2/14/01
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as of February
15, 2001, by and between CHICAGO PIZZA & BREWERY, INC., a California corporation
("Borrower"), and UNION BANK OF CALIFORNIA, N.A., a national banking association
("Bank").
SECTION 1. THE CREDIT
1.1 CREDIT FACILITIES.
1.1.1 REDUCING REVOLVING CREDIT COMMITMENT. During the period from the
date of this Agreement to but excluding February 28, 2003 (the "Revolving Credit
Commitment Termination Date"), Bank shall make revolving loans (collectively,
"Revolving Loans" and individually, a "Revolving Loan") to Borrower from time to
time upon Borrower's request in an aggregate principal amount at any one time
outstanding not to exceed Four Million Dollars ($4,000,000) (the "Reducing
Revolving Credit Commitment"). The proceeds of each Revolving Loan shall be
used only to finance capital expenditures associated with the opening by
Borrower of new stores and for working capital purposes. Borrower's obligation
to repay all of the Revolving Loans, together with accrued interest thereon,
shall be evidenced by that certain commercial promissory note, on Bank's
standard form, issued by Borrower in favor of Bank (the "Revolving Note"). Bank
shall enter the amount of each Revolving Loan and the amount of each repayment
in Bank's records and such entries shall be deemed correct, absent manifest
error. The failure of Bank to make any such entries shall not discharge
Borrower of its obligation to repay in full with interest all amounts borrowed
under the Reducing Revolving Credit Commitment.
1.1.2 CONVERSION LOAN COMMITMENT. During the period from the date of
this Agreement to but excluding the Revolving Credit Commitment Termination
Date, so long as no Event of Default has occurred and is then continuing,
Borrower may elect, upon not less than five (5) days' prior written notice to
Bank, to convert all or any portion of the Revolving Loans then outstanding
under the Reducing Revolving Credit Commitment to one or more term loans
(collectively, "Conversion Loans" and individually, a "Conversion Loan") (the
"Conversion Loan Commitment"); provided, however, that each Conversion Loan
shall be in a principal amount of not less than One Million Dollars
($1,000,000). The proceeds of each Conversion Loan shall be used solely to
repay a like amount of Revolving Loans then outstanding under the Reducing
Revolving Credit Commitment. Each Conversion Loan shall be evidenced by a
commercial promissory note, on Bank's standard form, issued by Borrower in favor
of Bank (each, a "Conversion Note" and collectively, the "Conversion Notes").
Each Conversion Note shall provide for payments of interest on the last day of
each month, commencing on the first such date after the date of the
corresponding Conversion Loan, and provide for payments of principal in
forty-eight (48) equal consecutive monthly installments, each in an amount equal
to one-forty-eighth (1/48) of the original principal amount of such Conversion
Note. Bank shall enter the amount of each Conversion Loan and the amount of
each repayment in Bank's records and such entries shall be deemed correct,
absent manifest error. The failure of Bank to make any such entries shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed under the Conversion Loan Commitment. Contemporaneously with the
making by Bank of each Conversion Loan, the amount of the Reducing Revolving
Credit Commitment shall be permanently reduced by the amount of such Conversion
Loan.
1.1.3 TERM LOAN COMMITMENT. Bank shall make a term loan (the
"Term Loan") to Borrower in the principal amount of Four Million Dollars
($4,000,000) in one disbursement on or before February 23, 2001 (the "Term Loan
Commitment"). The proceeds of the Term Loan shall be used solely to repay in
full all of Borrower's obligations and liabilities to Washington Mutual Bank,
doing business as WM Business Bank. Borrower's obligation to repay the
principal amount of the Term Loan, together with accrued interest thereon, shall
be evidenced by that certain commercial promissory note, on Bank's standard
form, issued by Borrower in favor of Bank (the "Term Note"). The Term Note
shall provide for payments of interest on the last day of each month, commencing
on the first such date after the date of the Term Loan, and provide for payments
of principal in sixty (60) equal consecutive monthly installments, each in an
amount equal to one-sixtieth (1/60) of the original principal amount of the Term
Note. Bank shall enter the amount of the Term Loan and the amount of each
repayment in Bank's records and such entries shall be deemed correct, absent
manifest error. The failure of Bank to make any such entries shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed under the Term Loan.
