SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of the fifth day of March, 1996 by and between ARK
RESTAURANTS CORP., a New York corporation (the "Company") and BANK LEUMI TRUST
COMPANY OF NEW YORK, 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 Credit Agreement"), wherein and whereby the Bank and the Company,
among other things, renewed and increased the Initial Facility. The Restated
Credit Agreement, and the Initial Facility, were further amended by Agreement
dated August 10, 1994.
C. The Bank and the Company have agreed (i) to the renewal and
increase of the Initial Facility and to certain amendments thereto, (ii) that
the Bank will provide the Company with a second credit facility and a second
letter of credit facility, to be used by the Company to finance the Las Vegas
Project (as herein defined), (iii) to the further collateralization of the
credit facilities provided by the Bank to the Company as referred to in (i) and
(ii) hereof, and (iv) to certain other modifications of the existing
arrangements. The Bank and the Company have agreed to reflect such changes in
this Second Amended and Restated Credit Agreement.
NOW, THEREFORE, IT IS AGREED:
I. 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.A. 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 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.B. The term "Agreement" means this Second 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.C. The term "Availability Date" means with respect to the WC
Revolving Loan the date of this Agreement, and with respect to the LV Loans the
date that the Company has satisfied the conditions precedent thereto as set
forth in Section 5.3 of this Agreement.
1.D. 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.E. The term "Commitment" and "Commitments", respectively, means
either the WC Commitment or LV Commitment (each as defined in Section 2.1.1),
and both the WC Commitment and the LV Commitment.
1.F. The term "Company's Collateral" means all of the issued and
outstanding shares of capital stock of each of the Subsidiaries and the
"security", as such term is defined in paragraph 3 of the Company's Security
Agreement.
1.G. The term "Consolidated Debt Service" means interest expense
and amortization cost for the applicable period on all of the Company's
Consolidated Indebtedness.
1.H. The term "Consolidated Indebtedness" means the aggregate
consolidated Indebtedness of the Company
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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.I. 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 the period and amortization cost
(including as part of such cost all Current Liabilities) for such period on all
Consolidated Indebtedness.
1.J. 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 that 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 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.K. 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.L. The term "Current Assets", with respect to any corporation,
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 is lower; (iii) good and collectible accounts and notes receivable
(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;
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(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.M. The term "Current Liabilities", with respect to any
corporation, 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.N. 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.
1.O. 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.P. 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.Q. The term "Event(s) of Default" shall have the meaning
provided therefor in Section 8.1.
1.R. The term "Guarantor" means each and "Guarantors" means all,
collectively, of the entities listed on the Disclosure Schedule annexed, and any
other Subsidiary of the Company now existing or hereafter formed which shall own
or hold any assets or conduct any operations.
1.S. The term "Guarantor's Collateral" means all assets of a
Guarantor.
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1.T. 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; and
1.20.2. also, to the extent not so treated,
1. 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;
2. liabilities of any other Person guaranteed directly or
indirectly, in any manner by such obligor;
3. 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;
4. 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
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5. 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.U. The term "Initial Facility" means the credit facility made
available by the Bank to the Company described in Recital A, as amended to date.
1.V. The term "Las Vegas Project" means the several restaurants
and other food service facilities to be constructed and operated by the Company
in the hotel and casino known as "New York New York" Las Vegas, Nevada.
1.W. 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.X. The terms "Loan and "Loans" mean, respectively, each WC
Revolving Loan or each LV Loan and all or more than one Loan or LV Loan.
1.Y. The term "Loan Documents" shall have the meaning provided
therefor in Section 4.1.1 hereof.
1.Z. The term "LV Loan" and "LV Loans" shall have the meanings
provided therefor in Section 2.1.1 hereof.
1.AA. The term "LV Note" shall have the meaning provided therefor
in Section 2.1.3 hereof.
1.AB. The term "LV Term Loan" shall have the meaning provided
therefor in Section 2.1.4 hereof.
1.AC. The term "LV Term Note" shall have the meaning provided
therefor in Section 2.1.4 hereof.
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1.AD. 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.AE. The terms "Note" and "Notes" shall have the meaning
provided therefor in Section 2.1.3 hereof.
1.AF. The term "PBGC" means the Pension Benefit Guaranty
Corporation, or any successor thereto.
1.AG. 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.AH. The term "Plan" means any employee benefit plan as defined
in Section 3(2) of ERISA.
1.AI. 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.AJ. 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.AK. 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.AL. The term "Reportable Event" means any of the events set
forth in Section 4043 of ERISA.
1.AM. The term "Restated Credit Agreement" means the Amended and
Restated Credit Agreement described in Recital B.
1.AN. The term "Restaurant-Related Business" means a restaurant,
catering, hospitality, food preparation or food service business.
