date.
2.1.4 Revolving Note. The Revolving Loans shall be evidenced
by a promissory note substantially in the form of Exhibit A annexed, with the
blanks completed in conformity herewith (the "Revolving Note") duly executed by
the Company and payable to the order of the Bank and (i) be dated as of the date
of this Agreement; (ii) be in the principal amount of $17,000,000; (iii) bear
interest at a fluctuating rate per annum equal to one half of one (1/2%) percent
above the Reference Rate, in effect from time to time, until maturity
6
(whether by acceleration or otherwise) and thereafter at a fluctuating rate per
annum equal to three (3%) percent above the Reference Rate, in effect from time
to time; and (iv) be payable as to interest at such rate in arrears on the first
day of each month commencing with the first day of the month following the date
of this Agreement and thereafter on the first day of each month until (a) the
Maturity Date, or (b) maturity by acceleration, and both before and after
judgment, until the principal amount is paid in full. The Revolving Note shall
amend, restate and supersede the note evidencing the Term Loan.
2.1.5 Letters of Credit. Subject to and upon the terms and
conditions contained in this Agreement (including compliance with the conditions
precedent to the obligations of the Bank to make the initial Revolving Loan to
the Company and the Application (as hereinafter defined) and provided the
Company is not then in default of any of its obligations under this Agreement,
the Bank agrees on or before ninety (90) days before the Maturity Date to issue,
from time to time, one or more letters of credit (each a "Letter of Credit"),
and to renew currently outstanding letters of credit at the request and for the
account of the Company; provided, however, that after the issuance of such
Letter of Credit, the aggregate face amount of all Letters of Credit then
outstanding does not exceed the Letter of Credit Availability. The Letters of
Credit to be made available by the Bank to the Company shall be for the
Company's current operations (including but not limited to security pursuant to
real property leases). The maximum contingent liability of the Bank (including
therein any payments made by the Bank to the beneficiaries of such Letters of
Credit which have not been repaid to the Bank) under all Letters of Credit
issued for the account of the Company shall not exceed the Letter of Credit
Availability at any time. If and whenever the Company desires to obtain a Letter
of Credit from the Bank for its account, it shall apply to the Bank for such
Letter of Credit in accordance with the Bank's normal practices as in effect at
that time, and shall execute and deliver to the Bank such application and
agreement as the Bank normally requires in connection with such transactions (an
"Application") and such other documents as may be required thereunder. The Bank
shall maintain a record of the Letters of Credit and all transactions
thereunder, which records shall be conclusive evidence of the matters set forth
therein, absent manifest error. In the event of any inconsistency between any
provision of this Agreement and any provision of the Application, this Agreement
shall govern and prevail. As consideration to the Bank for the issuance of the
Letters of Credit, the Company shall pay a commission to the Bank in an amount
equal to 1 and 1/2% per annum of the maximum amount which may be drawn under
each Letter of Credit; provided, however, that the commission payable to the
Bank on the renewal of any Letter of Credit outstanding on the date of this
Agreement shall be at a rate equal to the rate then payable with respect to such
Letter of Credit. All commissions shall be paid by the Company upon issuance of
the Letter of Credit. The obligation of the Bank to issue or extend any Letter
of Credit for the account of the Company hereunder shall exist at any time only
if at that time all conditions under Section 5.2 of this Agreement to the Bank's
obligation to make a Revolving Loan to the Company would have been satisfied in
full if the Company had requested a Revolving Loan in such amount. Each Letter
of Credit issued or renewed under this Section 2.1.5 shall have an expiration
date no later than one year from the date it is issued or renewed, but not
beyond the Maturity Date, and shall be renewable only in the sole discretion of
the Bank.
2.2 Prepayments.
2.2.1 Voluntary Prepayments. The Company may prepay the
Revolving Loans, or any of them, in part or in full at any time, and from time
to time, without premium or penalty, upon prior written notice to the Bank,
provided that each such prepayment shall be in the amount of $100,000 or any
integral multiple thereof. In the absence of any such designation, the Bank may
apply such prepayment at its discretion.
2.2.2 Mandatory Repayments. If at any time the Outstanding
Loan Balance plus the face amount of all Letters of Credit then outstanding
shall exceed the Commitment, the Borrower shall repay the Revolving Loans in
such amount as shall be necessary to reduce the amount of the Outstanding Loan
Balance plus the Outstanding Letters of Credit to a sum which is not more than
the Commitment.
2.2.3 Repayments Generally. Any repayments, whether
mandatory or voluntary, shall be accompanied by the payment of any accrued
interest on the principal amount so prepaid.
7
2.2.4 Application of Life Insurance Proceeds. The Bank will
apply any proceeds received by the Bank upon the policy or policies of insurance
assigned to the Bank upon the life of Michael Weinstein, in its discretion, to
the payment or prepayment of the Revolving Loans, or other obligations, as the
case may be, of the Company or the Subsidiaries to the Bank.
2.3 General Provisions Concerning the Revolving Loans. Interest,
including additional interest, shall be computed for the actual number of days
elapsed on the basis of a 360-day year. All mandatory and voluntary payments of
principal and all payments of interest under the Revolving Note shall be made by
the Company directly to the Bank in immediately available funds. To effect the
payment of any amount due hereunder, the Bank may, but shall not be obligated
to, charge any deposit account maintained by the Company with the Bank. If any
payment of principal of or interest on the Revolving Note, the commitment fee,
agency fee or any other payment required to be made by the Company hereunder or
pursuant to any of the Loan Documents, becomes due and payable on a day on which
the Bank is closed (as required or permitted by law or otherwise), the due date
thereof shall be extended to the next succeeding business day on which the Bank
is open and, in the case of principal, interest thereon shall be payable at the
applicable rate during such extension. All notations and entries made by the
Bank, or the holder of the Revolving Note, on the grid attached thereto shall be
presumptive evidence of the correctness of such notations and entries, absent
manifest error. The failure of the Bank to make any notation or entry on any
such grid shall not, however, limit or otherwise affect the obligations of the
Company under this Agreement or under the Revolving Note.
2.4 Security.
2.4.1 Concurrently with the execution and delivery of the
Restated Agreement, the Company granted a valid and perfected first priority
security interest to the Bank in the Company's Collateral, pursuant to a
security agreement, dated as of even date therewith, which security agreement
was amended and restated concurrently with the execution and delivery of the
Second Restated Agreement and the Fourth Restated Agreement and is concurrently
being further amended and restated in the form annexed as Exhibit B (the
"Company's Security Agreement").
2.4.2 Each of the Subsidiaries identified on the Disclosure
Schedule heretofore granted a valid and perfected security interest to the Bank
in such of the Subsidiary's Collateral as was owned by it pursuant to a security
agreement, which security agreement, except with respect to the security
agreements executed by the Subsidiaries identified on Schedule C-2, concurrently
with the execution and delivery of this Agreement, is being amended and
confirmed, as provided in Exhibit C annexed. Each existing security agreement,
as concurrently amended and confirmed, and each security agreement hereinafter
executed by a Subsidiary is a "Subsidiary's Security Agreement" and collectively
they are "Subsidiary' Security Agreements". Each security interest granted by a
Subsidiary's Security Agreement is a first priority security interest, subject
only to the security interests heretofore granted by each such Subsidiary, as
set forth on Schedule 4.13 and Purchase Money Indebtedness.
2.4.3 The Subsidiaries identified as "payees" on Schedule
2.4.3 annexed have pledged and delivered to the Bank each of the notes listed
thereon as part of the Subsidiary's Collateral, each with an allonge sufficient
to permit negotiation thereof, has been delivered and assigned to the Bank. Any
notes hereinafter received by the Company or any Subsidiary by reason of a sale
of a Restaurant-Related Business, as provided in Section 7.13, shall be pledged
to the Bank as Company Collateral or Subsidiary Collateral, as herein provided,
within five (5) business days of its receipt by the Company. Notwithstanding
anything otherwise in this Agreement or any Security Agreement to the contrary,
the Bank only shall have recourse to the collateral pledged pursuant to this
Section 2.4.3, and exercise its rights as secured party with respect thereto,
only upon the occurrence Event of Default pursuant to Section 8.1.1 or 8.1.10 of
this Agreement; provided, however, that with respect to Section 8.1.10, the
Company is the subject of the proceeding.
2.5 Guarantees. The Subsidiaries identified on the Disclosure
Schedule heretofore guaranteed all of the obligations of the Company to the Bank
pursuant to an unlimited guarantee executed by each such active Subsidiary.
Concurrently with the execution and delivery of this Agreement, each such
Subsidiary
8
identified in Exhibit C-1 is reaffirming its Guaranty, by its execution of a
Confirmation of Guarantee, annexed as Exhibit C-1. Each existing Guarantee as
concurrently confirmed, or hereinafter executed by a Subsidiary, is individually
a "Guaranty" and collectively are the "Guarantees". Exhibit C-2 sets forth each
Subsidiary which heretofore executed a Guarantee, is no longer actively engaged
in business and has no assets.