1.2 TERMINOLOGY. As used in this Agreement, the following words and
phrases, whether used in their singular or plural form, shall have the meanings
set forth below:
"Commitments" and "Commitment" means, respectively, (a) the Reducing Revolving
Credit Commitment, the Conversion Loan Commitment and the Term Loan Commitment,
and (b) any of such Commitments.
"GAAP" means generally accepted accounting principles consistently applied.
Accounting terms used in this Agreement but not otherwise expressly defined
shall have the meanings given them by GAAP.
"Lessors" means Source Capital Leasing Co., Surf & Sand Corporation and
Northwest Leasing Co. Inc.
"Lien" means any voluntary or involuntary security interest, mortgage, pledge,
claim, charge, encumbrance, title retention agreement, or third party interest,
covering all or any part of the property of Borrower or Guarantor.
"Loan" means all of the credit facilities described above.
"Loan Documents" means this Agreement, the Note, and all other documents,
instruments and agreements required by Bank and executed in connection with this
Agreement, the Note, the Loan and all other credit facilities from time to time
made available to Borrower by Bank.
"Note" means all of the promissory notes described above.
1.3 PREPAYMENT. The Loan may be prepaid in full or in part but only in
accordance with the terms of the Note, and any such prepayment shall be subject
to any prepayment fee provided for therein. In the event of a principal
prepayment on any term indebtedness, the amount prepaid shall be applied to the
scheduled principal installments due in the reverse order of their maturity on
the Loan being prepaid.
1.4 INTEREST. The unpaid principal balance of the Loan shall bear interest
at the rate or rates provided in the Note.
1.5 COMMITMENT FEE. On or before the date of execution of this Agreement,
Borrower shall pay to Bank a nonrefundable fee in connection with the
Commitments in the sum of Ten Thousand Dollars ($10,000).
1.6 DISBURSEMENT. Bank shall disburse the proceeds of the Loan as provided
in Bank's standard form Authorizations to Disburse executed by Borrower.
1.7 SECURITY.
(A) Prior to the disbursement of the Loan, Borrower shall execute a
security agreement, on Bank's standard form, and one or more financing
statements suitable for filing in the official records of the appropriate
jurisdictions and/or any other location required by Bank, granting to Bank a
first priority security interest in such of Borrower's personal property as is
described in such security agreement, all as security for Borrower's obligations
under this Agreement and the other Loan Documents. Any exceptions to Bank's
first priority Lien are permitted only as provided in this Agreement.
(B) Prior to the disbursement of the Loan, Borrower shall execute a
security agreement-trademarks, granting to Bank a first priority security
interest in all of Borrower's trademarks, trademark rights and registrations and
applications for trademarks, all as security for Borrower's obligations under
this Agreement and the other Loan Documents.
(C) Prior to the disbursement of the Loan, Borrower shall cause Chicago
Pizza Northwest, Inc., a Washington corporation ("Guarantor"), to execute a
security agreement on Bank's standard form, and one or more financing statements
suitable for filing in the official records of the appropriate jurisdictions
and/or any other location required by Bank, granting to Bank a first priority
security interest in such of Guarantor's property as is described in such
security agreement, all as security for Guarantor's obligations under the
Guaranty (as such term is defined in Section 2.1(b) hereof). Any exceptions to
Bank's first priority Lien are permitted only as provided in this Agreement.
SECTION 2. CONDITIONS
2.1 CONDITIONS PRECEDENT. Bank shall not be obligated to disburse all or
any portion of the Loan unless at or prior to the time of each such
disbursement, the following conditions have been fulfilled to Bank's
satisfaction:
(A) COMPLIANCE. Borrower shall have performed and complied with all terms
and conditions required by this Agreement to be performed or complied with, and
shall have executed and delivered to Bank, or caused to be executed and
delivered to Bank, the Note and all of the other Loan Documents.
(B) GUARANTY. Guarantor shall have executed and delivered to Bank a
continuing guaranty (the "Guaranty") in form and amount satisfactory to Bank.
(C) AUTHORIZATIONS TO OBTAIN CREDIT.