1.AO. The term "Shareholders' Equity" means the excess of the
total assets of the Company and its
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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.AP. The term "Subsidiary" and "Subsidiaries" mean,
respectively, each of the 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 the 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.AQ. The term "Term Conversion Date" means that date which is
two (2) years from the applicable Availability Date.
1.AR. The terms "Term Loan" and "Term Loans" mean, respectively,
each of the WC Term Loan and LV Term Loan, and the WC Term Loan and LV Term
Loan, collectively.
1.AS. The terms "Term Note" and "Term Notes" mean, respectively,
each of the WC Term Note and LV Term Note, and the WC Term Note and LV Term
Note, collectively.
1.AT. 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.AU. The terms "WC Revolving Loan" and "WC Revolving Loans"
shall have the meanings provided therefor in Section 2.1.1 hereof.
1.AV. The term "WC Revolving Note shall have the meaning provided
therefor in Section 2.1.3 hereof.
1.AW. The term "WC Term Loan" shall have the meaning provided
therefor in Section 2.1.4 hereof.
1.AX. The term "WC Term Note" shall have the meaning provided
therefor in Section 2.1.4 hereof.
1.AY. 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.
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II. THE LOAN
2.A. Amount and Terms of Credit.
2.1.1. Commitment of the Bank. The Bank shall, subject to
and upon the terms and conditions herein set forth, make available to the
Company, from the Availability Date until the expiration of two (2) years from
the date thereof (the "Term Conversion Date") loans (each a "Loan" and
collectively the "Loans"). The Loans made available to the Company shall be
pursuant to two (2) separate facilities; one for revolving loans to provide
working capital for the Company's current operations (each loan a "WC Revolving
Loan", and collectively the "WC Revolving Loans"), and the other to provide
working capital for the Company's Las Vegas Project (each loan a "LV Loan, and
collectively the "LV Loans"). The aggregate principal amount of the WC Revolving
Loans at any time shall not exceed $5,000,000 (the "WC Commitment"). Subject to
the foregoing, until the Term Conversion Date, the Company may borrow, repay and
reborrow the WC Revolving Loans to the limit of the WC Commitment. The aggregate
principal amount of the LV Loans at any time shall not exceed the lesser of (a)
$7,000,000 or (b) $7,000,000 minus the aggregate principal amount of all LV
Loans which have been repaid (the "LV Commitment"). Subject to the foregoing,
until the Term Conversion Date, the Company may borrow LV Loans to the limit of
the LV Commitment, but may not reborrow any LV Loans which have been repaid.
2.1.2. Notice of Borrowing. If and whenever the Company
desires to borrow under the WC Commitment or the LV Commitment, it shall give
the Bank at least three (3) full business days prior written or telegraphic
notice, specifying which Commitment the draw is against, 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 against
delivery to the Bank, at such office, of such documents and papers as are
provided for herein.
2.1.3. Notes. The Loans shall be evidenced by two (2)
promissory notes, one evidencing the WC Revolving Loans and the other evidencing
the LV Loans, substantially in the forms of Exhibits A-1 and A-2 annexed, with
the blanks completed in conformity herewith (the "Notes") duly executed by the
Company and payable to the order of the Bank and (i) be dated as of the
applicable Availability Date; (ii) be in the principal amount of $5,000,000 or
$7,000,000,
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as is applicable; (iii) bear interest at a fluctuating rate per annum equal to
1% above the Reference Rate, in effect from time to time, until maturity
(whether by acceleration or otherwise) and thereafter (if not converted into a
Term Loan) at a fluctuating rate per annum equal to 3% above the Reference Rate,
in effect from time to time; (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 applicable Availability Date and thereafter on the first day
of each month until maturity, (whether by acceleration or otherwise), and after
maturity upon demand, and both before and after judgment, until the principal
amount is paid in full; and (v) be convertible into a Term Note on the
applicable Term Conversion Date as provided in Section 2.1.4.