3. USE OF PROCEEDS.
The Company represents, warrants and covenants that the proceeds
of the Loans will be used for working capital, and no other purposes.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to
make the Loans, the Company represents and warrants to the Bank that:
4.1 Corporate Existence and Power.
4.1.1. The Company and each Subsidiary is a corporation duly
incorporated, validly existing and, except for those Subsidiaries listed on
Exhibit C-2, is in good standing under the law of its state of incorporation,
and is duly qualified as a foreign corporation in each jurisdiction wherein the
character of the property owned or the nature of the business being transacted
by it makes such qualification necessary; and the Company has the corporate
power to execute and deliver this Agreement, the Revolving Note and all other
documents to be executed and delivered by the Company in connection herewith,
and each Subsidiary which is a party thereto has the corporate power to execute
and deliver, as is applicable (i) the Confirmation of Guarantees and Amendment
and Confirmation of Security Agreements and (ii) all other documents executed
and delivered by such Subsidiary in connection herewith and to incur and perform
their respective obligations hereunder and thereunder.
4.1.2 Except as is otherwise set forth on the Disclosure
Schedule, all of the issued and outstanding shares of capital stock of each of
the Subsidiaries are owned of record and beneficially by the Company. The
Disclosure Schedule accurately sets forth the class and number of shares issued
by each Subsidiary, all of which shares have been duly issued, fully paid and
non-assessable. There are no outstanding warrants, options or other rights to
acquire any shares in any of the Subsidiaries.
4.2 Authorization. The Company and each of the Subsidiaries has
all requisite legal right, power and authority to execute, deliver and perform
the terms and provisions of this Agreement, the Loan Documents executed by it,
and all other instruments and documents delivered by it pursuant hereto and
thereto. The Company and each of the Subsidiaries has taken or caused to be
taken all necessary action to authorize the execution, delivery and performance
of this Agreement, the Loan Documents executed by it, the Revolving Note, and
any other related agreements, instruments or documents delivered or to be
delivered by the Company or the Subsidiaries pursuant hereto and thereto. This
Agreement, the Loan Documents and all related agreements, instruments and
documents delivered or to be delivered pursuant hereto or thereto constitute and
will constitute legal, valid and binding obligations of the Company (and, to the
extent executed by them, the Subsidiaries) enforceable in accordance with their
respective terms.
4.3 No Conflicts. Neither the execution and delivery of this
Agreement, the Loan Documents or any of the instruments and documents delivered
or to be delivered pursuant hereto or thereto, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the provisions
hereof or thereof, will violate any law or regulation, or any order, writ or
decree of any court or governmental instrumentality, or will conflict with, or
result in the breach of, or constitute a default in any respect under, any
indenture, mortgage, deed of trust, agreement or other instrument to which the
Company or any of the Subsidiaries is a party, or by which any of them or any of
their respective properties may be bound or affected, or will result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property of any of them (except as contemplated hereunder or under the Loan
Documents) or will violate any provision of the certificate or articles of
incorporation
9
(as amended to date) or by-laws (as currently in effect) of the Company or any
of the Subsidiaries.
4.4 Compliance and Other Agreements.
4.4.1 Neither the Company nor any of the Subsidiaries is in
default under any indenture, mortgage, deed of trust, agreement or other
instrument to which it is a party, or by which it or any of its properties may
be bound or affected, except for such defaults which, individually or in the
aggregate, will not have a material and adverse effect on the business,
operations, property or assets or in the condition, financial or otherwise, of
the Company or any of the Subsidiaries.
4.4.2 Neither the Company nor any of the Subsidiaries is in
default with respect to any order, writ, injunction or decree of any court or of
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or authority, domestic or foreign, or in violation of any
law, statute or regulation, domestic or foreign, to which it is, or any of its
properties are subject, except for such defaults or violations which, in the
aggregate, will not have a material or adverse effect on the business,
operations, property or assets or on the condition, financial or otherwise, of
the Company or any of the Subsidiaries.
4.4.3 Neither the Company nor any of the Subsidiaries is a
party to or bound by, nor are any of their respective properties bound or
affected by, any agreement, deed, lease or other instrument, or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award, or any law, statute, rule or regulation, any of which
materially and adversely affects or in the future may (so far as the Company or
any Subsidiary should reasonably foresee) materially and adversely affect the
business, operations, prospects, properties or assets, or the condition,
financial or otherwise, of the Company or any of the Subsidiaries.
4.5 ERISA. Each of the Company and the Subsidiaries is in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan; no notice of intent to terminate a Plan has
been filed nor has any Plan been terminated; no circumstances exist which
constitute grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administrate, a Plan, nor has
the PBGC instituted any such proceedings; neither the Company, any Subsidiary,
nor any ERISA Affiliate has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; the Company, the Subsidiaries
and each of their respective ERISA Affiliates have met their minimum funding
requirements under ERISA with respect to all of their Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the Plan and
in accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of the Company, the Subsidiaries or any of
their respective ERISA Affiliates to PBGC or the Plan under Title IV of ERISA;
and neither the Company nor any of the Subsidiaries or their respective ERISA
Affiliates has incurred any liability to the PBGC under ERISA.
4.6 Investment Company. Neither the Company nor any of the
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
4.7 Approvals and Consents. All authorizations, consents,
registrations, exemptions, approvals and licenses (governmental or otherwise) or
the taking of any other action (including, without limitation, by the
shareholders of the Company or any of the Subsidiaries) which are required as a
condition to the validity or enforceability of this Agreement, the Loan
Documents, or any of the instruments or documents delivered or to be delivered
pursuant hereto or thereto have been effected or obtained and are in full force
and effect.
4.8 Regulation U, etc. Neither the Company nor any of the
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation U or G
of the Board of Governors of the Federal Reserve System). None of the proceeds
of the Loans will be used, directly or indirectly, in violation of Regulation U
for the purpose of purchasing or carrying any margin stock or for any other
purpose which might constitute the loan contemplated hereby a "purpose credit"
within the meaning of such Regulation U which would be in violation of
Regulation U.
10
4.9 Financial Condition.
4.9.1. The consolidated balance sheets of the Company and
its Subsidiaries as at April 30, 2002 and September 28, 2002 (prepared on a
review basis as at April 30, 2002 and audited for September 28, 2002) and the
consolidated statements of operations, shareholders' equity and cash flows of
the Company and its Subsidiaries for the fiscal periods then ended (prepared on
a review basis as at April 30, 2002, and audited for September 28, 2002), copies
of which have been furnished to the Bank, are complete and correct and fairly
present the consolidated financial condition and results of operations of the
Company and its Subsidiaries as at the dates and for the periods indicated. All
of such financial statements have been prepared in conformity with generally
accepted accounting principles and practices applied on a basis consistently
maintained throughout the periods involved.
4.9.2. There are no material liabilities, direct or
indirect, fixed or contingent, of the Company or the Subsidiaries as of the
dates of such financial statements which were not reflected therein or in the
notes thereto. Since the date of the most recent financial statements, there has
been no material adverse change in the condition, financial or otherwise, or the
business, operations, prospects, properties or assets of the Company and its
Subsidiaries on a consolidated basis or of the Company individually.
4.10 Taxes. The Company and each Subsidiary has filed or caused
to be filed, all tax returns required to be filed, and has paid all taxes
(including interest and penalties) shown to be due and payable on said returns
or any assessments made against it, and no tax liens have been filed and no
claims are being asserted with respect to such taxes which are not reflected in
the financial statements referred to in Section 4.9.1 hereof. The Company has no
knowledge of any proposed material tax assessment against or affecting it or any
of the Subsidiaries and is not otherwise obligated by any agreement, instrument
or otherwise to contribute to the payment of taxes owed by any other Person. All
material tax liabilities are adequately provided for or reserved against on the
books of the Company and/or the Subsidiaries, as is applicable, in accordance
with generally accepted accounting principles.
4.11 Litigation. Except as set forth on Schedule 4.11 annexed,
there are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary or the
property of any of them before any court, arbitrator or governmental department,
commission, board, bureau, agency or instrumentality which, (i) if not covered
by insurance seeks recovery of more than $200,000 or if covered by insurance
seeks recovery of an amount in excess of the applicable insurance limits, (ii)
either in any case or in the aggregate, if adversely determined, would have a
material adverse effect on the financial condition, business or operations of
the Company or any Subsidiary, or (iii) question the validity or enforceability
of this Agreement, the Fourth Restated Agreement, the Loan Documents, or any
action to be taken in connection with the transactions contemplated hereby or
thereby.
4.12 Chief Executive Office; Collateral Locations. The address of
the chief executive office of the Company is set forth in the Company's Security
Agreement. The only locations of any of the Company's Collateral, other than
such of the Company's Collateral as the Bank shall take possession of to perfect
its lien and security interest therein, and the chief executive office of the
Company, are those listed in the Company's Security Agreement. The Chief
Executive Office, principal place of business, and state of incorporation of
each of the Subsidiaries is set forth on the Disclosure Schedule and in such
Subsidiaries Security Agreement. The only other locations of any of the
Subsidiaries Collateral, other than their Chief Executive Office or principal
places of business, are listed in the Subsidiaries Security Agreements.
