As of November 21, 2000
Ark Restaurants Corp.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Reference is made to that certain Fourth Amended and Restated
Credit Agreement, dated as of December 27, 1999 by and between Bank Leumi USA
(the "Bank") and Ark Restaurants Corp. (the "Company"), as amended by a letter
agreement, dated August 21, 2000 (as so amended, the "Restated Agreement").
Capitalized terms used in this letter agreement (the "Amendment"), and not
otherwise defined herein, shall have the meanings defined in the Restated
Agreement.
Pursuant to the Restated Agreement, the Bank agreed to (i)
make one or more Loans to the Company in an aggregate amount not to exceed
$27,500,000, at any one time outstanding, and (ii) issue letters of credit for
the benefit of the Company, in an aggregate amount not to exceed $2,500,000. The
Bank and the Company have agreed to further amend the Restated Agreement, among
other things, to (i) increase the aggregate amount of the Loans which the Bank
may make to the Company to the initial amount of $28,500,000, (ii) reduce the
aggregate amount of the Letters of Credit, which the Bank may issue for the
benefit of the Company, at any one time outstanding to $1,500,000, and (iii)
make certain changes in the Company's covenants.
Accordingly, the Company and the Bank agree as follows:
A. Amendments to Financing
A.1 Sections 1.6 and 1.7 of the Restated Agreement
are hereby amended and restated as follows:
"1.6 The term "Commitment" means the principal sum of (i)
$28,500,000 until June 30, 2001, (ii) $26,000,000 from June 30, 2001
until September 30, 2001, and (iii) $23,000,000 after September 30,
2001; provided, however, that the sums set forth in each of (i), (ii)
and (iii) shall be reduced by any Reduction Amount."
"1.7 The term "Company's Collateral" means all of (i) the
issued and outstanding shares of capital stock of each of the
Subsidiaries, other than shares of stock issued by one Subsidiary to
another Subsidiary, and the "security", as such term is defined in
paragraph 3 of the Company's Security Agreement, and (ii) each of the
notes pledged to the Bank pursuant to Section 2.4.3."
A.2 The following definitions are hereby added to
Article I of the Restated Agreement:
"The phrase `Earnings Before Taxes' means for any period the
sum of (i) net income (or loss) of the Restaurant-Related Business for
such period, as determined in accordance with GAAP, plus (ii) all
charges against income of such Restaurant-Related Business for such
period for federal, state and local taxes actually paid."
"The term "Outstanding Loan Balance" means the principal
amount of all Revolving Loans outstanding at any given time."
"The term "Reduction Amount" shall have the meanings defined
in Sections 7.3 and 7.13."
"The term "Revolving Loan" shall have the meaning defined in
Section 2.1.1."
"The term "Subordinated Debt" shall have the meaning defined
in Section 7.3."
B. Amendments to Amount and Terms of Credit
B.1 Section 2.1.1 of the Restated Agreement is hereby
amended and restated as follows:
"Section 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 "Revolving
Loan" and collectively the "Revolving Loans"). The Revolving Loans made
available to the Company pursuant to this revolving loan facility are
to provide working capital for the Company's operations. The aggregate
principal amount of the Revolving Loans, at any time outstanding, shall
not exceed 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.".
B.2 The first sentence of Section 2.1.4 of the
Restated Agreement is hereby amended and restated as follows:
Section 2.1.4. Note. The Revolving Loans shall be evidenced by
a promissory note evidencing the Loans substantially in the form of
Exhibit A annexed to the Amendment, with the blanks completed in
conformity herewith (the "Revolving Note") duly executed by the Company
and payable to the order of the Bank, and which shall (i) be dated as
of the date of the Amendment; (ii) be in the principal amount of
$28,500,000; (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 at such rate in arrears on the first day of
each month commencing with the first day of the month following the
date of the Amendment and thereafter on the first day of each month
until (a) the Conversion Date, or (b) maturity whether acceleration or
otherwise, and after maturity upon demand, and both before and after
judgment, until the principal amount is paid in full.