2.1.4. Conversion to Term Loans. On and after the applicable
Term Conversion Date, the Company shall no longer have the right to request
borrowings under the WC Commitment or the LV Commitment. The principal sum of
the WC Revolving Loans outstanding on the applicable Term Conversion Date (such
amount, a "Term Loan Amount") shall be converted to a term loan made by the Bank
to the Company (the "WC Term Loan"), and shall be repaid by the Company to the
Bank in twenty-four (24) consecutive equal monthly installments. The principal
sum of the LV Loans outstanding on the applicable Term Conversion Date (such
amount, a "Term Loan Amount") shall be converted to a term loan made by the Bank
to the Company (the "LV Term Loan"), and shall be repaid by the Company to the
Bank in twenty-four (24) consecutive monthly installments, (i) the last
installment to be in the principal amount of $1,000,000, and (ii) the other
twenty-three (23) installments to each be in a principal amount equal to (a) the
aggregate of the outstanding principal amount of all of the LV Loans on the
applicable Term Conversion Date, (b) minus $1,000,000, (c) divided by
twenty-three (23). The first installment due under each Term Loan shall be due
on the first day of the month immediately subsequent to the applicable Term
Conversion Date, and each subsequent installment shall be due on the first day
of each month thereafter. The maturity date of each Term Loan is twenty-four
(24) months after the applicable Term Conversion Date. On the applicable Term
Conversion Date, the Bank shall deliver the WC Revolving Note and the LV Note to
the Company upon delivery to the Bank by the Company, at the Bank's office
specified in Section 9.6 respectively, a note evidencing the WC Term Loan (the
"WC Term Note") substantially in the form of Exhibit B-1 annexed, and a note
evidencing the LV Term Loan (the "LV Term Note") substantially in the form of
Exhibit B-2 annexed, each completed in conformity herewith, and with such other
documents and papers as are provided for herein. Each Term Note shall be duly
executed by the Company and payable to the order of the Bank and (i) be dated
the applicable Term Conversion Date; (ii) be for the applicable
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Term Loan Amount; (iii) bear interest at a fluctuating rate per annum equal to 1
1/2% above the Reference Rate, in effect from time to time, until maturity
(whether by acceleration or otherwise), and thereafter at a fluctuating rate per
annum equal to 3% above the Reference Rate, in effect from time to time; (iv) be
payable as to interest at such rate in arrears on the first day of each month,
commencing on the first day of the first monthly immediately subsequent to the
applicable Term Conversion Date and thereafter on the first date of every month
thereafter until maturity (whether by acceleration or otherwise), and after
maturity upon demand, and both before and after judgment, until the principal
amount is paid in full; and (v) be payable as to principal in twenty-four (24)
consecutive monthly installments, commencing on the first day of the first month
immediately subsequent to the applicable Term Conversion Date, and on the first
day of each and every month thereafter, unless accelerated, until twenty four
(24) months after the applicable Term Conversion Date, when the entire then
unpaid balance and interest accrued thereon shall be due and payable.
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 Loan to the Company
on or after the date hereof) 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 to issue, from time to time, one or more letters of
credit and/or renewals of currently outstanding letters of credit, at the
request and for the account of the Company. The letters of credit to be made
available by the Bank to the Company shall be pursuant to two (2) separate
facilities; one for the Company's current operations (each such letter of credit
a "CLC"), and the other to facilitate the construction and development of the
Las Vegas Project (each such letter of credit a "LVLC"). 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 (i) all CLC's issued for the account of the Company shall not at any time
exceed the sum of $2,000,000, and (ii) all LVLC's issued for the account of the
Company shall not at any time exceed the sum of $2,000,000. 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
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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 (i) 2% per annum of the
maximum amount which may be drawn under each letter of credit which is in the
face amount of less than $50,000 and (ii) 1 and 1/2% per annum of the maximum
amount which may be drawn under each letter of credit which is in the face
amount of $50,000 or more; 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 (i)
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 Loan to the Company would have been satisfied in
full if the Company had requested a Loan in such amount, and (ii) with respect
to any LVLC shall exist only if at the time all conditions under Section 5.3 of
this Agreement to the Bank's obligation to make a LV Loan, would have been
satisfied in full if the Company would have requested an LV Loan in such amount.
The obligation of the Bank to issue or extend any (i) CLC's hereunder for the
account of the Company shall terminate twenty four (24) months after the date of
the Agreement, and (ii) LVLC's hereunder for the account of the Company shall
terminate twelve (12) months after the Availability Date for LV Loans, except
the Company shall have the right, on notice to the Bank given not less than
sixty (60) days prior to such date, to extend the term of its facility for
LVLC's for six (6) months. Each letter of credit issued under this Section 2.1.5
shall have an expiration date no later than the earlier of (i) one year from the
date of issuance thereof, or (ii) the expiration date of the applicable letter
of credit facility, and shall be renewable only in the sole discretion of the
Bank.
2.B. Facility Fees. From the date hereof to and including
the applicable Term Conversion Date, the Company will pay to the Bank a facility
fee (a "Facility Fee") of one-half of one percent (1/2 of 1%) per annum on the
difference between the average daily aggregate balance of the WC Loans
outstanding and the W.C. Commitment. Such Facility Fee, if any, will be due and
payable on the first day of each calendar quarter, commencing April 1, 1996.
From the Availability Date of the LC Loans and for twelve (12) months
thereafter, the Company will pay to the Bank a facility fee (a "Facility Fee")
of one-half of one percent (1/2 of 1%) per annum on the
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difference between the average daily aggregate balance of the LV Loans
outstanding and the LV Commitment. Such Facility Fee, if any, will be due and
payable on the first day of each calendar quarter, commencing with the first day
of the first quarter after the Availability Date for the LC Loans.
