EXHIBIT 10.3(3)
[LETTERHEAD OF METLIFE]
November 12, 1996
Chart House, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Executive Vice President and Chief Financial Officer
Gentlemen:
Reference is hereby made to (x) the Note Purchase and Guarantee Agreement, dated
as of December 30, 1993 (as amended, the "6.69% Note Agreement"), among Chart
House, Inc. (the "Company"), the Guarantors and Metropolitan Life Insurance
Company ("MetLife"), pursuant to which the Company issued its 6.69% Senior
Secured Notes due 2001 (as amended, the "6.69% Notes"), and (y) the Amended and
Restated Note Purchase and Guarantee Agreement, dated as of December 30, 1993
(as amended, the "10.40% Note Agreement" and, collectively with the 6.69% Note
Agreement, the "Note Agreements"), among the Company, the Guarantors and
MetLife, pursuant to which there is outstanding the Company's 10.40% Senior
Secured Notes due 2000 (as amended, the "10.40% Notes" and, collectively with
the 6.69% Notes, the "Notes"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Note Agreements.
As holder of the Notes and party to the Note Agreements, MetLife hereby consents
and agrees that, effective as of the Effective Date (as hereinbelow defined) or,
in the case of paragraphs d) and e) below, as of June 30, 1997 and July 2, 1997,
respectively:
a) the Events of Default existing under the Note Agreements by virtue of
the Company's failure to have been in compliance with (S)(S)7.7 and 7.31 thereof
as of September 30, 1996 are hereby waived;
b) the due date for (i) the $3,000,000 mandatory principal prepayment with
respect to the 6.69% Notes otherwise payable on January 2, 1997 pursuant to
(S)4.2 of the 6.69% Note Agreement, and (ii) the $3,000,000 mandatory
principal prepayment with respect to the 10.40% Notes otherwise payable on July
24, 1997 pursuant to (S)4.2 of the 10.40% Note Agreement, shall in each case
be extended (and (S)4.2 of the respective Note Agreements shall be deemed
amended mutatis mutandis to reflect such extension) until the date which is the
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earlier of (x) October 1, 1997 and (y) the date of execution of an agreement by
the Company effecting a refinance of all or a portion of the Company's
indebtedness to the Banks or any thereof under the Bank Agreement, provided that
nothing in this paragraph b) shall affect the Company's obligation with respect
to the payment of interest on the 6.69% Notes on January 2, 1997, and provided
further that the Company's failure to make such mandatory principal prepayments
with respect to the Notes, together with accrued interest thereon, on the
earlier of the dates referred to in subclauses (x) and (y) above shall
constitute an Event of Default under (S)(S)5.1(a) and/or (b) of the respective
Note Agreements (after the applicable grace periods therein have expired);
c) (S)(S)7.7 and 7.31 of the Note Agreements need not be complied with by
the Company for the fiscal quarters ending December 30, 1996, March 31, 1997,
June 30, 1997 and September 29, 1997, but such sections shall be complied with
thereafter;
d) the interest rate applicable to the 6.69% Notes shall be increased to
8.69% per annum, and the interest rate applicable to the 10.40% Notes shall be
increased to 12.40% per annum, in each case from and after June 30, 1997, and
the respective Note Agreements (including, without limitation, the first
sentence of (S)4.1 of each thereof) and the respective Notes shall be deemed
amended mutatis mutandis to reflect such increase;
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e) the Interest Payment Dates applicable to the Notes shall be amended to
be the second day of each month, commencing with July 2, 1997, and the Notes and
the Note Agreements shall be deemed amended mutatis mutandis;
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f) (S)7.4 of the Note Agreements shall be amended to read in its
entirety as follows:
"(S)7.4. Minimum Tangible Net Worth. The Parent and its Subsidiaries will
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maintain at all times a Consolidated Tangible Net Worth of not less than
(a) $51,700,000, plus (b) on a cumulative basis, the sum of (1) fifty
percent (50%) of Consolidated Net Income for each fiscal quarter ending after
January 1, 1997 with no deductions for losses plus (2) 100% of the net proceeds
of the issuance of equity securities of the Parent issued on or after January 1,
1997.";
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g) (S)7.6 of the Note Agreements shall be amended to read in its entirety
as follows:
"(S)7.6. Ratio of Consolidated Total Liabilities to Consolidated
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Tangible Net Worth. The Company will not permit the ratio of Consolidated
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Total Liabilities to Consolidated Tangible Net Worth to exceed 1.65:1 at
any time.";
h) (S)7.8 of the Note Agreements shall be amended to read in its entirety
as follows:
"(S)7.8. Capital Expenditures. The Company will not (a) make capital
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expenditures for any purpose other than maintenance and repair of existing
properties and assets and for legally mandated improvements, or (b)permit
the aggregate capital expenditures of the Parent and its Subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles (but exclusive of expenditures in respect of
Capitalized Leases), to exceed (i) $12,000,000 in the 1996 calendar year or
(ii) $4,000,000 in the nine-month period beginning January 1, 997 and
ending September 30, 1997 or (iii) $0 thereafter;
i) a new (S)(S)7.32 shall be added to the Note Agreements to read in its