4.13 Title to Properties/Priority of Liens.
4.13.1. The Company and its Subsidiaries have good and
marketable title to, or valid leasehold interests in, all of the properties and
assets reflected on the most recent of the financial statements delivered to the
Bank pursuant to Section 4.9.1 or acquired by it after the date of such
financial statements and prior to the date hereof, except for those properties
and assets which have been disposed of since such date in the ordinary
11
course of business. All such properties and assets are owned or leased by the
Company or a Subsidiary free and clear of all mortgages, pledges, liens,
security interests, encumbrances or charges of any kind, except (i) such as are
disclosed on Schedule 4.13 hereto, (ii) such as are in favor of the Bank, and
(iii) such as are permitted under the provisions of Section 7.5 hereof.
4.13.2 The liens and security interest granted by the
Company to the Bank under the Company's Security Agreement constitute valid and
perfected first priority liens and security interest in the Company's
Collateral. Except as disclosed on Schedule 4.13 hereto, the liens and security
interests granted by each of the Subsidiaries to the Bank under the Subsidiaries
Security Agreements constitute valid and perfected first priority liens and
security interests in each Subsidiary's Collateral.
4.14 Insurance. All physical properties and assets of the Company
and each of the Subsidiaries are insured in accordance with the requirements of
Section 6.5 hereof.
4.15 Subsidiaries. Except for shares of stock in the
Subsidiaries, neither the Company nor any Subsidiaries owns shares of stock in,
or has any option, warrant or other right to purchase or subscribe to shares of
stock in or otherwise acquire an equity interest in any Person which upon
effecting such purchase would be a Subsidiary.
4.16 Disclosure. No certificate, statement, report or other
document furnished to the Bank by or on behalf of the Company or any of the
Subsidiaries in connection herewith or in connection with any transaction
contemplated hereby, or this Agreement, or any Loan Document, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein not misleading.
4.17 No Event of Default. After giving effect to the transactions
contemplated by this Agreement, the Loan Documents and the other instruments or
documents delivered in connection herewith and therewith, there does not exist
at the date hereof any condition, event or act which constitutes an Event of
Default hereunder or which, after notice or lapse of time, or both, would
constitute an Event of Default hereunder.
5. CONDITIONS.
5.1 Initial Revolving Loan. The obligation of the Bank to make
the initial Revolving Loan to the Company hereunder on or after the date hereof
is subject to the satisfaction, on or before the date of the making of such
Revolving Loan, of each of the following conditions precedent:
5.1.1 Revolving Note. The Revolving Note shall have been
duly completed, executed and delivered to the Bank.
5.1.2 Loan Documents. The Company and each of the
Subsidiaries shall have executed and delivered to the Bank the Loan Documents to
be executed by each of them, and all other agreements, instruments and documents
required or contemplated by this Agreement and the Loan Documents. The liens and
security interests created by the Company's Security Agreement shall have been
perfected and be first and prior to any other lien with respect to the Company's
Collateral, and the liens and security interests created by each of the
Subsidiaries Security Agreements shall have been perfected and be first and be
prior to any other lien with respect to such of the Subsidiaries Collateral as
is owned by the Subsidiaries executing and delivering such Subsidiaries Security
Agreement, except as set forth on Schedule 4.13 hereof.
5.1.3 Opinion of the Company's Counsel. The Bank shall have
received a written opinion of Shack Siegel Katz & Flaherty, P.C., counsel to the
Company and each of the Subsidiaries, dated as of even date herewith, and
covering such other matters incident to the transactions herein contemplated as
the Bank may reasonably request.
12
5.1.4 Supporting Documents - Initial Revolving Loan. The
Bank shall have received the following: (a) a certificate of the Secretary or an
Assistant Secretary of the Company and of each Subsidiary, dated as of even date
herewith, certifying as to (i) the By-laws of the Company and each such
Subsidiary as then in effect, or in the case of any Subsidiary a certification
by an officer thereof that its by-laws have not been amended or repealed since
the date of the last copy thereof provided by such Subsidiary to the Bank; (ii)
resolutions of the Board of Directors of the Company and each such Subsidiary
authorizing the execution, delivery and performance of this Agreement, the
Revolving Note, the amendment to and confirmation of the Company's Security
Agreement, the Subsidiaries Security Agreements, on any applicable amendments
thereto and confirmation thereof, the Guarantees, or as applicable confirmations
thereof, and the other Loan Documents and the borrowing(s) hereunder, to the
extent being executed by each such corporation; (iii) the full force and effect
of such resolutions on the date hereof; and (iv) the incumbency and signature of
each of the officers of the Company and each Subsidiary signing such Loan
Documents and all other closing papers hereunder; (b) a certified copy of the
Certificate or Articles of Incorporation of the Company and each Subsidiary, as
amended through the date hereof, or in the case of any Subsidiary a
certification by an officer that its Certificate of Articles of Incorporation
have not been amended since the date of the last certified copy thereof provided
by the Subsidiary to the Bank; (c) a long-form certificate of subsistence from
the Secretary of State of the State of New York in respect of the Company and
certificates of subsistence or good standing from the appropriate official in
the jurisdiction of incorporation of each Subsidiary; (d) the tax status reports
in respect of the Company and each Subsidiary from state tax authorities unless
the authorities in such state do not issue tax status reports; and (e) such
additional supporting documents as the Bank may reasonably request.
5.1.5 Insurance. The Bank shall have received one or more
certificates, in form and substance satisfactory to the Bank, evidencing the
existence of the insurance required by the provisions of Section 6.5 hereof.
5.1.6 Assignment of Life Insurance Policy. The Bank shall
have received confirmation satisfactory to it that the assignment of life
insurance in the aggregate amount of $3,000,000 on the life of Michael
Weinstein, made as condition to the effectiveness of the Second Restated
Agreement, remains in full force and effect.
5.1.7 Commitment Fee. The Borrower shall have paid to the
Bank a commitment fee in the sum of $67,500, and the first annual installment of
the agency fee provided for in Section 5.2.5.
5.2 Subsequent Revolving Loans. In addition to the conditions set
forth above with respect to the initial Revolving Loan, each of the following
conditions precedent shall be applicable thereto and to any subsequent Revolving
Loans hereunder.
5.2.1 No Default. After giving effect to each Revolving Loan
there shall exist no Event of Default and no condition, event or act which, with
notice or lapse of time, or both, would constitute such an Event of Default.
5.2.2 Representations. All representations and warranties
contained herein, or otherwise made in writing in connection herewith by the
Company or any Subsidiary, shall be true and correct, with the same force and
effect as if made on and as of the date of such Revolving Loan, and the
representations and warranties set forth in Section 4.9.1 shall also be true and
correct (and shall be deemed repeated as of the date of such Revolving Loan) in
respect of all of the Company's financial statements and all other information
furnished to the Bank as at any such date, or with respect to any period,
subsequent to September 28, 2002.
13
5.2.3 Officers' Certificate. At the time of the making of
the initial Revolving Loan and at the time of the making of such subsequent
Revolving Loan, the Company shall deliver to the Bank a certificate signed by
the chief executive and the chief financial officers of the Company, dated such
date, certifying and confirming that (i) no default exists as set forth in
Section 5.2.2, (ii) the representations and warranties referred to in Section
5.2.3 are true and correct and (iii) all conditions to the Bank's obligation to
make the Loan have been fully satisfied.
5.2.4 Form U-1. If required by the Bank at any time, the
Company shall have furnished to the Bank its duly executed Federal Reserve Form
U-1, in form and substance reasonably satisfactory to the Bank.
5.2.5 Agency Fee. Concurrently with the execution and
delivery of this Agreement, and on each annual anniversary thereof, until the
Maturity Date, the Borrower shall pay the Bank an agency fee of $25,000.
5.2.6 Proceedings. All corporate and legal proceedings and
all instruments and agreements in connection with the transactions contemplated
by this Agreement shall be satisfactory in form, scope and substance to the Bank
and its counsel, and the Bank and such counsel shall have received all
information and copies of all documents, including reports of corporate
proceedings, which the Bank or its counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by proper
corporate and governmental authorities.
5.2.7 No Adverse Change. There shall have been no material
adverse change in the operations, business, property or assets or in the
condition (financial or otherwise) of the Company or any of the Subsidiaries.
Each borrowing hereunder shall constitute a representation and
warranty by the Company to the Bank that all of the conditions specified in this
Section 5 have been satisfied as of that time.
6. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that from and after the date hereof
and so long as any Revolving Loan (including interest or any other obligation
incurred hereunder) is outstanding or the Commitment is in effect, unless the
Bank shall otherwise consent in a writing delivered to the Company, the Company
and each Subsidiary will:
6.1 Financial Statements. Furnish to the Bank:
6.1.1. as soon as practicable, but in any event not later
than forty-five (45) days after the end of each of the first three (3) fiscal
quarters in each fiscal year of the Company, consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at such date and
consolidated and consolidating statements of operations, shareholders' equity
and cash flows of the Company and its Subsidiaries for the period commencing at
the beginning of such fiscal year and ending on the last day of such quarter,
together with the comparative financial statements for the corresponding period
of the preceding fiscal year, in each case duly certified by an authorized
officer of the Company as being complete and correct and as having been prepared
in accordance with generally accepted accounting principles consistently
applied;
6.1.2. as soon as practicable, but in any event not later
than ninety (90) days after the end of each fiscal year, consolidated balance
sheets of the Company and its Subsidiaries as at such date and consolidated
statements of operations, shareholders' equity and cash flows of the Company and
its Subsidiaries for such fiscal year, together with the comparative financial
statements for the preceding fiscal year, in each case certified by independent
certified public accountants of recognized standing acceptable to the Bank;
14
6.1.3. together with the financial statements referred to in
Sections 6.1.1 and 6.1.2, a certificate of an authorized officer of the Company
(a) stating that no event has occurred and is continuing which constitutes an
Event of Default or which with notice and/or lapse of time would constitute an
Event of Default, or if an Event of Default or such event has occurred and is
continuing, stating the nature thereof and the action which the Company proposes
to take in connection therewith; and (b) setting forth the information
(including detailed calculations) required in order to establish whether the
Company was in compliance with the covenants set forth in Section 7 hereof
during and as of the end of the period covered by the financial statements then
being furnished;
6.1.4. together with the financial statements referred to in
Section 6.1.2, the related consolidating financial statements of the Company and
its Subsidiaries, which need not be certified; and
6.1.5. as soon as practicable, but in any event not later
than forty-five (45) days prior to the end of each fiscal year, a projection for
the next following fiscal year, in form and substance acceptable to the Bank.
6.1.6 As soon as practical, but in any event not later than
thirty (30) days after the end of each month, a statement signed by an executive
officer of the Company separately setting forth the Earnings Before Taxes for
each Subsidiary engaged in a Restaurant-Related Business.
6.1.7 As soon as practical, but in any event not later than
forty-five (45) days after the end of each fiscal quarter of the Company, a
certificate signed by an executive officer of the Company, certifying that the
Company is in compliance with each of its covenants in this Agreement, or if the
Company is not in compliance, specifying its breaches, and the particulars
thereof.
6.2 SEC Filings. So long as the Company is registered with the
Securities and Exchange Commission ("SEC") pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, the Company will furnish to the
Bank, promptly following the filing thereof with the SEC or any securities
exchange, copies of all regular and periodic reports, notices, registration
statements, proxy statements and other documents filed by the Company with the
SEC or any securities exchange.
6.3 Notice of Default; Litigation. Furnish to the Bank (i) as
soon as practicable and in any event within five (5) days after the occurrence
of each Event of Default or each event which, with notice and/or lapse of time,
would constitute an Event of Default, the statement of an authorized officer of
the Company setting forth details of such Event of Default or event, and the
action which the Company proposes to take in connection therewith; and (ii)
promptly after the occurrence thereof, notice of the commencement of any action
or proceeding of the type described in Section 4.11 hereof and notice of any
material development in any such action or proceeding.
6.4 Payment of Taxes. Pay and discharge all taxes, assessments
and governmental charges or levies imposed upon it or its income or profits, or
upon any of its properties, or the income, profits or property of any
Subsidiary, prior to the date on which penalties attach thereto, except those
which are being contested in good faith and by proper proceedings; provided,
however, that the Company or Subsidiary, as the case may be, shall have
established appropriate and proper reserves which are reflected on its books, to
the extent required by generally accepted accounting principles.
6.5 Maintenance of Insurance. Maintain insurance with responsible
and reputable insurers reasonably acceptable to the Bank in such amounts and
covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general locations in which
the Company and each Subsidiary operates. All such insurance on the Company's
Collateral and the Subsidiaries Collateral (unless prohibited by the terms of
any lease to which the Company or such Subsidiary is a party) shall name the
Bank as loss payee in an amount not less than the maximum obligation of the
Company to the Bank hereunder, and shall contain such other provisions as the
Bank may reasonably require to fully protect its interest in the Company's
Collateral and the Subsidiaries Collateral, provided, however, that the Company
or a Subsidiary may
15
be named as initial loss payee of such insurance in an aggregate amount not
exceeding $50,000 for each occurrence; provided, however, the aggregate amount
for which the Company and all Subsidiaries shall be named as the initial loss
payee(s) shall not exceed $100,000 in any fiscal year of the Company. In the
event that the Bank shall receive any such insurance proceeds, it shall remit
such proceeds to the Company or the Subsidiary which suffered the insured loss,
which proceeds shall be used either (i) to restore or replace the fixtures,
furniture, furnishings or equipment as were the subject of the insured loss or
(ii) for working capital purposes. Notwithstanding the foregoing, the Bank shall
have the right to apply any such amount received by it to the payment of the
Revolving Note, or other obligation of the Company or the Subsidiaries to the
Bank should an Event of Default occur, and to retain such amount on deposit if
an event, condition or act which with notice or the lapse of time, or both,
would constitute an Event of Default, has occurred and is continuing.
6.6 Access to Premises, Books and Records. At any reasonable time
during normal business hours and from time to time, upon reasonable prior
notice, permit the Bank or any of its agents or representatives to examine and
make copies of and abstracts from its records and books of account, visit its
properties and discuss its affairs, finances and accounts with any of its
officers, directors or independent accountants.
6.7 Books of Account. Keep proper records and books of account,
in which complete entries will be made in accordance with generally accepted
accounting principles consistently applied, reflecting all of its financial
transactions.
6.8 Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges, and those of each of
the Subsidiaries, in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary or desirable in view of its business and operations
or the ownership of its properties; provided, however, that the Company shall
not be required to maintain the existence, rights, franchises and privileges of
any Subsidiary which shall no longer conduct any operations or own any property;
and provided, further, that any Subsidiary may be merged with and into the
Company or another Subsidiary.
6.9 Maintenance of Properties. Maintain, preserve and keep all of
its properties and assets in reasonably good working order and condition,
ordinary wear and tear excepted, and make all necessary and proper renewals,
replacements, additions and improvements thereto.
6.10 ERISA. Maintain compliance in all material respects with the
applicable provisions of ERISA. The Company will deliver to the Bank, promptly
after the filing or receiving thereof, copies of all reports, including annual
reports and notices, which the Company or any Subsidiary files with or receives
from the PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within thirty (30) days after the Company knows or has
reason to know that any Reportable Event or Prohibited Transaction has occurred
with respect to any Plan or that the PBGC, the Company or any Subsidiary has
instituted or will institute proceedings under Title IV of ERISA to terminate
any Plan, the Company will deliver to the Bank a certificate of the chief
executive officer or chief financial officer of the Company setting forth the
details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action the Borrower and/or each affected Subsidiary proposes
to take with respect thereto.
6.11 Change in Business. The Company and each Subsidiary will not
make any material change in the character of its business (a "Restaurant Related
Business") as carried on at the date hereof.
6.12 Compliance. The Company and each Subsidiary will comply with
the requirements of all applicable laws, rules, regulations, orders of any
governmental authority, and all agreements to which it is a party, a
noncompliance with which laws, rules, regulations, orders and agreements would
materially adversely affect the business, operations, prospects or assets, or
the condition, financial or otherwise, of the Company.
16
6.13 Additional Notification to Bank. The Company shall promptly
notify the Bank of (i) each and every default by the Company or any Subsidiary
under any obligation for borrowed money which would permit the holder of such
obligation to accelerate its maturity, including the names and addresses of the
holders of such obligation and the amount thereof, in each case describing the
nature thereof and the action the Company, or the applicable Subsidiary, as the
case may be, proposes to take with respect thereto, and (ii) any change in the
chief executive office of the Company or location of any of the Company's
Collateral or any Subsidiaries Collateral from that listed in the Company's
Security Agreement or any of the Subsidiaries Security Agreements.
6.14 Additional Subsidiaries. In the event that the Company or
any Subsidiary shall cause a new Subsidiary to be formed, or acquire such shares
of any corporation, or such equity interest in any other Person, that it shall
become a Subsidiary, the Company shall give the Bank not less than fifteen (15)
days notice following the formation or acquisition of a new Subsidiary or of
such Subsidiary, which notice shall (i) specify the name and state of
incorporation or formation of such new Subsidiary, identify each of the
shareholders, or other equity owners therein, and state the number of shares or
other equity interest owned by each of them, (ii) state whether it is to be a
party to a lease or management agreement and identify the other party thereto,
(iii) give the address of any Restaurant-Related Business or other facility to
be operated or managed by such Subsidiary, and (iv) state the amount to be
invested by the Company in such Subsidiary or to be paid by it to acquire same.
Concurrently with the Company's creating or acquiring a new Subsidiary, such
Subsidiary shall execute and deliver a Guaranty to the Bank, and a Subsidiary's
Security Agreement pursuant to which such Subsidiary, as debtor, shall grant to
the Bank a first priority perfected security interest in its Subsidiary's
Collateral subject only to the lien of Purchase Money Indebtedness in respect
thereof. All of the shares in any such Subsidiary which have been issued to the
Company or to any Subsidiary, together with stock powers executed in blank by
the record owner of such shares, or if applicable a collateral assignment of any
other form of equity interest in a Subsidiary, sufficient to transfer such
shares or other interest upon delivery, shall be delivered by the Company to the
Bank promptly after the Company, or such other Subsidiary's receipt thereof,
which shares and stock powers or collateral assignment will thereupon become
part of the Company's Collateral or the other Subsidiary's Collateral.
