EXHIBIT 10.4
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the
27th day of December, 1999 by and between ARK RESTAURANTS CORP., a New York
corporation (the "Company") and BANK LEUMI USA, a New York banking corporation
(the "Bank").
A. Pursuant to a Revolving Credit Loan Agreement between the
Bank and the Company dated as of March 3, 1989, as amended by Agreement dated
August 3, 1989, the Bank made available to the Company a revolving credit
facility, a standby letter of credit facility, and other financial
accommodations (collectively, the "Initial Facility").
B. On or about December 30, 1992, the Bank and the Company
entered into an Amended and Restated Credit Agreement, dated as of said date
(the "Restated Agreement"), wherein and whereby the Bank and the Company, among
other things, renewed and increased the Initial Facility. The Restated Agreement
was amended by an Agreement dated August 10, 1994.
C. On or about March 5, 1996, the Bank and the Company entered
into a Second Amended and Restated Credit Agreement, dated as of said date (the
"Second Restated Agreement") wherein and whereby the Bank and the Company, among
other things (i) renewed, increased and made amendments to the Initial Facility,
and (ii) the Bank provided the Company with a second loan facility and a second
letter of credit facility. The Second Restated Agreement was amended by
Agreements dated as of March 31, 1996, and as of December 24, 1996.
D. On or about May 28, 1998, the Bank and the Company entered
into a Third Amended and Restated Credit Agreement, dated said date (the "Third
Restated Agreement") wherein and whereby the Bank and the Company, among other
things, renewed and extended and made amendments to the loan facilities and
revolving credit facilities. The Third Restated Agreement was amended by
Agreements, dated as of April 27, 1999, November 10, 1999 and December 13, 1999.
E. The Bank and the Company have agreed (i) that the revolving
loan facility will be increased and amended, (ii) that the term of the revolving
loan facility will be extended to the Conversion Date (as herein defined),
(iii) that the Letter of
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Credit facilities made available to the Company will be renewed, increased and
amended, (iv) that on the Conversion Date the then outstanding principal balance
of the Loans made pursuant to the revolving credit facility will be converted
into the Term Loan, and (v) to certain other modifications of the existing
arrangements. The Bank and the Company have agreed to reflect these changes in
this Fourth Amendment and Restated Credit Agreement.
NOW, THEREFORE, IT IS AGREED:
1. DEFINITIONS
Unless the context otherwise requires, for all purposes of
this Agreement and of the other Loan Documents (as hereinafter defined), all
capitalized terms used in this Agreement and in the other Loan Documents without
definition shall have the respective meanings provided therefor or referred to
below:
1.1 The term "Affiliate" means with reference to
any Person, any director, officer or employee of such Person, any Person in
which such Person has a direct or indirect controlling interest or by which such
person is directly or indirectly controlled or which is under direct or indirect
common control with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") when used with respect to any specified Person shall mean
the power to direct or cause the direction of the actions, management or
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and whether or not such power is
actually exercised.
1.2 The term "Agreement" means this Fourth Amended
and Restated Credit Agreement, including all of the Schedules and Exhibits
hereto, as the same may be amended or otherwise modified from time to time, and
the terms "herein", "hereof", "hereunder" and like terms shall be taken as
referring to this Agreement in its entirety and shall not be limited to any
particular section or provision hereof.
1.3 The term "Bank Debt" means and includes all
(i) Consolidated Indebtedness for money borrowed, unless it meets
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the definition of Purchase Money Indebtedness (ii) the amount of any letters of
credit outstanding for the account of the Company or any Subsidiary and (iii)
the aggregate amount of all equipment leases entered into by the Company or any
Subsidiary where the rental payments would be required to be capitalized under
generally accepted accounting principles, unless such lease meets the definition
of Purchase Money Indebtedness.
1.4 The term "Capital Expenditures" means assets
purchased for use in a Restaurant Related Business (other than assets purchased
on a non-recourse Purchase Money Indebtedness basis), including Indebtedness to
the Company of any newly organized Subsidiary (or any such Indebtedness
guaranteed by the Company) in connection with the development or acquisition of
a Restaurant Related Business.
1.5 The term "Capitalized Leases" means all
capitalized leases made to the Bank, or an Affiliate of the Bank, as lessor, and
the Borrower or any Subsidiary as lessee.
1.6 The term "Commitment" means the Commitment
(as defined in Section 2.1.1).
1.7 The term "Company's Collateral" means all of
the issued and outstanding shares of capital stock of each of the Subsidiaries,
other than shares of stock issued by one Subsidiary to another Subsidiary, and
the "security", as such term is defined in paragraph 3 of the Company's Security
Agreement.
1.8 The term "Consolidated Debt Service" means
interest expense and required amortization cost for the applicable period on all
of the Company's Consolidated Indebtedness.
1.9 The term "Consolidated Indebtedness" means
the aggregate consolidated Indebtedness of the Company and its consolidated
Subsidiaries. It is understood that in the calculation of Consolidated
Indebtedness, if one or more Letters of Credit, Guarantees or similar
obligations relate to the same underlying liability, only the amount of the
underlying liability will be included in Consolidated Indebtedness.
1.10 The term "Consolidated Operating Cash Flow"
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means consolidated after-tax earnings of the Company computed in accordance with
generally accepted accounting principles for the period of calculation, plus
depreciation and interest expense for such period on all Consolidated
Indebtedness.
1.11 The term "Consolidated Net Worth" shall mean
the excess of total assets over total liabilities of the Company and its
consolidated Subsidiaries total assets and total liabilities each to be
determined as to both classification of items and amounts in accordance with
generally accepted accounting principles, and consistent with the standards
applied in the financial statements referred to in Section 4.9; provided there
shall be excluded from total assets (i) cash set apart and held in a sinking or
other analogous fund established for the purposes of redemption or other
retirement of capital stock, (ii) any revaluation or other write-up in book
value of assets subsequent to the date hereof, and (iii) amounts owed to the
Company or any Subsidiary from any of the officers, directors or employees
thereof or any of their Affiliates in excess of $300,000 at any one time
outstanding.
1.12 The term "Consolidated Trade Indebtedness"
means Current Liabilities of the Company and its consolidated Subsidiaries for
trade or other obligations, not outstanding more than sixty (60) days, incurred
in the ordinary course of their respective businesses and not as a result of
money borrowed.
1.13 The term "Conversion Date" means the date
set forth in Section 2.1.1.
1.14 The term "Current Assets", with respect to
any entity, means as of the date of determination thereof, (i) cash and cash
items on hand or in transit to or on deposit in any bank or trust company which
has not suspended business and which is located in the United States of America;
(ii) stocks, bonds and other securities or obligations which are readily
marketable in the United States of America, all taken on the basis of cost or
market value whichever note is lower; (iii) good and collectible accounts and s
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; (iv) inventories of merchandise and
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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.
1.15 The term "Current Liabilities", with respect
to any entity, includes, as of the date of determination thereof, all
Indebtedness maturing on demand or within one year from the date as of which
such determination is made, serial maturities, fixed sinking fund payments or
other prepayments required to be made with respect to any Indebtedness within
one year after such date, and all other items (including taxes accrued as
estimated) which in accordance with generally accepted accounting principles
would be included on a balance sheet as current liabilities.
1.16 The term "Disclosure Schedule" means the
Disclosure Schedule, dated as of even date herewith, executed by an officer of
the Company and delivered to the Bank setting forth certain information with
respect to the Company and the Subsidiaries, as same may be amended or modified
from time to time.
1.17 The term "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations and published interpretations thereof.
1.18 The term "ERISA Affiliate" means any trade
or business (whether or not incorporated) which together with the Company would
be treated as a single employer under Section 4001 (b)(1) of ERISA.
1.19 The term "Events(s) of Default" shall have
the meaning provided therefor in Section 8.1.