2.C. Prepayments.
2.3.1. Voluntary Prepayments. The Company may prepay the
Loans and the Term Loans, or any of them, in part or in full at any time, and
from time to time, without premium or penalty, upon not less than three (3)
business days' prior written notice to the Bank, provided that each such
prepayment shall be in the amount of $100,000 or any integral multiple thereof.
The Company may designate which Loan or Term Loan any prepayment is to be
applied against. In the absence of any such designation, the Bank may apply such
prepayment at its discretion. Each prepayment of a Term Loan shall be applied,
to the extent thereof, first to accrued interest and then to installments of
principal in the inverse order of maturity, and any such prepayments shall not
affect the Company's obligation to continue the consecutive principal
installments of any outstanding Term Note.
2.3.2. Prepayments Generally. Any prepayments, whether
mandatory or voluntary, shall be accompanied by the payment of any accrued
interest on the principal amount so prepaid.
2.3.3. 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 any of the Loans, either of the Term Loans, or
other obligations, as the case may be, of the Company or the Guarantors to the
Bank.
2.D. General Provisions Concerning Loans. Interest,
including additional interest, and the Facility Fee shall be computed for the
actual number of days elapsed on the basis of a 360-day year. All mandatory and
voluntary payments or prepayments of principal and all payments of a Facility
Fee and interest under any of the Notes or Term Notes 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 any of the Notes or Term Notes or the
Facility Fee 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 full business day and, in the case of
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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 a 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
such Note.
2.E. Security For the Loans and the Term Loans.
2.5.1 Concurrently with the execution and delivery of the
Restated Credit 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
is concurrently being amended and restated in the form annexed as Exhibit C-1
(the "Company's Security Agreement").
2.5.2 Each of the Guarantors identified on the Disclosure
Schedule as a pre-existing Subsidiary heretofore granted a valid and perfected
security interest to the Bank in such of the Guarantor's Collateral as was owned
by it pursuant to a security agreement, which security agreement, concurrently
with the execution and delivery of this Agreement, is being amended and
confirmed, as provided in Exhibit C-2 annexed. Concurrently with the execution
and delivery of this Agreement, each of the Guarantors identified on the
Disclosure Schedule as a new Subsidiary shall grant a valid and perfected
security interest in such of the Guarantor's Collateral as is owned by it
pursuant to a security agreement, dated as of the date hereof, in the form
annexed as Exhibit C-3. Each existing security agreement, as concurrently
amended and confirmed, and each security agreement concurrently executed and
delivered is a "Guarantor's Security Agreement" and collectively they are
"Guarantors' Security Agreements". Each security interest granted by a
Guarantor's Security Agreement is a first priority security interest, subject
only to the security interests heretofore granted by each such Guarantor, as set
forth on Schedule 4.13.
2.F. Guarantees. The Guarantors identified on the Disclosure
Schedule as pre-existing Subsidiaries heretofore guaranteed all of the
obligations of the Company to the Bank pursuant to an unlimited guarantee
executed by each such Guarantor. Concurrently with the execution and
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delivery of this Agreement, each of such Guarantors is reaffirming its Guaranty,
by its execution of a Confirmation of Guarantee, annexed as Exhibit C-2.
Concurrently with the execution and delivery of this Agreement, each of the
Guarantors identified on the Disclosure Schedule as a new Subsidiary shall
guarantee all of the obligations of the Company to the Bank, pursuant to an
unlimited guarantee dated as of even date herewith, and in the form annexed as
Exhibit D-1. Each Guarantee, heretofore or concurrently executed and delivered,
is individually a "Guaranty" and collectively are the "Guarantees".
III. USE OF PROCEEDS.
3.1 WC Revolving Loans and WC Term Loan. The Company represents,
warrants and covenants that the proceeds of the WC Revolving Loans and the WC
Term Loan will be used for the following purposes and no others: to finance the
development and construction of new restaurants, other than the Las Vegas
Project, and for working capital.
3.2 LV Loans and LV Term Loan. The Company represents, warrants
and covenants that the proceeds of the LV Loans the LV Term Loan will be used
for the following purposes and no others: to finance the development and
construction of the Las Vegas Project, and for its working capital.
IV. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to make
the Loans and the Term Loans, the Company represents and warrants to the Bank
that:
4.A. Corporate Existence and Power.