6.15 Notification of Write-offs of Investments and Sales of
Assets. Within ten (10) days of (a) the write-off or write-down of the Company's
or any Subsidiary's investments in or advances to any Restaurant-Related
Businesses in excess of an aggregate of $1,000,000 in any fiscal year, or (b)
the sale of any assets of the Company or any Subsidiary in excess of $250,000
other than in the ordinary course of business, the Company shall deliver a
written notice to the Bank describing such event in reasonable detail.
6.16 Description of New Restaurant Arrangements. Upon entering
into a letter of intent or similar document setting forth the terms of the
arrangements for the development or acquisition of a new Restaurant-Related
Business, the Company will deliver to the Bank a copy thereof, will advise the
Bank of the material terms (including, without limitation, the amount of the
proposed investment, any indebtedness proposed to be incurred, and whether such
indebtedness is to be non-recourse or with recourse) and will thereafter keep
the Bank informed of any material developments in respect thereof. Within ten
(10) days after execution thereof, the Company will deliver to the Bank a copy
of any acquisition agreement or lease relating thereto.
6.17 Further Assurances. The Company and each Subsidiary will
duly execute and deliver, or will cause to be duly executed and delivered, such
further instruments and documents, including, without limitation, additional
security agreements, Uniform Commercial Code financing statements or amendments
or continuations thereof, and will do or use its best efforts to cause to be
done such further acts as may be necessary or proper in the Bank's reasonable
opinion to effectuate the provisions or purposes of this Agreement or the Loan
Documents.
7. NEGATIVE COVENANTS.
17
The Company covenants and agrees that from and after the date hereof
and so long as any Loan (including interest or any other obligations incurred
hereunder) is outstanding or any Commitment is in effect, unless the Bank shall
otherwise consent in writing delivered to the Company, the Company will not, and
will not permit or suffer any Subsidiary to:
7.1 Indebtedness. Create, incur, assume or suffer to exist, any
Indebtedness except:
7.1.1. Indebtedness listed in the financial statements
described in Section 4.9.1, but no renewals, extensions or refinancings thereof;
7.1.2. Purchase Money Indebtedness;
7.1.3. Indebtedness of any Subsidiary (other than Purchase
Money Indebtedness) for assets purchased for use in the Restaurant-Related
Business of such Subsidiary, which shall be deemed a capital expenditure and
shall be subject to the limitation of Section 7.8;
7.1.4. Indebtedness of the Company for assets purchased for
use in the Restaurant-Related Business conducted by the Company or any
Subsidiary, which, if such Indebtedness provides for non-recourse liability
limited to the asset purchased, shall constitute, for the purposes of the second
sentence of Section 7.1.9, Purchase Money Indebtedness, or which, if such
Indebtedness does not so provide, shall be deemed a capital expenditure and
shall be subject to the limitation of Section 7.8, and which Indebtedness may be
secured by the asset Purchased;
7.1.5. Indebtedness of any Subsidiary to the Company, which
Indebtedness is created for working capital purposes and not in connection with
the development or acquisition of a Restaurant-Related Business in an amount not
exceeding $250,000, and any such Indebtedness of such Subsidiary exceeding such
amount, which excess shall be deemed a capital expenditure subject to the
limitation set forth in Section 7.8. Indebtedness of the Company to a
Subsidiary, or of a Subsidiary to a Subsidiary, is permitted without limitation.
7.1.6. Indebtedness to the Company of any newly-organized
Subsidiary (or any such Indebtedness guaranteed by the Company) in connection
with the development or acquisition of a Restaurant-Related Business, which
shall be deemed a capital expenditure subject to the limitation set forth in
Section 7.8.
7.1.7. Consolidated Trade Indebtedness;
7.1.8. Indebtedness of the Company and the Subsidiaries in
respect of endorsements made in connection with the deposit of items for credit
or collection in the normal and ordinary course of business; and
7.1.9. Consolidated Indebtedness, which in the aggregate
does not exceed (i) $20,500,000 through June 29, 2003, (ii) $13,000,000 from
June 30, 2003 through September 29, 2003, and (iii) $12,000,000 thereafter and
until the Maturity Date. Consolidated Indebtedness as calculated for the
purposes of this Section 7.1.9 shall not include (i) Consolidated Trade
Indebtedness, (ii) Purchase Money Indebtedness, and (iii) outstanding Letters of
Credit against which there has not been a draw. This Section 7.1.9 is a
maintenance test as well as an incurrence test in that calculations will be made
on a quarterly basis to determine compliance. Nothing in this Section 7.1.9, or
elsewhere in this Agreement, shall permit the Company or any Subsidiary to
incur, assume or suffer to exist any Indebtedness except for Indebtedness which
is required in the normal course of the business of operating and acquiring
Restaurant-Related Businesses.
18
7.1.10 Subordinated Indebtedness up to $5,000,000 at any one
time outstanding.
7.2 Cash Flow. Maintain Consolidated Operating Cash Flow,
calculated as at the end of each fiscal quarter on the basis of the twelve (12)
full calendar months preceding such calculation, of less than the product of (i)
(a) 1.5 to 1 (except as provided in subparagraph (ii)) and (b) the Consolidated
Debt Service for such twelve (12) month period, and (ii) for the fiscal quarter
of the Company ending March 31, 2003 (a) 1.25 to 1 and (b) the Consolidated Debt
Service for such twelve (12) month period.
7.3 Consolidated Net Worth. Maintain Consolidated Net Worth which
as at the end of each fiscal quarter is (i) not less than $19,000,000 at any
time until September 30, 2003 and (ii) not less than $23,000,000 from September
30, 2003 until the Maturity Date. For the purposes of this covenant and the
covenant set forth in Section 7.4, liabilities of the Company used in the
calculation of Consolidated Net Worth shall not include principal and interest
on all indebtedness which has been subordinated to the Indebtedness of the
Company to the Bank on the terms set forth in the next sentence and pursuant to
documentation reasonably acceptable to the Bank ("Subordinated Indebtedness");
provided, however, that the first $500,000 of Subordinated Indebtedness shall be
paid to the Bank in reduction of the outstanding Loan Balance (a "Reduction
Amount"). The Company may pay interest on and repay the Subordinated
Indebtedness, in whole or in part; provided, however, that after giving effect
to such payment (i) the Company shall be in full compliance with each covenant
in the Restated Agreement, based upon a determination made immediately after
giving effect to such payment, and (ii) no Event of Default shall have occurred
and be continuing.
7.4 Ratio of Consolidated Indebtedness to Shareholders' Equity.
Maintain a ratio of total Consolidated Indebtedness to Shareholders' Equity of
more than (i) 1.5 to 1 as at the end of each fiscal quarter of the Company
through September 30, 2003 and (ii) 1.25 to 1 as at the end of each fiscal
quarter of the Company until the Maturity Date.
7.5 Liens. Directly or indirectly, create, incur, assume or
permit or suffer to exist any mortgage, lien, security interest, charge or
encumbrance on, or pledge or deposit of or conditional sale, lease or other
title retention agreement with respect to, any of its properties or assets,
whether now owned or hereafter acquired or created, or be bound by or subject to
any agreement or option to do so, provided that the foregoing restrictions shall
not apply to:
7.5.1. liens for taxes, assessments or governmental charges
or levies the payment of which is not yet due or is being contested in good
faith by appropriate proceedings;
7.5.2. liens incurred by the Company or the Subsidiaries or
deposits made by the Company or the Subsidiaries in the ordinary course of
business in connection with worker's compensation or unemployment insurance or
to secure the performance of tenders, statutory obligations, surety and appeal
bonds, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
7.5.3. good faith deposits (in amounts not greater than the
amounts normally required under leases of that type) under leases of real
property to which the Company or any of the Subsidiaries is a party;
7.5.4. zoning restrictions, easements, rights-of-way,
restrictions, exceptions, reservations, covenants and other similar title
exceptions or encumbrances affecting real property, provided the same are not
incurred in connection with the borrowing of money and do not in the aggregate
materially detract from the value of said properties or materially interfere
with their use in the ordinary course of business;
7.5.5. statutory or common law possessory liens for charges
incurred by the Company or the Subsidiaries in the ordinary course of business,
the payment of which is not yet due or is being contested in good faith by
appropriate steps promptly initiated and diligently conducted, if adequate
reserves or other appropriate provision, if any, as shall be required by
generally accepted accounting principles shall have been made therefor;
19
7.5.6. the mortgages, liens and encumbrances disclosed on
Schedule 4.13 hereto;
7.5.7. purchase money liens securing Indebtedness permitted
to be incurred under Section 7.1 hereof, including conditional sale or related
lease arrangements, created or executed concurrently with or immediately
following the time of acquisition of such property;
7.5.8. purchase money liens created by any Subsidiary
securing Purchase Money Indebtedness or the assumption by any Subsidiary of
existing purchase money liens in connection with the acquisition by such
Subsidiary of any additional Restaurant-Related Business acquired by any
Subsidiary, provided, however, that such liens extend only to the assets of the
Restaurant-Related Business acquired;
7.5.9. a lien arising from a judgment which does not at the
time constitute the basis for a default under the provisions of Section 8.1.8
hereof; and
7.5.10. liens created in connection with the issuance of (or
to further secure) Bank Debt.