B.3 The third sentence of Section 2.1.5 of the
Restated Agreement is hereby amended and restated as follows:
"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 $1,500,000."
B.4 Section 2.2.2 of the Restated Agreement is hereby
amended and restated as follows:
"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 Loan Balance exceeds $22,000,000."
C. Amendments to Security for the Loans. The following
additional section is hereby added to Section 2.4 of the Restated Agreement:
"2.4.3 The Subsidiaries identified as "payees" on Schedule
2.4.3 annexed shall pledge and deliver to the Bank each of the notes
listed thereon as part of the Subsidiary's Collateral, each with an
allonge sufficient to permit negotiation thereof, except for the note
payable to Ark 27th St., Inc., which shall be delivered and assigned to
the Bank. To support such pledge, each such Subsidiary concurrently is
executing and delivering an Amended and Restated Guaranty and an
Amended and Restated Security Agreement, except Ark Southfield Corp.,
which is executing and delivering a Security Agreement. Any notes
hereinafter received by the Company or any Subsidiary by reason of sale
of a Restaurant-Related business, as provided in Section 7.13, shall be
pledged to the Bank as Company Collateral or Subsidiary Collateral, as
herein provided, within five (5) business days of their receipt.
Notwithstanding anything otherwise in the Restated Agreement or any
Security Agreement to the contrary, the Bank only shall have recourse
to the collateral pledged pursuant to this Section 2.4.3, and exercise
its rights as secured party with respect thereto, only upon the
occurrence of an Event of Default pursuant to Section 8.1.1 or 8.1.10
of the Restated Agreement; provided, however, that with respect to
Section 8.1.10, the Company is the subject of the preceding."
D. Amendments to Covenants.
D.1 The following additional Sections are hereby
added to Article 6 of the Agreement.
"6.1.6 As soon as practical, but in any event not later than
thirty (30) days after the end of each month, a statement signed by an
executive officer of the Company separately setting forth the Earnings
Before Taxes for each Subsidiary engaged in a Restaurant-Related
Business."
"6.1.7 As soon as practical, but in any event not later than
forty-five (45) days after the end of each fiscal quarter of the
Company, a certificate signed by an executive officer of the Company,
certifying that the Company is in compliance with each of its covenants
in this Agreement, or if the Company is not in compliance, specifying
its breaches, and the particulars thereof."
D.2 The first sentence of subsection 7.1.9 of the
Restated Agreement is hereby amended and restated as follows and a new
subsection 7.1.10 is added:
"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
Trade Indebtedness, (b) Purchase Money Indebtedness (c) outstanding
Letters of Credit against which there has not been a draw, and (d) any
Subordinated Indebtedness; provided, however, that the amounts set
forth in each of (i), (ii) and (iii) shall be reduced by the first
$500,000 of Subordinated Indebtedness issued by the Company."
"7.1.10 The Company may incur Subordinated Indebtedness up to
$5,000,000 at any one time outstanding."
D.3 Section 7.2 of the Restated Agreement is hereby
amended and restated as follows:
"7.2 Cash Flow. Maintain Consolidated Operating Cash Flow,
calculated on the basis of the twelve (12) full calendar months
preceding such calculation, of not less than the product of (i) (a) 1.1
as at the end of the first quarter of the Company's fiscal year 2001,
(b) 1.75 to 1 as at the end of the second quarter of the Company's
fiscal year 2001, and (c) 2.0 to 1 as at the end of the third quarter
of the Company's fiscal year 2001, and as at the end of each subsequent
quarter annual fiscal period, and (ii) 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.