4.1.1. The Company and each Guarantor is a corporation duly
incorporated, validly existing and 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
Notes, each of the Term Notes, the Company's Security Agreement and all other
documents to be executed and delivered by the Company in connection herewith,
and each Subsidiary has the corporate power to execute and deliver a Guarantee,
as is applicable (i) the Confirmation of Guarantees and Amendment and
Confirmation of Security Agreements or (ii) and a Guarantor's Security Agreement
and all other documents executed and delivered by such Subsidiary in connection
herewith (collectively, the "Loan Documents") 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
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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
Guarantors.
4.B. Authorization. The Company and each of the Guarantors 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 Guarantors 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 Notes, the Term Notes and
any other related agreements, instruments or documents delivered or to be
delivered by the Company or the Guarantors 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 Guarantors) enforceable in accordance with their
respective terms.
4.C. 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 Guarantors 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 (as amended to date) or by-laws (as currently in effect) of the
Company or any of the Guarantors.
4.D. Compliance and Other Agreements.
4.4.1 Neither the Company nor any of the Guarantors is in
default under any indenture, mortgage, deed of trust, agreement or other
instrument to which it is a
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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
Guarantors.
4.4.2 Neither the Company nor any of the Guarantors 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 Guarantors.
4.4.3 Neither the Company nor any of the Guarantors 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 Guarantor 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 Guarantors.
4.E. ERISA. Each of the Company and the Guarantors 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 Guarantor,
nor any ERISA Affiliate has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; the Company, the Guarantors 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
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the regulations thereunder for calculating the potential liability of the
Company, the Guarantors 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
Guarantors or their respective ERISA Affiliates has incurred any liability to
the PBGC under ERISA.
4.F. Investment Company. Neither the Company nor any of the
Guarantors is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
4.G. 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 Guarantors) 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 (except that the Bank waives the requirement, if any, for consent of
any landlord of premises leased to the Company or Subsidiary, to the pledge of
the Company's Collateral or any Guarantor's Collateral hereunder).
4.H. Regulation U, etc. Neither the Company nor any of the
Guarantors 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 or the Term 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.
4.I. Financial Condition.
4.9.1. The audited consolidated balance sheets of the
Company and its Subsidiaries as at September 30, 1995 and the audited
consolidated statements of operations, shareholders' equity and cash flows of
the Company and its Subsidiaries for the fiscal year then ended, and the
unaudited consolidated balance sheets and statements of operations,
shareholders' equity and cash flows of the Company and its Subsidiaries as at
and for the 13 weeks ended December 30, 1995, copies of which have been
furnished to the Bank, are complete and correct and fairly present (subject, in
the case of such unaudited statements, to year-end audit adjustments) the
consolidated financial condition and results of operations
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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.J. 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.K. 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 Restated Credit Agreement, the Loan Documents, or any
action to be taken in connection with the transactions contemplated hereby or
thereby.
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4.L. 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 and principal place of business of each of the Guarantors is
set forth on the Disclosure Schedule and in such Guarantor's Security Agreement.
The only other locations of any of the Guarantors' Collateral, other than their
Chief Executive Office or principal places of business, are listed in the
Guarantors' Security Agreements.
4.M. 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 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 Upon the Bank taking possession of the certificates
evidencing all of the issued and outstanding shares of capital stock owned by
the Company in each of the Subsidiaries identified on the Disclosure Schedule,
the liens and security interest granted by the Company to the Bank under the
Company's Security Agreement will constitute valid and perfected first priority
liens and security interest in the Company's Collateral. Except as disclosed on
Schedule 4.13 hereto, upon the filing of the Uniform Commercial Code financing
statements with the appropriate authorities with respect to the Guarantor's
identified on the Disclosure Schedule, the liens and security interests granted
by each of the Guarantors to the Bank under the Guarantors' Security Agreements
will constitute valid and perfected first priority liens and security interests
in the Guarantor's Collateral.
4.N. Insurance. All physical properties and assets of the Company
and each of the Guarantors are insured in accordance with the requirements of
Section 6.5 hereof.
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4.O. Subsidiaries. Except for shares of stock in the
Subsidiaries, neither the Company nor any Guarantor 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.P. Disclosure. No certificate, statement, report or other
document furnished to the Bank by or on behalf of the Company or any of the
Guarantors in connection herewith or in connection with any transaction
contemplated hereby, or this Agreement, the Restated Credit 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.Q. 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.
V. CONDITIONS TO LOANS.
5.A. Initial Loan. The obligation of the Bank to make the initial
WC 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 Loan,
of each of the following conditions precedent:
5.1.1 Loan Documents. The Company and each of the Guarantors
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
Guarantors' Security Agreements shall have been perfected and be first and be
prior to any other lien with respect to such of the Guarantor's Collateral as is
owned by the Guarantor executing and delivering such Guarantor's Security
Agreement, except as set forth on Schedule 4.13 hereof.