1.20 The term "Indebtedness", as applied to a
Person (an "obligor") at any time, shall mean the following amounts and
liabilities:
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1.20.1. all amounts which, in accordance
with generally accepted accounting principles, are or should be treated as
liabilities or other obligations on the liabilities side of a balance sheet of
such obligor prepared in accordance with generally accepted accounting
principles; provided, however, that amounts accrued by such obligor in respect
of operating lease deferred credits shall not be deemed indebtedness; and
1.20.2. also, to the extent not so treated,
(i) letters of credit (whether revocable or
irrevocable) issued for the account of such obligor, but only to the extent
drawn upon and not repaid to the issuer;
(ii) liabilities of any other Person
guaranteed directly or indirectly, in any manner by such obligor;
(iii) liabilities of or to any Person in
effect guaranteed, directly or indirectly, by such obligor through any
agreement, endorsement or understanding, contingent or otherwise (except
liabilities arising from endorsement of negotiable instruments for deposit or
collection in the ordinary course of business) of such obligor entered into for
the purpose, or which is used for the purpose, in whole or in part, of enabling
the debtor to pay, indemnify against or otherwise satisfy a liability or
obligation or to assure the obligee of the liability against loss, including
without limitation (x) agreements, commitments or understandings to repay
amounts drawn down by beneficiaries of letters of credit (whether revocable or
irrevocable) whether or not issued, directly or indirectly, for the account of
such obligor (y) statements or representations to the effect that such obligor
will not permit any other person to default in respect of any liability or will
maintain minimum net worth of another person, or (z) agreements, commitments or
understandings (A) to purchase securities or Indebtedness, or (B) to purchase or
sell services, products, raw materials or other property of any description,
outside of the ordinary course of its business, or (C) to supply funds to or in
any other manner make an investment in the debtor;
(iv) all liabilities secured (directly or
indirectly) by a lien or encumbrance upon any property or asset of such obligor
regardless of whether such obligor has assumed or
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become liable for the payment of such liabilities; and
(v) amounts equal to any reserves or
commitments which are, or, under generally accepted accounting principles,
should be, reflected on the liabilities side of a balance sheet of such obligor
in respect of contingent or disputed claims, debts or other similar monetary
obligations, either direct or guaranteed, to the extent that the same are not
included pursuant to (i), (ii) or (iii) above; provided, however, that items
includable as stockholders' equity (or parts thereof), minority interests and
reserves for deferred income taxes, each as determined or set aside in
accordance with generally accepted accounting principles, shall not be deemed to
be "Indebtedness". Obligations in respect of leases shall be included as
"Indebtedness" only to the extent that the same are treated as liabilities or
obligations by such obligor on its balance sheets prepared in accordance with
generally accepted accounting principles, except that operating lease deferred
credits shall not be included as "Indebtedness".
1.21 The term "Letter of Credit" shall have the
meaning provided therefor in Section 2.1.5 hereof.
1.22 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.
1.23 The terms "Loan and "Loans" shall mean all
of the Revolving Loans and the Term Loan.
1.24 The term "Loan Documents" shall mean and
include this Agreement, the Notes, the Guarantees, the Security Agreements
and all other documents executed by the Company or any Subsidiary pursuant
hereto or thereto, as same may be amended, modified, renewed or restated from
time to time.
1.25 The term "Maturity Date" shall have the
meaning provided therefor in Section 2.1.3 hereof.
1.26 The term "Multiemployer Plan" means a Plan
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described in Section 4001(a)(3) of ERISA which covers employees of the Company
or any ERISA Affiliate.
1.27 The terms "Note" and "Notes", respectively,
shall mean the Revolving Note and the Term Note.
1.28 The term "PBGC" means the Pension Benefit
Guaranty Corporation, or any successor thereto.
1.29 The term "Person" shall include an individual,
a partnership, a joint venture, a corporation (including, without limitation,
the Company or any Subsidiary), a limited liability company, a trust, an
estate, an unincorporated organization or association, a governmental agency
and any other business or legal entity.
1.30 The term "Plan" means any employee benefit
plan as defined in Section 3(2) of ERISA.
1.31 The term "Prohibited Transaction" means any
transaction set forth in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended from time to time.
1.32 The term "Purchase Money Indebtedness" means
purchase money Indebtedness incurred by a Subsidiary at the time of the
acquisition of Restaurant-Related Business assets, which Indebtedness is secured
only by the assets of the business being acquired and not guaranteed by the
Company or any Subsidiary of the Company and for which the instrument or
instruments relating to the Indebtedness does not provide recourse against the
Company or any Subsidiary of the Company other than the Subsidiary issuing the
Indebtedness.
1.33 The term "Reference Rate" means the rate
designated by the Bank, and in effect from time to time, as its reference rate,
adjusted when such reference rate changes.
1.34 The term "Reportable Event" means any of the
events set forth in Section 4043 of ERISA.
1.35 The term "Restaurant-Related Business" means
a restaurant, catering, hospitality, food preparation or food service business.
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1.36 The term "Revolving Note" shall have the
meaning defined in Section 2.1.3.
1.37 The term "Security Agreement" and "Security
Agreements" mean each security agreement made by the Company or a Subsidiary, as
debtor, in favor of the Bank, as secured party, and all of the foregoing.
1.38 The term "Shareholders' Equity" means the
excess of the total assets of the Company and its consolidated Subsidiaries over
their total liabilities, in each case as such items would be classified on the
consolidated balance sheet of the Company and its consolidated Subsidiaries
determined in accordance with generally accepted accounting principles.
1.39 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 any time owned by the
Company or by a Subsidiary of the Company, or by the Company and one or more
Subsidiaries of the Company.
1.40 The terms "Subsidiary's Collateral" and
"Subsidiaries Collateral", respectively, shall mean all of the assets of a
Subsidiary and all of the assets of all of the Subsidiaries, except as is
otherwise provided in the Disclosure Schedule, including shares of stock in any
other Subsidiary.
1.41 The term "Term Note" shall have the meaning
defined in Section 2.1.4.
1.42 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.
1.43 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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2. THE LOAN
2.1 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 until the second annual anniversary of the date of this
Agreement (the "Conversion Date") loans (each a "Loan" and collectively the
"Loans"). The Loans made available to the Company pursuant to this revolving
loan facility are to finance the development and construction of new restaurants
and to provide working capital for the Company's operations. The aggregate
principal amount of the Loans, at any time outstanding, shall not exceed
$28,000,000 (the "Commitment"). Subject to the foregoing, until the Conversion
Date, the Company may borrow, repay and reborrow the Loans to the limit of the
Commitment.
2.1.2. Notice of Borrowing. If and whenever
the Company desires to borrow under the Commitment it shall give the Bank prior
written notice, specifying the date of the proposed borrowing, and the amount to
be borrowed (which shall be not less than $250,000). Subject to all the terms
and conditions of this Agreement, the Bank shall make available to the Company
in immediately available funds at the Bank's office specified in Section 9.6,
not later than 11 a.m. current local time on the date specified in such notice,
the amount to be advanced hereunder.
2.1.3. Conversion to Term Loan. On and after
the Conversion Date, the Company shall no longer have the right to request
borrowings under the Commitment. The principal sum of the Revolving Loans
outstanding on the Conversion Date, as same may be reduced by reason of the
prepayment provided for in Section 2.2.2 of this Agreement (the "Term Loan
Amount") shall be converted to a term loan made by the Bank to the Company (the
"Term Loan"), and shall be repaid by the Company to the Bank in thirty-six (36)
consecutive equal monthly installments. The first installment under the Term
Loan shall be due and payable on the first day of the month immediately
subsequent to the Conversion Date, and each subsequent installment shall be due
on the first day of each month thereafter. The maturity date of the
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Term Loan is thirty six (36) months after the Conversion Date (the "Maturity
Date").
2.1.4. Notes. The Revolving Loans shall be
evidenced by a promissory note evidencing the Loans substantially in the form of
Exhibit A annexed, with the blanks completed in conformity herewith (the
"Revolving Note") duly executed by the Company and payable to the order of the
Bank and (i) be dated as of the date of this Agreement; (ii) be in the principal
amount of $28,000,000; (iii) bear interest at a fluctuating rate per annum equal
to one half of one (1/2%) percent above the Reference Rate, in effect from time
to time, until maturity (whether by acceleration or otherwise) and thereafter at
a fluctuating rate per annum equal to three (3%) percent above the Reference
Rate, in effect from time to time; and (iv) be payable as to interest at such
rate in arrears on the first day of each month commencing with the first day of
the month following the date of this Agreement and thereafter on the first day
of each month until (a) the Conversion Date, or (b) maturity by acceleration,
and both before and after judgment, until the principal amount is paid in full.
On the Conversion Date, the Company shall deliver the Revolving Note to the Bank
upon delivery by the Company to the Bank, at the Bank's office specified in
Section 9.6, (i) the prepayment, if any, provided for in Section 2.2.2 of this
Agreement, (ii) a note evidencing the Term Loan (the "Term Note") substantially
in the form of Exhibit B annexed, completed in conformity herewith, (iii)
payment of the conversion fee in an amount equal to three eighths of one (3/8%)
percent of the Term Loan Amount, and (iv) such other documents and papers as are
provided for herein. The Term Note shall be duly executed by the Company and
payable to the order of the Bank, and (i) be dated the Conversion Date, (ii) be
for the applicable Term Loan Amount, (iii) bear interest at a fluctuating rate
per annum equal to one half of one (1/2%) percent above the Reference Rate, in
effect from time to time, until maturity (whether by acceleration or
otherwise), and thereafter at a fluctuating rate per annum equal to three (3%)
percent above the Reference Rate, in effect from time to time, (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 month immediately subsequent to the
Conversion Date and thereafter on the first date of every month until maturity
(whether by acceleration or at the Maturity Date), until the principal amount
is paid in full, and (v) be payable as to
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principal in thirty-six (36) equal consecutive monthly installments, commencing
on the first day of the first month immediately subsequent to the Conversion
Date, and thereafter on the first day of every month thereafter until the
maturity (whether by acceleration or at the Maturity 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 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 (i) until the Conversion Date to issue, from time to
time, one or more letters of credit (each a "Letter of Credit"), and (ii) before
and after the Conversion Date to renew 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 for the Company's current
operations. The maximum contingent liability of the Bank (including therein any
payments made by the Bank to the beneficiaries of such Letters of Credit which
have not been repaid to the Bank) under all Letters of Credit issued for the
account of the Company shall not 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 be
conclusive evidence of the matters set forth therein, absent manifest error.