(I) Borrower shall have provided Bank with an Authorization to Obtain
Credit, on Bank's standard form therefor, duly executed by a secretary or
assistant secretary of Borrower, attesting to resolutions of the board of
directors of Borrower authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which Borrower is a party. Such
resolutions shall also designate the persons who are authorized to act on
Borrower's behalf in connection with this Agreement to do the things required of
Borrower pursuant to this Agreement.
(II) Borrower shall have caused Guarantor to provide Bank with an
Authorization to Obtain Credit, on Bank's standard form therefor, duly executed
by a secretary or assistant secretary of Guarantor, attesting to resolutions of
the board of directors of Guarantor authorizing the execution, delivery and
performance of the Guaranty. Such resolutions shall also designate the persons
who are authorized to act on Guarantor's behalf in connection with this
Agreement to do the things required of Guarantor pursuant to this Agreement.
(D) TERMINATION STATEMENTS. Borrower shall have provided Bank with
termination statements executed by such secured creditors (including without
limitation Washington Mutual Bank, doing business as WM Business Bank) as may be
required by Bank, suitable for filing with the Secretary of State in each state
designated by Bank.
(E) CONTINUING COMPLIANCE. At the time any disbursement is to be made and
immediately thereafter, there shall not exist any Event of Default or any event,
condition, or act which with notice or lapse of time, or both, would constitute
an Event of Default.
(F) OTHER DOCUMENTS. Bank shall have received such other documents,
instruments and agreements as Bank may reasonably require in order to effect
fully the financing arrangement contemplated herein.
2.2 CONDITIONS SUBSEQUENT. Bank's obligation to continue extending credit
to Borrower after the date of the initial disbursement of the Loan provided for
in this Agreement is subject to the satisfaction of the following conditions
subsequent:
(A) CAPITAL STRUCTURE. On or before April 30, 2001, Bank shall have
received satisfactory evidence from Borrower demonstrating that Borrower has
received cash equity investments from the issuance of common stock in an amount
of not less than Two Million Dollars ($2,000,000), and (b) Bank shall have
determined that such common stock has been issued on terms acceptable to Bank.
(B) TERMINATION STATEMENTS. On or before April 30, 2001, Bank shall have
received evidence that Guarantor's capital lease obligations to Lessors have
been repaid in full and Bank shall have received copies of filed termination
statements executed by Lessors with respect thereto.
(C) OTHER DOCUMENTS. Bank shall have received such other documents,
instruments and agreements as Bank may reasonably require in order to effect
fully the financing arrangement contemplated herein.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 BUSINESS ACTIVITY. Borrower's principal business is the operation of
restaurants in California, Colorado, Oregon and Arizona.
3.2 ORGANIZATION AND QUALIFICATION. Borrower is duly organized and existing
under the laws of the state of its organization, is duly qualified and in good
standing in any jurisdiction where such qualification is required, and has the
power and authority to carry on the business in which it is engaged and/or
proposes to engage.
3.3 POWER AND AUTHORIZATION. Borrower has the power and authority to enter
into this Agreement and to execute and deliver the Note and all of the other
Loan Documents. This Agreement and all things required by this Agreement and
the other Loan Documents have been duly authorized by all requisite corporate
action of Borrower.
3.4 AUTHORITY TO BORROW. The execution, delivery and performance of this
Agreement, the Note and all other Loan Documents are not in contravention of any
of the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its property is bound or affected.
3.5 COMPLIANCE WITH LAWS. Borrower is in compliance with all applicable
laws, rules, ordinances or regulations which materially affect the operations or
financial condition of Borrower.
3.6 TITLE. Except for assets which may have been disposed of in the
ordinary course of business, Borrower has good and marketable title to all
property reflected in its financial statements delivered to Bank and to all
property acquired by Borrower since the date of such financial statements, free
and clear of all Liens, except for Liens specifically referred to in such
financial statements.
3.7 FINANCIAL STATEMENTS. The consolidated financial statement of Borrower
and its subsidiaries, including both a consolidated balance sheet at December
31, 2000, together with supporting schedules, and a consolidated income
statement for the twelve (12) months ended December 31, 2000, have heretofore
been furnished to Bank, are true and complete, and fairly represent the
financial condition of Borrower and its subsidiaries for the period covered
thereby. Since December 31, 2000, there has been no material adverse change in
the financial condition or operations of Borrower or any of its subsidiaries.