entirety as follows:
"(S)7.32. Minimum EBITDA. The Company will not permit EBITDA of the
Company and its consolidated Subsidiaries to be less than:
For the Fiscal Quarter Ending Required EBITDA
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December 30, 1996 $2,400,000
March 31, 1997 $2,400,000
June 30, 1997 $3,800,000
September 29, 1997 $4,400,000
For purposes of this (S)7.32 the term 'EBITDA' shall mean for each fiscal
quarter the sum of (a) net income (or net loss), including, without
limitation, those terms Agreement interest income on the Florida Note and
the CA/AZ Note (as those terms are defined in that certain Consent to
Disposition and Agreement for Substitution of Collateral dated as of May
14, 1996), plus
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(b) all amounts treated as expenses for interest, amortization,
depreciation, taxes (to the extent included in the determination of net
loss)) and other non-cash charges for such fiscal quarter.";
(j) (S)10 of the Note Agreements is hereby amended to insert, in correct
alphabetical order, a new definition of "Consolidated Tangible Net Worth" to
read in its entirety as follows:
"Consolidated Tangible Net Worth shall mean the Consolidated total assets
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of the Parent and its Subsidiaries (exclusive of equity investments in
Subsidiaries and other Persons, notes receivable from affiliates (other
than the CA/AZ Note, as defined in that certain Consent to Disposition and
Agreement for Substitution of Collateral dated as of May 14, 1996),
goodwill, patents, trademarks, trade names, organization expense, treasury
stock, unauthorized debt discount and premium, deferred charges and other
intangibles) less Consolidated Total Liabilities.";
(k) the Company may sell the assets of Islands Florida LP (in which Big
Wave is a limited partner) located in Florida and other personal property assets
of the Company and its Subsidiaries with an aggregate net book value not to
exceed $1,000,000 (and MetLife hereby agrees to execute and deliver (at no cost
or expense to MetLife) such documents, instruments and agreements as may be
requested by the Company to release any lien, charge or interest of MetLife in
the subject sale assets), provided that (i) at the date of consummation of the
proposed sale and both before and after giving effect thereto there will not
exist a Default or an Event of Default, (ii) no later than five (5) Business
Days prior to the date of consummation of the proposed sale the Company will
deliver to MetLife a detailed description of the terms and conditions of the
proposed sale and such other information relating thereto as the Company
furnishes to the Agent (as defined in the Bank Agreement) or any of the Banks or
as MetLife may reasonably request, (iii) the sale is to an independent unrelated
third party for the fair market value of the subject personal property assets
and (iv) any Net Proceeds received by the Company or any Subsidiary with respect
to any asset sale (including, without limitation, the assets the sale of which
is permitted by this paragraph k)) which are used to reduce the Banks'
commitment to make Loans (as defined in the Bank Agreement) shall be used to
prepay the Notes and the Loans on a pro rata basis;
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(l) if the Company, in its reasonable business judgment and in accordance
with customary accounting practices, elects to write-off certain of its assets,
the financial covenants set forth in the Note Agreements shall automatically be
deemed modified to accommodate up to $1,000,000 in the aggregate of such write-
offs, provided that the Company shall deliver to MetLife at reasonable intervals
a description of such write-offs;
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(m) (S)7.9 of the Note Agreements shall be deemed amended mutatis mutandis
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to provide for the simultaneous delivery by the Company to MetLife of all
financial and other reports which the Company shall at any time deliver to the
Agent or the Banks under or in connection with the Bank Agreement; and
(n) (S)7.21 of the Note Agreements shall be amended to read in its entirety
as follows:
"(S)7.21. Distributions. Neither the Company nor any Guarantor will or
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will permit any of its Subsidiaries to make any Distributions, other
than distributions from any Subsidiary of the Parent to any Guarantor,
except that the Parent may make Distributions consisting of non-
dividend paying preferred stock if no Default or Event of Default then
exists or would result therefrom."
By their execution hereof, the Company and each of the Guarantors affirms and
agrees that (a) the execution and delivery by such Persons of, and the
performance of their respective obligations under, this consent and agreement
shall not in any way amend, impair, invalidate or otherwise affect any of such
Person's obligations or the rights, remedies and powers of MetLife under the
Loan Documents, including, without limitation, the Security Documents, as the
same are amended hereby, and (b) all Loan Documents remain in full force and
effect.
By their execution hereof, each of the Company, the Parent and Big Wave,
severally and independently as to itself only, represents and warrants that at
the date hereof and at and as of the Effective Date:
(a) Except to the extent such were by their terms made solely as of a
prior date, the representations and warranties of such party contained in the
Loan Documents are accurate and complete in all material respects.