In the event of any inconsistency between any provision of this Agreement and
any provision of the Application, this Agreement shall govern and prevail. As
consideration to the Bank for the issuance of the Letters of Credit, the
Company shall pay a commission to the Bank in an amount equal to 1 and 1/2% per
annum of the maximum amount which may be drawn under each Letter of Credit;
provided, however, that the commission payable to the Bank on the renewal of any
Letter of Credit outstanding on the
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date of this Agreement shall be at a rate equal to the rate then payable with
respect to such Letter of Credit. All commissions shall be paid by the Company
upon issuance of the Letter of Credit. The obligation of the Bank to issue or
extend any Letter of Credit for the account of the Company hereunder shall exist
at any time only if at that time all conditions under Section 5.2 of this
Agreement to the Bank's obligation to make a Loan to the Company would have been
satisfied in full if the Company had requested a Loan in such amount. Each
Letter of Credit issued or renewed under this Section 2.1.5 shall have an
expiration date no later than one year from the date it is issued or renewed and
if renewal shall have an expiration date which is not beyond the Maturity Date,
and shall be renewable only in the sole discretion of the Bank. Commencing on
the Conversion Date and on the first day of each month thereafter, the Company
shall deposit cash collateral with the Bank equal to 1/36 of the face amount of
the outstanding Letters of Credit on the Conversion Date, until such time as
such cash collateral equals the face amount of the then outstanding Letters of
Credit. If at any time the cash collateral exceeds the face amount of the
outstanding Letters of Credit, unless an Event of Default shall have occurred,
the excess shall be released to the Company.
2.2 Prepayments.
2.2.1. Voluntary Prepayments. The Company
may prepay the Loans, or any of them, in part or in full at any time, and from
time to time, without premium or penalty, upon prior written notice to the Bank,
provided that each such prepayment shall be in the amount of $100,000 or any
integral multiple thereof. In the absence of any such designation, the Bank may
apply such prepayment at its discretion.
2.2.2. Mandatory Payment. On the Conversion
Date, the Company, without premium or penalty, shall prepay the Loans to the
extent, if any, by which the outstanding principal balance of the Loans exceeds
$22,000,000.
2.2.3. Prepayments Generally. Any
prepayments, whether mandatory or voluntary, shall be accompanied by the payment
of any accrued interest on the principal amount so prepaid.
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2.2.4. Application of Life Insurance
Proceeds. The Bank will apply any proceeds received by the Bank upon the policy
or policies of insurance assigned to the Bank upon the life of Michael
Weinstein, in its discretion, to the payment or prepayment of the Loans, or
other obligations, as the case may be, of the Company or the Subsidiaries to the
Bank.
2.3 General Provisions Concerning Loans.
Interest, including additional interest, shall be computed for the actual number
of days elapsed on the basis of a 360- day year. All mandatory and voluntary
payments or prepayments of principal and all payments of interest under either
of the 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 either of
the Notes, the commitment fee, agency fee or any other payment required to be
made by the Company hereunder or pursuant to any of the Loan Documents, becomes
due and payable on a day on which the Bank is closed (as required or permitted
by law or otherwise), the due date thereof shall be extended to the next
succeeding full business day and, in the case of principal, interest thereon
shall be payable at the applicable rate during such extension. All notations and
entries made by the Bank, or the holder of the Revolving Note, on the grid
attached thereto shall be presumptive evidence of the correctness of such
notations and entries, absent manifest error. The failure of the Bank to make
any notation or entry on any such grid shall not, however, limit or otherwise
affect the obligations of the Company under this Agreement or under the
Revolving Note.
2.4 Security For the Loans.
2.4.1. Concurrently with the execution
and delivery of the Restated Agreement, the Company granted a valid and
perfected first priority security interest to the Bank in the Company's
Collateral, pursuant to a security agreement, dated as of even date therewith,
which security agreement was amended and restated concurrently with the
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execution and delivery of the Second Restated Agreement and is concurrently
being amended and restated in the form annexed as Exhibit C-1 (the "Company's
Security Agreement").
2.4.2. Each of the Subsidiaries identified
on the Disclosure Schedule heretofore granted a valid and perfected security
interest to the Bank in such of the Subsidiary's Collateral as was owned by it
pursuant to a security agreement, which security agreement, concurrently with
the execution and delivery of this Agreement, is being amended and confirmed, as
provided in Exhibit C-2 annexed. Each existing security agreement, as
concurrently amended and confirmed, and each security agreement hereinafter
executed by a Subsidiary is a "Subsidiary's Security Agreement" and collectively
they are "Subsidiary' Security Agreements". Each security interest granted by a
Subsidiary's Security Agreement is a first priority security interest, subject
only to the security interests heretofore granted by each such Subsidiary, as
set forth on Schedule 4.13 and Purchase Money Indebtedness.
2.5 Guarantees. The Subsidiaries identified on the
Disclosure Schedule heretofore guaranteed all of the obligations of the Company
to the Bank pursuant to an unlimited guarantee executed by each such Subsidiary.
Concurrently with the execution and delivery of this Agreement, each of such
Subsidiary is reaffirming its Guaranty, by its execution of a Confirmation of
Guarantee, annexed as Exhibit C-2. Each existing Guarantee as concurrently
confirmed, or hereinafter executed by a Subsidiary, is individually a "Guaranty"
and collectively are the "Guarantees".
3. USE OF PROCEEDS.
The Company represents, warrants and covenants that the
proceeds of the Loans will be used for the following purposes and no others: to
finance the development and construction of new restaurants, Restaurant Related
Businesses and for working capital.
4. REPRESENTATIONS AND WARRANTIES.
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In order to induce the Bank to enter into this Agreement and
to make the Loans, the Company represents and warrants to the Bank that:
4.1 Corporate Existence and Power.
4.1.1. The Company and each Subsidiary
is a corporation duly incorporated, validly existing and in good standing under
the law of its state of incorporation, and is duly qualified as a foreign
corporation in each jurisdiction wherein the character of the property owned or
the nature of the business being transacted by it makes such qualification
necessary; and the Company has the corporate power to execute and deliver this
Agreement, the Revolving Note and all other documents to be executed and
delivered by the Company in connection herewith, and each Subsidiary has the
corporate power to execute and deliver, as is applicable (i) the Confirmation of
Guarantees and Amendment and Confirmation of Security Agreements and (ii) all
other documents executed and delivered by such Subsidiary in connection herewith
(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 shares of capital
stock of each of the Subsidiaries are owned of record and beneficially by the
Company. The Disclosure Schedule accurately sets forth the class and number of
shares issued by each Subsidiary, all of which shares have been duly issued,
fully paid and non-assessable. There are no outstanding warrants, options or
other rights to acquire any shares in any of the Subsidiaries.
4.2 Authorization. The Company and each of
the Subsidiaries has all requisite legal right, power and authority to execute,
deliver and perform the terms and provisions of this Agreement, the Loan
Documents executed by it, and all other instruments and documents delivered by
it pursuant hereto and thereto. The Company and each of the Subsidiaries has
taken or caused to be taken all necessary action to authorize the execution,
delivery and performance of this Agreement, the Loan Documents executed by it,
the Revolving Note, and any other related agreements, instruments
16
or documents delivered or to be delivered by the Company or the Subsidiaries
pursuant hereto and thereto. This Agreement, the Loan Documents and all related
agreements, instruments and documents delivered or to be delivered pursuant
hereto or thereto constitute and will constitute legal, valid and binding
obligations of the Company (and, to the extent executed by them, the
Subsidiaries) enforceable in accordance with their respective terms.
4.3 No Conflicts. Neither the execution and
delivery of this Agreement, the Loan Documents or any of the instruments and
documents delivered or to be delivered pursuant hereto or thereto, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the provisions hereof or thereof, will violate any law or regulation, or
any order, writ or decree of any court or governmental instrumentality, or will
conflict with, or result in the breach of, or constitute a default in any
respect under, any indenture, mortgage, deed of trust, agreement or other
instrument to which the Company or any of the Subsidiaries is a party, or by
which any of them or any of their respective properties may be bound or
affected, or will result in the creation or imposition of any lien, charge
or encumbrance upon any of the property of any of them (except as contemplated
hereunder or under the Loan Documents) or will violate any provision of the
certificate or articles of incorporation (as amended to date) or by-laws (as
currently in effect) of the Company or any of the Subsidiaries.
4.4 Compliance and Other Agreements.
4.4.1. Neither the Company nor any of the
Subsidiaries is in default under any indenture, mortgage, deed of trust,
agreement or other instrument to which it is a party, or by which it or any of
its properties may be bound or affected, except for such defaults which,
individually or in the aggregate, will not have a material and adverse effect on
the business, operations, property or assets or in the condition, financial or
otherwise, of the Company or any of the Subsidiaries.