3.8 LITIGATION. There is no litigation or proceeding pending or threatened
against Borrower or Guarantor or any of their respective property which is
reasonably likely to affect the financial condition, property or business of
Borrower or Guarantor in a materially adverse manner or result in liability in
excess of Borrower's or Guarantor's insurance coverage.
3.9 ERISA. Borrower's defined benefit pension plans (as such term is
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), meet, as of the date hereof, the minimum funding standards of
Section 302 of ERISA, and no Reportable Event (as such term is defined in ERISA)
or Prohibited Transaction (as such term is defined in ERISA) has occurred with
respect to any such plan.
3.10 REGULATION U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System, or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and, except as may be expressly agreed to and documented between
Borrower and Bank, none of the proceeds of the Loan will be used directly or
indirectly for such purpose.
3.11 NO EVENT OF DEFAULT. Borrower is not now in default in the payment of
any of its material obligations, and there exists no Event of Default, and no
condition, event or act which with notice or lapse of time, or both, would
constitute an Event of Default.
3.12 CONTINUING REPRESENTATIONS AND WARRANTIES. The foregoing
representations and warranties shall be considered to have been made again at
and as of the date of each and every disbursement of the Loan and shall be true
and correct as of each such date.
SECTION 4. AFFIRMATIVE COVENANTS
Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
4.1 USE OF LOAN PROCEEDS. Borrower will use the proceeds of the Loan only
as provided in Section 1.1 above.
4.2 PAYMENT OF OBLIGATIONS. Borrower will and will cause Guarantor to pay
and discharge promptly all taxes, assessments and other governmental charges and
claims levied or imposed upon it or its property, or any part thereof; provided,
however, that Borrower and Guarantor shall have the right in good faith to
contest any such taxes, assessments, charges or claims and, pending the outcome
of such contest, to delay or refuse payment thereof provided that adequately
funded reserves are established by it to pay and discharge any such taxes,
assessments, charges and claims.
4.3 MAINTENANCE OF EXISTENCE. Borrower will and will cause Guarantor to
maintain and preserve its existence, its assets, and all rights, franchises,
licenses and other authority necessary for the conduct of its business, and will
maintain and preserve its property, equipment and facilities in good order,
condition and repair. Bank may, at reasonable times, visit and inspect any of
Borrower's or Guarantor's properties.
4.4 RECORDS. Borrower will keep and maintain full and accurate accounts and
records of its operations in accordance with GAAP and will permit Bank, at
Borrower's expense, to have access thereto, to make examination and photocopies
thereof, and to make audits of Borrower's accounts and records and the
collateral during regular business hours.
4.5 INFORMATION FURNISHED. Borrower will furnish to Bank:
(A) Within forty-five (45) days after the close of each fiscal month, except
for the final fiscal month of each fiscal year, the unaudited consolidated
balance sheet of Borrower and its subsidiaries as of the close of such fiscal
month, the unaudited income and expense statement of Borrower and its
subsidiaries with year-to-date totals and supportive schedules, and the
statement of retained earnings of Borrower and its subsidiaries for that fiscal
month, all prepared in accordance with GAAP;
(B) Within ninety (90) days after the close of each fiscal year, a copy of
the consolidated statement of financial condition of Borrower and its
subsidiaries, including at least the consolidated balance sheet of Borrower and
its subsidiaries as of the close of such fiscal year and the consolidated income
and expense statement of Borrower and its subsidiaries and the consolidated
retained earnings statement of Borrower and its subsidiaries for such fiscal
year, examined and prepared on an audited basis by independent certified public
accountants selected by Borrower and reasonably satisfactory to Bank in
accordance with GAAP, along with any management letter provided by such
independent certified public accountants;
(C) Within forty-five (45) days after the close of each fiscal quarter, a
certification of compliance with all covenants under this Agreement, in form and
substance acceptable to Bank, duly executed by an authorized officer of
Borrower;
(D) Within forty-five (45) days after the close of each fiscal quarter, a
sales and EBITDA statement for each store operated by Borrower and its
subsidiaries;
(E) Within thirty (30) days after the close of each fiscal year, an
operating budget of Borrower and its subsidiaries for the following fiscal year;
(F) Prompt written notice to Bank of any Event of Default or any
default under any of the terms or provisions of any other Loan Document, any
litigation which would have a material adverse effect on Borrower's or
Guarantor's financial condition, and any other matter which has resulted in, or
is likely to result in, a material adverse change in Borrower's or Guarantor's
financial condition or operations;
(G) Prior written notice to Bank of any change in Borrower's or Guarantor's
officers and other senior management, Borrower's or Guarantor's name, and the
location of Borrower's or Guarantor's assets, principal place of business or
chief executive office;
(H) Within fifteen (15) days after Borrower knows or has reason to know that
any Reportable Event (as such term is defined in ERISA) or Prohibited
Transaction (as such term is defined in ERISA) has occurred with respect to any
defined benefit pension plan of Borrower, a statement of an authorized officer
of Borrower describing such event or condition and the action, if any, which
Borrower proposes to take with respect thereto; and
(I) Such other financial statements and information relating to Borrower or
any of its subsidiaries as Bank may reasonably request from time to time.