5.1.2 Opinion of the Company's Counsel. The Bank shall have
received a written opinion of Shack & Siegel, P.C., counsel to the Company and
each of the Guarantors, dated as of even date herewith, to the effect set
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forth in Exhibit E annexed, and covering such other matters incident to the
transactions herein contemplated as the Bank may reasonably request.
5.1.3 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 Guarantor, dated as of even date
herewith, certifying as to (i) the Bylaws of the Company and each such Guarantor
as then in effect; (ii) resolutions of the Board of Directors of the Company and
each such Guarantor authorizing the execution, delivery and performance of this
Agreement, the Notes, the Term Notes, the Company's Security Agreement, the
Guarantors' Security Agreements, the Guarantees 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 Guarantor signing such Loan Documents and all other closing
papers hereunder; (b) certified copies of the Certificate or Articles of
Incorporation of the Company and each Guarantor, as amended through the date
hereof; (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 Guarantor; (d) tax status reports in respect of the
Company and each Guarantor from state tax authorities; and (e) such additional
supporting documents as the Bank may reasonably request.
5.1.4 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.
5.1.5 Assignment of Life Insurance Policy. The Company shall
have executed and delivered to the Bank and assignment of life insurance in the
minimum amount of $1,000,000 on the life of Michael Weinstein, such insurance to
be in addition to the insurance assigned to the Bank as a condition of the
effectiveness of the Restated Agreement. Such Assignment shall be in form and
substance reasonably satisfactory to the Bank and its counsel, and shall be
accompanied by the original life insurance policy or policies so assigned. The
Bank also shall have received confirmation satisfactory to it that the
assignment of life insurance in the amount of $2,000,000 on the life of Michael
Weinstein, made as condition to the effectiveness of the Restated Agreement,
remains in full force and effect.
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5.B. All Loans. In addition to the conditions set forth above
with respect to the initial WC Revolving Loan, each of the following conditions
precedent shall be applicable thereto and to any subsequent Loans hereunder and
to the Term Loans.
5.2.1 Notes. The applicable Note or, if applicable, the Term
Notes shall have been duly completed, executed and delivered to the Bank.
5.2.2 No Default. After giving effect to each Loan or Term
Loan, as is applicable, 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.
5.2.3 Representations. All representations and warranties
contained herein, or otherwise made in writing in connection herewith by the
Company or any Guarantor, shall be true and correct, with the same force and
effect as if made on and as of the date of such Loan or Term 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 Loan or Term 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 30, 1995.
5.2.4 Officers' Certificate. At the time of the making of
the initial Loan and at the time of the making of such subsequent Loan or Term
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 or Term Loan have been fully satisfied.
5.2.5 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.
5.2.6 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
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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 the Guarantors.
5.C. LV Loans. In addition to the conditions precedent set forth
in Section 5.2 with respect to any subsequent Loans hereunder and to the Term
Loans, no LV Loan or LV Term Loan shall be made until the Bank has received and
approved (i) all leases between the Company, as Tenant, and New York New York
Hotel, LLC, as landlord, for the Las Vegas Project and (ii) the form and terms
of the LVLC's which the Company will require in conjunction with the
construction work to be performed as part of the Las Vegas Project.
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.
VI. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that from and after the date hereof
and so long as any Loan or Term Loan (including interest or any other obligation
incurred hereunder) is outstanding or any Commitment is in effect, unless the
Bank shall otherwise consent in a writing delivered to the Company, the Company
and each Guarantor will:
6.A. 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;
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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;
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.B. 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.C. Notice of Default; Litigation. Furnish to the Bank (i) as
soon as practicable and in any event within five 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
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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.
6.D. 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, prior to the date on which penalties attach thereto,
except those which are being contested in good faith and by proper proceedings
if the Company or a 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.E. 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 or such Subsidiary operates. All such insurance on the
Company's Collateral and the Guarantors' Collateral (unless prohibited by the
terms of any lease to which the Company or such Guarantor 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 Guarantors' Collateral, provided, however, that the Company
or a Guarantor may 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 Guarantors 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 Guarantor 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 any of the Notes, the Term Notes, or other obligation of the Company or the
Guarantors 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.F. 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
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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.G. 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.H. Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges, and those of each of
the Guarantors, 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 Guarantor which shall no longer conduct any operations or own any property;
and provided, further, that any Guarantor may be merged with and into the
Company or another Guarantor.
6.I. 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.J. 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 Guarantor 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 Guarantor 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 Guarantor proposes
to take with respect thereto.
6.K. Change in Business. The Company and each Guarantor will not
make any material change in the character of its business as carried on at the
date hereof.
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6.L. Compliance. The Company and each Guarantor 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.
6.M. Additional Notification to Bank. The Borrower shall promptly
notify the Bank of (i) each and every default by the Company or any Guarantor
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 Guarantor, 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 the Guarantors' Collateral from that listed in the Company's
Security Agreement or any of the Guarantors' Security Agreements.