(b) The execution and delivery by such party of this consent and agreement
and the performance by such party of its obligations hereunder are within the
corporate power of such party, have been (or as of the Effective Date will be)
duly authorized by all necessary corporate action and do not and will not (1)
contravene any provision of such party's charter, other incorporation papers,
by-laws or any stock provisions, or any amendment thereof, (2) conflict with, or
result in a breach of any material term, condition or provision of, or
constitute a default under or result in the creation of any mortgage, lien,
pledge, charge, security interest or other encumbrance upon any of the property
of any of such parties (except the security interest and lien in favor of Xxxxx,
as Security Agent for the benefit of the Secured Parties (as such terms are
defined in the Company
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Security Agreement) on the Substitute Collateral (as defined in that certain
Consent to Disposition and Agreement for Substitution of Collateral, dated as of
May 14, 1996)) under any agreement, deed of trust, indenture, mortgage or other
instrument to which such party is a party or by which any of its properties are
bound, (3) violate or contravene any provision of any law, regulation, order,
ruling or interpretation thereunder or any decree, order or judgment of any
court or governmental or regulatory authority, bureau, agency or official, (4)
require any waiver, consent or approval of any Person other than such as have
been obtained and copies of which have been provided to MetLife, or (5) require
any approval, consent, order, authorization or license by, or giving of notice
to, or taking any other action with respect to, any governmental or regulatory
authority or agency under any provision of law, except those actions which have
been taken or will be taken prior to the Effective Date.
(c) This consent and agreement constitutes the legal, valid and binding
obligation of such party enforceable against such party in accordance with its
terms.
(d) No Default or Event of Default has occurred or is continuing (other
than Events of Default which are waived hereunder) or will occur as a result of
(1) the execution and delivery of this consent and agreement, or (2) the
consummation of the transactions contemplated hereby.
This consent and agreement shall become effective upon the date (the "Effective
Date") upon which there shall have been delivered to MetLife each of the
following:
(a) a copy or counterpart copies of this consent and agreement, duly
executed by the Company and the Guarantors;
(b) a duly executed copy of a Fifth Amendment to Credit Agreement from the
Banks, substantially in the form of Annex 1 hereto, which Fifth Amendment to
Credit Agreement shall be in full force and effect;
(c) evidence satisfactory to MetLife that the Banks and the Agent in
providing the Fifth Amendment to Credit Agreement referred to above have not
received and will not receive any compensation therefor, by way of amendment or
waiver fee or otherwise, or if in fact the Banks and the Agent have received or
will receive such compensation, an equivalent payment is made to MetLife;
(d) a counterpart of this consent and agreement, acknowledged and agreed to
by the Agent and the Banks; and
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(e) from each of Big Wave, the Company and the Parent, certified copies of
such corporate resolutions and authorizations as are furnished to the Agent or
the Banks or as MetLife may reasonably request.
Notwithstanding anything to the contrary contained herein, this consent and
agreement shall become effective only if no material adverse change in the
Company's financial condition or prospects, as determined in MetLife's
discretion, shall have occurred during the period from September 30, 1996 to the
Effective Date.
In the event the Effective Date shall not have occurred on or before November
15, 1996, then this consent and agreement shall, at the election of MetLife, as
evidenced by written notice of such election delivered by MetLife to the
Company, terminate and be of no further force or effect. By its execution
hereof, the Company agrees to promptly notify MetLife if the Fifth Amendment to
Credit Agreement referred to above is terminated pursuant to paragraph 10
thereof.
The representations, warranties, covenants and agreements of the Company, the
Parent and Big Wave set forth herein shall survive the Effective Date.
This consent and agreement shall be governed by and construed in accordance with
the laws of the State of New York.
This consent and agreement may be executed in counterparts and such counterparts
shall, when taken together, constitute one and the same agreement.
Very truly yours,
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxxxx X. Xxxxxxx
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ACKNOWLEDGED AND AGREED TO
this 13th day of November, 1996.
CHART HOUSE, INC.
By: /s/ XXXXXXX X. XXXXX, XX.
____________________________
Name: Xxxxxxx X. Xxxxx, Xx.
__________________________
Title: Executive Vice President
_________________________
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CHART HOUSE ENTERPRISES, INC.
By: /s/ XXXXXXX X. XXXXX, XX.
_____________________________
Name: Xxxxxxx X. Xxxxx, Xx.
____________________________
Title: Executive Vice President
___________________________
BIG WAVE, INC.
By: /s/ XXXXXXX X. XXXXX, XX.
_____________________________
Name: Xxxxxxx X. Xxxxx, Xx.
____________________________
Title: Vice President
___________________________
SANWA BANK CALIFORNIA
as Agent and Security Agent
By: /s/ XXXXX X. XXXXX
_____________________________
Name: Xxxxx X. Xxxxx
____________________________
Title: Vice President
___________________________
SANWA BANK CALIFORNIA
By: /s/ XXXXX X. XXXXX
_____________________________
Name: Xxxxx X. Xxxxx
____________________________
Title: Vice President
___________________________
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ XXXXXX X. XXXXXX, XX.
_____________________________
Name: Xxxxxx X. Xxxxxx, Xx.
____________________________
Title: Director
____________________________
THE SUMITOMO BANK OF CALIFORNIA
By: /s/ XXXXXXX X. XXX XXXXXXXXXX
_____________________________
Name: Xxxxxx X. Xxx Xxxxxxxxxx
____________________________
Title: Vice President
___________________________
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