1
EXHIBIT 10.3
AMENDMENT TO LOAN DOCUMENTS
THIS AGREEMENT made effective as of June 28, 1998, by and among PNC
BANK, NATIONAL ASSOCIATION, successor by merger to PNC BANK, OHIO, NATIONAL
ASSOCIATION ("Lender"), STEPHEN D. KING, an individual and resident of the
State of Ohio (the "Guarantor"), and CAFE ODYSSEY, INC., formerly known as
HOTEL DISCOVERY, INC., a Minnesota corporation, as successor by merger to HOTEL
MEXICO, INC., an Ohio corporation formerly known as "KRLP ACQUISITION CORP."
(the "New Borrower").
RECITALS
A. Lender extended a secured loan in the amount of $1,000,000.00 (the
"Loan") to the Kenwood Restaurant Limited Partnership, an Ohio
corporation (the "Original New Borrower") with respect to certain
premises, more particularly described in Schedule "A" hereto and made
a part hereof (the "Property"), the obligations of which were
guaranteed by the Guarantor and which loan is described herein as the
"Loan."
B. The Loan is now evidenced and/or secured by the documents listed in
Schedule B hereto (collectively, the "Loan Documents"), of which
Stephen D. King is the Guarantor pursuant to a Guarantee dated October
9, 1996 and identified in Schedule B hereto. All terms used herein,
but not defined, shall have the same definitions as used in the Loan
Agreement identified in Schedule "B" hereto.
C. The Original New Borrower transferred all of its right, title and
interest in the Property to Hotel Mexico, Inc. ("HMI").
D. Pursuant to certain Assignment and Assumption of Lease dated December
15, 1996 by and between Original New Borrower and HMI, and filed of
record in Official Record Volume 7268, Page 1034, in the Hamilton
County, Ohio Recorder's Office, HMI assumed all of the obligations of
the Original New Borrower under the Loan.
E. On or about August 1, 1997, HMI merged into the New Borrower, with New
Borrower being the surviving corporation under such merger.
F. Lender, New Borrower and Guarantor entered into a certain Second Loan
Assumption dated as of October 16, 1997, under which Lender approved
of said merger between HMI and New Borrower, New Borrower assumed
HMI's obligations under the Loan Documents, and the Loan Documents
were amended as provided therein.
G. New Borrower recently changed its name and is in the process of making
a name change filing with the Ohio Secretary of State.
H. New Borrower is in default under the Loan Documents and has requested
Lender to forebear its rights and remedies against New Borrower and
Guarantor as a result of such default, and to modify certain of its
obligations contained therein, and Lender has agreed to give such
2
forbearance and to approve such modifications in accordance with, but
subject to, the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Acknowledgement of Loan Terms
New Borrower acknowledges the following:
1.1 As of the effective date of this Agreement, New Borrower is
currently indebted to Lender in the outstanding principal
amount of $883,411.58 under the Loan.
1.2 The current annual rate of interest payable under the Loan is
9.06% per annum and shall remain at such rate until maturity.
1.3 The monthly installment payment of principal currently in
effect under the Loan is acknowledged to be $5,785.00, plus
accrued interest.
1.4 The Loan Documents are valid and binding obligations of the
New Borrower and Guarantor, as applicable, and are
enforceable in accordance with their terms.
2. Acknowledgement of Loan Defaults
New Borrower acknowledges that New Borrower and Guarantor are
currently in default of the Loan Documents as follows:
2.1 The incurrence of indebtedness pursuant to that certain
financing identified in the loan documentation contained in
Schedule 2.1 attached hereto and made a part hereof with
respect to its restaurant located at the Mall of America in
Minneapolis, Minnesota (the "Mall of America Financing") in
contravention of Section 7.1 contained in the Loan Agreement.
2.2 The repayment of certain indebtedness owed by New Borrower to
Guarantor in the amount of approximately $525,110.00 and
Guarantor's failure to pay such sum to Lender, in
contravention of Section 6 contained in the Guarantee and the
other Loan Documents.