4.4.2. Neither the Company nor any of the
Subsidiaries is in default with respect to any order, writ,
17
injunction or decree of any court or of any federal, state, municipal or other
governmental department, commission, board, bureau, agency or authority,
domestic or foreign, or in violation of any law, statute or regulation, domestic
or foreign, to which it is, or any of its properties are subject, except for
such defaults or violations which, in the aggregate, will not have a material or
adverse effect on the business, operations, property or assets or on the
condition, financial or otherwise, of the Company or any of the Subsidiaries.
4.4.3. Neither the Company nor any of the
Subsidiaries is a party to or bound by, nor are any of their respective
properties bound or affected by, any agreement, deed, lease or other instrument,
or subject to any charter or other corporate restriction or any judgment, order,
writ, injunction, decree or award, or any law, statute, rule or regulation, any
of which materially and adversely affects or in the future may (so far as the
Company or any Subsidiary should reasonably foresee) materially and adversely
affect the business, operations, prospects, properties or assets, or the
condition, financial or otherwise, of the Company or any of the Subsidiaries.
4.5 ERISA. Each of the Company and the
Subsidiaries is in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither the Company, any Subsidiary, nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer
Plan; the Company, the Subsidiaries and each of their respective ERISA
Affiliates have met their minimum funding requirements under ERISA with respect
to all of their Plans and the present fair market value of all Plan assets
exceeds the present value of all vested benefits under each Plan, as determined
on the most recent valuation date of the Plan and in accordance with the
provisions of ERISA and the regulations thereunder for
18
calculating the potential liability of the Company, the Subsidiaries or any of
their respective ERISA Affiliates to PBGC or the Plan under Title IV of ERISA;
and neither the Company nor any of the Subsidiaries or their respective ERISA
Affiliates has incurred any liability to the PBGC under ERISA.
4.6 Investment Company. Neither the Company
nor any of the Subsidiaries is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940.
4.7 Approvals and Consents. All authorizations,
consents, registrations, exemptions, approvals and licenses (governmental or
otherwise) or the taking of any other action (including, without limitation,
by the shareholders of the Company or any of the Subsidiaries) which are
required as a condition to the validity or enforceability of this Agreement,
the Loan Documents, or any of the instruments or documents delivered or to be
delivered pursuant hereto or thereto have been effected or obtained and are in
full force and effect.
4.8 Regulation U, etc. Neither the Company nor any
of the Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U or G of the Board of Governors of the Federal Reserve System). None
of the proceeds of the Loans will be used, directly or indirectly, in violation
of Regulation U for the purpose of purchasing or carrying any margin stock or
for any other purpose which might constitute the loan contemplated hereby a
"purpose credit" within the meaning of such Regulation U which would be in
violation of Regulation U.
4.9 Financial Condition.
4.9.1. The audited consolidated balance
sheets of the Company and its Subsidiaries as at September 30, 1999 and the
audited consolidated statements of operations, shareholders' equity and cash
flows of the Company and its Subsidiaries for the fiscal year then ended, copies
of which have been furnished to the Bank, are complete and correct and fairly
present the consolidated financial
19
condition and results of operations of the Company and its Subsidiaries as at
the dates and for the periods indicated. All of such financial statements have
been prepared in conformity with generally accepted accounting principles and
practices applied on a basis consistently maintained throughout the periods
involved.
4.9.2. There are no material
liabilities, direct or indirect, fixed or contingent, of the Company or the
Subsidiaries as of the dates of such financial statements which were not
reflected therein or in the notes thereto. Since the date of the most recent
financial statements, there has been no material adverse change in the
condition, financial or otherwise, or the business, operations, prospects,
properties or assets of the Company and its Subsidiaries on a consolidated basis
or of the Company individually.
4.10 Taxes. The Company and each Subsidiary
has filed or caused to be filed, all tax returns required to be filed, and has
paid all taxes (including interest and penalties) shown to be due and payable
on said returns or any assessments made against it, and no tax liens have been
filed and no claims are being asserted with respect to such taxes which are not
reflected in the financial statements referred to in Section 4.9.1 hereof. The
Company has no knowledge of any proposed material tax assessment against or
affecting it or any of the Subsidiaries and is not otherwise obligated by any
agreement, instrument or otherwise to contribute to the payment of taxes owed
by any other Person. All material tax liabilities are adequately provided for
or reserved against on the books of the Company and/or the Subsidiaries, as is
applicable, in accordance with generally accepted accounting principles.
4.11 Litigation. Except as set forth on
Schedule 4.11 annexed, there are no actions, suits or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or the property of any of them before any court, arbitrator or
governmental department, commission, board, bureau, agency or instrumentality
which, (i) if not covered by insurance seeks recovery of more than $200,000 or
if covered by insurance seeks recovery of an amount in excess of the
20
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 Third Restated
Agreement, the Loan Documents, or any action to be taken in connection with the
transactions contemplated hereby or thereby.
4.12 Chief Executive Office; Collateral Locations.
The address of the chief executive office of the Company is set forth in the
Company's Security Agreement. The only locations of any of the Company's
Collateral, other than such of the Company's Collateral as the Bank shall take
possession of to perfect its lien and security interest therein, and the chief
executive office of the Company, are those listed in the Company's Security
Agreement. The Chief Executive Office and principal place of business of each of
the Subsidiaries is set forth on the Disclosure Schedule and in such
Subsidiaries Security Agreement. The only other locations of any of the
Subsidiaries Collateral, other than their Chief Executive Office or principal
places of business, are listed in the Subsidiaries Security Agreements.
4.13 Title to Properties/Priority of Liens.
4.13.1. The Company and its Subsidiaries
have good and marketable title to, or valid leasehold interests in, all of the
properties and assets reflected on the most recent of the financial statements
delivered to the Bank pursuant to Section 4.9.1 or acquired by it after the date
of such financial statements and prior to the date hereof, except for those
properties and assets which have been disposed of since such date in the
ordinary course of business. All such properties and assets are owned or leased
by the Company or a Subsidiary free and clear of all mortgages, pledges, liens,
security interests, encumbrances or charges of any kind, except (i) such as are
disclosed on Schedule 4.13 hereto, (ii) such as are in favor of the Bank, and
(iii) such as are permitted under the provisions of Section 7.5 hereof.
4.13.2. The liens and security interest
granted by the Company to the Bank under the Company's
21
Security Agreement constitute valid and perfected first priority liens and
security interest in the Company's Collateral. Except as disclosed on Schedule
4.13 hereto, the liens and security interests granted by each of the
Subsidiaries to the Bank under the Subsidiaries Security Agreements constitute
valid and perfected first priority liens and security interests in each
Subsidiary's Collateral.
4.14 Insurance. All physical properties and assets of
the Company and each of the Subsidiaries are insured in accordance with the
requirements of Section 6.5 hereof.
4.15 Subsidiaries. Except for shares of stock in
the Subsidiaries, neither the Company nor any Subsidiaries owns shares of stock
in, or has any option, warrant or other right to purchase or subscribe to
shares of stock in or otherwise acquire an equity interest in any Person which
upon effecting such purchase would be a Subsidiary.
4.16 Year 2000. The Company has (i) undertaken a
sufficient inventory, review and assessment of all of the Company's areas
within its business and operations that could be adversely affected by the
failure of the Company to be Year 2000 Compliant on a timely basis, (ii)
developed a plan and timeline for becoming Year 2000 Compliant on a timely
basis, (iii) to date, implemented that plan in accordance with that timeline in
all material respects and, (iv) made inquiry of its key suppliers, vendors and
customers as to whether such person(s) will, on a timely basis, be Year 2000
Compliant in all material respects and on the basis of such inquiry reasonably
believes that all such person(s) will be Year 2000 Compliant. "Year 200
Compliant" shall mean that, in all material respects, all computer and software
related applications shall be able to recognize and perform properly, date
sensitive functions involving dates prior to and after December 31, 1999. The
Company shall take all action necessary to ensure that the Company shall be Year
2000 Compliant and that no material adverse change will arise in the Company's
financial condition as a result of its efforts or failure to be year 2000
Compliant.
4.17 Disclosure. No certificate, statement,
report or other document furnished to the Bank by or on
22
behalf of the Company or any of the Subsidiaries in connection herewith or in
connection with any transaction contemplated hereby, or this Agreement, each
agreement which this Agreement restates 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.
4.18 No Event of Default. After giving effect to
the transactions contemplated by this Agreement, the Loan Documents and the
other instruments or documents delivered in connection herewith and therewith,
there does not exist at the date hereof any condition, event or act which
constitutes an Event of Default hereunder or which, after notice or lapse of
time, or both, would constitute an Event of Default hereunder.
5. CONDITIONS TO LOANS.
5.1 Initial Loan. The obligation of the Bank to
make the initial 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 Subsidiaries shall have executed and delivered to the Bank the Loan
Documents to be executed by each of them, and all other agreements, instruments
and documents required or contemplated by this Agreement and the Loan Documents.
The liens and security interests created by the Company's Security Agreement
shall have been perfected and be first and prior to any other lien with respect
to the Company's Collateral, and the liens and security interests created by
each of the Subsidiaries Security Agreements shall have been perfected and be
first and be prior to any other lien with respect to such of the Subsidiaries
Collateral as is owned by the Subsidiaries executing and delivering such
Subsidiaries Security Agreement, except as set forth on Schedule 4.13 hereof.