D.4 Section 7.3 of the Restated Agreement is hereby
amended and restated as follows:
"7.3 Consolidated Net Worth. Maintain Consolidated Net Worth
(i) as at the end of the first quarter of the Company's fiscal year
2001 of not less than $23,800,000, (ii) as at the end of the second
quarter of the Company's fiscal year 2001 of not less than $23,300,000,
(iii) as at the end of the third quarter of the Company's fiscal year
2001 of not less than $25,000,000, and (iv) at the end of the Company's
fiscal year 2001, and at the end of each subsequent quarter annual
period of not less than $27,300,000; provided, however, that upon the
Company's written request, the Bank will extend the date for compliance
with its Consolidated Net Worth covenant as provided in (i) to the
earlier of (a) February 15, 2001 or (b) the date the Company issues its
financial statement for the first quarter of fiscal 2001. For the
purposes of this covenant and the covenant set forth in Section 7.4,
liabilities of the Company used in the calculation of Consolidated Net
Worth shall not include principal and interest on all indebtedness
which has been subordinated to the Indebtedness of the Company to the
Bank on the terms set forth in the next sentence and pursuant to
documentation reasonably acceptable to the Bank ("Subordinated
Indebtedness"); provided, however, that the first $500,000 of
Subordinated Indebtedness shall be paid to the Bank in reduction of the
outstanding Loan Balance (a "Reduction Amount"). The Company may pay
interest on and repay the Subordinated Indebtedness, in whole or in
part; provided, however, that after giving effect to such payment (i)
the Company shall be in full compliance with each covenant in the
Restated Agreement, based upon a determination made immediately after
giving effect to such payment, and (ii) no Event of Default shall have
occurred and be continuing."
D.4 Section 7.4 of the Restated Agreement is herby
amended and restated as follows:
"7.4 Ratio of Consolidated Indebtedness to Shareholders'
Equity. Maintain a ratio of total Consolidated Indebtedness to
Shareholders' Equity of more than (i) 1:75 to 1:00 at any time through
the second and third fiscal quarters of the Company's fiscal year 2001,
and (ii) 1:5 to 1:0 at any time thereafter."
D.5 Section 7.8 of the Restated Agreement is hereby
amended and restated as follows:
"7.8 Capital Expenditures. Without the prior written consent
of the Bank, make, in the in aggregate (by the Company and all
Subsidiaries) in any fiscal year, any expenditures for fixed or capital
assets whether by purchase or capitalized lease (including such loans,
advances, investments, recourse purchase money indebtedness and
guarantees as are deemed capital expenditures under Sections 7.1.3,
7.1.4, 7.1.5 and 7.1.6 of this Agreement) in excess of $1,000,000,
exclusive of (i) up to $850,000 to complete the construction of the
Lutece patio enclosure and the "Bar" at the Venetian Hotel in Las
Vegas, Nevada, and (ii) up to $1,150,000 to complete construction of
the Restaurant-Related Business at the Aladdin Hotel in Las Vegas,
Nevada."
D.6 Section 7.11 of the Restated Agreement is hereby
amended and restated as follows:
"7.11 Dividends, Redemptions. Without the prior written
consent of the Bank, 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 distributions of assets
to stockholders. Notwithstanding the foregoing, the Company may use up
to $5,000,000 of the proceeds from life insurance policies which it
owns on the life of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to redeem his shares in the event
of his death; provided, however, that (i) the Company is in compliance
with all of its covenants in this Restated Agreement, and (ii) the
insurance policies and proceeds utilized for such purpose have not been
pledged or assigned to the Bank."
D.7 Section 7.13 of the Restated Agreement is hereby
amended and restated as follows:
Section 7.13 Sale of Subsidiary's Shares or Assets. Sell any
of the capital stock of any Subsidiary, or all, or substantially all of
the assets of any Subsidiary, unless the Bank shall be paid seventy
(70%) percent of the cash proceeds of such sale in reduction of the
Loans. In the event that any such sale is financed by notes of the
purchaser, such notes shall be pledged to the Bank as Company
Collateral as provided in Section 2.4.3, and the cash proceeds thereof
shall be applied pursuant to this Section upon payment of such notes.