3. Amendment to Loan Agreement
The Loan Documents are hereby amend as follows:
2
3
3.1 Section 6.8.1 of the Loan Agreement is hereby revised to read
as follows:
Monthly statements. Furnish Lender within twenty days (20)
after the end of each fiscal thirty (30) day period with
internally prepared financial statements of New Borrower with
respect to such thirty (30) day period, which shall be in
Proper Form and shall contain such information as Lender may
request, including without limitation, operating statements
of the Project, cash flow statements, balance sheet, profit
and loss statements.
3.2 Section 6.28 of the Loan Agreement is hereby revised to read
as follows:
Maintenance of cash. Shall maintain at all times cash under
its exclusive control, not subject to any pledge, security or
similar arrangement, of $1,000,000.00, or more.
3.3 The following section is hereby incorporated as Section 6.29
into the Loan Agreement:
Tenant Finish for Mall of America Lease. Shall furnish to
Lender, in Proper Form, documentation which evidences receipt
of payment of the sum of $1,600,000.00 (the "Tenant Finish"),
from the Lessor pursuant to Section 24.20 of that certain
Lease dated by and between New Borrower, as Lessee, and Mall
of America Company, a Minnesota General Partnership, as
Lessor, affecting its restaurant in Mall of America,
Minneapolis, Minnesota (the "Mall of America Lease") no later
than fourteen (14) days after its receipt of such sum.
3.4 The maturity date of the Term Note is hereby revised from
"February 1, 1999" to "November 1, 1998.
4. Forbearance
4.1 Except as otherwise provided in this Agreement, PNC shall not
commence any adversarial legal proceeding against the New
Borrower or the Guarantor or against any of the Property or
other assets of New Borrower as a result of the occurrence of
any of the defaults provided in Section 2 hereof, and PNC
shall conditionally waive such defaults, except that this
forbearance and conditional waiver shall automatically
terminate, and shall be of no further force and effect as a
result of any of the following:
4.1.1 An Event of Default under any of the Loan Documents,
including without limitation, any additional
defaults under the provisions of the Loan Documents
specified in Section 2 hereof;
3
4
4.1.2 If Lender reasonably deems itself insecure as a
result of facts or circumstances not known to Lender
as of the date of this Agreement or if any other
event, matter or condition shall occur, arise or
exist creating in Lender a reasonable cause for
concern that any of its rights or interests may be
materially and adversely affected by any delay in
enforcing its remedies for any Event of Default,
including without limitation, any transfer by the
New Borrower or Guarantor that (i) its trustee in
bankruptcy could challenge under 11 U.S.C. Sections
544, 547 or 548 if the New Borrower or Guarantor
were insolvent and a petition were filed by or
against either such party in bankruptcy, (ii)
constituted a distribution to its shareholders or
(iii) compensated or benefited any insider (as
defined in Section 101 of the United States
Bankruptcy Code) in excess of a reasonable salary
for services actually performed or was more
favorable than or in consistent with past practices;
4.1.3 Lender determines that there are facts or
circumstances not directly known to Lender as to the
date of this Agreement which constitute a material
adverse change in the financial condition of New
Borrower; or
4.1.4 November 1, 1998.
4.2 This forbearance and conditional waiver by Lender are
expressly limited to the purposes specified in Section 4.1
hereof, and do not constitute a forbearance or waiver of any
additional defaults by New Borrower under the Loan Documents
specified in Section 2 hereof, or a forbearance or waiver of
any other Event of Default under the Loan Documents.
Furthermore, this forbearance and conditional waiver by
Lender shall not be deemed to amend, modify or extend any of
the obligations of either New Borrower or Guarantor under the
Loan Documents.