5.1.2. 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
23
Subsidiaries, dated as of even date herewith, to the effect set forth in Exhibit
D annexed, and covering such other matters incident to the transactions herein
contemplated as the Bank may reasonably request.
5.1.3. Supporting Documents - Initial Loan.
The Bank shall have received the following: (a) a certificate of the Secretary
or an Assistant Secretary of the Company and of each Subsidiary, dated as of
even date herewith, certifying as to (i) the By-laws of the Company and each
such Subsidiary as then in effect, or in the case of any Subsidiary a
certification by an officer thereof that its by-laws have not been amended or
repealed since the date of the last copy thereof provided by such Subsidiary to
the Bank; (ii) resolutions of the Board of Directors of the Company and each
such Subsidiary authorizing the execution, delivery and performance of this
Agreement, the Revolving Note, the amendment to and confirmation of the
Company's Security Agreement, the Subsidiaries Security Agreements, on any
applicable amendments thereto and confirmation thereof, the Guarantees, or as
applicable confirmations thereof, and the other Loan Documents and the
borrowing(s) hereunder, to the extent being executed by each such corporation;
(iii) the full force and effect of such resolutions on the date hereof; and (iv)
the incumbency and signature of each of the officers of the Company and each
Subsidiary signing such Loan Documents and all other closing papers hereunder;
(b) a certified copy of the Certificate or Articles of Incorporation of the
Company and each Subsidiary, as amended through the date hereof, or in the case
of any Subsidiary a certification by an officer that its Certificate of Articles
of Incorporation have not been amended since the date of the last certified copy
thereof provided by the Subsidiary to the Bank; (c) a long-form certificate of
subsistence from the Secretary of State of the State of New York in respect of
the Company and certificates of subsistence or good standing from the
appropriate official in the jurisdiction of incorporation of each Subsidiary;
(d) the tax status reports in respect of the Company and each Subsidiary from
state tax authorities; 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
24
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 Bank shall have received confirmation satisfactory to it that the
assignment of life insurance in the aggregate amount of $3,000,000 on the life
of Michael Weinstein, made as condition to the effectiveness of the Second
Restated Agreement, remains in full force and effect.
5.1.6. Commitment Fee. The Borrower
shall have paid to the Bank a commitment fee in the sum of $125,000, and the
first annual installment of the agency fee provided for in Section 5.2.6.
5.2 All Loans. In addition to the conditions
set forth above with respect to the initial Loan, each of the following
conditions precedent shall be applicable thereto and to any subsequent Loans
hereunder.
5.2.1. Revolving Note. The Revolving Note
shall have been duly completed, executed and delivered to the Bank.
5.2.2. No Default. After giving effect
to each Loan there shall exist no Event of Default and no condition, event or
act which, with notice or lapse of time, or both, would constitute such an Event
of Default.
5.2.3. Representations. All representations
and warranties contained herein, or otherwise made in writing in connection
herewith by the Company or any Subsidiary, shall be true and correct, with the
same force and effect as if made on and as of the date of such 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) 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, 1999.
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, the Company shall deliver to
25
the Bank a certificate signed by the chief executive and the chief financial
officers of the Company, dated such date, certifying and confirming that (i) no
default exists as set forth in Section 5.2.2, (ii) the representations and
warranties referred to in Section 5.2.3 are true and correct and (iii) all
conditions to the Bank's obligation to make the Loan have been fully satisfied.
5.2.5. 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. Agency Fee. Concurrently with the
execution and delivery of this Agreement, and on each annual anniversary
thereof, until the Maturity Date, the Borrower shall pay the Bank an agency
fee of $25,000.
5.2.7. Proceedings. All corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement shall be satisfactory in form, scope
and substance to the Bank and its counsel, and the Bank and such counsel shall
have received all information and copies of all documents, including reports of
corporate proceedings, which the Bank or its counsel may reasonably have
requested in connection therewith, such documents where appropriate to be
certified by proper corporate and governmental authorities.
5.2.8. No Adverse Change. There shall
have been no material adverse change in the operations, business, property or
assets or in the condition (financial or otherwise) of the Company or any of the
Subsidiaries.
Each borrowing hereunder shall constitute a representation and
warranty by the Company to the Bank that all of the conditions specified in this
Section 5 have been satisfied as of that time.
6. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that from and after the
date hereof and so long as any Loan (including interest or any other obligation
incurred hereunder) is outstanding or any Commitment is in effect, unless the
Bank
26
shall otherwise consent in a writing delivered to the Company, the Company and
each Subsidiary will:
6.1 Financial Statements. Furnish to the Bank:
6.1.1. as soon as practicable, but in
any event not later than forty-five (45) days after the end of each of the first
three (3) fiscal quarters in each fiscal year of the Company, consolidated and
consolidating balance sheets of the Company and its Subsidiaries as at such date
and consolidated and consolidating statements of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries for the period
commencing at the beginning of such fiscal year and ending on the last day of
such quarter, together with the comparative financial statements for the
corresponding period of the preceding fiscal year, in each case duly certified
by an authorized officer of the Company as being complete and correct and as
having been prepared in accordance with generally accepted accounting
principles consistently applied;
6.1.2. as soon as practicable, but in
any event not later than ninety (90) days after the end of each fiscal year,
consolidated balance sheets of the Company and its Subsidiaries as at such date
and consolidated statements of operations, shareholders' equity and cash flows
of the Company and its Subsidiaries for such fiscal year, together with the
comparative financial statements for the preceding fiscal year, in each case
certified by independent certified public accountants of recognized standing
acceptable to the Bank;
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
27
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.
6.2 SEC Filings. So long as the Company is
registered with the Securities and Exchange Commission ("SEC") pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, the Company will
furnish to the Bank, promptly following the filing thereof with the SEC or any
securities exchange, copies of all regular and periodic reports, notices,
registration statements, proxy statements and other documents filed by the
Company with the SEC or any securities exchange.
6.3 Notice of Default; Litigation. Furnish to the
Bank (i) as soon as practicable and in any event within five (5) days after the
occurrence of each Event of Default or each event which, with notice and/or
lapse of time, would constitute an Event of Default, the statement of an
authorized officer of the Company setting forth details of such Event of Default
or event, and the action which the Company proposes to take in connection
therewith; and (ii) promptly after the occurrence thereof, notice of the
commencement of any action or proceeding of the type described in Section 4.11
hereof and notice of any material development in any such action or proceeding.
6.4 Payment of Taxes. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any of its properties, or the income, profits or property of
any Subsidiary, prior to the date on which penalties attach thereto, except
those which are being contested in good faith and by proper proceedings;
provided, however, that the
28
Company or Subsidiary, as the case may be, shall have established appropriate
and proper reserves which are reflected on its books, to the extent required by
generally accepted accounting principles.
6.5 Maintenance of Insurance. Maintain insurance with
responsible and reputable insurers reasonably acceptable to the Bank in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general locations
in which the Company and each Subsidiary operates. All such insurance on the
Company's Collateral and the Subsidiaries Collateral (unless prohibited by the
terms of any lease to which the Company or such Subsidiary is a party) shall
name the Bank as loss payee in an amount not less than the maximum obligation of
the Company to the Bank hereunder, and shall contain such other provisions as
the Bank may reasonably require to fully protect its interest in the Company's
Collateral and the Subsidiaries Collateral, provided, however, that the Company
or a Subsidiary may be named as initial loss payee of such insurance in an
aggregate amount not exceeding $50,000 for each occurrence; provided, however,
the aggregate amount for which the Company and all Subsidiaries shall be named
as the initial loss payee(s) shall not exceed $100,000 in any fiscal year of the
Company. In the event that the Bank shall receive any such insurance proceeds,
it shall remit such proceeds to the Company or the Subsidiary which suffered the
insured loss, which proceeds shall be used either (i) to restore or replace the
fixtures, furniture, furnishings or equipment as were the subject of the insured
loss or (ii) for working capital purposes. Notwithstanding the foregoing, the
Bank shall have the right to apply any such amount received by it to the payment
of the Revolving Note, or Term Note, as is applicable, or other obligation of
the Company or the Subsidiaries to the Bank should an Event of Default occur,
and to retain such amount on deposit if an event, condition or act which with
notice or the lapse of time, or both, would constitute an Event of Default, has
occurred and is continuing.
6.6 Access to Premises, Books and Records. At any
reasonable time during normal business hours and from time to time, upon
reasonable prior notice, permit the Bank or any of its agents or representatives
to examine and make
29
copies of and abstracts from its records and books of account, visit its
properties and discuss its affairs, finances and accounts with any of its
officers, directors or independent accountants.
6.7 Books of Account. Keep proper records and
books of account, in which complete entries will be made in accordance with
generally accepted accounting principles consistently applied, reflecting all of
its financial transactions.
6.8 Preservation of Corporate Existence.
Preserve and maintain its corporate existence, rights, franchises and
privileges, and those of each of the Subsidiaries, in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is necessary or desirable in view of
its business and operations or the ownership of its properties; provided,
however, that the Company shall not be required to maintain the existence,
rights, franchises and privileges of any Subsidiary which shall no longer
conduct any operations or own any property; and provided, further, that any
Subsidiary may be merged with and into the Company or another Subsidiary.