6.N. Additional Guarantors. In the event that (i) the Company
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 or (ii) any Subsidiary which is not a Guarantor becomes party to a
lease or a management agreement or otherwise actively participates in the
management or operation of a Restaurant-Related Business or other facility, such
Subsidiary shall thereupon be deemed a Guarantor. The Company shall give the
Bank not less than fifteen (15) days notice following the formation or
acquisition of a new Subsidiary or of a Subsidiary becoming a Guarantor, which
notice shall (i) specify the name and state of incorporation or formation of
such new Guarantor, 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
Guarantor, and (iv) state the amount to be invested by the Company in such
Guarantor or to be paid by it to acquire same. Concurrently with the Company's
creating or acquiring a new Guarantor, or any Subsidiary becoming a Guarantor,
such Guarantor shall execute and deliver a Guaranty to the Bank, and a
Guarantor's Security Agreement pursuant to which such Guarantor, as debtor,
shall grant to the Bank a first priority perfected security interest in its
Guarantor's Collateral subject only to the lien of Purchase Money Indebtedness
in respect thereof. All of the
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shares in any such Guarantor which have been issued to the Company, together
with stock powers executed in blank by the Company 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's receipt thereof, which shares
and stock powers or collateral assignment will thereupon become part of the
Company's Collateral.
6.O. 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.P. 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.Q. Further Assurances. The Company and each Guarantor 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.
VII. NEGATIVE COVENANTS.
The Company covenants and agrees that from and after the date hereof
and so long as any Loan or Term Loan (including interest or any other
obligations incurred hereunder) is outstanding or any Commitment is in effect,
unless the Bank
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shall otherwise consent in writing delivered to the Company, the Company will
not, and will not permit or suffer any Subsidiary to:
7.A. 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 of the Company (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
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with the deposit of items for credit or collection in the normal and ordinary
course of business; and
7.1.9. Indebtedness of the Company and the Subsidiaries
("Consolidated Indebtedness"), which in the aggregate does not exceed
$16,000,000 exclusive of (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 and 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.
7.B. Cash Flow. Maintain Consolidated Operating Cash Flow,
calculated as of each September 30 on the basis of the twelve (12) full calendar
months preceding such calculation, of less than the product of (i) at all times
prior to September 30, 1998 (a) 1.5 and (b) the Consolidated Debt Service for
such twelve (12) month period and (ii) at all times subsequent to September 30,
1998 (a) 2.0 and (b) the Consolidated Debt Service for such twelve (12) month
period; provided in each of (i) and (ii), however, that if Consolidated
Operating Cash Flow for any such twelve (12) month period shall be less than the
product determined pursuant to the first clause of this sentence, then Working
Capital must equal or exceed the total amounts paid or payable for Consolidated
Debt Service for such twelve-month period, and provided, further, that
Consolidated Operating Cash Flow for any such twelve (12) month period shall at
all times at least equal the amount of Consolidated Debt Service for such
twelve-month period.
7.C. Net Worth. Maintain Consolidated Net Worth at any time
through (i) September 30, 1996 of not less than $15,750,000, and (ii) at each
subsequent September 30th in an amount which is not less than $1,500,000 more
than the minimum Consolidated Net Worth permitted hereunder for the prior
period.
7.D. Ratio of Consolidated Indebtedness to Shareholders'
Equity. Maintain a ratio of total Consolidated Indebtedness to Shareholders'
Equity of more than 1.5 to 1 at any time prior to September 29, 1997, and 1.25
to 1 at any time thereafter.
7.E. Liens. Directly or indirectly, create, incur, assume or
permit or suffer to exist any mortgage, lien,
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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;
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;
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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.F. 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 $400,000 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.
7.G. 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
endorse-
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ment 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.H. Capital Expenditures. Make, in the 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 an aggregate of 20% of Consolidated Net Worth at the
end of the Company's last fiscal year; provided, however that in addition to the
foregoing the Company and any Subsidiary, within one year of the date of this
Agreement, may make expenditures which would be capital expenditures in an
aggregate amount not to exceed $11,000,000 in conjunction with the Las Vegas
Project.
7.I. 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.J. Sales of Assets. Sell, lease, assign, transfer or otherwise
dispose of all or substantially all of its assets.
7.K. 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
-34-
dividends, return capital and make distributions of assets to the Company and
the Company may (i) declare and pay cash dividends in any fiscal year, and
redeem shares of its capital stock in an aggregate amount not exceeding 20% of
Consolidated Operating Cash Flow for such fiscal year, and (ii) declare and pay
stock dividends.
7.L. Transactions with Affiliates. 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.M. 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 net proceeds of any such sale are used for working
capital purposes of the Company or a Subsidiary.