Upon receipt by the Bank of a payment from the Borrower pursuant to
this Section, the Commitment shall be reduced by an amount equal to
fifty (50%) percent of such payment (a "Reduction Amount").
E. Waivers. The Bank hereby waives the Company's breaches for
its fiscal period ending September 30, 2000 of the following covenants (i)
compliance with the Cash Flow covenant set forth in Section 7.2 of the Restated
Agreement, (ii) compliance with the Consolidated Net Worth covenant set forth in
Section 7.3 of the Restated Agreement, (iii) compliance with the Ratio of
Consolidated Indebtedness to Shareholders' Equity covenant set forth in Section
7.4 of the Restated Agreement, and (iv) compliance with the Dividends,
Redemptions covenant set forth in Section 7.11 of the Restated Agreement.
Nothing herein shall be deemed a waiver of (i) any other term or covenant of the
Restated Agreement, (ii) the Bank's other rights and remedies under the Restated
Agreement, (iii) the Bank's right to enforce the waived covenants for any future
or other period of time, or (iv) the Bank's right under the Restated Agreement
to call a default if the Borrower breaches any of the covenants, conditions or
items of the Restated Agreement.
F. Conditions Precedent. The obligation of the Bank to execute
and deliver this Amendment is subject to the conditions precedent that:
F.1 Representations and Warranties. All of the
representations and warranties contained in the Restated Agreement, or otherwise
made to the Bank pursuant to or in connection with any of the Loan Documents,
shall be correct and complete in all material respects.
F.2 Note. The Company shall have executed and
delivered to the Bank the Revolving Note evidencing the Revolving Loans.
F.3 Supporting Documents. The Bank shall have
received the following: (a) a certificate of the Secretary or an Assistant
Secretary of the Company, dated as of even date herewith, certifying as to (i)
the Certification of Incorporation and By-Laws of the Company as then in effect;
(ii) the resolutions of the board of Directors of the Company authorizing the
execution, delivery and performance of this Amendment and the Note, and the
borrowing(s) thereunder; (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 signing this Amendment and the Note; (b) such additional
supporting documents as the Bank may reasonably request.
F.4 Opinion. The Bank shall have received a written
opinion of legal counsel to the Company, in form and substance satisfactory to
the Bank and its counsel.
F.5 Fees. The Company shall have paid (i) a waiver
fee of $40,000 to the Bank, (ii) the reasonable attorneys' fees of counsel for
the Bank, and (iii) all other charges and disbursements incurred in connection
with the transactions contemplated by the Amendment.
G. Representations and Warranties. To induce the Bank to
enter into the Amendment, the Company represents and warrants to the Bank that:
G.1 Authority, Enforceability. The Company has all
requisite legal right, power and authority to execute, deliver and perform this
Amendment. The Restated Agreement, this Amendment and the Loan Documents are
legal, valid and binding obligations of such of the Company and the Subsidiaries
as are parties thereto, and are enforceable in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency, moratorium
or other similar laws presently or hereafter in effect affecting the enforcement
of creditors' rights generally or the availability of equitable remedies.
G.2 Execution. The execution, delivery and
performance by the Company of this Amendment and the Revolving Note (a) have
been authorized by all requisite corporate action, (b) will not violate (i) the
Certificate of Incorporation or By-laws of the Company, (ii) the Certificate of
Incorporation or By-Laws of each Subsidiary, (iii) any agreement or contract to
which the Company is a party, or by which it or any of its property is bound, or
any order, decree or judgment, or the provisions of any statute, rule or
regulation, domestic or foreign, or (c) result in the creation of any lien,
charge or encumbrance of any nature whatsoever upon any property or assets of
the Company or any Subsidiary.
H. Miscellaneous.
H.1 Extant Note. As soon after execution and delivery
by the Company of the Note as is practical, the Bank will return to the Company
the note evidencing the Loans which was extant prior to the execution and
delivery of the Revolving Note.