4.3 New Borrower and Guarantor covenant and agree that if any
petition in bankruptcy is filed (voluntary or involuntary)
with respect to the New Borrower and/or the Guarantor, Lender
shall be entitled, and the New Borrower shall consent, to
immediate and complete relief from any automatic stay or
moratorium arising out of or related to the bankruptcy
petition and Lender shall be permitted to proceed to protect
and enforce its rights or remedies either by suit in equity
or by action at law, or both. New Borrower and Guarantor
covenant and agree to join with Lender in filing the
appropriate petitions or requests for relief required to
obtain the relief referred to herein. In addition, in the
event of any such bankruptcy, New Borrower waives its
exclusive rights under 11 U.S.C. Section 1121 to file a plan
of reorganization during the 120 day period after the date of
entry of an order for relief under chapter 11 of the United
States Bankruptcy Code and further waives any exclusive right
it may have under the United States Bankruptcy Code to secure
acceptance of any plan filed by it. New Borrower and
Guarantor hereby stipulate, acknowledge and agree that,
irrespective of the waiver herein, in any proceeding filed by
or against the New
4
5
Borrower, "cause" within the meaning of 11 U.S.C. Section
1121(d) exists for reducing to zero, on the request of
Lender, the 120 day and 180 day exclusivity periods
prescribed for under 11 U.S.C. Section 1121 with respect to
the filing by the New Borrower of a plan and securing
acceptance thereof and the New Borrower shall consent and
hereby does consent to a request by Lender if it shall so
elect, of the court to a reduction of such exclusivity
periods such that in a Chapter 11 case brought by or against
the New Borrower, Lender shall have the right to file and
seek to secure acceptance of a plan of reorganization at any
time after the date of the order for relief under such
chapter, whether or not the New Borrower at any time files a
plan in such proceeding. No provision hereof shall preclude
the New Borrower from filing a plan of reorganization under
chapter 11 of the United States Bankruptcy Code.
4.4 New Borrower and Guarantor acknowledge that Lender has been
induced to enter into this Agreement because New Borrower and
Guarantor have represented to Lender, and Lender agrees, that
the interests of all parties hereto and the other creditors
of New Borrower shall be best served without Bankruptcy Court
proceedings. Accordingly, the parties hereto have bargained
in good faith for the terms of the forbearance and
conditional waiver contained herein and New Borrower and
Guarantor agree that the filing of any Chapter 11 Bankruptcy
Petition with respect to New Borrower would be in bad faith,
and in abrogation of this Agreement and should be deemed to
have been so filed by the Bankruptcy Court, justifying
dismissal of such bankruptcy case or proceeding, or
enforcement of the relief from stay and waiver of exclusivity
provisions set forth above, and further, justifying
enforcement of the bankruptcy guarantee executed and
delivered concurrently with this Agreement by Guarantor.
Nothing in this Agreement shall be deemed in any way to limit
or restrict any of Lender's rights to seek in Bankruptcy
Court or any other court of competent jurisdiction, any
relief Lender may deem appropriate in the event that a
voluntary or involuntary petition under any title of the
United States Bankruptcy Code is filed by or against New
Borrower.
5. Release
New Borrower and Guarantor hereby release Lender and its employees,
agents and counsel from all claims, losses, damages and expenses,
including but without limitation reasonable attorneys fees, arising
out of or relating to the Loan, Lender's administration of the Loan
and negotiation of this Agreement.
6. Inducements
As an inducement for Lender to enter into this Agreement, New Borrower has paid
to Lender the sum of $300,000.00 to be used to reduce the outstanding principal
under the Loan, and has agreed to reimburse Lender for all of its reasonable
attorneys fees and other costs associated with the Loan through this date, both
of which sums have been paid to Lender concurrent with the execution of this
5
6
Agreement. As a further inducement for Lender to enter into this Agreement, New
Borrower and Guarantor represent, warrant and state to Lender the following:
6.1 The Loan Documents constitute the valid, legal and binding
obligations of the New Borrower and Guarantor, as applicable,
which are enforceable in accordance with their terms; and the
liens and security interests of the security documents
comprising the Loan Documents are valid and substituting
liens and interests against the collateral described therein,
first in priority of title, except for matters disclosed in
that certain Loan Policy of Title Insurance No. 36 0138 010
00004177 issued by Chicago Title Insurance Company to Lender.
6.2 There are no claims, causes of action, defenses or rights of
setoff against Lender with respect to the Loan Documents by
either of them.