4.6 CONSOLIDATED EBITDA TO CONSOLIDATED DEBT SERVICE RATIO. Borrower will
maintain a ratio of (a) Consolidated EBITDA, less taxes paid, less maintenance
capital expenditures (including capital expenditures on existing stores but
excluding any new store spending) to (b) Consolidated Debt Service of not less
than 2.0:1.0 as of the close of each fiscal quarter for the four (4) consecutive
fiscal quarters then ending. As used in this Agreement, "Consolidated EBITDA"
means the earnings before interest, taxes, pre-opening costs, other non-cash
charges (including non-cash extraordinary losses), depreciation and amortization
of Borrower and its subsidiaries. As used in this Agreement, "Consolidated Debt
Service" means the sum of that portion of the term obligations (including
principal and interest) of Borrower and its subsidiaries which came due during
the four (4) consecutive fiscal quarters preceding the date of calculation.
4.7 INSURANCE. Borrower will keep, and will cause Guarantor to keep, all of
its insurable property, whether real, personal or mixed, insured by companies
approved by Bank, against fire and such other risks, and in such amounts as is
customarily obtained by companies conducting similar business with respect to
like properties. Borrower will furnish, and will cause Guarantor to furnish, to
Bank statements of its insurance coverage, will promptly upon Bank's request
furnish other or additional insurance deemed necessary by Bank to the extent
that such insurance may be available, and hereby assigns to Bank, as security
for Borrower's or Guarantor's obligations to Bank, the proceeds of any such
insurance. Prior to any Loan disbursement, Bank will be named loss payee under
all policies insuring the collateral. Borrower will maintain, and will cause
Guarantor to maintain, adequate worker's compensation insurance and adequate
insurance against liability for damage to persons or property. All policies
shall require at least ten (10) days' written notice to Bank before alteration
or cancellation.
4.8 ADDITIONAL REQUIREMENTS. Upon Bank's demand, Borrower will promptly
take such further action and execute all such additional documents and
instruments in connection with this Agreement and the other Loan Documents to
which Borrower is a party as Bank in its reasonable discretion deems necessary,
and promptly supply Bank with such other information concerning its affairs or
the affairs of its subsidiaries as Bank may reasonably request from time to
time.
4.9 LITIGATION AND ATTORNEYS' FEES. Upon Bank's demand, Borrower will
promptly pay to Bank reasonable attorneys' fees, including the reasonable
estimate of the allocated costs and expenses of in-house legal counsel and
staff, and all costs and other expenses paid or incurred by Bank in collecting,
modifying or compromising the Loan or in enforcing or exercising its rights or
remedies created by, connected with or provided for in this Agreement and the
other Loan Documents. If any judicial action, arbitration or other proceeding is
commenced, only the prevailing party shall be entitled to attorneys' fees and
court costs.
4.10 BANK EXPENSES. Upon Bank's request, Borrower will pay or reimburse
Bank for all costs, expenses and fees incurred by Bank in preparing and
documenting this Agreement and the Loan, and all amendments and modifications to
any Loan Documents, including but not limited to all filing and recording fees,
costs of appraisals, insurance and attorneys' fees, including the reasonable
estimate of the allocated costs and expenses of in-house legal counsel and
staff.