6.9 Maintenance of Properties. Maintain, preserve
and keep all of its properties and assets in reasonably good working order and
condition, ordinary wear and tear excepted, and make all necessary and proper
renewals, replacements, additions and improvements thereto.
6.10 ERISA. Maintain compliance in all material
respects with the applicable provisions of ERISA. The Company will deliver to
the Bank, promptly after the filing or receiving thereof, copies of all
reports, including annual reports and notices, which the Company or any
Subsidiary files with or receives from the PBGC or the U.S. Department of Labor
under ERISA; and as soon as possible and in any event within thirty (30) days
after the Company knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC,
the Company or any Subsidiary has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, the Company will deliver to the Bank a
certificate
30
of the chief executive officer or chief financial officer of the Company setting
forth the details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action the Borrower and/or each affected Subsidiary proposes
to take with respect thereto.
6.11 Change in Business. The Company and each
Subsidiary will not make any material change in the character of its business
as carried on at the date hereof.
6.12 Compliance. The Company and each Subsidiary
will comply with the requirements of all applicable laws, rules, regulations,
orders of any governmental authority, and all agreements to which it is a
party, a noncompliance with which laws, rules, regulations, orders and
agreements would materially adversely affect the business, operations, prospects
or assets, or the condition, financial or otherwise, of the Company.
6.13 Additional Notification to Bank. The Company
shall promptly notify the Bank of (i) each and every default by the Company or
any Subsidiary under any obligation for borrowed money which would permit the
holder of such obligation to accelerate its maturity, including the names and
addresses of the holders of such obligation and the amount thereof, in each
case describing the nature thereof and the action the Company, or the
applicable Subsidiary, as the case may be, proposes to take with respect
thereto, and (ii) any change in the chief executive office of the Company or
location of any of the Company's Collateral or any Subsidiaries Collateral from
that listed in the Company's Security Agreement or any of the Subsidiaries
Security Agreements.
6.14 Additional Subsidiaries. In the event that
the Company or any Subsidiary shall cause a new Subsidiary to be formed, or
acquire such shares of any corporation, or such equity interest in any other
Person, that it shall become a Subsidiary, the Company shall give the Bank not
less than fifteen (15) days notice following the formation or acquisition of a
new Subsidiary or of such Subsidiary, which notice shall (i) specify the name
and state of incorporation or formation of such new Subsidiary, identify each of
the shareholders, or other equity owners
31
therein, and state the number of shares or other equity interest owned by each
of them, (ii) state whether it is to be a party to a lease or management
agreement and identify the other party thereto, (iii) give the address of any
Restaurant-Related Business or other facility to be operated or managed by such
Subsidiary, and (iv) state the amount to be invested by the Company in such
Subsidiary or to be paid by it to acquire same. Concurrently with the Company's
creating or acquiring a new Subsidiary, such Subsidiary shall execute and
deliver a Guaranty to the Bank, and a Subsidiary's Security Agreement pursuant
to which such Subsidiary, as debtor, shall grant to the Bank a first priority
perfected security interest in its Subsidiary's Collateral subject only to the
lien of Purchase Money Indebtedness in respect thereof. All of the shares in any
such Subsidiary which have been issued to the Company or to any Subsidiary,
together with stock powers executed in blank by the record owner of such shares,
or if applicable a collateral assignment of any other form of equity interest in
a Subsidiary, sufficient to transfer such shares or other interest upon
delivery, shall be delivered by the Company to the Bank promptly after the
Company, or such other Subsidiary's receipt thereof, which shares and stock
powers or collateral assignment will thereupon become part of the Company's
Collateral or the other Subsidiary's Collateral.
6.15 Notification of Write-offs of Investments and
Sales of Assets. Within ten (10) days of (a) the write-off or write-down of the
Company's or any Subsidiary's investments in or advances to any Restaurant-
Related Businesses in excess of an aggregate of $1,000,000 in any fiscal year,
or (b) the sale of any assets of the Company or any Subsidiary in excess of
$250,000 other than in the ordinary course of business, the Company shall
deliver a written notice to the Bank describing such event in reasonable detail.
6.16 Description of New Restaurant Arrangements.
Upon entering into a letter of intent or similar document setting forth the
terms of the arrangements for the development or acquisition of a new
Restaurant- Related Business, the Company will deliver to the Bank a copy
thereof, will advise the Bank of the material terms (including, without
limitation, the amount of the proposed
32
investment, any indebtedness proposed to be incurred, and whether such
indebtedness is to be non-recourse or with recourse) and will thereafter keep
the Bank informed of any material developments in respect thereof. Within ten
(10) days after execution thereof, the Company will deliver to the Bank a copy
of any acquisition agreement or lease relating thereto.
6.17 Further Assurances. The Company and each
Subsidiary will duly execute and deliver, or will cause to be duly executed
and delivered, such further instruments and documents, including, without
limitation, additional security agreements, Uniform Commercial Code financing
statements or amendments or continuations thereof, and will do or use its best
efforts to cause to be done such further acts as may be necessary or proper in
the Bank's reasonable opinion to effectuate the provisions or purposes of this
Agreement or the Loan Documents.
7. NEGATIVE COVENANTS.
The Company covenants and agrees that from and after the
date hereof and so long as any Loan (including interest or any other obligations
incurred hereunder) is outstanding or any Commitment is in effect, unless the
Bank shall otherwise consent in writing delivered to the Company, the Company
will not, and will not permit or suffer any Subsidiary to:
7.1 Indebtedness. Create, incur, assume or suffer
to exist, any Indebtedness except:
7.1.1. Indebtedness listed in the
financial statements described in Section 4.9.1, but no renewals, extensions
or refinancings thereof;
7.1.2. Purchase Money Indebtedness;
7.1.3. Indebtedness of any Subsidiary
(other than Purchase Money Indebtedness) for assets purchased for use in the
Restaurant-Related Business of such Subsidiary, which shall be deemed a capital
expenditure and shall be subject to the limitation of Section 7.8;
33
7.1.4. Indebtedness of the Company for
assets purchased for use in the Restaurant-Related Business conducted by the
Company or any Subsidiary, which, if such Indebtedness provides for non-recourse
liability limited to the asset purchased, shall constitute, for the purposes of
the second sentence of Section 7.1.9, Purchase Money Indebtedness, or which, if
such Indebtedness does not so provide, shall be deemed a capital expenditure
and shall be subject to the limitation of Section 7.8, and which Indebtedness
may be secured by the asset purchased;
7.1.5. Indebtedness of any Subsidiary to
the Company, which Indebtedness is created for working capital purposes and not
in connection with the development or acquisition of a Restaurant-Related
Business in an amount not exceeding $250,000, and any such Indebtedness of such
Subsidiary exceeding such amount, which excess shall be deemed a capital
expenditure subject to the limitation set forth in Section 7.8. Indebtedness of
the Company to a Subsidiary, or of a Subsidiary to a Subsidiary, is permitted
without limitation.
7.1.6. Indebtedness to the Company of any
newly-organized Subsidiary (or any such Indebtedness guaranteed by the Company)
in connection with the development or acquisition of a Restaurant-Related
Business, which shall be deemed a capital expenditure subject to the limitation
set forth in Section 7.8.
7.1.7. Consolidated Trade Indebtedness;
7.1.8. Indebtedness of the Company and the
Subsidiaries in respect of endorsements made in connection with the deposit of
items for credit or collection in the normal and ordinary course of business;
and
7.1.9. Consolidated Indebtedness, which
in the aggregate does not exceed (i) $26,000,000 prior to June 30, 2000, (ii)
$33,000,000 from July 1, 2000 through June 30, 2001, and (iii) thereafter
$24,000,000 until the Conversion Date, and subsequently $24,000,000 minus
scheduled monthly amortization on the Term Loan and Capitalized Leases; in each
of (i), (ii) and (iii) exclusive of (a) Consolidated
34
Trade Indebtedness, (b) Purchase Money Indebtedness, and (c) outstanding Letters
of Credit against which there has not been a draw. This Section 7.1.9 is a
maintenance test as well as an incurrence test in that calculations will be made
on a quarterly basis to determine compliance. Nothing in this Section 7.1.9, or
elsewhere in this Agreement, shall permit the Company or any Subsidiary to
incur, assume or suffer to exist any Indebtedness except for Indebtedness which
is required in the normal course of the business of operating and acquiring
Restaurant-Related Businesses.
7.2 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 (a) 2.0
and (b) the Consolidated Debt Service for such twelve (12) month period;
provided, 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
(12) 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 (12) month period.
7.3 Consolidated Net Worth. Maintain Consolidated
Net Worth which is less than (i) at March 31, 2000 of not less than
$27,000,000, (ii) at September 30, 2000 of not less than $32,000,000, (iii) at
March 31, 2001 of not less than $31,000,000, (iv) at June 30, 2001 of not less
than $$35,000,000, (v) at September 30, 2001 of not less than $37,000,000, and
(vi) $5,000,000 more than the required Consolidated Net Worth for the prior
fiscal year, on each such date during each subsequent fiscal year of the
Borrower until the Maturity Date; provided, however, that the dollar thresholds
set forth in this Section 7.3 shall be reduced on a dollar-for-dollar basis to
the extent of cash dividends paid and expenditures made by the Company to redeem
its capital stock, to the extent permitted by Section 7.11 of this Agreement.