7.6 Loans, Advances, Investments. Except (i) loans made to fund
the purchase of the Company's shares pursuant to its stock option plans, (ii)
loans to the Company's employees other than as provided for in (i), which loans
shall not exceed $1,000,000 in the aggregate, and (iii) other loans, with the
prior written consent of the Bank, which consent shall not be unreasonably
withheld or delayed:
7.6.1 make any loan, advance or capital contribution or
extend any credit to any Person (except to employees or to a Subsidiary in the
ordinary course of business, to the extent permitted in this Agreement), or make
any commitment to purchase or otherwise acquire any stock, bond, debenture, note
or other security or obligation of any Person if such loan, advance, capital
contribution, extension of credit or purchase or acquisition (an "Investment")
is to or in a Person engaged in other than a Restaurant-Related Business and
such Investment, together with all other outstanding Investments and the cost of
any mergers, consolidations or acquisitions of corporations engaged in other
than Restaurant-Related Businesses pursuant to Section 7.9 hereof, exceeds the
sum of $500,000; and
7.6.2 make any Investment in any Restaurant-Related
Businesses managed (but not owned by) the Company or a Subsidiary if such
Investment, together with all other such Investments made in any twelve (12)
month period, exceeds the sum of $1,000,000. For the purposes of this subsection
7.6.2, a Restaurant-Related Business which is "owned" by the Company shall
include a Restaurant-Related Business in which an Investment is permitted
pursuant to Section 7.6.3.
7.6.3 without the prior written consent of the Bank, make
any Investment in any Restaurant-Related Business, unless the Company, directly
or indirectly, shall own not less than 51% of both the equity and voting
interests in the Person owning and operating such Restaurant-Related Business.
7.7 Guarantees. Assume, guarantee, endorse or otherwise be or
become directly or contingently responsible or liable for the obligations of any
Person (including, but not limited to, an agreement to purchase any obligation,
stock, assets, goods or services or to supply or advance any funds, assets,
goods, or services other than in the ordinary course of business, or otherwise
to assure the creditors of any Person against loss) other than (i) guarantees by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business, (ii) guarantees by the Company
of the obligations of any Subsidiary, or by any Subsidiary of the obligations of
the Company or any other Subsidiary, (iii) guarantees in favor of the Bank, or
(iv) other guarantees by the Company or a Subsidiary not otherwise permitted
hereunder, provided that the amount thereof shall be deemed a capital
expenditure, subject to the limitation set forth in Section 7.8.
7.8 Capital Expenditures. Without the prior written consent of
the Bank, make, in the
20
aggregate (by the Company and any Subsidiary) in any fiscal year, any
expenditures for fixed or capital assets whether by purchase or capitalized
lease (including such loans, advances, investments, recourse purchase money
indebtedness and guarantees as are deemed capital expenditures under Sections
7.1.3, 7.1.4, 7.1.5 and 7.1.6 of this Agreement), in excess of $2,000,000.
7.9 Mergers, Consolidations, Acquisitions. Except with the prior
written consent of the Bank, which consent shall not be unreasonably withheld or
delayed, merge into or consolidate with or into any corporation (and, for
purposes of this Section 7.9, the acquisition by the Company or any Subsidiary,
by lease, purchase or otherwise, of all or substantially all of the assets of
any corporation shall be deemed a merger of such corporation with the Company or
such Subsidiary), if such corporation is not engaged in Restaurant-Related
Businesses, except that the Company or any Subsidiary may merge into,
consolidate with or into or acquire any corporation or corporations engaged in
other than Restaurant-Related Businesses without the prior consent of the Bank
if the aggregate cost thereof or purchase price therefor, together with the
amount of any Investments in other than Restaurant-Related Businesses, does not
exceed $500,000.
7.10 Sales of Assets. Sell, lease, assign, transfer or otherwise
dispose of all or substantially all of its assets; except any Subsidiary may
sell, lease, assign or otherwise dispose of substantially all of its assets.
7.11 Dividends, Redemptions. Declare or pay any dividend,
purchase, redeem or otherwise acquire for value any of its capital stock now or
hereafter outstanding or return any capital or make any distribution of assets
to stockholders, except that Subsidiaries may declare and pay dividends, return
capital and make distributions of assets to the Company and the Company may
declare and pay stock dividends. Notwithstanding the foregoing, the Company may
use up to $5,000,000 of the proceeds from life insurance policies which it owns
on the life of Michael Weinstein to redeem its shares in the event of his death;
provided, however, that the Company is in compliance with all of its covenants
in this Agreement, and the insurance policies and proceeds utilized for such
purpose have not been pledged or assigned to the Bank.
7.12 Transactions with Affiliates. Except as is otherwise
specifically permitted pursuant to this Agreement, enter into any transaction,
including, without limitation, the lease, purchase, sale or exchange of property
or the making of any loans or the entering into agreements for any payments with
respect to, or the making of any payment of, any fees, charges or other expenses
resulting from any allocation of general overhead, management fees or other
similar services, with any Affiliate of the Company or any of the Subsidiaries
except in the ordinary course of and pursuant to the reasonable requirements of
the business of the Company or such Subsidiary and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
7.13 Sale of Subsidiary's Shares or Assets. Sell any of the
capital stock of any Subsidiary, or all, or substantially all, of the assets of
any Subsidiary, unless the Bank shall be paid seventy (70%) percent of the cash
proceeds of such sale in reduction of the Revolving Loans. In the event that any
such sale is financed by notes of the purchaser, such notes shall be pledged to
the Bank as Company Collateral as provided in Section 2.4.3, and the cash
proceeds thereof shall be applied pursuant to this Section upon payment of such
notes. Upon receipt by the Bank of a payment from the Borrower pursuant to this
Section, the Commitment shall be reduced by an amount equal to fifty (50%)
percent of such payment (a "Reduction Amount").
8. DEFAULTS AND REMEDIES.
8.1 Events of Default. In the case of the occurrence of any of
the following events for any reason whatsoever, and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any governmental body or otherwise
(each herein sometimes called an "Event of Default"):
8.1.1. the Company shall fail to make any payment of
principal of or interest on the Revolving Note, or any commitment fee, facility
fee or deficiency fee within three (3) days after notice of a default in such
payment;
21
8.1.2. the Company or any Subsidiary shall default in the
performance or observance of any covenant or agreement contained in Section 7
hereof;
8.1.3. the Company or any Subsidiary shall default in the
performance of any other covenant or agreement contained in this Agreement which
shall remain unremedied for a period of ten (10) days after notice of the
occurrence thereof;
8.1.4. an event of default or default shall occur and be
continuing under any other Loan Document;
8.1.5. any representation or warranty made by or on behalf
of the Company or any Subsidiary in this Agreement, the Revolving Note, in any
other Loan Document or in any other certificate, agreement, instrument or
statement delivered to the Bank by or on behalf of the Company shall at any time
prove to have been incorrect when made in any material respect;
8.1.6. the Company or any Subsidiary shall default in the
payment of principal of or interest on any Indebtedness for borrowed money or
the deferred purchase price of property (including any such Indebtedness in the
nature of a lease) or shall default in the performance or observance of the
terms of any instrument pursuant to which such Indebtedness was created or is
secured, the effect of which default is to cause or permit any holder of any
such Indebtedness to cause the same to become due prior to its stated maturity
(and whether or not such default is waived by the holder thereof);
8.1.7. Michael Weinstein shall not at all times be active in
the management of the Company, other than by reason of his death or disability;
8.1.8. any judgment against the Company or any Subsidiary or
any attachment, levy or execution against any of its properties for an amount in
excess of $100,000 shall remain unpaid, or shall not be released, discharged,
dismissed, stayed or fully bonded for a period of thirty (30) days or more after
its entry, issue or levy, as the case may be;
8.1.9. the Company or any Subsidiary shall become insolvent
(however evidenced) or be unable, or admit in writing its inability, to pay its
debts as they mature; or
8.1.10. the Company or any Subsidiary shall make an
assignment for the benefit of creditors, or a trustee, receiver or liquidator
shall be appointed for the Company or any Subsidiary, or for any of its
property, or any proceedings by or against the Company or any Subsidiary under
any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt, receivership, liquidation or dissolution law or statute shall be commenced
and which, if not consented to by the Company or such Subsidiary, shall continue
undischarged for a period of thirty (30) days;
8.1.11 If the Company shall suspend or have suspended
(voluntarily or involuntarily and for whatever reason) the operation of a
material portion of the business conducted by the Company and the Subsidiaries;
or
8.1.12 If (i) a reportable event (within the meaning of
Section 4043(b) of ERISA) (whether or not waived) shall have occurred with
respect to a Plan which could, in the opinion of the Bank, have a material
adverse effect on the financial condition of the Company or of any Subsidiary,
(ii) the filing by the Company, any Subsidiary or an administrator of any Plan
of a notice of intent to terminate such Plan in a "distress termination" under
the provisions of Section 4041 of ERISA, (iii) the receipt of notice by the
Company, any Subsidiary or an administrator of a Plan that the PBGC has
instituted proceedings to terminate (or appoint a trustee to administer) such a
Plan, (iv) any other event or condition exists which might, in the opinion of
the Bank, constitute grounds under the provisions of Section 4042 of ERISA for
the termination of (or the appointment of a trustee to administer) any Plan by
the PBGC, (v) a Plan shall fail to maintain the minimum funding standard
required by Section 412 of the Internal Revenue Code for any plan year or a
waiver of such standard is sought or granted under the provisions of Section
412(d) of the Internal Revenue Code which could, in the opinion of the Bank,
have material adverse effect on the financial condition of the Company or of any
Subsidiary, (vi) the Company or any Subsidiary has incurred, or is likely to
incur, a liability under the provisions of Sections 4062, 4063, 4064 or 4201 of
ERISA which could, in the opinion of the
22
Bank, have a material adverse effect on the financial condition of the Company
or any Subsidiary; and in each case in clauses (i) through (vi) of this Section
8.1.12, such event or condition, together with all other such events or
conditions, if any, could subject the Company or any Subsidiary to any tax,
penalty or other liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition of the Company or
any Subsidiary.