6.3 Except for the defaults acknowledged in Section 2 hereof, the
New Borrower and Guarantor are currently not in default under
the Loan Documents and have fully performed all of their
respective duties and obligations thereunder through and
including the effective date of this Agreement. Furthermore,
Lender currently is entitled to enforce all of its rights and
remedies against New Borrower and Guarantor under the Loan
Documents as a result of the defaults acknowledged in Section
2 hereof.
6.4 This Agreement and the consummation of the transaction
contemplated hereby constitute the valid, enforceable and
binding obligation of the New Borrower and Guarantor,
respectively.
6.5 Neither the execution of this Agreement nor the consummation
of any of the transactions contemplated hereby will
constitute a violation of, be in conflict with, or constitute
a default under (or with the passage of time or delivery of
notice, or both), or will constitute a default under any term
or provision of any Agreement which the New Borrower or
Guarantor is a party to or bound by.
6.6 Concurrent with the signature and delivery of this Agreement
by the parties hereto, the New Borrower owns full, absolute
and complete title to the Property, subject to the lien of
the security documents comprising the Loan Documents and the
fee simple or reversionary interest of Phillip E. Stephens,
Trustee, under the Restaurant Lease.
6.7 Lender has acted at all times in a fair, reasonable, good
faith manner in connection with its administration and
enforcement of the Loan Documents, its dealings with the
parties hereto with respect to the Loan, and all other
transactions related to this Agreement or the Loan.
6
7
6.8 New Borrower has adopted the necessary resolution to enter
into this Agreement and its signatory to this Agreement is
authorized to execute the same and is in good standing with
New Borrower.
6.9 A true, correct and complete copy of the loan documentation
evidencing the Mall of America Financing is attached as
Schedule 6.9 hereto, and there are no modifications or
amendments thereto.
6.10 A true, correct and complete copy of the Mall of America
Lease is attached as Schedule 6.10 hereto, and there are no
amendments or modifications thereto.
6.11 The Mall of America Financing is in full force and effect,
New Borrower has received all loan proceeds therefrom and has
used the same in the ordinary course of New Borrower's
business.
6.12 The Mall of America Lease is in full force and effect and
there is no default thereunder by New Borrower.
6.13 The Tenant Finish shall be used in New Borrower's ordinary
course of business.
6.14 A true, correct and complete copy of the lease transaction of
New Borrower with respect to its restaurant to be located in
Denver, Colorado is attached hereto as Schedule 6.14, and
there are no amendments or modifications thereto.
6.15 New Borrower promptly shall file all documentation with the
Ohio Secretary of State necessary to reflect New Borrowers'
current name in its conduct of business in the State of Ohio,
and shall furnish Lender with a certified copy of a name
change certificate therefrom. Borrower further shall promptly
reimburse Lender for all fees and expenses incurred in the
filing of a U.C.C. Financing Statement with the Ohio
Secretary to reflect said name change.
6.16 All of the representations, warranties and other undertakings
of New Borrower and Guarantor, respectively, contained in the
Loan Documents, except as expressly modified herein, are
restated and made effective as of the date of this Agreement.
7. Notices
Notices to the parties hereto under the Loan Documents shall be sent in the
manner set forth in the Loan Agreement at the following addresses:
7
8
If to Lender: PNC Bank, National Association 201 East 5th
Street Cincinnati, Ohio 45201-1198 Attn:
Katherine Herke Nickel
with copy to: Frost & Jacobs LLP
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45201 Attn: Frederick W.
Kindel
If to New Borrower: Cafe Odyssey, Inc.
4801 West 81st Street
Suite 112
Bloomington, Minnesota 55437 Attn: Ronald
K. Fuller
with copy to: Maslon Edelman Borman & Brand 3300 Norwest
Center 90 South Seventh Street Minneapolis,
Minnesota 55402-4140 Attn: William M.
Mower, P.A.
If to Guarantor: Stephen D. King
8260 North Creek Drive, Suite 140
Cincinnati, Ohio 43235
with copy to: Maslon Edelman Borman & Brand 3300 Norwest
Center 90 South Seventh Street Minneapolis,
Minnesota 55402-4140 Attn: William M.