SECTION 5. NEGATIVE COVENANTS
Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:
5.1 LIENS. Borrower will not and will not permit Guarantor to create,
assume or suffer to exist any Lien on any of its property, whether real,
personal or mixed, now owned or hereafter acquired, or upon the income or
profits thereof, except (a) Liens in favor of Bank, (b) Liens for taxes not
delinquent and taxes and other items being contested in good faith, (c) minor
encumbrances and easements on real property which do not affect its market value
and (d) Liens on Borrower's or Guarantor's personal property in effect on the
date of this Agreement; provided, however, that the Liens created by Guarantor
in favor of Lessors shall be terminated on or before April 30, 2001 in
accordance with Section 2.2(b) hereof. All of the Liens on Borrower's personal
property described in subsection (d) of this Section 5.1 shall secure
indebtedness of Borrower in the aggregate principal amount at any one time
outstanding not exceeding One Million Dollars ($1,000,000).
5.2 BORROWINGS. Borrower will not and will not permit Guarantor to sell,
discount or otherwise transfer any account receivable or any note, draft or
other evidence of indebtedness, except to Bank or except to a financial
institution at face value for deposit or collection purposes only, and without
any fees other than the financial institution's normal fees for such services.
Borrower will not and will not permit Guarantor to borrow any money, become
contingently liable to borrow money, or enter any agreement to directly or
indirectly obtain borrowed money, except (a) indebtedness of Borrower existing
on the date of this Agreement; provided, however, that the aggregate outstanding
principal amount of such indebtedness shall not exceed One Million Dollars
($1,000,000) at any one time and (b) pursuant to agreements with Bank.
5.3 SALE OF ASSETS, LIQUIDATION OR MERGER. Borrower will not, and will not
permit Guarantor to liquidate, dissolve or enter into any consolidation, merger,
partnership or other combination, or convey, sell or lease all or the greater
part of its assets or business, or purchase or lease all or the greater part of
the assets or business of another.
5.4 LOANS, ADVANCES AND GUARANTIES. Borrower will not, and will not permit
Guarantor to, except in the ordinary course of business as currently conducted,
make any loans or advances, become a guarantor or surety, or pledge its credit
or properties.
5.5 INVESTMENTS. Borrower will not purchase, or permit Guarantor to
purchase, the debt or equity of another person or entity except for savings
accounts and certificates of deposit of Bank, direct U.S. Government
obligations, and commercial paper issued by corporations with the top ratings of
Moody's or Standard & Poor's, provided that all such permitted investments shall
mature within one year of purchase.
5.6 PAYMENT OF DIVIDENDS. Borrower will not declare or pay, or permit
Guarantor to declare or pay, any dividends.
5.7 AFFILIATE TRANSACTIONS. Borrower will not transfer, or permit Guarantor
to transfer, any property to any affiliate, except for value received in the
normal course of business and for an amount, including any management or service
fees, as would be conducted and charged with an unrelated or unaffiliated
entity. Borrower will not pay or permit Guarantor to pay any management fee or
fee for services to any affiliate.
5.8 CONSOLIDATED FUNDED INDEBTEDNESS TO CONSOLIDATED EBITDA RATIO. Borrower
will not permit its ratio of Consolidated Funded Indebtedness as at the end of
each fiscal quarter to Consolidated EBITDA for the four (4) consecutive fiscal
quarters ending on such date to be greater than 1.75:1.0. As used in this
Agreement, "Consolidated Funded Indebtedness" means indebtedness of Borrower and
its subsidiaries for borrowed money (including obligations under capital
leases), as reflected in the consolidated statement of financial condition of
Borrower and its subsidiaries.