Then, if any event described in Section 8.1.10 above shall have occurred the
then extant Note shall immediately become due and payable, and if any event
described in any other subsection of this Section 8.1 shall have occurred, and
at any time thereafter, if any such event shall then be continuing, the Bank may
take either or both of the following actions by notice to the Company: (i)
declare the principal of and accrued interest on the Revolving Note, and any
other notes or evidences of Indebtedness of the Company or any Subsidiary then
held by the Bank, to be due and payable, both as to principal and interest,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in either of the Notes
or in such other note or evidence of Indebtedness to the contrary
notwithstanding; and (ii) declare the Commitment terminated immediately. Upon
termination of the Commitment under this Section 8.1, any accrued fees shall be
and become forthwith due and payable to the Bank without further notice.
8.2 Suits for Enforcement. In case any one or more of such Events
of Default shall occur and be continuing, the Bank, or any other holder of the
Revolving Note may proceed, to the extent permitted by law, to protect and
enforce such holder's rights either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant, condition or
agreement contained in this Agreement or the Revolving Note or in aid of the
exercise of any power granted in this Agreement or the Revolving Note or proceed
to enforce the payment of the Revolving Note, or to enforce any other legal or
equitable right of the holder of the Revolving Note.
23
8.3 Remedies Cumulative. No right or remedy herein or in any
other agreement or instrument conferred upon the Bank or the holder of the
Revolving Note is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. Without limiting the generality of
the foregoing, if the Revolving Note or any of the other obligations of the
Company to the Bank shall not be paid when due, whether at the stated maturity
thereof, by acceleration or otherwise, the Bank shall not be required to resort
to any particular security, right or remedy or to proceed in any particular
order of priority and the Bank shall have the right at any time and from time to
time, in any manner and in any order, to enforce its security interests, liens,
rights and remedies, or any of them, as it deems appropriate in the
circumstances including, without limitation, all of the rights and remedies of a
secured party under the Uniform Commercial Code of the State of New York and
under the Uniform Commercial Code of any other jurisdiction in which any of the
Company's Collateral or any Subsidiary's Collateral may be situated and apply
the proceeds of such collateral to such obligations of the Company and the
Subsidiaries as it determines in its sole discretion.
9. MISCELLANEOUS.
9.1 No Waiver. No failure on the part of the Bank to exercise,
and no delay in exercising, any right hereunder or under any of the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise by the Bank of any right hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of the Bank hereunder and under the Loan Documents and under any other
present and future agreements between the Bank and the Company or any Subsidiary
are cumulative and not exclusive of any rights or remedies provided by law, or
under any of said Loan Documents or agreements, and all such rights and remedies
may be exercised successively or concurrently.
9.2 Costs and Expenses. The Company shall reimburse the Bank for
all costs and expenses incurred by it, and shall pay the reasonable fees and
disbursements of counsel to the Bank, in connection with the preparation of this
Agreement, the Revolving Note and all other Loan Documents. The Company shall
also pay the costs and expenses incurred by the Bank, including reasonable
attorneys' fees, in connection with the enforcement of the Bank's rights
hereunder and under the Revolving Note and the other Loan Documents. The Company
shall also pay any and all taxes (other than taxes on or measured by net income
of the holder of the Revolving Note) incurred or payable in connection with the
execution and delivery of the Revolving Note.
9.3 Amendments. No amendment, modification or waiver of any
provision of this Agreement, the Revolving Note nor consent to any departure by
the Company therefrom shall be effective unless the same shall be in writing and
signed by the Bank and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
24
9.4 Survival of Representations. All representations and
warranties made herein or in any other writing furnished to the Bank shall
survive the delivery of the Revolving Note.
9.5 Construction. This Agreement and the Revolving Note shall be
deemed to be contracts made under the laws of the State of New York and shall be
construed in accordance with the laws of said State applicable to contracts made
and to be performed entirely within such State.
9.6 Notices. All notices, approvals, consents, requests, demands
or other communications (collectively, "Communications") to or upon the
respective parties hereto shall be made in writing in one of the following ways
and shall be deemed to have been given, received and dated: If by hand,
immediately upon delivery; if by facsimile transmission, telex or telegram,
immediately upon receipt of answerback or confirmation; if by express mail or
any other overnight delivery service, one (1) day after dispatch; and if by
certified mail, return receipt requested, four (4) days after mailing. All
Communications are to be given to the following addresses (or to such other
address as any party may designate by Communication in accordance with this
Section):
If to the Bank: Bank Leumi USA
562 Fifth Avenue
New York, New York 10036
Attn: Ms. Iris Schechter
Vice President
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh LLP
555 Fifth Avenue
New York, New York 10017
Attn: Allen N. Ross, Esq.
If to the Company
or a Subsidiary: Ark Restaurants Corp.
85 Fifth Avenue
New York, New York 10003
Attn: Michael Weinstein, President
with a copy to: Shack Siegel Katz & Flaherty, P.C.
530 Fifth Avenue
New York, New York 10036
Attn: Donald Shack, Esq.
9.7 Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns and the terms hereof shall inure to
the benefit of the Bank and its successor and assigns, including a subsequent
holder of either of the Notes.
9.8 Further Assurances. The Company agrees to execute and deliver
such further documents and to do such other acts and things as the Bank may
reasonably request in order further to effect the purposes of this Agreement and
the due performance by the Company of its obligations hereunder.
9.9 Severability. The provisions of this Agreement are severable,
and if any provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall not in any
manner affect such provision in any other jurisdiction or any other provision of
this Agreement in any jurisdiction.
9.10 JURISDICTION; WAIVER OF JURY TRIAL. THE COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
25
LOCATED IN NEW YORK CITY OVER ANY ACTION OR PROCEEDING ARISING OUT OF ANY
DISPUTE BETWEEN THE COMPANY AND THE BANK WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY OF SUCH PROCESS TO THE
COMPANY AT THE ADDRESS SET FORTH ABOVE. IN THE EVENT OF LITIGATION BETWEEN THE
COMPANY AND THE BANK OVER ANY MATTER CONNECTED WITH THIS AGREEMENT OR RESULTING
FROM TRANSACTIONS HEREUNDER, THE RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED BY
THE COMPANY AND THE BANK.
9.11 Bank's Right of Set-Off. Upon the occurrence of an Event of
Default or of any condition, event or act which, with notice or lapse of time,
or both, would constitute such an Event of Default, the Bank is hereby
authorized at any time or from time to time, without notice to the Company, any
Subsidiary or any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (generally or
special) and any other Indebtedness or property at any time held or owing by the
Bank to or for the credit or the account of the Company or any Subsidiary,
whether or not related to this Agreement or any transaction or occurrence
hereunder, against and on account of any and all obligations and liabilities of
the Company or any Subsidiary to the Bank, including (without limitation) all
claims of any nature or description arising out of or connected with this
Agreement and/or the Revolving Note, irrespective of whether or not the Bank
shall have made any demand hereunder and although such obligations, liabilities
or claims, or any of them, shall be contingent or unmatured. In addition, as
security for any and all Indebtedness and other liabilities of the Company or
any Subsidiary to the Bank, whether direct or contingent, now existing or
hereafter arising, the Bank is hereby granted a lien and security interest in
all property of the Company or any Subsidiary held by the Bank, including,
without limitation, all property of every description, now or hereafter in the
possession or custody of or in transit to the Bank for any purpose, including
safekeeping, collection or pledge, for the account of the Company or any
Subsidiary, or as to which the Company or any Subsidiary may have any right or
power. The rights and/or remedies granted to the Bank under this Section 9.11
shall be in addition to, and not in substitution for, any rights of set-off and
banker's lien, to which the Bank may otherwise be entitled.