VIII. DEFAULTS AND REMEDIES.
8.A. 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 either of the Notes, either of the Term Notes or any
commitment fee, Facility Fee or Deficiency Fee within three (3) days after
notice of a default in such payment;
8.1.2. the Company or any Guarantor shall default in the
performance or observance of any covenant or agreement contained in Section 7
hereof;
8.1.3. the Company or any Guarantor shall default in the
performance of any other covenant or agreement contained in this Agreement which
shall remain unremedied for
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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 Guarantor in this Agreement, either of the Notes, either
of the Term Notes, 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 Guarantor 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 Guarantor 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 Guarantor 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 Guarantor shall make an
assignment for the benefit of creditors, or a trustee, receiver or liquidator
shall be appointed for the Company or any Guarantor, or for any of its property,
or any proceedings by or against the Company or any Guarantor 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 Guarantor, shall continue
undischarged for a period of thirty (30) days;
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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 Guarantors; 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 Guarantor,
(ii) the filing by the Company, any Guarantor 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 Guarantor 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 Guarantor,
(vi) the Company or any Guarantor 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 Bank, have a material adverse effect on the
financial condition of the Company or any Guarantor; 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
Guarantor 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 Guarantor.
then, if any event described in Section 8.1.10 above shall have occurred the
Notes or Term Notes, whichever are then outstanding, 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 Notes or Term Notes, whichever are then outstanding, and any
other notes or evidences of Indebtedness of the Company or any Guarantor 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
-37-
expressly waived, anything contained herein or in the Notes or Term Notes or in
such other note or evidence of Indebtedness to the contrary notwithstanding; and
(ii) declare the Commitments terminated immediately. Upon termination of the
Commitments under this Section 8.1, any accrued Facility Fees shall be and
become forthwith due and payable to the Bank without further notice.
8.B. 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 either of the Notes or either of the Term Notes, 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 Note or Term
Note or in aid of the exercise of any power granted in this Agreement or the
Note or Term Note or proceed to enforce the payment of the Note or Term Note or
to enforce any other legal or equitable right of the holder of the Note or Term
Note.
8.C. Remedies Cumulative. No right or remedy herein or in any
other agreement or instrument conferred upon the Bank or the holder of either of
the Notes or either of the Term Notes 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 either of the Notes or either of
the Term Notes 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 the
Guarantors' Collateral may be situated and apply the proceeds of its collateral
to such obligations of the Company and the Guarantors as it determines in its
sole discretion.
IX. MISCELLANEOUS.
9.A. 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
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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 Guarantor 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.B. 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 Notes, the Term Notes 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 either of the Notes, either of the Term Notes 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 either of the Notes or either of
the Term Notes) incurred or payable in connection with the execution and
delivery of the Notes and the Term Notes.
9.C. Amendments. No amendment, modification or waiver of any
provision of this Agreement, either of the Notes or either of the Term Notes 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.
9.D. Survival of Representations. All representations and
warranties made herein or in any other writing furnished to the Bank shall
survive the delivery of the Notes and the Term Notes.
9.E. Construction. This Agreement, the Notes and the Term Notes
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.F. 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
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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 Trust Company of
New York
562 Fifth Avenue
New York, New York 10036
Attn: Mr.Richard Oleszewski
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 Guarantor: Ark Restaurants, Inc.
158 West 29 Street
New York, New York 10001
Attn: Michael Weinstein, President
with a copy to: Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attn: Paul Goodman, Esq.
9.G. 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 subsequent
holders of either of the Notes and either of the Term Notes.
9.H. 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.I. 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.
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9.J. JURISDICTION; WAIVER OF JURY TRIAL. THE COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
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.K. 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
Guarantor 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 Guarantor, 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
Guarantor to the Bank, including (without limitation) all claims of any nature
or description arising out of or connected with this Agreement and/or either of
the Notes or either of the Term Notes held by the Bank, 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 Guarantor 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 Guarantor 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 Guarantor, or as to which the Company or any Guarantor 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.L. Use of Accounting Terms. Except as otherwise provided
herein, accounting terms used herein shall be construed, calculations hereunder
shall be made and finan-
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cial data required hereunder shall be prepared, both as to classification of
items and as to amounts, in accordance with generally accepted accounting
principles.
9.M. 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.N. Headings. Section headings are for convenience only and
shall not affect the interpretation or construction of this Agreement or the
Note or Term Note.
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/ Andrew Kuruc
--------------------------
Andrew Kuruc,
Vice President
BANK LEUMI TRUST COMPANY
OF NEW YORK
By: /s/ Yair Talmor
-------------------------
Yair Talmor,
Senior Vice President
By: /s/ Richard E. Oleszewski
-------------------------
Richard E. Oleszewski,
Vice President