35
7.4 Ratio of Consolidated Indebtedness to
Shareholders' Equity. Maintain a ratio of total Consolidated Indebtedness to
Shareholders' Equity of more than (i) 1:50 to 1:00 at any time through March 31,
2001, and (ii) 1.0 to 1.0 at any time thereafter.
7.5 Liens. Directly or indirectly, create, incur,
assume or permit or suffer to exist any mortgage, lien, security interest,
charge or encumbrance on, or pledge or deposit of or conditional sale, lease or
other title retention agreement with respect to, any of its properties or
assets, whether now owned or hereafter acquired or created, or be bound by or
subject to any agreement or option to do so, provided that the foregoing
restrictions shall not apply to:
7.5.1. liens for taxes, assessments or
governmental charges or levies the payment of which is not yet due or is being
contested in good faith by appropriate proceedings;
7.5.2. liens incurred by the Company or the
Subsidiaries or deposits made by the Company or the Subsidiaries in the
ordinary course of business in connection with worker's compensation or
unemployment insurance or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money);
7.5.3. good faith deposits (in amounts not
greater than the amounts normally required under leases of that type) under
leases of real property to which the Company or any of the Subsidiaries is a
party;
7.5.4. zoning restrictions, easements,
rights-of-way, restrictions, exceptions, reservations, covenants and other
similar title exceptions or encumbrances affecting real property, provided the
same are not incurred in connection with the borrowing of money and do not in
the aggregate materially detract from the value of said properties or materially
interfere with their use in the ordinary course of business;
36
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;
7.5.8. purchase money liens created by any
Subsidiary securing Purchase Money Indebtedness or the assumption by any
Subsidiary of existing purchase money liens in connection with the acquisition
by such Subsidiary of any additional Restaurant-Related Business acquired by any
Subsidiary, provided, however, that such liens extend only to the assets of the
Restaurant-Related Business acquired;
7.5.9. a lien arising from a judgment
which does not at the time constitute the basis for a default under the
provisions of Section 8.1.8 hereof; and
7.5.10. liens created in connection with
the issuance of (or to further secure) Bank Debt.
7.6 Loans, Advances, Investments. Except (i) loans
made to fund the purchase of the Company's shares pursuant to its stock
option plans, (ii) loans to the Company's employees other than as provided for
in (i), which loans shall not exceed $600,000 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
37
employees or to a Subsidiary in the ordinary course of business, to the extent
permitted in this Agreement), or make any commitment to purchase or otherwise
acquire any stock, bond, debenture, note or other security or obligation of any
Person if such loan, advance, capital contribution, extension of credit or
purchase or acquisition (an "Investment") is to or in a Person engaged in other
than a Restaurant-Related Business and such Investment, together with all other
outstanding Investments and the cost of any mergers, consolidations or
acquisitions of corporations engaged in other than Restaurant-Related Businesses
pursuant to Section 7.9 hereof, exceeds the sum of $500,000; and
7.6.2. make any Investment in any
Restaurant-Related Businesses managed (but not owned by) the Company or a
Subsidiary if such Investment, together with all other such Investments made in
any twelve (12) month period, exceeds the sum of $1,000,000. For the purposes of
this subsection 7.6.2, a Restaurant-Related Business which is "owned" by the
Company shall include a Restaurant-Related Business in which an Investment is
permitted pursuant to Section 7.6.3.
7.6.3. without the prior written consent of
the Bank, make any Investment in any Restaurant-Related Business, unless the
Company, directly or indirectly, shall own not less than 51% of both the equity
and voting interests in the Person owning and operating such Restaurant-Related
Business. The Bank hereby consents to the Company's (i) owning a 50% membership
interest in Southfield Restaurant Company, L.L.C.; provided, however, that the
Investment of the Company in Southfield Restaurant Company, L.L.C. for
construction of restaurants, but not including loans to cover pre-opening
expenses and operating losses, shall not exceed $8,000,000, and (ii) obtaining a
50% membership interest in Ark/EPE Restaurant Company LLC, which will construct
and operate a museum (including Elvis Presley artifacts), restaurants and a gift
shop to be located in Las Vegas, Nevada; provided, however, that the Investment
of the Company in Ark/EPE Restaurant Company, L.L.C. for the construction of
Restaurants, but not including loans to cover pre-opening expenses and operating
losses, shall not exceed $10,000,000.
38
7.7 Guarantees. Assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable for the
obligations of any Person (including, but not limited to, an agreement to
purchase any obligation, stock, assets, goods or services or to supply or
advance any funds, assets, goods, or services other than in the ordinary course
of business, or otherwise to assure the creditors of any Person against loss)
other than (i) guarantees by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business, (ii)
guarantees by the Company of the obligations of any Subsidiary, or by any
Subsidiary of the obligations of the Company or any other Subsidiary, (iii)
guarantees in favor of the Bank, or (iv) other guarantees by the Company or a
Subsidiary not otherwise permitted hereunder, provided that the amount thereof
shall be deemed a capital expenditure, subject to the limitation set forth in
Section 7.8.
7.8 Capital Expenditures. 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), (i) $33,000,000 for the fiscal year ending
September 30, 2000, and (ii) in excess of an aggregate of 30% of Consolidated
Net Worth at the end of each subsequent fiscal year.
7.9 Mergers, Consolidations, Acquisitions. Except
with the prior written consent of the Bank, which consent shall not be
unreasonably withheld or delayed, merge into or consolidate with or into any
corporation (and, for purposes of this Section 7.9, the acquisition by the
Company or any Subsidiary, by lease, purchase or otherwise, of all or
substantially all of the assets of any corporation shall be deemed a merger of
such corporation with the Company or such Subsidiary), if such corporation is
not engaged in Restaurant-Related Businesses, except that the Company or any
Subsidiary may merge into, consolidate with or into or acquire any corporation
or corporations engaged in other than Restaurant-Related Businesses without the
prior consent of
39
the Bank if the aggregate cost thereof or purchase price therefor, together with
the amount of any Investments in other than Restaurant-Related Businesses, does
not exceed $500,000.
7.10 Sales of Assets. Sell, lease, assign, transfer
or otherwise dispose of all or substantially all of its assets; except any
Subsidiary may sell, lease, assign or otherwise dispose of substantially all
of its assets.
7.11 Dividends, Redemptions. Declare or pay any
dividend, purchase, redeem or otherwise acquire for value any of its capital
stock now or hereafter outstanding or return any capital or make any
distribution of assets to stockholders, except that Subsidiaries may declare and
pay dividends, return capital and make distributions of assets to the Company
and the Company may (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.
7.12 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.
7.13 Sale of Subsidiary's Shares or Assets.
Sell any of the capital stock of any Subsidiary, or all, or substantially all,
of the assets of any Subsidiary, unless the net proceeds of any such sale are
used for working capital purposes of the Company or a Subsidiary.