Mower, P.A.
8. Consent to Jurisdiction; Waiver of Jury Trial
This Agreement has been executed, delivered and accepted at and will
be deemed to be made at Cincinnati, Ohio and will be interpreted and
the rights and liabilities of the party hereto determined in
accordance with the laws of the State of Ohio, and the New Borrower
and Guarantor hereby agree that the exclusive jurisdiction of any
state or federal court located within Hamilton County, Ohio and
consents that all service of process to New Borrower and Guarantor
shall be sent in the manner set forth in the Loan Agreement to the
addresses set forth in Section 7 hereof. Nothing contained herein will
prevent the Lender from bringing any action or exercising any right
against any property of the New Borrower within any other
8
9
state or nation to enforce any award of judgment obtained in the
federal or state court located within Hamilton County, Ohio. The New
Borrower and Guarantor waive any objection based on forum
non-conveniens and any objection to venue or any other action
instituted hereunder. The New Borrower and Guarantor and the Lender
each waive any right to trial by jury in any action or proceeding
related to this Agreement, the Loan Documents or any transaction
contemplated in any such documents.
9. Miscellaneous
This Agreement may be executed in counterparts. This Agreement,
together with the Loan Documents, contain the entire agreement among
the parties hereto and supersedes all discussions, communications,
documents and other matters furnished among the parties hereto or
their counsel. The Agreement shall be included in the definition of
"Loan Documents" as used herein. Notwithstanding anything contained
herein to the contrary, the liens and security interest of the
Security Documents comprised in the Loan Documents shall retain their
original priority of title. In the event one or more provisions
contained in this Agreement shall for any reason be held invalid,
legal or unenforceable, in any respect, such invalidity, legality or
unenforceability shall not affect any other provision of this
Agreement.
10. Confession of Judgment. Any attorney-at-law may appear in any court of
record situated in the county where either New Borrower or Guarantor
then resides or conducts business, or in the county where New Borrower
signed this warrant, or in any other court in the State of Ohio or in
any other state or territory of the United States, at any time after
the debt hereby evidenced shall become due, either at its stated
maturity or by acceleration or otherwise, and may waive the issuing
and service of process and confess judgment against New Borrower,
jointly and severally, in favor of Lender, for the amount then owing
herein, together with the costs of suit, and thereupon release all
errors and waive all rights of appeal and stays of execution. No such
judgment or judgments against less than all of the undersigned shall
be a bar to a subsequent judgment or judgments against any one or more
or the undersigned against whom judgment has not been obtained hereon,
this being a joint and several warrant of attorney to confess
judgment.
9
10
Executed as of July 23, 1998.
================================================================================
WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
================================================================================
NEW BORROWER:
CAFE ODYSSEY, INC. F/K/A
HOTEL DISCOVERY, INC.
By: /s/ Stephen D. King
Print Name: Stephen D. King
Title: Chairman
10
11
================================================================================
WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
================================================================================
GUARANTOR:
By: /s/ Stephen D. King
Print Name: STEPHEN D. KING
APPROVED AND AGREED:
LENDER:
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Lawrence Reynolds
Title: Vice President
STATE OF MINNESOTA )
) SS:
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me, a notary public,
this 23rd day of July, 1998 by Stephen D. King, the Chairman of CAFE ODYSSEY,
INC. F/K/A HOTEL DISCOVERY, INC., a Minnesota corporation.
/s/ William M. Mower Notary Public
11
12
STATE OF MINNESOTA )
) SS:
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me, a notary public,
this 23rd day of July, 1998 by STEPHEN D. KING, a resident of Ohio.
/s/ William M. Mower
Notary Public
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
The foregoing instrument was acknowledged before me, a notary public,
this 24th day of July, 1998 by Lawrence Reynolds, a Vice President of PNC BANK,
NATIONAL ASSOCIATION, a national banking association, on behalf of such
association.
/s/ Frederick W. Kindel
Notary Public
12