9.12 Use of Accounting Terms. Except as otherwise provided
herein, accounting terms used herein shall be construed, calculations hereunder
shall be made and financial data required hereunder shall be prepared, both as
to classification of items and as to amounts, in accordance with generally
accepted accounting principles.
9.13 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall constitute an original, and all of which
taken together shall constitute one and the same agreement.
9.14 Headings. Section headings are for convenience only and
shall not affect the interpretation or construction of this Agreement or either
of the Notes.
[Continued on page 35]
26
IN WITNESS WHEREOF, the Company and the Bank have duly executed this
Agreement as of the date first above written.
ARK RESTAURANTS CORP.
By: /s/ Robert Towers
--------------------------
Robert Towers,
Executive Vice President
BANK LEUMI USA
By: /s/ Iris Schechter
--------------------------
Iris Schechter,
Vice President
By: /s/ Eric A. Halpern
--------------------------
Eric A. Halpern
First Vice President
27
EXHIBIT A
NOTE
$17,000,000 As of February12, 2003
ARK RESTAURANTS CORP., a New York corporation (the "Company"),
hereby promises to pay to the order of BANK LEUMI USA (the "Bank"), at the
office of the Bank at 562 Fifth Avenue, New York, New York 10036, in lawful
money of the United States and in immediately available funds, the principal sum
of Seventeen Million ($17,000,000) Dollars or, if less, the aggregate principal
amount of all outstanding Revolving Loans as defined in and made by the Bank to
the Company pursuant the Loan Agreement (as hereinafter defined).
Each Loan made by the Bank under the Loan Agreement and each
payment thereof made by the Company, shall be endorsed by the Bank on the
schedule attached to this Note, provided, however, that the failure by the Bank
to endorse the schedule shall not affect the obligation of the Company to repay
the Loans.
The outstanding unpaid principal balance of this Note shall bear
interest at the rate per annum provided for in the Loan Agreement. Interest on
this Note shall be payable as set forth in the Loan Agreement and shall be
calculated on the basis of a year of 360 days, for the actual number of days
elapsed.
This note is the Revolving Note referred to in that certain Fifth
Amended and Restated Credit Agreement between the Company and the Bank, dated as
of even date herewith, as such agreement may be amended from time to time (the
"Loan Agreement"), and is subject to prepayment and its maturity is subject to
acceleration upon the terms contained in the Loan Agreement. Capitalized terms
used herein, and not defined in this Note, shall be defined as in the Loan
Agreement.
If any payment on this Note becomes due and payable on a day on
which the Bank's offices are closed (as required or permitted by applicable law
or otherwise), such payment shall be extended to the next succeeding day on
which those offices are open, and if the date for any payment of principal is so
extended, interest thereon shall be payable for the extended time.
Presentment for payment, demand, notice of dishonor, protest and
notice of protest are hereby waived.
ARK RESTAURANTS CORP.
By:
----------------------------
Robert Towers, Executive
Vice President and Treasurer
ARK RESTAURANTS CORP.
Schedule of Loans and Payments
Aggregate
Unpaid
Amount of Amount of Principal
Date Loan Loan Repaid Balance
- ---- --------- ----------- ---------
28
EXHIBIT C-1
CONFIRMATION OF GUARANTEES AND AMENDMENT AND
CONFIRMATION OF SECURITY AGREEMENTS
Each of the undersigned hereby confirms that:
1. It heretofore executed and delivered an Unlimited Guarantee
("Guarantee") in favor of Bank Leumi USA F/K/A Bank Leumi Trust Company of New
York (the "Bank"), wherein and whereby, among other things, it unconditionally
guaranteed to the Bank payment when due, whether by acceleration or otherwise of
any and all liabilities of Ark Restaurants Corp. (the "Company") to the Bank,
together with all interest thereon and all attorneys' fees, costs and expenses,
collection incurred by the Bank in enforcing any of such liabilities as therein
defined.
2. To secure its Guarantee, it executed and delivered a Security Agreement
as debtor, dated even date therewith, in favor of the Bank, as secured party.
Each reference in its Security Agreement to a Credit Agreement is hereby deemed
amended to refer to the Fifth Amended and Restated Credit Agreement, dated as of
even date herewith, by and between the Company and the Bank (the "Credit
Agreement") as same may be amended from time to time. All capitalized terms used
herein, and not otherwise defined herein, shall have the meanings defined in the
Credit Agreement.
3. Liabilities, as used in its Guarantee and Security Agreement, means and
includes, but is not limited to, the liabilities of the Company to the Bank for
(i) the Revolving Loans, (ii) Letters of Credit, and (iii) the Company's other
obligations to the Bank pursuant to the Credit Agreement and the Loan Documents.
3. The Bank has agreed to make the loans identified above, and otherwise
provide credit facilities to the Company in reliance, among other things, upon
the execution and delivery of this Confirmation of Guarantees and Amendment and
Confirmation of Security Agreements.
4. Its Guarantee and Security Agreement are in full force and effect, have
not been terminated, rescinded, amended or modified (except as the Security
Agreement is amended by paragraph 2 hereof), and the undersigned has no defenses
or offset with respect to its obligations to the Bank under its Guarantee or
Security Agreement.
Dated: New York, New York
February 12, 2003
Conis Realty Corp.
d/b/a Metropolitan Cafe
By:
----------------------------
Robert Towers
Executive Vice President
2
MEB On First Inc.
d/b/a Canyon Road Grill
By:
----------------------------
Robert Towers
Executive Vice President
MEB Emporium Corp.
d/b/a Ernie's
By:
----------------------------
Robert Towers
Executive Vice President
MEB Dining 18 Inc.
d/b/a America
By:
----------------------------
Robert Towers
Executive Vice President
Ark 47th Street Corp.
d/b/a B. Smith's
By:
----------------------------
Robert Towers
Executive Vice President
Ark Seventh Avenue South Corp.
d/b/a Woody's
By:
----------------------------
Robert Towers
Executive Vice President
Ark 474 Corp.
d/b/a Columbus Bakery
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Venus Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Ark Freemont, Inc.
By:
----------------------------
3
Robert Towers
Executive Vice President
Las Vegas Whiskey Bar, Inc.
By:
----------------------------
Robert Towers
Executive Vice President
Ark Rio Corp.
d/b/a El Rio Grande
By:
----------------------------
Robert Towers
Executive Vice President
Ark Operating Corp.
d/b/a El Rio Grande
By:
----------------------------
Robert Towers
Executive Vice President
Ark Union Station, Inc.
d/b/a America
By:
----------------------------
Robert Towers
Executive Vice President
Ark D.C. Kiosk, Inc.
d/b/a Center Cafe
By:
----------------------------
Robert Towers
Executive Vice President
Ark Sub-One Corp.
d/b/a Gonzalez y Gonzalez
By:
----------------------------
Robert Towers
Executive Vice President
Ark Potomac Corporation
d/b/a Sequoia
By:
----------------------------
Robert Towers
Executive Vice President
4
Ark of the Seaport, Inc.
d/b/a Sequoia
By:
----------------------------
Robert Towers
Executive Vice President
Ark Bryant Park Corp.
d/b/a Bryant Park Grill
By:
----------------------------
Robert Towers
Executive Vice President
Ark Fifth Avenue Corp.
(Corporate Headquarters)
By:
----------------------------
Robert Towers
Executive Vice President
Lutece, Inc.
By:
----------------------------
Robert Towers
Executive Vice President
Ark Islamorada Corp.
d/b/a Lorelei Restaurant &
Cabana Bar
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Steak House Corp.
d/b/a Gallagher's Steak House
By:
----------------------------
Robert Towers, Treasurer
Ark Las Vegas Restaurant Corp.
By:
----------------------------
Robert Towers, Treasurer
Las Vegas Festival Food Corp.
By:
----------------------------
Robert Towers, Treasurer
5
Las Vegas America Corp.
d/b/a America
By:
----------------------------
Robert Towers, Treasurer
Ark WFC Corp.
d/b/a The Grill Room
By:
----------------------------
Robert Towers
Executive Vice President
6
Sam & Emma's Deli, Inc.
d/b/a Stage Deli
By:
----------------------------
Robert Towers
Executive Vice President
Ark Fulton Street Corp.
d/b/a Red
By:
----------------------------
Robert Towers
Executive Vice President
Ark Southwest D.C. Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Downstairs Deli Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Mexico Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Asia Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Lutece Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Venice Deli Corp.
By:
----------------------------
Robert Towers
Executive Vice President
Las Vegas Venice Food Corp.
By:
----------------------------
7
Robert Towers
Executive Vice President
AFC Restaurant, Inc.
By:
----------------------------
Robert Towers, Secretary
Ark JMR Corp.
By:
----------------------------
Robert Towers, Treasurer
Aroc and Ark Corp.
By:
----------------------------
Robert Towers, Treasurer
8
EXHIBIT C-2
INACTIVE GUARANTORS
1. Ark Boston Corp.
2. Ark Southfield Corp.
3. Tyson's America Corp.
4. Al's Pizza, Inc.