H.2 Entire Agreement. This Amendment is intended by
the parties as the final expression of their agreement, and therefore
incorporates all negotiations of the parties hereto, and
together with the Restated Agreement and other Loan Documents set forth
in the entire agreement of the parties hereto.
H.3 Counterparts. This Amendment may be executed in
one or more counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding and
agreement, kindly indicate your acceptance thereof by signing below.
Very truly yours,
BANK LEUMI USA
By: s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
By: s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
First Vice President
AGREED TO:
ARK RESTAURANTS CORP.
By: s/▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
NOTE
$28,500,000 As of November 21, 2000
ARK RESTAURANTS CORP., a New York corporation (the "Company"),
hereby promises to pay to the order of BANK LEUMI USA (the "Bank"), at the
office of the Bank at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in lawful
money of the United States and in immediately available funds, the principal sum
of Twenty-Eight Million Five Hundred Thousand ($28,500,000) Dollars or, if less,
the aggregate principal amount of all outstanding Revolving Loans as defined in
and made by the Bank to the Company pursuant to the Loan Agreement (as
hereinafter defined).
Each Loan made by the Bank under the Loan Agreement and each
payment thereof made by the Company, shall be endorsed by the Bank on the
schedule attached to this Note, provided, however, that the failure by the Bank
to endorse the schedule shall not affect the obligation of the Company to repay
the Loans.
The outstanding unpaid principal balance of this Note shall
bear interest at the rate per annum provided for in the Loan Agreement. Interest
on this Note shall be payable as set forth in the Loan Agreement and shall be
calculated on the basis of a year of 360 days, for the actual number of days
elapsed.
This note is the Revolving Note referred to in that certain
Fourth Amended and Restated Credit Agreement between the Company and the Bank,
dated as of even day herewith, as heretofore and concurrently amended, and as
such agreement may be further amended from time to time (the "Loan Agreement"),
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in the Loan Agreement. Capitalized terms used herein shall
be defined as in the Loan Agreement.
If any payment on this Note becomes due and payable on a day
on which the Bank's offices are closed (as required or permitted by applicable
law or otherwise), such payment shall be extended to the next succeeding day on
which those offices are open, and if the date for any payment of principal is so
extended, interest thereon shall be payable for the extended time.
This Note shall be deemed to be in substitution or and
replacement of, and not a repayment of the Note dated December 27, 1999, made by
the Company to the Bank (the "Prior Note") and all interest accrued and unpaid
under such Prior Note shall be deemed evidenced by this Note and payable
hereunder from and after the date of accrual hereof. The execution and delivery
of this Note shall not be construed (i) to have constituted repayment of any
amount of principal or interest on the Prior Note, or (ii) release, cancel or
terminate or otherwise impair all or any part of any lien or security interest
granted to the Bank under the Restated Agreement as collateral security for the
Prior Note.
Presentment for payment, demand, notice of dishonor, protest
and notice of protest are hereby waived.
This Note amends and restates the extant Note made by the
Borrower to the Bank, to evidence the Revolving Loans.
ARK RESTAURANTS CORP.
By:
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
SCHEDULE 2.4.3
ARK RESTAURANTS
PROMISSORY NOTES
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PAYEE MAKER AMOUNT DATE
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Ark Southfield Corp. Southfield Restaurant
Company LLC $1,000,000 March 9, 2000
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AROC and Ark Corp. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Associates, L.L.C. $600,000 December 18, 1996
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Ark JMR Corp. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, LLC $1,150,000 October 31, 1997
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Columbus Cafe Corp. BS Mart Enterprises, LLC $250,000 November 2, 1998
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Ark 27th St., Inc.* Mexicali Enterprises, Ltd. $208,500 October 21, 1996
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Ark Seventh Avenue ▇▇▇▇▇▇▇ Seventh Corp. $234,068.18 [To be provided]
South Corp. ** (original amount)
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*This Note is not negotiable. The maker of this Note is currently the subject of
a proceeding under Chapter 11 of the Federal Bankruptcy Code.
**This Note is not negotiable.