40
8. DEFAULTS AND REMEDIES.
8.1 Events of Default. In the case of the
occurrence of any of the following events for any reason whatsoever, and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
governmental body or otherwise (each herein sometimes called an "Event of
Default"):
8.1.1. the Company shall fail to make any
payment of principal of or interest on either of the 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 Subsidiary shall
default in the performance or observance of any covenant or agreement contained
in Section 7 hereof;
8.1.3. the Company or any Subsidiary shall
default in the performance of any other covenant or agreement contained in this
Agreement which shall remain unremedied for a period of ten (10) days after
notice of the occurrence thereof;
8.1.4. an event of default or default
shall occur and be continuing under any other Loan Document;
8.1.5. any representation or warranty made
by or on behalf of the Company or any Subsidiary in this Agreement, either of
the 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 Subsidiary shall
default in the payment of principal of or interest on any Indebtedness for
borrowed money or the deferred purchase price of property (including any such
Indebtedness in the
41
nature of a lease) or shall default in the performance or observance of the
terms of any instrument pursuant to which such Indebtedness was created or is
secured, the effect of which default is to cause or permit any holder of any
such Indebtedness to cause the same to become due prior to its stated maturity
(and whether or not such default is waived by the holder thereof);
8.1.7. Michael Weinstein shall not at
all times be active in the management of the Company, other than by reason of
his death or disability;
8.1.8. any judgment against the Company or
any Subsidiary or any attachment, levy or execution against any of its
properties for an amount in excess of $100,000 shall remain unpaid, or shall not
be released, discharged, dismissed, stayed or fully bonded for a period of
thirty (30) days or more after its entry, issue or levy, as the case may be;
8.1.9. the Company or any Subsidiary
shall become insolvent (however evidenced) or be unable, or admit in writing
its inability, to pay its debts as they mature; or
8.1.10. the Company or any Subsidiary
shall make an assignment for the benefit of creditors, or a trustee, receiver or
liquidator shall be appointed for the Company or any Subsidiary, or for any of
its property, or any proceedings by or against the Company or any Subsidiary
under any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt, receivership, liquidation or dissolution law or statute
shall be commenced and which, if not consented to by the Company or such
Subsidiary, shall continue undischarged for a period of thirty (30) days;
8.1.11. If the Company shall suspend or
have suspended (voluntarily or involuntarily and for whatever reason) the
operation of a material portion of the business conducted by the Company
and the Subsidiaries; or
8.1.12. If (i) a reportable event (within
the meaning of Section 4043(b) of ERISA) (whether or not waived) shall have
occurred with respect to a Plan which
42
could, in the opinion of the Bank, have a material adverse effect on the
financial condition of the Company or of any Subsidiary, (ii) the filing by the
Company, any Subsidiary or an administrator of any Plan of a notice of intent to
terminate such Plan in a "distress termination" under the provisions of Section
4041 of ERISA, (iii) the receipt of notice by the Company, any Subsidiary or an
administrator of a Plan that the PBGC has instituted proceedings to terminate
(or appoint a trustee to administer) such a Plan, (iv) any other event or
condition exists which might, in the opinion of the Bank, constitute grounds
under the provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Plan by the PBGC, (v) a Plan shall
fail to maintain the minimum funding standard required by Section 412 of the
Internal Revenue Code for any plan year or a waiver of such standard is sought
or granted under the provisions of Section 412(d) of the Internal Revenue Code
which could, in the opinion of the Bank, have material adverse effect on the
financial condition of the Company or of any Subsidiary, (vi) the Company or any
Subsidiary has incurred, or is likely to incur, a liability under the provisions
of Sections 4062, 4063, 4064 or 4201 of ERISA which could, in the opinion of the
Bank, have a material adverse effect on the financial condition of the Company
or any Subsidiary; and in each case in clauses (i) through (vi) of this Section
8.1.12, such event or condition, together with all other such events or
conditions, if any, could subject the Company or any Subsidiary to any tax,
penalty or other liabilities in the aggregate material in relation to the
business, operations, property or financial or other condition of the Company or
any Subsidiary.
Then, if any event described in Section 8.1.10 above shall have occurred the
then extant Note shall immediately become due and payable, and if any event
described in any other subsection of this Section 8.1 shall have occurred, and
at any time thereafter, if any such event shall then be continuing, the Bank may
take either or both of the following actions by notice to the Company: (i)
declare the principal of and accrued interest on the Revolving Note or Term
Note, as applicable, and any other notes or evidences of Indebtedness of the
Company or any Subsidiary then held by the Bank, to be due and payable, both as
to principal and
43
interest, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived, anything contained herein or in either of
the Notes or in such other note or evidence of Indebtedness to the contrary
notwithstanding; and (ii) declare the Commitment terminated immediately. Upon
termination of the Commitment under this Section 8.1, any accrued fees shall be
and become forthwith due and payable to the Bank without further notice.
8.2 Suits for Enforcement. In case any one or more
of such Events of Default shall occur and be continuing, the Bank, or any other
holder of either of the 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 either of the Notes or in
aid of the exercise of any power granted in this Agreement or either of the
Notes or proceed to enforce the payment of the such of the Revolving Note or
Term Note, as is extant, or to enforce any other legal or equitable right of the
holder of either of the Notes.
8.3 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 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 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
44
Uniform Commercial Code of the State of New York and under the Uniform
Commercial Code of any other jurisdiction in which any of the Company's
Collateral or any Subsidiary's Collateral may be situated and apply the proceeds
of such collateral to such obligations of the Company and the Subsidiaries as it
determines in its sole discretion.
9. MISCELLANEOUS.
9.1 No Waiver. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder or under any of the
Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise by the Bank of any right hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right. The rights
and remedies of the Bank hereunder and under the Loan Documents and under any
other present and future agreements between the Bank and the Company or any
Subsidiary are cumulative and not exclusive of any rights or remedies provided
by law, or under any of said Loan Documents or agreements, and all such rights
and remedies may be exercised successively or concurrently.
9.2 Costs and Expenses. The Company shall reimburse
the Bank for all costs and expenses incurred by it, and shall pay the
reasonable fees and disbursements of counsel to the Bank, in connection with the
preparation of this Agreement, the 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 the 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) incurred or payable in connection with the
execution and delivery of the Notes.
9.3 Amendments. No amendment, modification or
waiver of any provision of this Agreement, either of the 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.
45
9.4 Survival of Representations. All
representations and warranties made herein or in any other writing furnished to
the Bank shall survive the delivery of both of the Notes.
9.5 Construction. This Agreement and each of
the 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.
9.6 Notices. All notices, approvals, consents,
requests, demands or other communications (collectively, "Communications")
to or upon the respective parties hereto shall be made in writing in one of the
following ways and shall be deemed to have been given, received and dated:
If by hand, immediately upon delivery; if by facsimile transmission, telex or
telegram, immediately upon receipt of answerback or confirmation; if by express
mail or any other overnight delivery service, one (1) day after dispatch; and
if by certified mail, return receipt requested, four (4) days after mailing.
All Communications are to be given to the following addresses (or to such other
address as any party may designate by Communication in accordance with this
Section):
If to the Bank: Bank Leumi USA
562 Fifth Avenue
New York, New York 10036
Attn: Mr. Richard Oleszewski
First Vice President
with a copy to: Warshaw Burstein Cohen
Schlesinger & Kuh LLP
555 Fifth Avenue
New York, New York 10017
Attn: Allen N. Ross, Esq.
If to the Company
or a Subsidiary: Ark Restaurants, Inc.
85 Fifth Avenue
New York, New York 10003
Attn: Michael Weinstein, President
46
with a copy to: Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attn: Paul Goodman, Esq.
9.7 Successors and Assigns. This Agreement shall
be binding upon the Company and its successors and assigns and the terms
hereof shall inure to the benefit of the Bank and its successor and assigns,
including a subsequent holder of either of the Notes.
9.8 Further Assurances. The Company agrees to
execute and deliver such further documents and to do such other acts and
things as the Bank may reasonably request in order further to effect the
purposes of this Agreement and the due performance by the Company of its
obligations hereunder.
9.9 Severability. The provisions of this Agreement
are severable, and if any provision shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Agreement in any jurisdiction.
9.10 JURISDICTION; WAIVER OF JURY TRIAL. THE
COMPANY HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT LOCATED IN NEW YORK CITY OVER ANY ACTION OR PROCEEDING ARISING OUT
OF ANY DISPUTE BETWEEN THE COMPANY AND THE BANK WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY OF SUCH
PROCESS TO THE COMPANY AT THE ADDRESS SET FORTH ABOVE. IN THE EVENT OF
LITIGATION BETWEEN THE COMPANY AND THE BANK OVER ANY MATTER CONNECTED WITH THIS
AGREEMENT OR RESULTING FROM TRANSACTIONS HEREUNDER, THE RIGHT TO A TRIAL BY JURY
IS HEREBY WAIVED BY THE COMPANY AND THE BANK.
9.11 Bank's Right of Set-Off. Upon the occurrence
of an Event of Default or of any condition, event or act which, with notice or
lapse of time, or both, would
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constitute such an Event of Default, the Bank is hereby authorized at any time
or from time to time, without notice to the Company, any Subsidiary or any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (generally or special) and any other
Indebtedness or property at any time held or owing by the Bank to or for the
credit or the account of the Company or any Subsidiary, whether or not related
to this Agreement or any transaction or occurrence hereunder, against and on
account of any and all obligations and liabilities of the Company or any
Subsidiary to the Bank, including (without limitation) all claims of any nature
or description arising out of or connected with this Agreement and/or either of
the 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 Subsidiary
to the Bank, whether direct or contingent, now existing or hereafter arising,
the Bank is hereby granted a lien and security interest in all property of the
Company or any Subsidiary held by the Bank, including, without limitation, all
property of every description, now or hereafter in the possession or custody of
or in transit to the Bank for any purpose, including safekeeping, collection or
pledge, for the account of the Company or any Subsidiary, or as to which the
Company or any Subsidiary may have any right or power. The rights and/or
remedies granted to the Bank under this Section 9.11 shall be in addition to,
and not in substitution for, any rights of set-off and banker's lien, to which
the Bank may otherwise be entitled.
9.12 Use of Accounting Terms. Except as otherwise
provided herein, accounting terms used herein shall be construed, calculations
hereunder shall be made and financial data required hereunder shall be
prepared, both as to classification of items and as to amounts, in accordance
with generally accepted accounting principles.
9.13 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall constitute an original, and
all of which taken together shall constitute one and the same agreement.
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9.14 Headings. Section headings are for
convenience only and shall not affect the interpretation or construction of this
Agreement or either of the Notes.
IN WITNESS WHEREOF, the Company and the Bank have duly
executed this Agreement as of the date first above written.
ARK RESTAURANTS CORP.
By:__________________________
Robert Towers,
Executive Vice President
BANK LEUMI USA
By:___________________________
Iris Schechter,
Vice President
By:___________________________
Richard E. Oleszewski,
First Vice President
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