5.9 CONSOLIDATED GROWTH CAPITAL EXPENDITURES. Borrower will not make or
permit Consolidated Growth Capital Expenditures in an aggregate amount exceeding
Seven Million Dollars ($7,000,000) in any fiscal year. As used in this
Agreement, "Consolidated Growth Capital Expenditures" means capital expenditures
of Borrower and its subsidiaries relating to the construction, acquisition or
opening of new stores operated by Borrower or any of its subsidiaries.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default") shall
terminate any obligation of Bank to make or continue the Loan and shall
automatically, unless otherwise provided under the Note, make all sums of
interest and principal and any other amounts owing under the Loan immediately
due and payable, without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or any other notices or demands:
6.1 PAYMENT DEFAULT. Borrower shall default in the due and punctual payment
of the principal of or the interest on the Note or on any amounts owing under
any of the Loan Documents; or
6.2 DEFAULT UNDER NOTE. Any default shall occur under the Note; or
6.3 COVENANT DEFAULT. Borrower shall default in the due performance or
observance of any covenant or condition of the Loan Documents; or
6.4 BREACH OR REVOCATION OF GUARANTY. The Guaranty required hereunder shall
be breached or become ineffective, or Guarantor shall disavow or attempt to
revoke or terminate the Guaranty; or
6.5 CHANGE OF OWNERSHIP. There shall be a change in ownership or control of
fifty-one percent (51%) or more of the equity interests in Borrower or
Guarantor.
SECTION 7. GENERAL PROVISIONS
7.1 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person or entity including but not limited to Bank's rights of setoff and
banker's lien.
7.2 NONWAIVER. Any forbearance or failure or delay by Bank in exercising
any right, power or remedy hereunder shall not be deemed a waiver thereof and
any single or partial exercise of any right, power or remedy shall not preclude
the further exercise thereof. No waiver shall be effective unless it is in
writing and signed by an officer of Bank.
7.3 INUREMENT. The benefits of this Agreement and the other Loan Documents
shall inure to the successors and assigns of Bank and the permitted successors
and assigns of Borrower, but any attempted assignment by Borrower without Bank's
prior written consent shall be null and void.
7.4 APPLICABLE LAW. This Agreement and the other Loan Documents shall be
governed by and construed according to the laws of the State of California.
7.5 SEVERABILITY. Should any one or more provisions of this Agreement or
any other Loan Document be determined to be illegal or unenforceable, all other
provisions of such document shall nevertheless be effective.
7.6 CONTROLLING DOCUMENT. In the event of any inconsistency between the
terms of this Agreement and any other Loan Document, the terms of the other Loan
Document shall prevail.
7.7 CONSTRUCTION. The section and subsection headings herein are for
convenient reference only and shall not limit or otherwise affect the
interpretation of this Agreement.
7.8 AMENDMENTS. This Agreement may be amended only in writing signed by all
parties hereto.
7.9 COUNTERPARTS. Borrower and Bank may execute one or more counterparts to
this Agreement, each of which shall be deemed an original, but all such
counterparts when taken together, shall constitute one and the same agreement.
7.10 NOTICES. Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods and
addressed to the parties at their respective addresses and shall be considered
to have been validly given (a) upon delivery, if delivered personally, (b) upon
receipt, if mailed, first class postage prepaid, with the United States Postal
Service, (c) on the next business day, if sent by overnight courier service of
recognized standing, or (d) upon telephoned confirmation of receipt, if
telecopied. The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.
7.11 INTEGRATION CLAUSE. Except for the other Loan Documents, this
Agreement constitutes the entire agreement between Bank and Borrower regarding
the Loan, and all prior oral or written communications between Borrower and Bank
shall be of no further effect or evidentiary value.
THIS AGREEMENT is executed on behalf of the parties by their duly
authorized representative(s) as of the date first above written.
"Borrower"
CHICAGO PIZZA & BREWERY, INC.
By:_________________________
Title:________________________
By:_________________________
Title:________________________
Address For Notices To Borrower:
Chicago Pizza & Brewery, Inc.
16162 Beach Boulevard, Suite 100
Huntington Beach, California 92647
Attention: Jeremiah J. Hennessy
Chief Operating Officer
Telephone No.: (714) 848-3747
Fax No.: (714) 848-5587
"Bank"
UNION BANK OF CALIFORNIA, N.A.
By:_________________________
Title:________________________
Address For Notices To Bank:
Union Bank of California, N.A.
Commercial Banking Group--
Metro Los Angeles Commercial Banking Division
445 South Figueroa Street, 10th Floor
Los Angeles, California 90071
Attention: Jon Strayer
Vice President
Telephone No.: (213) 236-7760
Fax No.: (213) 236-7635